Q4 2026 Dell Technologies Inc Earnings Call

February 26, 2026

Fourth quarter financial results Conference call for Dell Technologies, Inc. I'd.

I'd like to inform all participants this call is recorded at the request of Dell technologies.

This broadcast is copyrighted property of Dell Technologies, Inc. Any rebroadcast of this information in whole or part without the prior written permission of Dell technologies is prohibited.

Following prepared remarks, we will conduct a question and answer session. If you have a question simply press Star then one on your telephone keypad at any time during the presentation.

I'd like to turn the call over to Paul France head of Investor Relations. Mr. Frank You may begin.

Thanks, everyone for joining us with me today are Jeff Clark, David Kennedy empower Johnson, our earnings materials are available on our IR website and I encourage you to review these materials.

So please take some time to view the presentation, which includes additional content to complement our discussion this afternoon.

Guidance will be covered on today's call.

During this call unless otherwise indicated all references to financial measures refer to non-GAAP financial measures, including non-GAAP gross margin operating expenses operating income net income diluted earnings per share free cash flow and adjusted free cash flow a reconciliation of these measures.

Speaker #1: Operating income. And our diluted EPS increased 45% to $3.89 a record. Moving to ISG, ISG revenue was a record $19.6 billion, up 73%, marking eight consecutive quarters of double-digit revenue growth.

To their most directly comparable GAAP measures can be found in our web deck and our press release growth percentages refer to year over year change unless otherwise specified.

Statements made during this call that relate to future results events or future looking statements based on current expectations.

Speaker #1: Before I get into the categories, we are now breaking out AI server revenue from overall server and networking line, reflecting the scale of the business and growth we expect to see going forward.

Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our web deck in our SEC filings, we assume no obligation to update our forward looking statements.

Now I'll turn it over to Jeff Thanks, Paul and thanks to everyone for joining us FY 'twenty six was a defining year in our company's history, we delivered record full year revenue and EPS revenue reached $113 5 billion up 19% and EPS grew 27% to $10 30.

Speaker #1: Good afternoon and welcome to the Fiscal Year 2026 Fourth Quarter Financial Results Conference Call for Dell Technologies Inc. I'd like to inform all participants this call is recorded at the request of Dell Technologies.

Speaker #1: This broadcast is the copyrighted property of Dell Technologies Inc. Any rebroadcast of this information in whole or part without the prior written permission of Dell Technologies is prohibited.

We converted that performance into a record annual cash flow over $11 billion.

And returned $7 $5 billion to shareholders, including 54 million shares repurchased more than doubled last year. The AI opportunity is meaningfully growing and transforming the company in FY 'twenty six we closed $64 $1 billion in AI orders shipped $25 2 billion.

Speaker #1: Following prepared remarks, we will conduct a question-and-answer session. If you have a question, simply press star then 1 on your telephone keypad at any time during the presentation.

Speaker #1: I'd like to turn the call over to Paul Frantz, Head of Investor Relations. Mr. Frantz, you may begin.

Speaker #2: Thanks, everyone, for joining us. With me today are Jeff Clarke, David Kennedy, and Tyler Johnson. Our earnings materials are available on our IR website, and I encourage you to review these materials.

And exited with a record $43 billion in AI backlog powerful proof points that our engineering leadership and differentiated solutions are winning.

We are executing with discipline and speed, we are gaining share in our PC business and strengthening ISG with strong margins and traditional servers and storage all while positioning the company for the AI era. It was a months on mental year, we exit with strong momentum and I couldnt be more proud of this team with that let me turn to the key highlights for the <unk>.

Speaker #2: Also, please take some time to view the presentation, which includes additional content to complement our discussion this afternoon. Guidance will be covered on today's call.

Speaker #2: During this call, unless otherwise indicated, all references to financial measures referred to non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating income, net income, diluted earnings per share, free cash flow, and adjusted free cash flow.

Quarter.

We delivered a record quarter of Q4 revenue was $33 $4 billion up 39% and earnings per share was $3 89 up 45% driven by disciplined execution and demand for our AI solutions, while operating in a dynamic environment, we saw a record cash flow.

Speaker #2: A reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and our press release. Growth percentages refer to year-over-year change unless otherwise specified.

<unk> and above trend capital returns for shareholders now lets move to AI. We kept an already strong year was an exceptional quarter for AI record orders and broad based demand.

Speaker #2: Statements made during this call that relate to future results and events are forward-looking statements, based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our web deck and our SEC filings.

In Q4, we booked $34 $1 billion in AI orders evidence that demand is accelerating as customers deploy AI at scale, we shipped nine 5 billion.

Speaker #2: We assume no obligation to update our forward-looking statements. Now I'll turn it over to Jeff.

Servers in the quarter, we exited Q4 with a record $43 billion at AI backlog in our pipeline continued to grow sequentially, even after converting $34 1 billion of orders a clear sign of sustained momentum for.

Speaker #3: Thanks, Paul, and thanks, everyone, for joining us. FY26 was a defining year in our company's history. We delivered record full-year revenue and EPS, revenue reached $113.5 billion up 19%, and EPS grew 27% to $10.30.

For the full year AI orders reached $64 1 billion.

Our customer base surpassed 4000 with growth across new clouds sovereigns that enterprise customers evidence that demand is broadening across all customer types.

Speaker #3: We converted that performance into record annual cash flow over $11 billion, and returned 7.5 billion to shareholders, including $54 million shares repurchased, more than doubled last year.

We're winning for the reasons, we've outlined all year engineering for performance and time to market, while optimizing tcl for AI workloads deployment and installation at speed and scale ongoing lifecycle support that keeps clusters up and running and DFS financing. We're doing this with discipline profitability is in line with our.

Speaker #3: The AI opportunity is meaningfully growing and transforming the company. In FY26, we closed $64.1 billion in AI orders, shipped $25.2 billion, and exited with a record $43 billion in AI backlog.

Speaker #3: Powerful proof points that our engineering leadership and differentiated solutions are winning. We are executing with discipline and speed, we are gaining share in our PC business, and strengthening ISG with strong margins in traditional servers and storage, all while positioning the company for the AI era.

Mid single digits operating margin target, we like our position the line of sight, we have with our backlog and pipeline and the advantages our scale and supply chain frame moving to traditional server demand significantly outpaced supply in Q4 with strong double digit demand growth across every region and momentum accelerated through the quarter.

Speaker #3: It was a monumental year. We exit with strong momentum, and I couldn't be more proud of this team. With that, let me turn to the key highlights for the quarter.

As customers prioritize access to compute for critical workloads.

We saw broad based strength with units up a larger active buyer base and a richer mix of our 16th and 17th generation platforms as customers shifted to dense high performance configurations. The ROI to refresh is compelling even.

Speaker #3: We delivered a record quarter, Q4 revenue was $33.4 billion up 39%, and earnings per share was $3.89 up 45%, driven by discipline execution and demand for our AI solutions.

<unk> at higher Asps customers see a seven to one consolidation when upgrading from the 14th generation through our latest platforms.

Speaker #3: While operating in a dynamic environment, we saw record cash flow generation and above-trend capital returns for shareholders. Now let's move to AI. We capped an already strong year with an exceptional quarter for AI.

The runway a substantial majority of the installed base remains on 14th generation or older servers, creating a significant opportunity to modernize and improve performance and lower the cost of ownership.

Speaker #3: Record orders and broad-based demand. In Q4, we booked $34.1 billion in AI orders, evidence that demand is accelerating as customers deploy AI at scale.

Traditional X 86 is benefiting from AI infrastructure build outs, while many AI workloads rely on specialized gpus traditional compute remains essential for orchestration data processing and infant support as customers deploy AI. They are modernizing broader AI as states refreshing and expanding general.

Speaker #3: We shipped $9.5 billion in AI servers in the quarter. We exited Q4 with a record $43 billion in AI backlog, and our pipeline continued to grow sequentially even after converting $34.1 billion of orders, a clear sign of sustained momentum.

Purpose environments.

Turning to storage.

Revenue was up 2% with continued outperformance from our IP portfolio, we saw double digit demand growth in <unk> with momentum across power Max power store power scale objects scale and data protection.

Speaker #3: For the full year, AI orders reached $64.1 billion. Our customer base surpassed 4,000, with growth across NeoCloud, Sovereigns, and Enterprise customers. Evidence that demand is broadening across all customer types.

All flash arrays delivered their third consecutive quarter of double digit growth.

Speaker #3: We're winning for the reasons we've outlined all year. Engineering for performance and time-to-market while optimizing TCO for AI workloads deployment and installation at speed and scale ongoing lifecycle support that keeps clusters up and running and DFS financing.

Power store, our primary midrange platform posted its seventh consecutive quarter of double digit growth profitability improve supported by our higher Dell IP mix.

Lightning or parallel file solution remains on track for general availability in the first half of the year with early customer deployments already underway.

Speaker #3: We're doing this with discipline, profitability is in line with our mid-single digits operating margin target. We like our position, the line of sight we have with our backlog and pipeline, and the advantages are scale and supply chain bring.

Turning to <unk>.

Revenue grew 14% and we gained share as the October momentum carried through November and December we leaned into share and expanded our buyer base broadening the portfolio to reach more of the market, including the lower end of the commercial market emerging markets consumer and education and by targeting strategic accounts.

Speaker #3: Moving to traditional servers, demand significantly outpaced supply in Q4. With strong double-digit demand growth across every region and momentum accelerated through the quarter as customers prioritized access to compute for critical workloads.

Speaker #3: We saw broad-based strength with units up, a larger active buyer base, and a richer mix of our 16th and 17th generation platforms as customers shifted to dense high-performance configurations.

These actions expand our install base and position us for future refresh cycles.

As we leaned into growth, we saw a higher mix of competitive large bids and customer expansion and plan a.

Speaker #3: The ROI to refresh is compelling. Even at higher ASPs, customers see a 7 to 1 consolidation when upgrading from the 14th generation to our latest platforms.

A higher than normal industry channel inventory levels, which delayed price increases we have already taken actions to address each of these we implemented pricing moves effective January the six to reflect our higher input costs.

Speaker #3: The runway is substantial. A majority of the install base remains on 14th generation or older servers. Creating a significant opportunity to modernize and prove performance and lower the cost of ownership.

Orders margins improved and are the basis for all new orders, we remain confident we can operate <unk> within our long term value creation profitability framework commercial revenue grew 16% our sixth consecutive quarter of growth with demand up for the eighth quarter.

Speaker #3: Traditional x86 is benefiting from AI infrastructure buildouts. While many AI workloads rely on specialized GPUs, traditional compute remains essential for orchestration, data processing, and inference support.

We are seeing growth across geographies strong large enterprise demand and traction in the lower end of commercial where we set to extend the refresh cycle remains a meaningful opportunity given the large installed base of devices that are over 4% and five years old consumer revenue was roughly flat with demand up for the second consecutive quarter.

Speaker #3: As customers deploy AI, they are modernizing broader AI estates, refreshing and expanding general-purpose environments. Turning to storage, revenue was up 2%, with continued outperformance from our Dell IP portfolio.

Speaker #3: We saw double-digit demand growth in Dell IP, with momentum across PowerMax, PowerStore, PowerScale, ObjectScale, and Data Protection. All-flash arrays delivered their third consecutive quarter of double-digit growth.

Supported by strength in gaming.

Before I wrap up a quick update on the supply chain and component costs across the industry. The environment remains highly dynamic was unprecedented it AI demand trading sustained supply tightness and frequent pricing resets.

Speaker #3: PowerStore, our primary mid-range platform, posted its seventh consecutive quarter of double-digit growth. Profitability improved, supported by our higher Dell IP mix. Lightning, our parallel file solution, remains on track for general availability in the first half of the year, with early customer deployments already underway.

In Q4, we did what we said we would do.

Shorter quote validity periods more dynamic pricing and a tighter alignment between our supply chain sales and prices. We saw the benefit of this in ISG and expect it to extend to CST.

Speaker #3: Turning to CSG, revenue grew 14%, and we gained share as the October momentum carried through November and December. We leaned into share and expanded our buyer base.

Given <unk> higher trade and exceptional volume and deal velocity repricing to reflect multiple cost changes it takes longer to flow through.

We're executing our operating model with urgency securing supply as the first priority.

Speaker #3: Broadening the portfolio to reach more of the market, including the lower end of the commercial market, emerging markets, consumer, and education, and by targeting strategic accounts.

Our scale direct model World class supply chain and long standing supplier relationships, our real advantage and they become even more visible in periods of disruption. We are managing this environment in real time applying lessons learned from prior cycles to improve resilience and to strengthen our position.

Speaker #3: These actions expand our install base and position us for future refresh cycles. As we leaned into growth, we saw a higher mix of competitive large bids and customer expansion than planned.

In closing FY 'twenty six is a pivotal year for <unk>, we delivered record performance converted into record cash generation and returned significant capital to shareholders, all while building a stronger company.

Speaker #3: A higher-than-normal industry channel inventory levels, which delayed price increases. We have already taken actions to address each of these. We implemented pricing moves effective January the 6th to reflect our higher input costs.

Speaker #3: Orders margins improved, and are the basis for all new orders. We remain confident we can operate CSG within our long-term value creation profitability framework.

<unk> executed across the portfolio ISG is at record levels with accelerating AI demand.

Traditional servers is growing sharply with demand outpacing supply Dell IP storage continues to outperform the market and <unk> is gaining momentum with share gains in Q4.

Speaker #3: Commercial revenue grew 16%, our sixth consecutive quarter of growth, with demand up for the eighth quarter. We are seeing growth across geographies, strong large enterprise demand, and traction in the lower end of commercial when we set to expand.

We are operating with discipline lower opex alongside meaningful double digit revenue growth. We've made the company more agile which is on display in this commodity environment Bottomline, we enter FY 'twenty seven with momentum a strong backlog and pipeline and a proven operating model.

Speaker #3: The refresh cycle remains a meaningful opportunity.

Im excited about the road ahead and proud of our team's execution with that let me turn it over to David to walk through the financials and our outlook.

Thanks, Jeff.

Was a record year for Dow and as Jeff mentioned, we're very excited about what's ahead.

Team executed extremely well this quarter delivering record revenue EPS and cash flow with strong returns to shareholders.

Total revenue was up 39% to $33 4 billion.

Gross margin dollars increased 18% to $6 8 billion.

Gross margin rate was slightly better than anticipated at 25% and reflected a mix shift to AI servers with AI revenue up more than four X year over year and improved profitability in storage.

Operating expenses were up 5% to $3 3 billion.

<unk> from variable compensation tied to outperformance.

We continue to drive meaningful scale within the P&L with Opex down 320 bps to nine 9% of revenue.

Operating income grew 32% to.

The $3 5 billion.

Our 10, 6% of revenue, primarily driven by higher revenue.

Net income was up 36% to $2 6 billion primarily driven.

Driven by stronger operating income and.

Our diluted EPS increased 45% to $3 89 a record.

Moving to ISG.

ISG revenue was a record 19 $6 billion up 73%, marking eight consecutive quarters of double digit revenue growth.

Before I get into the categories. We are now breaking out AI server revenue from overall server and networking line, reflecting the scale of the business and growth, we expect to see going forward.

AI server demand remained exceptional but records across the board.

We had $34 1 billion in orders.

Nine 5 billion and shipments now.

$9 billion in revenue and an ending backlog of 43 billion.

And traditional server demand improved throughout the quarter outpacing revenue with stable profitability.

Traditional server and networking revenue was $5 9 billion.

Of 27%.

Storage revenue was $4 8 billion.

Up 2% with strong demand across the <unk> portfolio.

CIP demand outpaced market growth on power still remained a bright spot with eight consecutive quarters of growth seven of which were double digit.

ISG operating income was a record $2 9 billion.

A 41%, marking seven consecutive quarters of double digit growth.

This was driven primarily by higher revenue.

Operating margin was 14, 8% up 240 basis points sequentially.

The sequential improvement was driven by scaling and strong storage profitability due to higher mix of that IP.

Turning to <unk>.

<unk> revenue was up 14% to 13 5 billion.

Commercial revenue grew for the sixth consecutive quarter up 16% to 11 6 billion.

Yvonne McGill: Operating income and our diluted EPS increased 45% to $3.89, a record. Moving to ISG. ISG revenue was a record $19.6 billion, up 73%, marking 8 consecutive quarters of double-digit revenue growth. Before I get into the categories, we are now breaking out AI server revenue from overall server and networking line, reflecting the scale of the business and growth we expect to see going forward. AI server demand remained exceptional with records across the board. We had $34.1 billion in orders, $9.5 billion in shipments, $9 billion in revenue, and an ending backlog of $43 billion. In traditional server, demand improved throughout the quarter, outpacing revenue with stable profitability. Traditional server networking revenue was $5.9 billion, up 27%.

David Kennedy: Operating income and our diluted EPS increased 45% to $3.89, a record. Moving to ISG. ISG revenue was a record $19.6 billion, up 73%, marking 8 consecutive quarters of double-digit revenue growth. Before I get into the categories, we are now breaking out AI server revenue from overall server and networking line, reflecting the scale of the business and growth we expect to see going forward. AI server demand remained exceptional with records across the board. We had $34.1 billion in orders, $9.5 billion in shipments, $9 billion in revenue, and an ending backlog of $43 billion. In traditional server, demand improved throughout the quarter, outpacing revenue with stable profitability. Traditional server networking revenue was $5.9 billion, up 27%.

While consumer revenue was roughly flat at $1 9 billion.

<unk> operating income was <unk> 6 billion.

Four 7% of revenue.

As Jeff mentioned profitability reflect strategic share capture in a highly competitive market.

This is building our installed base and expanding our services and attach opportunities positioning us well for the refresh cycle ahead.

Moving to cash and the balance sheet.

We delivered a record cash quarter with cash flow from operations of $4 7 billion.

This was primarily driven by higher profitability and sequential revenue growth.

We ended the quarter with $13 3 billion in cash and investments up.

$9 billion in revenue and an ending backlog of $43 billion.

One 9 billion sequentially.

Our core leverage ratio is at one point Forex in line with our target.

in traditional server demand improved throughout the quarter outpacing Revenue with stable profitability,

We returned $2 2 billion.

To shareholders this quarter, including repurchasing $14 9 million shares at an average price of $125 per share I'm paying a dividend of approximately <unk> 53 per share.

Traditional server networking Revenue was 5.9 billion of 27%.

Yvonne McGill: Storage revenue was $4.8 billion, up 2%, with strong demand across the Dell IP portfolio. Dell IP demand outpaced market growth, and PowerStore remained a bright spot with eight consecutive quarters of growth, seven of which were double digits. ISG operating income was a record $2.9 billion, up 41%, marking seven consecutive quarters of double-digit growth. This was driven primarily by higher revenue. Operating margin was 14.8%, up 240 basis points sequentially. The sequential improvement was driven by scaling and strong storage profitability due to higher mix of Dell IP. Turning to CSG. CSG revenue was up 14% to $13.5 billion. Commercial revenue grew for the sixth consecutive quarter, up 16% to $11.6 billion, while consumer revenue was roughly flat at $1.9 billion.

David Kennedy: Storage revenue was $4.8 billion, up 2%, with strong demand across the Dell IP portfolio. Dell IP demand outpaced market growth, and PowerStore remained a bright spot with eight consecutive quarters of growth, seven of which were double digits. ISG operating income was a record $2.9 billion, up 41%, marking seven consecutive quarters of double-digit growth. This was driven primarily by higher revenue. Operating margin was 14.8%, up 240 basis points sequentially. The sequential improvement was driven by scaling and strong storage profitability due to higher mix of Dell IP. Turning to CSG. CSG revenue was up 14% to $13.5 billion. Commercial revenue grew for the sixth consecutive quarter, up 16% to $11.6 billion, while consumer revenue was roughly flat at $1.9 billion.

Storage revenue was $4.8 billion, up 2%, with strong demand across the Dell IP portfolio.

For the year, we returned $7 5 billion and repurchased roughly 54 million shares more than double the amount of shares we repurchased in FY 'twenty five.

Lip demand outpace market growth and power store, remained a bright spot with a consecutive quarters of growth 7 of which were double digits.

Looking ahead to FY 'twenty seven we're raising our annual dividend by 20% to $2 52 per share well above our long term value creation framework.

ISG operating income was a record $2.9 billion, up 41%, marking seven consecutive quarters of double-digit growth.

This was driven primarily by higher Revenue.

Additionally, the board of directors approved a $10 billion increase in our share repurchase authorization.

Operating margin was 14.8% of 240 basis. Points sequentially

These actions reflect our confidence in the business and our ability to generate strong cash flow in any environment.

The sequential Improvement was driven by scaling and strong storage profitability, due to higher mix of Dell IP.

Next to guidance.

Turning to CSG.

Looking ahead to FY 'twenty seven we expect to build on our record FY 'twenty six and deliver another exceptional year.

CSG Revenue was up 14% to 13.5 billion dollars.

AI demand continues to accelerate and our value proposition is resonating with customers and driving continued wins and success.

Yvonne McGill: CSG operating income was $0.6 billion or 4.7% of revenue. As Jeff mentioned, profitability reflects strategic share capture in a highly competitive market. This is building our install base and expanding our services and attach opportunities, positioning us well for the refresh cycle ahead. Moving to cash and the balance sheet. We delivered a record cash quarter with cash flow from operations of $4.7 billion. This was primarily driven by higher profitability and sequential revenue growth. We ended the quarter with $13.3 billion in cash and investments, up $1.9 billion sequentially. Our core leverage ratio is at 1.4x, in line with our target.

David Kennedy: CSG operating income was $0.6 billion or 4.7% of revenue. As Jeff mentioned, profitability reflects strategic share capture in a highly competitive market. This is building our install base and expanding our services and attach opportunities, positioning us well for the refresh cycle ahead. Moving to cash and the balance sheet. We delivered a record cash quarter with cash flow from operations of $4.7 billion. This was primarily driven by higher profitability and sequential revenue growth. We ended the quarter with $13.3 billion in cash and investments, up $1.9 billion sequentially. Our core leverage ratio is at 1.4x, in line with our target.

Commercial Revenue grew for the sixth consecutive quarter up 16% to 11.6 billion dollars. While consumer Revenue was roughly flat at 1.9 billion dollars.

This is demonstrated by $10 billion in shipments in FY 'twenty five.

And 150% year over year growth to $25 billion in FY 'twenty six.

CSG operating income was 0.6 billion or 4.7% of Revenue.

With an exiting backlog of 43 billion.

As Jeff mentioned, profitability, reflects strategic, share capture in a highly competitive market.

For FY 'twenty, seven we expect $50 billion.

AI revenue about 100% growth year over year.

This is billing our install base and expanding our services and attach opportunities positioning as well for the refresh. Cycle ahead.

This outlook reflects the composition of our existing backlog customer readiness and delivery schedules.

Moving to cache and the balance sheet.

Across the rest of the business customers are assessing their needs and priorities in an environment, where component demand is outpacing supply, which is elevating input costs and extending lead times.

We delivered our record cash quarter with cash flow from operations of 4.7 billion.

This was primarily driven by higher profitability and sequential Revenue growth.

We have price to offset these pressures and our guidance incorporates a prudent view of second half demand while navigating this dynamic environment.

We ended the quarter with 13.3 billion dollars in cash and Investments up 1.9 billion dollars sequentially.

Yvonne McGill: We returned $2.2 billion to shareholders this quarter, including repurchasing 14.9 million shares at an average price of $125 per share and paying a dividend of approximately $0.53 per share. For the year, we returned $7.5 billion and repurchased roughly 54 million shares, more than double the amount of shares we repurchased in FY25. Looking ahead to FY27, we're raising our annual dividend by 20% to $2.52 per share, well above our long-term value creation framework. Additionally, the board of directors approved a $10 billion increase in our share repurchase authorization. These actions reflect our confidence in the business and our ability to generate strong cash flow in any environment. Next to guidance.

David Kennedy: We returned $2.2 billion to shareholders this quarter, including repurchasing 14.9 million shares at an average price of $125 per share and paying a dividend of approximately $0.53 per share. For the year, we returned $7.5 billion and repurchased roughly 54 million shares, more than double the amount of shares we repurchased in FY25. Looking ahead to FY27, we're raising our annual dividend by 20% to $2.52 per share, well above our long-term value creation framework. Additionally, the board of directors approved a $10 billion increase in our share repurchase authorization. These actions reflect our confidence in the business and our ability to generate strong cash flow in any environment. Next to guidance.

Our core leverage ratio is at 1.4 X in line with our Target.

For full year, we expect revenue of $138 billion to 142 billion up 23% at the midpoint of $140 billion.

Speaker #4: demand outpaced supply in traditional servers grew double digits. And we saw that across all use cases and small business, medium business, large, multinationals across all geographies.

ISG is expected to grow in the mid Forty's driven.

Driven by roughly a 100% growth at AI revenue.

We returned, 2.2 billion dollars to shareholders. This quarter, including repurchasing 14.9 million shares at an average price of 125 per share and paying a dividend of approximately 0.53 cents per share.

Traditional servers and storage are expected to be up mid single digits with growth concentrated in traditional servers are more weighted towards the first half.

Speaker #4: We saw the continuation of the consolidation that we've talked about and modernization that we've talked about in traditional data centers. Where you're getting credible efficiency upgrading old technology, for example, our 14Gs converted to a 17G converts at six to one to seven to one.

For the year, we returned 7.5 billion and repurchased roughly 54 million shares. More than double the amount of shares. We repurchased in fi25.

<unk> is expected to grow roughly 1%.

Margin rate expansion remains a priority.

Maintaining pricing discipline, and our transition to Dell IP storage is accretive to margins.

Looking ahead to fi27q.

Speaker #4: So you're getting incredible efficiencies and power, space, and cooling, and that continued throughout the quarter. And we're projecting that to continue into fiscal 27.

Excluding the impact of AI mix, our gross margin rates are up year over year.

Additionally, the board of directors approved a $10 billion increase in our share repurchase authorization.

We expect operating expense dollars up low single digits, delivering significant operating leverage as we continue to invest and modernize simply.

These actions, reflect our confidence in the business, and our ability to generate strong cash flow in any environment.

Speaker #4: Additionally, we are seeing AI workloads on x86 pickup. I think that is significant. And we saw that in enterprises. A phrase that we use inside the company is AI forward.

Yvonne McGill: Looking ahead to FY27, we expect to build on a record FY26 and deliver another exceptional year. AI demand continues to accelerate, and our value proposition is resonating with customers and driving continued wins and success. This is demonstrated by $10 billion in shipments in FY25 and 150% year-over-year growth to $25 billion in FY26, with an exiting backlog of $43 billion. For FY27, we expect $50 billion in AI revenue, about 100% growth year-over-year. This outlook reflects the composition of our existing backlog, customer readiness, and delivery schedules. Across the rest of the business, customers are assessing their needs and priorities in an environment where component demand is outpacing supply, which is elevating input costs and extending lead times.

David Kennedy: Looking ahead to FY27, we expect to build on a record FY26 and deliver another exceptional year. AI demand continues to accelerate, and our value proposition is resonating with customers and driving continued wins and success. This is demonstrated by $10 billion in shipments in FY25 and 150% year-over-year growth to $25 billion in FY26, with an exiting backlog of $43 billion. For FY27, we expect $50 billion in AI revenue, about 100% growth year-over-year. This outlook reflects the composition of our existing backlog, customer readiness, and delivery schedules. Across the rest of the business, customers are assessing their needs and priorities in an environment where component demand is outpacing supply, which is elevating input costs and extending lead times.

Next to guidance.

Simplifying standardizing automating and enhancing our operating model with AI.

Looking ahead to FY 27. We expect to build on a record FY, 26, and deliver another exceptional year.

We expect <unk> operating income rates to be at the lower end of our long term framework, reflecting the rapid mix shift to AI in the near term CSC margin dynamics, we discussed earlier.

Speaker #4: So the most advanced enterprises that are really adapting AI are moving quickly. And we saw them use that across a large number of use cases, whether that be software development, scientific computing, whether that be some of the financial trading traders that are using very sophisticated algorithms, we're seeing that deployed broadly as well as in some inference use cases.

AI demand continues to accelerate, and our value proposition is resonating with customers and driving continued wins and success.

This is demonstrated by 10 billion in shipments in fi25.

Operating income is expected to grow approximately 18%.

And 150% year-over-year growth to 25 billion in FY, 26.

Iron ore is expected to be between $1 4 billion and $1 5 billion.

With an exiting backlog of $43 billion.

Diluted non-GAAP earnings per share is expected to be $12 90.

Speaker #4: I'll let David take the guide.

Plus or minus 25.

For FY '27, we expect $50 billion in AI revenue, about 100% growth year-over-year.

Speaker #5: Yeah, so to build on that, Jeff, like you said, demand far outweighs supply in relation to the Q4 results. Q1 guide, your strong reflection, we see that momentum continuing as strong double-digit growth in Q1.

Of 25% at the midpoint.

Youre seeing the operating model at work with strong EPS growth driven.

It's the composition of our existing backlog, customer Readiness and delivery schedules.

Driven by significant expansion of our AI business.

Growth and improving profitability across the rest of the portfolio.

Speaker #5: We have moderated that slightly as we go into the back half of the year. There's a lot of dynamics out there as we watch the supply-demand dynamics.

Meaningful opex scaling.

Yvonne McGill: We have priced to offset these pressures. Our guidance incorporates a prudent view of second half demand while navigating this dynamic environment. For full year, we expect revenue of $138 to 142 billion, up 23% at the midpoint of $140 billion. ISG is expected to grow in the mid-forties, driven by roughly 100% growth in AI revenue. Traditional servers and storage are expected to be up mid-single digits, with growth concentrated in traditional servers and more weighted towards the first half. CSG is expected to grow roughly 1%. Margin rate expansion remains a priority, and our transition to Dell IP storage is accretive to margins.

David Kennedy: We have priced to offset these pressures. Our guidance incorporates a prudent view of second half demand while navigating this dynamic environment. For full year, we expect revenue of $138 to 142 billion, up 23% at the midpoint of $140 billion. ISG is expected to grow in the mid-forties, driven by roughly 100% growth in AI revenue. Traditional servers and storage are expected to be up mid-single digits, with growth concentrated in traditional servers and more weighted towards the first half. CSG is expected to grow roughly 1%. Margin rate expansion remains a priority, and our transition to Dell IP storage is accretive to margins.

and priorities in an environment where component demand is outpacing Supply, which is elevating input costs and extending lead times

And EPS leverage from our share repurchase program.

We're leveraging our strengths in a dynamic environment.

Speaker #5: Part of that will be us out there looking for more supply. But if this demand continues, obviously there is the potential for growth. But you're going to see in Q1, we're guiding to particularly strong quarters similar to Q4.

For Q1, we expect revenue of $34 7 billion to $35 7 billion.

we have priced to offset these pressures and our guidance incorporates a prudent view of second half demand, while navigating this Dynamic environment,

Up 51% at the midpoint of $35 2 billion.

ISG is expected to grow over 100% supported by $13 billion of AI server revenue.

For the full year, we expect revenue of $138 billion to $142 billion, up 23% at the midpoint of $140 billion.

Speaker #4: Thanks, Lou.

I see is expected to grow in the mid 40s.

Speaker #3: And our next question comes from Ahmed Daryanani with Evercore.

<unk> is expected to be up roughly 2%.

Driven by roughly 100% growth in AI revenue.

Operating expenses are expected to be down low single digits.

Speaker #4: Yep. Thanks a lot for taking my question. Clearly, you folks did not get the memo that you're supposed to miss numbers, by the way, with memory prices go up.

We expect operating income to be up roughly 60% with sequential improvements in <unk> operating income rate.

Traditional servers and storage are expected to be up mid-single digits, with growth concentrated in traditional servers and more weighted towards the first half.

Speaker #4: But it's good to see these results. And I'm hoping you folks can talk about, as we shift to Ruben, could you just contrast how you think the Ruben cycle plays out in 27 versus the Blackwell cycle?

CSG is expected to grow roughly 1%.

We anticipate a.

Margin rate, expansion remains a priority.

Diluted share count of roughly 664 million shares.

Speaker #4: And really hoping you can touch on, A, do you think operating margins will be much more smoother through Ruben, or will it have the same cadence that we saw with Blackwell?

Diluted non-GAAP earnings per share is expected to be $2 90.

Yvonne McGill: Excluding the impact of AI mix, our gross margin rates are up year-over-year. We expect operating expense dollars up low single digits, delivering significant operating leverage as we continue to invest and modernize, simplifying, standardizing, automating, and enhancing our operating model with AI. We expect ISG and CSG operating income rates to be at the lower end of our long-term framework, reflecting the rapid mix shift to AI and the near term CSG margin dynamics we discussed earlier. Operating income is expected to grow approximately 18%. INO is expected to be between $1.4 billion and $1.5 billion. Diluted non-GAAP earnings per share is expected to be $12.90 ±$0.25, up 25% at the midpoint.

David Kennedy: Excluding the impact of AI mix, our gross margin rates are up year-over-year. We expect operating expense dollars up low single digits, delivering significant operating leverage as we continue to invest and modernize, simplifying, standardizing, automating, and enhancing our operating model with AI. We expect ISG and CSG operating income rates to be at the lower end of our long-term framework, reflecting the rapid mix shift to AI and the near term CSG margin dynamics we discussed earlier. Operating income is expected to grow approximately 18%. INO is expected to be between $1.4 billion and $1.5 billion. Diluted non-GAAP earnings per share is expected to be $12.90 ±$0.25, up 25% at the midpoint.

We are maintaining pricing discipline and our transition to Del IP storage is a creative to margins.

Plus or minus 10.

Speaker #4: And then, B, do you think the revenue lumpiness could be less severe as you have a much more diversified customer base, perhaps? I'd love to just contrast those things.

Excluding the impact of AI mix our gross margin rates are up year-over-year.

Up 87% at the midpoint.

In closing, we delivered an extraordinary year with record revenue EPS cash flow and capital returns.

Speaker #4: And then, David, perhaps I missed this, free cash flow expectations for fiscal 27 would be appreciated as well. Thank you.

We expect operating expense dollars of low. Single digits delivering significant operating leverage, as we continue to invest and modernize.

Revenue reached $113 $5 billion up 19%.

Speaker #6: Sure, Ahmed. On Vera Ruben, look, we're excited about the technology that's in front of us. We have a significant technology transition to go through.

Simplifying standardizing automating and enhancing our operating model with AI.

<unk> grew 27% to $10 30.

We generated over $11 billion in cash.

Speaker #6: There's been a lot of lessons learned from the Grace Blackwell implementations. We're expecting a smoother transition. We're expecting all of the manufacturing lessons and lessons around tests that are implemented into the next architecture to allow us to ramp up more velocity and speed.

And returned $7 5 billion to shareholders.

We expect ISG and CSG operating income rates to be at the lower end of our long-term framework, reflecting the rapid mix shift to AI and the near-term CSG margin dynamics we discussed earlier.

Our focus is clear drive durable shareholder value through consistent execution.

Operating income is expected to grow approximately 18%.

Profitable growth and robust cash generation through any cycle our environment.

Enos expected to be between 1.4 billion and 1.5 billion dollars.

I'm excited about the year ahead, we have the portfolio off.

Speaker #6: So that we believe that's the case. We have our early engineering samples. We're working with customers now on designs. Very encouraged with what we're seeing thus far.

Operating model discipline, and multiple levers to deliver growth that exceeds our long term value creation framework.

Yvonne McGill: You're seeing the operating model at work with strong EPS growth driven by significant expansion of our AI business, growth and improving profitability across the rest of the portfolio, meaningful OpEx scaling, and EPS leverage from our share repurchase program. We're leveraging our strength in a dynamic environment. For Q1, we expect revenue of $34.7 to 35.7 billion, up 51% at the midpoint of $35.2 billion. ISG is expected to grow over 100%, supported by $13 billion of AI server revenue, and CSG is expected to be up roughly 2%. Operating expenses are expected to be down low single digits. We expect operating income to be up roughly 60% with sequential improvements in CSG operating income rate. We anticipate a diluted share count of roughly 664 million shares.

David Kennedy: You're seeing the operating model at work with strong EPS growth driven by significant expansion of our AI business, growth and improving profitability across the rest of the portfolio, meaningful OpEx scaling, and EPS leverage from our share repurchase program. We're leveraging our strength in a dynamic environment. For Q1, we expect revenue of $34.7 to 35.7 billion, up 51% at the midpoint of $35.2 billion. ISG is expected to grow over 100%, supported by $13 billion of AI server revenue, and CSG is expected to be up roughly 2%. Operating expenses are expected to be down low single digits. We expect operating income to be up roughly 60% with sequential improvements in CSG operating income rate. We anticipate a diluted share count of roughly 664 million shares.

Diluted non-GAAP earnings per share is expected to be $12.90, plus or minus $0.25, or 2%, at the midpoint.

Thank you to the team for their outstanding work and thank you all for your time.

You're seeing the operating model at work, with strong EPS growth,

And now I will turn back to Paul to begin Q&A.

Speaker #6: When I look in terms of operating margins, the question I guess will be consistent here. We believe we can operate in the mid-single digits with the backlog at hand, with the new orders that we'll take on over the course of the year, which will include Vera Ruben.

Driven by significant expansion of our AI business.

David let's get to Q&A in order to ensure we get to as many of you as possible. Please ask one concise question operator, let's go to the first question.

Growth, and improving profitability across the rest of the portfolio.

Meaningful Opex, scaling.

And EPS leverage from our share repurchase program.

We will take our first question from Tim long with Barclays.

We're leveraging our strengths in a dynamic environment.

Speaker #6: And that's our outlook and guidance. And what we've implied in the numbers that David has given and I think it is a smoother transition.

Thank you.

Try to be concise.

Wanted to just follow up on the AI servers, obviously pretty.

Speaker #6: We've learned a lot. We're more enabled, more skilled. We've invested in more engineering capability. Our forward deployed engineers, again, are working with customers right now on advanced designs.

Huge order number there really good performance.

For q1, we expect revenue of 34.7, billion to 35.7 billion up to 51% at the midpoint of 35.2 billion.

Curious if you could kind of provide us a little color clearly given the demand backdrop. It seems like youre, not really seeing any memory price impacts on that business.

Isg, is expected to grow over a 100% supported by 13 billion of AI server Revenue.

Speaker #6: And I like what we're doing. And I expect it to ship in the second half of the year because we know Vera Rubin is in production.

And CSG is expected to be up, roughly 2%.

But I'm curious as the business scales continually it seems like you're maintaining that mid single digit.

Operating expenses are expected to be download single digits.

Speaker #5: And to touch on cash, we're obviously coming off the back of a very strong FY26—$4.7 billion of cash flow from operations. That totaled up to $11.2 billion for the full year.

Operating margin, which is excellent but as we see scale in all of the diversification you are talking about maybe you could just provide a little color on other opportunities either on the margin front or pull through of other business as that business reaches a much broader.

We expect operating income to be up. Roughly 60% with sequential improvements in CSG. Operating income rate.

We anticipate.

A diluted share count of roughly 6,604 million shares.

Yvonne McGill: Diluted non-GAAP earnings per share is expected to be $2.90 ±$0.10, up 87% at the midpoint. In closing, we delivered an extraordinary year with record revenue, EPS, cash flow, and capital returns. Revenue reached $113.5 billion, up 19%. EPS grew 27% to $10.30. We generated over $11 billion in cash and returned $7.5 billion to shareholders. Our focus is clear: drive durable shareholder value through consistent execution, profitable growth, and robust cash generation through any cycle or environment. I'm excited about the year ahead. We have the portfolio, operating model, discipline, and multiple levers to deliver growth that exceeds our long-term value creation framework. Thank you to the team for their outstanding work, and thank you all for your time.

David Kennedy: Diluted non-GAAP earnings per share is expected to be $2.90 ±$0.10, up 87% at the midpoint. In closing, we delivered an extraordinary year with record revenue, EPS, cash flow, and capital returns. Revenue reached $113.5 billion, up 19%. EPS grew 27% to $10.30. We generated over $11 billion in cash and returned $7.5 billion to shareholders. Our focus is clear: drive durable shareholder value through consistent execution, profitable growth, and robust cash generation through any cycle or environment. I'm excited about the year ahead. We have the portfolio, operating model, discipline, and multiple levers to deliver growth that exceeds our long-term value creation framework. Thank you to the team for their outstanding work, and thank you all for your time.

Speaker #5: And that allowed us to maintain our commitment to our shareholders, right, to return over 80% of our adjusted free cash flow back repurchasing over 54 million shares in the year.

Diluted non-gaap earnings per share is expected to be 2.90.

More diversified customer base. Thank you.

Yes, Tim I'll take the question, let's start with we had an extraordinary quarter of taking $34 billion worth of orders and I think equally important and we tried to call. This out the <unk>.

Plus, or minus 10 cents up 87% at the midpoint.

Speaker #5: And while we don't guide to cash flow, what I can say is we expect another really strong cash quote or cash year ahead. Our net income to adjusted free cash flow will be at or slightly ahead of our commitment and our long-term value creation framework.

In closing, we delivered an extraordinary year with record revenue, EPS, cash flow, and capital returns.

Five quarter pipeline grew as well, we didnt drain it we actually grew it and we grew it across all customer types csp's.

Revenue reached 113.5 billion of 19%.

Speaker #5: And that consistency and ability to reward a shareholder will be strong again. You can see that with our dividend commitment today: 20% growth in our dividend per share.

EPS crew. 27% to 10.30 cents.

<unk> neoplasms, we call Csp's and enterprise enterprise in particular I'd call out in Q4 demand is very strong.

We generated over 11 billion in cash.

Speaker #5: That's the fourth year in a row of double-digit increase in our dividend per share. That with our execution on the share buyback program means we should have a very strong and stable working capital year ahead.

And returned $7.5 billion to shareholders.

We now have over 4000 customers, we saw our enterprise AI business grow significantly quarter over quarter, and very encouraging and we're seeing AI deployed across many use cases and enterprise.

Our focus is clear Drive durable. Shareholder value through consistent execution, profitable growth and robust, cash generation through any cycle or environment.

Speaker #4: All right. Thanks, Ahmed.

I'm excited about the year ahead. We have the portfolio.

Speaker #3: Our next question comes from Ben Reitzes with Lilius Research.

So the backdrop of demand continues to be strong.

Speaker #7: Hey, thanks a lot. Nice execution here, guys. I'll echo that. My question is on storage. It sounds like it's turning a little bit. You beat the street by a little bit, 2%.

And you called it out we tried to call it out as well we operated throughout the quarter and over the course of the year in that mid single digit operating income.

Operating model discipline and multiple levers to deliver growth. That exceeds our long-term value creation framework.

Yvonne McGill: Now I'll turn back to Paul to begin Q&A.

David Kennedy: Now I'll turn back to Paul to begin Q&A.

Thank you to the team for their outstanding work and thank you all for your time.

And now I'll turn back to Paul to begin Q&A.

Jeff Clarke: David, let's get to Q&A. In order to ensure we get to as many of you as possible, please ask one concise question. Operator, let's go to the first question.

Paul Frantz: David, let's get to Q&A. In order to ensure we get to as many of you as possible, please ask one concise question. Operator, let's go to the first question.

What we see in front of US there's no reason to change that that is our guidance of where we can operate this business and we're going to continue to grow and it's exciting to say that we can grow twice.

Speaker #7: And then you said I believe that it'll grow in the mid-singles. For the year, and it looks like it may outgrow servers in the back half of the year.

Operator: We'll take our first question from Tim Long with Barclays.

David, let's get to Q&A in order to ensure we get to as many of you as possible. Please ask 1 concise. Question, operator. Let's go to the first question.

We'll take our first question.

But it was this year.

Speaker #7: So can you just talk about what's really going on with storage, your highest margin business? Is it really turning? Is it going to be a contributor to mix in the upcoming year that allows you to keep gross margins pretty flat for the year in the tough component environment?

We grew orders six times over the previous year, and we're excited about the prospects of growth and probably a backdrop from a technology perspective.

Tim Long: Thank you. Yeah, try to be concise. Did want to just follow up on the AI servers, obviously, you know, pretty huge order number there. Really good performance. Just curious if you could kind of provide us a little color. Clearly, given the demand backdrop, it seems like you're not really seeing any, you know, memory price impacts on that business. I am curious, as the business scales continually, it seems like you're maintaining that mid-single digit operating margin, which is excellent. As we see scale and all the diversification you're talking about, maybe you could just provide a little color on other opportunities, either on the margin front or pull through of other business as that business reaches, you know, a much broader, more diversified customer base. Thank you.

As we see inference ramp.

And France is driving more tokens tokens drive more compute capacity and intensity.

Speaker #7: Thanks a lot.

Speaker #4: Sure, Ben. Look, we're excited about our storage business. Again, we're reporting that on an orders basis, our Dell IP portfolio grew double digits. That's the entire portfolio.

Ultimately that is good for the revenue stream of the company.

Okay. Thank you.

And we will take our next question from Mark Newman with Bernstein.

Thanks, So much for taking my question Greg.

Speaker #4: PowerMax, PowerStore, PowerScale, ObjectScale, and our data domain platforms all grew double-digit demand. Our all-flash grew double-digit demand. It grew in all regions. And we acquired new customers.

Presses numbers on the AI service I Wonder if you could.

Talk about the.

Profitability.

AI service given the huge numbers you are posting.

Any any any changed any change in timing for that.

Jeff Clarke: Yeah, Tim, I'll take the question. I mean, let's start with we had an extraordinary quarter taking $34 billion worth of orders, and I think equally important, we tried to call this out, the 5-quarter pipeline grew as well. We didn't drain it. We actually grew it, and we grew it across all customer types, CSPs, sovereigns, neoclouds, as we call CSPs, and enterprise. Enterprise in particular, I'd call out in Q4 demand is very strong. We now have over 4,000 customers. We saw our enterprise AI business grow significantly quarter-over-quarter and very encouraging. We're seeing AI deployed across many use cases in enterprise. The backdrop of demand continues to be strong. You called it out, we tried to call it out as well.

Scales continually seems like you're maintaining that mid single digit. Um operating margin, which is excellent but as we see scale and all the diversification you're talking about, maybe you can just provide a little color on other opportunities, either on the margin front or pull through of other business as that business reaches, you know, a much broader, uh, more Diversified customer base. Thank you.

As previous quarter.

Speaker #4: PowerStore tore grew its eighth consecutive quarter, seven of those last seven double digits. Half of those new customers that we're winning are new to PowerStore and nearly 30% are new to Dell buying storage.

Going forwards.

We may anticipate given the huge upsides on the topline.

Yeah, Tim I'll take the question. I mean, let's start with, we had an extraordinary record of taking 34 billion dollars worth of orders and I think equally important and we tried to call this out.

And then similarly, I guess, we will get to this later in the call, but a little bit more.

Explanation on how rising menu prices impacting profitability in <unk>.

Speaker #4: We saw tremendous demand for our unstructured products as AI inference and AI continues to grow, grow, grow, grow, grow. Our Dell IP portfolio is now a greater percentage of the mix year over year.

PSG and traditional service would be appreciated thanks very much.

So two questions. The first one ill reemphasize, what we just talked about we maintained throughout the quarter and the guidance that David just talked about that we can operate AI at the velocity, we're seeing in the mid single digits.

The 5 quarter pipeline grew as well. We didn't drain it, we actually grew it and we grew it across, all customer types, csps, as we call csps and Enterprise enterprise Enterprise in particular, I'd call out in Q4 demand is very strong.

Speaker #4: We expect it to grow FY27 over '26. It will be a greater percentage of mix next year than this year. That's part of the profit contribution that David has outlined in our guidance.

Uh, we now have over 4,000 customers. We saw our Enterprise AI business grow significantly quarter of a quarter and a very, and we're seeing AI deployed across many use cases in Enterprise.

You have a significant technology transition in front of us we see our ability to work our way through that and maintain mid single digits.

Speaker #4: And we're entering an era in my humble opinion where architecture matters. So where we have the leading data rate reduction five to one with our PowerStore product, we're going to increase customers' effective storage capacity.

Jeff Clarke: We operated throughout the quarter and over the course of the year in that mid-single digit operating income. With what we see in front of us, there's no reason to change that. That is our guidance of where we can operate this business, and we're going to continue to grow it. It's exciting to say that we can grow it twice what it was this year. We grew orders six times over the previous year, and we're excited about the prospects of growth. Probably a backdrop from a technology perspective, as we see inference ramp, inference is driving more tokens drive more compute capacity and intensity, and ultimately that is good for the revenue stream of the company.

Clearly have a lot of backlog declarer with $43 billion in backlog backlog will ship bids.

So, the backdrop of demand continues to be strong, and you called it out—we tried to call it out as well. We operated throughout the quarter, and over the course of the year, in that mid-single-digit operating income.

Mid single digits. So hopefully those are three data points of backlog future demand and technology transitions that are in and our guide that we can maintain the profitability that we've talked about.

Speaker #4: We're the leader there. If you take our data protection product where we have up to 75 to 1 compression and dedupe, we are going to help customers through this memory crisis shortage, whatever you want to call it, with advanced architectures that require fewer servers and fewer drives to back up customers' information.

With what we see in front of us, there's no reason to change that. That is our guidance of where we can operate this business, and we're going to continue to grow it. It's exciting to say that we can grow it twice.

When we look at the other two businesses traditional servers and <unk> that you called out.

But it was this year.

I think we are operating at a high level of proficiency.

Changing our price as our input costs are rapidly changing.

We grew order 6 times over the previous year and uh we're excited about the prospects of growth and probably a backdrop from a technology perspective.

Speaker #4: That architecture difference, we believe, is fuel that will continue to serve our Dell IP portfolio well in FY27.

As we see inference ramp.

We began to change price most notably in servers in mid December December the tent to be specific and we saw our margins stabilize with higher input costs coming our way.

Inferences driving more tokens, tokens drive more compute capacity and intensity, and ultimately that is good for the revenue stream of the company.

Speaker #5: I would also add there, Ben, I think you asked about the contribution and the margin that we see going forward. What we see it today, right, the results from Q4 illustrate that in relation to the upbeat performance of the ICE GP&L, which was tremendous.

Tim Long: Okay, thank you.

Okay, thank you.

Operator: We'll take our next question from Mark Newman with Bernstein.

<unk> G. We purposely we were deliberate in delaying moving price because we believed into a share position we began that in October.

And we'll take our next question from Mark Newman with Bernstein.

Mark Newman: Thanks so much for taking the question. Great numbers. Very impressive numbers on AI servers. I wonder if you could talk about the profitability of AI servers given the huge numbers you're posting. Any change in directionally versus previous quarter and going forward that we may anticipate given the huge upside on the top line? Similarly, I guess we'll get to this later in the call, but a little bit more explanation on how rising memory prices are impacting profitability in CSG and traditional servers would be appreciated. Thanks very much.

Speaker #5: As we look into the guidance, particularly in the back half of the year, we talk about mid-single digit between traditional server and storage. Maybe a smidgen more on the traditional server side, but growth nonetheless.

We gained momentum on October November and December you saw that in the share results. Our business grew 18% in a market that grew 10% we took a 100 basis points of share.

Speaker #5: So hope that helps.

Speaker #4: Thanks, Ben.

Speaker #7: Hey, thanks, guys.

We chose not to take our foot off the accelerator.

Speaker #3: And our next question comes from Eric Woodring with Morgan Stanley.

Side change in the composition of the business in December in particular, with a higher mix of large deals as well as acquisition pricing of new customers. We grew our customer base in CST and then we made a price change on January the sixth.

Speaker #8: Hey, guys. Thank you for taking my question. And really impressive guide. I'm Jeffrey David. I guess the question is, can you maybe just help us understand what kind of memory price inflation you're assuming in your 2027 outlook?

Thank you too much for taking the question. Uh, great numbers. Very impressive numbers on AI servers. I wonder if you could, um, talk about the, um, profitability of, uh, AI service. Given the huge numbers of your posting, um, any, any any changed, any change in Dynamics in the versus previous quarter, uh, and going forward, uh, that we we may anticipate given the huge upside on the

When we made a price change on January the sixth.

Speaker #8: And fiscal '27 outlook, excuse me. And since you're talking about margin rates, improving year over year, maybe just help us also understand what you're doing different this cycle versus past cycles to protect your profitability?

Our business normalized margin stabilized and they're where they need to be so we can operate within the profitability framework that we've committed to hope that was clear enough.

Jeff Clarke: 2 questions. The first one I'll re-emphasize what we just talked about. We maintained throughout the quarter and in the guidance that David just talked about, that we can operate AI at the velocity we're seeing in the mid-single digits. We have a significant technology transition in front of us. We see our ability to work our way through that and maintain mid-single digits. We clearly have a lot of backlog to clear with $43 billion in backlog. That backlog will ship at mid-single digits. Hopefully those are 3 data points of backlog, future demand, and technology transition that are in and our guide that we can maintain the profitability that we've talked about.

Top Line. Uh, and then and similarly, I guess we'll get to this later in the call, but a little bit more, uh, explanation on how Rising memory prices are impacting, uh, profitability in, uh, CSG and traditional service would be appreciated. Thanks very much.

Alright, Thanks, a lot really appreciate that.

Speaker #8: Thank you very much.

Speaker #4: Yeah, a few questions in there. I think if you go line by line in terms of the business, so we talk CSG in relation to guidance.

Okay.

And our next question comes from Louis <unk> from Daiwa.

So 2 questions, the first 1, I'll I'll re-emphasize what we just talked about. We maintained throughout the quarter in the guidance. That David just talked about that we can operate AI at the velocity, we're seeing in the mid single digits.

Hey, Thanks for taking my question and Great numbers guys. Congratulations.

Speaker #4: Our current assessment of the market is double-digit, probably in around that minus 11, minus 12 percent range. As we look at the year ahead, probably more acute in the second half.

You look at traditional servers.

You are growing exceptionally well in the AI ones. Some of our checks suggested faster growth in that area. So I guess I'm just trying to understand why numbers not hire for that more into the solid double digit range and are you only seeing inference deployed on AI service and not yet as much on traditional servers.

Speaker #4: So obviously, we believe our guide, which is 1% growth in revenue, for the year ahead is a prudent guide to start with, align with a commitment to manage and maintain our margin rates within that portfolio.

We have a significant technology transition in front of us, we see our ability to work our way through that and maintain mid single digits. We clearly have a lot of backlog to clear with 43 billion dollars in backlog. That backlog will ship at the single digits. So hopefully, those are 3 data points of backlog, future demand, and Technology transition that are and in our guide that we can maintain the profitability that we've talked about.

Jeff Clarke: When we look at the other two businesses, traditional servers and CSG that you called out, I think we are operating at a high level of proficiency of changing our price as our input costs are rapidly changing. We began to change price, most notably in servers in mid-December, 10 December to be specific. We saw our margins stabilize with higher input costs coming our way. CSG, we purposely, we were deliberate in delaying moving price 'cause we leaned into a share position. We began that in October. We gained momentum in October, November, and December. You saw that in the share results. Our business grew 18% in a market that grew 10%. We took 100 basis points of share. We chose not to take our foot off the accelerator.

Speaker #4: So you can see the difference between the units and the revenue there. We do and will take share, just like we did in Q4.

Sure.

Let me, let me try to break that down on us for David's help on sort of the forward guide in the quarter I think we were very.

Speaker #4: But we'll obviously learn as we go to the price increases have been there. Costs will continue to go up to a certain degree. We'll make quick and decisive decisions and execute.

When we look at the other 2, businesses traditional servers and CSG that you called out, I think we are operating at a high level of proficiency.

Outspoken about demand outpaced supply and traditional servers grew double digits.

Of changing our price as our input costs are rapidly changing.

Speaker #4: Jeff outlined earlier the ability in the execution of the team, particularly on the server side, in relation to Q4. We're already seeing the signs of that for Q1.

And we saw that across all use cases in small business medium business large multinationals across all geographies.

We began to change price, most notably in servers in mid December, December the 10th to be specific.

Speaker #4: So all the actions we discussed around time validity of quotes, moving at speed, increasing list prices, moving to discount off list pricing, limiting to little or no promotions, all of those actions are strong operational execution levers we've got.

And we saw our margins stabilized with higher input costs. Coming our way.

We saw the continuation of the consolidation that we've talked about in modernization that we've talked about in traditional data centers.

Youre getting incredible efficiency upgrading old technology for example, our <unk> converted to a 17 G converts at 6% to 1% to 7% to one. So you are getting incredible efficiencies in power space in cooling and that continued throughout the quarter and were projecting that to continue.

Speaker #4: To work the business as we kind of move forward into the guidance.

Speaker #5: I mean, Eric, you asked about memory assumptions. Obviously, our price has proprietary. I'm not going to share our specific percentages. But look at the spot market.

Jeff Clarke: We saw a change in the composition of the business in December, in particular, with a higher bit mix of large deals, as well as acquisition pricing of new customers. We grew our customer base in CSG, and then we made a price change on 6 January. When we made a price change on 6 January, our business normalized, margins stabilized, and they're where they need to be so we can operate within the profitability framework that we've committed to. Hope that was clear enough.

We purposely were deliberate in delaying moving price because we leaned into a shared position. We began that in October; we gained momentum in October, November, and December. You saw that in the share results—our business grew 18% in a market that grew 10%. We took 100 basis points of share. We chose not to take our foot off the accelerator.

To fill.

Speaker #5: I mean, the spot market for a gigabit of DRAM over the last six months is up nearly 5.5 times at $2.39 a gigabit. If you're to look at NAND, the cost is 20 cents a gigabyte.

Fiscal 2007.

Additionally, we are seeing AI workloads on X 86 pick up.

But I think that is significant.

And we saw that in enterprises.

And then we made a price change on January the 6th.

Speaker #5: That's up nearly 4x over the last six months. The industry analysts have Q2 up over Q1 in a range of 20% to 50%.

A phrase that we use inside the company is AI forward. So the most advanced enterprises that are really adapting AI are moving quickly and.

when we made a price change on January the 6th,

Speaker #5: They have Q3 5 to 15 percent. Q4 5 to 10 percent. Those are estimates. Those are probably in ballparks where things are. So we haven't changed anything.

And we solve them use that across a large number of use cases, whether that'd be software development scientific computing, whether that be some of the financial trading as traders that are using very sophisticated algorithms, we're seeing that deployed broadly as well as in some inference use cases I'll, let David take the guide.

Our business, normalized margin stabilized, and there were, they need to be so we can operate within the profitability. Framework that we've committed to hope that was clear enough.

Mark Newman: Great. Thanks for the clarity. Really appreciate that.

Great, thanks. I really appreciate that.

Operator: Our next question comes from Lewis Mossocha from Daiwa.

and our next question comes from,

Speaker #5: We continue to work with our long-term partners. We've had LTAs in place. We've had capacity agreements in place. We know how to budgetary price I mean, David's team has our best estimate of cost for Q2, Q3, and Q4 and how our pricing deals today.

Moshe from DIA.

Lewis Mossocha: Hey. Thanks for taking my question. Great numbers, guys. Congratulations. If you look at traditional servers, obviously you're growing exceptionally well in the AI ones. Some of our checks suggested faster growth in that area. I guess I'm just trying to understand why numbers not higher for that, more into the solid double-digit range. Are you only seeing inference deployed on AI servers and not yet as much on traditional servers? Thank you.

Louis Miscioscia: Hey. Thanks for taking my question. Great numbers, guys. Congratulations. If you look at traditional servers, obviously you're growing exceptionally well in the AI ones. Some of our checks suggested faster growth in that area. I guess I'm just trying to understand why numbers not higher for that, more into the solid double-digit range. Are you only seeing inference deployed on AI servers and not yet as much on traditional servers? Thank you.

Yes to build on that Jeff like you said.

Demand outweighs supply in relation to the Q4 results Q1 guide.

Strong reflection, we see that momentum continuing its strong double digit growth in Q1.

Speaker #5: We're working with our memory partners to be as flexible and as agile as possible. We are working through things of how do we minimize our complexity?

We have moderated that slightly as we go into the back half of the year. There is a lot of dynamics out there as we watch the supply demand dynamics parts of that would be.

Hey yeah, thanks for taking my question and a great number guys. Congratulations. If you look at traditional servers uh obviously you're going exceptionally well in the AI ones uh some of our checks suggested uh faster growth in in that area. So I get them just trying to understand. Um, you know, why numbers not higher for that more into the solid double digit range. And are you only seeing inference deployed on AI servers and not yet as much on traditional servers. Thank you.

Jeff Clarke: Lewis, let me try to break that down. I'll ask for David's help on sort of the forward guide. In the quarter, I think we were very outspoken about demand outpaced supply, and traditional servers grew double digits. We saw that across all use cases in small business, medium business, large multinationals, across all geographies. We saw the continuation of the consolidation that we've talked about and modernization that we've talked about in traditional data centers, where you get incredible efficiency upgrading old technology. For example, our 14Gs converted to a 17G converts at 6 to 1 to 7 to 1. You're getting incredible efficiencies in power, space, and cooling, and that continued throughout the quarter, and we're projecting that to continue into fiscal 27. Additionally, we are seeing AI workloads on x86 pick up.

Speaker #5: How do we improve our mix? How do we sell what's coming? How do we improve our designs to take whatever parts that are available?

US out Theyre looking for more supply.

But if this demand continues obviously there is the potential for growth.

Speaker #5: And then to answer really maybe to put the bow around this, the pricing actions. Look, we became very proficient during COVID. And all of the best practices that we learned during COVID, as I mentioned in the last call, we put in place.

But youre going to see in Q1, we're guiding to a particularly strong quarter similar to Q4.

Uh, Louis, let me—let me try to break that down, and I'll ask for David's help on sort of the Ford guide in the quarter. I think we were very, uh,

Outspoken about demand outpaced Supply and traditional servers, grew double digits.

Thanks Luke.

And our next question comes from Amit <unk> with Evercore.

Speaker #5: And we put in place faster. We changed the entire pricing of our server business on December the 10th in a couple of tens of thousands of open quotes in the PC business and changed them all on January the 6th.

Thanks, a lot for taking my question clearly you folks did not get the memo that you're supposed to miss numbers by the way, but memory prices go up but.

It's good to see these results and I'm, hoping you folks can talk about as we shift to Reuben could you. Just contrast, hyping the Ruben cycle plays out in 2007 versus the Blackwell cycle and really hoping you can touch on that.

Speaker #5: This notion of we recover our cost in two-thirds of it in 90 days, we moved that quickly. That's what we learned in COVID. That's what we put in place here.

Do you think operating margins will be much more smoother through Reuben OLED <unk> have the same cadence will be solid Blackwell and then B do you think the revenue lumpiness could be less severe as you have a much more diversified customer base price. So I'd love to just contrast, those things and then David perhaps I missed this free cash flow expectations for fiscal 'twenty seven would be appreciated as well. Thank you.

Speaker #5: So we made list price changes across the board. We've changed in our vernacular, our internal mechanisms around smart price and margin floors all changed in discount off list price.

Jeff Clarke: I think that is significant. We saw that in enterprises. A phrase that we use inside the company is AI forward. The most advanced enterprises that are really adapting AI are moving quickly, and we saw them use that across a large number of use cases, whether that be software development, scientific computing, whether that be some of the financial traders that are using very sophisticated algorithms. We're seeing that deployed broadly as well as in some inference use cases. I'll let David take the guide.

Speaker #5: We're compressing discounting. Our quotes are valid for the shortest period of time. They have ever been. And we're reducing promotions and all sorts of special pricing going forward.

Sure Amit on Vera Rubin look we're excited about the technology. That's in front of US we have a significant technology transition to go through.

Speaker #5: That's what we've done. It's been in place. As I mentioned with one of the previous questions, we saw our server business stabilize with the higher input cost.

There has been a lot of lessons learned from the Grace Blackwell implementations.

We're expecting a smoother.

Transition, we're expecting all of the manufacturing lessons and lessons around tests that are implemented into the next architecture to allow us to ramp up more velocity and speed. So thats, we believe thats the case.

Speaker #5: You saw that in the performance of the business. And ISG, which was extraordinary. And PCs, we purposely delayed implementing that price move to stay in the hunt to take share and to drive growth, which will service for the long run.

Yvonne McGill: To build on that, Jeff, like you said, demand far outweighs supply in relation to the Q4 results. Q1 guide, you know, a strong reflection. We see that momentum continuing at strong double-digit growth in Q1. We have moderated that slightly as we go into the back half of the year. There's a lot of dynamics out there as we watch the supply-demand dynamics. Part of that will be us out there looking for more supply. If this demand continues, obviously there is the potential for growth. You're gonna see in Q1 we're guiding to a particularly strong quarter similar to Q4.

David Kennedy: To build on that, Jeff, like you said, demand far outweighs supply in relation to the Q4 results. Q1 guide, you know, a strong reflection. We see that momentum continuing at strong double-digit growth in Q1. We have moderated that slightly as we go into the back half of the year. There's a lot of dynamics out there as we watch the supply-demand dynamics. Part of that will be us out there looking for more supply. If this demand continues, obviously there is the potential for growth. You're gonna see in Q1 we're guiding to a particularly strong quarter similar to Q4.

We have our early engineering samples, we're working with customers now on designs.

Speaker #5: And then when we made the change on January the 6th, it wasn't 90 days later. It was that day we stabilized margins. I hope that helped.

Very encouraged with what we're seeing thus far.

When I look in terms of operating margins the question.

Speaker #4: Thanks, Eric.

It will be consistent here.

Speaker #1: And we'll take our next question from Krish Sankar with TD Cowen.

We believe we can operate in the mid single digits with the backlog at hand, with the new orders that will take.

Speaker #5: Yeah, hi. Thanks for taking my question. And congrats on the amazing results. Jeff, I had a question on enterprise AI adoption. You kind of said there's very strong in your server business.

Take on over the course of the year, which will include Vera Rubin.

And that's our outlook and guidance and what we've implied in the numbers that David has given.

Speaker #5: Clearly, agentic AI, long horizon agents, all of them have implications across your server, Dell AI factory, and your storage business. I'm just wondering, is there a way to break down your AI server orders between enterprise, NeoCloud, and Sovereign?

And I think it is a smoother transition we've learned a lot.

We're more enabled more skilled we've invested in more engineering capability. Our forward deployed engineers again are working with customers right now on advanced designs.

Jeff Clarke: Thanks, Luke.

Paul Frantz: Thanks, Luke.

Operator: Our next question comes from Amit Daryanani with Evercore.

Speaker #5: And when do you expect enterprise AI adoption to spill over to your storage segment and probably start a new storage cycle?

And.

Amit Daryanani: Yep. Thanks a lot for taking my question. Clearly you folks did not get the memo that you're supposed to miss numbers by the way that memory prices go up. It's good to see these results. I'm hoping, you know, you folks can talk about, you know, as we shift to Rubin, could you just contrast how you think the Rubin cycle plays out in 2027 versus the Blackwell cycle? Really hoping you can touch on, you know, A, do you think operating margins will be much more smoother through Rubin, or will it have the same cadence that we saw with Blackwell? B, do you think the revenue lumpiness could be less severe as you have a much more diversified customer base perhaps? I'd love to just contrast those things.

I like what we're doing and I expect it to ship in the second half of the year, because we know Vera Rubin is in production.

Speaker #4: Well, of course, there's a way to parse it. I won't do this on the call. But we absolutely keep track of the health and growth of those three parts—our NeoClouds, Sovereigns, and enterprise.

And to touch on cash I mean, obviously, we're coming off the back of a very strong FY 'twenty six $4 7 billion of cash flow from operations totaled up to $11 2 billion for the full year and allowed us to maintain our commitments to our shareholders rights returned over 80% of our adjusted free cash.

Speaker #4: We try to give you a sense of the enterprise adoption with the number of customers, which is now over 4,000. We gave, I think, some breadcrumbs, if you will, around the buyer base group.

Go back.

Speaker #4: It was a record quarter in enterprise revenue in Q4. We're seeing usage models expand. I take a look at our own company as an example that I would give.

Repurchasing over 54 million shares in the year.

And while we don't guide to cash look what I can say is we expect another really strong cash cost or cash year ahead.

Amit Daryanani: David, perhaps I missed this, free cash flow expectations for fiscal 27 would be appreciated as well. Thank you.

Our net income to adjusted free cash flow will be at or slightly ahead of of our commitment and our long term value creation framework.

Jeff Clarke: Sure, Ahmed. On Vera Rubin, look, we're excited about the technology that's in front of us. We have a significant technology transition to go through. There's been a lot of lessons learned from the Grace Blackwell implementations. We're expecting a smoother transition. We're expecting all of the manufacturing lessons and lessons around tests that are implemented into the next architecture to allow us to ramp with more velocity and speed. We believe that's the case. We have our early engineering samples. We're working with customers now on designs. Very encouraged with what we're seeing thus far. When I look in terms of operating margins, the question I guess will be consistent here.

Speaker #4: Two years ago, we deployed coding assistance. And it used some GPU capacity. Mid last year, we started deploying agents to write the actual software.

And that consistency and ability to reward the shareholders will be strong again, you can see that with our dividend commitment today, 20% growth in our dividend per share. That's the fourth year in a row of double digit increase in our dividend per share that with our execution on the share buyback program. It.

Speaker #4: With basically specifications from our software developers and architects. And what we saw was an incredible need for more compute power. The amount of tokens that is required to do that well is significant.

It means we should have a very strong and stable working capital a year ahead.

Speaker #4: And that's just one use case and one company. And what we believe is we're seeing that broadly in the leading companies who have deployed AI and seeing their tremendous benefit and potential of this technology that we're going to see AI in enterprise continue to ramp.

Thanks Alan.

Our next question comes from Ben Reitzes with Melius research.

Hey, Thanks, a lot nice execution here guys Alex.

Ill echo that.

My question is on storage.

Speaker #4: We'll continue to give you signals of our customer expansion and the revenue going forward. I'd also just make sure that I'm very clear — the enterprise portion of our five-quarter pipeline grew.

It sounds like it's turning a little bit you beat the street by a little bit 2% and then you said I believe that it will grow in the mid singles for the year and it looks like it may outgrow servers in the back half of the year. So can you just talk about what's really going on with storage your highest margin business is it really turning.

Jeff Clarke: We believe we can operate in the mid-single digits with the backlog at hand, with the new orders that we'll take on over the course of the year, which will include Vera Rubin, and that's our outlook and guidance and what we've implied in the numbers that David has given. I think it is a smoother transition. We've learned a lot. We're more enabled, more skilled. We've invested in more engineering capability. Our forward-deployed engineers, again, are working with customers right now on advanced designs. I like what we're doing, and I expect it to ship in the second half of the year 'cause we know Vera Rubin is in production.

Speaker #4: And actually, with the fastest growing portion of the five-quarter pipeline. I hope that helped put some context around it.

Is it going to be a contributor to mix in the.

Speaker #3: Thanks, Jeff.

Speaker #4: Thanks, Krish.

Upcoming year that allows you to it.

Speaker #1: And we'll take our next question with Wamzee Mohan with Bank of America.

Keep gross margins pretty flat for the year and the tough component environment. Thanks, a lot.

Speaker #6: Yes. Thank you so much. Jeff, maybe you can talk a little bit about what you're seeing from a purchasing behavior standpoint as you're implementing these price increases.

Sure Ben look or excited about our storage business.

Again, we're reporting that on an orders basis, our Dell IP.

Speaker #6: It sounds like you deliberately delayed your CSG price increases to take share. Obviously, it indicates that that is elastic. In that sense, from a server perspective, you did implement and you've had some time now to look at sort of what the reaction from customers has been.

The portfolio grew double digits.

Yvonne McGill: To touch on cash, obviously we're coming off the back of a very strong FY26, $4.7 billion of cash flow from operations. That totaled up to $11.2 billion for the full year and allowed us to maintain our commitment to our shareholders, right. To return over 80% of our adjusted free cash flow back, you know, repurchasing over 54 million shares in the year. While we don't guide to cash, look, what I can say is we expect another really strong cash flow or cash year ahead. Our net income to adjusted free cash flow will be at or slightly ahead of our commitment and our long-term value creation framework. That consistency and ability to reward the shareholders will be strong again.

David Kennedy: To touch on cash, obviously we're coming off the back of a very strong FY26, $4.7 billion of cash flow from operations. That totaled up to $11.2 billion for the full year and allowed us to maintain our commitment to our shareholders, right. To return over 80% of our adjusted free cash flow back, you know, repurchasing over 54 million shares in the year. While we don't guide to cash, look, what I can say is we expect another really strong cash flow or cash year ahead. Our net income to adjusted free cash flow will be at or slightly ahead of our commitment and our long-term value creation framework. That consistency and ability to reward the shareholders will be strong again.

That's the entire portfolio.

Our Max power store power scale objects scale, and our data domain platforms, all grew double digit demand.

Speaker #6: I'm kind of curious to see if you've either seen material elasticity both on CSG and ISG side. If you could maybe put some bookmarks around that and also did you see any pull forward behavior given that the expectation is that you shorten sort of these windows of quote validity.

Our all flash grew double digits.

It grew in all regions.

And we acquired new customers power store grew its eighth consecutive quarter seven of those last seven double digits.

Half of.

Speaker #6: You're talking about continued sort of price escalation from a component standpoint. Are customers worried about supply and is that creating any change in terms of pull forward across your portfolio?

Of those new customers that we're winning are new to power store and nearly 30% are new to Dell buying storage.

We saw tremendous demand for our unstructured products as AI inference and AI continues to.

Yvonne McGill: You can see that with our dividend commitment today, 20% growth in our dividend per share. That's the fourth year in a row of double-digit increase in our dividend per share. That with our execution on the share buyback program means we should have a very strong and stable working capital year ahead.

David Kennedy: You can see that with our dividend commitment today, 20% growth in our dividend per share. That's the fourth year in a row of double-digit increase in our dividend per share. That with our execution on the share buyback program means we should have a very strong and stable working capital year ahead.

Speaker #6: And quickly, if I could, for David, the inventory stepped up a fair amount. I'm just kind of wondering if you could break that down for us a little bit on the composition of those things.

Grow grow grow grow grow.

Our IP portfolio is now a greater percentage of the mix year over year, we expect it to grow.

Speaker #6: Thank you.

Speaker #4: How about David, you take the last one first because it sounds easier. I have a multifaceted question to answer.

FY 'twenty seven over 2006, it will be a greater percentage of mix next year than this year.

Speaker #3: Yeah, sure. I think, look, if you look at our cash conversion cycle, minus 32 days, that's actually flat, quarter on quarter. And actually, improvements of a day, year on year.

Jeff Clarke: All right. Thanks, Amit Daryanani.

Paul Frantz: All right. Thanks, Amit Daryanani.

Operator: Our next question comes from Ben Reitzes with Melius Research.

As part of the profit contribution that David has outlined in our guidance.

Speaker #3: So if you think building on the expansion of our AI business and shipments that we've done, to maintain cash conversion cycle in that position shows the diligence that we have from a working capital perspective.

Ben Reitzes: Hey, thanks a lot. Nice execution here, guys. I'll echo that. My question is on storage. It, it sounds like, you know, it's turning a little bit. You know, you beat the street by a little bit, 2%. You said, I believe that it'll grow in the mid-single for the year, and it looks like it may outgrow servers in the back half of the year. Can you just talk about what's really going on with storage, your highest margin business? Is it really turning? Is it gonna be a contributor to mix in the upcoming year that allows you to keep gross margins pretty flat for the year in a tough component environment? Thanks a lot.

And we're entering an era in my humble opinion, where architecture matters.

So where we have the leading data rate reduction five to one with our power store product, we're going to increase customers' effective <unk>.

Speaker #3: We have guided to 13 billion in Q1 of AI shipments. That results in reality in February and March, we're shipping billions of dollars of gear.

Storage capacity.

We're the leader there.

Take our data protection products, where we have up to 75 to one compression in detail we are going to help customers through this memory prices shortage, whatever you want to call. It with advanced architectures that require fewer servers and fewer drives to backup customers information.

Speaker #3: And obviously, we're positioning inventory to do that. So it's purely a function of the size and scale and growth we're seeing in the business that we've got.

Speaker #4: Okay. Wamzee, I'm going to take a run at all the parts of that question. So how are customers doing reacting? I mean, clearly, early on, there was a wide range of emotions.

That architecture difference, we believe as fuel that will continue to serve our Dell IP portfolio well in FY 'twenty seven.

Jeff Clarke: Sure, Ben. Look, we're excited about our storage business. Again, we're reporting that on an orders basis, our Dell IP portfolio grew double digits. That's the entire portfolio. PowerMax, PowerStore, PowerScale, ObjectScale, and our Data Domain platforms all grew double-digit demand. Our all-flash grew double-digit demand. It grew in all regions, and we acquired new customers. PowerStore grew its eighth consecutive quarter, seven of those, the last seven double digit. Half of those new customers that we're winning are new to PowerStore, and nearly 30% are new to Dell buying storage. We saw tremendous demand for our unstructured products as AI inference and AI continues to grow. Our Dell IP portfolio is now a greater percentage of the mix year-over-year. We expect it to grow FY27 over FY26.

Speaker #4: As it wasn't completely understood. And there's a dynamic that I think it's important for me to communicate. A different reaction in PCs versus infrastructure.

I would also add there have been I think you asked about the contribution of the margin that we see going forward what do we see it today right. The results from Q4 illustrates that in relation to the upping performance of the ISG, P&L, which was which was tremendous.

Speaker #4: So I'm going to talk initially about infrastructure. Then I'll pivot to PCs. And infrastructure after the sticker shock and our customers began to understand the gravity of the situation, the conversations quickly turned to access the supply.

As we look into the guidance, particularly in the back half of the year, we talked about mid single digit between traditional server and storage, maybe a smidge and more on the traditional server side, but growth. Nonetheless, so hope that helps.

Speaker #4: It was not literally a light switch, but it was some pretty quick order after the emotions of price increases was, "Oh, this is real." And as you know, over the course of the quarter, the understanding of this situation became better understood.

Thanks, Andy Thanks, guys.

And our next question comes from Erik Woodring with Morgan Stanley.

Hey, guys. Thanks for taking my question really impressive guide.

Jeff or David I guess the question is can you maybe just help us understand what kind of memory price inflation, you're assuming in your 2027 outlook and fiscal 'twenty seven outlet excuse me and since Youre talking about margin rates improving year over year, maybe just help us also understand what youre doing different.

Speaker #4: Customers began to see that. And the largest customers in the world, the most sophisticated customers in the world, began to move aggressively to protect their infrastructure buildouts.

Speaker #4: And we saw that over the course of the quarter in AI and in traditional servers and in storage. PCs was a little different because you had inflated inventory positions in the channel.

This cycle versus past cycles to protect your profitability. Thank you very much.

Jeff Clarke: It will be a greater percentage of mix next year than this year. That's part of the profit contribution that David has outlined in our guidance. We're entering an era, in my humble opinion, where architecture matters. Where we have the leading data rate reduction five to one with our PowerStore product, we're going to increase customers' effective storage capacity. We're the leader there. If you take our data protection product, where we have up to 75 to one compression and dedupe, we are going to help customers through this memory crisis, shortage, whatever you want to call it, with advanced architectures that require fewer servers and fewer drives to back up customers' information. That architecture difference, we believe is fuel that will continue to serve our Dell IP portfolio well in FY27.

Yeah, a few questions in there I think if you go line by line in terms of the business. So we talks ESG in relation to guidance.

Speaker #4: So the cost did not hit that inventory, which is another reason why we stayed in price position for growth. And when we began to see it in PCs was in large bids, where they would be fulfilled over the course of the year, course over the first half, and what have you.

Our current assessment of the market.

Double digit probably in around that minus 11 minus 12% range.

As we look at the year ahead, probably more acute in the second half. So obviously, we believe our guide which is 1% growth in revenue for the year ahead is a prudent guide to start with the line with our commitment to manage and maintain our margin rates within that portfolio.

Speaker #4: Customers began to see the reality that this was going to be tight—costs were going to go up depending on when you wanted product and delivery.

So you can see the difference between the units and the revenue there we do and will take share just like we did in Q4, but we'll obviously learn as we go to the price increases have been their cost will continue to go up to a certain degree will make quick and decisive decisions and execute Jeff outlined earlier, the ability and the execution of the.

Speaker #4: There was an associated cost with it. And then, when you started having conversations—“What's this going to cost me in the first half versus today?”—and you give an answer, “I don't know,” it certainly heightens a buyer's awareness. Understanding the cost today is likely better than the price that will be tomorrow.

Team, particularly on the server side in relation to Q4.

Yvonne McGill: I would also add there, Ben, I think you asked about the contribution and the margin that we see going forward. Well we see it today, right? The results from Q4 illustrate that in relation to the upping performance of the ISG P&L, which was tremendous. We look into the guidance, particularly in the back half of the year, we talk about mid-single digit between traditional server and storage. Maybe a smidgen more on the traditional server side, but growth nonetheless. Hope that helps.

David Kennedy: I would also add there, Ben, I think you asked about the contribution and the margin that we see going forward. Well we see it today, right? The results from Q4 illustrate that in relation to the upping performance of the ISG P&L, which was tremendous. We look into the guidance, particularly in the back half of the year, we talk about mid-single digit between traditional server and storage. Maybe a smidgen more on the traditional server side, but growth nonetheless. Hope that helps.

Speaker #4: The next day and so on. So that clearly has driven some amount of pull ahead. I don't know how to quantify that. What we do know is IT budgets are generally fixed at the beginning of the year.

We're already seeing the signs of that for Q1. So all the actions we discussed around time validity of quotes moving at speed.

Creasing list prices moving.

Moving to discounts off list pricing limiting to little or no promotions all of those actions are strong operational execution levers we've got to work the business as we kind of move forward into the guidance.

Speaker #4: So this pull in is going to obviously drain those IT budgets to some degree. That's sort of what we put into our guide. Our best understanding of that and why you saw some of the numbers around our PC business and traditional server business.

I mean, Eric you asked about memory assumptions.

Jeff Clarke: Thanks, Ben.

Paul Frantz: Thanks, Ben.

Tim Long: Okay. Thanks, guys.

Ben Reitzes: Okay. Thanks, guys.

Operator: Our next question comes from Erik Woodring with Morgan Stanley.

Speaker #4: But clearly, technology has to be replaced. If budgets aren't sufficient this year, that just means replacement cycles will be elongated and extended. And I think the result over the next couple of years is we'll see product bought early, but we'll also see the replacement of some technology extend over time.

Our prices proprietary I'm not going to share our specific percentages, but look at the spot market the spot market for a gigabit of DRAM.

Erik Woodring: Hey, guys. Thank you for taking my question. Really impressive guide. Jeff or David, I guess the question is, can you maybe just help us understand what kind of memory price inflation you're assuming in your 2027 outlook and Fiscal 2027 outlook, excuse me. Since you're talking about margin rates, improving year-over-year, maybe just help us also understand what you're doing different this cycle versus past cycles to protect your profitability. Thank you very much.

Over the last.

Six months is up nearly five five times at $2 39 gigabit. If you look at NAND the cost US 20, gigabyte thats up nearly forex over the last six months.

Speaker #4: I hope that answered the multi-party question.

The industry analyst have Q2 up over Q1 in a range of 20% to 50% the Q3, 55% to 15% Q4, 5% to 10%.

Speaker #6: Yeah. Thanks, Jeff.

Speaker #4: Thanks, Wamzee.

Speaker #1: And our next question comes from Somic Tatterjee with JPMorgan.

Speaker #6: Hi. Thanks for taking my question and congrats on the outlook as well. Jeff, maybe just wanted to get sort of any more color that you can share on the AI order backlog of 43 billion.

Those are estimates those are probably the ballparks, where things are so we haven't changed anything we continue to work with our long term partners. We've had LTA is in place we've had capacity agreements in place.

Yvonne McGill: Yeah, a few questions in there. I think, you know, if you go line by line in terms of the business, we talk CSG in relation to guidance. You know, our current assessment of the market is double-digit, probably in around that -11%, -12% range as we look at the year ahead. Probably more acute in the second half. Obviously we believe our guide, which is 1% growth in revenue for the year ahead, is a prudent guide to start with, aligned with a commitment to manage and maintain our margin rates within that portfolio. You can see the difference between the units and the revenue there. We do and will take share, just like we did in Q4. We'll obviously learn as we go too. The price increases have been there.

David Kennedy: Yeah, a few questions in there. I think, you know, if you go line by line in terms of the business, we talk CSG in relation to guidance. You know, our current assessment of the market is double-digit, probably in around that -11%, -12% range as we look at the year ahead. Probably more acute in the second half. Obviously we believe our guide, which is 1% growth in revenue for the year ahead, is a prudent guide to start with, aligned with a commitment to manage and maintain our margin rates within that portfolio. You can see the difference between the units and the revenue there. We do and will take share, just like we did in Q4. We'll obviously learn as we go too. The price increases have been there.

Speaker #6: How does it break down between Blackwell and where Rubin, and what are the implications of when some of that backlog ships based on the backlog mix?

We know how to budgetary pricing I mean David's team has our best estimate of cost for Q2, Q3, and Q4 and how we're pricing deals today.

Speaker #6: And you're now guiding to 50 billion of revenue on that front. How should we think about capacity? You're doubling sort of revenue, but to the extent that demand is higher, how should we think about your ability to add capacity over time?

We're working with our memory partners to be as flexible and as agile as possible. We are working through things of how do we minimize our complexity how do we improve our mix how do we sell whats coming how do we improve our designs and take whatever parts that are available.

Speaker #6: Thank you.

Speaker #4: So, on the $43 billion backlog, Somic, it is predominantly, overwhelmingly Grace Blackwell. There is Vera Rubin in the backlog. There is Vera Rubin in the five-quarter pipeline.

Yvonne McGill: Costs will continue to go up to a certain degree. We'll make quick and decisive decisions and execute. Jeff outlined earlier the ability and the execution of the team, particularly on the server side in relation to Q4. We're already seeing the signs of that for Q1. All the actions we discussed around time validity of quotes, moving at speed, you know, increasing list prices, moving to discount off list pricing, limiting to little or no promotions, all of those actions are strong operational execution levers we've got to work the business as we kind of move forward into the guidance.

David Kennedy: Costs will continue to go up to a certain degree. We'll make quick and decisive decisions and execute. Jeff outlined earlier the ability and the execution of the team, particularly on the server side in relation to Q4. We're already seeing the signs of that for Q1. All the actions we discussed around time validity of quotes, moving at speed, you know, increasing list prices, moving to discount off list pricing, limiting to little or no promotions, all of those actions are strong operational execution levers we've got to work the business as we kind of move forward into the guidance.

And then to answer really maybe you put the bow around this the pricing actions, we became very proficient and during COVID-19.

Speaker #4: The largest percentage of our five-quarter pipeline is a combination of Grace Blackwell and Blackwell. What we're seeing is a rise in x86 Blackwell in the five-quarter pipeline.

And all of the best practices that we learned during Covid as I mentioned in the last call we put in place and we put in place faster.

We changed the entire pricing of our server business on to some of the 10th in a couple of days.

Speaker #4: Driven primarily by enterprise deployment. Air being the number one consideration. The second consideration that's driving that demand in the five-quarter pipeline tends to be around some of the scientific work.

We had tens of thousands of open quotes in the PC business.

And change them all on January 6th.

Speaker #4: And some of the, as I mentioned, one of the earlier questions, some of the financial trading models and algorithms, the high-frequency traders and using some of the x86 air-cooled solutions to meet their AI needs.

This notion of we recover our cost and two third two thirds of it 90 days, we moved that quickly that's what we learned in Covid. That's what we put in place here. So we made a list price changes across the board we've.

Jeff Clarke: I mean, Eric, you asked about memory assumptions. Obviously our price is proprietary. I'm not going to share our specific percentages. Look at the spot market. I mean, the spot market for a gigabit of DRAM over the last 5, 6 months is up nearly 5.5 times at $2.39 a gigabit. If you're to look at NAND, the cost is $0.20 a gigabyte. That's up nearly 4x over the last 6 months. The industry analysts have Q2 up over Q1 in a range of 20% to 50%. They have Q3, 5% to 15%. Q4, 5% to 10%. Those are estimates. Those are probably ballparks where things are. We haven't changed anything. We continue to work with our long-term partners. We've had LTAs in place. We've had capacity agreements in place.

Speaker #4: So I think that's sort of the composition of both the backlog and the ability to convert that five-quarter pipeline. That is clearly our job is to take that five-quarter pipeline and convert the potential into POs.

We've changed in our vernacular our internal mechanisms around smart price and margin, Florida, all changed since it instantaneously.

We're moving to discount off list price were compressing discounting.

Our quotes are valid for the shortest period of time they've ever been.

Speaker #4: The corresponding next part of that is we'll go find parts to match the POs. The 50 billion guidance that we gave is the alignment of what we believe at this point in time four weeks into the fiscal year.

And we're reducing promotions and all sorts of special pricing.

Going forward, that's what we've done it's been in place as I mentioned was one of the previous questions. We saw our server business stabilize with the higher input costs you saw that in the performance of the business in ISG, which was extraordinary.

Speaker #4: Of our best understanding of our customers' deployments and buildout of buildings and power and infrastructure, the availability of DRAM and E1 drives and E3 drives, our ability to deliver that yields the 50 billion number that David gave.

Tcs we purposely.

Delayed implementing that price move to stay in the hunt to take share and to drive growth, which will service for the long run and then when we made the change on January the sixth it wasn't 90 days later it was that day, we stabilized margins.

Jeff Clarke: We know how to budgetary price. I mean, David's team has our best estimate of cost for Q2, Q3, and Q4 and how we're pricing deals today. We're working with our memory partners to be as flexible and as agile as possible. We are working through things of how do we minimize our complexity? How do we improve our mix? How do we sell what's coming? How do we improve our designs to take whatever parts that are available? Then to answer really, to maybe put the bow around this, the pricing actions. Look, we became very proficient during COVID. All of the best practices that we learned during COVID, as I mentioned in the last call, we put in place, and we put in place faster. We changed the entire pricing of our server business on 10 December in a couple of days.

Speaker #4: But leading the operational part of the organization, we're out looking for more parts. Our job is to, again, those orders get converted to be able to fulfill our customers' needs and to do that in a timely fashion.

I hope that helped.

Speaker #4: That's what we're working on.

Thanks, Eric.

Speaker #6: Okay. Thank you.

And we will take our next question from Chris <unk> with TD Cowen.

Speaker #4: Thanks, Jeff.

Speaker #6: Of course.

Speaker #1: And we'll go to our next question from Aaron Rakers with Wells Fargo.

Yes, hi, Thanks for taking my question and congrats on the Amazing results, Jeff I had a question on enterprise adoption you kind of said, there's very strong in your server business clearly agent alongside the maintenance all of them have implications across the silver delay factoring in your storage business.

Speaker #5: Yeah. Thanks for taking the question also, Mike. Congrats on the quarter. I guess one just housekeeping thing. When I look at the slide deck and you talk about 9.5 billion of AI shipments, you're now disclosing an AI revenue number that's a little bit different, right?

Speaker #5: 8.95 versus 9.5. Can you help me understand what that difference is, number one? And then number two on the traditional server side, I'm just curious, Jeff, with all of the pricing stuff going on, it sounds like a very healthy demand backdrop.

Wondering is that a way to breakdown AI server orders between enterprise Neil clouds in sovereign and when do you expect enterprise adoption.

Below historic segment, and piling southern new storage cycle.

Speaker #5: How do I take the context of mid-single-digit growth and maybe separate that between what that underpins in terms of unit growth versus what I would assume to be a pretty healthy ASP uplift environment through the course of this year?

While of course, there is a way to parse that I won't do this on the call, but we absolutely keep track of the health and growth of those three parts are Neil clouds, sufferings and enterprise. We tried to give you a sense of the enterprise adoption with the number of customers, which is now over 4000.

Jeff Clarke: We had tens of thousands of open quotes in the PC business and changed them all on 6 January. This notion of we recover our costs in two-thirds of it in 90 days, we moved that quickly. That's what we learned in COVID. That's what we put in place here. We made list price changes across the board. We've changed in our vernacular, our internal mechanisms around smart price and margin floors all changed instantaneously. We're moving to discount off list price. We're compressing discounting. Our quotes are valid for the shortest period of time they've ever been. We're reducing promotions and all sorts of special pricing going forward. That's what we've done. It's been in place. As I mentioned with one of the previous questions, we saw our server business stabilize with the higher input costs.

Speaker #4: Yeah. So look, the first piece that I had in relation to shipments versus revenue, normally in any given quarter, they'd be close to the same number.

We gave I think some bread crumbs, if you will around the buyer base grew.

Speaker #4: It's simply in transit. So as we ship out 9.5 billion dollars, some of that obviously would have been happening time-wise right at the end of January.

Was a.

A record quarter in enterprise revenue in Q4.

We're seeing usage models.

Speaker #4: So literally just in transit, it will show up days later from a P&L perspective. So just normal run-the-business there in relation to that piece.

Expand.

I take a look at our own company that example that I would give two years ago, we deployed coding assistance and used some GPU capacity.

Speaker #5: On traditional servers outlook, reconciling unit growth of the industry TRU expansion, we clearly saw TRU expansion in Q4. Customers are continuing to migrate towards our 16 and 17G server and buying them with a lot of DRAM and a lot of storage.

Mid last year, we started deploying agents to write the actual software based.

Basically specifications from our software developers and architects and what we saw was an incredible need for more compute power. The amount of <unk> that is required to do that well is significant and thats. Just one use case and one company and what we believe is we're seeing that.

Jeff Clarke: You saw that in the performance of the business in ISG, which was extraordinary. In PCs, we purposely delayed implementing that price move to stay in the hunt to take share and to drive growth, which will serve us for the long run. When we made the change on 6 January, it wasn't 90 days later, it was that day we stabilized margins. I hope that helped.

Speaker #5: That's part of the consolidation play, 16G, 7 to 1 if it's a 17G. And we'll continue to see that behavior of buying servers with more CPU capability or memory, more storage.

Widely in the leading companies, who have deployed AI and seeing their tremendous benefit and potential of this technology that we're going to see AI and enterprise continue to ramp.

Speaker #5: Our best estimate in demand for units next year or I guess the year we're in, sorry, excuse me, 26 is units are clearly down while TRUs are up.

Tim Long: Thanks, Eric.

Paul Frantz: Thanks, Eric.

We will continue to give you signals of our customer expansion the revenue going forward.

Operator: We'll take our next question from Krish Sankar with TD Cowen.

I'd also just to make sure that I am very clear the enterprise portion of our five quarter pipeline grew and actually was the fastest growing portion of the five quarter pipeline.

Krish Sankar: Yeah. Hi, thanks for taking my question, and congrats on the amazing results. Jeff, I had a question on enterprise AI adoption. You kind of said that it's very strong in your server business. Clearly, agentic AI, long-horizon agents, all of them have implications across your server, Dell AI Factory, and your storage business. I'm just wondering, is there a way to break down your AI server orders between enterprise, neoclouds, and sovereign? When do you expect enterprise AI adoption to spill over to your storage segment and probably start a new storage cycle?

Speaker #5: To reconcile the difference of that spread of prices increasing, I think what we tried to outlay in our guidance, and David can chime in here, is the uncertainty.

I hope that helped put some context around it.

Thanks, Jeff.

Thanks Krish.

And we'll take our next question with Onesie <unk> Mohan with Bank of America.

Speaker #5: We're being prudent in our planning. In our guidance to you, because of the uncertainty associated with the second half, we try to put that in our best reflection in our guidance.

Yes. Thank you so much.

Jeff maybe you can talk a little bit about what youre seeing from a purchasing behavior standpoint, as you're implementing these price increases it sounds like you're deliberately delayed <unk> price increases to take share obviously indicates that that is elastic and that sense from a software perspective, you did emblem.

Speaker #5: And that's how you can reconcile between what we talked about in Q4, that demand was out ahead of supply, double-digit growth, TRU expansion, clearly seeing that into Q1.

Jeff Clarke: Well, of course, there's a way to parse it. I won't do this on the call, but we absolutely keep track of the health and growth of those three parts, our Neo clouds, sovereigns, and enterprise. We try to give you a sense of the enterprise adoption with the number of customers, which is now over 4,000. We gave, I think, some breadcrumbs, if you will, around the buyer base group. It was a record quarter in enterprise revenue in Q4. We're seeing usage models expand. I take a look at our own company, that example that I would give. Two years ago, we deployed coding assistants, and it used some GPU capacity. Mid last year, we started deploying agents to write the actual software with basically specifications from our software developers and architects. What we saw was an incredible need for more compute power.

Speaker #5: But as we see go into the second half of the year, we're trying to describe that uncertainty.

And then you had some time now to look at sort of what the reaction from customers has been I'm kind of curious to see if you're either seeing material elasticity bolt ons ESG at ISG side, if you could maybe put some bookmarks around that and also did you see any pull forward behavior given that the expectation is that.

Speaker #6: And again, just to dovetail on that, again, it's linked to the articulations if we enter the year, we have sufficient supply to support and meet the guide that we've laid out.

Speaker #6: Obviously, demand is far outstripping supply right now. If that continues, like Jeff operationally said, we’ll, and he’ll be out hunting for more parts to try and find that.

Getting a shortened sort of these windows of quote well alrighty youre talking about continued sort of price escalation from a component standpoint, our customers worried about supply and is that creating any change in terms of pull forward across across your portfolio and quickly if I could for David.

Speaker #6: But right now, I think it's a good guide. We see the strength. Double-digit growth for Q1. And then we'll take care of the rest of the year as we go.

Speaker #4: Thanks, Aaron.

Speaker #5: Thank you.

Speaker #1: And we'll take our next question from Asiya Merchant with Citi.

The inventory step up a fair amount and I'm just kind of wondering if you could break that down for us a little bit on the composition of those things. Thank you.

Speaker #3: Great. Thank you for squeezing me in here. If I could, just the clear if you could provide any incremental color on the attach rate that you're seeing as you're shipping out these AI servers.

Jeff Clarke: The amount of tokens that is required to do that well is significant, and that's just one use case in one company. What we believe is we're seeing that broadly in the leading companies who have deployed AI and seeing their tremendous benefit and potential of this technology that we're going to see AI in enterprise continue to ramp. We'll continue to give you signals of our customer expansion, the revenue going forward. I'd also just make sure that I'm very clear, the enterprise portion of our five-quarter pipeline grew and actually was the fastest-growing portion of the five-quarter pipeline. I hope that helped put some context around it.

David you take the last one first because it sounds easier I have a multifaceted question to answer yes, sure I think look if you look at our cash conversion cycle minus 32 days, that's actually flat quarter on quarter and that's the improvement of one day year on year. So if you think building on the expansion of our AI business and shipments that we've done.

Speaker #3: Are you seeing a better attach rate perhaps than what you have? And any other further color on what else we can attach to those AI servers that you're shipping?

Speaker #3: Thank you.

To maintain our cash conversion cycle and that physician shows the diligence that we have from a working capital perspective.

Speaker #5: Well, clearly, the attach items for us around an AI server, I think, lie in three distinct groups. Storage, and given the enterprise momentum, we're seeing more storage with enterprise customers.

We have guided to $13 billion in Q1 of AI shipments.

That results in reality in February and March were shipping billions of dollars of gear.

And obviously, we're positioning inventory to do that so it's purely a function of the size and scale and growth we're seeing in the business that we've got.

Speaker #5: Networking, our networking business continues to grow. And the third bucket would be around all of services. Installation, deployment, services, break/fix services, which are proven to be a huge source of differentiation for us in the marketplace.

Krish Sankar: Thanks, Jeff.

Jeff Clarke: Thanks, Krish.

Paul Frantz: Thanks, Krish.

<unk> San will take a run at all the parts of that question. So how our customers doing react Jamie clearly early on there was a wide range of emotions.

Operator: We'll take our next question with Wamsi Mohan with Bank of America.

Wamsi Mohan: Yes. Thank you so much. Jeff, maybe you can talk a little bit about what you're seeing from a purchasing behavior standpoint as you're implementing these price increases. It sounds like, you know, you deliberately delayed your CSG price increases to take share. Obviously indicates that that is elastic in that sense. From a server perspective, you did implement, and you've had some time now to look at sort of what the reaction from customers has been. I'm kinda curious to see if you've either seen material elasticity both on CSG and ISG side, if you could, like, maybe put some bookmarks around that. Also, did you see any pull forward behavior given that the expectation is that, you know, you shorten sort of, you know, these windows of quote validity, you're talking about continued sort of price escalation from a component standpoint.

As it wasn't completely understood and there is a dynamic that I think it's important for me to communicate a different reaction in Pcs versus infrastructure Soma talked initially about infrastructure and then I'll pivot to Pcs.

Speaker #5: Our ability to deploy and install these very complex customers is unmatched in the marketplace today. Our uptimes are the best in the industry. And then our ability to maintain them, with Dell-badged employees on-site taking care of any challenge, any miscue, again, is a differentiated capability that we have in the marketplace.

In infrastructure after the sticker shock.

Our customers began to understand the gravity of the situation the conversations quickly turned to access to supply.

It was.

Speaker #5: So those are the three areas that we focus on and attach. We're seeing continued growth and acceptance of that. And we're optimistic that we'll continue into FY27.

Not literally.

A light switch, but it was in pretty quick order after the emotions of price increases. It was Oh. This is real and as you know over the course of the quarter. The understanding of this situation became better understood customers began to see that.

Speaker #4: Thanks, Asiya. And we'll do one more question before we have Jeff close the call.

Wamsi Mohan: Are customers worried about supply, and is that creating any change in terms of pull forward across your portfolio? Quickly, if I could for David, the inventory stepped up a fair amount. I'm just kind of wondering if you could break that down for us a little bit on the composition of those things. Thank you.

Speaker #1: Well, and I'll take our final question from David Vogt with UBS.

And large the largest customers in the world. The most sophisticated customers in the world began to move aggressively to protect their infrastructure build outs.

Speaker #7: Thanks, Paul, for squeezing me. And Jeff, just a quick question on the structural share gains in PCs. Is it sort of the premise here that your ability to dynamically adjust price and steer demand based on your supply chain availability and your expertise relative to maybe some of the smaller competitors puts you in a position to structurally have a better sort of CSG backdrop in fiscal 27 calendar 26 and more likely than not in fiscal 28 as we think about where you're positioned?

And we saw that over the course of the quarter in AI.

Jeff Clarke: How about, David, you take the last one first 'cause it sounds easier. I have a multifaceted question to answer.

Sir ended traditional servers and in storage.

Yvonne McGill: Yeah, sure. I think, look, if you look at our cash conversion cycle, -32 days, that's actually flat quarter-over-quarter, and that's the improvement of a day year-over-year. If you think building on the expansion of our AI business and shipments that we've done to maintain our cash conversion cycle in that position shows the diligence that we have from a working capital perspective. We have guided to $13 billion in Q1 of AI shipments. That results in reality in February and March, we're shipping billions of dollars of gear, and obviously we're positioning inventory to do that. It's purely a function of the size and scale and growth we're seeing in the business that we've got.

David Kennedy: Yeah, sure. I think, look, if you look at our cash conversion cycle, -32 days, that's actually flat quarter-over-quarter, and that's the improvement of a day year-over-year. If you think building on the expansion of our AI business and shipments that we've done to maintain our cash conversion cycle in that position shows the diligence that we have from a working capital perspective. We have guided to $13 billion in Q1 of AI shipments. That results in reality in February and March, we're shipping billions of dollars of gear, and obviously we're positioning inventory to do that. It's purely a function of the size and scale and growth we're seeing in the business that we've got.

<unk> was a little different because you had inflated inventory positions in the channel.

So the cost did not hit that inventory, which is another reason why we stayed in price positioned for growth.

Speaker #7: Is that really where you're going to see share gains? I'm just trying to get a sense for how you're going to outgrow a market that's going to be down double digits.

Speaker #7: I get the pricing. Umbrella, that's going to happen, but just want to get a better sense for where those gains are going to come from.

And when we began to see at Mpc's was in large bids where they would be fulfilled over the course of the year of course over the first half and what have you.

Speaker #4: David, I couldn't have said it better myself. If you look at the last industry-wide shortage, Dell excelled and took share across the board. Most notably in its PC business.

Customers began to see the reality that this was going to be.

Costs were going to go up.

Depending on when you wanted product and delivery there was an associated costs with it and then when you started having conversations what's it's going to cost me in the first half versus today and you've given answer I don't know its certainly heightens a buyer's awareness.

Speaker #4: Our long-term relationships supply agreements with our partners we believe position us to take share in all of our businesses. And in particular, PCs. Again, which is, again, reinforcing point why we didn't back off on the pricing position and the posture that we had during the quarter.

Jeff Clarke: Okay. Wamsi, I'm gonna take a run at all the parts of that question. How are customers doing, reacting? I mean, clearly early on, there was a wide range of emotions as it wasn't completely understood. There's a dynamic that I think it's important for me to communicate, a different reaction in PCs versus infrastructure. I'm gonna talk initially about infrastructure, then I'll pivot to PCs. In infrastructure after the sticker shock and our customers began to understand the gravity of the situation, the conversations quickly turned to access to supply. It was not literally a light switch, but it was in pretty quick order after the emotions of price increases. It was, Oh, this is real. As you know, over the course of the quarter, the understanding of this situation became better understood.

And understanding the cost today is likely better than the price it will be tomorrow. The next day and so on so that clearly has driven some amount.

Speaker #4: We believe we are entering and change the trajectory of the business. We had lost share for three years. We exited the year with tremendous momentum.

A pull ahead I don't know how to quantify that what we do know is it budgets are generally fixed at.

Speaker #4: You saw it in the Q4 results. 14% revenue growth. IDC number was 18% unit growth for Q4. Calendar Q4 to be specific. That momentum is important to us.

At the beginning of the year.

So this Poland is going to obviously train those budgets to some degree that's sort of what we've put into our guide our best understanding of that.

Speaker #4: We grew customers, and we're going to continue to focus on driving and winning in that business. And we think there is a structural share gain opportunity for us, certainly over the next couple of years, as our supply chain team has positioned us quite well.

And why you saw some of the numbers around RPC business and traditional server business.

But clearly.

Technology has to be replaced if budgets aren't sufficient this year that just means replacement cycles will be elongated and extended and I think the result over the next couple of years as we will see.

Speaker #4: I believe we can do that in servers, and I believe we can do that in storage as well.

Jeff Clarke: Customers began to see that, the largest customers in the world, the most sophisticated customers in the world, began to move aggressively to protect their infrastructure build-outs. We saw that over the course of the quarter in AI and in traditional servers and in storage. PCs was a little different because you had inflated inventory positions in the channel. The cost did not hit that inventory, which is another reason why we stayed in price position for growth. When we began to see it in PCs was in large bits where they would be fulfilled over the course of the year, course over the first half and what have you. Customers began to see the reality that this was going to be tight, costs were going to go up depending on when you wanted product and delivery, there was an associated cost with it.

Speaker #6: Perfect. I appreciate it. Thanks, guys.

Product bought early but we'll also see the replacement of some technology extend over time I hope that answered the multipart question.

Speaker #4: All right, Jeff, go right ahead.

Speaker #7: Sure. We closed FY26 a defining year for the company with record results and strong execution. And we are entering FY27 with clear momentum. We have tremendous AI traction entering the year, with 43 million billion dollars in AI backlog.

Yes, Thanks, Jeff.

Thanks Jorge.

Okay.

And our next question comes from Selman <unk> with J P. Morgan.

Hi, Thanks for taking my question and congrats on the outlook as well, Jeff maybe just wanted to get sort of any more color that you can share on the order backlog of 43 billion, how does the breakdown between Blackwell and very Rubin and what are the implications of when some of that backlog ships based on those.

Speaker #7: The supply environment is tight as we've ever seen, and input costs are moving higher. Our priorities are straightforward. First, secure supply. Next, price to protect our margin rates.

Speaker #7: You've seen this in ISG. CSG will follow with improvements beginning in Q1 and continuing through the year. In Q4, our gross margin rate came in slightly better than anticipated.

Backlog mix than you are now guiding to $50 billion of revenue on that front, how should we think about capacity youre doubling of revenue but.

Speaker #7: Excluding AI mix, we are guiding FY27 gross margin rate up on a year-over-year basis. The operating model we've executed for the past four decades allows us to move fast and adjust as demand evolves.

To the extent that demand is high or how should we think about your ability to add capacity over time. Thank you.

So in the $43 billion backlog, so Mike it is predominantly <unk>.

Speaker #7: With a broad portfolio and several levers at our disposal. Our FY27 guide reflects that. 23% revenue growth at the midpoint and 25% EPS growth.

Jeff Clarke: When you started having conversations, what's this going to cost me in the first half versus today? You give an answer, I don't know. It certainly heightens a buyer's awareness and understanding the cost today is likely better than the price it will be tomorrow, the next day, and so on. That clearly has driven some amount of pull ahead. I don't know how to quantify that. What we do know is IT budgets are generally fixed at the beginning of the year. This pull-in is going to obviously drain those IT budgets to some degree. That's sort of what we put into our guide, our best understanding of that, and why you saw some of the numbers around our PC business and traditional server business. Clearly, technology has to be replaced.

Overwhelmingly great platform.

There is no Vera Rubin and the backlog.

There is Vera Rubin and the five quarter pipeline.

Speaker #7: Driven by the expansion of our AI business, growth and improving profitability across the rest of the portfolio, meaningful OPEX scaling, and EPS leverage from our share repurchase program.

Okay.

Largest percentage of our five quarter pipeline is a combination of Grace Blackwell and Blackwell, where we're seeing a rise in X 86, Blackwell and the five quarter pipeline.

Speaker #7: We are positioned for another record year, thanks for your time today.

Driven primarily by enterprise deployment air being the number one consideration the second consideration, that's driving that demand and the five quarter pipeline tends to be around some of the scientific work.

And some of the as I mentioned, one of the earlier questions some of the.

Financial trading models and algorithms to high frequency traders and using some of the X 86 air cooled solutions to meet their needs.

Jeff Clarke: If budgets aren't sufficient this year, that just means replacement cycles will be elongated and extended. I think the result over the next couple of years is we'll see product bought early, but we'll also see the replacement of some technology extend over time. I hope that answered the multi-parted question.

So I think that's sort of the composition of both the backlog and the ability to.

Convert that five quarter pipeline.

That is clearly our job is to take that five quarter pipeline and convert the potential into <unk>.

Corresponding next part of that is we'll go find parts to match the pose.

Yvonne McGill: Yeah. Thanks, Jeff.

Wamsi Mohan: Yeah. Thanks, Jeff.

Jeff Clarke: Thanks, Marty.

Paul Frantz: Thanks, Marty.

The $50 billion guidance that we gave is the alignment of what we believe at this point in time four weeks into the fiscal year.

Yvonne McGill: You bet.

Operator: Our next question comes from Samik Chatterjee with J.P. Morgan.

Samik Chatterjee: Hi, thanks for taking my question and congrats on the outlook as well. Jeff, maybe, just want to get sort of any more color that you can share on the AI order backlog of $43 billion. How does it break down between Blackwell and Vera Rubin, and what are the implications of when some of that backlog ships, based on the backlog mix? You're now guiding to $50 billion of revenue on that front. How should we think about capacity? You're doubling sort of revenue, but, if to the extent that demand is high, or how should we think about your ability to add capacity over time? Thank you.

Of our best understanding of our customers deployments and build out of buildings and power and infrastructure the availability of DRAM in <unk> drives in east re drives our ability to deliver that yields the billion dollar number that David gave.

But leading the operational part of the organization where outlook for more parts. Our job is to get those orders get converted to be able to fulfill our customers' needs and to do that in the timely fashion. That's what we're working on.

Got it thank you.

Thanks, Chris.

Jeff Clarke: On the $43 billion backlog, Samik, it is predominantly, overwhelmingly Grace Blackwell. There is no Vera Rubin in the backlog. There is Vera Rubin in the five-quarter pipeline.

And we'll go to our next question from Aaron Rakers with Wells Fargo.

Yes, thanks for taking the question I'll offer my congrats on the quarter I guess, one just housekeeping thing when I look at the slide deck. When you talk about $9 5 billion of AI shipments.

Now disclosing an AI revenue number that's a little bit different right $8 95 versus 95.

Samik Chatterjee: Okay.

Jeff Clarke: The largest percentage of our five-quarter pipeline is a combination of Grace Blackwell and Blackwell, where we're seeing a rise in x86 Blackwell in the five-quarter pipeline, driven primarily by enterprise deployment, AI being the number one consideration. The second consideration that's driving that demand in the five-quarter pipeline tends to be around some of the scientific work and some of the, as I mentioned in one of the earlier questions, some of the financial trading models and algorithms, the high frequency traders in using some of the x86 air-cooled solutions to meet their AI needs. I think that's sort of the composition of both the backlog and the ability to convert that five-quarter pipeline. That is clearly our job, is to take that five-quarter pipeline and convert the potential into POs.

Can you help me understand what that differences number one and then number two on the traditional server side I'm just curious Jeff.

With all of the pricing stuff going on it sounds like a very healthy demand backdrop, how do I take the context of mid single digit growth and maybe separate that between what that underpins in terms of unit growth versus what I would assume to be a pretty healthy asps.

Uplift environment through the course of this year.

Yes.

The first piece of that in relation to shipments versus revenue normally in any given quarter that would be close to the same number.

It's simply in transit so as we ship out $9 $5 billion. Some of that obviously would have been happening time wise right at the end of January so literally just in trends and it will show up days later from a P&L perspective, so just normal run the business there in relation to that piece.

Jeff Clarke: The corresponding next part of that is we'll go find parts to match the POs. The $50 billion guidance that we gave is the alignment of what we believe at this point in time, 4 weeks into the fiscal year, of our best understanding of our customers' deployments and build out of buildings, power, and infrastructure, the availability of DRAM, E1.S drives, and E3.S drives. Our ability to deliver that yields the $50 billion number that David gave. Leading the operational part of the organization, we're out looking for more parts. Our job is to get those orders converted to be able to fulfill our customers' needs and to do that in a timely fashion. That's what we're working on.

On traditional servers outlook reconciling unit growth of the industry Tru expansion, we clearly saw tier expansion in Q.

Q4 customers are continuing to migrate towards our 2016, and 17, <unk> server and buying them.

Lot of DRAM and a lot of <unk>.

Storage as part of the consolidation play, replacing five to one if it's a <unk> seven.

700, <unk>, if it's a 17 G and we will continue to see that behavior.

Of buying servers with more CPU capability.

Or memory more storage.

Our best estimate.

In demand for units next year.

Samik Chatterjee: Got it. Thank you.

Jeff Clarke: Thanks, Samik.

Paul Frantz: Thanks, Samik.

I guess that Youre, winning sorry, excuse me in FY 'twenty seven calendar 'twenty six as units are clearly down while tiara user up.

Operator: We'll go to our next question from Aaron Rakers with Wells Fargo.

Aaron Rakers: Yeah. Thanks, Jeff, for taking the question. Also, my congrats on the quarter. I guess one just housekeeping thing. When I look at the, you know, slide deck and you talk about $9.5 billion of AI shipments, you're now disclosing an AI, you know, revenue number that's a little bit different, right? $8.95 billion versus $9.5 billion. Can you help me understand what that difference is, number one? Number two, on the traditional server side, I'm just curious, Jeff, you know, with all of the pricing stuff going on, it sounds like a very healthy demand backdrop. How do I take the context of mid-single-digit growth and maybe separate that between what that underpins in terms of unit growth versus what I would assume to be a pretty healthy ASP uplift environment through the course of this year?

To reconcile the difference of that spread of prices increasing.

I think what we tried to outlay in our guidance and David can chime in here is the.

The uncertainty we're being prudent in our planning.

And our guidance to you because of the uncertainty associated with the second half.

We tried to.

Put that in our best reflection in our guidance and that's how you can reconcile between what.

Well, we've talked about in Q4 that demand was out ahead of supply double digit growth Tru expansion clearly seeing that in Q1, but as we see go into the second half of the year.

Yvonne McGill: Yeah. Look, the first piece that I had in relation to shipments versus revenue, normally in any given quarter, they'll be close to the same number. It's simply in transit. As we ship out $9.5 billion, some of that obviously would have been happening time-wise right at the end of January. Literally just in transit, it will show up, you know, days later from a P&L perspective. Just normal run the business there in relation to that piece.

David Kennedy: Yeah. Look, the first piece that I had in relation to shipments versus revenue, normally in any given quarter, they'll be close to the same number. It's simply in transit. As we ship out $9.5 billion, some of that obviously would have been happening time-wise right at the end of January. Literally just in transit, it will show up, you know, days later from a P&L perspective. Just normal run the business there in relation to that piece.

Trying to describe that uncertainty.

And again just to dovetail on that again, it's linked to.

The articulations, if we entered the year, we have sufficient supply to support and meet the guy that we've laid out obviously demand is far outstripping supply right now if that continues.

Jeff operationally set.

And he'll be out hunting for more parts to try and find that.

But right now I think it's a good guy and we see this trend.

Jeff Clarke: On traditional servers outlook, reconciling unit growth of the industry, TRU expansion. We clearly saw TRU expansion in Q4, customers are continuing to migrate towards our 16G and 17G server and buying them with a lot of DRAM and a lot of storage as part of the consolidation play, replacing 5 to 1 if it's a 16G, 7 to 1 if it's a 17G. We'll continue to see that behavior of buying servers with more CPU capability, more memory, more storage. Our best estimate in demand for units next year, or I guess the year we're in, sorry, excuse me. In FY27, calendar 2026, is units are clearly down while TRUs are up. To reconcile the difference of that spread of prices increasing, I think what we tried to outlay in our guidance, and David can chime in here, is the uncertainty.

Double digit growth for Q1, and then we will we'll take care of the rest of the year as we go.

Thanks, Erin thank you.

And we will take our next question from <unk> merchant with Citi.

Okay.

Great. Thank you for squeezing me in here.

Hi, Kurt.

If you could provide any incremental color on the attach rate that you're seeing as you're shipping out these AI servers.

Are you seeing better attach rate, perhaps than what you have and any other further color on that on what else. We can attach to those AI servers that youre shipping. Thank you.

Well clearly the attach items for us around in AI server, I think Leigh and.

Three distinct groups storage.

And given the enterprise momentum, we're seeing more storage with enterprise customers networking.

Our networking business continues to grow.

And the third bucket would be around all of the types of services.

Installation and deployment services break fix services, which are which are proven to be a huge source of differentiation for us in the marketplace.

Jeff Clarke: We're being prudent in our planning, in our guidance to you because of the uncertainty associated with the second half. We try to put that in our best reflection in our guidance, and that's how you can reconcile between what we talked about in Q4, that demand was out ahead of supply, double-digit growth, TRU expansion. Clearly seeing that into Q1, but as we see go into the second half of the year, we're trying to describe that uncertainty.

Our ability to deploy and install these very complex customers is unmatched in the marketplace today.

Our up times are the best in the industry.

And then our ability to maintain them with.

Dell Badged employees on site, taking care of any challenge any miscue again as a differentiated capability that we have in the marketplace. So those are the three areas that we focus on and attach.

Yvonne McGill: Again, just to dovetail on that, again, it's linked to the articulations. If we enter the year, we have sufficient supply to support and meet the guide that we've laid out. Obviously, demand is far outstripping supply right now. If that continues, like Jeff operationally said, he'll be out hunting for more parts to try and find that. Right now, I think it's a good guide. We see this trend, double-digit growth for Q1, and then we'll take care of the rest of the year as we go.

David Kennedy: Again, just to dovetail on that, again, it's linked to the articulations. If we enter the year, we have sufficient supply to support and meet the guide that we've laid out. Obviously, demand is far outstripping supply right now. If that continues, like Jeff operationally said, he'll be out hunting for more parts to try and find that. Right now, I think it's a good guide. We see this trend, double-digit growth for Q1, and then we'll take care of the rest of the year as we go.

<unk> continued growth and acceptance of that and we're optimistic that will continue into FY 'twenty seven.

Thanks Assia.

We will do one more question before we have Jeff close call.

We will now take our final question from David <unk> with UBS.

Jeff Clarke: Thanks, Aaron. Thank you.

Paul Frantz: Thanks, Aaron.

Thanks, Paul for squeezing me and Jeff just a quick question on the structural share gains in Pcs is.

Aaron Rakers: Thank you.

Operator: We'll take our next question from Asiya Merchant with Citi.

Is it sort of the premise here that your ability to dynamically adjust price in steel demand based on your supply chain availability and your expertise relative to maybe some of the smaller competitors put you in a position structurally have a better sort of CST backdrop in fiscal 'twenty seven calendar, 'twenty, six and more likely than not.

Asiya Merchant: Great. Thank you for squeezing me in here. If I could just, you know, If you could provide any incremental color on the attach rate that you're seeing as you're shipping out these AI servers. You know, are you seeing a better attach rate perhaps than what you have? Any other further color on what else we can attach to those AI servers that you're shipping? Thank you.

Fiscal 2008, as we think about where your position is that really where youre going to see share gains I'm, just trying to get a sense for how you're going to outgrow its a market thats going to be down double digits I get the pricing umbrella, that's going to happen, but I just wanted to get a better sense for where that's the gains are going to come from.

Jeff Clarke: Well, clearly, the attach items for us around an AI server, I think lie in three distinct groups. Storage, given the enterprise momentum, we're seeing more storage with enterprise customers. Networking. Our networking business continues to grow. The third bucket would be around all of the types of services. Installation, deployment services, break-fix services, which are proven to be a huge source of differentiation for us in the marketplace. Our ability to deploy and install these very complex customers is unmatched in the marketplace today. Our up times are the best in the industry, then our ability to maintain them with Dell-badged employees on-site, taking care of any challenge, any miscue, again, is a differentiated capability that we have in the marketplace. Those are the three areas that we focus on in attach.

David I couldn't have said it better myself.

If you look at the last industry wide shortage.

Delek cells and took share across the board most notably in its PC business.

Our long term relationships.

<unk> agreements with our partners, we believe position us to take share in all of our businesses.

And in particularly Pcs.

Again, which is again reinforcing why we didn't back off on the pricing position in the posture that we had during the quarter.

We believe we are entering and change the trajectory of the business. We had lost share for three years, we exited the year with tremendous momentum you saw it in the Q4 results, 14% revenue growth IDC number was 18% unit growth for Q4 calendar Q4 to be specific.

That momentum is important to us.

Customers and we're going to continue to focus on driving and winning in that business and we think there is a structural share gain opportunity for us.

Jeff Clarke: We're seeing continued growth and acceptance of that, and we're optimistic that will continue into FY27. Thanks, Asiya. We'll do one more question before we have Jeff close the call.

Jeff Clarke: We're seeing continued growth and acceptance of that, and we're optimistic that will continue into FY27.

Over the next couple of years as our supply chain team has positioned us quite well.

Paul Frantz: Thanks, Asiya. We'll do one more question before we have Jeff close the call.

I believe we can do that in servers and I believe we can do that in storage as well.

Operator: We'll now take our final question from David Vogt with UBS.

Perfect I appreciate it thanks guys.

Okay.

David Vogt: Thanks, Paul, for squeezing me in. Jeff, just a quick question on the structural share gains in PCs. Is it sort of the premise here that your ability to dynamically adjust price and steer demand based on your supply chain availability and your expertise relative to maybe some of the smaller competitors, puts you in a position to structurally have a better sort of CSG backdrop in fiscal 27, calendar 26, and more likely than not in fiscal 28 as we think about where you're positioned? Is that really where you're gonna see share gains? I'm just trying to get a sense for how you're gonna outgrow a market that's gonna be down double digits. I get the pricing umbrella that's gonna happen, but just wanna get a better sense for where the gains are gonna come from.

Hey, Jeff go right ahead sure we closed FY 'twenty six a defining year for the company with record results and strong execution and we are entering FY 'twenty seven with clear momentum.

We have tremendous AI traction entering the year with 43 million billion.

AI backlog the supply environment is tightest, we've ever seen in input cost are moving higher or priorities are straightforward first secure supply.

Next price to protect our margin rates you've seen this in ISG <unk> will follow with improvements beginning in Q1 and continuing through the year in.

In Q4, our gross margin rate came in slightly better than anticipated, excluding AI mix, we're guiding FY 'twenty seven gross margin rate up on a year over year basis.

Jeff Clarke: David, I couldn't have said it better myself. If you look at the last industry-wide shortage, Dell excelled and took share across the board, most notably in its PC business. Our long-term relationships, supply agreements with our partners, we believe position us to take share in all of our businesses, and in particularly PCs. Again, which is again, reinforcing point why we didn't back off on the pricing position and the posture that we had during the quarter. We believe we are entering and changed the trajectory of the business. We had lost share for 3 years. We exited the year with tremendous momentum. You saw it in the Q4 results, 14% revenue growth. IDC number was 18% unit growth for Q4, calendar Q4 to be specific. That momentum is important to us.

The operating model, we've executed for the past four decades allows us to move fast and adjust as demand involves.

With a broad portfolio and several levers at our disposal.

Our FY 'twenty seven guide reflects at 23% revenue growth at the midpoint and 25% EPS growth driven by the expansion of our AI business growth and improving profitability across the rest of the portfolio meaningful opex scaling and EPS leverage from our share repurchase program.

We're positioned for another record year. Thanks for your time today.

This concludes today's conference call. We appreciate your participation you may now disconnect at this time.

Jeff Clarke: We grew customers, and we're gonna continue to focus on driving and winning in that business. We think there is a structural share gain opportunity for us, certainly over the next couple of years as our supply chain team has positioned us quite well. Believe we can do that in servers, and I believe we can do that in storage as well.

David Vogt: Perfect. I appreciate it. Thanks, guys.

Jeff Clarke: Jeff, go right ahead. Sure. We closed FY26, a defining year for the company with record results and strong execution, and we are entering FY27 with clear momentum. We have tremendous AI traction entering the year with $43 billion in AI backlog. The supply environment is tight as we've ever seen, and input costs are moving higher. Our priorities are straightforward. First, secure supply. Next, price to protect our margin rates. You've seen this in ISG. CSG will follow with improvements beginning in Q1 and continuing through the year. In Q4, our gross margin rate came in slightly better than anticipated. Excluding AI mix, we are guiding FY27 gross margin rate up on a year-over-year basis.

Paul Frantz: Jeff, go right ahead.

Jeff Clarke: Sure. We closed FY26, a defining year for the company with record results and strong execution, and we are entering FY27 with clear momentum. We have tremendous AI traction entering the year with $43 billion in AI backlog. The supply environment is tight as we've ever seen, and input costs are moving higher. Our priorities are straightforward. First, secure supply. Next, price to protect our margin rates. You've seen this in ISG. CSG will follow with improvements beginning in Q1 and continuing through the year. In Q4, our gross margin rate came in slightly better than anticipated. Excluding AI mix, we are guiding FY27 gross margin rate up on a year-over-year basis.

Jeff Clarke: The operating model we've executed for the past four decades allows us to move fast and adjust as demand evolves with a broad portfolio and several levers at our disposal. Our FY27 guide reflects that, 23% revenue growth at the midpoint and 25% EPS growth, driven by the expansion of our AI business, growth and improving profitability across the rest of the portfolio, meaningful OpEx scaling, and EPS leverage from our share repurchase program. We are positioned for another record year. Thanks for your time today.

Operator: This concludes today's conference call. We appreciate your participation. You may now disconnect at this time.

Q4 2026 Dell Technologies Inc Earnings Call

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