First look at Dell's numbers since return to stock exchange

The tech giant had a positive return to the stock market with its Q4 earnings

Dell Technologies celebrated a strong return to publicly listed life with its fourth-quarter and fiscal year results.

The tech titan reported a 15 per cent increase in overall turnover for its fiscal 2019 to $90.6bn (£68.5bn), with its Q4 results - the first reported since it returned to the stock market - seeing a nine per cent year-over-year increase to $23.8bn.

We dug through the numbers to pull out the key messages for partners from Dell's latest results.

Strong showing in storage, servers and networking

Revenue for the company's infrastructure solutions group - a combination of its storage, servers and networking businesses - saw a 10 per cent year-on-year increase to $9.9bn in the fourth quarter.

Servers and networking contributed $5.3bn to this number, marking a 14 per cent year-on-year increase, while storage saw a seven per cent year-on-year rise to $4.6bn revenue.

Full-year revenue in the infrastructure solutions group was even more positive, hitting $36.7bn.

Servers and networking saw a 28 per cent rise in revenue to $20bn, with networking rising nine per cent to $16.7bn.

Jeff Clarke, treasurer at Dell Technologies, told analysts on an earnings call that the company plans to consolidate in the server market, in order to capture more share.

"We think when you look at this big $85bn-ish opportunity - two thirds of it being in mainstream servers - our share position is a little less than $30m, so there's a fair amount of room for us to consolidate," he said on the call, transcribed by Seeking Alpha.

"That continues to be bolstered by the fact that we still see on-premise private cloud early build-out."

Clarke was optimistic that predicted further spend on on-premise cloud environments would have a positive impact on this segment.

"We think that bodes well for the environment, as it's clear we're in a multi-hybrid cloud world," he said.

The company's storage business grew for the fourth consecutive quarter, which Clarke said was proof that it had "stabilised" the business.

"The investments we've made in sales, capacity and coverage are yielding net new buyers, which is good to see," he stated. "We continue to tune the sales compensation focus on storage, which is very important to us.

"We have more work to do but believe we have taken the right actions to drive meaningful long-term improvement in our storage business."

Mixed results for the consumer business

The firm's client solutions group - which includes commercial and consumer revenues - was up four per cent year on year to $10.9bn for Q4.

Though commercial revenue grew nine per cent to $7.8bn, Dell saw consumer revenue decline six per cent to $3.1bn.

CFO Tom Sweet attributed this decline to "supply chain dynamics" causing it to shift its focus to high-end notebooks and gaming.

However, he remained positive about the segment, stating that the mix of offerings, pricing and component costs combined to improve profitability in its client solutions group.

Refining its channel programme

Sweet told analysts that the firm's business model is split 50/50 between direct and indirect sales, and that this is key to the company's long-term success.

He also stated that Dell is making changes to its channel programme to ensure that partners have the best opportunities to add value for customers.

"We're making refinements to our channel programme to incentivise them to ensure that they're driving the higher-value offerings, like storage, and attaching services where appropriate," he said.

"It's a continued refinement, as we continue to tune the model, and I think we'll continue to make progress."

No caution among customers

The CFO echoed comments made by Cisco CEO Chuck Robbins that the speed of digital transformation means that customers are seeing IT spend as essential, and the current global political climate is not affecting that desire.

"From our perspective, in terms of any caution or slowdown from the customer set, we really haven't seen anything in terms of customers beginning to delay significant activity or to push out investments that they were planning on making," he said.

However, Sweet still aired a note of caution to investors, noting that he does not expect Dell's fiscal 2020 to see the same growth as 2019.

"If you look at the macro dynamics that we see across the globe, I'm not expecting fiscal 2020 to be as strong as fiscal 2019 from a revenue growth perspective, nor have we guided you that way," he said.

"We're probably going to have to navigate through some choppy waters at times…but I think the environment is generally still positive for us."

SecureWorks still in the works

Sweet said he was pleased with the performance of cybersecurity arm SecureWorks, despite rumours that Dell is seeking to sell it.

The security division is bundled into the "other business revenue" category, along with Boomi, Virtustream, RSA and Pivotal. This category grew five per cent year on year in Q4 to $593m.

The CFO said the creation of an end-point security solution for commercial PCs between Dell and SecureWorks has led to vigour to drive further collaboration across Dell's business strands.