Dell: Fiscal 2Q18 Financial Results

Storage orders declined in mid-single digits and similar during last three quarters
By Jean Jacques Maleval on 2017.09.11

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Storage revenue of Dell

(in $ million) 2Q17 2Q18 6mo 17 6mo 18
Revenue 542 3,666 1,081 7,351
Growth 1% Y/Y  -1% Q/Q
581% Y/Y

580% Y/Y

(results prior 3FQ17 do not include EMC/VMware))

Dell Technologies Inc. announced its financial results for its second quarter of fiscal 2018 ended August 4, 2017.

Including EMC, storage revenue was $3.7 billion, down 1% Q/Q, with orders up mid-teens quarter-on-quarter. The primary differences between reported sequential revenue and orders demand was growth in product backlog and an increase in flexible consumption deals.

Overall, storage orders declined in the mid-single digits and were similar during the last three quarters but the company expects to see improved order growth rates in the second half of the year.

The storage industry, like Dell, is seeing a big trend, which there is a shift in the market mix towards more than mid-range storage systems. So the high end of the market, the systems of over $500,000 are - is declining, and has been declining in the kind of mid-teens percentage range for the company.

David Goulden, president, infrastructure solutions group, Dell, wants to react by "changing our quota and compensation schemes to put more emphasis on the mid-market within storage, introducing more products, etc."

As for many other storage giants, hyperconverged and all-flash are the motors for their business.

Dell continued triple-digit demand growth for hyperconverged portfolio, including Dell/EMC VxRail, which has 2,000 customers and 14,000 nodes deployed to date in dozens of industries across 97 countries.

In all-flash subsystems, the firm estimates to be twice more the size of its nearest competitor.

After 419 days of shipping, Unity family of all-flash and hybrid flash arrays has achieved $1 billion in cumulative bookings, making it one of the fastest growing products in company's history but now with softness in hybrid. The firm got a strong first quarter for its new VMAX 950 solution, expecting further benefit next quarter from the launch of the new XtremIO solution X2.

The firm saw double-digit demand growth in next-generation Isilon scale-out NAS with new Infinity architecture.

But it's clear that global storage revenue of the combined Dell/EMC is much less that the addition before the merger.

Goulden commented: "We still have work to do to improve our storage velocity, especially in the higher transaction volume commercial segment of the markets. Our action plan includes better alignments of our sales teams through further changes and modify incentive problems to better emphasize and capture storage opportunities. We're also adding several hundred storage specialists across our commercial go-to-market segments, our global storage specialty team and our channel team to increase our storage go-to-market capacity. We expect the impact of these changes to build over the next few quarters."

To read the earnings call transcript