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Dell Technologies (NYSE:DELL) stock fell ~4% premarket on Friday despite Q1 results beating estimates as the PC and tech giant expects currency headwinds and impact on revenue in Q2.
Corporate Controller Yvonne McGill said on the Q1 2024 earnings call that the company expects Q2 revenue to be between $20.2B and $21.2B, between down 3% and up 1% sequentially, with a midpoint of $20.7B (Consensus $21.13B).
“Currency continues to be a headwind, and we are expecting a roughly 200 basis point impact to Q2 revenue. We expect CSG revenue to be roughly flat sequentially and ISG down in the low single digits sequentially,” McGill commented.
Co-Chief Operating Officer Chuck Whitten said on the call that the client business was still recovering and the Consumer business remains under pressure. However, the Commercial business showed some areas of improvement.
Whitten noted that the company expects the CSG (Client Solutions Group) revenue to be roughly flat sequentially, which reflects a recovering, but not a fully recovered market.
“I think if you look at it, it’s probably closer to the three-year average sequential, but not yet back to pre-pandemic levels,” Whitten added.
For ISG (Infrastructure Solutions Group), Whitten said that there remains a challenging demand environment and that the caution that was seen entering the spending environment in Q2 last year continues a year later.
“Customers aren’t outright canceling digital projects, but they are prioritizing spend and they continue to constrain investments in infrastructure hardware after the burst of pandemic spending the last couple of years,” Whitten added.
McGill said that with inventories normalizing across the supply chain, the company expects a more competitive pricing environment.
Dell expects Q2 EPS to be $1.10, plus or minus $0.10.
Fiscal 2024 outlook:
For the full year, Dell maintained its FY’24 revenue outlook, down between 12% and 18% and down 15% at the midpoint.
“Given Q2 guidance, this implies a return to sequential growth in the second half of the year,” McGill noted.
In addition, the company increased its expectation for EPS to $5.50, plus or minus $0.25.
Q1 results:
Dell Q1 total revenue declined -20% Y/Y to $20.92B. Total ISG net revenue fell -18% Y/Y to $7.59B, while total CSG net revenue decreased ~23% Y/Y to $11.98B.
Non-GAAP EPS fell -29% Y/Y to $1.31.
DELL -3.65% to $43.80 premarket June 2
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