Revenue and profit momentum improved throughout the year while navigating a challenging component cost environment
Dell Technologies had a rewarding 2018. The FY’18 consolidated GAAP results showed 28 percent growth over 2017, delivering US$78,660 million, against US$ 61,642 million in 2017. The FY’18 consolidated non-GAAP results had a similar story. FY’18 delivered US$79,929 million, against US$ 62,822 million in 2017, a growth of 27 percent. Its Indian revenue for 2018-2019 is estimated at approx USD 2,600 Mn. There was strong top-line velocity all year, delivering ~$80B in revenue. Revenue and profit momentum improved throughout the year while navigating a challenging component cost environment.
External feedback regarding the integration has been positive. A survey conducted by IDC found that 91% of customers felt that Dell and EMC have delivered on the pre-merger promises. It also increased the global coverage by investing significantly in the sales team and channel program.
The Infrastructure Solutions Group (ISG) revenue growth was driven by servers and networking. Servers and networking revenue was up 27% Y/Y. Storage revenue was down 11% Y/Y. The OpInc percentage declined 350 bps over the prior year, primarily due to a higher mix of servers and to a lesser extent, higher component costs.
As for the ISG Group, Dell EMC and VMware were named leaders in the first-ever Gartner Magic Quadrant for Hyperconverged Infrastructure. Gartner ranked both Dell EMC and VMware highly in the 2018 Magic Quadrant for HCI, positioning both Dell EMC’s VxRail appliance and VxRack rackscale system as well as VMware’s vSAN software as leaders in the category.
Dell EMC also expanded the server capabilities for software-defined, edge and high-performance computing. It expanded the 14th generation of the Dell EMC PowerEdge portfolio with three new servers – the PowerEdge R6415, R7415 and R7425 – with capabilities to address the demanding workload requirements of today’s modern data center, including software-defined, edge and high-performance computing.
Dell EMC also announced the expansion of its market-leading converged infrastructure portfolio. Dell EMC unveiled the next-generation Dell EMC VxBlock System 1000, an all-in-one system designed to support workloads of all types that includes a substantially broader choice of world class storage arrays, data protection and compute than previous-generation VxBlock Systems.
As for the Client Solutions Group ( CSG) performance, the commercial revenue was up 9% Y/Y due to ASP expansion for notebooks and workstations, as well as double-digit revenue growth in displays. The consumer revenue grew 6% Y/Y, driven by growth in ASPs for notebooks and XPS products. OpInc was up 70% Y/Y as the team did a good job offsetting component cost headwinds through repricing and also focused on attaching higher-margin services and S&P.
For FY’19, the company intends to grow above the market and drive share gains, with a particular focus on storage and client. It will look to generate strong cash flow and de-lever the balance sheet. It will look to drive profitability in ISG as it balances server velocity and profitability, and accelerate storage and data protection velocity.
—ALOK OHRIE President & MD, Dell Technologies