Analysis: Dell Technologies, Inc. announces Q4 FY2025 financial results

Analysis: Dell Technologies, Inc. announces Q4 FY2025 financial results

Chris EvansAnalysis, Data Practice: Data Storage, Dell Technologies, Storage, Storage Hardware

Dell Technologies, Inc. has announced Q4 FY2025 and full-year financial results for the period ending 31st January 2025, which show an increase in annual revenue of 8.1% to $95.6 billion.  For Q4, the year-on-year improvement was 7.2%, driven, once again, by a 36.6% increase in server sales (54% for the year).  As we’ve previously highlighted, the only growth area for the company is box-shifting servers and GPUs.

Background

Dell Technologies, Inc. has posted financial results for Q4 and the full year of FY2025 that show revenue for the quarter of $23.9 billion (up 7.2% year-on-year) and $95.6 billion for the full year (up 8.1%).  By category, ISG increased 28.6%, while CSG declined 1.1%.  Within the ISG revenue, Servers & Networking rose 54% for the year, while Storage rose 1.2%.  The worst-performing category was CSG – Consumer, down 17.1% for the year.

We present the data in six graphs, labelled Figures 1 to 6.

Figure 1 – Dell Technologies P&L
Figure 2 – Dell Technologies Revenue by Division

AI Boom

The demand from the AI boom continues almost unabated, with Servers & Networking the star division for Dell.  In the post-earnings call, COO Jeff Clarke highlighted sales of the PowerEdge XE9712, using NVIDIA NVL-72 GB200 GPUs.  Dell has also heavily invested in rack-scale servers, with high power demands and liquid cooling advancements.  Obviously, we don’t specifically cover the server market other than to highlight the ongoing demand in the industry, which for Dell has declined slightly quarter-on-quarter over the financial year.

Elsewhere, the PC market failed to deliver, with CSG Consumer down 12.4% for the quarter and 17.1% over the financial year.  The inability to interest customers in the AI PC is interesting as the focus on AI within Dell (in general) is so strong.  We continue to believe that the AI PC is a marketing failure; the capabilities of AI-enabled processors will simply enter the market as part of a general client desktop refresh.

Figure 3 – Dell Technologies Quarterly Revenue
Figure 4 – Dell Technologies Revenue by Quarter

Storage

Looking at our normal area of focus within Dell, the Storage business increased revenue by only 1.2% annually and 5.4% in Q4 FY2025 compared to Q4 FY2024.  Over FY2025, Storage increased revenue in each quarter.  However, if we look at the data in Figure 5, we can see that, per quarter, the Storage business has hovered around the $4-4.5 billion mark for almost a decade.

During FY2025 Dell introduced PowerScale F910 and F710 systems, plus a QLC-based PowerStore platform (our coverage here).  It’s worth noting that Dell Technologies has focused on reducing operational expenses, with the result that operating income for ISG (which includes the Storage business) rose by 30% over the year.

Figure 5 – Dell Technologies Quarterly Revenue by BU
Figure 6 – Dell Technologies Quarterly Revenue by Group

The Architect’s View®

Undoubtedly the highlight for Dell Technologies is the continued growth in server sales, particularly the euphemistically named AI Servers, which are essentially traditional x86 servers bundled with GPUs.  Over the past 12 months, the Storage business has failed to excite customers, with a 1.2% increase in revenue over the period effectively a reduction in real terms, once we consider inflationary effects.

Dell’s storage portfolio is lacklustre and desperately in need of some updating, especially the PowerStore brand, where we see the most adoption.  The PowerStore platform is at least two generations behind its competitors in terms of the processor/memory/PCIe architecture, which has a direct impact on acquisition and operational costs for the customer. 

Part of the reason for the stagnation in innovation could be the massive reduction in R&D spending.  Before the COVID-19 pandemic, Dell Technologies spent $4.4 billion, $4.6 billion and $5 billion on R&D in FY 2018, 2019 and 2020 respectively.  The spending was halved in FY2021 ($2.5 billion) and has only reached $3.1 billion in the latest annual period.  In percentage terms, the difference is stark – reducing from approximately 20-22% pre-pandemic to just 12.7% today.  This compares to around 17% for NetApp and 24% for Pure Storage.

Dell Technologies can continue to survive on the legacy of the 2015 EMC acquisition for some time, as the company remains the largest seller of storage hardware to the enterprise.  However, the competition is growing sales quicker than Dell, which will undoubtedly be a problem when AI server sales falter. 

Hopefully, the storage products will be revamped and made more competitive.  In the meantime, customers will continue to look elsewhere at more creative and dynamic alternatives.

Related Posts

Copyright (c) 2007-2025 – Post #55d8 – Brookend Limited, first published on https://www.architecting.it/blog, do not reproduce without permission. Dell Technologies is a Tracked Vendor for storage and data protection products.