Driven by demand for desktop and notebook computers as the coronavirus pandemic forces more people to work from home, Dell Technologies saw its revenue and profit soar past Wall Street’s expectations in its fiscal third quarter, the company said Tuesday.
Revenue for the quarter ended Oct. 30 was $23.5 billion, a 3% year over year increase, the company reported, beating analysts’ expectations of $21.9 billion.
The Round Rock-based technology giant has net income of $17 billion, or $1.08 per share. Dell said its adjusted earnings were $2.03 per share, well above Wall Street analysts’ forecasts for $1.42 per share.
Dell Technologies shares closed Tuesday up 1.3% at $70.33, and edged up less than 1% in after-hours trading following its earnings report.
In a call with investors, Dell Technologies chief operating officer Jeff Clarke said despite the pandemic, the company has been able to grow, innovate and deliver for its customers.
“Through it all, one thing is clear: The mega-technology trends that we have long called out are accelerating, and these trends are highly favorable to Dell Technologies,” Clarke said. “We are uniquely positioned to win in the growing markets of 2020, and we are making the right investments and innovating to capture growing the markets of tomorrow.”
Dell saw increased demand for its client solutions group of products, which includes desktop PCs, notebooks and tablets. Revenue for the division was a record $12.29 billion, an 8% year over year increase.
“Technology has never been more important, and as the world evolves, so does our business,” Clarke said in a written statement. “We met unprecedented demand for remote work and learn solutions this quarter while increasing revenue to $23.5 billion. At the same time, we accelerated our as-a-service strategy and hybrid cloud capabilities at the edge – positioning us to win in these growing markets and making it easy for customers to manage data and workloads across all their operations.”
Clarke said the company saw orders increase by 24% on notebooks. Commercial Chromebook orders also doubled.
“The PC is the essential device for this remote everything environment we’re living in today — evidenced by the ongoing demand we’re seeing for work and learn from home solutions along with double-digit growth in education, government — particularly our North America Federal business — and consumer verticals,” he said.
The company’s premium laptop XPS and Alienware hardware brands saw a combined 43% increase in orders, Clarke said.
Patrick Moorhead, a technology analyst and founder of Austin-based consulting firm Moor Insights and Strategy, said it was a surprising but positive sign to see commercial PC sales growing, even as the information technology sector pulls back. He also said he was pleased to see growth for the company in both premium and higher revenue on gaming systems and XPS laptops.
“Dell had a very solid (quarter) increasing revenue 3% in a very uncertain time. I believe its revenue growth is a testament to its diversity across PC, infrastructure, software and cloud,” Moorhead said in a written statement.
Dell’s data center business saw some slippage. The unit’s sales fell 4% year over year to $8.02 billion. The company said it has seen challenges with big companies, but better velocity in demand from small and medium businesses.
Moorhead said Dell did see less of a decline than some competitors, and saw double-digit growth on newer and higher-margin products, VxRail and PowerMax.
VMware, which is a California-based Dell subsidiary that makes software used to improve data center performance and cloud infrastructure, also reported a strong quarter. Its revenue climbed 8%, to $2.89 billion.
Moorhead said he would prefer to see double digit growth for the subsidiary, but that the company still has strong double and triple digit growth areas.
Dell, which owns 81% of VMware, said in July that it’s exploring a possible spin-off of the subsidiary. The company said in a report that the company is still exploring the potential agreement, which would come no sooner than September 2021.
Founded by CEO Michael Dell in his University of Texas dorm room in in 1984, Dell Technologies has grown into one of the world’s largest tech companies. It is one of the largest private employers in the Austin metro area, with more than 10,000 workers in Central Texas.