Dell Technologies, Nutanix Report Ups and Downs in Earnings

Dell Technologies’ executives were pumped at their annual conference one month ago, having had a terrific fiscal 2019 (ended February 2019) — boasting revenue of about $91 billion, increased product sales and gains in market share. That was before earnings as a – once again – public company. The vendor’s latest earnings report (Q1 FY20) is a mixed bag.

The good news is that the company reported a profit of more than $1.2 billion, up 2.5% year over year. Revenue also was up, increasing 2.6% year over year, to a little more than $21.9 billion. However, analysts targeted $22.5 billion in revenue for the first quarter, so the vendor fell short of expectations.

Dell EMC’s Joyce Mullen

Taking a closer look at Dell’s operating segments, Infrastructure Solutions Group (ISG) revenue was $8.2 billion, a 5.4% decrease year over year. ISG accounts for more than 37% of total revenue.

The decline was attributed to a 9% loss in servers and networking revenue to $4.2 billion, and a 1% decline year over year in storage revenue, to $4 billion.

In February, Dell continued to emphasize to partners its push in storage, with the goal of closing out the year with a gain in market share. At that time, Joyce Mullen, president, global channel, OEM and IoT solutions, said the average number of lines of business, storage, servers and networking [and so on] being sold by partners was up by 10 percent.

The company’s Client Solutions Group (CSC) was up 6.2% year over year, accounting for more than $10.9 billion, and commercial revenue topped $8.3 billion — that’s 13% growth. The CSC represents almost one-half of total revenue.

In April, IDC reported better-than-expected performance for first-quarter PC shipments.

“Desktop PCs were surprisingly resilient as the commercial segment helped drive a refresh during the quarter,” said Jitesh Ubrani, research manager for IDC’s Mobile Device Trackers. “Capitalizing on this refresh cycle, the top vendors – HP, Lenovo, and Dell – each increased their year-over-year volume and captured additional share in the desktop PC market.”

Dell’s consumer revenues ($2.6 billion) took a 10% hit year over year.

The company’s increasingly tight relationship with VMware was one of the highlights at Dell Technologies World. VMware revenue was up 13%, to $2.3 billion.

Meantime, Nutanix, which has been struggling with transformation from a hardware/software HCI vendor to an HCI software-only vendor, reported revenue of less than $288 million for its fiscal third quarter, down by about $2 million from the year-ago quarter. That missed Wall Street’s estimate of $296 million.

The latest earnings report follows a 31% stock plummet, or almost $3 billion in market value, back in March. In early April, Channel Futures reported that both channel chief Rodney Foreman and Lou Attanasio, executive vice president and chief revenue officer, had left the company.

Nutanix’s Dheeraj Pandey

“While we faced a top-line impact on our third quarter as we continue to execute our strategic shift toward a recurring-revenue business model, our strong foundation and commitment to our customers position us well for the long term,” said Dheeraj Pandey, chairman, founder and CEO of Nutanix.

The vendor reported an accelerated shift to subscription revenue, with quarterly billings increasing to 65% of total billings. That’s up 8 percentage points from the previous quarter, with revenue reaching $168.4 million, a year-over-year increase of 110%. New customer bookings represented 25% of total bookings compared with 29% last year.

Earlier this month, Nutanix and HPE signed a global agreement to deliver hybrid cloud as a service, leveraging Nutanix’s Enterprise Cloud OS software including its built-in, free AHV hypervisor delivered through HPE GreenLake. Product availability is expected sometime in the third quarter.