Dell Technologies (DELL) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenue reached $24.4 billion, up 10% year-over-year, driven by record ISG growth and strong AI server momentum, while CSG and other businesses declined.

• Diluted EPS was $1.58, up 16% year-over-year; non-GAAP diluted EPS was $2.15, up 14%.

• Cash flow from operations was $1.6 billion, with $6.6 billion in cash and investments at quarter end.

• AI-optimized server orders hit a record $3.6 billion, with a five-quarter pipeline up over 50% sequentially and a $4.5 billion AI backlog exiting Q3.

• Secureworks entered a definitive agreement to be acquired for $0.9 billion, expected to close in early 2025.

Financial highlights

• Gross margin was $5.3 billion (21.8% of revenue), down 130–140 bps due to higher AI-optimized server mix and CSG pricing pressure.

• Operating income rose 12% to $1.7 billion (GAAP) and $2.2 billion (non-GAAP).

• Net income was $1.13 billion (GAAP), up 13%, and $1.54 billion (non-GAAP), up 11%.

• Adjusted EBITDA reached $2.80 billion, representing 11.5% of revenue.

• Free cash flow for Q3 was $914 million, down 37% year-over-year; adjusted free cash flow was $716 million, down 17%.

Outlook and guidance

• Q4 revenue expected between $24–$25 billion, up 10% at midpoint; ISG and CSG combined to grow 13%.

• ISG revenue growth rate projected mid-20s% year-over-year; CSG up low single digits.

• Q4 non-GAAP EPS expected at $2.50 ± $0.10, up 14% at midpoint.

• Long-term revenue growth targeted at 3–4% CAGR, with ISG at 6–8% and CSG at 2–3%.

• Dividend growth rate targeted at 10%+ through FY28, with FY25 dividend raised 20% to $1.78 per share.