Dell Technologies (DELL) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue reached $23.4 billion, up 5% year-over-year, with growth across all core markets and strong ISG and CSG performance.

• Non-GAAP diluted EPS was $1.55, up 17%; GAAP diluted EPS was flat at $1.37; net income was $965 million, down 3% due to higher tax expense.

• Record Q1 cash flow from operations reached $2.8 billion, up 168%, and $2.4 billion was returned to shareholders via buybacks and dividends.

• AI-optimized server demand surged, with $12.1 billion in Q1 orders and a $14.4 billion backlog, surpassing all FY25 shipments.

• Sale of Secureworks completed for $0.9 billion, resulting in a $0.2 billion gain.

Financial highlights

• Gross margin was $4.94 billion (21.1% of revenue), down 70–80 bps due to competitive pricing and mix; non-GAAP gross margin was $5.06 billion (21.6%).

• Operating income rose 21% to $1.2 billion; non-GAAP operating income increased 10% to $1.7 billion.

• Adjusted EBITDA was $2.28 billion (9.7% of revenue); free cash flow was $2.23 billion, up 388%.

• Earnings per share (diluted) remained flat at $1.37; non-GAAP EPS rose 17% to $1.55.

• Product net revenue grew 9% to $17.6 billion; services net revenue declined 6% to $5.8 billion.

Outlook and guidance

• FY26 revenue guidance is $101–$105 billion, midpoint $103 billion, up 8%; non-GAAP EPS guidance raised to $9.40 ± $0.25, up 15% at midpoint.

• Q2 FY26 revenue expected between $28.5–$29.5 billion, up 16% at midpoint; non-GAAP EPS expected at $2.25 ± $0.10.

• ISG expected to grow high teens, driven by $15B+ in AI server shipments; CSG to grow low-to-mid single digits.

• Margin growth anticipated despite competitive pressures; input costs projected to decline modestly in FY26.