Episode
DELL Stock: Revenue +58%, But Free Cash Flow Fell 47% (Dell Q2 FY2027 Earnings)
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- Sep 3, 2026
- Duration seconds
- 902
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Summary
Dell Technologies (DELL) Q2 FY2027 — The stock rose 15.8% the next session, from $425.00 to $492.20, on 6.2x normal volume. Dell grew revenue 58% to $46.97bn, trebled non-GAAP EPS to $7.04 against a $4.91 Street bar, expanded every margin it reports, and added $25bn to its own full-year guide. Free cash flow still fell 47%, to $986m. The record $8,149m of 'adjusted free cash flow' in the headline is that $986m plus $6,667m of financing receivables - money owed by customers for equipment Dell financed itself. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$436 vs ~$492.20 today. KEY METRICS: - Revenue $46,971m (+58%), non-GAAP EPS $7.04 (+203%), GAAP EPS $6.34 (+273%). Beat its own 28 May guide by 5.6% on revenue and 46.7% on EPS - the bar was RAISED first, not cut - Free cash flow $986m, DOWN 47% year over year, while reported net income rose 255% to $4,133m. Operating cash flow fell 13% to $2,225m - The record $8,149m 'adjusted free cash flow' is $986m plus $6,667m of financing receivables plus $496m of equipment under operating leases - 88% of it is the add-back (FY2026: 26%) - Financing receivables went from $13,950m at 1 May to $20,430m at 31 Jul - $6,480m in ONE quarter, against $2,858m across the SEVEN quarters before it - We tested AI margin dilution and it is NOT present: gross margin 18.3% to 20.9%, non-GAAP operating margin 7.7% to 12.6%, ISG segment margin 8.8% to 15.0% - ISG revenue $31,782m (+89%); AI-optimised servers $16,401m (+100%); traditional servers and networking $10,531m (+122%); storage $4,850m (+26%); CSG $15,034m (+20%) - FY2027 revenue guide: $140.0bn on 26 Feb, $167.0bn on 28 May, $192.0bn now. Non-GAAP EPS guide $12.90, then $17.90, then $25.50 - AI orders $60.9bn booked in the quarter (April: $24.4bn) but recognised AI revenue only went…