Dell Technologies continues to expand its annual recurring revenue (ARR), and the associated APEX as-a-service business has also grown. Still, Dell has been careful not to over-hype APEX revenues -- especially since they represent a tiny fraction of the company's overall annual sales.
In many ways, Dell APEX competes against such rival options as Hewlett Packard Enterprise GreenLake and Cisco Plus. Each of the major enterprise hardware providers introduced hybrid as-a-service options to counter each other and to potentially compete more effectively against public cloud providers such as Amazon Web Services, Google Cloud Platform and Microsoft Azure.
Among the latest anecdotes to note: Dell's Q3 of 2023 financial results included:
- Recurring revenue of approximately $5.4 billion, up 11% year-over-year.
- Overall revenue of $24.7 billion, down 6% compared to the corresponding quarter last year.
- Record operating income of $1.8 billion -- up 68% compared to Q2 of fiscal 2022.
- Areas of strength included servers and networking ($5.2 billion, up 14%) and storage ($4.4 billion, up 11%).
- Areas of weakness involved PCs, where revenues fell 17% to $13.8 billion.
Dell APEX Revenues: $1 Billion?
Meanwhile, Dell continues to invest in the APEX business -- which involves a growing mix of hardware as a service (HaaS) along with various SaaS and cloud services.
Dell APEX "sort of" hit the $1 billion milestone earlier this year (Q2 of fiscal 2023), Co-Chief Operation Officer Chuck Whitten said during the company's earnings call on November 21, 2022.
APEX is "growing at a continued healthy rate and adding new customers," Whitten added. "We’ve been consistent that we’re going to be thoughtful about how we discuss progress there."
Still, Whitten was quick to avoid any type of APEX momentum hype. He stated:
"We’re not -- certainly not going to provide sort of quarter-to-quarter updates. And so, we can share metrics that can be traced clearly back to the P&L. But what I would tell you is interest remains very high in our subscription offers. We saw again triple-digit customer growth and healthy ARR growth in the quarter. And we continue to invest in the portfolio and our webdeck as a whole series of new APEX offers that we’ve released since we last spoke in August."
Dell APEX - A Small Slice of Annual Revenue: In terms of customer interest, APEX tends to be "concentrated at some of the larger companies in the medium-sized businesses in the world, but we’re getting a lot of interest in conversations from customers as they try to navigate this macro environment as you would imagine," Whitten noted.
And in terms of Dell's overall revenues, APEX is "not sizable enough relative to our $100 billion trailing 12-month business to sort of go much more beyond that. We are getting a lot of customer interest."
HPE GreenLake and Cisco Plus: Rival as a Service Options
Meanwhile, HPE expects to generate ARR (annual recurring revenue) of nearly $2.3 billion by the end of 2024, CEO Antonio Neri said during an August 2022 earnings call.
That journey will involve a three-year ARR CAGR (compound annual growth rate) target of 35% to 45% from fiscal year 2021 to fiscal year 2024, HPE CFO Tarek Robbiati said in August 2022.
Elsewhere, Cisco did not say much about the Cisco Plus effort during the company's partner summit in early November 2022. Cisco Plus also was not mentioned during the networking company's earnings call on November 16, 2022.
Still, Cisco's ARR remains in growth mode. Indeed, ARR was $23.2 billion during Q1 of fiscal 2023, up 7% compared to the corresponding quarter last year, CEO Chuck Robbins said during that November 2022 earnings call.
