DELL 10-Q
Dell Technologies Inc. (DELL)
10-Q
2026-09-08
For: 2026-07-31
View Original
Added on
September 08, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| (Mark One) | ||||||||||||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||||||
For the quarterly period ended | ||||||||||||||
| or | ||||||||||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||||||
For the transition period from to | ||||||||||||||
Commission File Number: 001-37867
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) (Zip Code)
1-800 -289-3355
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☑ | Accelerated filer | ☐ | |||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
| Emerging growth company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ
As of September 1, 2026, there were 635,812,750 shares of the registrant’s common stock outstanding, consisting of 315,433,188 outstanding shares of Class C Common Stock, 276,744,341 outstanding shares of Class A Common Stock, and 43,635,221 outstanding shares of Class B Common Stock.
1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). The words “may,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “aim,” “seek,” and similar expressions as they relate to us or our management are intended to identify these forward-looking statements. All statements by us regarding our expected financial position, revenues, cash flows and other operating results, business strategy, legal proceedings, and similar matters are forward-looking statements. Our expectations expressed or implied in these forward-looking statements may turn out not to be correct. Our results could be materially different from our expectations because of various risks, including the risks discussed in “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026, in this report and in our other periodic and current reports filed with the Securities and Exchange Commission (“SEC”). Any forward-looking statement speaks only as of the date as of which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or our expectations, the occurrence of unanticipated events, or otherwise.
2
DELL TECHNOLOGIES INC.
TABLE OF CONTENTS
| Page | ||||||||
3
PART I — FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED)
Index
| Page | |||||
4
DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
| July 31, 2026 | January 30, 2026 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance of $ | |||||||||||
Short-term financing receivables, net of allowance of $ | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant, and equipment, net | |||||||||||
| Long-term investments | |||||||||||
Long-term financing receivables, net of allowance of $ | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued and other | |||||||||||
| Short-term deferred revenue | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term deferred revenue | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
Commitments and contingencies (Note 10) | |||||||||||
| Shareholders’ equity (deficit): | |||||||||||
Common stock and capital in excess of $ | $ | $ | |||||||||
| Treasury stock at cost | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders' equity (deficit) | ( | ( | |||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5
DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total net revenue | |||||||||||||||||||||||
| Cost of net revenue: | |||||||||||||||||||||||
| Products | |||||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total cost of net revenue | |||||||||||||||||||||||
| Gross margin | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general, and administrative | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Interest and other, net | ( | ( | ( | ||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6
DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustments and actuarial gains (losses) | ( | ( | |||||||||||||||||||||
| Cash flow hedges: | |||||||||||||||||||||||
| Change in unrealized gains (losses) | ( | ( | |||||||||||||||||||||
| Reclassification adjustment for net (gains) losses included in net income | ( | ( | |||||||||||||||||||||
| Net change in cash flow hedges | ( | ||||||||||||||||||||||
Total other comprehensive income (loss), net of tax expense (benefit) of $ | ( | ( | |||||||||||||||||||||
| Comprehensive income, net of tax | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7
DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
| Six Months Ended | |||||||||||
| July 31, 2026 | August 1, 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Stock-based compensation expense | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Other, net (a) | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Financing receivables | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Other assets and liabilities | |||||||||||
| Accounts payable | |||||||||||
| Deferred revenue | ( | ||||||||||
| Change in cash from operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of investments | ( | ( | |||||||||
| Sales of equity and other investments | |||||||||||
| Capital expenditures and capitalized software development costs | ( | ( | |||||||||
| Divestitures of businesses and assets, net | |||||||||||
| Other | |||||||||||
| Change in cash from investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Repurchases of common stock for employee tax withholdings | ( | ( | |||||||||
| Payments of dividends and dividend equivalents | ( | ( | |||||||||
| Proceeds from debt | |||||||||||
| Repayments of debt | ( | ( | |||||||||
| Debt-related costs and other, net | ( | ( | |||||||||
| Change in cash from financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ||||||||||
| Change in cash, cash equivalents, and restricted cash | |||||||||||
| Cash, cash equivalents, and restricted cash at beginning of the period | |||||||||||
| Cash, cash equivalents, and restricted cash at end of the period | $ | $ | |||||||||
____________________
(a) During the six months ended July 31, 2026, other, net, includes $0.6 billion of gains recognized within the Company’s strategic investments portfolio.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8
DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(in millions, except per share amounts; unaudited; continued on next page)
| Common Stock and Capital in Excess of Par Value | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended July 31, 2026 | Issued Shares | Amount | Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Dell Technologies Shareholders' Equity (Deficit) | Non-Controlling Interests | Total Shareholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||
| Balances as of May 1, 2026 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividend equivalents declared ($ | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of shares repurchased for employee tax withholding | — | ( | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock repurchases | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Balances as of July 31, 2026 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Common Stock and Capital in Excess of Par Value | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended July 31, 2026 | Issued Shares | Amount | Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Dell Technologies Shareholders' Equity (Deficit) | Non-Controlling Interests | Total Shareholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||
| Balances as of January 30, 2026 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividend equivalents declared ($ | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of shares repurchased for employee tax withholding | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock repurchases | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Balances as of July 31, 2026 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
9
DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(continued; in millions, except per share amounts; unaudited)
| Common Stock and Capital in Excess of Par Value | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended August 1, 2025 | Issued Shares | Amount | Shares | Amount | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Dell Technologies Shareholders' Equity (Deficit) | Non-Controlling Interests | Total Shareholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||
| Balances as of May 2, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividend equivalents declared ($ | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of shares repurchased for employee tax withholding | — | ( | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock repurchases | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Balances as of August 1, 2025 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Common Stock and Capital in Excess of Par Value | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended August 1, 2025 | Issued Shares | Amount | Shares | Amount | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Dell Technologies Shareholders' Equity (Deficit) | Non-Controlling Interests | Total Shareholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||
| Balances as of January 31, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends and dividend equivalents declared ($ | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of shares repurchased for employee tax withholding | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock repurchases | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Sale of SecureWorks Corp. | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of August 1, 2025 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
10
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 — OVERVIEW AND BASIS OF PRESENTATION
Dell Technologies Inc. was incorporated in Delaware in January 2013. Following approval by the Company’s shareholders at its 2026 annual meeting of shareholders, Dell Technologies Inc. changed its jurisdiction of incorporation from Delaware to Texas effective July 1, 2026 pursuant to a plan of conversion.
Dell Technologies is a leader in the global technology industry that designs, develops, manufactures, markets, sells, and supports a wide range of comprehensive and integrated solutions, products, and services. Dell Technologies offerings include servers, networking, storage, cloud solutions, desktops, notebooks, services, software, branded peripherals, and third-party software and peripherals.
Basis of Presentation — The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes filed with the U.S. Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2026. These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company as of July 31, 2026 and January 30, 2026; the results of operations, corresponding comprehensive income, and changes in shareholders’ equity (deficit) for the three and six months ended July 31, 2026 and August 1, 2025; and cash flows for the six months ended July 31, 2026 and August 1, 2025.
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying Notes. Actual results could differ materially from those estimates. The results of operations, corresponding comprehensive income, and changes in shareholders’ equity (deficit) for the three and six months ended July 31, 2026 and August 1, 2025 and cash flows for the six months ended July 31, 2026 and August 1, 2025 are not necessarily indicative of the results to be expected for the full fiscal year or for any other fiscal period.
The Company’s fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. The fiscal year ending January 29, 2027 and the fiscal year ended January 30, 2026 may be referred to as “Fiscal 2027” and “Fiscal 2026,” respectively. Both the fiscal year ending January 29, 2027 and the fiscal year ended January 30, 2026 are 52-week periods.
Principles of Consolidation — These Condensed Consolidated Financial Statements include the accounts of Dell Technologies Inc. and its wholly-owned subsidiaries, as well as the accounts of SecureWorks Corp. (“Secureworks”), which was majority-owned by Dell Technologies through the date of the sale of Secureworks as discussed below. All intercompany transactions have been eliminated.
The Company also consolidates Variable Interest Entities ("VIEs") where it has been determined that the Company is the primary beneficiary of the applicable entities’ operations. For each VIE, the primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to such VIE. In evaluating whether the Company is the primary beneficiary of each entity, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of each entity and the risks each entity was designed to create and pass through to its respective variable interest holders. The Company also evaluates its economic interests in each of the VIEs. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information regarding consolidated VIEs.
Secureworks — On February 3, 2025, the sale of Secureworks to Sophos Inc., an affiliate of Thoma Bravo, L.P., was completed in an all-cash transaction for a purchase price of approximately $0.9 billion. The Company received total cash consideration for the equity interest held in Secureworks of approximately $0.6 billion, resulting in a gain on sale of $0.2 billion recognized in interest and other, net in the Condensed Consolidated Statements of Income for the six months ended August 1, 2025.
11
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Related Party Transactions — The Company enters into purchase and sales transactions with other publicly-traded and privately-held companies, as well as not-for-profit organizations, that could be influenced by members of the Company’s board of directors, executive officers, or significant shareholders. The Company enters into these arrangements in the ordinary course of its business. Transactions with related parties were immaterial for the three and six months ended July 31, 2026 and August 1, 2025.
Recently Issued Accounting Pronouncements
Environmental Credits and Environmental Credit Obligations — In May 2026, the Financial Accounting Standards Board (“FASB”) issued guidance to improve the financial accounting disclosure of environmental credits and environmental credit obligations, providing recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2027, with early adoption permitted. Upon adoption, the guidance will be applied retrospectively. The Company is currently evaluating the impact and timing of adoption of this guidance.
Internal-Use Software — In September 2025, the FASB issued guidance to modernize internal-use software capitalization by removing references to software development project stages, increasing the operability of the recognition guidance permitting consideration of different methods of software development, including the agile method. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2027, with early adoption permitted. Upon adoption, the guidance may be applied prospectively, retrospectively, or through a modified approach. The Company is currently evaluating the impact and timing of adoption of this guidance.
Expense Disaggregation Disclosures — In November 2024, the FASB issued guidance to improve disclosures about a public entity’s expenses by requiring disclosure of additional information about the types of expenses commonly presented in the financial statements on an annual and interim basis. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2026, with early adoption permitted. Upon adoption, the guidance will be applied prospectively. Adoption of this new guidance will result in increased disclosures in the Notes to the Condensed Consolidated Financial Statements.
12
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 2 — FAIR VALUE MEASUREMENTS
The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Marketable equity and other securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative instruments | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value.
Marketable Equity and Other Securities — The Company’s investments in equity and other securities that are measured at fair value on a recurring basis consist of strategic investments in publicly-traded companies. The valuation of these securities is based on quoted prices in active markets.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis — Certain assets are measured at fair value on a nonrecurring basis and therefore are not included in the recurring fair value table above. These assets consist primarily of financial assets such as the Company’s strategic investments in non-marketable equity and other securities and non-financial assets such as goodwill and intangible assets.
13
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Carrying Value and Estimated Fair Value of Outstanding Debt — The following table presents the carrying value and estimated fair value of the Company’s outstanding debt as described in Note 6 of the Notes to the Condensed Consolidated Financial Statements, including the current portion, as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| (in billions) | |||||||||||||||||||||||
| Senior Notes | $ | $ | $ | $ | |||||||||||||||||||
| Legacy Notes | $ | $ | $ | $ | |||||||||||||||||||
| DFS Debt | $ | $ | $ | $ | |||||||||||||||||||
The fair values of the outstanding debt shown in the table above were determined based on observable market prices in a less active market or based on valuation methodologies using observable inputs and were categorized as Level 2 in the fair value hierarchy.
14
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 3 — INVESTMENTS
The Company has strategic investments in equity and other securities as well as immaterial investments in fixed income debt securities that are recorded as long-term investments in the Condensed Consolidated Statements of Financial Position. As of July 31, 2026 and January 30, 2026, total investments were $2.7 billion and $1.7 billion, respectively. The total gain on investments, net is recorded as interest and other, net in the Condensed Consolidated Statements of Income and was $0.7 billion for the six months ended July 31, 2026 and immaterial
Equity and other securities include strategic investments in marketable and non-marketable securities. Investments in marketable securities are measured at fair value on a recurring basis. Investments in non-marketable equity and other securities primarily represent early-stage companies without readily determinable fair values. The Company has elected to apply the measurement alternative for non-marketable securities which allows investments without readily determinable fair values to be measured at cost, less impairment, adjusted for observable price changes. The Company makes a separate election to apply the measurement alternative for each eligible investment and is required to reassess at each reporting period whether an investment qualifies for the alternative. In evaluating these investments for impairment or observable price changes, the Company uses inputs including pre- and post-money valuations of recent financing events and the impact of those events on its fully diluted ownership percentages, as well as other available information regarding the issuer’s historical and forecasted performance.
The following table presents the carrying value of the Company's strategic investments in marketable and non-marketable equity and other securities as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Marketable | $ | $ | |||||||||
| Non-marketable | |||||||||||
| Total equity and other securities | $ | $ | |||||||||
The following table presents unrealized gains and losses on marketable and non-marketable equity and other securities for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Marketable securities: | |||||||||||||||||||||||
| Net unrealized gains (losses) | $ | $ | $ | ( | $ | ( | |||||||||||||||||
| Non-marketable securities: | |||||||||||||||||||||||
| Unrealized gains | |||||||||||||||||||||||
| Unrealized losses | ( | ( | ( | ( | |||||||||||||||||||
| Net unrealized gains (losses) (a) | ( | ( | ( | ||||||||||||||||||||
| Net unrealized gains (losses) on equity and other securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
____________________
(a)During the six months ended July 31, 2026, net unrealized gains on non-marketable securities were primarily attributable to an upward observable price adjustment of $0.6 billion related to a single investee.
15
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 4 — FINANCIAL SERVICES
The Company offers or arranges a portfolio of payment and consumption solutions and services for its customers globally, including utility, subscription, as-a-service, leases, and loans, designed to match customers' consumption and financing preferences and to provide operational and financial flexibility.
To support financing solutions and services as part of the Dell Technologies portfolio, Dell Financial Services and its affiliates (“DFS”) originate, collect, and service customer financing arrangements primarily related to the purchase and use of Dell Technologies products and services. In some cases, the Company also offers financing for the purchase of third-party technology products that complement the portfolio of the Company’s products and services. New financing originations were $7.5 billion and $2.4 billion for the three months ended July 31, 2026 and August 1, 2025, respectively, and $10.3 billion and $4.0 billion for the six months ended July 31, 2026 and August 1, 2025, respectively.
The Company’s financing arrangements with customers are aggregated as fixed-term leases and loans as described below.
Leases — The Company enters into fixed-term financing arrangements with customers who seek lease financing for equipment. Leases are generally classified as sales-type leases or operating leases. Additionally, utility, subscription, and as-a-service flexible consumption models may result in identification of embedded lease arrangements that require the recognition of sales-type leases or operating leases. Leases with business customers generally have fixed terms of to five years .
Loans — The Company also offers fixed-term loans to qualified small businesses, large commercial accounts, governmental organizations, educational entities, and certain individual consumer customers. These loans are repaid in periodic payments including interest and have defined terms typically ranging from to five years . The fair value of the fixed-term loan portfolio is determined using market observable inputs. The carrying value of these loans approximates fair value.
Financing Receivables
The following table presents the components of the Company’s financing receivables as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Customer receivables, gross (a) | $ | $ | |||||||||
| Allowance for losses | ( | ( | |||||||||
| Customer receivables, net | |||||||||||
| Residual interest | |||||||||||
| Financing receivables, net | $ | $ | |||||||||
| Short-term | $ | $ | |||||||||
| Long-term | $ | $ | |||||||||
____________________
(a)Customer receivables, gross include amounts due from customers under fixed-term leases and loans and accrued interest.
The following table presents the changes in allowance for financing receivable losses for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Balances at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Charge-offs, net of recoveries | ( | ( | ( | ( | |||||||||||||||||||
| Provision charged to income statement | |||||||||||||||||||||||
| Balances at end of period | $ | $ | $ | $ | |||||||||||||||||||
16
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Company recognizes an allowance for financing receivable losses, including both the lease receivable and unguaranteed residual, in an amount equal to the expected credit losses, net of recoveries. The allowance for financing receivable losses on the lease receivable is determined based on various factors, including lifetime expected losses determined using macroeconomic forecast assumptions and management judgments applicable to and through the expected life of the portfolios as well as past due receivables, receivable type, and customer risk profile. The Company continues to monitor broader economic indicators and their potential impact on future credit loss performance.
Aging
The following table presents the aging of the Company’s customer financing receivables, gross, including accrued interest, as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Current 0 — 30 Days | $ | $ | |||||||||
| Past Due 31 — 90 Days | |||||||||||
| Past Due > 90 Days | |||||||||||
| Total | $ | $ | |||||||||
Aging is likely to fluctuate as a result of the variability in volume of large transactions entered into over the period, and the administrative processes that accompany those transactions. Aging is also impacted by the timing of the Company’s fiscal period end date relative to calendar month-end customer payment due dates. As a result of these factors, fluctuations in aging from period to period do not necessarily indicate a material change in the collectibility of the portfolio.
Customer receivables are placed on non-accrual status if principal or interest is past due and considered delinquent, or if there is concern about the collectibility of a specific customer receivable. The receivables identified as doubtful for collectibility may be classified as current for aging purposes.
Credit Quality
The following tables present customer receivables, gross, including accrued interest, by credit quality indicator, as of the dates indicated:
| July 31, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Fiscal Year of Origination | |||||||||||||||||||||||||||||||||||||||||
| 2027 | 2026 | 2025 | 2024 | 2023 | Years Prior | Total | |||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Higher | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Mid | |||||||||||||||||||||||||||||||||||||||||
| Lower | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| January 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Fiscal Year of Origination | |||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Years Prior | Total | |||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Higher | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Mid | |||||||||||||||||||||||||||||||||||||||||
| Lower | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
17
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The categories shown in the tables above segregate customer receivables, gross, based on the relative degrees of credit risk. Credit quality indicators are updated on a periodic basis. An internal grading system is utilized that assigns a credit level score based on a number of considerations, including liquidity, operating performance, and industry outlook.
Leases
The following table presents amounts included in the Condensed Consolidated Statements of Income related to sales-type lease activity for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Net revenue — products | $ | $ | $ | $ | |||||||||||||||||||
Cost of net revenue — products | |||||||||||||||||||||||
Gross margin — products | $ | $ | $ | $ | ( | ||||||||||||||||||
The following table presents the future maturity of the Company’s customer leases and associated financing payments, and reconciles the undiscounted cash flows to the customer receivables, gross recognized on the Condensed Consolidated Statements of Financial Position as of the date indicated:
| July 31, 2026 | |||||
| (in millions) | |||||
| Fiscal 2027 (remaining six months) | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 and thereafter | |||||
| Total undiscounted cash flows | |||||
| Loans | |||||
| Less: Unearned income | ( | ||||
| Total customer receivables, gross | $ | ||||
Operating Leases
The Company’s operating leases primarily consist of fixed-term leases and contractually committed embedded leases identified within flexible consumption arrangements.
The following table presents the components of the Company’s operating lease portfolio included in property, plant, and equipment, net as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Equipment under operating lease, gross | $ | $ | |||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Equipment under operating lease, net | $ | $ | |||||||||
18
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents operating lease income related to lease payments and depreciation expense for the Company’s operating lease portfolio for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
The following table presents the future payments to be received by the Company in operating lease contracts as of the date indicated:
| July 31, 2026 | |||||
| (in millions) | |||||
| Fiscal 2027 (remaining six months) | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 and thereafter | |||||
| Total | $ | ||||
DFS Debt
The Company maintains programs that facilitate the funding of leases, loans, and other alternative payment structures in the capital markets. The majority of DFS debt is non-recourse to Dell Technologies and represents borrowings under securitization programs and structured financing programs for which the Company’s risk of loss is limited to transferred lease and loan payments and associated equipment.
The following table presents DFS debt as of the dates indicated and excludes the allocated portion of the Company’s other borrowings, which represents the additional amount considered to fund the DFS business:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| DFS U.S. debt: | |||||||||||
| Asset-based financing facility | $ | $ | |||||||||
| Fixed-term securitization offerings | |||||||||||
| Total DFS U.S. debt, principal amount | |||||||||||
| DFS international debt: | |||||||||||
| Securitization facility | |||||||||||
| Other borrowings | |||||||||||
| Dell Bank senior unsecured eurobonds | |||||||||||
| Total DFS international debt, principal amount | |||||||||||
| Total DFS debt, principal amount | $ | $ | |||||||||
| Short-term | $ | $ | |||||||||
| Long-term | $ | $ | |||||||||
19
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
DFS U.S. Debt
Asset-Based Financing Facility — The Company maintains an asset-based financing facility in the United States, which is a revolving facility for fixed-term leases and loans. This debt is collateralized solely by the U.S. lease and loan payments and associated equipment in the facility. The asset-based financing facility consists of two tranches, with effective dates through July 7, 2027 and July 7, 2028, respectively. As of July 31, 2026, the total debt capacity related to the asset-based financing facility was $4.6 billion. The debt has a variable interest rate, and the duration of the debt is based on the terms of the underlying lease and loan payment streams. The Company enters into interest rate swap agreements to economically convert a portion of this debt from a floating rate to a fixed rate. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company’s interest rate swaps.
The asset-based financing facility contains standard structural features related to the performance of the funded receivables, which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the facility, no further funding of receivables will be permitted and the timing of the Company’s expected cash flows from over-collateralization will be delayed. As of July 31, 2026, these criteria were met.
Fixed-Term Securitization Offerings — The Company periodically issues asset-backed debt securities under fixed-term securitization programs to private investors. The asset-backed debt securities are collateralized solely by the U.S. fixed-term lease and loan payments and associated equipment, which are held by Special Purpose Entities (“SPEs”), as discussed below. The interest rate on these securities is fixed and ranges from 4.01 % to 6.12 % per annum as of July 31, 2026, and the duration of these securities is based on the terms of the underlying lease and loan payment streams.
DFS International Debt
Securitization Facility — The Company maintains a securitization facility in Europe for fixed-term leases and loans. The debt under this facility has a variable interest rate, and the duration of the debt is based on the terms of the underlying lease and loan payment streams. This facility is effective through December 22, 2026 and had a total debt capacity of $922 million as of July 31, 2026.
The securitization facility contains standard structural features related to the performance of the securitized receivables, which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the program, no further funding of receivables will be permitted and the timing of the Company’s expected cash flows from over-collateralization will be delayed. As of July 31, 2026, these criteria were met.
Other Borrowings — In connection with the Company’s international financing operations, the Company has entered into revolving structured financing debt programs related to its fixed-term lease and loan products sold in Canada, Europe, the Middle East, Australia and New Zealand, and Singapore. The debt under these programs has a variable interest rate.
The duration of the debt in Canada, Europe, the Middle East, and Australia and New Zealand is based on the terms of the underlying lease and loan payment streams. These facilities are collateralized solely by the lease and loan payments and associated equipment in their respective region or country.
As of July 31, 2026,
•the Canadian facility had a total debt capacity of $250 million and is effective through January 15, 2028,
•the European facility had a total debt capacity of $461 million and is effective through December 14, 2026,
•the Middle East facility had a total debt capacity of $150 million and is effective through March 14, 2028, and
•the Australia and New Zealand facility had a total debt capacity of $299 million and is effective through April 17, 2027.
The Company also has two unsecured Singapore facilities, which had a total debt capacity of $257 million as of July 31, 2026 and are effective through July 3, 2027 and July 12, 2027, respectively.
20
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Dell Bank Senior Unsecured Eurobonds — Dell Bank issued €500 million of 0.50 % senior unsecured five-year eurobonds due October 2026 on October 27, 2021, €500 million of 4.50 % senior unsecured five-year eurobonds due October 2027 on October 18, 2022, and €500 million of 3.63 % senior unsecured five-year eurobonds due June 2029 on June 24, 2024. The issuances of the senior unsecured eurobonds support the expansion of the financing operations in Europe.
Variable Interest Entities
In connection with the asset-based financing facility, fixed-term securitization offerings, and securitization facility discussed above, the Company transfers certain U.S. and European lease and loan payments and associated equipment to SPEs that meet the definition of a VIE and are consolidated, along with the associated debt described above, into the Condensed Consolidated Financial Statements, as the Company is the primary beneficiary of the VIEs. The SPEs are bankruptcy-remote legal entities with separate assets and liabilities. The purpose of the SPEs is to facilitate the funding of customer lease and loan payments and associated equipment in the capital markets.
Some of the SPEs have entered into financing arrangements with multi-seller conduits that, in turn, issue asset-backed debt securities in the capital markets. DFS debt outstanding held by the consolidated VIEs is collateralized by the lease and loan payments and associated equipment. The Company’s risk of loss related to securitized receivables is limited to the amount by which the Company’s right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities. The Company provides credit enhancement to the securitization offerings in the form of over-collateralization.
The following table presents the assets and liabilities held by the consolidated VIEs as of the dates indicated, which are included in the Condensed Consolidated Statements of Financial Position:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Assets held by consolidated VIEs: | |||||||||||
| Other current assets | $ | $ | |||||||||
| Financing receivables, net of allowance: | |||||||||||
| Short-term | $ | $ | |||||||||
| Long-term | $ | $ | |||||||||
| Property, plant, and equipment, net | $ | $ | |||||||||
| Liabilities held by consolidated VIEs: | |||||||||||
| Debt, net of unamortized debt issuance costs: | |||||||||||
| Short-term | $ | $ | |||||||||
| Long-term | $ | $ | |||||||||
Lease and loan payments and associated equipment transferred via securitization through SPEs were $1.4 billion and $0.8 billion for the three months ended July 31, 2026 and August 1, 2025, respectively, and $2.7 billion and $2.0 billion for the six months ended July 31, 2026, and August 1, 2025, respectively.
Customer Receivables Sales
To manage certain concentrations of customer credit exposure, the Company may sell selected fixed-term customer receivables to unrelated third parties on a periodic basis, without recourse. The amounts of customer receivables sold for this purpose were immaterial for both the six months ended July 31, 2026 and August 1, 2025. The Company’s continuing involvement in these customer receivables is primarily limited to servicing arrangements.
21
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 5 — LEASES
The Company enters into leasing transactions in which the Company is the lessee. These lease contracts are typically classified as operating leases. The Company’s lease contracts are generally for office space used to conduct its business, and the determination of whether such contracts contain leases generally does not require significant estimates or judgments. The Company also leases certain property, equipment, and warehouses. As of July 31, 2026, the remaining terms of the Company’s leases generally range from one month to approximately ten years . As of July 31, 2026 and January 30, 2026, there were no material finance leases in which the Company was a lessee.
The Company also enters into leasing transactions in which the Company is the lessor, primarily through customer financing arrangements offered under DFS. DFS originates leases that are primarily classified as either sales-type leases or operating leases. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information about the Company’s lessor arrangements.
During the three and six months ended July 31, 2026 and August 1, 2025, total lease costs, inclusive of operating lease costs, variable costs, finance lease costs, and short-term lease costs, were immaterial.
The following table presents supplemental information related to operating leases included in the Condensed Consolidated Statements of Financial Position as of the dates indicated:
| Classification | July 31, 2026 | January 30, 2026 | |||||||||||||||
| (in millions, except for term and discount rate) | |||||||||||||||||
| Operating lease right-of-use assets | $ | $ | |||||||||||||||
| Current operating lease liabilities | $ | $ | |||||||||||||||
| Non-current operating lease liabilities | |||||||||||||||||
| Total operating lease liabilities | $ | $ | |||||||||||||||
| Weighted-average remaining lease term (in years) | |||||||||||||||||
| Weighted-average discount rate | % | % | |||||||||||||||
During the six months ended July 31, 2026 and August 1, 2025, cash paid for amounts included in the measurement of lease liabilities and right-of-use assets obtained in exchange for new operating lease liabilities were immaterial.
22
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents the future maturity of the Company’s operating lease liabilities under non-cancelable leases and reconciles the undiscounted cash flows for these leases to the lease liability recognized on the Condensed Consolidated Statements of Financial Position as of the date indicated:
| July 31, 2026 | |||||
| (in millions) | |||||
| Fiscal 2027 (remaining six months) | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 | |||||
| Thereafter | |||||
| Total lease payments | |||||
| Less: Imputed interest | ( | ||||
| Total | $ | ||||
| Current operating lease liabilities | $ | ||||
| Non-current operating lease liabilities | $ | ||||
23
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 6 — DEBT
The following table summarizes the Company’s outstanding debt as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Senior Notes | $ | $ | |||||||||
| Legacy Notes | |||||||||||
DFS Debt (Note 4) | |||||||||||
| Other | |||||||||||
| Total debt, principal amount | |||||||||||
| Debt issuance costs and net unamortized discount | ( | ( | |||||||||
| Total debt, carrying value | $ | $ | |||||||||
| Short-term | $ | $ | |||||||||
| Long-term | $ | $ | |||||||||
The Company completed the following transactions during the six months ended July 31, 2026:
•repayment of the remaining outstanding $0.5 billion principal amount of 6.02 % Senior Notes due June 2026; and
•issuance of $1.0 billion principal amount of 4.75 % Senior Notes due July 2031, $0.75 billion principal amount of 5.00 % Senior Notes due February 2034, and $1.25 billion principal amount of 5.25 % Senior Notes due February 2037, the net proceeds of which the Company intends to use for general corporate purposes, which may include the repayment of debt.
Outstanding Debt
Senior Notes — The Company completed offerings of multiple series of senior notes which were issued on June 1, 2016, March 20, 2019, April 9, 2020, December 13, 2021, January 24, 2023, March 18, 2024, October 8, 2024, April 1, 2025, October 6, 2025, and June 16, 2026 in aggregate principal amounts of $20.0 billion, $4.5 billion, $2.3 billion, $2.3 billion, $2.0 billion, $1.0 billion, $1.5 billion, $4.0 billion, $4.5 billion, and $3.0 billion, respectively (collectively, the “Senior Notes”). The Senior Notes have maturity dates ranging from 2026 through 2051. Interest rates on these borrowings are fixed, ranging from 3.38 % to 8.35 % per annum, and interest is payable semiannually.
Legacy Notes — The Company has outstanding unsecured notes and debentures (collectively, the “Legacy Notes”) that were issued by Dell Inc. (“Dell”), a wholly-owned subsidiary of Dell Technologies Inc., prior to the acquisition of Dell by Dell Technologies Inc. in the going-private transaction that closed in October 2013. The Legacy Notes’ maturities range from 2028 through 2040. Interest rates on these borrowings are fixed, ranging from 5.40 % to 7.10 % per annum, and interest is payable semiannually.
DFS Debt — See Note 4 and Note 7 of the Notes to the Condensed Consolidated Financial Statements, respectively, for discussion of DFS debt and the interest rate swap agreements that hedge a portion of that debt.
Revolving Credit Facility — On June 10, 2026, the Company entered into a new senior unsecured revolving credit facility (the "revolving credit facility"). The revolving credit facility replaced the Company's prior revolving credit facility entered into in 2021, which was repaid and terminated in connection with the closing of the new facility. The revolving credit facility, which matures on June 10, 2031, provides the Company with revolving commitments in an aggregate principal amount of $6.0 billion for general corporate purposes. The facility also acts as a backstop to provide liquidity support for the Company’s commercial paper program.
24
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Borrowings under the revolving credit facility bear interest at a rate per annum equal to an applicable margin plus, at the borrowers’ option, either (a) the specified adjusted term Secured Overnight Financing Rate (“SOFR”) or (b) a base rate. The margin applicable to SOFR and base rate borrowings varies based upon the Company’s existing credit ratings. The base rate is calculated based upon the greatest of the specified prime rate, the specified federal reserve bank rate, or SOFR plus 1 %. The borrowers may voluntarily repay outstanding loans at any time without premium or penalty, other than customary breakage costs.
As of July 31, 2026, the Company had no outstanding borrowings under the revolving credit facility.
Commercial Paper Program — The Company maintains a commercial paper program under which the Company may issue unsecured notes in a maximum aggregate face amount of $5.0 billion outstanding at any time, with maturities of up to 397 days from the date of issuance. The notes are sold on customary terms in the U.S. commercial paper market on a private placement basis. The proceeds of the notes are used for general corporate purposes. As of July 31, 2026, the Company had no outstanding issuances under the commercial paper program.
The Company may purchase, redeem, prepay, refinance, or otherwise retire any amount of outstanding indebtedness under the terms of such indebtedness at any time and from time to time, in open market or negotiated transactions with the holders of such indebtedness or otherwise, as considered appropriate in light of market conditions and other relevant factors.
Covenants — The credit agreement governing the revolving credit facility and the indentures governing the Senior Notes and the Legacy Notes impose various limitations, subject to exceptions, on creating certain liens and entering into sale and lease-back transactions. The foregoing credit agreement and indentures contain customary events of default, and the revolving credit facility is subject to an interest coverage ratio covenant that is tested at the end of each fiscal quarter with respect to the Company’s preceding four fiscal quarters. The Company was in compliance with this financial covenant as of July 31, 2026.
Aggregate Future Maturities
The following table presents the aggregate future maturities of the Company’s debt as of July 31, 2026, excluding associated carrying value adjustments, for the periods indicated:
| July 31, 2026 | |||||
| (in millions) | |||||
| Fiscal 2027 (remaining six months) | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 | |||||
| Thereafter | |||||
| Total maturities, principal amount | $ | ||||
Interest Expense
25
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 7 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
As part of its risk management strategy, the Company uses derivative instruments, primarily foreign currency forward and option contracts and interest rate swaps, to hedge certain foreign currency and interest rate exposures, respectively.
The Company’s objective is to offset gains and losses resulting from these exposures with gains and losses on the derivative contracts used to hedge the exposures, thereby reducing volatility of earnings and protecting the fair values of assets and liabilities. The earnings effects of the derivative instruments are presented in the same line items on the Condensed Consolidated Statements of Income as the earnings effects of the hedged items. For derivatives designated as cash flow hedges, the Company assesses hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the instruments.
Foreign Exchange Risk
The Company uses foreign currency forward and option contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted transactions denominated in currencies other than the U.S. Dollar. Hedge accounting is applied based upon the criteria established by accounting guidance for derivative instruments and hedging activities. The risk of loss associated with forward contracts is equal to the exchange rate differential from the time the contract is entered into until the time it is settled. The risk of loss associated with purchased options is limited to premium amounts paid for the option contracts. The majority of these contracts typically expire in twelve months or less.
During the three and six months ended July 31, 2026 and August 1, 2025, the Company did not discontinue any cash flow hedges related to foreign exchange contracts that had a material impact on the Company’s results of operations due to the probability that the forecasted cash flows would not occur.
The Company uses forward contracts to hedge monetary assets and liabilities denominated in a foreign currency. These contracts generally expire in three months or less, are considered economic hedges, and are not designated for hedge accounting. The change in the fair value of these instruments represents a natural hedge as their gains and losses offset the changes in the underlying fair value of the monetary assets and liabilities due to movements in currency exchange rates.
In connection with DFS operations in Europe, forward contracts are used to hedge financing receivables denominated in foreign currencies other than Euro. These contracts are not designated for hedge accounting and most expire within three years or less.
Interest Rate Risk
The Company uses interest rate swaps to hedge the variability in cash flows related to the interest rate payments on structured financing debt. The interest rate swaps economically convert the variable rate on the structured financing debt to a fixed interest rate to match the underlying fixed rate being received on fixed-term customer leases and loans. These contracts are not designated for hedge accounting and most expire within four years or less.
Interest rate swaps are utilized to manage the interest rate risk, at a portfolio level, associated with DFS operations in Europe. The interest rate swaps economically convert the fixed rate on financing receivables to a one-month or three-month Euribor floating rate in order to match the floating rate nature of the banks’ funding pool. The Company also uses interest rate swaps to manage the cash flows related to interest payments on Dell Bank senior unsecured eurobonds. The interest rate swaps economically convert the fixed rate on the eurobonds to a floating rate to match the underlying lease repayments profile. These contracts are not designated for hedge accounting and most expire within five years or less. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information about the senior unsecured eurobonds.
The Company utilizes cross-currency amortizing swaps to hedge the currency and interest rate risk exposure associated with the European securitization program. The cross-currency swaps combine a Euro-based interest rate swap with a British Pound or U.S. Dollar foreign exchange forward contract in which the Company pays a fixed or floating British Pound or U.S. Dollar amount and receives a fixed or floating amount in Euros linked to the one-month Euribor rate. The notional value of the swaps amortizes in line with the expected cash flows and runoff of the securitized assets. The swaps are not designated for hedge accounting and expire within five years or less.
26
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Derivative Instruments
The following table presents the notional amounts of outstanding derivative instruments as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Foreign exchange contracts: | |||||||||||
| Designated as cash flow hedging instruments | $ | $ | |||||||||
| Non-designated as hedging instruments | |||||||||||
| Total | $ | $ | |||||||||
| Interest rate contracts: | |||||||||||
| Non-designated as hedging instruments | $ | $ | |||||||||
The following table presents the effect of derivative instruments designated as cash flow hedging instruments on the Condensed Consolidated Statements of Financial Position and the Condensed Consolidated Statements of Income for the periods indicated:
| Derivatives in Cash Flow Hedging Relationships | Gain (Loss) Recognized in Accumulated OCI, Net of Tax, on Derivatives | Location of Gain (Loss) Reclassified from Accumulated OCI into Income | Gain (Loss) Reclassified from Accumulated OCI into Income | |||||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||
| For the three months ended July 31, 2026 | ||||||||||||||||||||
| Total net revenue | $ | |||||||||||||||||||
| Foreign exchange contracts | $ | Total cost of net revenue | ( | |||||||||||||||||
| Total | $ | Total | $ | |||||||||||||||||
| For the three months ended August 1, 2025: | ||||||||||||||||||||
| Total net revenue | $ | ( | ||||||||||||||||||
| Foreign exchange contracts | $ | ( | Total cost of net revenue | ( | ||||||||||||||||
| Total | $ | ( | Total | $ | ( | |||||||||||||||
| For the six months ended July 31, 2026: | ||||||||||||||||||||
| Total net revenue | $ | |||||||||||||||||||
| Foreign exchange contracts | $ | Total cost of net revenue | ( | |||||||||||||||||
| Total | $ | Total | $ | |||||||||||||||||
| For the six months ended August 1, 2025: | ||||||||||||||||||||
| Total net revenue | $ | ( | ||||||||||||||||||
| Foreign exchange contracts | $ | ( | Total cost of net revenue | ( | ||||||||||||||||
| Total | $ | ( | Total | $ | ( | |||||||||||||||
Gains (losses) of derivative instruments not designated as hedging instruments were immaterial for the three and six months ended July 31, 2026 and August 1, 2025 and are recorded as interest and other, net in the Condensed Consolidated Statements of Income.
27
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Company presents its derivative instruments on a net basis in the Condensed Consolidated Statements of Financial Position due to the right of offset by its counterparties under master netting arrangements. The following tables present the fair value of those derivative instruments presented on a gross basis as of the dates indicated:
| July 31, 2026 | |||||||||||||||||||||||||||||
| Other Current Assets | Other Non-Current Assets | Other Current Liabilities | Other Non-Current Liabilities | Total Fair Value | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||
| Foreign exchange contracts in an asset position | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Foreign exchange contracts in a liability position | ( | ( | ( | ||||||||||||||||||||||||||
| Net asset (liability) | ( | ||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||
| Foreign exchange contracts in an asset position | |||||||||||||||||||||||||||||
| Foreign exchange contracts in a liability position | ( | ( | ( | ||||||||||||||||||||||||||
| Interest rate contracts in an asset position | |||||||||||||||||||||||||||||
| Interest rate contracts in a liability position | ( | ( | |||||||||||||||||||||||||||
| Net asset (liability) | ( | ( | |||||||||||||||||||||||||||
| Total derivatives at fair value | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
| January 30, 2026 | |||||||||||||||||||||||||||||
| Other Current Assets | Other Non-Current Assets | Other Current Liabilities | Other Non-Current Liabilities | Total Fair Value | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||
| Foreign exchange contracts in an asset position | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Foreign exchange contracts in a liability position | ( | ( | ( | ||||||||||||||||||||||||||
| Net asset (liability) | ( | ( | ( | ||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||
| Foreign exchange contracts in an asset position | |||||||||||||||||||||||||||||
| Foreign exchange contracts in a liability position | ( | ( | ( | ||||||||||||||||||||||||||
| Interest rate contracts in an asset position | |||||||||||||||||||||||||||||
| Interest rate contracts in a liability position | ( | ( | |||||||||||||||||||||||||||
| Net asset (liability) | ( | ( | |||||||||||||||||||||||||||
| Total derivatives at fair value | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
28
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following tables present the gross amounts of the Company’s derivative instruments, amounts offset due to master netting agreements with the Company’s counterparties, and the net amounts recognized in the Condensed Consolidated Statements of Financial Position as of the dates indicated:
| July 31, 2026 | |||||||||||||||||||||||||||||||||||
| Gross Amounts of Recognized Assets/(Liabilities) | Gross Amounts Offset in the Statement of Financial Position | Net Amounts of Assets/(Liabilities) Presented in the Statement of Financial Position | Gross Amounts not Offset in the Statement of Financial Position | Net Amount of Assets/ (Liabilities) Recognized in the Statement of Financial Position | |||||||||||||||||||||||||||||||
| Financial Instruments | Cash Collateral Received or Pledged | ||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| ( | ( | ( | |||||||||||||||||||||||||||||||||
| Total derivative instruments | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| January 30, 2026 | |||||||||||||||||||||||||||||||||||
| Gross Amounts of Recognized Assets/(Liabilities) | Gross Amounts Offset in the Statement of Financial Position | Net Amounts of Assets/(Liabilities) Presented in the Statement of Financial Position | Gross Amounts not Offset in the Statement of Financial Position | Net Amount of Assets/ (Liabilities) Recognized in the Statement of Financial Position | |||||||||||||||||||||||||||||||
| Financial Instruments | Cash Collateral Received or Pledged | ||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| ( | ( | ( | |||||||||||||||||||||||||||||||||
| Total derivative instruments | $ | $ | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||
29
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 8 — GOODWILL AND INTANGIBLE ASSETS
Goodwill
The Infrastructure Solutions Group (“ISG”) and Client Solutions Group (“CSG”) reporting units are consistent with the reportable segments identified in Note 14 of the Notes to the Condensed Consolidated Financial Statements.
The following table presents goodwill allocated to the Company’s reportable segments and changes in the carrying amount of goodwill as of the dates indicated:
| Infrastructure Solutions Group | Client Solutions Group | Total | |||||||||||||||
| (in millions) | |||||||||||||||||
| Balances as of January 30, 2026 | $ | $ | $ | ||||||||||||||
| Impact of foreign currency translation and other | ( | ( | |||||||||||||||
| Balances as of July 31, 2026 | $ | $ | $ | ||||||||||||||
Intangible Assets
The following table presents the Company’s intangible assets as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||||||||||||||||||||||||||
| Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Developed technology | ( | ( | |||||||||||||||||||||||||||||||||
| Trade names | ( | ( | |||||||||||||||||||||||||||||||||
| Definite-lived intangible assets | ( | ( | |||||||||||||||||||||||||||||||||
| Indefinite-lived trade names | — | — | |||||||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Amortization expense related to definite-lived intangible assets was $0.1 0.2 no
The following table presents the estimated future annual pre-tax amortization expense of definite-lived intangible assets as of the date indicated:
| July 31, 2026 | |||||
| (in millions) | |||||
| Fiscal 2027 (remaining six months) | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 | |||||
| Thereafter | |||||
| Total | $ | ||||
30
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Goodwill and Indefinite-Lived Intangible Assets Impairment Testing
Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third fiscal quarter and whenever events or circumstances may indicate that an impairment has occurred.
For the annual impairment review performed during the third quarter of Fiscal 2026, the Company assessed the goodwill in each of its reporting units and indefinite-lived intangible assets. The Company is permitted to conduct a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. The Company’s qualitative assessment included consideration of the relevant events and circumstances affecting the reporting unit, including macroeconomic, industry and market conditions, recent market transactions, overall financial performance, trends in the public company market valuation, changes in projected future cash flows, and the results of the most recent quantitative assessment, where applicable. Based on this assessment, the Company concluded that it was more likely than not that the estimated fair values of the reporting units and indefinite-lived intangible assets were higher than their respective carrying values. No goodwill or indefinite-lived assets impairment test was performed during the six months ended July 31, 2026.
31
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 9 — DEFERRED REVENUE
Deferred revenue consists of support and deployment services, software maintenance, training, software-as-a-service, and undelivered hardware and professional services, consisting of installations and consulting engagements. Deferred revenue is recorded when the Company has invoiced or payments have been received for undelivered products or services, or in situations where revenue recognition criteria have not been met. Revenue is recognized as the Company’s performance obligations under the contract are completed.
The following table presents the changes in the Company’s deferred revenue for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Deferred revenue at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Revenue deferrals | |||||||||||||||||||||||
| Revenue recognized | ( | ( | ( | ( | |||||||||||||||||||
| Deferred revenue at end of period | $ | $ | $ | $ | |||||||||||||||||||
| Short-term | $ | $ | $ | $ | |||||||||||||||||||
| Long-term | $ | $ | $ | $ | |||||||||||||||||||
Remaining Performance Obligations
Revenue allocated to remaining performance obligations, which includes deferred revenue and unbilled amounts not yet recorded in deferred revenue, was approximately $132 billion as of July 31, 2026. The Company expects to recognize approximately 77 % of remaining performance obligations as revenue in the next twelve months , approximately 14 % in the following twelve months , and the remainder thereafter.
The Company excludes from remaining performance obligations the revenue under cancelable contracts where there is no substantive termination penalty. Additionally, the Company applies the practical expedient to exclude the value of remaining performance obligations where revenue is recognized at the amount for which the Company has the right to invoice for services performed.
Remaining performance obligations estimates are subject to change and are affected by multiple factors, including terminations, changes in the scope or price of contracts, and adjustments for currency.
32
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Purchase Obligations
The Company has contractual obligations that are enforceable and legally binding to purchase goods or services and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Purchase obligations include the non-cancelable portion or the minimum cancellation fee under the contract, and are primarily related to commitments with suppliers, software maintenance, and support services. As of July 31, 2026, such purchase obligations were $22.4 billion for the remainder of Fiscal 2027, $4.9 billion for Fiscal 2028, $6.1 billion for Fiscal 2029, $0.8 billion for Fiscal 2030, and $0.6 billion for Fiscal 2031 and thereafter.
Guarantees
The Company utilizes a limited number of contract manufacturers that assemble a portion of its products. The Company purchases components from suppliers and sells those components to such contract manufacturers. The Company reflects the sale of the components by recognizing non-trade receivables from the contract manufacturers and a reduction in inventory when title and risk of loss pass to the contract manufacturer. Cash flows related to these transactions are recorded within cash flows from operating activities. The Company does not reflect the sale of the components in revenue and does not recognize any profit on the component sales until the Company sells the related products to the customer after purchasing such products from the contract manufacturers. The agreements with the majority of the contract manufacturers permit the Company to offset its payables against the receivables, thereby mitigating the credit risk in whole or in part.
In the ordinary course of business, certain contract manufacturers may purchase components directly from a supplier, and the Company may issue financial guarantees to a supplier in connection with the purchases by such a contract manufacturer. In the event any such contract manufacturers fail to pay a supplier pursuant to the payment terms of the underlying agreements between the contract manufacturer and supplier, the Company in some circumstances would be obligated to make payments to such supplier under its financial guarantee and would have full recourse against such contract manufacturer for the amount of such payments.
As the Company largely offsets its corresponding payables against receivables with these contract manufacturers and is entitled to full recourse against the applicable contract manufacturers in the event the Company is obligated to make payments to a supplier under a financial guarantee, the Company’s payables and receivables in the Consolidated Statements of Financial Position are not materially impacted by the guarantees. As of July 31, 2026, the Company’s maximum potential future payments under the financial guarantees is $8.6 billion, which the Company would have recourse to recover in full from the applicable contract manufacturers. The Company believes the likelihood of having to perform under the guarantees is remote.
Legal Matters
The Company is involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business, including those identified below, consisting of matters involving consumer, antitrust, tax, intellectual property, and other issues on a global basis.
The Company accrues a liability when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in the Company’s accrued liabilities are recorded in the period in which such a determination is made. For some matters, the incurrence of a liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made.
33
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Class Action Relating to Dell 401(k) Plan — On January 28, 2026, a complaint was filed in the U.S. District Court for the Western District of Texas in a putative class action captioned Lowbruck et al. v. Dell Technologies Inc., et al., against the Company, the Company’s Board of Directors, and the Dell Benefits Administration Committee alleging a breach of fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”). In the complaint, the plaintiffs seek a judicial declaration that the defendants breached their fiduciary duties by failing to remove imprudent investments from the Dell 401(k) (“Plan”) in a reasonable time, engaging in transactions allegedly prohibited under ERISA, and failing to monitor the fiduciaries responsible for the Plan’s administration. The plaintiffs also seek, among other remedies, an award of damages, fees, and costs in an unspecified amount. The Company intends to vigorously defend this action.
In accordance with the relevant accounting guidance, the Company provides disclosures of matters where it is at least reasonably possible that the Company could experience a material loss exceeding the amounts already accrued for across all proceedings or matters. In addition, the Company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer, and employee relations considerations. As of July 31, 2026, the Company does not believe there is a reasonable possibility that a material loss exceeding the amounts already accrued for across all proceedings or matters has been incurred. However, since the ultimate resolution of any such proceedings and matters is inherently unpredictable, the Company’s business, financial condition, results of operations, or cash flows could be materially affected in any particular period by unfavorable outcomes in one or more of these proceedings or matters. Whether the outcome of any claim, suit, assessment, investigation, or legal proceeding, individually or collectively, could have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows will depend on a number of factors, including the nature, timing, and amount of any associated expenses, amounts paid in settlement, damages, or other remedies or consequences.
Indemnifications Obligations
In the ordinary course of business, the Company enters into various contracts under which it may agree to indemnify other parties for losses incurred from certain events as defined in the relevant contract, such as litigation, regulatory penalties, or claims relating to past performance. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments related to these indemnification obligations have not been material to the Company.
Under the Separation and Distribution Agreement entered into with VMware, Inc. (currently operating under the name VMware LLC, and individually and together with its subsidiaries, “VMware”), Dell Technologies and VMware agreed to indemnify each other and their respective subsidiaries, directors, officers, employees, and any successors and assigns of the foregoing, from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to each party as part of the separation of their respective businesses. The amounts that VMware and Dell Technologies may be obligated to pay each other could vary depending on the outcome of certain unresolved tax matters, which may not be resolved for several years. Net income tax indemnification receivables from VMware were immaterial as of July 31, 2026 and January 30, 2026.
34
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 11 — INCOME AND OTHER TAXES
For the three months ended July 31, 2026, the Company’s effective income tax rate was 19.5 % on pre-tax income of $5.1 billion compared to 19.2 % on pre-tax income of $1.4 billion for the three months ended August 1, 2025. For the six months ended July 31, 2026, the Company’s effective income tax rate was 16.6 % on pre-tax income of $9.1 billion compared to 15.6 % on pre-tax income of $2.5 billion for the six months ended August 1, 2025. The differences between the estimated effective income tax rates and the U.S. federal statutory rate of 21% is primarily due to the taxation of foreign earnings at different rates, as well as to discrete tax items.
In June 2023, the Company received a Revenue Agent’s Report for the federal income tax examination by the Internal Revenue Service (“IRS”) of fiscal years 2018 through 2019. The IRS proposed significant adjustments primarily relating to certain transactions the Company completed as part of its business integration efforts. In August 2023, the Company submitted a written protest to the IRS relating to certain assessments. The Company received a rebuttal from the IRS to its written protest in April 2024. The Company disagrees with the IRS’s proposed adjustments and will contest them through the IRS administrative appeals procedures. The Company expects to continue discussions with the IRS Independent Office of Appeals throughout the fiscal year and anticipates that the appeals process for the resolution of these matters will extend beyond the next twelve months. The IRS is also currently conducting a federal income tax examination of the Company for fiscal years 2020 through 2022.
The Company is also currently under income tax audits in various U.S. state and foreign taxing jurisdictions. The Company is undergoing negotiations, and in some cases contested proceedings, relating to tax matters with the taxing authorities in these jurisdictions. With respect to major U.S. state and foreign taxing jurisdictions, the Company is generally not subject to tax examinations for years prior to the fiscal year ended February 2, 2018.
Judgment is required in evaluating the Company’s uncertain tax positions and determining the Company’s provision for income taxes. Net unrecognized tax benefits were $1.2 billion and $1.1 billion as of July 31, 2026 and January 30, 2026, respectively, and are included in other non-current liabilities in the Condensed Consolidated Statements of Financial Position. The Company believes that it has provided adequate reserves related to all income tax matters contained in tax periods open to examination, including the IRS audits described above. Although the Company believes it has made adequate provisions for the uncertainties with respect to these audits, should the Company experience unfavorable outcomes, such outcomes could have a material impact on its results of operations, financial position, and cash flows.
35
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 12 — CAPITALIZATION
The following table presents the Company’s authorized, issued, and outstanding common stock as of the dates indicated:
| Authorized | Issued | Outstanding | |||||||||||||||
| (in millions) | |||||||||||||||||
| Common stock as of July 31, 2026: | |||||||||||||||||
| Class A | |||||||||||||||||
| Class B | |||||||||||||||||
| Class C | |||||||||||||||||
| Class D | |||||||||||||||||
| Common stock as of January 30, 2026: | |||||||||||||||||
| Class A | |||||||||||||||||
| Class B | |||||||||||||||||
| Class C | |||||||||||||||||
| Class D | |||||||||||||||||
Preferred Stock
The Company is authorized to issue one million shares of preferred stock, par value $0.01 per share. As of July 31, 2026 and January 30, 2026, no
Common Stock
Dell Technologies Common Stock — The Class A Common Stock, the Class B Common Stock, the Class C Common Stock, and the Class D Common Stock are collectively referred to as Dell Technologies Common Stock. The par value for all series of Dell Technologies Common Stock is $0.01 per share. The Class A Common Stock, the Class B Common Stock, the Class C Common Stock, and the Class D Common Stock share equally in dividends declared or accumulated and have equal participation rights in undistributed earnings.
Voting Rights — Each holder of record of (a) Class A Common Stock is entitled to ten votes per share of Class A Common Stock; (b) Class B Common Stock is entitled to ten votes per share of Class B Common Stock; (c) Class C Common Stock is entitled to one vote per share of Class C Common Stock; and (d) Class D Common Stock is not entitled to any vote on any matter except to the extent required by provisions of Texas law (in which case such holder is entitled to one vote per share of Class D Common Stock).
Conversion Rights — Under the Company’s certificate of formation, at any time and from time to time, any holder of Class A Common Stock or Class B Common Stock has the right to convert all or any of the shares of Class A Common Stock or Class B Common Stock, as applicable, held by such holder into shares of Class C Common Stock on a one -to-one basis.
During the six months ended July 31, 2026, the Company issued approximately 8 million shares of Class C Common Stock to shareholders upon the conversion of the same number of shares of Class B Common Stock in accordance with the Company’s certificate of formation.
During the fiscal year ended January 30, 2026, the Company issued approximately 10 million shares of Class C Common Stock to shareholders upon the conversion of an immaterial number of Class A Common Stock shares and 10 million shares of Class B Common Stock in accordance with the Company’s certificate of formation.
36
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Dividends
On February 26, 2026, the Company announced that the Board of Directors approved a 20 % increase in the quarterly dividend rate to $0.630 per share per fiscal quarter beginning in the first quarter of Fiscal 2027.
The Company paid the following dividends during the periods presented:
| Three Months Ended | Declaration Date | Record Date | Payment Date | Dividend per Share | Amount (in millions) | |||||||||||||||||||||||||||
| Fiscal 2027: | ||||||||||||||||||||||||||||||||
| May 1, 2026 | March 2, 2026 | April 21, 2026 | May 1, 2026 | $ | $ | |||||||||||||||||||||||||||
| July 31, 2026 | June 16, 2026 | July 21, 2026 | July 31, 2026 | $ | $ | |||||||||||||||||||||||||||
| Fiscal 2026: | ||||||||||||||||||||||||||||||||
| May 2, 2025 | February 27, 2025 | April 22, 2025 | May 2, 2025 | $ | $ | |||||||||||||||||||||||||||
| August 1, 2025 | June 17, 2025 | July 22, 2025 | August 1, 2025 | $ | $ | |||||||||||||||||||||||||||
During the three and six months ended July 31, 2026 and August 1, 2025, the Company also paid an immaterial amount of dividend equivalents on eligible vested equity awards which are not included above.
Repurchases of Common Stock
On September 23, 2021, the Company’s Board of Directors approved the Company’s current stock repurchase program with no fixed expiration date under which the Company may repurchase a specified dollar value of Class C Common Stock, exclusive of any fees, commissions, or other expenses related to such repurchases. As of January 30, 2026, the Company’s Board of Directors authorized the repurchase of up to $20.0 billion of Class C Common Stock and on February 26, 2026 authorized an additional $10.0 billion of Class C Common Stock for repurchase. Following the February 26, 2026 approval, the Company had approximately $15.2 billion of authorized shares remaining for repurchase under the program.
During the six months ended July 31, 2026 and August 1, 2025, the Company repurchased approximately 20 million and 30 million shares of Class C Common Stock for total purchase prices of approximately $5.4 billion and $2.9 billion, respectively. The foregoing amounts exclude U.S. federal excise taxes and shares withheld from equity awards to settle employee tax withholding obligations related to the vesting of such awards.
37
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 13 — EARNINGS PER SHARE
Basic earnings per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares used in the basic earnings per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive instruments. The Company excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is antidilutive.
The following table presents basic and diluted earnings per share for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
The following table presents the computation of basic and diluted earnings per share for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income — basic and diluted | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
Weighted-average shares outstanding — basic | |||||||||||||||||||||||
| Dilutive effect of equity awards | |||||||||||||||||||||||
Weighted-average shares outstanding — diluted | |||||||||||||||||||||||
Weighted-average shares outstanding — antidilutive | |||||||||||||||||||||||
38
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 14 — SEGMENT INFORMATION
The Company reports its financial results through two reportable segments which are based on the following business units: Infrastructure Solutions Group (“ISG”) and Client Solutions Group (“CSG”). The Company organizes its reportable segments based on the manner in which management evaluates the performance of the Company.
The Company’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM is regularly provided and reviews segment revenue and segment operating income to assess the performance of each segment and allocate resources to the segments in the annual planning process. The Company’s measure of segment revenue and segment operating income for management reporting purposes excludes Corporate and other, amortization of intangible assets, stock-based compensation expense, and other corporate expenses, as applicable, which are not used in evaluating the results of, or in allocating resources to, the segments. The Company does not allocate assets to its reportable segments for internal reporting purposes. The accounting policies of the segments are the same as those described in Note 2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2026.
ISG includes the Company’s Artificial Intelligence (“AI”)-optimized servers offerings, traditional servers and networking offerings, and storage offerings as major product categories. The Company’s AI-optimized servers are designed to run high-value workloads, including AI model training, fine-tuning, and inferencing. The Company’s traditional servers are high-performance general-purpose servers designed to deliver scalable performance, reliability, and efficient management across a wide range of enterprise workloads. The Company’s networking portfolio includes wide area network infrastructure, data center and edge networking switches, and cables and optics. The Company’s comprehensive storage portfolio includes modern and traditional storage solutions that span primary, unstructured and data protection offerings and are delivered through multiple architectures, including all-flash, purpose-built, software-defined, and hyper-converged infrastructure platforms. ISG also offers software, peripherals, and services, including consulting and support and deployment.
CSG includes the Company’s commercial offerings and consumer offerings as major product categories. The Company’s CSG portfolio includes branded PCs, including notebooks, desktops, and workstations and branded peripherals that include displays, docking stations, keyboards, mice, and webcam and audio devices, as well as third-party software and peripherals. CSG also includes services offerings, such as configuration, support and deployment, and extended warranties.
In March 2024, the Company terminated the Commercial Framework Agreement with VMware, whereby Dell Technologies acted as a distributor of VMware’s stand-alone products and services and purchased such products and services for resale to end-user customers (“VMware Resale”). Dell Technologies no longer acts as a distributor of those products and services, although it continues to support customers that have purchased resale offerings sold in prior periods. The results of VMware Resale transactions are reflected in Corporate and other. The Company continues to integrate and embed certain VMware products and services with the Company’s VxRail solution to end-user customers. The results for this integrated offering are reflected within ISG.
39
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents a reconciliation of net revenue by the Company’s reportable segments to the Company’s consolidated net revenue as well as a reconciliation of segment operating income to the Company’s consolidated operating income for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Consolidated net revenue: | |||||||||||||||||||||||
| Infrastructure Solutions Group | $ | $ | $ | $ | |||||||||||||||||||
| Client Solutions Group | |||||||||||||||||||||||
| Reportable segment net revenue | |||||||||||||||||||||||
| Corporate and other (a) | |||||||||||||||||||||||
| Total consolidated net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Consolidated operating income: | |||||||||||||||||||||||
| Infrastructure Solutions Group | $ | $ | $ | $ | |||||||||||||||||||
| Client Solutions Group | |||||||||||||||||||||||
| Reportable segment operating income (b) | |||||||||||||||||||||||
| Corporate and other (a) | |||||||||||||||||||||||
| Amortization of intangibles (c) | ( | ( | ( | ( | |||||||||||||||||||
| Stock-based compensation expense (d) | ( | ( | ( | ( | |||||||||||||||||||
| Other corporate expenses (e) | ( | ( | ( | ( | |||||||||||||||||||
| Total consolidated operating income (f) | $ | $ | $ | $ | |||||||||||||||||||
____________________
(a)Corporate and other includes VMware Resale and other items that are managed at the corporate level and are not allocated to reportable segments.
(b)Depreciation expense directly attributable to each reportable segment is included in the operating results of each segment. However, the CODM does not evaluate depreciation expense by operating segment, and therefore such expense is not separately presented.
(c)Amortization of intangibles includes non-cash purchase accounting adjustments that are primarily related to the acquisition by merger of EMC Corporation in 2016.
(d)Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date.
(e)Other corporate expenses includes severance expenses, payroll taxes associated with stock-based compensation, incentive charges related to equity investments, transaction-related expenses, and impairment charges.
(f)Income and expenses within interest and other, net, is not allocated to the reportable segments. Therefore, the Company does not report below reportable segment operating income.
40
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents the significant expense categories by reportable segment for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Infrastructure Solutions Group: | |||||||||||||||||||||||
| Cost of net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general, and administrative | $ | $ | $ | $ | |||||||||||||||||||
| Research and development | $ | $ | $ | $ | |||||||||||||||||||
| Client Solutions Group: | |||||||||||||||||||||||
| Cost of net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general, and administrative | $ | $ | $ | $ | |||||||||||||||||||
| Research and development | $ | $ | $ | $ | |||||||||||||||||||
The following table presents the disaggregation of net revenue by reportable segment and by major product categories within the segments for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Infrastructure Solutions Group: | |||||||||||||||||||||||
| AI-optimized servers | $ | $ | $ | $ | |||||||||||||||||||
| Traditional servers and networking | |||||||||||||||||||||||
| Storage | |||||||||||||||||||||||
| Total ISG net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Client Solutions Group: | |||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | |||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Total CSG net revenue | $ | $ | $ | $ | |||||||||||||||||||
41
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 15 — SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION
The following table presents additional information on selected assets included in the Condensed Consolidated Statements of Financial Position as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Cash, cash equivalents, and restricted cash: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash (a) | |||||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | |||||||||
| Inventories: | |||||||||||
| Production materials | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Total inventories | $ | $ | |||||||||
| Property, plant, and equipment, net: | |||||||||||
| Assets in a customer contract | $ | $ | |||||||||
| Computer and other equipment | |||||||||||
| Land and buildings | |||||||||||
| Internal use software | |||||||||||
| Total property, plant, and equipment | |||||||||||
| Accumulated depreciation and amortization | ( | ( | |||||||||
| Total property, plant, and equipment, net | $ | $ | |||||||||
____________________
Warranty Liability
The following table presents changes in the Company’s liability for standard limited warranties for the periods indicated:
____________________
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Warranty liability at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Costs accrued for new warranty contracts and changes in estimates for pre-existing warranties (a) | |||||||||||||||||||||||
| Service obligations honored | ( | ( | ( | ( | |||||||||||||||||||
| Warranty liability at end of period (b) | $ | $ | $ | $ | |||||||||||||||||||
(a)Changes in cost estimates related to pre-existing warranties are aggregated with accruals for new standard warranty contracts. The Company’s warranty liability process does not differentiate between estimates made for pre-existing warranties and those made for new warranty obligations.
(b)The liabilities for standard warranties are included in accrued and other and in non-current liabilities in the Condensed Consolidated Statements of Financial Position.
42
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Severance Charges
The Company incurs costs related to employee severance and records a liability for these costs when it is probable that employees will be entitled to termination benefits and the amounts can be reasonably estimated. The liability related to these actions is primarily included in accrued and other within current liabilities in the Condensed Consolidated Statements of Financial Position.
The following table presents the activity related to the Company’s severance liability for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Severance liability at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Severance charges | |||||||||||||||||||||||
| Cash paid and other | ( | ( | ( | ( | |||||||||||||||||||
| Severance liability at end of period | $ | $ | $ | $ | |||||||||||||||||||
The following table presents severance charges as included in the Condensed Consolidated Statements of Income for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Cost of net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general, and administrative | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Total severance charges | $ | $ | $ | $ | |||||||||||||||||||
Supply Chain Finance Program
The Company maintains a Supply Chain Finance Program (the “SCF Program”), which enables eligible suppliers, at the supplier's sole discretion, to sell receivables due from the Company to a third-party financial institution. The Company has no involvement in establishing the terms or conditions of the arrangement between its suppliers and the financial institution, no economic interest in a supplier's decision to sell a receivable, and does not provide legally secured assets or other forms of guarantees under the arrangement. The SCF Program does not impact the Company's liquidity, as payments for participating supplier invoices are remitted by the Company to the financial institution on the original invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution.
43
DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 16 — SUBSEQUENT EVENTS
There were no known events occurring after July 31, 2026 and up until the date of issuance of this report that would materially affect the information presented herein.
44
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management’s discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2026 and the unaudited Condensed Consolidated Financial Statements included in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs, and that are subject to numerous risks and uncertainties. Our actual results may differ materially from those expressed or implied in any forward-looking statements.
Unless otherwise indicated, all results presented are prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the United States of America (“GAAP”). Unless otherwise indicated, all changes identified for the current-period results represent comparisons to results for the prior corresponding fiscal period.
Unless the context indicates otherwise, references in this management’s discussion and analysis to “we,” “us,” “our,” the “Company,” and “Dell Technologies” mean Dell Technologies Inc. and its consolidated subsidiaries.
Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. We refer to our fiscal year ending January 29, 2027 as “Fiscal 2027” and our fiscal year ended January 30, 2026 as “Fiscal 2026.” Fiscal 2027 and Fiscal 2026 include 52 weeks.
INTRODUCTION
Company Overview
Dell Technologies is a leader in the global technology industry focused on providing broad and innovative technology solutions for the data and artificial intelligence (“AI”) era. We build and offer solutions ranging from client devices and peripherals to infrastructure solutions across servers, networking, and storage to meet the evolving needs of our customers and drive better business outcomes. With our extensive portfolio and our commitment to innovation, we offer secure, integrated solutions that extend from the edge to the core to the cloud, and we are at the forefront of AI, software-defined, and cloud native infrastructure solutions. Our vision is to become the most essential technology partner. We intend to realize our vision by executing our strategy of leveraging our strengths to extend our leadership positions and capture new growth.
We are organized into two business units which are also our reportable segments: Infrastructure Solutions Group and Client Solutions Group.
Infrastructure Solutions Group (“ISG”) — We provide a comprehensive portfolio of advanced infrastructure solutions designed to help customers simplify, streamline, and automate information technology (“IT”) operations. ISG also offers software, peripherals, and services, including consulting and support and deployment. Our major product categories within ISG include our AI-optimized servers offerings, our traditional servers and networking offerings, and our storage offerings.
•AI-optimized servers — We offer a specialized portfolio of AI-optimized servers designed to handle the most demanding compute-intensive workloads, including AI model training, fine-tuning, and inferencing.
•Traditional servers and networking — Our traditional servers portfolio provides the trusted foundation for modern IT environments, supporting a wide range of general-purpose and mission-critical workloads, including certain AI-related workloads such as inferencing. Our networking portfolio helps our business customers transform and modernize their infrastructure, complementing our storage and AI-optimized and traditional servers offerings, and includes wide area network infrastructure, data center and edge networking switches, and cables and optics.
•Storage — Our comprehensive storage portfolio includes modern and traditional storage solutions that span primary, unstructured and data protection offerings and are delivered through multiple architectures, including all-flash, purpose-built, software-defined, and hyper-converged infrastructure platforms.
45
Client Solutions Group (“CSG”) — Our CSG portfolio includes branded personal computers (“PCs”), including notebooks, desktops, and workstations, branded peripherals, and third-party software and peripherals. CSG also includes services offerings, such as configuration, support and deployment, and extended warranties. Our major product categories within CSG include our commercial offerings and consumer offerings.
•Commercial — Our commercial portfolio provides customers with solutions centered on flexibility to address their complex needs such as IT modernization, hybrid work transformation, and other critical areas.
•Consumer — Our consumer portfolio provides customers with solutions ranging from essential computing, connectivity, and productivity needs of the everyday user to powerful performance, processing, and end-user experiences in high-end consumer and gaming offerings.
Corporate and other primarily consists of our historical resale of standalone offerings of VMware LLC (formerly VMware, Inc. and individually and together with its subsidiaries, “VMware”), referred to as “VMware Resale.” These offerings are no longer actively sold and Corporate and other is not classified as an operating segment.
For further discussion regarding our current reportable segments, see “Results of Operations — Business Unit Results” and Note 14 of the Notes to the Condensed Consolidated Financial Statements included in this report.
We offer customers choices in how they acquire our solutions, including traditional purchasing and offerings under the Dell Payment Solutions portfolio. These offerings provide both payment and consumption solutions, including utility, subscription, as-a-service, leases, and loans, which allow our customers to pay over time and provide them with operational and financial flexibility. Dell Financial Services and its affiliates (“DFS”) support financing solutions and services as part of the portfolio. For additional information about our financing arrangements, see Note 4 of the Notes to the Condensed Consolidated Financial Statements included in this report.
Business Trends and Challenges
During the second quarter and first six months of Fiscal 2027, we executed our strategy and delivered exceptional operating results, generating significant net revenue and operating income growth. The following trends and conditions affected the environment in which we operated:
•Macroeconomic environment: We continued to experience substantial demand growth across our ISG offerings, resulting in ISG net revenue growth and a continued shift in the mix of the business towards our ISG offerings. Additionally, the demand environment was significant for our CSG offerings, resulting in CSG net revenue growth.
•Demand for AI-optimized servers: Our ISG business benefitted from substantial demand for our AI-optimized servers offerings as customers continue to adopt and further integrate AI, resulting in a significant increase in backlog as we exited the quarter. Given the scale of the AI opportunities, the varying stages of customer readiness, and the frequency of component part updates or transitions, there is inherent non-linearity in the timing of demand and subsequent shipments for our AI-optimized servers offerings, which continues to drive variability in our revenue.
•Technology refresh: Within our ISG business, we continue to see customers modernize and consolidate their data centers as more customers transition to next-generation products and expand capacity to support growing workloads, which has resulted in significant demand within our traditional servers and networking offerings and our storage offerings. Additionally, within our CSG business, the PC refresh cycle is underway as customers continue to upgrade their devices, which has contributed to significant demand for our commercial offerings.
•Supply chain: We experienced an increase in input costs, driven by higher component costs. Strong and accelerating industry demand for AI‑optimized solutions, together with current limitations in capacity from memory manufacturers, has resulted in global supply constraints and substantial inflation in memory component costs.
•Business modernization initiatives: We continue to prioritize ongoing modernization initiatives to achieve greater efficiencies and streamline our processes, while also continuing to make strategic investments designed to enable growth and innovation. These initiatives have partially contributed to a net reduction in our operating expense rate.
46
We remain focused on executing our key strategic priorities, creating long-term value for our shareholders, and addressing our customers’ needs. We have the following expectations regarding our performance for the full fiscal year:
•Revenue: Overall, we expect IT environments to enable growth, productivity, and competitive advantage for our customers. As a result, we anticipate significant ISG and strong CSG net revenue growth. We expect ISG net revenue growth will be driven largely by increased demand for our servers and networking offerings and, to a lesser extent, our storage offerings.
•Gross margin: We expect margin growth, while balancing anticipated margin rate pressure resulting from a continuing shift in mix towards our AI-optimized servers offerings. We expect the notable inflationary environment for component costs will persist throughout the remainder of Fiscal 2027. We continue to monitor the rapidly evolving commodity supply environment and will leverage the agility and scale of our world-class supply chain as we seek to maintain disciplined pricing while balancing profitability and growth.
•Operating expenses: We continue to advance our own capabilities to change the way we work and make decisions, improve business outcomes and the customer experience, leverage new technology, and optimize business processes. We remain committed to disciplined cost management in coordination with our ongoing business modernization initiatives, and expect to continue to scale operating expenses as we take targeted measures to manage costs, including employee reorganizations, limitation of external hiring, and other actions to align our investments with our strategic priorities and customer needs.
We believe our unique operating advantages provide a foundation to foster business growth, enable innovation, drive efficiencies, and continue to position us for long-term success.
ISG — We expect that ISG will be influenced by the dynamic nature of the IT infrastructure market and the competitive landscape. With our extensive scale and market-leading solutions portfolio, we believe we are well-positioned to navigate these competitive dynamics and evolving technology trends to meet customer needs. By leveraging our collaborative, customer-focused approach to innovation, we aim to deliver relevant new and next-generation solutions and software to our customers swiftly and efficiently. We remain focused on expanding our customer base and enhancing the lifetime value of our customer relationships.
We anticipate that ISG will continue to benefit from technology advancements and interest in AI as customers continue to adopt and integrate AI. The timing of customer purchases reflects the varying stages of adoption of AI by different customer segments and drives variability in our revenue. To meet the growing demand and increasing complexity of our AI-optimized servers offerings, we have increased our purchases of certain components with suppliers, which has resulted in increased inventory levels, higher purchase obligations, and new working capital dynamics. Additionally, frequent component part updates or transitions may create additional challenges in managing demand and supply levels.
We expect that growth in data will continue to generate long-term demand for our storage solutions and services. We continue to expand our offerings in external storage arrays, which incorporate flexible, cloud-based functionality. We benefit from offering solutions that provide the foundation for AI, enabling organizations to store, protect, and manage data across environments for both traditional and AI workloads. Our storage business is subject to seasonal trends, which may continue to impact ISG results.
CSG — Our CSG offerings are an important element of our strategy, generating strong cash flow and opportunities for cross-selling of complementary solutions. We maintain a broad presence across all segments of the PC market. Our strategic focus is on driving share gain while balancing profitability across all segments, enhancing our product portfolio to address evolving customer needs, and expanding our presence across the broader PC ecosystem through branded peripherals. We anticipate that CSG will benefit from advances in AI over the long-term as customers will require PCs with the ability to run their complex AI workloads.
Competitive dynamics remain an important factor in our CSG business and continue to influence pricing and operating results. We are committed to our long-term CSG strategy and will continue to make investments to innovate across the portfolio. We expect that the CSG demand environment will continue to be subject to seasonal trends and to be influenced by the PC refresh cycle.
47
Relationship with VMware — In March 2024, following the acquisition of VMware by Broadcom, we terminated our Commercial Framework Agreement with VMware, whereby we acted as a distributor of VMware standalone products and services. We no longer act as a distributor of those products and services, although we continue to support customers that have purchased resale offerings sold in prior periods. We continue to integrate and embed certain VMware products and services with our VxRail solution for end-user customers. The results for this integrated offering are reflected within ISG.
Recurring Revenue and Consumption Models — We expect that our flexible consumption models will further strengthen our customer relationships and provide a foundation for recurring revenue. We define recurring revenue as revenue recognized that is primarily related to hardware and software maintenance, as well as operating leases, subscription, as-a-service, and usage-based offerings.
Strategic Investments and Acquisitions — As part of our strategy, we will continue to evaluate opportunities for strategic investments through our venture capital investment arm, Dell Technologies Capital, with a focus on emerging technology areas that are relevant to our business and that will complement our existing portfolio of solutions. The technologies or products these companies have under development are typically in the early stages and may never have commercial value, which could result in a loss of a substantial part of our investment in the companies. In addition to these investments, we may also make targeted acquisitions of businesses that advance our strategic objectives and accelerate our innovation agenda.
Foreign Currency Exposure — We manage our business on a U.S. Dollar basis. However, we have a large global presence, generating approximately 40% of our net revenue from sales to customers outside of the United States during both the second quarter and first six months of Fiscal 2027 and 40% and 45% during the second quarter and first six months of Fiscal 2026, respectively. As a result, our operating results can be impacted by fluctuations in foreign currency exchange rates. We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.
Other Macroeconomic Risks and Uncertainties — The impacts of trade protection measures, including changes in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility associated with terrorism, military conflicts (including the Iran conflict), and other events, and global macroeconomic conditions, or uncertainty regarding the impact of proposed or future trade protection measures, may affect our results of operations in some markets. We continue to leverage the agility and scale of our world-class supply chain to mitigate impacts of trade protection measures and will continue to respond to changing market conditions as needed.
48
NON-GAAP FINANCIAL MEASURES
In this management’s discussion and analysis, we use supplemental measures of our performance which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include non-GAAP product gross margin; non-GAAP services gross margin; non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating income; non-GAAP net income; non-GAAP earnings per share - diluted; free cash flow; and adjusted free cash flow. These non-GAAP financial measures are not meant to be considered as indicators of performance or liquidity in isolation from or as a substitute for gross margin, operating expenses, operating income, net income, diluted earnings per share, or cash flows from operating activities prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis.
We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. Management uses these non-GAAP measures in financial planning and forecasting and when evaluating our financial results and operating trends and performance. We believe, when used supplementally with GAAP financial measures, these non-GAAP financial measures provide our investors with useful and transparent information to help them evaluate our results by facilitating an enhanced understanding of our results of operations and enabling them to make period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this report. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Non-GAAP product gross margin, non-GAAP services gross margin, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share - diluted, as defined by us, exclude amortization of intangible assets, stock-based compensation expense, other corporate expenses and, for non-GAAP net income and non-GAAP earnings per share - diluted, fair value adjustments on equity investments and an aggregate adjustment for income taxes. As the excluded items may have a material impact on our financial results, our management compensates for this limitation by relying primarily on our GAAP results and using non-GAAP financial measures supplementally or for projections when comparable GAAP financial measures are not available.
Reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. The discussion below includes information on each of the excluded items as well as our reasons for excluding them from our non-GAAP results. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, the exclusion of these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual.
The following is a summary of the items excluded from the most comparable GAAP financial measures to calculate our non-GAAP financial measures.
•Amortization of Intangible Assets — Amortization of intangible assets primarily consists of the amortization of customer relationships, developed technology, and trade names. In connection with our acquisition by merger of EMC Corporation in 2016, all of the tangible and intangible assets and liabilities were accounted for and recognized at fair value on the transaction date. We exclude amortization charges for the amortization of intangible assets as they do not reflect our current operating performance and charges are significantly impacted by the timing and magnitude of our acquisitions and, as a result, may vary in amount from period to period.
•Stock-based Compensation Expense — Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date. To estimate the fair value of performance-based awards containing a market condition, we use the Monte Carlo valuation model. For other share-based awards, the fair value is generally based on the closing price of the Class C Common Stock as reported on the New York Stock Exchange on the date of grant or most recent preceding trading day if the grant date falls on a non-trading day. Although stock-based compensation is an important aspect of the compensation of our employees and executives, we exclude such expense because the fair value of the stock-based awards may fluctuate based on factors unrelated to the operating performance of the business and may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards.
49
•Other Corporate Expenses — Other corporate expenses consist primarily of severance expenses, transaction-related impacts of the sales of businesses, payroll taxes associated with stock-based compensation, incentive charges related to equity investments, and transaction-related expenses. Severance costs are primarily related to severance and benefits for employees impacted by cost management initiatives. During the first six months of Fiscal 2027 and Fiscal 2026, we recognized $0.5 billion and $0.3 billion, respectively, of severance expense related to workforce reduction activities. During the first six months of Fiscal 2026, we recognized a $0.2 billion gain related to the sale of our subsidiary SecureWorks Corp. (“Secureworks”). Although we may incur these types of items in the future, we exclude other corporate expenses, as they can vary from period to period, are significantly impacted by the timing and nature of these events, and are not used by management in assessing operating performance of the business.
•Fair Value Adjustments on Equity Investments — Fair value adjustments on equity investments primarily consist of the gain (loss) on strategic investments, which includes recurring fair value adjustments of investments in publicly-traded companies, as well as those in privately-held companies, which are adjusted for observable price changes and any potential impairments. During the first six months of Fiscal 2027, we recognized a $0.6 billion gain from our strategic investment portfolio related to a single investee. See Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information on our strategic investment activity. We exclude fair value adjustments on equity investments given the volatility in ongoing adjustments to the valuation of these strategic investments and because such adjustments are unrelated to the operating performance of our business.
•Aggregate Adjustment for Income Taxes — The aggregate adjustment for income taxes is the estimated combined income tax effect for the adjustments described above and determined based on the tax jurisdictions where those adjustments were incurred, as well as an adjustment for discrete tax items. We exclude these benefits or charges for purposes of calculating non-GAAP net income due to the variability in recognition of discrete tax items from period to period. The tax effects are determined based on the tax jurisdictions where the above items were incurred. See Note 11 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our income taxes. Our non-GAAP income tax was calculated using a fixed estimated annual tax rate that is determined based on historical trends and projections for the current fiscal year. We may adjust our estimated annual tax rate during the fiscal year to take into account events that would significantly impact our income tax expense, including significant changes resulting from tax legislation, material changes in geographic mix of net revenue and expenses, changes to our corporate structure, and other significant events.
The following table presents a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 31, 2026 | % Change | August 1, 2025 | July 31, 2026 | % Change | August 1, 2025 | ||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Product gross margin | $ | 7,122 | 146 | % | $ | 2,891 | $ | 12,375 | 130 | % | $ | 5,374 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 31 | 39 | 57 | 80 | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 20 | 15 | 41 | 30 | |||||||||||||||||||||||||||||||
| Other corporate expenses | 3 | 7 | 12 | 16 | |||||||||||||||||||||||||||||||
| Non-GAAP product gross margin | $ | 7,176 | 143 | % | $ | 2,952 | $ | 12,485 | 127 | % | $ | 5,500 | |||||||||||||||||||||||
| Services gross margin | $ | 2,708 | 6 | % | $ | 2,556 | $ | 5,237 | 5 | % | $ | 5,010 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 23 | 22 | 46 | 46 | |||||||||||||||||||||||||||||||
| Other corporate expenses | 22 | 42 | 108 | 73 | |||||||||||||||||||||||||||||||
| Non-GAAP services gross margin | $ | 2,753 | 5 | % | $ | 2,620 | $ | 5,391 | 5 | % | $ | 5,129 | |||||||||||||||||||||||
50
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 31, 2026 | % Change | August 1, 2025 | July 31, 2026 | % Change | August 1, 2025 | ||||||||||||||||||||||||||||||
| (in millions, except percentages and per share amounts) | |||||||||||||||||||||||||||||||||||
| Gross margin | $ | 9,830 | 80 | % | $ | 5,447 | $ | 17,612 | 70 | % | $ | 10,384 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 31 | 39 | 57 | 80 | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 43 | 37 | 87 | 76 | |||||||||||||||||||||||||||||||
| Other corporate expenses | 25 | 49 | 120 | 89 | |||||||||||||||||||||||||||||||
| Non-GAAP gross margin | $ | 9,929 | 78 | % | $ | 5,572 | $ | 17,876 | 68 | % | $ | 10,629 | |||||||||||||||||||||||
| Operating expenses | $ | 4,445 | 21 | % | $ | 3,674 | $ | 8,571 | 15 | % | $ | 7,446 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization of intangibles | (65) | (86) | (136) | (171) | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | (141) | (142) | (286) | (293) | |||||||||||||||||||||||||||||||
| Other corporate expenses | (239) | (158) | (437) | (303) | |||||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 4,000 | 22 | % | $ | 3,288 | $ | 7,712 | 15 | % | $ | 6,679 | |||||||||||||||||||||||
| Operating income | $ | 5,385 | 204 | % | $ | 1,773 | $ | 9,041 | 208 | % | $ | 2,938 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 96 | 125 | 193 | 251 | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 184 | 179 | 373 | 369 | |||||||||||||||||||||||||||||||
| Other corporate expenses | 264 | 207 | 557 | 392 | |||||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 5,929 | 160 | % | $ | 2,284 | $ | 10,164 | 157 | % | $ | 3,950 | |||||||||||||||||||||||
| Net income | $ | 4,133 | 255 | % | $ | 1,164 | $ | 7,571 | 256 | % | $ | 2,129 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 96 | 125 | 193 | 251 | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 184 | 179 | 373 | 369 | |||||||||||||||||||||||||||||||
| Other corporate expenses | 260 | 200 | 548 | 142 | |||||||||||||||||||||||||||||||
| Fair value adjustments on equity investments | (73) | (4) | (704) | (21) | |||||||||||||||||||||||||||||||
| Aggregate adjustment for income taxes | (9) | (73) | (200) | (193) | |||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 4,591 | 189 | % | $ | 1,591 | $ | 7,781 | 191 | % | $ | 2,677 | |||||||||||||||||||||||
| Earnings per share — diluted | $ | 6.34 | 273 | % | $ | 1.70 | $ | 11.58 | 277 | % | $ | 3.07 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 0.15 | 0.19 | 0.29 | 0.36 | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.28 | 0.26 | 0.57 | 0.53 | |||||||||||||||||||||||||||||||
| Other corporate expenses | 0.39 | 0.29 | 0.84 | 0.21 | |||||||||||||||||||||||||||||||
| Fair value adjustments on equity investments | (0.11) | (0.01) | (1.08) | (0.03) | |||||||||||||||||||||||||||||||
| Aggregate adjustment for income taxes | (0.01) | (0.11) | (0.30) | (0.28) | |||||||||||||||||||||||||||||||
| Non-GAAP earnings per share — diluted | $ | 7.04 | 203 | % | $ | 2.32 | $ | 11.90 | 208 | % | $ | 3.86 | |||||||||||||||||||||||
51
In addition to the above measures, we use free cash flow and adjusted free cash flow as non-GAAP liquidity measures to evaluate our performance. As presented in the following table, we define free cash flow as cash flow from operations after excluding capital expenditures and capitalized software development costs, net. To measure adjusted free cash flow, we exclude the impact of financing receivables and equipment under operating leases from free cash flow, as the initial funding of these DFS offerings at the time of origination is largely subsequently replaced with cash inflows from our DFS related debt.
Free cash flow and adjusted free cash flow provide useful information to management and investors in part because we use these metrics in our long-term capital allocation framework. Further, we believe free cash flow and adjusted free cash flow are useful measures to management and investors because they reflect cash that we can use, among other purposes, to repurchase common stock, pay dividends on our common stock, invest in our business, pay down debt, and make strategic acquisitions.
As is the case with the other non-GAAP measures presented above, users should consider the limitations of using free cash flow and adjusted free cash flow, including the fact that those measures do not provide a complete measure of our cash flows for any period. Free cash flow and adjusted free cash flow do not purport to be alternatives to cash flows from operating activities as a measure of liquidity. In particular, free cash flow and adjusted free cash flow are not intended to be a measure of cash flow available for management’s discretionary use, as these measures do not reflect certain cash requirements, such as debt service requirements and other contractual commitments.
The following table presents a reconciliation of free cash flow and adjusted free cash flow to cash flow from operations for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 31, 2026 | % Change | August 1, 2025 | July 31, 2026 | % Change | August 1, 2025 | ||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Cash flow from operations | $ | 2,225 | (13) | % | $ | 2,543 | $ | 6,306 | 18 | % | $ | 5,339 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Capital expenditures and capitalized software development costs, net (a) | (1,239) | (675) | (2,202) | (1,243) | |||||||||||||||||||||||||||||||
| Free cash flow | $ | 986 | (47) | % | $ | 1,868 | $ | 4,104 | — | % | $ | 4,096 | |||||||||||||||||||||||
| Free cash flow | $ | 986 | (47) | % | $ | 1,868 | $ | 4,104 | — | % | $ | 4,096 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Financing receivables (b) | 6,667 | 592 | 6,404 | 569 | |||||||||||||||||||||||||||||||
| Equipment under operating leases (c) | 496 | 58 | 806 | 85 | |||||||||||||||||||||||||||||||
| Adjusted free cash flow | $ | 8,149 | 224 | % | $ | 2,518 | $ | 11,314 | 138 | % | $ | 4,750 | |||||||||||||||||||||||
____________________
(a)Capital expenditures and capitalized software development costs, net includes proceeds from sales of facilities, land, and other assets.
(b)Financing receivables represent the operating cash flow impact from the change in financing receivables.
(c)Equipment under operating leases represents the net impact of capital expenditures and depreciation expense for leases and contractually embedded leases identified within flexible consumption arrangements.
52
RESULTS OF OPERATIONS
Consolidated Results
The following table summarizes our consolidated results for the periods indicated. Unless otherwise indicated, all changes identified for the current-period results represent comparisons to results for the prior corresponding fiscal period.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | $ | 41,112 | 87.5 | % | 72 | % | $ | 23,935 | 80.4 | % | $ | 79,217 | 87.2 | % | 91 | % | $ | 41,534 | 78.1 | % | |||||||||||||||||||||||||||||||||||||||
| Services | 5,859 | 12.5 | % | — | % | 5,841 | 19.6 | % | 11,596 | 12.8 | % | — | % | 11,620 | 21.9 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total net revenue | $ | 46,971 | 100.0 | % | 58 | % | $ | 29,776 | 100.0 | % | $ | 90,813 | 100.0 | % | 71 | % | $ | 53,154 | 100.0 | % | |||||||||||||||||||||||||||||||||||||||
| Gross margin: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | $ | 7,122 | 17.3 | % | 146 | % | $ | 2,891 | 12.1 | % | $ | 12,375 | 15.6 | % | 130 | % | $ | 5,374 | 12.9 | % | |||||||||||||||||||||||||||||||||||||||
| Services | 2,708 | 46.2 | % | 6 | % | 2,556 | 43.8 | % | 5,237 | 45.2 | % | 5 | % | 5,010 | 43.1 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total gross margin | $ | 9,830 | 20.9 | % | 80 | % | $ | 5,447 | 18.3 | % | $ | 17,612 | 19.4 | % | 70 | % | $ | 10,384 | 19.5 | % | |||||||||||||||||||||||||||||||||||||||
| Operating expenses | $ | 4,445 | 9.5 | % | 21 | % | $ | 3,674 | 12.3 | % | $ | 8,571 | 9.4 | % | 15 | % | $ | 7,446 | 14.0 | % | |||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 5,385 | 11.5 | % | 204 | % | $ | 1,773 | 6.0 | % | $ | 9,041 | 10.0 | % | 208 | % | $ | 2,938 | 5.5 | % | |||||||||||||||||||||||||||||||||||||||
| Net income | $ | 4,133 | 8.8 | % | 255 | % | $ | 1,164 | 3.9 | % | $ | 7,571 | 8.3 | % | 256 | % | $ | 2,129 | 4.0 | % | |||||||||||||||||||||||||||||||||||||||
| Earnings per share — diluted | $ | 6.34 | 273 | % | $ | 1.70 | $ | 11.58 | 277 | % | $ | 3.07 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash flow from operations | $ | 2,225 | (13) | % | $ | 2,543 | $ | 6,306 | 18 | % | $ | 5,339 | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Financial Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP gross margin: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | $ | 7,176 | 17.5 | % | 143 | % | $ | 2,952 | 12.3 | % | $ | 12,485 | 15.8 | % | 127 | % | $ | 5,500 | 13.2 | % | |||||||||||||||||||||||||||||||||||||||
| Services | 2,753 | 47.0 | % | 5 | % | 2,620 | 44.9 | % | 5,391 | 46.5 | % | 5 | % | 5,129 | 44.1 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total non-GAAP gross margin | $ | 9,929 | 21.1 | % | 78 | % | $ | 5,572 | 18.7 | % | $ | 17,876 | 19.7 | % | 68 | % | $ | 10,629 | 20.0 | % | |||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 4,000 | 8.5 | % | 22 | % | $ | 3,288 | 11.0 | % | $ | 7,712 | 8.5 | % | 15 | % | $ | 6,679 | 12.6 | % | |||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 5,929 | 12.6 | % | 160 | % | $ | 2,284 | 7.7 | % | $ | 10,164 | 11.2 | % | 157 | % | $ | 3,950 | 7.4 | % | |||||||||||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 4,591 | 9.8 | % | 189 | % | $ | 1,591 | 5.3 | % | $ | 7,781 | 8.6 | % | 191 | % | $ | 2,677 | 5.0 | % | |||||||||||||||||||||||||||||||||||||||
| Non-GAAP earnings per share — diluted | $ | 7.04 | 203 | % | $ | 2.32 | $ | 11.90 | 208 | % | $ | 3.86 | |||||||||||||||||||||||||||||||||||||||||||||||
| Free cash flow | $ | 986 | (47) | % | $ | 1,868 | $ | 4,104 | — | % | $ | 4,096 | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted free cash flow | $ | 8,149 | 224 | % | $ | 2,518 | $ | 11,314 | 138 | % | $ | 4,750 | |||||||||||||||||||||||||||||||||||||||||||||||
____________________
(a)Totals of net revenue percentages may not foot due to rounding.
53
Non-GAAP product gross margin, non-GAAP services gross margin, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP earnings per share - diluted, free cash flow, and adjusted free cash flow are not measurements of financial performance prepared in accordance with GAAP. See “Non‑GAAP Financial Measures” for additional information about these non-GAAP financial measures, including our reasons for including these measures, material limitations with respect to the usefulness of the measures, and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.
Overview
During the second quarter and first six months of Fiscal 2027, net revenue increased by 58% and 71%, respectively, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue. The increase in ISG net revenue was driven by growth in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings. The increase in CSG net revenue was primarily attributable to an increase in sales of our commercial offerings. Corporate and other net revenue declined primarily due to a decrease in VMware Resale revenue, as we no longer act as a distributor of standalone VMware offerings.
During the second quarter of Fiscal 2027, operating income and non-GAAP operating income increased by 204% to $5.4 billion and 160% to $5.9 billion, respectively. During the first six months of Fiscal 2027, operating income and non-GAAP operating income increased by 208% to $9.0 billion and 157% to $10.2 billion, respectively. The increases were attributable to an increase in ISG operating income and, to a lesser extent, CSG operating income. The increase in ISG operating income was driven by our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG operating income was driven primarily by our commercial offerings.
During the second quarter and first six months of Fiscal 2027, operating income as a percentage of net revenue increased 550 basis points to 11.5% and 450 basis points to 10.0%, respectively. During the second quarter and first six months of Fiscal 2027, non-GAAP operating income as a percentage of net revenue increased 490 basis points to 12.6% and 380 basis points to 11.2%, respectively. Operating income and non-GAAP operating income as a percentage of net revenue benefited from the favorable impact of a decline in operating expense rate as a result of substantial net revenue growth. During the second quarter of Fiscal 2027, operating income and non-GAAP operating income rate also benefited from an increase in gross margin rate driven by disciplined pricing.
Cash provided by operating activities was $6.3 billion during the first six months of Fiscal 2027 and was driven by net revenue growth, profitability, and working capital dynamics, partially offset by higher financing receivables, all of which factors were primarily affected by increased demand for our ISG offerings. During the first six months of Fiscal 2026, cash provided by operating activities was $5.3 billion and was driven by net revenue growth, profitability, and similar working capital dynamics. See “Liquidity, Cash Requirements, and Market Conditions” for additional information about our cash flow metrics.
We continue to see opportunities to create value and grow as we respond to long-term demand for our IT solutions driven by a data- and AI-enabled world. We have demonstrated our ability to adjust to changing market conditions with complementary solutions and innovation across both segments of our business, an agile workforce, and the strength of our global supply chain. As we continue to innovate and modernize our offerings, we believe that Dell Technologies is well-positioned for long-term profitable growth.
Net Revenue
During the second quarter and first six months of Fiscal 2027, net revenue increased 58% and 71%, respectively, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue. See “Business Unit Results” for further information.
•Product Net Revenue — Product net revenue includes revenue from the sale of hardware products and software licenses. During the second quarter and first six months of Fiscal 2027, product net revenue increased 72% and 91%, respectively, due to an increase in ISG product net revenue and, to a lesser extent, CSG product net revenue. The increase in ISG product net revenue was primarily driven by growth in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings. The increase in CSG product net revenue was primarily attributable to growth in our commercial offerings.
54
•Services Net Revenue — Services net revenue includes revenue from our services offerings and support services related to hardware products and software licenses. During both the second quarter and first six months of Fiscal 2027, services net revenue remained flat as a decline in Corporate and other services net revenue was offset by an increase in ISG services net revenue.
A substantial portion of services net revenue is derived from offerings that have been deferred over a period of time. As a result, reported growth rates for services net revenue will be different than reported growth rates for product net revenue.
From a geographical perspective, net revenue increased in the Americas, the Europe, Middle East and Africa region (“EMEA”), and the Asia-Pacific and Japan region (“APJ”) during the second quarter and first six months of Fiscal 2027, most notably within the Americas.
Gross Margin
During the second quarter of Fiscal 2027, gross margin and non-GAAP gross margin increased 80% to $9.8 billion and 78% to $9.9 billion, respectively. During the first six months of Fiscal 2027, gross margin and non-GAAP gross margin increased 70% to $17.6 billion and 68% to $17.9 billion, respectively. The increases in gross margin and non-GAAP gross margin were primarily due to an increase in ISG gross margin and, to a lesser extent, CSG gross margin. The increase in ISG gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG gross margin was primarily driven by growth in our commercial offerings.
During the second quarter of Fiscal 2027, gross margin percentage and non-GAAP gross margin percentage increased 260 basis points to 20.9% and 240 basis points to 21.1%, respectively, driven by disciplined pricing. During the first six months of Fiscal 2027, gross margin percentage and non-GAAP gross margin percentage decreased 10 basis points to 19.4% and 30 basis points to 19.7%, respectively, primarily due to a shift in mix towards our AI-optimized servers offerings, the effect of which was largely offset by disciplined pricing.
•Product Gross Margin — During the second quarter of Fiscal 2027, product gross margin and non-GAAP product gross margin increased 146% to $7.1 billion and 143% to $7.2 billion, respectively. During the first six months of Fiscal 2027, product gross margin and non-GAAP product gross margin increased 130% to $12.4 billion and 127% to $12.5 billion, respectively. The increases were attributable to an increase in ISG product gross margin and, to a lesser extent, CSG product gross margin. The increase in ISG product gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG gross margin was primarily attributable to growth in our commercial offerings.
During the second quarter of Fiscal 2027, both product gross margin percentage and non-GAAP product gross margin percentage increased 520 basis points to 17.3% and 17.5%, respectively. During the first six months of Fiscal 2027, product gross margin percentage and non-GAAP product gross margin percentage increased 270 basis points to 15.6% and 260 basis points to 15.8%, respectively. The increases in product gross margin percentage and non-GAAP product gross margin percentage were primarily due to disciplined pricing. During the first six months of Fiscal 2027, the increases were partially offset by a shift in mix towards our AI-optimized servers offerings.
•Services Gross Margin — During the second quarter of Fiscal 2027, services gross margin and non-GAAP services gross margin increased 6% to $2.7 billion and 5% to $2.8 billion, respectively. During the first six months of Fiscal 2027, both services gross margin and non-GAAP services gross margin increased 5% to $5.2 billion and $5.4 billion, respectively. The increases were primarily attributable to an increase in ISG services gross margin.
During the second quarter of Fiscal 2027, services gross margin percentage and non-GAAP services gross margin percentage increased 240 basis points to 46.2% and 210 basis points to 47.0%, respectively. During the first six months of Fiscal 2027, services gross margin percentage and non-GAAP services gross margin percentage increased 210 basis points to 45.2% and 240 basis points to 46.5%, respectively, primarily driven by a shift in mix, as we no longer act as a distributor of standalone VMware offerings.
55
Vendor Programs
Our gross margin is affected by our ability to achieve competitive pricing with our vendors and contract manufacturers, including through our negotiation of a variety of vendor rebate programs to achieve lower net costs for the various components we include in our products. Under these programs, vendors provide us with rebates or other discounts from the list prices for the components, which are generally elements of their pricing strategy. We account for vendor rebates and other discounts as a reduction in cost of net revenue. We manage our costs on a total net cost basis, which includes supplier list prices reduced by vendor rebates and other discounts.
The terms and conditions of our vendor rebate programs are largely based on product volumes and are generally negotiated either at the beginning of the annual or quarterly period, depending on the program. The timing and amount of vendor rebates and other discounts we receive under the programs may vary from period to period, reflecting changes in the competitive environment. We monitor our component costs and seek to address the effects of any changes to terms that might arise under our vendor rebate programs. Our gross margins for the second quarter and first six months of Fiscal 2027 were not materially affected by any changes to the terms of our vendor rebate programs, as the amounts we received under these programs were generally stable relative to our total net cost. We are not aware of any significant changes to our vendor rebate programs that will materially impact our results in the near term.
Operating Expenses
The following table presents information regarding our operating expenses for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general, and administrative | $ | 3,336 | 7.1 | % | 15 | % | $ | 2,889 | 9.7 | % | $ | 6,479 | 7.1 | % | 11 | % | $ | 5,853 | 11.0 | % | |||||||||||||||||||||||||||||||||||||||
| Research and development | 1,109 | 2.4 | % | 41 | % | 785 | 2.6 | % | 2,092 | 2.3 | % | 31 | % | 1,593 | 3.0 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 4,445 | 9.5 | % | 21 | % | $ | 3,674 | 12.3 | % | $ | 8,571 | 9.4 | % | 15 | % | $ | 7,446 | 14.0 | % | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| July 31, 2026 | August 1, 2025 | July 31, 2026 | August 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | Dollars | % of Net Revenue (a) | % Change | Dollars | % of Net Revenue (a) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 4,000 | 8.5 | % | 22 | % | $ | 3,288 | 11.0 | % | $ | 7,712 | 8.5 | % | 15 | % | $ | 6,679 | 12.6 | % | |||||||||||||||||||||||||||||||||||||||
____________________
(a)Totals of net revenue percentages may not foot due to rounding.
During the second quarter and first six months of Fiscal 2027, total operating expenses increased 21% and 15%, respectively, due to an increase in research and development (“R&D”) expenses and selling, general, and administrative (“SG&A”) expenses.
•Selling, General, and Administrative — During the second quarter and first six months of Fiscal 2027, SG&A expenses increased 15% and 11%, respectively, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.
•Research and Development — During the second quarter and first six months of Fiscal 2027, R&D expenses increased 41% and 31%, respectively, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.
56
During the second quarter and first six months of Fiscal 2027, non-GAAP operating expenses increased 22% and 15%, respectively, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.
We continue to make strategic investments designed to enable growth and innovation, while balancing our efforts to drive cost efficiencies in the business. We also expect to continue making investments in support of our own digital transformation, which aims to streamline and optimize our business processes.
Operating Income
During the second quarter of Fiscal 2027, operating income and non-GAAP operating income increased by 204% to $5.4 billion and 160% to $5.9 billion, respectively. During the first six months of Fiscal 2027, operating income and non-GAAP operating income increased by 208% to $9.0 billion and 157% to $10.2 billion, respectively. The increases were attributable to an increase in ISG operating income and, to a lesser extent, CSG operating income. The increase in ISG operating income was driven by our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG operating income was driven primarily by our commercial offerings.
During the second quarter and first six months of Fiscal 2027, operating income as a percentage of net revenue increased 550 basis points to 11.5% and 450 basis points to 10.0%, respectively. During the second quarter and first six months of Fiscal 2027, non-GAAP operating income as a percentage of net revenue increased 490 basis points to 12.6% and 380 basis points to 11.2%, respectively. Operating income and non-GAAP operating income as a percentage of net revenue benefited from the favorable impact of a decline in operating expense rate as a result of substantial net revenue growth. During the second quarter of Fiscal 2027, operating income and non-GAAP operating income rate also benefited from an increase in gross margin rate driven by disciplined pricing.
Interest and Other, Net
During the second quarter and first six months of Fiscal 2027, interest and other, net decreased by 24% to $254 million of expense and 109% to $38 million of income, respectively. The favorable changes were primarily attributable to gains recognized within our strategic investments portfolio.
Income and Other Taxes
For the second quarter of Fiscal 2027 and Fiscal 2026, our effective income tax rates were 19.5% on pre-tax income of $5.1 billion and 19.2% on pre-tax income of $1.4 billion, respectively. For the first six months of Fiscal 2027 and Fiscal 2026, our effective income tax rates were 16.6% on pre-tax income of $9.1 billion and 15.6% on pre-tax income of $2.5 billion, respectively.
See Note 11 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our income and other taxes.
Net Income
During the second quarter of Fiscal 2027, net income and non-GAAP net income increased 255% to $4.1 billion and 189% to $4.6 billion, respectively. During the first six months of Fiscal 2027, net income and non-GAAP net income increased 256% to $7.6 billion and 191% to $7.8 billion, respectively. The increases in net income and non-GAAP net income for both periods were primarily due to an increase in operating income, partially offset by higher income tax expense.
57
Business Unit Results
Our reportable segments are based on the ISG and CSG business units. A description of our business units is provided under “Introduction.” See Note 14 of the Notes to the Condensed Consolidated Financial Statements included in this report for a reconciliation of net revenue and operating income by reportable segment to consolidated net revenue and consolidated operating income, respectively.
Infrastructure Solutions Group
The following table presents net revenue and operating income attributable to ISG for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 31, 2026 | % Change | August 1, 2025 | July 31, 2026 | % Change | August 1, 2025 | ||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||||||||||||||
| AI-optimized servers | $ | 16,401 | 100 | % | $ | 8,208 | $ | 32,533 | 222 | % | $ | 10,090 | |||||||||||||||||||||||
| Traditional servers and networking | 10,531 | 122 | % | 4,736 | 19,074 | 108 | % | 9,175 | |||||||||||||||||||||||||||
| Servers and networking | 26,932 | 108 | % | 12,944 | 51,607 | 168 | % | 19,265 | |||||||||||||||||||||||||||
| Storage | 4,850 | 26 | % | 3,856 | 9,184 | 17 | % | 7,852 | |||||||||||||||||||||||||||
| Total ISG net revenue | $ | 31,782 | 89 | % | $ | 16,800 | $ | 60,791 | 124 | % | $ | 27,117 | |||||||||||||||||||||||
| Operating income: | |||||||||||||||||||||||||||||||||||
| ISG operating income | $ | 4,781 | 225 | % | $ | 1,470 | $ | 7,836 | 218 | % | $ | 2,468 | |||||||||||||||||||||||
| % of segment net revenue | 15.0 | % | 8.8 | % | 12.9 | % | 9.1 | % | |||||||||||||||||||||||||||
Net Revenue — During the second quarter and first six months of Fiscal 2027, ISG net revenue increased 89% and 124%, respectively, driven by strength in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings.
AI-optimized servers net revenue increased 100% and 222% during the second quarter and first six months of Fiscal 2027, respectively, primarily driven by an increase in units sold as a result of significant increased demand for our AI-optimized servers offerings, and, to a lesser extent, an increase in the average selling prices of these offerings. The increase in average selling prices was driven by richer configurations and, to a lesser extent, disciplined pricing.
Traditional servers and networking net revenue increased 122% and 108% during the second quarter and first six months of Fiscal 2027, respectively, primarily driven by an increase in the average selling price of these offerings, driven by disciplined pricing and, to a lesser extent, richer configurations.
During the second quarter and first six months of Fiscal 2027, storage net revenue increased 26% and 17%, respectively, primarily due to growth in demand for our Dell-IP storage offerings and disciplined pricing.
From a geographical perspective, ISG net revenue increased in the Americas, EMEA, and APJ during the second quarter and first six months of Fiscal 2027, most notably within the Americas.
Operating Income — During the second quarter of Fiscal 2027, ISG operating income as a percentage of net revenue increased 620 basis points to 15.0% due to a decline in operating expense rate and an increase in gross margin rate. Operating expense rate declined primarily due to substantial ISG net revenue growth. The increase in gross margin rate was primarily driven by disciplined pricing.
During the first six months of Fiscal 2027, ISG operating income as a percentage of net revenue increased 380 basis points to 12.9% due to a decline in operating expense rate that outpaced the decline in gross margin rate. Operating expense rate declined primarily due to substantial ISG net revenue growth. Gross margin rate decreased primarily as the result of a shift in mix towards our AI-optimized servers offerings.
58
Client Solutions Group
The following table presents net revenue and operating income attributable to CSG for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 31, 2026 | % Change | August 1, 2025 | July 31, 2026 | % Change | August 1, 2025 | ||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||||||||||||||
| Commercial | $ | 13,192 | 22 | % | $ | 10,781 | $ | 26,212 | 20 | % | $ | 21,827 | |||||||||||||||||||||||
| Consumer | 1,842 | 7 | % | 1,722 | 3,431 | 8 | % | 3,185 | |||||||||||||||||||||||||||
| Total CSG net revenue | $ | 15,034 | 20 | % | $ | 12,503 | $ | 29,643 | 19 | % | $ | 25,012 | |||||||||||||||||||||||
| Operating income: | |||||||||||||||||||||||||||||||||||
| CSG operating income | $ | 1,142 | 42 | % | $ | 803 | $ | 2,312 | 59 | % | $ | 1,456 | |||||||||||||||||||||||
| % of segment net revenue | 7.6 | % | 6.4 | % | 7.8 | % | 5.8 | % | |||||||||||||||||||||||||||
Net Revenue — During the second quarter and first six months of Fiscal 2027, CSG net revenue increased 20% and 19%, respectively, primarily driven by strength in our commercial offerings.
During the second quarter and first six months of Fiscal 2027, commercial net revenue increased 22% and 20%, respectively, primarily due to an increase in the average selling prices of our commercial offerings. During the second quarter of Fiscal 2027, the increase was partially offset by a decrease in units sold.
Consumer net revenue increased 7% and 8% during the second quarter and first six months of Fiscal 2027, respectively, due to an increase in the average selling prices of our consumer offerings, partially offset by a decline in units sold.
The increase in the average selling prices of our CSG offerings was primarily attributable to disciplined pricing.
From a geographical perspective, CSG net revenue increased in the Americas, EMEA, and APJ during the second quarter and first six months of Fiscal 2027, most notably in the Americas.
Operating Income — During the second quarter and first six months of Fiscal 2027, CSG operating income as a percentage of net revenue increased 120 basis points to 7.6% and 200 basis points to 7.8%, respectively, driven by an increase in gross margin rate and, to a lesser extent, a decline in operating expense rate. The increase in gross margin rate was primarily driven by disciplined pricing. The decline in operating expense rate was primarily due to CSG net revenue growth.
59
OTHER BALANCE SHEET ITEMS
Accounts Receivable
We sell products and services directly to customers and through a variety of sales channels, including retail distribution. Our accounts receivable, net was $22.9 billion and $17.6 billion as of July 31, 2026 and January 30, 2026, respectively. The increase in accounts receivable, net was primarily driven by an increase in net revenue largely due to our AI-optimized servers offerings. We maintain an allowance for expected credit losses to cover receivables that may be deemed uncollectible. The allowance for expected credit losses is an estimate based on an analysis of historical loss experience, current receivables aging, and management’s assessment of current conditions, as well as specific identifiable customer accounts considered at risk or uncollectible. As of July 31, 2026 and January 30, 2026, the allowance for expected credit losses was $56 million and $77 million, respectively. Based on our assessment, we believe that we are adequately reserved for expected credit losses.
Dell Financial Services and Financing Receivables
We offer or arrange a portfolio of payment and consumption solutions and services for our customers globally, including as-a-service, subscription, utility, leases, and loans, designed to match customers' consumption and financing preferences. We believe these options provide operational and financial flexibility and strengthen our customer relationships. To support financing solutions and services as part of the portfolio, DFS originates, collects, and services customer receivables primarily related to the purchase of our product and services solutions. New financing originations were $7.5 billion and $2.4 billion for the second quarter of Fiscal 2027 and Fiscal 2026, respectively, and $10.3 billion and $4.0 billion for the first six months of Fiscal 2027 and Fiscal 2026, respectively. The increase in our new financing originations was primarily attributable to increased demand for our ISG offerings.
Our leases are generally classified as sales-type leases or operating leases. On commencement of sales-type leases, we recognize profit up-front and recognize amounts due from the customer under the lease contract as financing receivables. Interest income is recognized as net product revenue over the term of the lease. Upon origination of operating leases, we record equipment under operating leases, classified as property, plant, and equipment, net. We recognize product revenue and depreciation expense, classified as cost of net revenue, over the contract term.
As of July 31, 2026 and January 30, 2026, our financing receivables, net were $20.4 billion and $14.3 billion, respectively. The increase in financing receivables, net was primarily attributable to increased demand for our ISG offerings. We maintain an allowance to cover expected financing receivables credit losses and evaluate credit loss expectations based on our total portfolio. The principal charge-off rate for our financing receivables portfolio was 0.5% and 0.1% for the second quarter of Fiscal 2027 and Fiscal 2026, respectively, and 0.4% and 0.2% for the first six months of Fiscal 2027 and Fiscal 2026, respectively. The credit quality of our financing receivables remains strong due to the mix of high-quality commercial accounts in our portfolio. We continue to monitor broader economic indicators and their potential impact on future credit loss performance. We have an extensive process to manage our exposure to customer credit risk that includes active management of credit lines and collection activities. We also sell select fixed-term financing receivables without recourse to unrelated third parties on a periodic basis, primarily to manage certain concentrations of customer credit exposure. Based on our assessment of the customer financing receivables, we believe that we are adequately reserved.
We retain a residual interest in equipment leased under our lease programs. As of both July 31, 2026 and January 30, 2026, the residual interest recorded as part of financing receivables was $0.2 billion. The amount of the residual interest is established at the inception of the lease based upon estimates of the value of the equipment at the end of the lease term using historical studies, industry data, and future value-at-risk demand valuation methods. On a quarterly basis, we assess the carrying amount of our recorded residual values for expected losses. Generally, expected losses as a result of residual value risk on equipment under lease are not considered to be significant primarily because of the existence of a secondary market with respect to the equipment. Further, the lease agreement defines applicable return conditions and remedies for non-compliance to ensure that the leased equipment will be in good operating condition upon return. No expected losses were recorded related to residual assets during the second quarter and first six months of Fiscal 2027 and Fiscal 2026.
60
As of July 31, 2026 and January 30, 2026, equipment under operating leases, net was $3.2 billion and $2.5 billion, respectively. We assess the carrying amount of the equipment under operating leases for impairment whenever events or circumstances may indicate that an impairment has occurred. No material impairment losses were recorded related to such equipment during the second quarter and first six months of Fiscal 2027 and Fiscal 2026.
See Note 4 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our financing receivables and the associated allowances, and equipment under operating leases.
61
LIQUIDITY, CASH REQUIREMENTS, AND MARKET CONDITIONS
Liquidity and Capital Resources
We rely on operating cash flows, which are impacted by trends in the demand environment, as our primary source of liquidity for our ongoing business operations. We monitor the efficiency of our balance sheet to ensure that we have adequate liquidity to support our business and strategic initiatives.
In addition to internally generated cash, we have access to other capital sources to finance our strategic initiatives and fund growth in our financing operations. Our strategy is to deploy capital from any potential source, whether internally generated cash or debt, depending on the adequacy and availability of that source of capital and whether it can be accessed in a cost-effective manner.
We believe that our current cash and cash equivalents, together with cash that will be provided by future operations and borrowings and issuances expected to be available under our revolving credit facility and commercial paper program, will be sufficient over the next twelve months and for the foreseeable future thereafter to meet our material cash requirements, including funding of our operations, debt-related payments, capital expenditures, and other corporate needs.
As part of our overall capital allocation strategy, we intend to continue returning capital to our shareholders through both share repurchase programs and dividend payments and to use the remaining available cash to drive growth and maintain our investment grade credit rating.
The following table presents our cash and cash equivalents as well as our available borrowings as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| Cash and cash equivalents | $ | 11,569 | $ | 11,528 | |||||||
| Remaining available borrowings under the revolving credit facility | 5,884 | 5,886 | |||||||||
| Total cash and cash equivalents, and available borrowings | $ | 17,453 | $ | 17,414 | |||||||
During the first six months of Fiscal 2027, cash and cash equivalents was flat as the cash flows from operating activities and net proceeds from the issuance of debt were largely offset by the return of capital to our shareholders and capital expenditures.
As of July 31, 2026, our revolving credit facility had a maximum capacity of $6.0 billion. Available borrowings under this facility are reduced by draws on the facility and outstanding letters of credit. As of July 31, 2026, there were no outstanding borrowings pursuant to draws on the facility and remaining available borrowings totaled approximately $5.9 billion. The facility also acts as a backstop to provide liquidity support for our commercial paper program.
We maintain a commercial paper program under which we may issue unsecured notes in a maximum aggregate face amount of $5.0 billion outstanding at any time, with maturities of up to 397 days from the date of issue. As of July 31, 2026, we had no outstanding issuances under the program.
We may regularly use our available borrowings from the revolving credit facility and issuances under the commercial paper program, generally on a short-term basis, for general corporate purposes. See the following discussion for additional information about our debt.
62
Debt
The following table presents our outstanding debt as of the dates indicated:
| July 31, 2026 | Change | January 30, 2026 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Core debt: | |||||||||||||||||
| Senior Notes | $ | 24,073 | $ | 2,500 | $ | 21,573 | |||||||||||
| Legacy Notes | 952 | — | 952 | ||||||||||||||
| DFS allocated debt | (11,042) | (5,535) | (5,507) | ||||||||||||||
| Total core debt | 13,983 | (3,035) | 17,018 | ||||||||||||||
| DFS related debt: | |||||||||||||||||
| DFS debt | 9,618 | 479 | 9,139 | ||||||||||||||
| DFS allocated debt | 11,042 | 5,535 | 5,507 | ||||||||||||||
| Total DFS related debt | 20,660 | 6,014 | 14,646 | ||||||||||||||
| Other | 104 | 5 | 99 | ||||||||||||||
| Total debt, principal amount | 34,747 | 2,984 | 31,763 | ||||||||||||||
| Carrying value adjustments | (281) | (21) | (260) | ||||||||||||||
| Total debt, carrying value | $ | 34,466 | $ | 2,963 | $ | 31,503 | |||||||||||
During the first six months of Fiscal 2027, the outstanding principal amount of our total debt increased $3.0 billion to $34.7 billion, driven primarily by an increase in net debt from the issuance of Senior Notes.
We define core debt as the total principal amount of our debt, less DFS related debt and other debt. Our core debt was $14.0 billion and $17.0 billion as of July 31, 2026 and January 30, 2026, respectively. See Note 6 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our debt.
DFS debt primarily represents debt from our securitization and structured financing programs. Our risk of loss under these programs is limited to transferred lease and loan payments and associated equipment, as the credit holders have no recourse to Dell Technologies.
To fund the expansion of our DFS business, we balance the use of the securitization and structured financing programs with other sources of liquidity. We approximate the amount of our core debt used to fund the DFS business by applying a 7:1 debt-to-equity ratio to the sum of our financing receivables balance and equipment under operating leases, net, also referred to as DFS owned assets. The debt-to-equity ratio is based on the underlying credit quality of the assets. See Note 4 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our DFS debt.
The following table presents DFS owned assets as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
Financing receivables, net | $ | 20,430 | $ | 14,280 | |||||||
Equipment under operating leases, net | 3,182 | 2,459 | |||||||||
DFS owned assets | $ | 23,612 | $ | 16,739 | |||||||
We believe we will continue to be able to make our debt principal and interest payments, including payment of short-term maturities, from existing and expected sources of cash. Cash used for debt principal and interest payments may include operating cash flows, short-term borrowings under our commercial paper program or our revolving credit facility, or other borrowings. Under our variable-rate debt, we could experience variations in our future interest expense from potential fluctuations in applicable reference rates, or from possible fluctuations in the level of DFS debt required to meet future demand for customer financing.
63
At our sole discretion, we may purchase, redeem, prepay, refinance, or otherwise retire any amount of our outstanding indebtedness under the terms of such indebtedness at any time and from time to time, in open market or negotiated transactions with the holders of such indebtedness or otherwise, as we consider appropriate in light of market conditions and other relevant factors.
Cash Flows
The following table presents a summary of our Condensed Consolidated Statements of Cash Flows for the periods indicated:
| Six Months Ended | |||||||||||
| July 31, 2026 | August 1, 2025 | ||||||||||
| (in millions) | |||||||||||
| Net change in cash from: | |||||||||||
| Operating activities | $ | 6,306 | $ | 5,339 | |||||||
| Investing activities | (2,404) | (743) | |||||||||
| Financing activities | (3,836) | (228) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (35) | 104 | |||||||||
| Change in cash, cash equivalents, and restricted cash | $ | 31 | $ | 4,472 | |||||||
Operating Activities — Cash provided by operating activities was $6.3 billion during the first six months of Fiscal 2027 and was driven by net revenue growth, profitability, and working capital dynamics, partially offset by higher financing receivables, all of which factors were primarily affected by increased demand for our ISG offerings. During the first six months of Fiscal 2026, cash provided by operating activities was $5.3 billion and was driven by net revenue growth, profitability, and similar working capital dynamics.
Investing Activities — Investing activities primarily consist of cash used to fund capital expenditures for property, plant, and equipment inclusive of equipment under operating leases and equipment used to support our as-a-service offerings, which we refer to collectively as assets in a customer contract. Additional activities may include capitalized software development costs, the maturities, sales, and purchases of investments, and acquisitions and divestitures. Cash used in investing activities was $2.4 billion during the first six months of Fiscal 2027 and primarily consisted of cash used for capital expenditures. Cash used in investing activities was $0.7 billion during the first six months of Fiscal 2026 and consisted of cash used for capital expenditures, partially offset by cash proceeds from the sale of Secureworks.
Financing Activities — Financing activities primarily consist of the proceeds and repayments of debt and return of capital to our shareholders. Cash used by financing activities was $3.8 billion and $0.2 billion during the first six months of Fiscal 2027 and Fiscal 2026, respectively, and primarily consisted of repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, and the payment of quarterly dividends, the effects of which were partially offset by net proceeds from the issuance of Senior Notes and DFS debt.
DFS Cash Flow Impacts — DFS offerings are initially funded through cash on hand at the time of origination, some of which is subsequently replaced with financing. For offerings that qualify as sales-type leases, the initial funding of financing receivables is reflected as an impact to cash flows from operations. For offerings that qualify as operating leases, the initial funding is classified as a capital expenditure and reflected as cash flows used in investing activities. DFS new financing originations were $10.3 billion and $4.0 billion during the first six months of Fiscal 2027 and Fiscal 2026, respectively. As of July 31, 2026, we had $20.4 billion of total net financing receivables and $3.2 billion of equipment under operating leases, net.
Supply Chain Finance Program — We maintain a Supply Chain Finance Program (the “SCF Program”) that enables eligible suppliers to sell receivables due from us to a third-party financial institution at the suppliers’ sole discretion. The SCF Program does not impact our liquidity, as payments by us to participating suppliers are remitted to the financial institution on the original invoice due date. Further, we negotiate payment terms with our suppliers regardless of their decision to participate in the SCF Program. Payments made under the SCF Program are included in cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows. See Note 15 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information regarding the SCF Program.
64
Capital Commitments and Other Cash Requirements
Capital Expenditures — We spent $2.2 billion and $1.2 billion during the first six months of Fiscal 2027 and Fiscal 2026, respectively, on property, plant, and equipment and capitalized software development costs. Of total expenditures incurred, funding of assets in a customer contract totaled $1.6 billion and $0.7 billion during the first six months of Fiscal 2027 and Fiscal 2026, respectively. Product demand, product mix, the use of contract manufacturers, and ongoing investments in operating and information technology infrastructure influence the level and prioritization of our capital expenditures.
Repurchases of Common Stock — On September 23, 2021, our Board of Directors approved a stock repurchase program with no fixed expiration date under which we were authorized to repurchase a specified dollar value of Class C Common Stock, exclusive of any fees, commissions, or other expenses related to such repurchases. As of January 30, 2026, our Board of Directors authorized the repurchase of up to $20 billion of Class C Common Stock and on February 26, 2026 authorized an additional $10 billion of Class C Common Stock for repurchase. Following the February 26, 2026 approval, we had approximately $15.2 billion of authorized shares remaining under the program.
During the first six months of Fiscal 2027, we repurchased approximately 20 million shares of Class C Common Stock for a total purchase price of approximately $5.4 billion. During the first six months of Fiscal 2026, we repurchased approximately 30 million shares of Class C Common Stock for a total purchase price of approximately $2.9 billion.
Dividend Payments — During the first six months of Fiscal 2027 and Fiscal 2026, we paid $0.9 billion and $0.8 billion in dividends and dividend equivalents, respectively, at a rate of $0.630 and $0.525 per share per fiscal quarter, respectively.
Purchase Obligations — Purchase obligations are contractual obligations that are enforceable and legally binding on us to purchase goods or services and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Purchase obligations include the non-cancelable portion or the minimum cancellation fee under the contract, and they are primarily related to commitments with suppliers, software maintenance, and support services.
Purchase obligations exclude contracts that may be canceled without penalty, open purchase orders that are entered into during the ordinary course of business, and certain portions of strategic supplier agreements. Open purchase orders typically represent flexible and mutually beneficial purchase arrangements with our suppliers which authorize us to make purchases based on our projected demand and manufacturing needs rather than through binding purchase obligations. Strategic supplier agreements are typically long-term in nature with fixed or minimum quantities to be purchased from our suppliers throughout the term of the contract in order to minimize inventory risk, particularly in a dynamic commodity supply environment. The portions of strategic supplier agreements for which certain commodities will be purchased at a price to be mutually agreed upon after the balance sheet date cannot be reasonably estimated and therefore are excluded from purchase obligations.
To meet growing demand, we have increased our purchases of certain components with suppliers, resulting in increased purchase obligations. We expect our purchases of those components will continue to increase, including committed purchases under long-term strategic supplier agreements at prices to be mutually agreed upon at a future date.
As of July 31, 2026, we had purchase obligations of $34.8 billion, of which $24.6 billion is payable within twelve months.
65
Market Conditions
We regularly monitor economic conditions and associated impacts on the financial markets and our business. We consistently evaluate the financial health of our supplier base, carefully manage customer credit, diversify counterparty risk, and monitor the concentration risk of our cash and cash equivalents balances globally. We routinely monitor our financial exposure to borrowers and counterparties.
We monitor credit risk associated with our financial counterparties using various market credit risk indicators such as credit ratings issued by nationally recognized credit rating agencies and changes in market credit default swap levels. To date, the majority of revenue from our AI‑optimized servers offerings has involved purchases by a relatively small number of large customers and cloud service providers. Such purchases generally involve larger amounts of credit, and could impact our overall credit risk in trade and financing receivables. We perform periodic evaluations of our positions with counterparties and may limit exposure to any one counterparty in accordance with our policies. We monitor and manage our positions based on current and expected market developments.
We use derivative instruments to hedge certain foreign currency exposures. We use forward contracts and purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions denominated in currencies other than the U.S. Dollar. In addition, we primarily use forward contracts and may use purchased options to hedge monetary assets and liabilities denominated in a foreign currency. See Note 7 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our use of derivative instruments.
We are exposed to interest rate risk related to our variable-rate debt portfolio. In the normal course of business we follow established policies and procedures to manage this risk, including monitoring of our asset and liability mix and the use of derivative instruments. As a result, we do not anticipate any material losses from interest rate risk.
66
Summarized Guarantor Financial Information
The Company’s outstanding senior notes (“Senior Notes”) are registered, unsecured, and issued by Dell International L.L.C. and EMC Corporation (the “Issuers”), both of which are wholly-owned subsidiaries of Dell Technologies Inc. The Senior Notes are guaranteed on a joint and several unsecured basis by Dell Technologies Inc. and its wholly-owned subsidiaries, Denali Intermediate, Inc. and Dell Inc. (collectively, the “Guarantors”).
Basis of Preparation of the Summarized Financial Information — The tables below are summarized financial information provided in conformity with Rule 13-01 of the SEC’s Regulation S-X. The summarized financial information of the Issuers and Guarantors (collectively, the “Obligor Group”) is presented on a combined basis, excluding intercompany balances and transactions between entities in the Obligor Group. The Obligor Group’s investment balances in subsidiaries of Dell Technologies Inc. that are not part of the Obligor Group (the “Non-Obligor Subsidiaries”) have been excluded. The Obligor Group’s amounts due from, amounts due to, and transactions with Non-Obligor Subsidiaries have been presented separately.
The following table presents summarized results of operations information for the Obligor Group for the period indicated:
| Six Months Ended | |||||
| July 31, 2026 | |||||
| (in millions) | |||||
| Net revenue | $ | 3,952 | |||
| Gross margin | 2,431 | ||||
| Operating income | 624 | ||||
| Interest and other, net | (1,886) | ||||
| Loss before income taxes | $ | (1,262) | |||
| Net loss attributable to Obligor Group (a) | $ | (863) | |||
(a)Includes net loss from intercompany transactions with Non-Obligor Subsidiaries of $1.6 billion, which primarily consists of interest expense, shared services, and the resale of solutions.
The following table presents summarized balance sheet information for the Obligor Group as of the dates indicated:
| July 31, 2026 | January 30, 2026 | ||||||||||
| (in millions) | |||||||||||
| ASSETS | |||||||||||
| Current assets | $ | 3,132 | $ | 2,470 | |||||||
| Intercompany receivables | — | 317 | |||||||||
| Short-term intercompany loan receivables | 784 | 306 | |||||||||
| Total current assets | 3,916 | 3,093 | |||||||||
| Goodwill and intangible assets | 13,696 | 13,788 | |||||||||
| Other non-current assets | 3,669 | 3,319 | |||||||||
| Total assets | $ | 21,281 | $ | 20,200 | |||||||
| LIABILITIES | |||||||||||
| Current liabilities | $ | 6,375 | $ | 6,037 | |||||||
| Intercompany payable | 454 | — | |||||||||
| Total current liabilities | 6,829 | 6,037 | |||||||||
| Long-term debt | 22,511 | 20,035 | |||||||||
| Long-term intercompany loan payables | 44,826 | 44,825 | |||||||||
| Other non-current liabilities | 3,021 | 3,293 | |||||||||
| Total liabilities | $ | 77,187 | $ | 74,190 | |||||||
67
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For quantitative and qualitative disclosures about market risk affecting us, see “Part II — Item 7A — Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026. Our exposure to market risks has not changed materially from that set forth in such Annual Report on Form 10-K.
ITEM 4 — CONTROLS AND PROCEDURES
This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2 filed with this report. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
In connection with the preparation of this report, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2026. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of July 31, 2026, the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
We are in the process of an ongoing business modernization initiative to advance our capabilities, leverage new technology, and optimize business processes to change the way we work and make decisions, improve business outcomes, and reduce costs. As part of this enterprise-wide initiative, we are modernizing accounting and finance systems. During the fiscal quarter ended July 31, 2026, we implemented certain functions of a new enterprise resource planning system, and we plan to migrate additional business processes in the future. We have modified and will continue to modify the design and implementation of certain internal control processes to accommodate changes to our business processes and finance procedures, as our business modernization initiative continues.
There were no other changes in our internal control over financial reporting during the fiscal quarter ended July 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
68
PART II — OTHER INFORMATION
ITEM 1 — LEGAL PROCEEDINGS
The information required by this item is incorporated herein by reference to the information set forth under the caption “Legal Matters” in Note 10 of the Notes to the Condensed Consolidated Financial Statements included in Part I of this report.
ITEM 1A — RISK FACTORS
In addition to the risks and uncertainties set forth in this report, the risks discussed in “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026 could materially affect our business, operating results, financial condition, or prospects. The risks described in such Annual Report on Form 10-K and our subsequent SEC reports are not the only risks facing us. There are additional risks and uncertainties not currently known to us or that we currently deem to be immaterial that also may materially adversely affect our business, operating results, financial condition, or prospects.
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities
The following table presents information with respect to our purchases of Class C Common Stock during the second quarter of Fiscal 2027:
| Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs | ||||||||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||||||||
| Repurchases from May 2, 2026 to May 29, 2026 | 0.5 | $ | 224.40 | 0.5 | $ | 14,059 | ||||||||||||||||||||
| Repurchases from May 30, 2026 to June 26, 2026 | 4.1 | $ | 408.36 | 4.1 | $ | 12,404 | ||||||||||||||||||||
| Repurchases from June 27, 2026 to July 31, 2026 | 4.9 | $ | 413.67 | 4.9 | $ | 10,371 | ||||||||||||||||||||
| Total | 9.5 | 9.5 | ||||||||||||||||||||||||
This table excludes U.S. federal excise taxes and shares withheld from stock awards to settle employee withholding obligations related to the vesting of such awards.
On September 23, 2021, our Board of Directors approved our current stock repurchase program with no fixed expiration date under which we may repurchase a specified dollar value of Class C Common Stock, exclusive of any fees, commissions, or other expenses related to such repurchases. As of January 30, 2026, our Board of Directors authorized the repurchase of up to $20 billion of Class C Common Stock and on February 26, 2026 authorized an additional $10 billion of Class C Common Stock for repurchase. Following the February 26, 2026 approval, we had approximately $15.2 billion of authorized shares remaining for repurchase under the program.
See Note 12 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about the stock repurchase program.
Sales of Unregistered Securities
During July 2026, the Company issued 716,173 shares of Class C Common Stock to shareholders upon the conversion of the same number of shares of our Class B Common Stock held by and at the election of such shareholders in accordance with our certificate of formation. The issuance of the Class C Common Stock in this transaction was made in reliance on the exemption from registration under the Securities Act afforded by Section 3(a)(9) thereof. No commission or other remuneration was paid or given directly or indirectly for soliciting the exchange of these securities.
69
ITEM 5 — OTHER INFORMATION
On June 11, 2026 , Richard J. Rothberg , the Company’s General Counsel , terminated a trading arrangement that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The arrangement, originally adopted on March 10, 2026, was scheduled to remain in effect through June 30, 2026, and provided for the sale of up to 45,000 shares of the Company's Class C Common stock. No shares of Class C Common Stock were sold pursuant to the arrangement prior to its termination.
70
ITEM 6 — EXHIBITS
71
| 101 .INS† | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101 .SCH† | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101 .CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101 .DEF† | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101 .LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101 .PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101) | |||||||
| † | Filed with this report. | |||||||
| †† | Furnished with this report. | |||||||
| * | Management contracts or compensation plans or arrangements in which directors or executive officers participate. | |||||||
72
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DELL TECHNOLOGIES INC. | ||||||||
| By: | /s/ RICHARD TROY SHARP | |||||||
| Richard Troy Sharp | ||||||||
| Senior Vice President, Corporate Finance and Chief Accounting Officer | ||||||||
| (On behalf of registrant and as principal accounting officer) | ||||||||
Date: September 8, 2026
73