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Item 7. Management’s Discussion and Analysis

2025-03-25 compared with 2024-03-25 · 322 added, 300 removed, 501 unchanged (55% of the section changed)

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This management’s discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes included in this Annual Report on Form 10-K.

This section of this Form 10-K generally discusses Fiscal 2024 and Fiscal 2023 items and presents year-to-year comparisons between Fiscal 2024 and Fiscal 2023 results.

Discussion of Fiscal 2022 items and year-to-year comparisons between Fiscal 2023 and Fiscal 2022 results that are not included in this Form 10-K are presented in “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2023, as filed with the SEC on March 30, 2023, which is available free of charge on the SEC’s website at www.sec.gove and on our Investor Relations website at investors.delltechnologies.com.

This section of this Annual Report on Form 10-K generally discusses Fiscal 2025 and Fiscal 2024 items.

This section also discusses Fiscal 2024 and Fiscal 2023 results, as the Company revised its Fiscal 2024 items to correct for a misstatement in its financial statements discovered during the fourth quarter of Fiscal 2025.

The revisions ensure comparability across all periods reflected herein.

For additional information, see Note 1 and Note 22 of the Notes to the 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.

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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.

Unless the context indicates otherwise, references in this report to “we,” “us,” “our,” the “Company,” and “Dell Technologies” mean Dell Technologies Inc.

and its consolidated subsidiaries, references to “Dell” mean Dell Inc.

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Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31.

We refer to our fiscal year ended February 2, 2024 as “Fiscal 2024” and our fiscal year ended February 3, 2023 as “Fiscal 2023.” Fiscal 2024 included 52 weeks and Fiscal 2023 included 53 weeks.

We refer to our fiscal years ended January 31, 2025, February 2, 2024, and February 3, 2023 as “Fiscal 2025,” “Fiscal 2024,” and “Fiscal 2023,” respectively.

Both Fiscal 2025 and Fiscal 2024 included 52 weeks, while Fiscal 2023 included 53 weeks.

Company Overview

Dell Technologies is a global technology company that provides customers with a broad and innovative solutions portfolio to help customers modernize their information technology (“IT”) infrastructure, address workforce transformation, and provide critical solutions that keep people and organizations connected.

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 artificial intelligence (“AI”), software-defined, and cloud native infrastructure solutions.

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 as we execute our strategy to leverage our strengths to extend our leadership positions and capture new growth.

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”) — ISG includes our storage, server, and networking offerings.

Our comprehensive storage portfolio includes modern and traditional storage solutions, including all-flash arrays, scale-out file, object platforms, hyper-converged infrastructure, and software-defined storage.

• Infrastructure Solutions Group (“ISG”) — ISG includes our servers and networking offerings and our storage offerings.

Our server portfolio includes high-performance general-purpose and AI-optimized servers.

Our networking portfolio includes wide area network infrastructure, data center and edge networking switches, and cables and optics.

ISG also offers software, peripherals, and services, including consulting and support and deployment.

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CSG also includes services offerings, such as configuration, support and deployment, and extended warranties.

Our “other businesses” primarily consist of our resale of standalone offerings of VMware LLC (formerly “VMware, Inc.” and individually and together with its subsidiaries, “VMware”), referred to as “VMware Resale,” and offerings of SecureWorks Corp.

Our other businesses primarily consist of our resale of standalone offerings of VMware LLC (formerly VMware, Inc.

and individually and together with its subsidiaries, “VMware”), referred to as “VMware Resale,” and offerings of SecureWorks Corp.

(“Secureworks”).

These businesses are not classified as reportable segments, either individually or collectively.

For further discussion regarding our current reportable segments, see “Item 1 Business”, “Results of Operations — Business Unit Results,” and Note 19 of the Notes to the Consolidated Financial Statements included in this report.

We offer customers choice in how they acquire our solutions including traditional purchasing and financing offerings provided by Dell Financial Services and its affiliates (“DFS”).

We also offer flexible consumption models, including utility, subscription, and as-a-Service models.

These offerings allow our customers to pay over time and provide them with operational and financial flexibility.

These businesses are divested businesses or their offerings are no longer actively sold, and are not classified as reportable segments, either individually or collectively.

Their operating results are reported within Corporate and other.

On October 21, 2024, Secureworks announced that it had entered into a definitive agreement providing for its sale to Sophos Inc., an affiliate of Thoma Bravo, L.P., a private equity and growth capital firm.

The transaction was completed on February 3, 2025, subsequent to the close of the Company’s fiscal year ended January 31, 2025, in an all-cash transaction for a purchase price of approximately $0.9 billion.

For further discussion regarding our current reportable segments, see “Results of Operations — Business Unit Results” and Note 18 of the Notes to the Consolidated Financial Statements included in this report.

We offer customers choice 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 as-a-Service, subscription, utility, 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 5 of the Notes to the Consolidated Financial Statements included in this report.

Business Trends and Challenges

Fiscal 2024 Significant Developments — During Fiscal 2024, certain significant developments impacted the environment in which we operate.

Such developments, and their impact on our operations, were as follows:

• Macroeconomic uncertainty:

Throughout the year, the effects of the evolving macroeconomic environment continued to impact industry-wide demand as customers were cautious and measured in their approach to IT spending, which affected our ISG and CSG net revenue performance.

• Advancements in artificial intelligence:

Despite overall caution from our enterprise and large corporate customers, our ISG business benefited from increased demand for AI-optimized solutions as advancements in AI influenced customer spending behavior as organizations look to implement AI in their own operations.

Demand for AI-optimized servers outpaced the supply of graphics processing units (“GPUs”) for these products, resulting in elevated backlog levels for such offerings as we exited the fiscal year.

Fiscal 2025 Significant Developments — During Fiscal 2025, we executed our strategy with strong operating results, generating net revenue and operating income growth.

The following trends and conditions affected the environment in which we operated:

• Macroeconomic environment:

The demand environment was strong for our servers and networking offerings, which contributed to overall net revenue growth.

Additionally, we saw modest demand improvement in our commercial offerings within CSG.

Given the demand dynamics for the year, we experienced a shift in the mix of the business towards our ISG offerings.

• Demand for AI-optimized solutions:

Our ISG business continued to benefit from increased demand for AI-optimized solutions as customers continue to adopt and further integrate AI into their operations.

As a result of the continued strong demand for our AI-optimized servers, backlog levels for such offerings remained elevated as we exited the fiscal year.

• Supply chain:

Notwithstanding the constraints in supply for GPUs, our supply chain operated efficiently during the year.

We experienced a decline in component and logistics costs, which we refer to as input costs.

Input costs decreased generally as a result of declines in demand leading to improving supply positions for certain limited-source components as well as reductions in both expedited shipments and overall rate costs in the freight network.

Notwithstanding the increased demand for AI-optimized solutions, our supply chain continued to operate efficiently.

We experienced a modest increase in input costs, primarily driven by both component and logistics costs.

• Broadcom’s acquisition of VMware:

On November 22, 2023, Broadcom, Inc., (“Broadcom”) completed its acquisition of VMware, leading to changes to our relationship with VMware described below.

The changes affected our other businesses net revenue, most notably in the fourth quarter of the fiscal year.

Throughout the year, we remained focused on our key strategic priorities, building long-term value creation for our stakeholders, and addressing our customers’ needs while continuing to make prudent decisions in response to the environment.

We balanced profitability and growth while executing disciplined pricing and navigating through competitive pricing pressures, which increased as the year progressed.

Additionally, we continued to execute cost management measures, including limiting external hiring, employee reorganizations, and other actions to align our investments with our strategic priorities and customer needs.

These actions resulted in a reduction in our overall headcount.

Despite continued near-term challenges, we expect the demand environment to improve in Fiscal 2025 which will enable us to achieve net revenue growth for the full fiscal year.

We expect ISG net revenue to grow, driven by our AI-optimized servers, improving demand for our traditional servers, and a recovery in demand for our storage offerings.

We expect CSG net revenue growth for the full fiscal year, driven in part by the anticipated PC refresh cycle in the latter part of Fiscal 2025.

While we anticipate both ISG and CSG net revenue growth, we expect a continued reduction of our other businesses’ net revenue as a result of the change in our commercial relationship with VMware.

We expect input costs to increase during Fiscal 2025, principally driven by anticipated inflation for component costs as the year progresses.

Further, we anticipate that the pricing environment will be more competitive in Fiscal 2025, which we began to observe during the second half of Fiscal 2024.

On November 22, 2023, Broadcom Inc.

(“Broadcom”) completed its acquisition of VMware, leading to changes to our relationship with VMware as described below.

We expect demand growth across our servers and networking offerings and, to a lesser extent, our storage offerings, which we expect will result in ISG net revenue growth in Fiscal 2026.

We expect modest CSG net revenue growth for the full fiscal year, driven in part by the anticipated PC refresh cycle in the latter part of Fiscal 2026.

Additionally, we expect a continued reduction of our Corporate and other net revenue as we no longer act as a distributor of VMware’s standalone products and services.

We expect a modest decline in input costs during the first half of Fiscal 2026.

Input cost trends are dependent on the strength or weakness of actual end-user demand and supply dynamics, which will continue to fluctuate and ultimately impact our costs, pricing, and operating results.

We plan to mitigate the impact of these dynamics through continued disciplined cost management.

Throughout Fiscal 2025, we will continue to advance our own capabilities to change the way we work and make decisions, improve business outcomes and the customer experience, and reduce cost by leveraging new technology to streamline our own systems and optimize business processes.

We remain focused on executing our key strategic priorities, building long-term value creation for our stakeholders, and addressing our customers’ needs while continuing to make prudent decisions in response to the environment.

We expect margin rate pressure resulting from a continuing shift in mix towards our AI-optimized servers and a competitive environment.

We look to balance profitability and growth while maintaining disciplined pricing as we navigate through competitive pricing pressures.

We continue to advance our own capabilities to change the way we work and make decisions, improve business outcomes and the customer experience, and reduce costs by leveraging new technology and optimizing business processes.

We remain committed to disciplined cost management in coordination with our ongoing business modernization initiatives and expect continued reductions in operating expenses as we take certain measures to reduce costs, including limitation of external hiring, employee reorganizations, and other actions to align our investments with our strategic priorities and customer needs.

We anticipate these actions will result in additional reductions in our overall headcount.

We believe our unique operating advantages provide a foundation to foster growth, drive efficiencies, and continue to position us for long-term success.

Relationship with VMware — On November 1, 2021, we completed our spin-off of VMware by means of a special stock dividend (the “VMware Spin-off”).

In connection with and upon completion of the VMware Spin-off, we entered into the Commercial Framework Agreement (“CFA”) with VMware, which provided the framework under which we and VMware continued our commercial relationship.

Pursuant to the CFA, we have acted as a distributor of VMware’s standalone products and services, purchased such products and services for resale to customers, and integrated VMware products and services with Dell Technologies’ offerings for sale to end-users.

On November 22, 2023, VMware was acquired by Broadcom.

Following the acquisition, Broadcom announced changes to its go-to-market approach for VMware offerings which impacted our commercial relationship with VMware.

In response to such changes, on January 25, 2024, under a provision of the CFA permitting us to terminate the agreement upon a change in control of VMware, we delivered notice of termination of the CFA to Broadcom under which the agreement will terminate on March 25, 2024.

The Company continues to integrate select VMware products and services with Dell Technologies’ offerings and sell them to end-users.

Relationship with VMware — On November 22, 2023, VMware was acquired by Broadcom, and subsequently announced changes to its go-to-market approach for VMware offerings that impacted our commercial relationship with VMware.

On March 25, 2024, we terminated our Commercial Framework Agreement with VMware, which provided the framework under which we and VMware continued our commercial relationship following our spin-off of VMware on November 1, 2021.

We no longer act as a distributor of Broadcom’s VMware standalone products and services, although we will 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 selected Dell Technologies’ offerings to end-users, such as through our VxRail solution.

The results of such offerings are reflected within CSG or ISG, depending upon the nature of the underlying offering sold.

VMware was a related party until the date of its acquisition by Broadcom.

The acquisition terminated the preexisting related party relationship with VMware such that no related party relationship exists with either Broadcom or VMware as of the date of issuance of this report.

For more information regarding the impact of the Broadcom acquisition of VMware and our related party transactions with VMware, see Note 20 of the Notes to the Consolidated Financial Statements included in this report.

ISG — We expect that ISG will continue to be impacted by the evolving nature of the IT infrastructure market and competitive environment.

With our scale and strong solutions portfolio, we believe we are well-positioned to address the ongoing competitive dynamics and trends in technology and customer needs.

The acquisition terminated the preexisting related party relationship with VMware such that no related party relationship exists with either Broadcom or VMware effective as of November 22, 2023.

For more information regarding the impact of the Broadcom acquisition of VMware and our prior related party transactions with VMware, see Note 19 of the Notes to the Consolidated Financial Statements included in this report.

ISG — We expect ISG will continue to be impacted by the evolving nature of the IT infrastructure market and competitive environment.

With our scale and market-leading solutions portfolio, we believe we are well-positioned to address the ongoing competitive dynamics and trends in technology and customer needs.

Through our collaborative, customer-focused approach to innovation, we strive to deliver new and relevant solutions and software to our customers quickly and efficiently.

We continue to focus on customer base expansion and the lifetime value of customer relationships.

We anticipate that ISG will continue to benefit from technology advances and customer interest in AI.

Through our server and storage offerings, including our AI-optimized solutions, we are well positioned to capture growth and support our customers’ needs.

We anticipate ISG will continue to benefit from technology advancements and interest in AI as customers continue to adopt and integrate AI into their operations.

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 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 create additional challenges in managing demand and supply levels.

While we have seen lead times shorten, we anticipate the next-generation of these components will be subject to supply constraints as demand for these components remains high.

We expect that growth in data will continue to generate long-term demand for our storage solutions and services.

Cloud native applications are expected to continue to be a key trend in the infrastructure market.

We benefit from offering solutions that address software-defined storage, hyper-converged infrastructure, and modular solutions based on server-centric architectures.

We continue to expand our offerings in external storage arrays, which incorporate flexible, cloud-based functionality.

We benefit from offering solutions that address software-defined storage, hyper-converged infrastructure, and modular solutions based on server-centric architectures.

Our storage business is subject to seasonal trends, which may continue to impact ISG results.

CSG — We participate in all segments of the PC market but focus on commercial and high-end consumer computing devices, as we believe they represent the most stable and profitable markets.

We anticipate that CSG will benefit from advances in AI in the long-term as customers will require PCs with the ability to run their complex AI workloads.

Competitive dynamics continue to be an important factor in our CSG business and continue to impact pricing and operating results.

We remain 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.

CSG — We participate in all segments of the PC market with a focus on commercial and high-end consumer computing devices, which we believe represent the most stable and profitable markets.

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 impact 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 be subject to seasonal trends and influenced by the timing and scale of the anticipated PC refresh cycle.

Recurring Revenue and Consumption Models — We expect that our flexible consumption models will further strengthen our customer relationships and provide a foundation for growth in 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.

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.

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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 increases in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility (including ongoing military conflicts in Ukraine and the Middle East), and global macroeconomic conditions (including those in China), may affect our ability to conduct business in some non-U.S.

Other Macroeconomic Risks and Uncertainties — The impacts of trade protection measures, including increases in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility, and global macroeconomic conditions (including those in China) may affect our ability to conduct business in some non-U.S.

We monitor and seek to mitigate these risks with adjustments to our manufacturing, supply chain, and distribution networks.

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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 net revenue;

non-GAAP services net revenue;

non-GAAP net revenue;

non-GAAP product gross margin;

These non-GAAP financial measures include non-GAAP product gross margin;

non-GAAP services gross margin;

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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 net revenue, non-GAAP services net revenue, non-GAAP net revenue, 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 attributable to Dell Technologies, Inc.

- diluted, as defined by us, exclude amortization of intangible assets, the impact of purchase accounting, transaction-related expenses, stock-based compensation expense, other corporate expenses and, for non-GAAP net income and non-GAAP diluted earnings per share attributable to Dell Technologies, fair value adjustments on equity investments and an aggregate adjustment for income taxes.

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 attributable to Dell Technologies Inc.

- 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 attributable to Dell Technologies Inc.

- 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.

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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 amortization of customer relationships, developed technology, and trade names.

In connection with our acquisition by merger of EMC, referred to as the “EMC merger transaction,” and the acquisition of Dell Inc.

by Dell Technologies Inc., referred to as the “going-private transaction,” all of the tangible and intangible assets and liabilities of EMC and Dell Inc.

and their consolidated subsidiaries, respectively, were accounted for and recognized at fair value on the transaction dates.

Accordingly, for the periods presented, amortization of intangible assets primarily represents amortization associated with intangible assets recognized in connection with the EMC merger transaction and the going-private transaction.

We exclude amortization charges for purchased intangible assets as they are significantly impacted by the timing and magnitude of our acquisitions, may vary in amount from period to period, and do not reflect current operating performance.

• Impact of Purchase Accounting — The impact of purchase accounting includes purchase accounting adjustments primarily related to the EMC merger transaction recorded under the acquisition method of accounting in accordance with the accounting guidance for business combinations.

In accordance with such guidance, all of the assets and liabilities acquired were accounted for and recognized at fair value as of the transaction date, and the fair value adjustments continue to amortize over the estimated useful lives in the periods following the transaction.

The fair value adjustments that are still amortizing primarily relate to property, plant, and equipment.

We exclude the impact of purchase accounting as it is does 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.

• Transaction-Related (Income) Expenses — Transaction-related expenses typically consist of acquisition, integration, and divestiture related costs, and are expensed as incurred.

During Fiscal 2022, this category also includes costs incurred in connection with the VMware Spin-off.

These expenses primarily represent costs for legal, banking, consulting, and advisory services.

During Fiscal 2022, this category included $1.5 billion in debt extinguishment fees primarily associated with the early retirement of certain senior notes.

From time to time, this category also may include transaction-related income related to divestitures of businesses or asset sales.

During Fiscal 2022, we recognized a pre-tax gain of $4.0 billion on the sale of our Boomi business.

We exclude transaction-related expenses because they are significantly impacted by the timing and magnitude of our acquisitions and divestitures and do not reflect current operating performance.

• 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, referred to as the “EMC merger transaction,” and the acquisition of Dell by Dell Technologies Inc., referred to as the “going-private transaction,” all of the tangible and intangible assets and liabilities of EMC and Dell, respectively, were accounted for and recognized at fair value on the transaction dates.

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 NYSE on the date of grant.

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.

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.

• Other Corporate Expenses — Other corporate expenses consist primarily of impairment charges, severance expenses, incentive charges related to equity investments, facility action costs, and payroll taxes associated with stock-based compensation.

During Fiscal 2024 and Fiscal 2023, we recognized $0.6 billion and $0.5 billion, respectively, of severance expense related to workforce reduction activities.

Severance costs are primarily related to severance and benefits for employees terminated pursuant to cost savings initiatives.

During Fiscal 2023, other corporate expenses includes $0.9 billion of net expense recognized within interest and other, net, in connection with an agreement to settle the Class V transaction litigation.

• Other Corporate Expenses — Other corporate expenses consist primarily of severance expenses, payroll taxes associated with stock-based compensation, incentive charges related to equity investments, facility action costs, transaction-related expenses, and impairment charges.

Severance costs are primarily related to severance and benefits for employees terminated pursuant to cost management initiatives.

During Fiscal 2025, Fiscal 2024, and Fiscal 2023, we recognized $0.7 billion, $0.6 billion, and $0.5 billion, respectively, of severance expense related to workforce reduction activities.

During Fiscal 2023, other corporate expenses also included $0.9 billion of net expense recognized within interest and other, net, in connection with an agreement to settle the Class V transaction litigation.

See Note 11 of the Notes to the Consolidated Financial Statements included in this report for information about this matter.

Transaction-related expenses typically consist of acquisition, integration, and divestitures related costs, primarily representing costs for legal, banking, consulting, and advisory services, and are expensed as incurred.

Although we may incur these types of expenses 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.

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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, as well as an adjustment for discrete tax items.

• 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.

During Fiscal 2025, the aggregate adjustment for income taxes included discrete tax benefits of $0.4 billion related to changes in uncertain tax benefits resulting from the expiration of certain U.S.

statutes of limitations and $0.2 billion related to stock-based compensation.

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.

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See Note 12 of the Notes to the Consolidated Financial Statements included in this report for additional information about our income taxes.

Beginning in Fiscal 2025, our non-GAAP income tax will be calculated using a fixed estimated annual tax rate which will be 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 the geographic mix of revenue and expenses, changes to our corporate structure, and other significant events.

Beginning in Fiscal 2025, 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 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:

Fiscal Year Ended

February 2, 2024 % Change February 3, 2023 % Change January 28, 2022

January 31, 2025 % Change February 2, 2024 % Change February 3, 2023

(in millions, except percentages)

Product net revenue $ 64,353 (19) % $ 79,250 (1) % $ 79,830

Non-GAAP adjustments:

Impact of purchase accounting — — —

Non-GAAP product net revenue $ 64,353 (19) % $ 79,250 (1) % $ 79,830

Services net revenue $ 24,072 4 % $ 23,051 8 % $ 21,367

Non-GAAP adjustments:

Impact of purchase accounting — — 32

Non-GAAP services net revenue $ 24,072 4 % $ 23,051 8 % $ 21,399

Net revenue $ 88,425 (14) % $ 102,301 1 % $ 101,197

Non-GAAP adjustments:

Impact of purchase accounting — — 32

Non-GAAP net revenue $ 88,425 (14) % $ 102,301 1 % $ 101,229

Product gross margin $ 11,258 — % $ 11,237 (15) % $ 13,221

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Amortization of intangibles 238 331 416

Impact of purchase accounting — 2 3

Stock-based compensation expense 56 51 52

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Non-GAAP adjustments:

Impact of purchase accounting — — 32

Stock-based compensation expense 96 98 100

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Amortization of intangibles 238 331 416

Impact of purchase accounting — 2 35

Stock-based compensation expense 152 149 152

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Non-GAAP gross margin $ 21,810 1 % $ 21,644 (8) % $ 23,427

Fiscal Year Ended

February 2, 2024 % Change February 3, 2023 % Change January 28, 2022

(in millions, except percentages)

Operating expenses $ 15,013 (4) % $ 15,658 (7) % $ 16,915

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Amortization of intangibles (429) (502) (598)

Impact of purchase accounting (14) (42) (32)

Transaction-related expenses (12) (22) (273)

Stock-based compensation expense (633) (729) (779)

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Non-GAAP operating expenses $ 13,281 (4) % $ 13,766 (7) % $ 14,790

Fiscal Year Ended

January 31, 2025 % Change February 2, 2024 % Change February 3, 2023

(in millions, except percentages and per share amounts)

Operating income $ 6,237 15 % $ 5,411 (6) % $ 5,771

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Amortization of intangibles 667 833 1,014

Impact of purchase accounting 14 44 67

Transaction-related expenses 12 22 273

Stock-based compensation expense 785 878 931

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Amortization of intangibles 667 833 1,014

Impact of purchase accounting 14 44 67

Transaction-related (income) expenses 49 (16) (2,143)

Stock-based compensation expense 785 878 931

3 unchanged sentences

Non-GAAP net income $ 5,865 8 % $ 5,422 (5) % $ 5,727

Fiscal Year Ended

2024 % Change February 3,

2023 % Change January 28,

Earnings per share attributable to Dell Technologies Inc.

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Amortization of intangibles 0.93 1.13 1.35

Impact of purchase accounting 0.02 0.06 0.08

Transaction-related (income) expenses 0.07 (0.02) (2.71)

Stock-based compensation expense 1.09 1.19 1.24

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— diluted $ 8.14 10 % $ 7.37 (3) % $ 7.61

In addition to the above measures, we consider free cash flow and adjusted free cash flow to be liquidity measures that 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 to, among other purposes, 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 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.

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 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 debt, the majority of which is asset-backed.

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 consider 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 from operating activities for the periods indicated:

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:

Fiscal Year Ended

2024 % Change February 3,

2023 % Change January 28,

January 31, 2025 % Change February 2, 2024 % Change February 3, 2023

(in millions, except percentages)

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Non-GAAP adjustments:

DFS financing receivables (b) (309) 461 241

DFS operating leases (c) (7) 500 394

Financing receivables (b) 951 (309) 461

Equipment under operating leases (c) 188 (7) 500

Adjusted free cash flow $ 3,097 (45) % $ 5,607 266 % $ 1,533

____________________

(a) Capital expenditures and capitalized software development costs, net include proceeds from sales of facilities, land, and other assets.

(b) DFS financing receivables represent the operating cash flow impact from the change in financing receivables.

We exclude the cash flow impact of DFS financing receivables and operating leases from our adjusted free cash flow, as the initial funding at the time of origination is largely subsequently replaced with cash inflows from DFS debt, the majority of which is asset-backed.

(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.

RESULTS OF OPERATIONS

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Fiscal Year Ended

February 2, 2024 February 3, 2023 January 28, 2022

Net Revenue %

Change Dollars % of

Net Revenue %

Change Dollars % of

January 31, 2025 February 2, 2024 February 3, 2023

Dollars % of Net Revenue % Change Dollars % of Net Revenue % Change Dollars % of Net Revenue

(in millions, except percentages and per share amounts)

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Fiscal Year Ended

February 2, 2024 February 3, 2023 January 28, 2022

Dollars % of Non-GAAP

Net Revenue %

Change Dollars % of Non-GAAP

Net Revenue %

Change Dollars % of Non-GAAP

January 31, 2025 February 2, 2024 February 3, 2023

Dollars % of Net Revenue % Change Dollars % of Net Revenue % Change Dollars % of Net Revenue

(in millions, except percentages and per share amounts)

Non-GAAP net revenue:

Products $ 64,353 72.8 % (19) % $ 79,250 77.5 % (1) % $ 79,830 78.9 %

Services 24,072 27.2 % 4 % 23,051 22.5 % 8 % 21,399 21.1 %

Total non-GAAP net revenue $ 88,425 100.0 % (14) % $ 102,301 100.0 % 1 % $ 101,229 100.0 %

Non-GAAP gross margin:

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Adjusted free cash flow $ 3,097 (45) % $ 5,607 266 % $ 1,533

Non-GAAP product net revenue, non-GAAP services net revenue, non-GAAP net revenue, 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 diluted earnings per share attributable to Dell Technologies, free cash flow, and adjusted free cash flow are not measurements of financial performance prepared in accordance with GAAP.

Non-GAAP financial measures as a percentage of revenue are calculated based on non-GAAP net revenue, where applicable.

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 attributable to Dell Technologies - 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.

During Fiscal 2024, net revenue decreased by 14%, driven by declines in CSG net revenue and, to a lesser extent, ISG net revenue, which reflected the prolonged impact of global macroeconomic conditions on demand.

The decline in CSG net revenue was primarily attributable to a decrease in units sold within both commercial and consumer offerings, partially offset by an increase in the average selling prices of our commercial offerings.

ISG net revenue decreased as a result of a reduction in net revenue attributable to our servers and networking offerings and, to a lesser extent, our storage offerings.

Operating income and non-GAAP operating income decreased by 10% to $5.2 billion and 11% to $7.7 billion, respectively, during Fiscal 2024.

The decline in operating income and non-GAAP operating income was driven by a decrease in ISG operating income and, to a lesser extent, CSG operating income, which both declined primarily as a result of a decrease in net revenue that outpaced the favorable impacts of a decline in input costs and cost management measures.

The decline in ISG operating income was primarily attributable to decreases in our servers and networking offerings and, to a lesser extent, our storage offerings.

The decline in CSG operating income was driven by decreases in both commercial and consumer offerings.

The decline in operating income was partially offset by decreases in other corporate expenses and amortization of intangibles.

During Fiscal 2024, both operating income and non-GAAP operating income as a percentage of net revenue increased 30 basis points to 5.9% and 8.7%, respectively.

These increases were due to an increase in gross margin as a percentage of net revenue, which was principally driven by a decline in input costs.

The increase in operating income and non-GAAP operating income as a percentage of net revenue was offset by an increase in operating expense rate, principally within ISG, that was attributable to a decrease in net revenue which outpaced the impact of continued cost management measures.

Cash provided by operating activities was $8.7 billion during Fiscal 2024, and was primarily driven by profitability coupled with strong inventory management and cash collections performance.

During Fiscal 2023, cash provided by operating activities was $3.6 billion, which primarily reflected profitability that was partially offset by the impact of working capital dynamics.

During Fiscal 2025, net revenue increased by 8%, driven by an increase in ISG net revenue that was partially offset by a decrease in Corporate and other net revenue and, to a lesser extent, CSG net revenue.

The increase in ISG net revenue was driven by growth in our servers and networking 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.

The decline in CSG net revenue was attributable to a decrease in sales of our consumer offerings.

During Fiscal 2025, operating income and non-GAAP operating income increased by 15% to $6.2 billion and 8% to $8.5 billion, respectively.

During Fiscal 2025, the increases in operating income and non-GAAP operating income were primarily attributable to an increase in ISG operating income that was driven by our servers and networking offerings and, to a lesser extent, our storage offerings, which was partially offset by a decrease in CSG operating income.

During Fiscal 2025, operating income and non-GAAP operating income as a percentage of net revenue increased 40 basis points to 6.5% and remained flat at 8.9%, respectively.

The operating income and non-GAAP operating income rates during the current year were affected by the favorable impact of a decrease in operating expense rate that was driven by strong ISG net revenue growth coupled with continued disciplined cost management.

The favorable impact of a decrease in operating expense rate was offset by a decline in gross margin as a percentage of net revenue due to a shift in mix towards AI-optimized server offerings and a competitive CSG pricing environment.

Cash provided by operating activities was $4.5 billion during Fiscal 2025, and was driven by profitability, partially offset by working capital dynamics.

Working capital was primarily impacted by AI, which led to higher inventory, accounts receivable, and accounts payable levels.

During Fiscal 2024, cash provided by operating activities was $8.7 billion, which was primarily driven by profitability coupled with strong inventory management and cash collections performance.

Cash provided by operating activities during Fiscal 2024 also reflected the impact of the $0.9 billion net payment to settle the Class V transaction litigation and $0.4 billion in proceeds from the sale of our U.S.

consumer revolving customer receivables portfolio.

See “Liquidity, Cash Requirements, and Market Conditions” for additional information about our cash flow metrics.

Despite the near-term challenges driven by uncertainty in the macroeconomic environment, we continue to see opportunities to create value and grow as we respond to long-term demand for our IT solutions driven by a technology- and data-enabled world.

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.

During Fiscal 2024, net revenue decreased 14%, primarily driven by declines in CSG net revenue and, to a lesser extent, ISG net revenue.

Fiscal 2025 compared to Fiscal 2024

During Fiscal 2025, net revenue increased 8%, primarily driven by an increase in ISG net revenue that was partially offset by a decrease in Corporate and other net revenue and, to a lesser extent, CSG 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 Fiscal 2024, product net revenue decreased 19%, due to declines in CSG product net revenue and, to a lesser extent, ISG product net revenue.

CSG product net revenue decreased primarily as a result of a decline in units sold, which impacted both our commercial and consumer offerings.

The decline in ISG product net revenue was primarily attributable to a decrease in product net revenue attributable to our servers and networking offerings driven by a decrease in units sold, and, to a lesser extent, a decline in our product net revenue attributable to storage offerings.

During Fiscal 2025, product net revenue increased 11% due to an increase in ISG product net revenue driven by growth in our servers and networking offerings.

The increase was partially offset by a decrease in CSG product net revenue as a result of a decrease in the average selling prices of our CSG offerings and, to a lesser extent, a decline in units sold within our consumer offerings, as well as a decline in Corporate and other product net revenue as we no longer act as a distributor of standalone VMware offerings.

• Services Net Revenue — Services net revenue includes revenue from our services offerings and support services related to hardware products and software licenses.

During Fiscal 2024, services net revenue increased 4%, driven primarily by growth within services net revenue attributable to CSG and other businesses.

During Fiscal 2025, services net revenue was flat as the growth within CSG services net revenue and, to a lesser extent, ISG services net revenue was offset by a decline in Corporate and other services net revenue.

The increase in CSG services net revenue was primarily due to CSG third-party software support and maintenance as well as support and maintenance associated with products sold in prior periods.

The increase in ISG services net revenue was primarily due to support and maintenance associated with products sold in prior periods.

Corporate and other services net revenue declined as we no longer act as a distributor of standalone VMware offerings.

A substantial portion of services net revenue is derived from offerings that have been deferred over a period of time, and, 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 during Fiscal 2025 in the Americas and, to a lesser extent, APJ and remained flat in EMEA.

Fiscal 2024 compared to Fiscal 2023

During Fiscal 2024, net revenue decreased 14%, primarily driven by declines in CSG net revenue and, to a lesser extent, ISG net revenue.

See “Business Unit Results” for further information.

• Product Net Revenue — During Fiscal 2024, product net revenue decreased 19% due to declines in CSG product net revenue and, to a lesser extent, ISG product net revenue.

CSG product net revenue decreased primarily as a result of a decline in units sold, which impacted both our commercial and consumer offerings.

The decline in ISG product net revenue was primarily attributable to a decrease in product net revenue attributable to our servers and networking offerings that was driven by a decrease in units sold and, to a lesser extent, a decline in our product net revenue attributable to storage offerings.

• Services Net Revenue — During Fiscal 2024, services net revenue increased 4%, driven primarily by growth within services net revenue attributable to CSG and Corporate and other.

The increase in services net revenue attributable to CSG was driven primarily by third-party software support and maintenance and hardware support and maintenance.

The increase in services net revenue attributable to other businesses was driven primarily by VMware software maintenance arrangements.

The increase in services net revenue attributable to Corporate and other was driven primarily by VMware software maintenance arrangements.

See “Introduction” for additional information about the impact of Broadcom’s acquisition of VMware on our relationship with VMware.

From a geographical perspective, net revenue decreased in the Americas, EMEA, and APJ during Fiscal 2024, most notably within APJ.

During Fiscal 2024, gross margin and non-GAAP gross margin both decreased 8% to $20.9 billion and $21.4 billion, respectively.

Fiscal 2025 compared to Fiscal 2024

During Fiscal 2025, both gross margin and non-GAAP gross margin increased 1%, to $21.3 billion and $21.8 billion, respectively, driven by an increase in ISG gross margin that was largely offset by a decrease in CSG gross margin.

The increase in ISG gross margin was primarily attributable to growth in our AI-optimized server offerings and, to a lesser extent, our storage offerings.

The decrease in CSG gross margin was primarily attributable to a competitive pricing environment.

During Fiscal 2025, gross margin and non-GAAP gross margin percentage decreased 160 basis points to 22.2% and 170 basis points to 22.8%, respectively.

The decreases in gross margin percentage and non-GAAP gross margin percentage were primarily driven by a shift in mix towards AI-optimized server offerings and a competitive CSG pricing environment.

• Product Gross Margin — During Fiscal 2025, product gross margin and non-GAAP product gross margin remained flat at $11.3 billion and decreased 1% to $11.6 billion, respectively, as the decrease in CSG product gross margin was largely offset by an increase in ISG product gross margin.

The decline in CSG product gross margin was primarily attributable to a competitive pricing environment.

The increase in ISG product gross margin was primarily due to growth in our AI-optimized server offerings and, to a lesser extent, our storage offerings.

During Fiscal 2025, product gross margin percentage and non-GAAP product gross margin percentage decreased 170 basis points to 15.8% and 190 basis points to 16.2%, respectively.

The declines were primarily attributable to a shift in mix towards our AI-optimized server offerings and a competitive CSG pricing environment.

• Services Gross Margin — During Fiscal 2025, both services gross margin and non-GAAP services gross margin increased 2%, to $10.0 billion and $10.2 billion, respectively.

Services gross margin and non-GAAP services gross margin benefited from an increase in support and maintenance associated with products sold in prior periods within both ISG and CSG and, to a lesser extent, an increase in CSG third-party software support and maintenance.

During Fiscal 2025, services gross margin percentage and non-GAAP services gross margin percentage increased 60 basis points to 41.4% and 80 basis points to 42.4%, respectively.

The increases in services gross margin percentage and non-GAAP services gross margin percentage were primarily driven by a shift in mix as we no longer act as a distributor of standalone VMware offerings.

Fiscal 2024 compared to Fiscal 2023

During Fiscal 2024, gross margin and non-GAAP gross margin decreased 7% to $21.1 billion and 8% to $21.6 billion, respectively.

The declines were driven by decreases in both ISG and CSG gross margin that were primarily attributable to a decrease in net revenue, the effect of which was partially offset by lower input costs.

Both gross margin and non-GAAP gross margin percentage increased 160 basis points, to 23.8% and 24.5%, respectively, during Fiscal 2024.

The increases were primarily attributable to the impacts of an overall decline in input costs coupled with an increase in average selling price across many of our offerings as we continued to exercise disciplined pricing in an increasingly competitive environment.

The increases were primarily attributable to the impacts of an overall decline in input costs coupled with an increase in average selling prices across many of our offerings as we continued to exercise disciplined pricing in an increasingly competitive environment.

• Product Gross Margin — During Fiscal 2024, product gross margin and non-GAAP product gross margin both decreased 15%, to $11.2 billion and $11.6 billion, respectively.

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During Fiscal 2024, product gross margin percentage and non-GAAP product gross margin percentage both increased 80 basis points, to 17.5% and 18.1%, respectively, primarily due to an increase in CSG product gross margin percentage.

CSG product gross margin percentage increased primarily as a result of the impacts of an overall decline in input costs coupled with an increase in average selling price across many of our product offerings.

CSG product gross margin percentage increased primarily as a result of the impacts of an overall decline in input costs coupled with an increase in average selling prices across many of our product offerings.

• Services Gross Margin — During Fiscal 2024, services gross margin and non-GAAP services gross margin increased 4% to $9.8 billion and 3% to $10.0 billion, respectively.

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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 Fiscal 2024 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.

Our gross margins for Fiscal 2025 and Fiscal 2024 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.

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Fiscal Year Ended

February 2, 2024 February 3, 2023 January 28, 2022

Dollars % of Net Revenue %

Change Dollars % of Net Revenue %

Change Dollars % of Net Revenue

January 31, 2025 February 2, 2024 February 3, 2023

Dollars % of Net Revenue % Change Dollars % of Net Revenue % Change Dollars % of Net Revenue

(in millions, except percentages)

4 unchanged sentences

Fiscal Year Ended

February 2, 2024 February 3, 2023 January 28, 2022

Dollars % of Net Revenue %

Change Dollars % of Net Revenue % Change Dollars % of Net Revenue

January 31, 2025 February 2, 2024 February 3, 2023

Dollars % of Net Revenue % Change Dollars % of Net Revenue % Change Dollars % of Net Revenue

(in millions, except percentages)

Non-GAAP operating expenses $ 13,281 13.9 % (4) % $ 13,766 15.6 % (7) % $ 14,790 14.5 %

During Fiscal 2024, total operating expenses decreased 7%, due to a decline in selling, general, and administrative expenses.

• Selling, General, and Administrative — During Fiscal 2024, selling, general, and administrative (“SG&A”) expenses decreased 9%, driven by a decrease in employee compensation and benefits expense, principally due to a decline in overall headcount and, to a lesser extent, a decrease in advertising and outside services expense as a result of continued disciplined cost management.

Fiscal 2025 compared to Fiscal 2024

During Fiscal 2025, total operating expenses decreased 4%, due to a decline in selling, general, and administrative (“SG&A”) expenses.

• Selling, General, and Administrative — During Fiscal 2025, SG&A expenses decreased 7%, driven by a decrease in employee compensation and benefits expense, principally due to a decline in overall headcount.

• Research and Development — Research and development (“R&D”) expenses are primarily composed of personnel-related expenses incurred in connection with product development.

R&D expenses increased 1% during Fiscal 2024, principally due to an increase in R&D-related employee compensation and benefits expense, partially offset by a decrease in outside services as a result of continued disciplined cost management.

R&D expenses increased 9% during Fiscal 2025, principally due to an increase in R&D-related employee compensation and benefits expense.

As a percentage of net revenue, R&D expenses for both Fiscal 2025 and Fiscal 2024 were 3.2%.

We continue to support R&D initiatives to innovate and introduce new and enhanced solutions into the market.

During Fiscal 2025, non-GAAP operating expenses decreased 4%, driven by a decline in employee compensation and benefits expense, primarily resulting from a decline in overall headcount.

The decline in employee compensation and benefits expense was partially offset by continued support of R&D initiatives.

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.

Fiscal 2024 compared to Fiscal 2023

During Fiscal 2024, total operating expenses decreased 7% due to a decline in SG&A expenses.

• Selling, General, and Administrative — During Fiscal 2024, SG&A expenses decreased 9%, driven by a decrease in employee compensation and benefits expense, principally due to a decline in overall headcount and, to a lesser extent, a decrease in advertising and outside services expense as a result of continued disciplined cost management.

• Research and Development — R&D expenses increased 1% during Fiscal 2024 principally due to an increase in R&D-related employee compensation and benefits expense, partially offset by a decrease in outside services as a result of continued disciplined cost management.

As a percentage of net revenue, R&D expenses for Fiscal 2024 and Fiscal 2023 were 3.2% and 2.7%, respectively.

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During Fiscal 2024, non-GAAP operating expenses decreased 7% principally due to continued disciplined cost management, which resulted in a decline in employee compensation and benefits, outside services, and advertising expenses, among other items.

We continue to make strategic investments designed to enable growth, marketing, and R&D, 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

Fiscal 2025 compared to Fiscal 2024

During Fiscal 2025, operating income and non-GAAP operating income increased by 15% to $6.2 billion and 8% to $8.5 billion, respectively.

During Fiscal 2025, operating income and non-GAAP operating income as a percentage of net revenue increased 40 basis points to 6.5% and remained flat at 8.9%, respectively.

Fiscal 2024 compared to Fiscal 2023

Operating income and non-GAAP operating income decreased by 6% to $5.4 billion and 9% to $7.9 billion, respectively, during Fiscal 2024.

The decreases were driven by a decrease in ISG operating income, which declined primarily as a result of a decrease in net revenue that outpaced the favorable impacts of a decline in input costs and cost management measures.

The decline in ISG operating income was primarily attributable to decreases in our servers and networking offerings and, to a lesser extent, our storage offerings.

The decline in CSG operating income was driven by decreases in both commercial and consumer offerings.

The decline in operating income was partially offset by decreases in other corporate expenses and amortization of intangibles.

During Fiscal 2024, both operating income and non-GAAP operating income as a percentage of net revenue increased 50 basis points, to 6.1% and 8.9%, respectively.

These increases were due to an increase in gross margin as a percentage of net revenue, which was principally driven by a decline in input costs.

The increases were due to an increase in gross margin as a percentage of net revenue, which was principally driven by a decline in input costs.

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Fiscal Year Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(in millions)

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Foreign exchange (112) (199) (265)

Gain on disposition of businesses and assets — — 3,968

Debt extinguishment gain (loss) 68 — (1,572)

Legal settlement, net — — (894)

1 unchanged sentence

Total interest and other, net $ (1,189) $ (1,324) $ (2,546)

Fiscal 2025 compared to Fiscal 2024

During Fiscal 2025, the change in interest and other, net was favorable primarily due to gains recognized within our strategic investments portfolio and a reduction in interest expense, partially offset by a decline in interest income on investments.

Fiscal 2024 compared to Fiscal 2023

The change in interest and other, net was favorable primarily as a result of $0.9 billion of expense recognized in Fiscal 2023 in connection with an agreement to settle the Class V transaction litigation, coupled with a gain on investments and an increase in investment income during Fiscal 2024.

4 unchanged sentences

Fiscal Year Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(in millions, except percentages)

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Effective income tax rate 9.4 % 17.5 % 24.9 %

For Fiscal 2024 and Fiscal 2023, our effective income tax rate was 17.8% and 24.9%, respectively.

Changes related to our effective income tax rates for Fiscal 2024 as compared to Fiscal 2023 were primarily attributable to the tax impact of foreign operations and benefits from U.S.

research and development tax credits.

In addition, our effective tax rate for Fiscal 2023 included the impact of an expense recognized in connection with the agreement to settle the Class V transaction litigation described in Note 12 of the Notes to the Consolidated Financial Statements.

Fiscal 2025 compared to Fiscal 2024

For Fiscal 2025 and Fiscal 2024, our effective income tax rates were 9.4% and 17.5%, respectively.

The change in our effective tax rates for Fiscal 2025 as compared to Fiscal 2024 was primarily attributable to discrete tax items.

For Fiscal 2025, we recorded discrete tax benefits of $0.4 billion related to changes in uncertain tax benefits resulting from the expiration of certain U.S.

statutes of limitations and $0.2 billion related to stock-based compensation.

Our effective income tax rate can fluctuate depending on the geographic distribution of our worldwide earnings, as our foreign earnings are generally taxed at lower rates than in the United States.

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Many of these tax holidays and reduced tax rates may be extended when certain conditions are met or may be terminated early if certain conditions are not met or as a result of changes in tax legislation.

As of February 2, 2024, we were not aware of any matters of non-compliance or enacted tax legislative changes affecting these tax holidays.

Many countries have enacted or are in the process of enacting laws based on the Pillar Two proposal relating to global minimum tax issued by the Organisation for Economic Co-operation and Development (“OECD”).

While we expect our effective income tax rate and cash income tax payments could increase in future years as a result of the global minimum tax, we do not anticipate a material impact to our Fiscal 2025 consolidated results of operations.

Our assessment could be affected by legislative guidance and future enactment of additional provisions within the Pillar Two framework, particularly in countries in which we have tax holidays and incentives.

Our income tax benefit from tax holidays and incentives decreased the provision for income taxes by approximately $244 million ($0.33 per share) during Fiscal 2024.

As of January 31, 2025, we were not aware of any matters of non-compliance.

Our income tax benefits attributable to tax holidays and incentives of the affected subsidiaries were immaterial to our provision for income taxes and earnings per share for Fiscal 2025 and Fiscal 2024.

Many countries, including Singapore, a country in which we have a tax holiday, have enacted or are in the process of enacting laws based on the Pillar Two proposal relating to a global minimum tax issued by the Organisation for Economic Co-operation and Development (“OECD”).

While we expect our effective income tax rate and cash income tax payments may increase in future years as a result of the global minimum tax, the tax did not have a material impact on our Fiscal 2025 consolidated results of operations and we do not expect a material impact for Fiscal 2026.

Our assessment could be affected by legislative guidance and future enactment of additional provisions within the Pillar Two framework.

For further discussion regarding tax matters, including the status of income tax audits, see Note 12 of the Notes to the Consolidated Financial Statements included in this report.

Fiscal 2024 compared to Fiscal 2023

For Fiscal 2024 and Fiscal 2023, our effective income tax rates were 17.5% and 24.9%, respectively.

The change related to our effective income tax rates for Fiscal 2024 as compared to Fiscal 2023 was primarily attributable to the tax impact of foreign operations and benefits from U.S.

research and development tax credits.

In addition, our effective tax rate for Fiscal 2023 included the impact of an expense recognized in connection with the agreement to settle the Class V transaction litigation described in Note 11 of the Notes to the Consolidated Financial Statements included in this report.

Fiscal 2025 compared to Fiscal 2024

During Fiscal 2025, net income and non-GAAP net income increased 36% to $4.6 billion and 8% to $5.9 billion, respectively.

Net income increased primarily due to an increase in operating income and, to a lesser extent, lower income tax expense.

Non-GAAP net income increased primarily due to an increase in operating income.

Fiscal 2024 compared to Fiscal 2023

During Fiscal 2024, net income increased 39% to $3.4 billion, driven primarily by a favorable change in interest and other, net, partially offset by a decline in operating income.

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Fiscal Year Ended

February 2, 2024 % Change February 3, 2023 % Change January 28, 2022

January 31, 2025 % Change February 2, 2024 % Change February 3, 2023

(in millions, except percentages)

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% of segment net revenue 12.8 % 12.6 % 13.2 %

Fiscal 2025 compared to Fiscal 2024

Net Revenue — During Fiscal 2025, ISG net revenue increased 29%, driven primarily by strength in our servers and networking offerings.

Net revenue from sales of servers and networking increased 54% during Fiscal 2025.

The increase in servers and networking net revenue was driven by growth in our AI-optimized server offerings and, to a lesser extent, our traditional server and networking offerings.

Storage net revenue increased 1% during Fiscal 2025 primarily due to an increase in our core storage offerings.

From a geographical perspective, net revenue attributable to ISG increased across all regions during Fiscal 2025, most notably in the Americas.

Operating Income — During Fiscal 2025, ISG operating income as a percentage of net revenue increased 20 basis points to 12.8% due to a decline in operating expense as a percentage of revenue that outpaced the decline in gross margin rate.

Operating expense as a percentage of net revenue declined primarily due to strong ISG net revenue growth coupled with continued disciplined cost management.

Gross margin rate decreased primarily as the result of a shift in mix towards AI-optimized server offerings.

Fiscal 2024 compared to Fiscal 2023

Net Revenue — During Fiscal 2024, ISG net revenue decreased 12%, driven primarily by servers and networking net revenue and, to a lesser extent, storage net revenue as global macroeconomic conditions continued to impact demand.

Revenue from sales of servers and networking decreased 14% during Fiscal 2024, driven by a decrease in units sold, the effect of which was partially offset by an increase in the average selling prices of our server offerings.

The average selling price of our server offerings increased as a result of the impact of attached offerings and richer configurations.

The average selling prices of our server offerings increased as a result of the impact of attached offerings and richer configurations.

During Fiscal 2024, storage net revenue decreased 9%, driven by a decline in net revenue across the majority of our storage offerings.

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Operating expenses as a percentage of net revenue increased as a result of a decline in revenue that outpaced the impact of continued cost management measures coupled with continued investment in research and development.

The impact of an increase in operating expenses as a percentage of net revenue was partially offset by an overall decline in input costs coupled with an increase in average selling price.

The impact of an increase in operating expenses as a percentage of net revenue was partially offset by an overall decline in input costs coupled with an increase in average selling prices.

Client Solutions Group

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Fiscal Year Ended

February 2, 2024 % Change February 3, 2023 % Change January 28, 2022

January 31, 2025 % Change February 2, 2024 % Change February 3, 2023

(in millions, except percentages)

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% of segment net revenue 6.1 % 7.6 % 6.6 %

Fiscal 2025 compared to Fiscal 2024

Net Revenue — During Fiscal 2025, CSG net revenue declined 1% primarily due to a decrease in units sold and, to a lesser extent, a decline in the average selling prices of our offerings.

Commercial net revenue increased 3% during Fiscal 2025 primarily due to an increase in units sold.

Consumer net revenue decreased 17% during Fiscal 2025, primarily as the result of a decline in units sold and, to a lesser extent, a decline in the average selling prices of our consumer offerings.

From a geographical perspective, net revenue attributable to CSG decreased in APJ and the Americas and increased in EMEA during Fiscal 2025.

Operating Income — During Fiscal 2025, CSG operating income as a percentage of net revenue decreased 150 basis points to 6.1% primarily due to a decline in gross margin rate, which was partially offset by a decrease in operating expenses as a percentage of net revenue.

The decline in gross margin rate was primarily the result of a competitive pricing environment.

The decline in operating expenses as a percentage of net revenue was due to continued disciplined cost management.

Fiscal 2024 compared to Fiscal 2023

Net Revenue — During Fiscal 2024, CSG net revenue decreased 16% driven by a decline in units sold as global macroeconomic conditions continued to impact demand.

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Average selling prices of our commercial offerings increased primarily as a result of richer configurations and the mix of offerings sold.

Consumer net revenue decreased 28% during Fiscal 2024, principally due to a decrease in units sold and, to a lesser extent, a decline in the average selling price of our consumer offerings.

Consumer net revenue decreased 28% during Fiscal 2024 principally due to a decrease in units sold and, to a lesser extent, a decline in the average selling prices of our consumer offerings.

From a geographical perspective, net revenue attributable to CSG decreased primarily in APJ and, to a lesser extent, in the Americas and EMEA during Fiscal 2024.

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We sell products and services directly to customers and through a variety of sales channels, including retail distribution.

Our accounts receivable, net, was $9.3 billion and $12.5 billion as of February 2, 2024 and February 3, 2023, respectively.

The reduction in accounts receivable, net was driven primarily by a decline in net revenue coupled with strong collections.

Our accounts receivable, net was $10.3 billion and $9.3 billion as of January 31, 2025 and February 2, 2024, respectively.

Accounts receivable, net was up due to growth in our AI-optimized server offerings and the timing of cash receipts.

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 and its reasonable and supportable expectation of future conditions, as well as specific identifiable customer accounts that are deemed at risk.

As of February 2, 2024 and February 3, 2023, the allowance for expected credit losses was $71 million and $78 million, respectively.

As of January 31, 2025 and February 2, 2024, the allowance for expected credit losses was $63 million and $71 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 various financing options and services for our customers globally, including through captive financing operations.

DFS originates, collects, and services customer receivables primarily related to the purchase of our product, software, and service solutions.

We further strengthen customer relationships through flexible consumption models, including utility, subscription, and as-a-Service models, which enable our customers the option to pay over time to provide them with financial and operational flexibility.

New financing originations were $8.4 billion, $9.7 billion, and $8.5 billion for Fiscal 2024, Fiscal 2023, and Fiscal 2022 respectively.

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 $8.4 billion for both Fiscal 2025 and Fiscal 2024 and $9.7 billion for Fiscal 2023.

Our leases are generally classified as sales-type leases or operating leases.

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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.

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 February 2, 2024 and February 3, 2023, our financing receivables, net were $10.5 billion and $10.9 billion, respectively .

The decline in financing receivables was driven primarily by the sale of our U.S.

consumer revolving customer financing receivables portfolio.

See Note 6 of the Notes to the Consolidated Financial Statements included in this report for additional information about the sale.

We maintain an allowance to cover expected financing receivable credit losses and evaluate credit loss expectations based on our total portfolio.

For both Fiscal 2024 and Fiscal 2023, the principal charge-off rate for our financing receivables portfolio was 0.5% and for Fiscal 2022 was 0.6%.

The credit quality of our financing receivables has improved in recent years as the mix of high-quality commercial accounts in our portfolio has continued to increase.

As of January 31, 2025 and February 2, 2024, our financing receivables, net were $11.2 billion and $10.5 billion, respectively .

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 0.6% for Fiscal 2025 and 0.5% for both Fiscal 2024 and Fiscal 2023.

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, including active management of credit lines and our collection activities.

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 selected fixed-term financing receivables without recourse to unrelated third parties on a periodic basis, primarily to manage certain concentrations of customer credit exposure.

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We retain a residual interest in equipment leased under our lease programs.

As of February 2, 2024 and February 3, 2023, the residual interest recorded as part of financing receivables was $157 million and $142 million, respectively.

As of January 31, 2025 and February 2, 2024, the residual interest recorded as part of financing receivables was $168 million and $157 million, respectively.

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.

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No expected losses were recorded related to residual assets during Fiscal 2025 and Fiscal 2024.

As of February 2, 2024 and February 3, 2023, equipment under operating leases, net was $2.2 billion.

As of both January 31, 2025 and February 2, 2024, equipment under operating leases, net was $2.2 billion.

We assess the carrying amount of the equipment under operating leases for impairment whenever events or circumstances may indicate that an impairment has occurred.

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DFS offerings are initially funded through cash on hand at the time of origination, most of which is subsequently replaced with asset-backed financing.

For DFS offerings which qualify as sales-type leases, the initial funding of financing receivables is reflected as an impact to cash flows from operations and is largely subsequently offset by cash proceeds from financing.

For DFS operating leases, the initial funding is classified as a capital expenditure and reflected as an impact to cash flows used in investing activities.

For offerings that qualify as sales-type leases, the initial funding of financing receivables is reflected as an impact to cash flows from operations and is largely subsequently offset by cash proceeds from financing.

For offerings that qualify as operating leases, the initial funding is classified as a capital expenditure and reflected as an impact to cash flows used in investing activities.

See Note 5 of the Notes to the Consolidated Financial Statements included in this report for additional information about our financing receivables and the associated allowances, and equipment under operating leases.

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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 expected to be available under our revolving credit facility and commercial paper program, will be sufficient over at least 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.

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 return capital to our stockholders through both share repurchase programs and dividend payments and 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:

February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024

(in millions)

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Cash and cash equivalents $ 3,633 $ 7,366

Remaining available borrowings under 2021 Revolving Credit Facility 5,999 5,999

Remaining available borrowings under the revolving credit facility 5,999 5,999

Total cash and cash equivalents, and available borrowings $ 9,632 $ 13,365

During Fiscal 2024, cash and cash equivalents decreased by $1.2 billion primarily due to the return of capital to our stockholders, capital expenditures, and the repayment of Senior Notes, the effect of which was partially offset by cash flows from operations.

As of February 2, 2024, our 2021 Revolving Credit Facility had a maximum capacity of $6.0 billion.

During Fiscal 2025, cash and cash equivalents decreased by $3.7 billion primarily due to the return of capital to our stockholders, capital expenditures, net repayment of DFS debt and Senior Notes, and payments to settle employee tax withholdings on stock-based compensation, the effects of which were partially offset by cash flows from operations.

As of January 31, 2025, 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 February 2, 2024, there were no borrowings outstanding under the facility and remaining available borrowings totaled approximately $6.0 billion.

As of January 31, 2025, there were no borrowings outstanding under the facility and remaining available borrowings totaled approximately $6.0 billion.

The revolving credit 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 up to 397 days from the date of issue.

As of February 2, 2024, we had no outstanding borrowings under the program.

We may regularly use our available borrowings from the 2021 Revolving Credit Facility and issuances under the commercial paper program on a short-term basis for general corporate purposes.

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 January 31, 2025, 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.

The following table presents our outstanding debt as of the dates indicated:

February 2, 2024 Change February 3, 2023

January 31, 2025 Change February 2, 2024

(in millions)

Senior Notes $ 15,073 $ (534) $ 15,607

Legacy Notes and Debentures 952 — 952

Legacy Notes 952 — 952

DFS allocated debt (3,028) (1,388) (1,640)

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Total debt, carrying value $ 24,567 $ (1,427) $ 25,994

The outstanding principal amount of our debt decreased $3.6 billion to $26.2 billion as of February 2, 2024, driven primarily by the prepayment of $2.7 billion principal amount of Senior Notes and a reduction in DFS debt which was principally attributable to the prepayment and termination of our U.S.

securitization facility for consumer revolving loans.

Subsequent to the close of Fiscal 2024, we issued $1.0 billion aggregate principal amount of 5.40% Senior Notes due 2034.

We intend to use the net proceeds of the issuance to prepay a portion of our outstanding 6.02% Senior Notes due 2026.

The outstanding principal amount of our debt decreased $1.4 billion to $24.8 billion as of January 31, 2025, driven primarily by net repayments of our DFS debt and 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 $14.9 billion and $18.1 billion as of February 2, 2024 and February 3, 2023, respectively.

Our core debt was $13.0 billion and $14.9 billion as of January 31, 2025 and February 2, 2024, respectively.

See Note 7 of the Notes to the Consolidated Financial Statements included in this report for additional information about our debt.

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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 expansion of the 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.

To fund the expansion of our DFS business, we balance the use of the securitization and structured financing programs with other sources of liquidity.

The debt-to-equity ratio is based on the underlying credit quality of the assets.

See Note 5 of the Notes to the 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:

January 31, 2025 February 2, 2024

(in millions)

Financing receivables, net

$ 11,231 $ 10,520

Equipment under operating leases, net

DFS owned assets

$ 13,416 $ 12,722

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, primarily from operating cash flows.

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Fiscal Year Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(in millions)

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Change in cash, cash equivalents, and restricted cash $ (3,688) $ (1,387) $ (1,188)

Operating Activities — Cash provided by operating activities was $8.7 billion during Fiscal 2024, and was primarily driven by profitability coupled with strong inventory management and cash collections performance.

Cash provided by operating activities also reflected the impact of the $0.9 billion net payment to settle the Class V transaction litigation and $0.4 billion in proceeds from the sale of our U.S.

Operating Activities — Cash provided by operating activities was $4.5 billion during Fiscal 2025 and was driven by profitability, partially offset by working capital dynamics.

Working capital was primarily impacted by AI, which led to higher inventory, accounts receivable, and accounts payable levels.

During Fiscal 2024, cash provided by operating activities was $8.7 billion, which was primarily driven by profitability coupled with strong inventory management and cash collections performance.

consumer revolving customer receivables portfolio.

During Fiscal 2023, cash provided by operating activities was $3.6 billion, which primarily reflected profitability that was partially offset by the impact of 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 DFS 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 include capitalized software development costs, acquisitions and divestitures, and the maturities, sales, and purchases of investments.

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 $2.2 billion and $2.8 billion during Fiscal 2025 and Fiscal 2024, respectively, and was primarily applied to capital expenditures.

Financing Activities — Financing activities primarily consist of the proceeds and repayments of debt and return of capital to our stockholders.

Cash used in financing activities was $7.1 billion during Fiscal 2024 and primarily consisted of principal repayments of our Senior Notes, repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, and the payment of quarterly dividends.

During Fiscal 2023, cash used in financing activities was $1.6 billion 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.

Cash used in financing activities was $5.8 billion during Fiscal 2025 and primarily consisted of repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, net repayments of our DFS debt and Senior Notes, and the payment of quarterly dividends.

During Fiscal 2024, cash used in financing activities was $7.1 billion and primarily consisted of principal repayments of our Senior Notes, repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, and the payment of quarterly dividends.

DFS Cash Flow Impacts — DFS offerings are initially funded through cash on hand at the time of origination, most of which is subsequently replaced with asset-backed financing.

For DFS offerings that qualify as sales-type leases, the initial funding of financing receivables is reflected as an impact to cash flows from operations and is largely subsequently offset by cash proceeds from financing.

For 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 $8.4 billion, $9.7 billion, and $8.5 billion during Fiscal 2024, Fiscal 2023, and Fiscal 2022 respectively.

As of February 2, 2024, the Company had $10.5 billion of total net financing receivables and $2.2 billion of equipment under operating leases, net.

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 $8.4 billion during both Fiscal 2025 and Fiscal 2024 and $9.7 billion during Fiscal 2023.

As of January 31, 2025, we had $11.2 billion of total net financing receivables and $2.2 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.

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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 — Effective as of September 23, 2021, our Board of Directors approved a stock repurchase program with no fixed expiration date under which we are authorized to repurchase up to $5.0 billion of shares of our Class C Common Stock.

Effective as of October 5, 2023, the Company’s Board of Directors approved the repurchase of an additional $5.0 billion of shares of the Class C Common Stock with no fixed expiration date.

Following the additional approval, the Company had approximately $5.7 billion in cumulative authorized amount remaining under the stock repurchase program.

During Fiscal 2024, the Company repurchased approximately 34 million shares of Class C Common Stock for a total purchase price of approximately $2.1 billion.

During Fiscal 2023, the Company repurchased approximately 62 million shares of Class C Common Stock for a total purchase price of approximately $2.8 billion.

Dividend Payments — During Fiscal 2024 and Fiscal 2023, the Company paid $1.1 billion and $1.0 billion, respectively, in dividends and dividend equivalents at a rate of $0.37 per share per fiscal quarter and $0.33 per share per fiscal quarter, respectively.

On February 29, 2024, subsequent to the close of Fiscal 2024, we announced that the Board of Directors approved a 20% increase in the dividend rate to $0.445 per share per fiscal quarter beginning in the first quarter of Fiscal 2025.

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 may repurchase up to $5 billion of shares of Class C Common Stock, exclusive of any fees, commissions, or other expenses related to such repurchases.

On October 5, 2023 and February 27, 2025, subsequent to the close of Fiscal 2025, our Board of Directors authorized additional shares for repurchase under the stock repurchase program of $5 billion and $10 billion, respectively.

Following the February 27, 2025 approval, we had approximately $11.5 billion of authorized shares remaining under the program.

During Fiscal 2025, we repurchased approximately 22 million shares of Class C Common Stock for a total purchase price of approximately $2.6 billion.

During Fiscal 2024, we repurchased approximately 34 million shares of Class C Common Stock for a total purchase price of approximately $2.1 billion.

Dividend Payments — During Fiscal 2025 and Fiscal 2024, the Company paid $1.3 billion and $1.1 billion in dividends and dividend equivalents at a rate of $0.445 and $0.37 per share per fiscal quarter, respectively.

On February 27, 2025, we announced that the Board of Directors approved an 18% increase in the dividend rate to $0.525 per share per fiscal quarter beginning in the first quarter of Fiscal 2026.

Additionally, the Company’s material cash requirements include the following contractual obligations:

Debt — Our expected principal cash payments on borrowings are exclusive of discounts and premiums.

As of February 2, 2024, the Company had outstanding debt for an aggregate principal amount of $26.2 billion, with $7.0 billion payable within 12 months.

Included within the aggregate principal amount was $16.7 billion of outstanding long-term notes with varying maturities, with $1.1 billion payable within 12 months, and $9.5 billion of DFS debt, with $5.9 billion payable within 12 months.

As of February 2, 2024, future interest payments associated with outstanding debt were $7.4 billion, with $1.2 billion payable within 12 months.

Included within total future interest payments is $6.9 billion of payments related to outstanding long-term notes, with $0.9 billion payable within 12 months, and $0.5 billion of payments related to our DFS debt, with $0.3 billion payable within 12 months.

As of January 31, 2025, the Company had outstanding debt for an aggregate principal amount of $24.8 billion, with $5.2 billion payable within 12 months.

Included within the aggregate principal amount was $16.1 billion of corporate and other debt with varying maturities, with an immaterial amount payable within 12 months, and $8.7 billion of DFS debt, with $5.2 billion payable within 12 months.

As of January 31, 2025, future interest payments associated with outstanding debt were $7.4 billion, with $1.2 billion payable within 12 months.

Included within total future interest payments is $6.9 billion of payments related to corporate and other debt, with $0.9 billion payable within 12 months, and $0.5 billion of payments related to DFS debt, with $0.3 billion payable within 12 months.

Purchase Obligations — Purchase obligations are defined as contractual obligations to purchase goods or services that are enforceable and legally binding on us.

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Consistent with industry practice, we acquire raw materials or other goods and services, including product components, by issuing to suppliers authorizations to purchase based on our projected demand and manufacturing needs.

Additionally, to meet the growing demand and increasing complexity of our AI-optimized offerings, we have increased our purchases of certain components with suppliers, which has resulted in increased purchase obligations.

These purchase orders are typically fulfilled within 30 days and are entered into during the ordinary course of business in order to establish best pricing and continuity of supply for our production.

Purchase orders are not included in purchase obligations, as they typically represent our authorization to purchase rather than binding purchase obligations.

As of February 2, 2024, the Company had purchase obligations of $5.0 billion, with $4.4 billion payable within 12 months.

As of January 31, 2025, the Company had purchase obligations of $6.5 billion, of which $5.0 billion was payable within 12 months.

Operating Leases — We lease property and equipment, manufacturing facilities, and office space under non-cancelable leases.

Certain of these leases obligate us to pay taxes, maintenance, and repair costs.

As of February 2, 2024, the Company had operating lease obligations of $0.9 billion, with $0.3 billion payable within 12 months.

As of January 31, 2025, the Company had operating lease obligations of $0.8 billion, with $0.2 billion payable within 12 months.

See Note 6 of the Notes to the Consolidated Financial Statements included in this report for additional information about our leasing transactions in which we are the lessee.

Tax Obligations — Tax obligations represent a one-time mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries.

As of February 2, 2024, the balance of tax obligations was $108 million, with $48 million payable within 12 months.

Excluded from the amounts above are $1.3 billion in additional liabilities associated with uncertain tax positions as of February 2, 2024.

As of January 31, 2025, the balance of tax obligations was $60 million, with the full amount payable within 12 months.

Excluded from the amounts above are $0.9 billion in additional liabilities associated with uncertain tax positions as of January 31, 2025.

We are unable to reliably estimate the expected payment dates for any liabilities for uncertain tax positions.

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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.

We perform periodic evaluations of our positions with these counterparties and may limit exposure to any one counterparty in accordance with our policies.

We monitor and manage these activities depending on current and expected market developments.

Our AI solutions to date have been purchased primarily by a small number of larger customers and cloud service providers.

Such purchases generally involve larger amounts of credit, and could impact 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.

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Summarized Guarantor Financial Information

Dell International L.L.C.

and EMC Corporation (the “Issuers”), both of which are wholly-owned subsidiaries of Dell Technologies Inc., completed private offerings of multiple series of senior secured notes issued on June 1, 2016, March 20, 2019, and April 9, 2020 (the “Senior Secured Notes”).

The Senior Secured Notes became unsecured obligations following the release of the collateral securing such Senior Secured Notes during Fiscal 2022.

On December 13, 2021, the Issuers completed a private offering of senior unsecured notes (together with the Senior Secured Notes, the “Unregistered Senior Notes”).

In June 2021 and September 2023, the Issuers completed exchange offers in which they issued $18.4 billion and $2.1 billion, respectively, in aggregate principal amount of registered senior notes under the Securities Act of 1933 (the “Exchange Notes”) in exchange for the same principal amount and substantially identical terms of the Senior Notes.

On January 24, 2023, the Issuers completed a public offering of unsecured senior notes (together with the Exchange Notes, the “Senior Notes”) in the aggregate principal amount of $2.0 billion.

The unsecured senior notes were sold pursuant to a shelf registration statement.

Guarantees — The Senior Notes are guaranteed on a joint and several unsecured basis by Dell Technologies Inc.

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.

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The Obligor Group’s amounts due from, amounts due to, and transactions with Non-Obligor Subsidiaries have been presented separately.

The Obligor Group’s transactions with VMware LLC (formerly “VMware, Inc.” and individually and together with its subsidiaries, “VMware”) and its consolidated subsidiaries (the “Related Party”) have been presented separately through November 21, 2023, the date immediately prior to Broadcom, Inc.’s acquisition of VMware, effective upon which the related party relationship terminated.

The following table presents summarized results of operations information for the Obligor Group for the period indicated:

Fiscal Year Ended

February 2, 2024

January 31, 2025

(in millions)

Net revenue (a) $ 9,198

Gross margin (b) 4,029

Net revenue $ 8,507

Gross margin 4,328

Operating income 908

Interest and other, net (c) (3,739)

Interest and other, net (4,021)

Loss before income taxes $ (3,113)

Net loss attributable to Obligor Group $ (2,055)

Net loss attributable to Obligor Group (a) $ (2,167)

____________________

(a) Includes net revenue from products and services sold to Non-Obligor Subsidiaries of $850 million and $121 million, respectively.

(b) Includes cost of net revenue from the resale of solutions purchased from Non-Obligor Subsidiaries for the fiscal year and from the Related Party through November 21, 2023, of $948 million and $298 million, respectively.

Includes cost of net revenue from shared services provided by Non-Obligor Subsidiaries of $570 million.

(c) Includes interest expense on intercompany loan payables of $2,172 million and other expenses from services provided by Non-Obligor Subsidiaries of $87 million.

(a) Includes net loss from intercompany transactions with Non-Obligor Subsidiaries of $4,268 million, 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:

February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024

(in millions)

1 unchanged sentence

Intercompany receivables 175 281

Due from related party, net — 312

Short-term intercompany loan receivables — 92

Total current assets 3,307 3,004

Due from related party, net — 440

Goodwill and intangible assets 14,073 14,447

2 unchanged sentences

Current liabilities $ 4,097 $ 5,255

Due to related party — 110

Total current liabilities 5,255 6,721

Long-term debt 15,824 15,353

Intercompany loan payables 41,617 38,896

Long-term intercompany loan payables 44,516 41,617

Other non-current liabilities 3,339 3,473

71 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis