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Our networking portfolio includes wide area network infrastructure, data center and edge networking switches, and cables and optics.
−Removed: 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.
+Added: Our comprehensive storage portfolio includes modern and traditional storage solutions that span primary, unstructured and data protection offerings and are delivered through multiple architectures, including all-flash, purpose-built, software-defined and hyper-converged infrastructure platforms.
ISG also offers software, peripherals, and services, including consulting and support and deployment.
8 unchanged sentences
On February 3, 2025, the sale of Secureworks to Sophos Inc., an affiliate of Thoma Bravo, L.P., was completed in an all-cash transaction for a purchase price of approximately $0.9 billion.
−Removed: We received total cash consideration for the equity interest held in Secureworks of approximately $0.6 billion, resulting in a gain on sale recorded of $0.2 billion recognized in interest and other, net in the Condensed Consolidated Statements of Income during the six months ended August 1, 2025.
+Added: We received total cash consideration for the equity interest held in Secureworks of approximately $0.6 billion, resulting in a gain on sale recorded of $0.2 billion recognized in interest and other, net in the Condensed Consolidated Statements of Income during the nine months ended October 31, 2025.
For further discussion regarding our current reportable segments, see “Results of Operations — Business Unit Results” and Note 15 of the Notes to the Condensed Consolidated Financial Statements included in this report.
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Business Trends and Challenges
−Removed: During the second quarter and first six months of Fiscal 2026, we executed our strategy with strong operating results, generating overall net revenue and operating income growth.
+Added: During the third quarter and first nine months of Fiscal 2026, we executed our strategy with strong operating results, generating overall net revenue and operating income growth.
The following trends and conditions affected the environment in which we operated:
• Macroeconomic environment:
−Removed: Demand significantly increased for our AI-optimized server offerings, resulting in ISG net revenue growth and a shift in the mix of the business towards our ISG offerings.
−Removed: Additionally, we experienced moderate net revenue growth in our traditional servers and networking offerings and commercial offerings, although demand moderated in our domestic market as customers reevaluated spending in the current macroeconomic environment.
+Added: We experienced continued significant demand for our AI-optimized server offerings, resulting in ISG net revenue growth and a shift in the mix of the business towards our ISG offerings.
+Added: Additionally, the demand environment remained strong for our traditional servers and networking offerings and commercial offerings, for which we saw sequential improvement in our domestic market.
• Demand of AI-optimized solutions:
−Removed: Our ISG business continued to benefit from significant increased demand for AI-optimized solutions as customers continue to adopt and further integrate AI.
−Removed: While backlog levels remain elevated compared to the prior year, significant shipments in the current quarter resulted in a sequential backlog decline.
+Added: Our ISG business continued to benefit from significant increased demand for AI-optimized solutions as customers continue to adopt and further integrate AI, which resulted in significant backlog levels that remained elevated as we exited the quarter.
Given the scale of the AI opportunities, the varying stages of customer readiness, and the frequency of component part updates or transitions, there is inherent non-linearity in the timing of demand and subsequent shipments for our AI-optimized server offerings, which continues to drive variability in our revenue.
• Technology refresh in core markets:
−Removed: Within our CSG business, the PC refresh cycle is underway as customers have begun upgrading their devices, which has contributed to increased demand for our commercial offerings and modest CSG net revenue growth.
−Removed: Additionally, within our ISG business, we continue to see customers modernize and consolidate their data centers as more customers transition to next-generation products, which has contributed to moderate net revenue growth within our traditional servers and networking offerings.
+Added: Within our CSG business, the PC refresh cycle is underway as customers continue to upgrade their devices, which has contributed to increased demand for our commercial offerings and modest CSG net revenue growth.
+Added: Additionally, within our ISG business, we continue to see customers modernize and consolidate their data centers as more customers transition to next-generation products, which has contributed to strong demand and moderate net revenue growth during the year within our traditional servers and networking offerings.
• Business modernization initiatives:
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These initiatives have resulted in a continued net reduction in our operating expenses.
−Removed: We expect net revenue growth for the full fiscal year driven by ISG and CSG net revenue, most notably within ISG.
−Removed: We expect ISG net revenue growth driven by demand growth across our servers and networking offerings, largely in our AI-optimized server offerings.
−Removed: While we expect overall ISG net revenue growth, we anticipate demand moderation to persist into the second half of the year within our traditional servers and networking offerings and storage offerings as customers within our domestic market continue to reevaluate IT spending behavior due to uncertainty in the macroeconomic environment.
−Removed: We expect modest CSG net revenue growth driven in part by the continuation of the PC refresh cycle.
−Removed: Additionally, we expect a continued reduction of our Corporate and other net revenue driven by offerings that are no longer actively sold and businesses that have been divested.
−Removed: We expect input costs to remain flat for the remainder of Fiscal 2026.
−Removed: 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.
−Removed: We remain focused on executing our key strategic priorities, creating long-term value for our stakeholders, and addressing our customers’ needs while continuing to make prudent decisions in response to the environment.
−Removed: We expect margin growth for the full fiscal year, while balancing anticipated margin rate pressure resulting from a continuing shift in mix towards our AI-optimized servers and a competitive environment.
−Removed: We look to balance profitability and growth while maintaining disciplined pricing as we navigate through competitive pricing pressures.
+Added: For both the fourth quarter and the full fiscal year, we expect ISG and CSG net revenue growth, most notably within ISG.
+Added: We expect that ISG net revenue growth will be driven by increased demand across our servers and networking offerings, largely in our AI-optimized server offerings.
+Added: We expect modest CSG net revenue growth to be driven in part by the continuation of the PC refresh cycle.
+Added: Additionally, we expect a continued reduction of our Corporate and other net revenue due to offerings that are no longer actively sold and businesses that have been divested.
+Added: We expect margin growth for both the fourth quarter and the full fiscal year, while balancing anticipated margin rate pressure resulting from a continuing shift in mix towards our AI-optimized servers and a competitive environment.
+Added: We continue to monitor the commodity supply environment and anticipate increased inflation for component costs, with a modest increase in input costs expected for the remainder of Fiscal 2026 and more notable dynamics expected for Fiscal 2027.
+Added: We continue to leverage the agility and scale of our world-class supply chain and seek to balance profitability and growth while maintaining disciplined pricing as we navigate through competitive pricing pressures.
+Added: We remain focused on executing our key strategic priorities, creating long-term value for our shareholders, and addressing our customers’ needs.
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.
−Removed: 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 targeted measures to reduce costs, including employee reorganizations, limitation of external hiring, and other actions to align our investments with our strategic priorities and customer needs.
+Added: We remain committed to disciplined cost management in coordination with our ongoing business modernization initiatives, and expect to continue to scale operating expenses as we take targeted measures to reduce costs, including employee reorganizations, limitation of external hiring, 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.
2 unchanged sentences
We no longer act as a distributor of such products and services, although we continue to support customers that have purchased resale offerings sold in prior periods.
−Removed: We continue to integrate and embed certain VMware products and services with our VxRail solution to end-user customers.
+Added: We continue to integrate and embed certain VMware products and services with our VxRail solution for end-user customers.
The results for this integrated offering are reflected within ISG.
9 unchanged sentences
We expect that growth in data will continue to generate long-term demand for our storage solutions and services.
−Removed: Cloud native applications are expected to continue to be a key trend in the infrastructure market.
We continue to expand our offerings in external storage arrays, which incorporate flexible, cloud-based functionality.
−Removed: We benefit from offering solutions that address software-defined storage, hyper-converged infrastructure, and modular solutions based on server-centric architectures.
+Added: We benefit from offering solutions that provide the foundation for AI, enabling organizations to store, protect, and manage data across environments for both traditional and AI workloads.
Our storage business is subject to seasonal trends, which may continue to impact ISG results.
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We are committed to our long-term CSG strategy and will continue to make investments to innovate across the portfolio.
−Removed: We expect that the CSG demand environment will be subject to seasonal trends and will continue to be influenced by the PC refresh cycle.
+Added: We expect that the CSG demand environment will continue to be subject to seasonal trends and to be influenced by the 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 recurring revenue.
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Dollar basis.
−Removed: However, we have a large global presence, generating approximately 40% and 45% of our net revenue from sales to customers outside of the United States during the second quarter and first six months of Fiscal 2026, respectively, and 50% during both the second quarter and first six months of Fiscal 2025.
+Added: However, we have a large global presence, generating approximately 40% and 45% of our net revenue from sales to customers outside of the United States during the third quarter and first nine months of Fiscal 2026, respectively, and 50% during both the third quarter and first nine months of Fiscal 2025.
As a result, our operating results can be, and particularly in recent periods have been, impacted by fluctuations in foreign currency exchange rates.
We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.
−Removed: Other Macroeconomic Risks and Uncertainties — During the first six months of Fiscal 2026, a number of countries, including the United States, imposed or proposed tariffs on imports, and may continue to do so.
+Added: Other Macroeconomic Risks and Uncertainties — During the first nine months of Fiscal 2026, a number of countries, including the United States, imposed or proposed tariffs on imports, and may continue to do so.
The impacts of trade protection measures, including increases or changes in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility, and global macroeconomic conditions, or uncertainty regarding the impact of proposed or future trade protection measures, may affect our results of operations in some markets.
37 unchanged sentences
Severance costs are primarily related to severance and benefits for employees impacted by cost management initiatives.
−Removed: During the first six months of Fiscal 2026 and Fiscal 2025, we recognized $0.3 billion and $0.4 billion, respectively, of severance expense related to workforce reduction activities.
−Removed: During the first six months of Fiscal 2026, we recognized a $0.2 billion gain related to the sale of Secureworks.
+Added: During the first nine months of Fiscal 2026 and Fiscal 2025, we recognized $0.4 billion and $0.6 billion, respectively, of severance expense related to workforce reduction activities.
+Added: During the first nine months of Fiscal 2026, we recognized a $0.2 billion gain related to the sale of Secureworks.
Although we may incur these types of items in the future, we exclude other corporate expenses as they can vary from period to period, are significantly impacted by the timing and nature of these events, and are not used by management in assessing operating performance of the business.
3 unchanged sentences
• 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.
−Removed: During the first six months of 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.
+Added: During the first nine months of 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.
5 unchanged sentences
The following table presents a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure for the periods indicated:
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 % Change August 2, 2024 August 1, 2025 % Change August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024
(in millions, except percentages)
22 unchanged sentences
Non-GAAP operating expenses $ 3,183 (2) % $ 3,238 $ 9,862 (3) % $ 10,141
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 % Change August 2, 2024 August 1, 2025 % Change August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024
(in millions, except percentages and per share amounts)
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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.
−Removed: 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.
+Added: As presented in the following table, we define free cash flow as cash flow from operations after excluding capital expenditures and capitalized software development costs, net.
To measure adjusted free cash flow, we exclude the impact of financing receivables and equipment under operating leases from free cash flow, as the initial funding of these DFS offerings at the time of origination is largely subsequently replaced with cash inflows from our DFS debt, the majority of which is asset-backed.
5 unchanged sentences
The following table presents a reconciliation of free cash flow and adjusted free cash flow to cash flow from operations for the periods indicated:
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 % Change August 2, 2024 August 1, 2025 % Change August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024
(in millions, except percentages)
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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.
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 August 2, 2024 August 1, 2025 August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 November 1, 2024 October 31, 2025 November 1, 2024
Dollars % of Net Revenue % Change Dollars % of Net Revenue Dollars % of Net Revenue % Change Dollars % of Net Revenue
13 unchanged sentences
Non-GAAP Financial Information
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 August 2, 2024 August 1, 2025 August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 November 1, 2024 October 31, 2025 November 1, 2024
Dollars % of Net Revenue % Change Dollars % of Net Revenue Dollars % of Net Revenue % Change Dollars % of Net Revenue
12 unchanged sentences
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.
−Removed: During the second quarter and first six months of Fiscal 2026, net revenue increased by 19% and 12%, respectively, driven by an increase in ISG net revenue that was partially offset by a decrease in Corporate and other net revenue.
+Added: During the third quarter and first nine months of Fiscal 2026, net revenue increased by 11% and 12%, respectively, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue.
The increase in ISG net revenue was driven by growth in our servers and networking offerings.
+Added: The increase in CSG net revenue was attributable to an increase in sales of our commercial offerings.
Corporate and other net revenue declined primarily due to a decrease in VMware Resale revenue, as we no longer act as a distributor of standalone VMware offerings.
−Removed: During the first six months of Fiscal 2026, the increase in net revenue was also attributable to an increase in CSG net revenue driven by an increase in sales of our commercial offerings.
−Removed: During the second quarter of Fiscal 2026, operating income and non-GAAP operating income increased by 27% to $1.8 billion and 10% to $2.3 billion, respectively.
−Removed: During the first six months of Fiscal 2026, operating income and non-GAAP operating income increased by 25% to $2.9 billion and 10% to $4.0 billion, respectively.
+Added: During the third quarter of Fiscal 2026, operating income and non-GAAP operating income increased by 23% to $2.1 billion and 11% to $2.5 billion, respectively.
+Added: During the first nine months of Fiscal 2026, operating income and non-GAAP operating income increased by 24% to $5.1 billion and 10% to $6.5 billion, respectively.
The increases for both periods were primarily attributable to an increase in ISG operating income that was driven primarily by our storage offerings and, to a lesser extent, our servers and networking offerings.
−Removed: During the second quarter and first six months of Fiscal 2026, operating income as a percentage of net revenue increased 40 basis points to 6.0% and 50 basis points to 5.5%, respectively.
−Removed: During the second quarter and first six months of Fiscal 2026, non-GAAP operating income as a percentage of net revenue decreased 60 basis points to 7.7% and 20 basis points to 7.4%, respectively.
−Removed: Operating income and non-GAAP operating income as a percentage of net revenue during both the second quarter and first six months of Fiscal 2026 were impacted by a decline in gross margin rate as a result of a shift in mix towards our AI-optimized server offerings.
−Removed: The decline in gross margin rate was largely offset by the favorable impact of a decline in operating expense rate as a result of strong net revenue growth coupled with continued disciplined cost management.
−Removed: During both periods, operating income as a percentage of net revenue was further impacted by lower other corporate expenses.
−Removed: Cash provided by operating activities was $5.3 billion during the first six months of Fiscal 2026 and was driven by net revenue growth, profitability, and working capital dynamics.
−Removed: Working capital was primarily impacted by increased demand for our AI-optimized server offerings, which led to higher accounts payable, accounts receivable, and inventory levels.
−Removed: During the first six months of Fiscal 2025, cash provided by operating activities was $2.4 billion and was driven by profitability, partially offset by working capital dynamics primarily due to growth in our AI-optimized server offerings.
+Added: During the third quarter and first nine months of Fiscal 2026, operating income as a percentage of net revenue increased 70 basis points to 7.8% and 60 basis points to 6.3%, respectively.
+Added: During the third quarter and first nine months of Fiscal 2026, non-GAAP operating income as a percentage of net revenue increased 10 basis points to 9.3% and decreased 10 basis points to 8.1%, respectively.
+Added: Operating income and non-GAAP operating income as a percentage of net revenue during both the third quarter and first nine months of Fiscal 2026 benefitted from the favorable impact of a decline in operating expense rate as a result of strong net revenue growth coupled with continued disciplined cost management.
+Added: The favorable impact of operating expense rate was largely offset by a decline in gross margin rate as a result of a shift in mix towards our AI-optimized server offerings.
+Added: During the first nine months of Fiscal 2026, operating income as a percentage of net revenue was further impacted by lower other corporate expenses.
+Added: Cash provided by operating activities was $6.5 billion during the first nine months of Fiscal 2026 and was driven by net revenue growth and profitability, partially offset by higher financing receivables and working capital levels, both of which were primarily impacted by increased demand for our AI-optimized server offerings.
+Added: During the first nine months of Fiscal 2025, cash provided by operating activities was $3.9 billion and was driven by profitability, partially offset by working capital dynamics.
+Added: Working capital during the Fiscal 2025 period was primarily impacted by AI dynamics, which led to higher inventory, accounts receivable, and accounts payable levels.
See “Liquidity, Cash Requirements, and Market Conditions” for additional information about our cash flow metrics.
2 unchanged sentences
As we continue to innovate and modernize our offerings, we believe that Dell Technologies is well-positioned for long-term profitable growth.
−Removed: During the second quarter and first six months of Fiscal 2026, net revenue increased 19% and 12%, respectively, primarily driven by an increase in ISG net revenue that was partially offset by a decrease in Corporate and other net revenue.
−Removed: During the first six months of Fiscal 2026, the increase in net revenue was also attributable to an increase in CSG net revenue.
+Added: During the third quarter and first nine months of Fiscal 2026, net revenue increased 11% and 12%, respectively, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue.
See “Business Unit Results” for further information.
• Product Net Revenue — Product net revenue includes revenue from the sale of hardware products and software licenses.
−Removed: During the second quarter and first six months of Fiscal 2026, product net revenue increased 26% and 18%, respectively, due to an increase in ISG product net revenue driven by growth in our servers and networking offerings.
−Removed: During the first six months of Fiscal 2026, the increase in product net revenue was also driven to a lesser extent by an increase in CSG product revenue.
−Removed: The increase in CSG product net revenue reflected growth in our commercial offerings, partially offset by lower demand for our consumer offerings.
+Added: During the third quarter and first nine months of Fiscal 2026, product net revenue increased 16% and 18%, respectively, due to an increase in ISG product net revenue and, to a lesser extent, CSG product net revenue.
+Added: The increase in ISG product net revenue was driven by growth in our servers and networking offerings.
+Added: The increase in CSG product net revenue reflected growth in our commercial offerings during both periods, which was partially offset by lower demand for our consumer offerings during the first nine months of Fiscal 2026.
• Services Net Revenue — Services net revenue includes revenue from our services offerings and support services related to hardware products and software licenses.
−Removed: During the second quarter and first six months of Fiscal 2026, services net revenue decreased 4% and 5%, respectively, due to a decline in Corporate and other services net revenue, as we no longer act as a distributor of standalone VMware offerings.
+Added: During both the third quarter and first nine months of Fiscal 2026, services net revenue decreased 5% due to a decline in Corporate and other services net revenue, as we no longer act as a distributor of standalone VMware offerings.
+Added: During the first nine months of Fiscal 2026, this decrease was partially offset by growth within services net revenue attributable to ISG and CSG, which was driven by support and maintenance associated with products sold in prior periods within both CSG and ISG and higher AI-optimized server offerings within ISG.
A substantial portion of services net revenue is derived from offerings that have been deferred over a period of time.
As a result, reported growth rates for services net revenue will be different than reported growth rates for product net revenue.
−Removed: From a geographical perspective, net revenue increased in the Americas, driven by our AI-optimized server offerings, and, to a lesser extent, EMEA and APJ during the second quarter and first six months of Fiscal 2026.
−Removed: During the second quarter of Fiscal 2026, gross margin and non-GAAP gross margin increased 2% to $5.4 billion and 1% to $5.6 billion, respectively, driven by an increase in ISG gross margin that was primarily attributable to growth in our servers and networking offerings.
−Removed: During the first six months of Fiscal 2026 gross margin and non-GAAP gross margin increased 2% to $10.4 billion and 1% to $10.6 billion, respectively, driven by an increase in ISG gross margin that was primarily attributable to growth in our storage offerings and servers and networking offerings.
−Removed: During the second quarter of Fiscal 2026, gross margin and non-GAAP gross margin percentage decreased 310 basis points to 18.3% and 330 basis points to 18.7%, respectively.
−Removed: During the first six months of Fiscal 2026, gross margin and non-GAAP gross margin percentage decreased 210 basis points to 19.5% and 220 basis points to 20.0%, respectively.
+Added: From a geographical perspective, net revenue increased in the Americas, driven by our AI-optimized server offerings, and, to a lesser extent, EMEA during the third quarter and first nine months of Fiscal 2026.
+Added: Net revenue decreased in APJ during the third quarter of Fiscal 2026 and remained flat during the first nine months of Fiscal 2026.
+Added: During the third quarter of Fiscal 2026, gross margin and non-GAAP gross margin increased 4% to $5.6 billion and 4% to $5.7 billion, respectively, primarily due to an increase in ISG gross margin that was driven by growth in our AI-optimized server offerings and our core storage offerings.
+Added: During the first nine months of Fiscal 2026, gross margin and non-GAAP gross margin increased 3% to $16.0 billion and 2% to $16.3 billion, respectively, primarily due to an increase in ISG gross margin that was driven by growth in our core storage offerings and our AI-optimized server offerings.
+Added: During the third quarter of Fiscal 2026, gross margin and non-GAAP gross margin percentage decreased 130 basis points to 20.7% and 140 basis points to 21.1%, respectively.
+Added: During the first nine months of Fiscal 2026, gross margin and non-GAAP gross margin percentage decreased 180 basis points to 19.9% and 190 basis points to 20.4%, respectively.
The decreases in gross margin percentage and non-GAAP gross margin percentage were primarily driven by a shift in mix towards our AI-optimized server offerings.
−Removed: • Product Gross Margin — During the second quarter of Fiscal 2026, product gross margin and non-GAAP product gross margin decreased 1% to $2.9 billion and 2% to $3.0 billion, respectively.
−Removed: During the first six months of Fiscal 2026, product gross margin and non-GAAP product gross margin increased 1% to $5.4 billion and remained flat at $5.5 billion, respectively.
−Removed: During the second quarter of Fiscal 2026, product gross margin percentage and non-GAAP product gross margin percentage decreased 330 basis points to 12.1% and 350 basis points to 12.3%, respectively.
−Removed: During the first six months of Fiscal 2026, product gross margin percentage and non-GAAP product gross margin percentage decreased 230 basis points to 12.9% and 240 basis points to 13.2%, respectively.
+Added: • Product Gross Margin — During the third quarter of Fiscal 2026, product gross margin and non-GAAP product gross margin increased 6% to $3.0 billion and 5% to $3.0 billion, respectively.
+Added: During the first nine months of Fiscal 2026, product gross margin and non-GAAP product gross margin increased 3% to $8.4 billion and 2% to $8.5 billion, respectively.
+Added: The increases in product gross margin and non-GAAP product gross margin were primarily attributable to an increase in ISG product gross margin due to the mix in our storage offerings.
+Added: During the third quarter of Fiscal 2026, product gross margin percentage and non-GAAP product gross margin percentage decreased 130 basis points to 14.0% and 140 basis points to 14.3%, respectively.
+Added: During the first nine months of Fiscal 2026, product gross margin percentage and non-GAAP product gross margin percentage decreased 190 basis points to 13.3% and 210 basis points to 13.6%, respectively.
The decreases for both periods were primarily attributable to a shift in mix towards our AI-optimized server offerings.
−Removed: • Services Gross Margin — During the second quarter of Fiscal 2026, services gross margin and non-GAAP services gross margin increased 5% and 4%, respectively, to $2.6 billion.
−Removed: During the first six months of Fiscal 2026, services gross margin and non-GAAP services gross margin increased 3% to $5.0 billion and 2% to $5.1 billion, respectively.
−Removed: The increases for both periods were primarily attributable to an increase in ISG services gross margin primarily driven by higher AI-optimized server offerings and hardware support and maintenance associated with products sold in prior periods.
−Removed: During the second quarter of Fiscal 2026, services gross margin percentage and non-GAAP services gross margin percentage increased 370 basis points to 43.8% and 360 basis points to 44.9%, respectively.
−Removed: During the first six months of Fiscal 2026, services gross margin percentage and non-GAAP services gross margin percentage increased 310 basis points to 43.1% and 290 basis points to 44.1%, respectively.
+Added: • Services Gross Margin — During the third quarter of Fiscal 2026, services gross margin and non-GAAP services gross margin increased 2% to $2.6 billion and 2% to $2.7 billion, respectively.
+Added: During the first nine months of Fiscal 2026, services gross margin and non-GAAP services gross margin increased 3% to $7.6 billion and 2% to $7.8 billion, respectively.
+Added: The increases for both periods were principally attributable to an increase in ISG services gross margin, which was primarily driven by higher AI-optimized server offerings and hardware support and maintenance associated with products sold in prior periods.
+Added: During the third quarter of Fiscal 2026, services gross margin percentage and non-GAAP services gross margin percentage increased 340 basis points to 45.5% and 310 basis points to 46.1%, respectively.
+Added: During the first nine months of Fiscal 2026, services gross margin percentage and non-GAAP services gross margin percentage increased 320 basis points to 43.9% and 300 basis points to 44.8%, respectively.
The increases for both periods were primarily driven by a shift in mix, as we no longer act as a distributor of standalone VMware offerings.
7 unchanged sentences
We monitor our component costs and seek to address the effects of any changes to terms that might arise under our vendor rebate programs.
−Removed: Our gross margins for the second quarter and first six months of Fiscal 2026 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.
+Added: Our gross margins for the third quarter and first nine months of Fiscal 2026 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.
1 unchanged sentence
The following table presents information regarding our operating expenses for the periods indicated:
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 August 2, 2024 August 1, 2025 August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 November 1, 2024 October 31, 2025 November 1, 2024
Dollars % of Net Revenue % Change Dollars % of Net Revenue Dollars % of Net Revenue % Change Dollars % of Net Revenue
4 unchanged sentences
Total operating expenses $ 3,474 12.9 % (5) % $ 3,639 15.0 % $ 10,920 13.6 % (5) % $ 11,494 16.0 %
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 August 2, 2024 August 1, 2025 August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 November 1, 2024 October 31, 2025 November 1, 2024
Dollars % of Net Revenue % Change Dollars % of Net Revenue Dollars % of Net Revenue % Change Dollars % of Net Revenue
1 unchanged sentence
Non-GAAP operating expenses $ 3,183 11.8 % (2) % $ 3,238 13.3 % $ 9,862 12.3 % (3) % $ 10,141 14.1 %
−Removed: During the second quarter and first six months of Fiscal 2026, total operating expenses decreased 7% and 5%, respectively, due to a decline in selling, general, and administrative (“SG&A”) expenses.
−Removed: • Selling, General, and Administrative — During the second quarter and first six months of Fiscal 2026, SG&A expenses decreased 9% and 7%, respectively, driven by a decrease in employee compensation and benefits expense that primarily resulted from a decline in overall headcount.
+Added: During both the third quarter and first nine months of Fiscal 2026, total operating expenses decreased 5% primarily due to a decline in selling, general, and administrative (“SG&A”) expenses.
+Added: • Selling, General, and Administrative — During the third quarter and first nine months of Fiscal 2026, SG&A expenses decreased 6% and 7%, respectively, driven by a decrease in employee compensation and benefits expense that primarily resulted from 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.
−Removed: R&D expenses increased 1% and 3% during the second quarter and first six months of Fiscal 2026, respectively, principally due to continued support of R&D initiatives.
−Removed: As a percentage of net revenue, R&D expenses for the second quarter of Fiscal 2026 and Fiscal 2025 were 2.6% and 3.1%, respectively, and for the first six months of Fiscal 2026 and Fiscal 2025 were 3.0% and 3.3%, respectively.
+Added: R&D expenses increased 1% and 2% during the third quarter and first nine months of Fiscal 2026, respectively, principally due to continued support of investments in R&D initiatives.
+Added: As a percentage of net revenue, R&D expenses for the third quarter of Fiscal 2026 and Fiscal 2025 were 2.8% and 3.1%, respectively, and for the first nine months of Fiscal 2026 and Fiscal 2025 were 2.9% and 3.2%, respectively.
We continue to support R&D initiatives to innovate and introduce new and enhanced solutions into the market.
−Removed: During the second quarter and first six months of Fiscal 2026, non-GAAP operating expenses decreased 4% and 3%, respectively, driven by a decline in employee compensation and benefits expense that primarily resulted from a decline in overall headcount.
−Removed: The decline in employee compensation and benefits expense was partially offset by continued support of R&D initiatives.
+Added: During the third quarter and first nine months of Fiscal 2026, non-GAAP operating expenses decreased 2% and 3%, respectively, driven by a decline in employee compensation and benefits expense that primarily resulted from a decline in overall headcount.
+Added: The decline in employee compensation and benefits expense was partially offset by continued support of investments in 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.
1 unchanged sentence
Operating Income
−Removed: During the second quarter of Fiscal 2026, operating income and non-GAAP operating income increased by 27% to $1.8 billion and 10% to $2.3 billion, respectively.
−Removed: During the first six months of Fiscal 2026, operating income and non-GAAP operating income increased by 25% to $2.9 billion and 10% to $4.0 billion, respectively.
+Added: During the third quarter of Fiscal 2026, operating income and non-GAAP operating income increased by 23% to $2.1 billion and 11% to $2.5 billion, respectively.
+Added: During the first nine months of Fiscal 2026, operating income and non-GAAP operating income increased by 24% to $5.1 billion and 10% to $6.5 billion, respectively.
The increases for both periods were primarily attributable to an increase in ISG operating income that was driven primarily by our storage offerings and, to a lesser extent, our servers and networking offerings.
−Removed: During the second quarter and first six months of Fiscal 2026, operating income as a percentage of net revenue increased 40 basis points to 6.0% and 50 basis points to 5.5%, respectively.
−Removed: During the second quarter and first six months of Fiscal 2026, non-GAAP operating income as a percentage of net revenue decreased 60 basis points to 7.7% and 20 basis points to 7.4%, respectively.
−Removed: Operating income and non-GAAP operating income as a percentage of net revenue during both the second quarter and first six months of Fiscal 2026 were impacted by a decline in gross margin rate as a result of a shift in mix towards our AI-optimized server offerings.
−Removed: The decline in gross margin rate was largely offset by the favorable impact of a decline in operating expense rate as a result of strong net revenue growth coupled with continued disciplined cost management.
−Removed: During both periods, operating income as a percentage of net revenue was further impacted by lower other corporate expenses.
+Added: During the third quarter and first nine months of Fiscal 2026, operating income as a percentage of net revenue increased 70 basis points to 7.8% and 60 basis points to 6.3%, respectively.
+Added: During the third quarter and first nine months of Fiscal 2026, non-GAAP operating income as a percentage of net revenue increased 10 basis points to 9.3% and decreased 10 basis points to 8.1%, respectively.
+Added: Operating income and non-GAAP operating income as a percentage of net revenue during both the third quarter and first nine months of Fiscal 2026 benefitted from the favorable impact of a decline in operating expense rate as a result of strong net revenue growth coupled with continued disciplined cost management.
+Added: The favorable impact of operating expense rate was largely offset by a decline in gross margin rate as a result of a shift in mix towards our AI-optimized server offerings.
+Added: During the first nine months of Fiscal 2026, operating income as a percentage of net revenue was further impacted by lower other corporate expenses.
Interest and Other, Net
The following table presents information regarding interest and other, net for the periods indicated:
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 August 2, 2024 August 1, 2025 August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 November 1, 2024 October 31, 2025 November 1, 2024
(in millions)
1 unchanged sentence
Investment income, primarily interest $ 72 $ 35 $ 167 $ 127
−Removed: Gain (loss) on investments, net 4 5 21 (25)
+Added: Gain on investments, net 173 46 194 21
Interest expense (396) (321) (1,149) (1,051)
3 unchanged sentences
Total interest and other, net $ (178) $ (276) $ (593) $ (1,002)
−Removed: During the second quarter of Fiscal 2026, the change in interest and other, net was favorable primarily due to an increase in investment income.
−Removed: During the first six months of Fiscal 2026, the change in interest and other, net was favorable primarily due to the gain on the sale of Secureworks and, to a lesser extent, the gains recognized within our strategic investments portfolio.
+Added: During the third quarter of Fiscal 2026, the change in interest and other, net was favorable primarily due to gains recognized within our strategic investments portfolio, partially offset by increased interest expense.
+Added: During the first nine months of Fiscal 2026, the change in interest and other, net was favorable primarily due to the gain on the sale of Secureworks and gains recognized within our strategic investments portfolio, partially offset by increased interest expense.
Income and Other Taxes
The following table presents information regarding our income and other taxes for the periods indicated:
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 August 2, 2024 August 1, 2025 August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 November 1, 2024 October 31, 2025 November 1, 2024
(in millions, except percentages)
Income before income taxes $ 1,941 $ 1,445 $ 4,464 $ 3,076
−Removed: Income tax expense (benefit) $ 276 $ 157 $ 394 $ (243)
+Added: Income tax expense $ 393 $ 275 $ 787 $ 32
Effective income tax rate 20.2 % 19.0 % 17.6 % 1.0 %
−Removed: For the second quarter of Fiscal 2026 and Fiscal 2025, our effective income tax rates were 19.2% and 15.1%, respectively.
−Removed: For the first six months of Fiscal 2026 and Fiscal 2025, our effective income tax rates were 15.6% and (14.9)%, respectively.
−Removed: The change in our effective tax rates for Fiscal 2026 as compared to Fiscal 2025 was primarily attributable to discrete tax items.
−Removed: For the first six months of 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.
+Added: For the third quarter of Fiscal 2026 and Fiscal 2025, our effective income tax rates were 20.2% and 19.0%, respectively.
+Added: For the first nine months of Fiscal 2026 and Fiscal 2025, our effective income tax rates were 17.6% and 1.0%, respectively.
+Added: The changes in our effective tax rates for the Fiscal 2026 periods as compared to the Fiscal 2025 periods were primarily attributable to discrete tax items.
+Added: For the first nine months of 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.
2 unchanged sentences
Effective for Fiscal 2026, changes include, but are not limited to, immediate expensing of domestic research and development expenditures, the restoration of 100% bonus depreciation, and an EBITDA-based interest expense limitation.
−Removed: These provisions did not have a material impact on the Company’s Condensed Consolidated Financial Statements for the first six months of Fiscal 2026.
+Added: These provisions did not have a material impact on the Company’s Condensed Consolidated Financial Statements for the first nine months of Fiscal 2026.
Effective starting in Fiscal 2027, additional changes will include certain modifications to the international tax framework.
9 unchanged sentences
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.
−Removed: As of August 1, 2025, we were not aware of any matters of non-compliance.
+Added: As of October 31, 2025, we were not aware of any matters of non-compliance.
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”).
−Removed: While our effective income tax rate and cash income tax payments may increase in future years as a result of the global minimum tax, we do not expect it will have a material impact for Fiscal 2026.
+Added: While our effective income tax rate and cash income tax payments may increase in future years as a result of the global minimum tax, we do not expect this tax will have a material impact for Fiscal 2026.
Our assessment could be affected by legislative guidance and future enactment of additional provisions within the OECD’s Pillar Two framework.
For further discussion regarding tax matters, including the status of income tax audits, see Note 11 of the Notes to the Condensed Consolidated Financial Statements included in this report.
−Removed: During the second quarter of Fiscal 2026, net income increased 32% to $1.2 billion primarily due to an increase in operating income.
−Removed: During the first six months of Fiscal 2026, net income increased 14% to $2.1 billion primarily due to an increase in operating income and a favorable change in interest and other, net, which were partially offset by higher income tax expense.
−Removed: During both the second quarter and first six months of Fiscal 2026, non-GAAP net income increased 13% to $1.6 billion and $2.7 billion, respectively, primarily due to an increase in operating income.
+Added: During the third quarter of Fiscal 2026, net income increased 32% to $1.5 billion primarily due to an increase in operating income.
+Added: During the first nine months of Fiscal 2026, net income increased 21% to $3.7 billion primarily due to an increase in operating income and, to a lesser extent, a favorable change in interest and other, net, the effects of which were partially offset by higher income tax expense.
+Added: During both the third quarter and first nine months of Fiscal 2026, non-GAAP net income increased 11% to $1.8 billion and 12% to $4.4 billion, respectively, primarily due to an increase in operating income.
Business Unit Results
3 unchanged sentences
The following table presents net revenue and operating income attributable to ISG for the periods indicated:
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 % Change August 2, 2024 August 1, 2025 % Change August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024
(in millions, except percentages)
5 unchanged sentences
% of segment net revenue 12.4 % 13.3 % 10.2 % 10.9 %
−Removed: Net Revenue — During the second quarter and first six months of Fiscal 2026, ISG net revenue increased 44% and 30%, respectively, driven primarily by strength in our servers and networking offerings.
−Removed: Servers and networking net revenue increased 69% and 47% during the second quarter and first six months of Fiscal 2026, respectively.
−Removed: The increase in servers and networking net revenue was driven by growth primarily in our AI-optimized server offerings and, to a lesser extent, our traditional servers and networking offerings.
−Removed: During the second quarter of Fiscal 2026, storage net revenue decreased 3% due to a decline in net revenue from our core storage offerings.
−Removed: During the first six months of Fiscal 2026, storage net revenue increased 2% primarily due to an increase in our core storage offerings.
−Removed: From a geographical perspective, net revenue attributable to ISG increased in the Americas, driven by our AI-optimized server offerings, and, to a lesser extent, EMEA and APJ during the second quarter and first six months of Fiscal 2026.
−Removed: Operating Income — During the second quarter and first six months of Fiscal 2026, ISG operating income as a percentage of net revenue decreased 220 basis points to 8.8% and 60 basis points to 9.1%, respectively, due to a decline in gross margin rate that outpaced the decline in operating expense as a percentage of net revenue.
+Added: Net Revenue — During the third quarter and first nine months of Fiscal 2026, ISG net revenue increased 24% and 28%, respectively, driven primarily by strength in our servers and networking offerings.
+Added: Servers and networking net revenue increased 37% and 43% during the third quarter and first nine months of Fiscal 2026, respectively.
+Added: The increase was driven by growth primarily in our AI-optimized server offerings during the third quarter and first nine months of Fiscal 2026 and, to a lesser extent, our traditional servers and networking offerings during the first nine months of Fiscal 2026.
+Added: During the third quarter of Fiscal 2026, storage net revenue decreased 1% due to lower demand in our hyper-converged infrastructure offerings largely offset by an increase in our core storage offerings.
+Added: During the first nine months of Fiscal 2026, storage net revenue increased 1% primarily due to an increase in our core storage offerings.
+Added: From a geographical perspective, ISG net revenue increased in the Americas, driven by our AI-optimized server offerings, during the third quarter and first nine months of Fiscal 2026 and, to a lesser extent, in EMEA and APJ during the first nine months of Fiscal 2026.
+Added: ISG net revenue decreased in APJ and remained flat in EMEA during the third quarter of Fiscal 2026.
+Added: Operating Income — During the third quarter and first nine months of Fiscal 2026, ISG operating income as a percentage of net revenue decreased 90 basis points to 12.4% and 70 basis points to 10.2%, respectively, due to a decline in gross margin rate that outpaced the decline in operating expense rate.
Gross margin rate decreased primarily as the result of a shift in mix towards our AI-optimized server offerings.
−Removed: Operating expense as a percentage of net revenue declined primarily due to strong ISG net revenue growth coupled with continued disciplined cost management.
+Added: Operating expense rate declined primarily due to strong ISG net revenue growth coupled with continued disciplined cost management.
Client Solutions Group
The following table presents net revenue and operating income attributable to CSG for the periods indicated:
−Removed: Three Months Ended Six Months Ended
−Removed: August 1, 2025 % Change August 2, 2024 August 1, 2025 % Change August 2, 2024
+Added: Three Months Ended Nine Months Ended
+Added: October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024
(in millions, except percentages)
5 unchanged sentences
% of segment net revenue 6.0 % 6.2 % 5.9 % 6.4 %
−Removed: Net Revenue — During the second quarter and first six months of Fiscal 2026, CSG net revenue increased 1% and 3%, respectively, driven primarily by strength in our commercial offerings, partially offset by lower demand for our consumer offerings.
−Removed: Commercial net revenue increased 2% during the second quarter of Fiscal 2026, primarily due to an increase in average selling prices.
−Removed: Commercial net revenue increased 5% during the first six months of Fiscal 2026, primarily as the result of an increase in units sold and, to a lesser extent, an increase in average selling prices.
−Removed: The increase in the average selling prices of our commercial offerings across both periods was primarily the result of richer configurations and change in mix within our offerings.
−Removed: Consumer net revenue decreased 7% and 13% during the second quarter and first six months of Fiscal 2026, respectively, primarily due to a decline in units sold.
−Removed: From a geographical perspective, net revenue attributable to CSG increased in EMEA and remained flat across the Americas and APJ during the second quarter of Fiscal 2026 and increased in the Americas and EMEA and remained flat in APJ during the first six months of Fiscal 2026.
−Removed: Operating Income — During the second quarter and first six months of Fiscal 2026, CSG operating income as a percentage of net revenue decreased 20 basis points to 6.4% and 70 basis points to 5.8%, respectively.
−Removed: The decline in operating income rate during the second quarter of Fiscal 2026 was primarily attributable to an increase in operating expense as a percentage of net revenue driven by an increase in R&D expenses.
−Removed: The decline in operating income rate during the first six months of Fiscal 2026 was primarily due to a decline in gross margin rate driven by a competitive pricing environment and change in mix within our offerings.
+Added: Net Revenue — During both the third quarter and first nine months of Fiscal 2026, CSG net revenue increased 3%, driven primarily by strength in our commercial offerings, partially offset by our consumer offerings.
+Added: During both the third quarter and first nine months of Fiscal 2026, commercial net revenue increased 5% primarily due to an increase in units sold and richer configurations, partially offset by a decline in average selling prices.
+Added: Consumer net revenue decreased 7% during the third quarter of Fiscal 2026, primarily due to mix of configurations.
+Added: Consumer net revenue decreased 11% during the first nine months of Fiscal 2026 due to a decline in units sold and mix of configurations.
+Added: From a geographical perspective, net revenue attributable to CSG increased in EMEA and remained flat in the Americas and APJ during the third quarter and first nine months of Fiscal 2026.
+Added: Operating Income — During the third quarter and first nine months of Fiscal 2026, CSG operating income as a percentage of net revenue decreased 20 basis points to 6.0% and 50 basis points to 5.9%, respectively.
+Added: The decline in operating income rate during the first nine months of Fiscal 2026 was primarily due to a decline in gross margin rate driven by a change in mix within our offerings.
OTHER BALANCE SHEET ITEMS
1 unchanged sentence
We sell products and services directly to customers and through a variety of sales channels, including retail distribution.
−Removed: Our accounts receivable, net was $15.0 billion and $10.3 billion as of August 1, 2025 and January 31, 2025, respectively.
−Removed: The increase in accounts receivable, net was primarily driven by an increase in net revenue largely attributable to our AI-optimized offerings.
+Added: Our accounts receivable, net was $11.7 billion and $10.3 billion as of October 31, 2025 and January 31, 2025, respectively.
+Added: The increase in accounts receivable, net was primarily driven by an increase in net revenue largely due to our AI-optimized offerings.
We maintain an allowance for expected credit losses to cover receivables that may be deemed uncollectible.
The allowance for expected credit losses is an estimate based on an analysis of historical loss experience, current receivables aging, and management’s assessment of current conditions and its reasonable and supportable expectation of future conditions, as well as specific identifiable customer accounts that are deemed at risk.
−Removed: As of August 1, 2025 and January 31, 2025, the allowance for expected credit losses was $83 million and $63 million, respectively.
+Added: As of October 31, 2025 and January 31, 2025, the allowance for expected credit losses was $75 million and $63 million, respectively.
Based on our assessment, we believe that we are adequately reserved for expected credit losses.
3 unchanged sentences
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.
−Removed: New financing originations were $2.4 billion for both the second quarter of Fiscal 2026 and Fiscal 2025, and $4.0 billion and $4.3 billion for the first six months of Fiscal 2026 and Fiscal 2025, respectively.
+Added: New financing originations were $3.1 billion and $1.6 billion for the third quarter of Fiscal 2026 and Fiscal 2025, respectively, and $7.1 billion and $5.9 billion for the first nine months of Fiscal 2026 and Fiscal 2025, respectively.
Our leases are generally classified as sales-type leases or operating leases.
3 unchanged sentences
We recognize product revenue and depreciation expense, classified as cost of net revenue, over the contract term.
−Removed: As of August 1, 2025 and January 31, 2025, our financing receivables, net were $12.0 billion and $11.2 billion, respectively .
+Added: As of October 31, 2025 and January 31, 2025, our financing receivables, net were $13.2 billion and $11.2 billion, respectively .
+Added: The increase in financing receivables, net was primarily attributable to our AI-optimized offerings.
We maintain an allowance to cover expected financing receivables credit losses and evaluate credit loss expectations based on our total portfolio.
−Removed: The principal charge-off rate for our financing receivables portfolio was 0.1% and 0.7% for the second quarter of Fiscal 2026 and Fiscal 2025, respectively, and 0.2% and 0.5% for the first six months of Fiscal 2026 and Fiscal 2025, respectively.
+Added: The principal charge-off rate for our financing receivables portfolio was 0.2% and 1.4% for the third quarter of Fiscal 2026 and Fiscal 2025, respectively, and 0.2% and 0.8% for the first nine months of Fiscal 2026 and Fiscal 2025, respectively.
The credit quality of our financing receivables remains strong due to the mix of high-quality commercial accounts in our portfolio.
4 unchanged sentences
We retain a residual interest in equipment leased under our lease programs.
−Removed: As of August 1, 2025 and January 31, 2025, the residual interest recorded as part of financing receivables was $185 million and $168 million, respectively.
+Added: As of October 31, 2025 and January 31, 2025, the residual interest recorded as part of financing receivables was $186 million and $168 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.
2 unchanged sentences
Further, the lease agreement defines applicable return conditions and remedies for non-compliance to ensure that the leased equipment will be in good operating condition upon return.
−Removed: No expected losses were recorded related to residual assets during the second quarter and first six months of Fiscal 2026 and Fiscal 2025.
−Removed: As of August 1, 2025 and January 31, 2025, equipment under operating leases, net was $2.3 billion and $2.2 billion, respectively.
+Added: No expected losses were recorded related to residual assets during the third quarter and first nine months of Fiscal 2026 and Fiscal 2025.
+Added: As of October 31, 2025 and January 31, 2025, equipment under operating leases, net was $2.4 billion and $2.2 billion, respectively.
We assess the carrying amount of the equipment under operating leases for impairment whenever events or circumstances may indicate that an impairment has occurred.
−Removed: No material impairment losses were recorded related to such equipment during the second quarter and first six months of Fiscal 2026 and Fiscal 2025.
+Added: No material impairment losses were recorded related to such equipment during the third quarter and first nine months of Fiscal 2026 and Fiscal 2025.
DFS offerings are initially funded through cash on hand at the time of origination, most of which is subsequently replaced with asset-backed financing.
11 unchanged sentences
The following table presents our cash and cash equivalents as well as our available borrowings as of the dates indicated:
−Removed: August 1, 2025 January 31, 2025
+Added: October 31, 2025 January 31, 2025
(in millions)
3 unchanged sentences
Total cash and cash equivalents, and available borrowings $ 15,455 $ 9,632
−Removed: During the first six months of Fiscal 2026, cash and cash equivalents increased by $4.5 billion primarily due to an increase in cash flows from operations, net debt from the issuance of Senior Notes and DFS debt, and the proceeds from the sale of Secureworks, the effects of which were partially offset by the return of capital to our stockholders, capital expenditures, and payments to settle employee tax withholdings on stock-based compensation.
−Removed: As of August 1, 2025, our revolving credit facility had a maximum capacity of $6.0 billion.
+Added: During the first nine months of Fiscal 2026, cash and cash equivalents increased by $5.9 billion primarily due to an increase in cash flows from operations, net debt from the issuance of Senior Notes and DFS debt, and the proceeds from the sale of Secureworks, the effects of which were partially offset by the return of capital to our stockholders, capital expenditures, and payments to settle employee tax withholdings on stock-based compensation.
+Added: As of October 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.
−Removed: As of August 1, 2025, there were no borrowings outstanding under the facility and remaining available borrowings totaled approximately $5.9 billion.
+Added: As of October 31, 2025, there were no borrowings outstanding under the facility and remaining available borrowings totaled approximately $5.9 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 of up to 397 days from the date of issue.
−Removed: As of August 1, 2025, we had no outstanding issuances under the program.
+Added: As of October 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.
1 unchanged sentence
The following table presents our outstanding debt as of the dates indicated:
−Removed: August 1, 2025 Change January 31, 2025
+Added: October 31, 2025 Change January 31, 2025
(in millions)
11 unchanged sentences
Total debt, carrying value $ 31,243 $ 6,676 $ 24,567
−Removed: The outstanding principal amount of our debt increased $4.1 billion to $28.9 billion as of August 1, 2025, driven primarily by an increase in net debt from the issuance of Senior Notes.
+Added: The outstanding principal amount of our debt increased $6.7 billion to $31.5 billion as of October 31, 2025, driven primarily by an increase in net debt from the issuance of Senior Notes.
We define core debt as the total principal amount of our debt, less DFS related debt and other debt.
−Removed: Our core debt was $16.3 billion and $13.0 billion as of August 1, 2025 and January 31, 2025, respectively.
+Added: Our core debt was $17.9 billion and $13.0 billion as of October 31, 2025 and January 31, 2025, respectively.
See Note 6 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our debt.
−Removed: DFS related debt primarily represents debt from our securitization and structured financing programs.
+Added: DFS debt primarily represents debt from our securitization and structured financing programs.
Our risk of loss under these programs is limited to transferred lease and loan payments and associated equipment, as the credit holders have no recourse to Dell Technologies.
4 unchanged sentences
The following table presents DFS owned assets as of the dates indicated:
−Removed: August 1, 2025 January 31, 2025
+Added: October 31, 2025 January 31, 2025
(in millions)
9 unchanged sentences
The following table presents a summary of our Condensed Consolidated Statements of Cash Flows for the periods indicated:
−Removed: Six Months Ended
−Removed: August 1, 2025 August 2, 2024
+Added: Nine Months Ended
+Added: October 31, 2025 November 1, 2024
(in millions)
5 unchanged sentences
Change in cash, cash equivalents, and restricted cash $ 5,914 $ (2,103)
−Removed: Operating Activities — Cash provided by operating activities was $5.3 billion during the first six months of Fiscal 2026 and was driven by net revenue growth, profitability, and working capital dynamics.
−Removed: Working capital was primarily impacted by increased demand for our AI-optimized server offerings, which led to higher accounts payable, accounts receivable, and inventory levels.
−Removed: During the first six months of Fiscal 2025, cash provided by operating activities was $2.4 billion and was driven by profitability, partially offset by working capital dynamics primarily attributable to growth in our AI-optimized server offerings.
+Added: Operating Activities — Cash provided by operating activities was $6.5 billion during the first nine months of Fiscal 2026 and was driven by net revenue growth and profitability, partially offset by higher financing receivables and working capital levels, both of which were primarily impacted by increased demand for our AI-optimized server offerings.
+Added: During the first nine months of Fiscal 2025, cash provided by operating activities was $3.9 billion and was driven by profitability, partially offset by working capital dynamics.
+Added: Working capital was primarily impacted by AI dynamics, which led to higher inventory, accounts receivable, and accounts payable levels.
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.
−Removed: Cash used in investing activities was $0.7 billion during the first six months of Fiscal 2026 and consisted of cash used for capital expenditures, partially offset by cash proceeds from the sale of Secureworks.
−Removed: Cash used in investing activities was $1.0 billion during the first six months of Fiscal 2025 and was primarily used for capital expenditures.
+Added: Cash used in investing activities was $1.4 billion during the first nine months of Fiscal 2026 and consisted of cash used for capital expenditures, partially offset by cash proceeds from the sale of Secureworks.
+Added: Cash used in investing activities was $1.5 billion during the first nine months of Fiscal 2025 and was primarily used for capital expenditures.
Financing Activities — Financing activities primarily consist of the proceeds and repayments of debt and return of capital to our stockholders.
−Removed: Cash used by financing activities was $0.2 billion during the first six months of Fiscal 2026 and primarily consisted of repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, and the payment of quarterly dividends, the effects of which were partially offset by net proceeds from the issuance of Senior Notes and DFS debt.
−Removed: Cash used in financing activities was $4.1 billion during the first six months of Fiscal 2025 and primarily consisted of repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, net repayments on our Senior Notes and DFS debt, and the payment of quarterly dividends.
+Added: Cash provided by financing activities was $0.6 billion during the first nine months of Fiscal 2026 and primarily consisted of net proceeds from the issuance of Senior Notes and DFS debt, partially offset by repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, and the payment of quarterly dividends.
+Added: Cash used in financing activities was $4.4 billion during the first nine months of Fiscal 2025 and primarily consisted of repurchases of common stock, inclusive of payments to settle employee tax withholdings on stock-based compensation, net repayments on our Senior Notes and DFS debt, 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.
1 unchanged sentence
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.
−Removed: DFS new financing originations were $4.0 billion and $4.3 billion during the first six months of Fiscal 2026 and Fiscal 2025, respectively.
−Removed: As of August 1, 2025, we had $12.0 billion of total net financing receivables and $2.3 billion of equipment under operating leases, net.
+Added: DFS new financing originations were $7.1 billion and $5.9 billion during the first nine months of Fiscal 2026 and Fiscal 2025, respectively.
+Added: As of October 31, 2025, we had $13.2 billion of total net financing receivables and $2.4 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.
4 unchanged sentences
Capital Commitments and Other Cash Requirements
−Removed: Capital Expenditures — We spent $1.2 billion and $1.3 billion during the first six months of Fiscal 2026 and Fiscal 2025, respectively, on property, plant, and equipment and capitalized software development costs.
−Removed: Of total expenditures incurred, funding of assets in a customer contract totaled $0.7 billion during both the first six months of Fiscal 2026 and Fiscal 2025.
+Added: Capital Expenditures — We spent $1.9 billion during both the first nine months of Fiscal 2026 and Fiscal 2025 on property, plant, and equipment and capitalized software development costs.
+Added: Of total expenditures incurred, funding of assets in a customer contract totaled $1.0 billion during both the first nine months of Fiscal 2026 and Fiscal 2025.
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.
2 unchanged sentences
Following the February 27, 2025 approval, we had approximately $11.5 billion of authorized shares remaining under the program.
−Removed: During the first six months of Fiscal 2026, we repurchased approximately 30 million shares of Class C Common Stock for a total purchase price of approximately $2.9 billion.
−Removed: During the first six months of Fiscal 2025, we repurchased approximately 12 million shares of Class C Common Stock for a total purchase price of approximately $1.4 billion.
−Removed: Dividend Payments — During the first six months of Fiscal 2026 and Fiscal 2025, the Company paid $0.8 billion and $0.7 billion in dividends and dividend equivalents at a rate of $0.525 and $0.445 per share per fiscal quarter, respectively.
+Added: During the first nine months of Fiscal 2026, we repurchased approximately 39 million shares of Class C Common Stock for a total purchase price of approximately $4.2 billion.
+Added: During the first nine months of Fiscal 2025, we repurchased approximately 16 million shares of Class C Common Stock for a total purchase price of approximately $1.8 billion.
+Added: Dividend Payments — During the first nine months of Fiscal 2026 and Fiscal 2025, the Company paid $1.1 billion and $1.0 billion in dividends and dividend equivalents, respectively, at a rate of $0.525 and $0.445 per share per fiscal quarter, respectively.
Purchase Obligations — Purchase obligations are defined as contractual obligations to purchase goods or services that are enforceable and legally binding on us.
9 unchanged sentences
Purchase orders are not included in purchase obligations, as they typically represent our authorization to purchase rather than binding purchase obligations.
−Removed: As of August 1, 2025, we had purchase obligations of $7.2 billion, of which $5.4 billion is payable within twelve months.
+Added: As of October 31, 2025, we had purchase obligations of $8.5 billion, of which $6.5 billion is payable within twelve months.
Market Conditions
27 unchanged sentences
The following table presents summarized results of operations information for the Obligor Group for the period indicated:
−Removed: Six Months Ended
−Removed: August 1, 2025
+Added: Nine Months Ended
+Added: October 31, 2025
(in millions)
8 unchanged sentences
The following table presents summarized balance sheet information for the Obligor Group as of the dates indicated:
−Removed: August 1, 2025 January 31, 2025
+Added: October 31, 2025 January 31, 2025
(in millions)
13 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.