What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-06-09 compared with 2025-12-09 · 223 added, 262 removed, 403 unchanged (55% of the section changed)

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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 report to “we,” “us,” “our,” the “Company,” and “Dell Technologies” mean Dell Technologies Inc.

Unless the context indicates otherwise, references in this management’s discussion and analysis to “we,” “us,” “our,” the “Company,” and “Dell Technologies” mean Dell Technologies Inc.

and its consolidated subsidiaries.

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Infrastructure Solutions Group and Client Solutions Group.

• 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.

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.

Infrastructure Solutions Group (“ISG”) — We provide a comprehensive portfolio of advanced infrastructure solutions designed to help customers simplify, streamline, and automate information technology (“IT”) operations.

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

• Client Solutions Group (“CSG”) — CSG includes offerings designed for commercial and consumer customers.

Our CSG portfolio includes branded PCs, including notebooks, desktops, and workstations, branded peripherals, and third-party software and peripherals.

Our major product categories within ISG include our AI-optimized servers offerings, our traditional servers and networking offerings, and our storage offerings.

• AI-optimized servers — We offer a specialized portfolio of AI-optimized servers designed to handle the most demanding compute-intensive workloads, including AI model training, fine-tuning, and inferencing.

• Traditional servers and networking — Our traditional servers portfolio provides the trusted foundation for modern IT environments, supporting a wide range of general-purpose and mission-critical workloads, including certain AI-related workloads such as inferencing.

Our networking portfolio helps our business customers transform and modernize their infrastructure, complementing our storage and AI-optimized and traditional servers offerings, and includes wide area network infrastructure, data center and edge networking switches, and cables and optics.

• Storage — Our comprehensive storage portfolio includes modern and traditional storage solutions that span primary, unstructured and data protection offerings and are delivered through multiple architectures, including all-flash, purpose-built, software-defined, and hyper-converged infrastructure platforms.

Client Solutions Group (“CSG”) — Our CSG portfolio includes branded personal computers (“PCs”), including notebooks, desktops, and workstations, branded peripherals, and third-party software and peripherals.

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

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

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

(“Secureworks”) through the date of the sale of Secureworks as discussed below.

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 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.

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.

Our major product categories within CSG include our commercial offerings and consumer offerings.

• Commercial — Our commercial portfolio provides customers with solutions centered on flexibility to address their complex needs such as IT modernization, hybrid work transformation, and other critical areas.

• Consumer — Our consumer portfolio provides customers with solutions ranging from essential computing, connectivity, and productivity needs of the everyday user to powerful performance, processing, and end-user experiences in high-end consumer and gaming offerings.

Corporate and other primarily consists of our historical resale of standalone offerings of VMware LLC (formerly VMware, Inc.

and individually and together with its subsidiaries, “VMware”), referred to as “VMware Resale.” These offerings are no longer actively sold and Corporate and other is not classified as an operating segment.

For further discussion regarding our current reportable segments, see “Results of Operations — Business Unit Results” and Note 15 of the Notes to the Condensed Consolidated Financial Statements included in this report.

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Business Trends and Challenges

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.

During the first quarter of Fiscal 2027, we executed our strategy and delivered exceptional operating results, generating significant net revenue and operating income growth.

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

• Macroeconomic environment:

We 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.

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:

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:

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.

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.

We experienced substantial demand growth across our ISG offerings, resulting in ISG net revenue growth and a continued shift in the mix of the business towards our ISG offerings.

Additionally, the demand environment was significant for our CSG offerings, resulting in CSG net revenue growth.

• Demand for AI-optimized servers:

Our ISG business benefitted from substantial demand for our AI-optimized servers offerings as customers continue to adopt and further integrate AI, resulting in a significant increase in backlog as we exited the quarter.

Given the scale of the AI opportunities, the varying stages of customer readiness, and the frequency of component part updates or transitions, there is inherent non-linearity in the timing of demand and subsequent shipments for our AI-optimized servers offerings, which continues to drive variability in our revenue.

• Technology refresh:

Within our ISG business, we continue to see customers modernize and consolidate their data centers as more customers transition to next-generation products and expand capacity to support growing workloads, which has resulted in significant demand within our traditional servers and networking offerings and our storage offerings.

Additionally, within our CSG business, the PC refresh cycle is underway as customers continue to upgrade their devices, which has contributed to significant demand for our commercial offerings.

• Supply Chain:

We experienced an increase in input costs, driven primarily by higher component costs.

Strong and accelerating industry demand for AI‑optimized solutions, together with current limitations in capacity from memory manufacturers, has resulted in global supply constraints and substantial inflation in memory component costs.

• Business modernization initiatives:

We continue to prioritize ongoing modernization initiatives to achieve greater efficiencies and streamline our processes, while also continuing to make strategic investments designed to enable growth and innovation.

These initiatives have resulted in a continued net reduction in our operating expenses.

For both the fourth quarter and the full fiscal year, we expect ISG and CSG net revenue growth, most notably within ISG.

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.

We expect modest CSG net revenue growth to be driven in part by the continuation of the PC refresh cycle.

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.

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.

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.

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.

These initiatives have partially contributed to a net reduction in our operating expense rate.

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.

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.

We have the following expectations regarding our performance for the full fiscal year:

Overall, while customers continue to reassess their spending priorities throughout the year in light of the dynamic commodity supply environment, we expect significant ISG and strong CSG net revenue growth.

We expect ISG net revenue growth will be driven largely by increased demand for our servers and networking offerings and, to a lesser extent, our storage offerings.

We anticipate CSG net revenue growth to be driven in part by the continuation of the PC refresh cycle.

• Gross margin:

We expect margin growth, while balancing anticipated margin rate pressure resulting from a continuing shift in mix towards our AI-optimized servers offerings.

We expect the notable inflationary environment for component costs will persist throughout the remainder of Fiscal 2027.

We continue to monitor the rapidly evolving commodity supply environment and will leverage the agility and scale of our world-class supply chain as we seek to maintain disciplined pricing while balancing profitability and growth.

• Operating expenses:

We continue to advance our own capabilities to change the way we work and make decisions, improve business outcomes and the customer experience, leverage new technology, and optimize business processes.

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

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

Relationship with VMware — On March 25, 2024, we terminated our Commercial Framework Agreement with VMware, whereby we acted as a distributor of Broadcom Inc.’s VMware standalone products and services.

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.

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.

ISG — We expect that ISG will be influenced by the dynamic nature of the IT infrastructure market and the competitive landscape.

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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.

To meet the growing demand and increasing complexity of our AI-optimized servers offerings, we have increased our purchases of certain components with suppliers, which has resulted in increased inventory levels, higher purchase obligations, and new working capital dynamics.

Additionally, frequent component part updates or transitions create additional challenges in managing demand and supply levels.

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

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

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

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

CSG — We maintain a broad presence across all segments of the PC market, with a strategic emphasis on driving share gain in commercial and high-end consumer computing devices, which we believe represent the most stable and profitable segments of the industry.

CSG — Our CSG offerings are an important element of our strategy, generating strong cash flow and opportunities for cross-selling of complementary solutions.

We maintain a broad presence across all segments of the PC market.

Our strategic focus is on driving share gain while balancing profitability across all segments, enhancing our product portfolio to address evolving customer needs, and expanding our presence across the broader PC ecosystem through branded peripherals.

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

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

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

We are committed to our long-term CSG strategy and will continue to make investments to innovate across the portfolio.

We expect that the CSG demand environment will continue to be subject to seasonal trends and to be influenced by the PC refresh cycle.

Relationship with VMware — In March 2024, following the acquisition of VMware by Broadcom, we terminated our Commercial Framework Agreement with VMware, whereby we acted as a distributor of VMware standalone products and services.

We no longer act as a distributor of those products and services, although we continue to support customers that have purchased resale offerings sold in prior periods.

We continue to integrate and embed certain VMware products and services with our VxRail solution for end-user customers.

The results for this integrated offering are reflected within ISG.

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

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Dollar basis.

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.

However, we have a large global presence, generating approximately 45% and 50% of our net revenue from sales to customers outside of the United States during the first quarter of Fiscal 2027 and the first quarter of Fiscal 2026, respectively.

As a result, our operating results can be impacted by fluctuations in foreign currency exchange rates.

We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.

Other Macroeconomic Risks and Uncertainties — 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.

We continue to leverage the agility and scale of our world-class supply chain to mitigate impacts of tariffs and will continue to respond to changing market conditions as needed.

Other Macroeconomic Risks and Uncertainties — The impacts of trade protection measures, including changes in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility associated with terrorism, military conflicts (including the Iran conflict), and other events, and global macroeconomic conditions, or uncertainty regarding the impact of proposed or future trade protection measures, may affect our results of operations in some markets.

We continue to leverage the agility and scale of our world-class supply chain to mitigate impacts of trade protection measures and will continue to respond to changing market conditions as needed.

NON-GAAP FINANCIAL MEASURES

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non-GAAP net income;

non-GAAP earnings per share attributable to Dell Technologies Inc.

non-GAAP earnings per share - diluted;

free cash flow;

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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.

- 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.

Non-GAAP product gross margin, non-GAAP services gross margin, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share - diluted, as defined by us, exclude amortization of intangible assets, stock-based compensation expense, other corporate (income) expenses and, for non-GAAP net income and non-GAAP earnings per share - diluted, fair value adjustments on equity investments and an aggregate adjustment for income taxes.

As the excluded items may have a material impact on our financial results, our management compensates for this limitation by relying primarily on our GAAP results and using non-GAAP financial measures supplementally or for projections when comparable GAAP financial measures are not available.

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To estimate the fair value of performance-based awards containing a market condition, we use the Monte Carlo valuation model.

For other share-based awards, the fair value is generally based on the closing price of the Class C Common Stock as reported on the New York Stock Exchange on the date of grant.

For other share-based awards, the fair value is generally based on the closing price of the Class C Common Stock as reported on the New York Stock Exchange on the date of grant or most recent preceding trading day if the grant date falls on a non-trading day.

Although stock-based compensation is an important aspect of the compensation of our employees and executives, we exclude such expense because the fair value of the stock-based awards may fluctuate based on factors unrelated to the operating performance of the business and may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards.

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

• Other Corporate (Income) Expenses — Other corporate (income) expenses consist primarily of severance expenses, transaction-related impacts of the sales of businesses, payroll taxes associated with stock-based compensation, incentive charges related to equity investments, and transaction-related expenses.

Severance costs are primarily related to severance and benefits for employees impacted by cost management initiatives.

During the first 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.

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.

During the first quarter of Fiscal 2027, we recognized $0.2 billion of severance expense related to workforce reduction activities.

During the first quarter of Fiscal 2026, we recognized a $0.2 billion gain related to the sale of our subsidiary SecureWorks Corp.

(“Secureworks”).

Although we may incur these types of items in the future, we exclude other corporate (income) expenses as they can vary from period to period, are significantly impacted by the timing and nature of these events, and are not used by management in assessing operating performance of the business.

• Fair Value Adjustments on Equity Investments — Fair value adjustments on equity investments primarily consist of the gain (loss) on strategic investments, which includes recurring fair value adjustments of investments in publicly-traded companies, as well as those in privately-held companies, which are adjusted for observable price changes and any potential impairments.

During the first quarter of Fiscal 2027, we recognized a $0.6 billion gain from our strategic investment portfolio related to a single investee.

See Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information on our strategic investment activity.

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• 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 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.

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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The following table presents a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure for the periods indicated:

Three Months Ended Nine Months Ended

October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024

Three Months Ended

May 1, 2026 % Change May 2, 2025

(in millions, except percentages)

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Non-GAAP services gross margin $ 2,638 5 % $ 2,509

Three Months Ended

May 1, 2026 % Change May 2, 2025

(in millions, except percentages and per share amounts)

Gross margin $ 7,782 58 % $ 4,937

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Non-GAAP operating expenses $ 3,712 9 % $ 3,391

Three Months Ended Nine Months Ended

October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024

(in millions, except percentages and per share amounts)

Operating income $ 3,656 214 % $ 1,165

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Stock-based compensation expense 189 190

Other corporate expenses 95 166 237 665

Other corporate (income) expenses 288 (58)

Fair value adjustments on equity investments (631) (17)

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Non-GAAP net income $ 3,190 194 % $ 1,086

Earnings per share attributable to Dell Technologies Inc.

— diluted $ 2.28 39 % $ 1.64 $ 5.34 26 % $ 4.24

Earnings per share — diluted $ 5.24 282 % $ 1.37

Non-GAAP adjustments:

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Stock-based compensation expense 0.29 0.27

Other corporate expenses 0.14 0.23 0.35 0.92

Other corporate (income) expenses 0.44 (0.08)

Fair value adjustments on equity investments (0.96) (0.02)

Aggregate adjustment for income taxes (0.29) (0.17)

Total non-GAAP adjustments attributable to non-controlling interests — (0.01) — (0.02)

Non-GAAP earnings per share attributable to Dell Technologies Inc.

— diluted $ 2.59 17 % $ 2.21 $ 6.44 18 % $ 5.47

Non-GAAP earnings per share — diluted $ 4.86 214 % $ 1.55

In addition to the above measures, we use free cash flow and adjusted free cash flow as non-GAAP liquidity measures to evaluate our performance.

As presented in the following table, we define free cash flow as cash flow from operations after excluding capital expenditures and capitalized software development costs, net.

To measure adjusted free cash flow, we exclude the impact of financing receivables and equipment under operating leases from free cash flow, as the initial funding of these DFS offerings at the time of origination is largely subsequently replaced with cash inflows from our DFS 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.

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The following table presents a reconciliation of free cash flow and adjusted free cash flow to cash flow from operations for the periods indicated:

Three Months Ended Nine Months Ended

October 31, 2025 % Change November 1, 2024 October 31, 2025 % Change November 1, 2024

Three Months Ended

May 1, 2026 % Change May 2, 2025

(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.

Three Months Ended Nine Months Ended

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

Three Months Ended

May 1, 2026 May 2, 2025

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

(in millions, except percentages and per share amounts)

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Net income $ 3,438 7.8 % 256 % $ 965 4.1 %

Earnings per share attributable to Dell Technologies — diluted $ 2.28 39 % $ 1.64 $ 5.34 26 % $ 4.24

Earnings per share — diluted $ 5.24 282 % $ 1.37

Cash flow from operations $ 4,081 46 % $ 2,796

Non-GAAP Financial Information

Three Months Ended Nine Months Ended

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

Three Months Ended

May 1, 2026 May 2, 2025

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

(in millions, except percentages and per share amounts)

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Non-GAAP net income $ 3,190 7.3 % 194 % $ 1,086 4.6 %

Non-GAAP earnings per share attributable to Dell Technologies — diluted $ 2.59 17 % $ 2.21 $ 6.44 18 % $ 5.47

Non-GAAP earnings per share — diluted $ 4.86 214 % $ 1.55

Free cash flow $ 3,118 40 % $ 2,228

Adjusted free cash flow $ 3,165 42 % $ 2,232

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.

Non-GAAP product gross margin, non-GAAP services gross margin, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP earnings per share - diluted, free cash flow, and adjusted free cash flow are not measurements of financial performance prepared in accordance with GAAP.

See “Non‑GAAP Financial Measures” for additional information about these non-GAAP financial measures, including our reasons for including these measures, material limitations with respect to the usefulness of the measures, and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

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.

The increase in CSG net revenue was attributable to an increase in sales of our commercial offerings.

During the first quarter of Fiscal 2027, net revenue increased by 88%, 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 primarily driven by growth in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings.

The increase in CSG net revenue was primarily attributable to an increase in sales of our commercial offerings.

Corporate and other net revenue declined primarily due to a decrease in VMware Resale revenue, as we no longer act as a distributor of standalone VMware offerings.

During the 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.

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.

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.

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.

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.

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.

During the first nine months of Fiscal 2026, operating income as a percentage of net revenue was further impacted by lower other corporate expenses.

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.

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.

Working capital during the Fiscal 2025 period was primarily impacted by AI dynamics, which led to higher inventory, accounts receivable, and accounts payable levels.

During the first quarter of Fiscal 2027, operating income and non-GAAP operating income increased by 214% to $3.7 billion and 154% to $4.2 billion, respectively.

The increases were primarily attributable to an increase in ISG operating income and, to a lesser extent, CSG operating income.

The increase in ISG operating income was driven by our servers and networking offerings and, to a lesser extent, our storage offerings.

The increase in CSG operating income was driven primarily by our commercial offerings.

During the first quarter of Fiscal 2027, operating income and non-GAAP operating income as a percentage of net revenue increased 330 basis points to 8.3% and 260 basis points to 9.7%, respectively.

Operating income as a percentage of net revenue benefited from the favorable impact of a decline in operating expense rate as a result of substantial net revenue growth.

The favorable impact of operating expense rate was partially offset by a decline in gross margin rate due to a shift in mix towards our AI-optimized servers offerings.

Cash provided by operating activities was $4.1 billion during the first quarter of Fiscal 2027 and was driven by net revenue growth and profitability, partially offset by working capital dynamics.

Working capital was primarily affected by increased demand for our AI-optimized servers offerings.

During the first quarter of Fiscal 2026, cash provided by operating activities was $2.8 billion and was driven by profitability and similar working capital dynamics as well as by other business impacts, including annual incentive-based personnel-related payments.

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

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As we continue to innovate and modernize our offerings, we believe that Dell Technologies is well-positioned for long-term profitable growth.

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.

During the first quarter of Fiscal 2027, net revenue increased 88%, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue.

See “Business Unit Results” for further information.

• Product Net Revenue — Product net revenue includes revenue from the sale of hardware products and software licenses.

During the 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.

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

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.

During the first quarter of Fiscal 2027, product net revenue increased 117% due to an increase in ISG product net revenue and, to a lesser extent, CSG product net revenue.

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

The increase in CSG product net revenue was primarily attributable to growth in our commercial offerings.

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

During both the 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.

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.

During the first quarter of Fiscal 2027, services net revenue decreased 1% due to a decline in Corporate and other services net revenue, which was driven by a decrease in VMware Resale revenue.

The decline was largely offset by an increase in ISG services net revenue, which was driven by higher AI-optimized servers offerings and support and maintenance associated with products sold in prior periods.

A substantial portion of services net revenue is derived from offerings that have been deferred over a period of time.

As a result, reported growth rates for services net revenue will be different than reported growth rates for product net revenue.

From a geographical perspective, net revenue increased in the Americas, driven by our AI-optimized server offerings, and, to a lesser extent, EMEA during the third quarter and first nine months of Fiscal 2026.

Net revenue decreased in APJ during the third quarter of Fiscal 2026 and remained flat during the first nine months of Fiscal 2026.

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.

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.

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.

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.

• 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.

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.

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.

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.

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.

• 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.

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.

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.

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.

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.

From a geographical perspective, net revenue increased in the Americas, the Europe, Middle East and Africa region (“EMEA”), and the Asia-Pacific and Japan region (“APJ”) during the first quarter of Fiscal 2027, most notably within the Americas.

During the first quarter of Fiscal 2027, gross margin and non-GAAP gross margin increased 58% to $7.8 billion and 57% to $7.9 billion, respectively, primarily due to an increase in ISG gross margin and, to a lesser extent, CSG gross margin.

The increase in ISG gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings.

The increase in CSG gross margin was primarily driven by growth in our commercial offerings.

During the first quarter of Fiscal 2027, gross margin percentage and non-GAAP gross margin percentage decreased 330 basis points to 17.8% and 350 basis points to 18.1%, respectively.

The decreases were primarily driven by a shift in mix towards our AI-optimized servers offerings.

• Product Gross Margin — During the first quarter of Fiscal 2027, product gross margin and non-GAAP product gross margin increased 112% and 108%, respectively, to $5.3 billion.

The increases were attributable to an increase in ISG product gross margin and, to a lesser extent, CSG product gross margin.

The increase in ISG product gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings.

The increase in CSG gross margin was primarily attributable to growth in our commercial offerings.

During the first quarter of Fiscal 2027, product gross margin percentage and non-GAAP product gross margin percentage decreased 30 basis points to 13.8% and 60 basis points to 13.9%, respectively, primarily due to a shift in mix towards our AI-optimized servers offerings.

• Services Gross Margin — During the first quarter of Fiscal 2027, services gross margin and non-GAAP services gross margin increased 3% to $2.5 billion and 5% to $2.6 billion, respectively.

The increases were attributable to an increase in ISG services gross margin, which was primarily driven by higher support and maintenance associated with products sold in prior periods and increased demand for our servers and networking offerings.

During the first quarter of Fiscal 2027, services gross margin percentage and non-GAAP services gross margin percentage increased 160 basis points to 44.1% and 260 basis points to 46.0%, respectively, primarily driven by a shift in mix, as we no longer act as a distributor of standalone VMware offerings.

Vendor Programs

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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 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.

Our gross margins for the first quarter of Fiscal 2027 were not materially affected by any changes to the terms of our vendor rebate programs, as the amounts we received under these programs were generally stable relative to our total net cost.

We are not aware of any significant changes to our vendor rebate programs that will materially impact our results in the near term.

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The following table presents information regarding our operating expenses for the periods indicated:

Three Months Ended Nine Months Ended

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

Three Months Ended

May 1, 2026 May 2, 2025

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

(in millions, except percentages)

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Total operating expenses $ 4,126 9.5 % 9 % $ 3,772 16.1 %

Three Months Ended Nine Months Ended

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

Three Months Ended

May 1, 2026 May 2, 2025

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

(in millions, except percentages)

Non-GAAP operating expenses $ 3,712 8.4 % 9 % $ 3,391 14.5 %

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.

• 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.

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.

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.

During the first quarter of Fiscal 2027, total operating expenses increased 9% due to an increase in research and development (“R&D”) expenses and selling, general, and administrative (“SG&A”) expenses.

• Selling, General, and Administrative — During the first quarter of Fiscal 2027, SG&A expenses increased 6%, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.

• Research and Development — R&D expenses increased 22% during the first quarter of Fiscal 2027, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.

As a percentage of net revenue, R&D expenses for the first quarter of Fiscal 2027 and Fiscal 2026 were 2.2% and 3.5%, respectively.

The decline in R&D expense as a percentage of revenue was driven by an increase in net revenue.

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

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.

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

During the first quarter of Fiscal 2027, non-GAAP operating expenses increased 9%, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.

We continue to make strategic investments designed to enable growth and innovation, while balancing our efforts to drive cost efficiencies in the business.

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Operating Income