Dell Technologies Inc.
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Company Overview
Dell Technologies is a leader in the global technology industry focused on providing broad and innovative technology solutions for the data and artificial intelligence (“AI”) era. These solutions range from client devices and peripherals to infrastructure solutions across servers, networking, and storage to meet the evolving needs of our customers and drive better business outcomes. With our extensive portfolio and commitment to innovation, we design, deploy, and support secure, integrated solutions that extend from the edge to the core to the cloud. We deliver AI-optimized, software-defined, and cloud native infrastructure solutions across a broad partner ecosystem to help customers address evolving information technology (“IT”) needs, drive outcomes, and capture growth as customer spending priorities evolve.
Dell Technologies operates globally in over 170 countries, supported by a world-class organization across key functional areas, including technology and product development, marketing, sales, services, and financing. We have a number of operational advantages that provide a critical foundation for our success. We provide leading end-to-end solutions across our portfolio of products and services. Our go-to-market operations include an extensive direct sales force, with the ability to build deep customer relationships, and a global network of channel partners. Our global services footprint consists of service and support professionals and vendor-managed service centers that support customers across the world. Our world-class supply chain operates at a significant scale with the ability to remain agile in a variety of environments.
We offer customers choice in how they acquire our solutions, including utility, subscription, as-a-Service, leases, loans, and immediate pay models. These options allow our customers to pay upfront or over time, providing them with operational and financial flexibility.
Our Vision and Strategy
Our vision is to become the most essential technology partner. We help customers address their IT needs and digital transformation objectives as they embrace today’s changing technology landscape. We intend to realize our vision by executing our strategy of leveraging our strengths to extend our leadership positions and capture new growth.
We believe we are uniquely positioned in our industry and that our results will continue to benefit from our operational advantages, which position our Company for long-term growth and value creation while keeping our purpose at the forefront of our decision-making: to create technologies that drive human progress.
Technology is rapidly evolving with demand for simple and holistic solutions as companies navigate an increasingly complex IT environment. To meet our customers’ needs, we invest in research and development, sales, and other key areas of our business to deliver superior products and solutions capabilities and to drive sustainable long-term growth.
The impacts of technological advancement and data expansion continue to be a force for progress as artificial intelligence and generative AI have become the next wave of technological innovation. Through each wave of technological progress, we look to advance our capabilities to change the way we work and make decisions, improve business outcomes and the customer experience, and reduce costs by leveraging new technology to optimize business processes. We believe our unique operating advantages, our leadership, and our way of doing business provide a foundation to foster growth, drive efficiencies, and capitalize on each successive wave of innovation in a dynamic industry.
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Products and Services
We design, develop, manufacture, market, sell, and support a wide range of comprehensive and integrated solutions, products, and services. We are organized into two business units which are also our reportable segments: Infrastructure Solutions Group and Client Solutions Group.
Infrastructure Solutions Group (“ISG”) — ISG enables our customers’ digital transformations with solutions that address AI, machine learning, data analytics, and multicloud environments. We provide a comprehensive portfolio of advanced infrastructure solutions designed to help customers simplify, streamline, and automate IT operations. ISG solutions are built for multicloud environments and are optimized to run workloads in both public and private clouds, as well as on-premises. ISG also offers software, peripherals, and services, including consulting, configuration, and support and deployment. Given the scale and growth of our AI-optimized servers business, effective in the fourth quarter of Fiscal 2026, we disaggregated our servers and networking offerings within revenue by major product category into AI-optimized servers offerings and traditional servers and networking offerings. As a result, our major product categories within ISG are our AI-optimized servers offerings, traditional servers and networking offerings, and 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. Our networking portfolio helps our business customers transform and modernize their infrastructure, complementing our storage and AI-optimized and traditional servers offerings.
•Storage — Our comprehensive storage portfolio includes modern and traditional storage solutions that span primary, unstructured, and data protection offerings that are delivered through multiple architectures, including all-flash, purpose-built, software-defined, and hyper-converged infrastructure platforms.
Approximately 65% of ISG revenue is generated by sales to customers in the Americas, with the remaining portion derived from sales to customers in the Europe, Middle East, and Africa region (“EMEA”) and the Asia-Pacific and Japan region (“APJ”).
Client Solutions Group (“CSG”) — CSG offers branded personal computers (“PCs”), including notebooks, desktops, and workstations and branded peripherals that include displays, docking stations, keyboards, mice, and webcam and audio devices, as well as third-party software and peripherals. Our CSG offerings are designed to optimize performance, reliability, manageability, design, and security for our customers and include on-device AI for greater end-user creativity and productivity. CSG also includes services offerings, such as configuration, support and deployment, and extended warranties. Our major product categories within CSG are 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.
Approximately 60% of CSG revenue is generated by sales to customers in the Americas, with the remaining portion derived from sales to customers in EMEA and APJ.
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.
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•VMware Resale includes our sale of standalone VMware offerings. On November 22, 2023, VMware was acquired by Broadcom Inc. (“Broadcom”), and subsequently announced changes to its go-to-market approach for VMware offerings that impacted our commercial relationship with VMware. On March 25, 2024, we terminated our Commercial Framework Agreement with VMware, whereby we acted as a distributor of 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. See Note 19 of the Notes to the Consolidated Financial Statements included in this report for more information regarding the impact of Broadcom’s acquisition of VMware.
•Secureworks is a global cybersecurity provider of technology-driven security solutions that enable organizations of varying size and complexity to prevent security breaches, detect malicious activity, respond rapidly when a security breach occurs, and identify emerging threats. On February 3, 2025, Secureworks was acquired by Sophos Inc., an affiliate of Thoma Bravo, L.P.
For further discussion regarding our current reportable segments, see “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Business Unit Results” and Note 18 of the Notes to the Consolidated Financial Statements included in this report.
Dell Payment Solutions
Our customers seek choice in how they acquire our solutions and look to remove cost and complexity, align offerings with their business needs, and provide consistent, high-quality operations throughout their IT enterprise. The Dell Payment Solutions portfolio offers a wide range of payment and consumption options to enable our customers globally to deploy the technology solutions they need now with predictability, flexibility, and choice.
We offer our customers choices that include utility, subscription, as-a-Service, leases, loans and immediate pay models designed to match customers’ consumption and financing preferences. We believe these options provide operational and financial flexibility and strengthen our customer relationships. Additionally, these offerings typically result in multiyear agreements which generate recurring revenue streams over the term of the arrangement. We expect that these offerings will provide a foundation for growth in recurring revenue. We define recurring revenue as revenue recognized that is primarily related to hardware and software maintenance as well as operating leases, subscription, as-a-Service, and usage-based offerings.
To support financing solutions and services as part of the portfolio, Dell Financial Services and its affiliates (“DFS”) originate, collect, and service customer receivables primarily related to the purchase or use of our product, software, and services offerings. DFS funded $11.9 billion of originations in Fiscal 2026 and as of January 30, 2026 maintains a $14.3 billion global portfolio of financing receivables with a strong credit quality. The results of these operations are allocated to our segments based on the underlying product or service financed and may be impacted by, among other factors, changes in the interest rate environment and the translation of those changes to pricing. For additional information about our financing arrangements, see Note 5 of the Notes to the Consolidated Financial Statements included in this report.
Research and Development
We focus on developing innovative solutions that incorporate desirable features and capabilities at competitive prices. We employ a collaborative approach to design and development in which our engineers, with direct customer input, design solutions and work with a global network of technology partners to architect new system designs, influence the direction of future development, and integrate new technologies into our products and solutions. We strive to deliver new and relevant products to the market quickly and efficiently.
Our software engineers are focused on developing the next generation of innovative solutions. Our embedded software simplifies the complex through automation, increasingly leveraging artificial intelligence and machine-learning technology. Most of our research and development (“R&D”) expenditures represent costs to develop the software that powers these solutions.
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We manage our R&D expenses by concentrating on solutions that we believe are most valuable to our customers and by leveraging the capabilities of our strategic partnerships. We have a global R&D presence, with total R&D expenses of $3.1 billion for both Fiscal 2026 and Fiscal 2025 and $2.8 billion for Fiscal 2024. These investments reflect our commitment to innovation that aims to create the right solutions to help our customers build their digital future and transform their businesses.
Strategic Investments and Acquisitions
As part of our strategy, we will continue to evaluate opportunities for strategic investments through our venture capital investment arm, Dell Technologies Capital, with a focus on emerging technology areas that are relevant to our business and that will complement our existing portfolio of solutions. We target investments in areas such as storage, software-defined networking, management and orchestration, security, machine learning and AI, big data and analytics, cloud, edge computing, and software development operations. The technologies or products these companies have under development are typically in the early stages and may never have commercial value, which could result in a loss of a substantial part of our investment in the companies.
We held strategic investments in non-marketable securities of $1.6 billion and $1.5 billion as of January 30, 2026 and January 31, 2025, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in this report for additional information.
In addition to these investments, we may also make targeted acquisitions of businesses that advance our strategic objectives and accelerate our innovation agenda.
Manufacturing and Materials
We own manufacturing facilities located in the United States, Malaysia, China, Brazil, India, Poland, and Ireland. See “Item 2 — Properties” for information about our manufacturing and distribution facilities.
We also utilize contract manufacturers throughout the world to manufacture or assemble our products under the Dell Technologies brand to provide operational flexibility, achieve cost efficiencies, deliver products faster, better serve our customers, and enhance our supply chain. When using contract manufacturers, we purchase components from suppliers and subsequently sell those components to the manufacturer. Our manufacturing process consists of assembly, software installation, functional testing, and quality control. We conduct operations utilizing a formal, documented quality management system to ensure that our products and services satisfy customer needs and expectations. Testing and quality control are also applied to components, parts, sub-assemblies, and systems obtained from third-party suppliers.
Our quality management system is maintained through the testing of components, sub-assemblies, software, and systems at various stages in the manufacturing process. Quality control procedures also include a burn-in period for completed units after assembly, ongoing production reliability audits, failure tracking for early identification of production and component problems, and processing of information from customers obtained through services and support programs. This system is certified to the ISO 9001 International Standard that includes our global sites and organizations that design, manufacture, and service our products.
Our order fulfillment, manufacturing, and test facilities are also certified to the ISO 9001 International Standard for quality management systems, the ISO 14001 International Standard for environmental management systems, the ISO 45001 International Standard for health and safety management systems, and the ISO 50001 International Standard for energy management systems. These internationally-recognized endorsements of ongoing quality, environmental, health and safety, and energy management are among the highest levels of certifications available. We also have implemented programs and methodologies to ensure that the quality of our designs, manufacturing, test processes, and supplier relationships are continually improved. Additionally, we maintain a Supplier Code of Conduct and actively manage recycling processes for our returned products.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals.
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ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management’s discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes included in this Annual Report on Form 10-K. This section generally discusses Fiscal 2026 results compared to Fiscal 2025 results. Discussion of Fiscal 2025 results compared to Fiscal 2024 results, to the extent not included in this Form 10-K, are presented in “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025.
In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs, and that are subject to numerous risks and uncertainties. Our actual results may differ materially from those expressed or implied in any forward-looking statements.
Unless otherwise indicated, all results presented are prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the United States of America (“GAAP”). Unless otherwise indicated, all changes identified for the current-period results represent comparisons to results for the prior corresponding fiscal period.
Unless the context indicates otherwise, references in this management’s discussion and analysis to “we,” “us,” “our,” the “Company,” and “Dell Technologies” mean Dell Technologies Inc. and its consolidated subsidiaries.
Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. We refer to our fiscal years ended January 30, 2026, January 31, 2025, and February 2, 2024 as “Fiscal 2026,” “Fiscal 2025,” and “Fiscal 2024,” respectively. All fiscal years presented included 52 weeks. We refer to our fiscal year ending January 29, 2027 as “Fiscal 2027.”
INTRODUCTION
Company Overview
Dell Technologies is a leader in the global technology industry focused on providing broad and innovative technology solutions for the data and artificial intelligence (“AI”) era. We build and offer solutions ranging from client devices and peripherals to infrastructure solutions across servers, networking, and storage to meet the evolving needs of our customers and drive better business outcomes. With our extensive portfolio and our commitment to innovation, we offer secure, integrated solutions that extend from the edge to the core to the cloud, and we are at the forefront of AI, software-defined, and cloud native infrastructure solutions. Our vision is to become the most essential technology partner. We intend to realize our vision by executing our strategy of leveraging our strengths to extend our leadership positions and capture new growth.
We are organized into two business units which are also our reportable segments: Infrastructure Solutions Group and Client Solutions Group.
Infrastructure Solutions Group (“ISG”) — We provide a comprehensive portfolio of advanced infrastructure solutions designed to help customers simplify, streamline, and automate information technology (“IT”) operations. ISG also offers software, peripherals, and services, including consulting and support and deployment. Given the scale and growth of our AI-optimized servers business, effective in the fourth quarter of Fiscal 2026, we disaggregated our servers and networking offerings within revenue by major product category into AI-optimized servers offerings and traditional servers and networking offerings. As a result, 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. 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.
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•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 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.
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 of $0.2 billion recognized in interest and other, net in the Consolidated Statements of Income during Fiscal 2026.
For further discussion regarding our current reportable segments, see “Results of Operations — Business Unit Results” and Note 18 of the Notes to the Consolidated Financial Statements included in this report.
We offer customers choices in how they acquire our solutions, including traditional purchasing and offerings under the Dell Payment Solutions portfolio. These offerings provide both payment and consumption solutions, including utility, subscription, as-a-Service, leases, and loans, which allow our customers to pay over time and provide them with operational and financial flexibility. Dell Financial Services and its affiliates (“DFS”) support financing solutions and services as part of the portfolio. For additional information about our financing arrangements, see Note 5 of the Notes to the Consolidated Financial Statements included in this report.
Business Trends and Challenges
During Fiscal 2026, 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 significant demand for our AI-optimized servers offerings and strong demand for our traditional servers and networking offerings, resulting in ISG net revenue growth and a shift in the mix of the business towards our ISG offerings. The demand environment was also strong for our commercial offerings, resulting in moderate CSG net revenue growth.
•Demand for AI-optimized servers: Our ISG business continued to benefit from significant increased demand for our AI-optimized servers offerings as customers continue to adopt and further integrate AI, resulting in a substantial increase in backlog as we exited the year. 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.
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•Technology refresh in core markets: Within our ISG business, we continue to see customers modernize and consolidate their data centers as more customers transition to next-generation products, which contributed to strong demand and net revenue growth during the year within our traditional servers and networking offerings. Additionally, 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 moderate CSG net revenue growth.
•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.
We remain focused on executing our key strategic priorities, creating long-term value for our shareholders, and addressing our customers’ needs. We have the following expectations regarding our performance in Fiscal 2027:
•Revenue: We expect significant ISG and modest CSG net revenue growth. We expect ISG net revenue growth will be driven by increased demand across our servers and networking offerings, largely in our AI-optimized servers offerings, and, to a lesser extent, our storage offerings. We anticipate 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. Overall, while customers continue to reassess their priorities throughout the year driven by the dynamic commodity supply environment, we anticipate net revenue growth for the full fiscal year.
•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 anticipate notable inflation for component costs in Fiscal 2027 and continue to monitor the rapidly evolving commodity supply environment, leverage the agility and scale of our world-class supply chain, and seek to balance profitability and growth while maintaining disciplined pricing.
•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, 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 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 — 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.
VMware was a related party until its acquisition by Broadcom on November 22, 2023. The acquisition terminated the preexisting related party relationship with VMware such that no related party relationship exists with either Broadcom or VMware effective as of November 22, 2023. For more information regarding the impact of the Broadcom acquisition of VMware and our prior related party transactions with VMware, see Note 19 of the Notes to the Consolidated Financial Statements included in this report.
ISG — We expect that ISG will be influenced by the dynamic nature of the IT infrastructure market and the competitive landscape. With our extensive scale and market-leading solutions portfolio, we believe we are well-positioned to navigate these competitive dynamics and evolving technology trends to meet customer needs. By leveraging our collaborative, customer-focused approach to innovation, we aim to deliver relevant new and next-generation solutions and software to our customers swiftly and efficiently. We remain focused on expanding our customer base and enhancing the lifetime value of our customer relationships.
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We anticipate that ISG will continue to benefit from technology advancements and interest in AI as customers continue to adopt and integrate AI. The timing of customer purchases reflects the varying stages of adoption of AI by different customer segments and drives variability in our revenue. To meet the growing demand and increasing complexity of our AI-optimized servers offerings, we have increased our purchases of certain components with suppliers, which has resulted in increased inventory levels, higher purchase obligations, and new working capital dynamics. Additionally, frequent component part updates or transitions 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 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. We continue to expand our offerings in external storage arrays, which incorporate flexible, cloud-based functionality. We benefit from offering solutions that provide the foundation for AI, enabling organizations to store, protect, and manage data across environments for both traditional and AI workloads. Our storage business is subject to seasonal trends, which may continue to impact ISG results.
CSG — Our CSG offerings are an important element of our strategy, generating strong cash flow and opportunities for cross-selling of complementary solutions. We maintain a broad presence across all segments of the PC market. Our strategic focus is on driving share gain while balancing profitability across all segments, enhancing our product portfolio to address evolving customer needs, and expanding our presence across the broader PC ecosystem through branded peripherals. We anticipate that CSG will benefit from advances in AI over the long-term as customers will require PCs with the ability to run their complex AI workloads.
Competitive dynamics remain an important factor in our CSG business and continue to influence pricing and operating results. We are committed to our long-term CSG strategy and will continue to make investments to innovate across the portfolio. We expect that the CSG demand environment will continue to be subject to seasonal trends and to be influenced by the PC refresh cycle.
Recurring Revenue and Consumption Models — We expect that our flexible consumption models will further strengthen our customer relationships and provide a foundation for recurring revenue. We define recurring revenue as revenue recognized that is primarily related to hardware and software maintenance, as well as operating leases, subscription, as-a-Service, and usage-based offerings.
Strategic Investments and Acquisitions — As part of our strategy, we will continue to evaluate opportunities for strategic investments through our venture capital investment arm, Dell Technologies Capital, with a focus on emerging technology areas that are relevant to our business and that will complement our existing portfolio of solutions. The technologies or products these companies have under development are typically in the early stages and may never have commercial value, which could result in a loss of a substantial part of our investment in the companies. In addition to these investments, we may also make targeted acquisitions of businesses that advance our strategic objectives and accelerate our innovation agenda.
Foreign Currency Exposure — We manage our business on a U.S. Dollar basis. However, we have a large global presence, generating approximately 45% and 50% of our net revenue from sales to customers outside of the United States during Fiscal 2026 and Fiscal 2025, respectively. 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.
Other Macroeconomic Risks and Uncertainties — During 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 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.
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NON-GAAP FINANCIAL MEASURES
In this management’s discussion and analysis, we use supplemental measures of our performance which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include non-GAAP product gross margin; non-GAAP services gross margin; non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating income; non-GAAP net income; non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted; free cash flow; and adjusted free cash flow. These non-GAAP financial measures are not meant to be considered as indicators of performance or liquidity in isolation from or as a substitute for gross margin, operating expenses, operating income, net income, diluted earnings per share, or cash flows from operating activities prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis.
We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. Management uses these non-GAAP measures in financial planning and forecasting and when evaluating our financial results and operating trends and performance. We believe, when used supplementally with GAAP financial measures, these non-GAAP financial measures provide our investors with useful and transparent information to help them evaluate our results by facilitating an enhanced understanding of our results of operations and enabling them to make period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this report. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Non-GAAP product gross margin, non-GAAP services gross margin, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, as defined by us, exclude amortization of intangible assets, stock-based compensation expense, other corporate expenses and, for non-GAAP net income and non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, fair value adjustments on equity investments and an aggregate adjustment for income taxes. As the excluded items may have a material impact on our financial results, our management compensates for this limitation by relying primarily on our GAAP results and using non-GAAP financial measures supplementally or for projections when comparable GAAP financial measures are not available.
Reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. The discussion below includes information on each of the excluded items as well as our reasons for excluding them from our non-GAAP results. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, the exclusion of these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual.
The following is a summary of the items excluded from the most comparable GAAP financial measures to calculate our non-GAAP financial measures.
•Amortization of Intangible Assets — Amortization of intangible assets primarily consists of the amortization of customer relationships, developed technology, and trade names. In connection with our acquisition by merger of EMC Corporation in 2016, all of the tangible and intangible assets and liabilities were accounted for and recognized at fair value on the transaction date. We exclude amortization charges for the amortization of intangible assets as they do not reflect our current operating performance and charges are significantly impacted by the timing and magnitude of our acquisitions and, as a result, may vary in amount from period to period.
•Stock-based Compensation Expense — Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date. To estimate the fair value of performance-based awards containing a market condition, we use the Monte Carlo valuation model. For other share-based awards, the fair value is generally based on the closing price of the Class C Common Stock as reported on the New York Stock Exchange on the date of grant or most recent preceding trading day if the grant date falls on a non-trading day. Although stock-based compensation is an important aspect of the compensation of our employees and executives, we exclude such expense because the fair value of the stock-based awards may fluctuate based on factors unrelated to the operating performance of the business and may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards.
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•Other Corporate Expenses — Other corporate expenses consist primarily of severance expenses, transaction-related impacts of the sales of businesses, payroll taxes associated with stock-based compensation, incentive charges related to equity investments, transaction-related expenses, facility action costs, and impairment charges. Severance costs are primarily related to severance and benefits for employees impacted by cost management initiatives. During Fiscal 2026, Fiscal 2025, and Fiscal 2024, we recognized $0.6 billion, $0.7 billion, and $0.6 billion, respectively, of severance expense related to workforce reduction activities. During 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.
•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. See Note 4 of the Notes to the Consolidated Financial Statements included in this report for additional information on our strategic investment activity. We exclude fair value adjustments on equity investments given the volatility in ongoing adjustments to the valuation of these strategic investments and because such adjustments are unrelated to the operating performance of our business.
•Aggregate Adjustment for Income Taxes — The aggregate adjustment for income taxes is the estimated combined income tax effect for the adjustments described above and determined based on the tax jurisdictions where those adjustments were incurred, as well as an adjustment for discrete tax items. During Fiscal 2025, the aggregate adjustment for income taxes included discrete tax benefits of $0.4 billion related to changes in uncertain tax benefits resulting from the expiration of certain U.S. statutes of limitations and $0.2 billion related to stock-based compensation. We exclude these benefits or charges for purposes of calculating non-GAAP net income due to the variability in recognition of discrete tax items from period to period. The tax effects are determined based on the tax jurisdictions where the above items were incurred. See Note 12 of the Notes to the Consolidated Financial Statements included in this report for additional information about our income taxes. Our non-GAAP income tax was calculated using a fixed estimated annual tax rate that is determined based on historical trends and projections for the current fiscal year. We may adjust our estimated annual tax rate during the fiscal year to take into account events that would significantly impact our income tax expense, including significant changes resulting from tax legislation, material changes in geographic mix of net revenue and expenses, changes to our corporate structure, and other significant events.
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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:
| Fiscal Year Ended | |||||||||||||||||||||||||||||||||||||||||||||
| January 30, 2026 | % Change | January 31, 2025 | % Change | February 2, 2024 | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||
| Product gross margin | $ | 12,348 | 10 | % | $ | 11,258 | — | % | $ | 11,237 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 162 | 238 | 331 | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 66 | 56 | 51 | ||||||||||||||||||||||||||||||||||||||||||
| Other corporate expenses | 23 | 22 | 23 | ||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP product gross margin | $ | 12,599 | 9 | % | $ | 11,574 | (1) | % | $ | 11,642 | |||||||||||||||||||||||||||||||||||
| Services gross margin | $ | 10,359 | 4 | % | $ | 9,992 | 2 | % | $ | 9,832 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 91 | 96 | 98 | ||||||||||||||||||||||||||||||||||||||||||
| Other corporate expenses | 110 | 148 | 72 | ||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP services gross margin | $ | 10,560 | 3 | % | $ | 10,236 | 2 | % | $ | 10,002 | |||||||||||||||||||||||||||||||||||
| Gross margin | $ | 22,707 | 7 | % | $ | 21,250 | 1 | % | $ | 21,069 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 162 | 238 | 331 | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 157 | 152 | 149 | ||||||||||||||||||||||||||||||||||||||||||
| Other corporate expenses | 133 | 170 | 95 | ||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP gross margin | $ | 23,159 | 6 | % | $ | 21,810 | 1 | % | $ | 21,644 | |||||||||||||||||||||||||||||||||||
| Operating expenses | $ | 14,558 | (3) | % | $ | 15,013 | (4) | % | $ | 15,658 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | (335) | (429) | (502) | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (566) | (633) | (729) | ||||||||||||||||||||||||||||||||||||||||||
| Other corporate expenses | (489) | (670) | (661) | ||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 13,168 | (1) | % | $ | 13,281 | (4) | % | $ | 13,766 | |||||||||||||||||||||||||||||||||||
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| Fiscal Year Ended | |||||||||||||||||||||||||||||||||||||||||||||
| January 30, 2026 | % Change | January 31, 2025 | % Change | February 2, 2024 | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 8,149 | 31 | % | $ | 6,237 | 15 | % | $ | 5,411 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 497 | 667 | 833 | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 723 | 785 | 878 | ||||||||||||||||||||||||||||||||||||||||||
| Other corporate expenses | 622 | 840 | 756 | ||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 9,991 | 17 | % | $ | 8,529 | 8 | % | $ | 7,878 | |||||||||||||||||||||||||||||||||||
| Net income | $ | 5,936 | 30 | % | $ | 4,576 | 36 | % | $ | 3,372 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 497 | 667 | 833 | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 723 | 785 | 878 | ||||||||||||||||||||||||||||||||||||||||||
| Other corporate expenses | 364 | 830 | 793 | ||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustments on equity investments | (254) | (177) | (47) | ||||||||||||||||||||||||||||||||||||||||||
| Aggregate adjustment for income taxes | (220) | (816) | (407) | ||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 7,046 | 20 | % | $ | 5,865 | 8 | % | $ | 5,422 | |||||||||||||||||||||||||||||||||||
| Earnings per share attributable to Dell Technologies Inc. — diluted | $ | 8.68 | 36 | % | $ | 6.38 | 39 | % | $ | 4.60 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 0.72 | 0.93 | 1.13 | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 1.06 | 1.09 | 1.19 | ||||||||||||||||||||||||||||||||||||||||||
| Other corporate expenses | 0.53 | 1.16 | 1.08 | ||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustments on equity investments | (0.37) | (0.25) | (0.06) | ||||||||||||||||||||||||||||||||||||||||||
| Aggregate adjustment for income taxes | (0.32) | (1.15) | (0.55) | ||||||||||||||||||||||||||||||||||||||||||
| Total non-GAAP adjustments attributable to non-controlling interests | — | (0.02) | (0.02) | ||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP earnings per share attributable to Dell Technologies Inc. — diluted | $ | 10.30 | 27 | % | $ | 8.14 | 10 | % | $ | 7.37 | |||||||||||||||||||||||||||||||||||
44
In addition to the above measures, we use free cash flow and adjusted free cash flow as non-GAAP liquidity measures to evaluate our performance. As presented in the following table, we define free cash flow as cash flow from operations after excluding capital expenditures and capitalized software development costs, net. To measure adjusted free cash flow, we exclude the impact of financing receivables and equipment under operating leases from free cash flow, as the initial funding of these DFS offerings at the time of origination is largely subsequently replaced with cash inflows from our DFS related debt.
Free cash flow and adjusted free cash flow provide useful information to management and investors in part because we use these metrics in our long-term capital allocation framework. Further, we believe free cash flow and adjusted free cash flow are useful measures to management and investors because they reflect cash that we can use, among other purposes, to repurchase common stock, pay dividends on our common stock, invest in our business, pay down debt, and make strategic acquisitions.
As is the case with the other non-GAAP measures presented above, users should consider the limitations of using free cash flow and adjusted free cash flow, including the fact that those measures do not provide a complete measure of our cash flows for any period. Free cash flow and adjusted free cash flow do not purport to be alternatives to cash flows from operating activities as a measure of liquidity. In particular, free cash flow and adjusted free cash flow are not intended to be a measure of cash flow available for management’s discretionary use, as these measures do not reflect certain cash requirements, such as debt service requirements and other contractual commitments.
The following table presents a reconciliation of free cash flow and adjusted free cash flow to cash flow from operations for the periods indicated:
| Fiscal Year Ended | |||||||||||||||||||||||||||||||||||||||||||||
| January 30, 2026 | % Change | January 31, 2025 | % Change | February 2, 2024 | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||
| Cash flow from operations | $ | 11,185 | 147 | % | $ | 4,521 | (48) | % | $ | 8,676 | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures and capitalized software development costs, net (a) | |||||||||||||||||||||||||||||||||||||||||||||
Next expected filings
- ~2026-06-10 10-Q expected by 2026-06-12 (in 40 days)
- ~2026-09-08 10-Q expected by 2026-09-10 (in 130 days)
- ~2026-12-09 10-Q expected by 2026-12-11 (in 222 days)
- ~2027-03-15 10-K expected by 2027-03-20 (in 318 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-20 8-K Unregistered Equity Sale
- 2026-03-16 10-K Annual Report
- 2026-02-26 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-09 10-Q Quarterly Report
- 2025-11-25 8-K/A Officer/Director Change
- 2025-11-25 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-17 8-K/A Officer/Director Change
- 2025-10-06 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2025-10-02 8-K/A Officer/Director Change
- 2025-10-02 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-09-26 8-K Unregistered Equity Sale
- 2025-09-23 8-K Other Events; Financial Statements and Exhibits
- 2025-09-08 10-Q Quarterly Report
- 2025-09-08 8-K Officer/Director Change
- 2025-08-28 8-K Earnings Release; Financial Statements and Exhibits