10-Q 1 dell-20240503.htm 10-Q dell-20240503
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(a) Includes related party cost of net revenue as follows (Note 15):
Products$— $207 
Services$— $876 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)  
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMay 3, 2024
or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from            to           
 
Commission File Number: 001-37867
 
Dell Technologies Inc.
(Exact name of registrant as specified in its charter) 
 
Delaware 80-0890963
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
One Dell Way, Round Rock, Texas 78682
(Address of principal executive offices) (Zip Code)

1-800-289-3355 
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class C Common Stock, par value of $0.01 per shareDELLNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer 
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No þ
As of June 4, 2024, there were 709,304,133 shares of the registrant’s common stock outstanding, consisting of 309,036,606 outstanding shares of Class C Common Stock, 328,262,341 outstanding shares of Class A Common Stock, and 72,005,186 outstanding shares of Class B Common Stock.



1


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words may, will, anticipate, estimate, expect, intend, plan, aim, seek, and similar expressions as they relate to us or our management are intended to identify these forward-looking statements. All statements by us regarding our expected financial position, revenues, cash flows and other operating results, business strategy, legal proceedings, and similar matters are forward-looking statements. Our expectations expressed or implied in these forward-looking statements may not turn out to be correct. Our results could be materially different from our expectations because of various risks, including the risks discussed in “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 2, 2024, in this report and in our other periodic and current reports filed with the Securities and Exchange Commission (“SEC”). Any forward-looking statement speaks only as of the date as of which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or our expectations, the occurrence of unanticipated events, or otherwise.

2


DELL TECHNOLOGIES INC.

TABLE OF CONTENTS


3



PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)

Index
Page


4


DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
May 3, 2024February 2, 2024
ASSETS
Current assets:  
Cash and cash equivalents$5,830 $7,366 
Accounts receivable, net of allowance of $66 and $71
8,563 9,343 
Short-term financing receivables, net of allowance of $86 and $79 (Note 4)
4,660 4,643 
Inventories4,782 3,622 
Other current assets10,792 10,973 
Total current assets34,627 35,947 
Property, plant, and equipment, net6,237 6,432 
Long-term investments1,293 1,316 
Long-term financing receivables, net of allowance of $109 and $91 (Note 4)
5,941 5,877 
Goodwill19,640 19,700 
Intangible assets, net5,538 5,701 
Other non-current assets6,914 7,116 
Total assets$80,190 $82,089 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Short-term debt$6,098 $6,982 
Accounts payable20,586 19,389 
Accrued and other6,016 6,805 
Short-term deferred revenue15,034 15,318 
Total current liabilities47,734 48,494 
Long-term debt19,382 19,012 
Long-term deferred revenue13,116 13,827 
Other non-current liabilities2,681 3,065 
Total liabilities$82,913 $84,398 
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Common stock and capital in excess of $0.01 par value (Note 13)
$8,606 $8,926 
Treasury stock at cost(6,622)(5,900)
Accumulated deficit(4,001)(4,630)
Accumulated other comprehensive loss(805)(800)
Total Dell Technologies Inc. stockholders’ equity (deficit)(2,822)(2,404)
Non-controlling interests99 95 
Total stockholders’ equity (deficit)(2,723)(2,309)
Total liabilities and stockholders’ equity$80,190 $82,089 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5


DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)
Three Months Ended
 May 3, 2024May 5, 2023
Net revenue:
Products$16,127 $15,036 
Services6,117 5,886 
Total net revenue22,244 20,922 
Cost of net revenue (a):
Products13,766 12,375 
Services3,672 3,529 
Total cost of net revenue17,438 15,904 
Gross margin4,806 5,018 
Operating expenses:
Selling, general, and administrative3,123 3,261 
Research and development763 688 
Total operating expenses3,886 3,949 
Operating income920 1,069 
Interest and other, net(373)(364)
Income before income taxes547 705 
Income tax expense (benefit)(408)127 
Net income955 578 
Less: Net loss attributable to non-controlling interests(5)(5)
Net income attributable to Dell Technologies Inc.$960 $583 
Earnings per share attributable to Dell Technologies Inc.
Basic$1.36 $0.81 
Diluted$1.32 $0.79 
(a) Includes related party cost of net revenue as follows (Note 15):
Products$ $207 
Services $ $876 
 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


6


DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)
Three Months Ended
May 3, 2024May 5, 2023
Net income$955 $578 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments(74)31 
Cash flow hedges:
Change in unrealized gains87 10 
Reclassification adjustment for net (gains) losses included in net income(19)91 
Net change in cash flow hedges68 101 
Pension and other postretirement plans:
Recognition of actuarial net gains from pension and other postretirement plans2 1 
Reclassification adjustments for net gains from pension and other postretirement plans(1) 
Net change in actuarial net gains from pension and other postretirement plans1 1 
Total other comprehensive income (loss), net of tax expense of $7 and $5, respectively
(5)133 
Comprehensive income, net of tax950 711 
Less: Net loss attributable to non-controlling interests(5)(5)
Comprehensive income attributable to Dell Technologies Inc.$955 $716 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

7


DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
 Three Months Ended
 May 3, 2024May 5, 2023
Cash flows from operating activities: 
Net income$955 $578 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization800 809 
Stock-based compensation expense210 225 
Deferred income taxes(327)(93)
Other, net224 308 
Changes in assets and liabilities:
Accounts receivable683 3,000 
Financing receivables(165)367 
Inventories(1,236)684 
Other assets and liabilities(592)(1,322)
Due from/to related party, net (1,458)
Accounts payable1,241 (726)
Deferred revenue(750)(595)
Change in cash from operating activities1,043 1,777 
Cash flows from investing activities:
Purchases of investments(39)(15)
Maturities and sales of investments119 19 
Capital expenditures and capitalized software development costs(596)(701)
Other60 13 
Change in cash from investing activities(456)(684)
Cash flows from financing activities:
Proceeds from the issuance of common stock 2 
Repurchases of common stock(700)(240)
Repurchases of common stock for employee tax withholdings(521)(306)
Payments of dividends and dividend equivalents(336)(276)
Proceeds from debt2,992 2,521 
Repayments of debt(3,477)(3,698)
Debt-related costs and other, net(35)(5)
Change in cash from financing activities(2,077)(2,002)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(55)(58)
Change in cash, cash equivalents, and restricted cash(1,545)(967)
Cash, cash equivalents, and restricted cash at beginning of the period7,507 8,894 
Cash, cash equivalents, and restricted cash at end of the period$5,962 $7,927 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


8


DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(in millions, except per share amounts; continued on next page; unaudited)

Common Stock and Capital in Excess of
Par Value
Treasury Stock
Issued SharesAmountSharesAmountAccumulated DeficitAccumulated Other Comprehensive Income/(Loss)Dell Technologies
Stockholders’ Equity (Deficit)
Non-Controlling InterestsTotal Stockholders’ Equity (Deficit)
Balances as of February 3, 2023798 $8,424 82 $(3,813)$(6,732)$(1,001)$(3,122)$97 $(3,025)
Net income (loss)— — — — 583 — 583 (5)578 
Dividends and dividend equivalents declared ($0.37 per common share)
— — — — (281)— (281)— (281)
Foreign currency translation adjustments— — — — — 31 31 — 31 
Cash flow hedges, net change— — — — — 101 101 — 101 
Pension and other post-retirement— — — — — 1 1 — 1 
Issuance of common stock, net of shares repurchased for employee tax withholding19 (299)— — — — (299)— (299)
Stock-based compensation expense— 218 — — — — 218 7 225 
Treasury stock repurchases— — 6 (251)— — (251)— (251)
Impact from equity transactions of non-controlling interests— (4)— — — — (4)— (4)
Balances as of May 5, 2023817 $8,339 88 $(4,064)$(6,430)$(868)$(3,023)$99 $(2,924)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.











9


DELL TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(continued; in millions, except per share amounts; unaudited)

Common Stock and Capital in Excess of
Par Value
Treasury Stock
Issued SharesAmountSharesAmountAccumulated DeficitAccumulated Other Comprehensive Income/(Loss)Dell Technologies
Stockholders’ Equity (Deficit)
Non-Controlling InterestsTotal Stockholders’ Equity (Deficit)
Balances as of February 2, 2024821 $8,926 116 $(5,900)$(4,630)$(800)$(2,404)$95 $(2,309)
Net income (loss)— — — — 960 — 960 (5)955 
Dividends and dividend equivalents declared ($0.445 per common share)
— — — — (331)— (331)— (331)
Foreign currency translation adjustments— — — — — (74)(74)— (74)
Cash flow hedges, net change— — — — — 68 68 — 68 
Pension and other post-retirement— — — — — 1 1 — 1 
Issuance of common stock, net of shares repurchased for employee tax withholding12 (515)— — — — (515)— (515)
Stock-based compensation expense— 202 — — — — 202 8 210 
Treasury stock repurchases— — 7 (722)— — (722)— (722)
Impact from equity transactions of non-controlling interests— (7)— — — — (7)1 (6)
Balances as of May 3, 2024833 $8,606 123 $(6,622)$(4,001)$(805)$(2,822)$99 $(2,723)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.











10


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1 — OVERVIEW AND BASIS OF PRESENTATION

Dell Technologies is a leading global end-to-end technology provider that designs, develops, manufactures, markets, sells, and supports a wide range of comprehensive and integrated solutions, products, and services. Dell Technologies offerings include servers and networking, storage, cloud solutions, desktops, notebooks, services, software, branded peripherals, and third-party software and peripherals. References in these Notes to the Condensed Consolidated Financial Statements to the “Company” or “Dell Technologies” mean Dell Technologies Inc. individually and together with its consolidated subsidiaries.

Basis of Presentation — The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes filed with the U.S. Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2024. These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company as of May 3, 2024 and February 2, 2024 and the results of its operations, corresponding comprehensive income, changes in stockholders’ equity, and cash flows for the three months ended May 3, 2024 and May 5, 2023.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying Notes. Actual results could differ materially from those estimates. The results of its operations, corresponding comprehensive income, changes in stockholders’ equity, and cash flows for the three months ended May 3, 2024 and May 5, 2023 are not necessarily indicative of the results to be expected for the full fiscal year or for any other fiscal period.

The Company’s fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. Both the fiscal year ended February 2, 2024 (“Fiscal 2024”) and the fiscal year ending January 31, 2025 (“Fiscal 2025”) are 52-week periods.

Principles of Consolidation — These Condensed Consolidated Financial Statements include the accounts of Dell Technologies Inc., its wholly-owned subsidiaries, and the accounts of SecureWorks Corp. (“Secureworks”), which is majority-owned by Dell Technologies. All intercompany transactions have been eliminated.

Secureworks — As of May 3, 2024 and February 2, 2024, the Company held approximately 79.2% and 81.0%, respectively, of the outstanding equity interest in SecureWorks Corp. (“Secureworks”). The portion of the results of operations of Secureworks allocable to its other owners is shown as net loss attributable to non-controlling interests in the Condensed Consolidated Statements of Income, as an adjustment to net income attributable to Dell Technologies stockholders. The non-controlling interests’ share of equity in Secureworks is reflected as non-controlling interests in the Condensed Consolidated Statements of Financial Position and was $99 million and $95 million as of May 3, 2024 and February 2, 2024, respectively.

Variable Interest Entities — The Company consolidates Variable Interest Entities ("VIEs") where it has been determined that the Company is the primary beneficiary of the applicable entities’ operations. For each VIE, the primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to such VIE. In evaluating whether the Company is the primary beneficiary of each entity, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of each entity and the risks each entity was designed to create and pass through to its respective variable interest holders. The Company also evaluates its economic interests in each of the VIEs. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information regarding consolidated VIEs.

Other Events — On October 4, 2023, the Company established a new consumer revolving financing program with Comenity Capital Bank, a subsidiary of Bread Financial Holdings, Inc. (“Bread”), under which transactions are originated, owned, serviced, and collected by Bread. Under the agreement, the Company also sold its U.S. consumer revolving customer receivables portfolio for total cash consideration of approximately $390 million resulting in an immaterial gain recognized within the Condensed Consolidated Statements of Income. The Company has no continuing involvement with these receivables, which are serviced by Bread.


11


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Recently Issued Accounting Pronouncements

Segment Reporting — In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to improve disclosures about a public entity’s reportable segments by requiring disclosure of additional information about a reportable segment’s expenses on an annual and interim basis. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2023, with early adoption permitted. Upon adoption, the guidance is required to be applied retrospectively to all prior periods presented in the financial statements. Adoption of this new guidance will result in increased disclosures in the Notes to the Consolidated Financial Statements.

Income Taxes — In December 2023, the FASB issued guidance which requires companies to provide disaggregated income tax disclosures within the income tax rate reconciliation and income taxes paid. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2024, with early adoption permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. Adoption of this new guidance will result in increased disclosures in the Notes to the Consolidated Financial Statements.






12


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 2 — FAIR VALUE MEASUREMENTS

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the dates indicated:
 May 3, 2024February 2, 2024
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
 Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs 
 (in millions)
Assets:        
Money market funds$1,915 $ $ $1,915 $3,170 $ $ $3,170 
Marketable equity and other securities10   10 10   10 
Derivative instruments 170  170  104  104 
Total assets$1,925 $170 $ $2,095 $3,180 $104 $ $3,284 
Liabilities:        
Derivative instruments$ $29 $ $29 $ $84 $ $84 
Total liabilities$ $29 $ $29 $ $84 $ $84 

The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value.

Money Market Funds — The Company’s investment in money market funds that are classified as cash equivalents hold underlying investments with a weighted average maturity of 90 days or less and are recognized at fair value. The valuations of these securities are based on quoted prices in active markets for identical assets, when available, or pricing models whereby all significant inputs are observable or can be derived from, or corroborated by, observable market data. The Company reviews security pricing and assesses money market fund liquidity on a quarterly basis. As of May 3, 2024, the Company’s portfolio had no material exposure to money market funds with a fluctuating net asset value.

Marketable Equity and Other Securities — The Company’s investments in equity and other securities that are measured at fair value on a recurring basis consist of strategic investments in publicly-traded companies. The valuation of these securities is based on quoted prices in active markets.

Derivative Instruments — The Company’s derivative financial instruments consist primarily of foreign currency forward and purchased option contracts and interest rate swaps. The fair value of the portfolio is determined using valuation models based on market observable inputs, including interest rate curves, forward and spot prices for currencies, and implied volatilities. Credit risk is also factored into the fair value calculation of the Company’s derivative financial instrument portfolio. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for a description of the Company’s derivative financial instrument activities.

Deferred Compensation Plans — The Company offers deferred compensation plans for eligible employees, which allow participants to defer a portion of their compensation. Assets were the same as liabilities associated with the plans at approximately $227 million and $214 million as of May 3, 2024 and February 2, 2024, respectively, and are included in other assets and other liabilities on the Condensed Consolidated Statements of Financial Position. The net impact to the Condensed Consolidated Statements of Income is not material since changes in the fair value of the assets substantially offset changes in the fair value of the liabilities. As such, assets and liabilities associated with these plans have not been included in the recurring fair value table above.



13


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis — Certain assets are measured at fair value on a nonrecurring basis and therefore are not included in the recurring fair value table above. These assets consist primarily of non-financial assets such as goodwill and intangible assets. See Note 8 of the Notes to the Condensed Consolidated Financial Statements for additional information about goodwill and intangible assets.

As of both May 3, 2024 and February 2, 2024, the Company held strategic investments in non-marketable equity and other securities of $1.3 billion. As these investments represent early-stage companies without readily determinable fair values, they are not included in the recurring fair value table above. See Note 3 of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company’s strategic investments.

Carrying Value and Estimated Fair Value of Outstanding Debt — The following table presents the carrying value and estimated fair value of the Company’s outstanding debt as described in Note 6 of the Notes to the Condensed Consolidated Financial Statements, including the current portion, as of the dates indicated:
May 3, 2024February 2, 2024
Carrying ValueFair ValueCarrying ValueFair Value
(in billions)
Senior Notes$15.5 $15.5 $15.5 $15.8 
Legacy Notes$0.9 $1.0 $0.9 $1.0 
DFS Debt$9.0 $8.6 $9.5 $9.1 

The fair values of the outstanding debt shown in the table above were determined based on observable market prices in a less active market or based on valuation methodologies using observable inputs and were categorized as Level 2 in the fair value hierarchy.




14


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 3 — INVESTMENTS

The Company has strategic investments in equity and other securities as well as investments in fixed income debt securities. All equity and other securities as well as long-term fixed income debt securities are recorded as long-term investments while short-term fixed income debt securities are recorded as other current assets in the Condensed Consolidated Statements of Financial Position.

Total investments were $1.5 billion as of May 3, 2024 and $1.6 billion as of February 2, 2024.

Equity and Other Securities

Equity and other securities include strategic investments in marketable and non-marketable securities. Investments in marketable securities are measured at fair value on a recurring basis. The Company has elected to apply the measurement alternative for non-marketable securities. Under the alternative, the Company measures investments without readily determinable fair values at cost, less impairment, adjusted by observable price changes. The Company makes a separate election to use the alternative for each eligible investment and is required to reassess at each reporting period whether an investment qualifies for the alternative. In evaluating these investments for impairment or observable price changes, the Company uses inputs including pre- and post-money valuations of recent financing events and the impact of those events on its fully diluted ownership percentages, as well as other available information regarding the issuer’s historical and forecasted performance.

Carrying Value of Equity and Other Securities

The following table presents the cost, cumulative unrealized gains, cumulative unrealized losses, and carrying value of the Company's strategic investments in marketable and non-marketable equity and other securities as of the dates indicated:
May 3, 2024February 2, 2024
CostUnrealized GainUnrealized LossCarrying ValueCostUnrealized GainUnrealized LossCarrying Value
(in millions)
Marketable$17 $24 $(31)$10 $12 $24 $(26)$10 
Non-marketable751 1,016 (485)1,282 732 1,015 (454)1,293 
Total equity and other securities$768 $1,040 $(516)$1,292 $744 $1,039 $(480)$1,303 

15


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Gains and Losses on Equity and Other Securities

The following table presents unrealized gains and losses on marketable and non-marketable equity and other securities for the periods indicated:

Three Months Ended
May 3, 2024May 5, 2023
(in millions)
Marketable securities:
Unrealized loss$(5)$(23)
Net unrealized loss(5)(23)
Non-marketable securities:
Unrealized gain 9 
Unrealized loss(30)(5)
Net unrealized gain (loss) (a) (b)(30)4 
Net unrealized loss on equity and other securities$(35)$(19)
____________________
(a)    For the three months ended May 3, 2024, net unrealized losses on non-marketable securities were primarily attributable to downward adjustments for observable price changes.
(b)    For the three months ended May 5, 2023, net unrealized gains on non-marketable securities were primarily attributable to upward adjustments for observable price changes.

Fixed Income Debt Securities

The Company has fixed income debt securities carried at amortized cost which are primarily held as collateral for borrowings. The Company intends to hold the investments to maturity. As of May 3, 2024, the Company held $198 million in fixed income debt securities which will mature within one year and $1 million in fixed income debt securities which will mature within five years.

The following table summarizes the Company’s debt securities as of the dates indicated:
May 3, 2024February 2, 2024
CostUnrealized GainUnrealized LossCarrying ValueCostUnrealized GainUnrealized LossCarrying Value
(in millions)
Fixed income debt securities$215 $36 $(52)$199 $325 $67 $(91)$301 



16


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 4 — FINANCIAL SERVICES

The Company offers or arranges various financing options and alternative payment structures for its customers globally. Alternative payment structures consist of various flexible consumption models, including utility, subscription, and as-a-Service models.

Financing options are offered to the Company’s customers primarily through Dell Financial Services and its affiliates (“DFS”). The Company also arranges financing for some of its customers in various countries where DFS does not currently operate as a captive enterprise. The key activities of DFS include originating, collecting, and servicing customer financing arrangements primarily related to the purchase or use of Dell Technologies products and services. In some cases, DFS also offers financing for the purchase of third-party technology products that complement the Dell Technologies portfolio of products and services. New financing originations were $1.9 billion and $1.8 billion for the three months ended May 3, 2024 and May 5, 2023, respectively.

The Company’s lease and loan arrangements with customers are aggregated primarily into the following categories:

Fixed-term leases and loans — The Company enters into financing arrangements with customers who seek lease financing for equipment. DFS leases are generally classified as sales-type leases or operating leases. Leases with business customers have fixed terms of generally two to four years.

The Company also offers fixed-term loans to qualified small businesses, large commercial accounts, governmental organizations, educational entities, and certain individual consumer customers. These loans are repaid in equal payments including interest and have defined terms of generally three to five years. The fair value of the fixed-term loan portfolio is determined using market observable inputs.  The carrying value of these loans approximates fair value. 

Revolving loans — Revolving loans provide qualified customers with a revolving credit line for the purchase of products and services offered by Dell Technologies. The Company primarily offers revolving loans to small and medium-sized commercial customers. Revolving loans in the United States bear interest at a variable annual percentage rate that is tied to the prime rate. Based on historical payment patterns, revolving loan transactions are typically repaid within twelve months on average. Due to the short-term nature of the revolving loan portfolio, the carrying value of the portfolio approximates fair value.

Flexible consumption models, as defined above, further enable the Company to offer its customers the option to pay over time to provide them with financial and operational flexibility. Such models may result in identification of embedded lease arrangements that lead to the recognition of operating or sales-type leases.



17


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Financing Receivables

The following table presents the components of the Company’s financing receivables segregated by portfolio segment as of the dates indicated:
 May 3, 2024February 2, 2024
RevolvingFixed-termTotalRevolvingFixed-termTotal
 (in millions)
Financing receivables, net:  
Customer receivables, gross (a)$163 $10,470 $10,633 $173 $10,360 $10,533 
Allowances for losses(8)(187)(195)(9)(161)(170)
Customer receivables, net155 10,283 10,438 164 10,199 10,363 
Residual interest 163 163  157 157 
Financing receivables, net$155 $10,446 $10,601 $164 $10,356 $10,520 
Short-term$155 $4,505 $4,660 $164 $4,479 $4,643 
Long-term$ $5,941 $5,941 $ $5,877 $5,877 
____________________
(a)    Customer receivables, gross include amounts due from customers under revolving loans, fixed-term loans, fixed-term leases, and accrued interest.


The following table presents the changes in allowance for financing receivables losses for the periods indicated:

Three Months Ended
May 3, 2024May 5, 2023
RevolvingFixed-termTotalRevolvingFixed-termTotal
(in millions)
Allowance for financing receivable losses:
Balances at beginning of period$9 $161 $170 $88 $113 $201 
Charge-offs, net of recoveries(2)(6)(8)(17)(1)(18)
Provision charged to income statement1 32 33 13 23 36 
Balances at end of period$8 $187 $195 $84 $135 $219 

The Company recognizes an allowance for financing receivables losses, including both the lease receivable and unguaranteed residual, in an amount equal to the expected losses net of recoveries. The allowance for financing receivables losses on the lease receivable is determined based on various factors, including lifetime expected losses determined using macroeconomic forecast assumptions and management judgments applicable to and through the expected life of the portfolios as well as past due receivables, receivable type, and customer risk profile. The Company continues to monitor broader economic indicators and their potential impact on future credit loss performance.


18


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Aging

The following table presents the aging of the Company’s customer financing receivables, gross, including accrued interest, segregated by class, as of the dates indicated:
May 3, 2024February 2, 2024
Current
Past Due
1 — 90 Days
Past Due
>90 Days
TotalCurrent
Past Due
1 — 90 Days
Past Due
>90 Days
Total
(in millions)
Revolving$142 $17 $4 $163 $151 $17 $5 $173 
Fixed-term — Consumer and Commercial9,477 891 102 10,470 9,345 889 126 10,360 
Total customer receivables, gross$9,619 $908 $106 $10,633 $9,496 $906 $131 $10,533 

Aging is likely to fluctuate as a result of the variability in volume of large transactions entered into over the period, and the administrative processes that accompany those transactions. Aging is also impacted by the timing of the Company’s fiscal period end date relative to calendar month-end customer payment due dates.  As a result of these factors, fluctuations in aging from period to period do not necessarily indicate a material change in the collectibility of the portfolio.

Fixed-term consumer and commercial customer receivables are placed on non-accrual status if principal or interest is past due and considered delinquent, or if there is concern about the collectibility of a specific customer receivable. The receivables identified as doubtful for collectibility may be classified as current for aging purposes. Aged revolving portfolio customer receivables identified as delinquent are charged off.

19


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Credit Quality

The following tables present customer receivables, gross, including accrued interest, by credit quality indicator, segregated by class, as of the dates indicated:
May 3, 2024
Fixed-term — Consumer and Commercial
Fiscal Year of Origination
20252024202320222021Years PriorRevolvingTotal
(in millions)
Higher$687 $2,827 $1,699 $683 $274 $46 $39 $6,255 
Mid237 1,030 783 202 55 13 49 2,369 
Lower764 578 374 143 61 14 75 2,009 
Total$1,688 $4,435 $2,856 $1,028 $390 $73 $163 $10,633 

February 2, 2024
Fixed-term — Consumer and Commercial
Fiscal Year of Origination
20242023202220212020Years PriorRevolvingTotal
(in millions)
Higher$3,261 $1,979 $833 $345 $64 $ $47 $6,529 
Mid1,111 911 290 86 19  50 2,467 
Lower703 469 187 80 21 1 76 1,537 
Total$5,075 $3,359 $1,310 $511 $104 $1 $173 $10,533 

The categories shown in the tables above segregate customer receivables based on the relative degrees of credit risk. Credit quality indicators for revolving and fixed-term accounts are generally updated on a periodic basis.

For the revolving receivables and fixed-term commercial receivables shown in the tables above, an internal grading system is utilized that assigns a credit level score based on a number of considerations, including liquidity, operating performance, and industry outlook. The grading criteria and classifications for the fixed-term products differ from those for the revolving products as loss experience varies between these product and customer groups. The credit quality categories cannot be compared between the different classes as loss experience varies substantially between the classes.

20


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Leases

The following table presents amounts included in the Condensed Consolidated Statements of Income related to sales-type lease activity for the periods indicated:
Three Months Ended
May 3, 2024May 5, 2023
(in millions)
Net revenue products
$728 $247 
Cost of net revenue products
618 196 
Gross margin products
$110 $51 

The following table presents the future maturity of the Company’s fixed-term customer leases and associated financing payments, and reconciles the undiscounted cash flows to the customer receivables, gross recognized on the Condensed Consolidated Statements of Financial Position as of the date indicated:
May 3, 2024
(in millions)
Fiscal 2025 (remaining nine months)$2,109 
Fiscal 20262,416 
Fiscal 20271,529 
Fiscal 2028522 
Fiscal 2029 and beyond226 
Total undiscounted cash flows6,802 
Fixed-term loans4,740 
Revolving loans163 
Less: Unearned income(1,072)
Total customer receivables, gross$10,633 

Operating Leases

The Company’s operating leases primarily consist of DFS captive fixed-term leases and contractually committed embedded leases identified within flexible consumption arrangements.

The following table presents the components of the Company’s operating lease portfolio included in property, plant, and equipment, net as of the dates indicated:
May 3, 2024February 2, 2024
(in millions)
Equipment under operating lease, gross$3,951 $4,002 
Less: Accumulated depreciation(1,827)(1,800)
Equipment under operating lease, net$2,124 $2,202 

21


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents operating lease income related to lease payments and depreciation expense for the Company’s operating lease portfolio for the periods indicated:
Three Months Ended
May 3, 2024May 5, 2023
(in millions)
Income related to lease payments$356 $321 
Depreciation expense $240 $233 

The following table presents the future payments to be received by the Company in operating lease contracts as of the date indicated:
May 3, 2024
(in millions)
Fiscal 2025 (remaining nine months)$852 
Fiscal 2026819 
Fiscal 2027443 
Fiscal 2028169 
Fiscal 2029 and beyond60 
Total$2,343 

DFS Debt

The Company maintains programs that facilitate the funding of leases, loans, and other alternative payment structures in the capital markets. The majority of DFS debt is non-recourse to Dell Technologies and represents borrowings under securitization programs and structured financing programs, for which the Company’s risk of loss is limited to transferred loan and lease payments and associated equipment.
The following table presents DFS debt as of the dates indicated and excludes the allocated portion of the Company’s other borrowings, which represents the additional amount considered to fund the DFS business:
May 3, 2024February 2, 2024
DFS debt(in millions)
DFS U.S. debt:
Asset-based financing facility$2,331 $2,730 
Fixed-term securitization offerings 3,305 3,157 
Other26 28 
Total DFS U.S. debt, principal amount5,662 5,915 
DFS international debt:
Securitization facility720 761 
Other borrowings797 935 
Note payable250 250 
Dell Bank senior unsecured eurobonds1,609 1,631 
Total DFS international debt, principal amount3,376 3,577 
Total DFS debt, principal amount$9,038 $9,492 
Total short-term DFS debt$5,038 $5,863 
Total long-term DFS debt$4,000 $3,629 


22


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
DFS U.S. Debt

Asset-Based Financing Facility During the three months ended May 3, 2024, the Company consolidated its two separate asset-based financing facilities into a single asset-based financing facility in the United States, which is a revolving facility for fixed-term leases and loans. This debt is collateralized solely by the U.S. loan and lease payments and associated equipment in the facility. The asset-based financing facility consists of two tranches, with effective dates through July 7, 2025 and July 7, 2026. As of May 3, 2024, the total debt capacity related to the asset-based financing facility was $5.0 billion. The debt has a variable interest rate, and the duration of the debt is based on the terms of the underlying loan and lease payment streams. The Company enters into interest swap agreements to effectively convert a portion of this debt from a floating rate to a fixed rate. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company’s interest rate swaps.

The asset-based financing facility contains standard structural features related to the performance of the funded receivables, which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the facility, no further funding of receivables will be permitted and the timing of the Company’s expected cash flows from over-collateralization will be delayed. As of May 3, 2024, these criteria were met.

Fixed-Term Securitization Offerings The Company periodically issues asset-backed debt securities under fixed-term securitization programs to private investors. The asset-backed debt securities are collateralized solely by the U.S. fixed-term lease and loan payments and associated equipment, which are held by Special Purpose Entities (“SPEs”), as discussed below. The interest rate on these securities is fixed and ranged from 2.49% to 6.80% per annum as of May 3, 2024, and the duration of these securities is based on the terms of the underlying lease and loan payment streams.

DFS International Debt

Securitization Facility The Company maintains a securitization facility in Europe for fixed-term leases and loans. The debt under this facility has a variable interest rate, and the duration of the debt is based on the terms of the underlying loan and lease payment streams. This facility is effective through December 23, 2024 and had a total debt capacity of $858 million as of May 3, 2024.

The securitization facility contains standard structural features related to the performance of the securitized receivables, which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the program, no further funding of receivables will be permitted and the timing of the Company’s expected cash flows from over-collateralization will be delayed. As of May 3, 2024, these criteria were met.

Other Borrowings In connection with the Company’s international financing operations, the Company has entered into revolving structured financing debt programs related to its fixed-term lease and loan products sold in Canada, Europe, Australia, New Zealand, and the Middle East. The debt under these programs has a variable interest rate, and the duration of the debt is based on the terms of the underlying loan and lease payment streams. The Canadian facility, which is collateralized solely by Canadian loan and lease payments and associated equipment, had a total debt capacity of $329 million as of May 3, 2024 and is effective through January 16, 2025. The European facility, which is collateralized solely by European loan and lease payments and associated equipment, had a total debt capacity of $536 million as of May 3, 2024 and is effective through June 14, 2025. The Australia and New Zealand facility, which is collateralized solely by Australia and New Zealand loan and lease payments and associated equipment, had a total debt capacity of $295 million as of May 3, 2024 and is effective through April 20, 2025. The Middle East facility, which is collateralized solely by Middle East loan and lease payments and associated equipment, had a total debt capacity of $150 million as of May 3, 2024 and is effective through March 24, 2025.

Note Payable On May 25, 2022, the Company entered into an unsecured credit agreement to fund receivables in Mexico. As of May 3, 2024, the aggregate principal amount of the note payable was $250 million. The note bore interest at an annual rate of 4.24% and matured and was paid in full on May 31, 2024.


23


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Dell Bank Senior Unsecured Eurobonds On June 24, 2020, Dell Bank issued 500 million Euro of 1.625% senior unsecured four year eurobonds due June 2024. On October 27, 2021, Dell Bank issued 500 million Euro of 0.5% senior unsecured five year eurobonds due October 2026. On October 18, 2022, Dell Bank issued 500 million Euro of 4.5% senior unsecured five year eurobonds due October 2027. The issuances of the senior unsecured eurobonds support the expansion of the financing operations in Europe.

Variable Interest Entities

In connection with the asset-based financing facility, securitization facility, and fixed-term securitization offerings discussed above, the Company transfers certain U.S. and European lease and loan payments and associated equipment to SPEs that meet the definition of a VIE and are consolidated, along with the associated debt described above, into the Condensed Consolidated Financial Statements, as the Company is the primary beneficiary of the VIEs. The SPEs are bankruptcy-remote legal entities with separate assets and liabilities. The purpose of the SPEs is to facilitate the funding of customer loan and lease payments and associated equipment in the capital markets.

Some of the SPEs have entered into financing arrangements with multi-seller conduits that, in turn, issue asset-backed debt securities in the capital markets. DFS debt outstanding held by the consolidated VIEs is collateralized by the lease and loan payments and associated equipment. The Company’s risk of loss related to securitized receivables is limited to the amount by which the Company’s right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities. The Company provides credit enhancement to the securitization in the form of over-collateralization.

The following table presents the assets and liabilities held by the consolidated VIEs as of the dates indicated, which are included in the Condensed Consolidated Statements of Financial Position:
 May 3, 2024February 2, 2024
 (in millions)
Assets held by consolidated VIEs
Other current assets$124 $136 
Financing receivables, net of allowance
Short-term$3,140 $3,314 
Long-term$2,752 $2,747 
Property, plant, and equipment, net$1,031 $1,081 
Liabilities held by consolidated VIEs
Debt, net of unamortized debt issuance costs
Short-term$3,553 $4,450 
Long-term$2,804 $2,184 

Lease and loan payments and associated equipment transferred via securitization through SPEs were $0.8 billion and $1.5 billion for the three months ended May 3, 2024 and May 5, 2023, respectively.

Customer Receivables Sales

To manage certain concentrations of customer credit exposure, the Company may sell selected fixed-term customer receivables to unrelated third parties on a periodic basis, without recourse. The amount of customer receivables sold for this purpose was $67 million and $169 million for the three months ended May 3, 2024 and May 5, 2023, respectively. The Company’s continuing involvement in these customer receivables is primarily limited to servicing arrangements.

24


DELL TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 5 — LEASES

The Company enters into leasing transactions in which the Company is the lessee. These lease contracts are typically classified as operating leases. The Company’s lease contracts are generally fo