DELLDell Technologies

•Services Net Revenue — Services net revenue includes revenue from our services offerings and support services related to hardware products and software licenses. During Fiscal 2025, 2026, services net revenue was flat as the growth within CSG services net revenue and, decreased 4% due to a lesser extent, ISG services net revenue was offset by a decline in Corporate and other services net revenue. The increase in CSG services net revenue decline was primarily due to CSG third-party software support and maintenance as well as support and maintenance associated with products sold a decrease in prior periods. The increase in ISG services net revenue was primarily due to support and maintenance associated with products sold in prior periods. Corporate and other services net revenue declined VMware Resale revenue, as we no longer act as a distributor of standalone VMware offerings. offerings and, to a lesser extent, the sale of Secureworks. The decline was partially offset by growth within services net revenue attributable to ISG and CSG, which was driven by support and maintenance associated with products sold in prior periods within both CSG and ISG and higher AI-optimized servers offerings within ISG.

Stock-Based Compensation — The Company measures stock-based Stock-based compensation expense for all share-based 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, the Company uses the Monte Carlo valuation model. The fair value of other share-based Stock-based compensation expense for equity awards is generally recorded over the requisite service period in cost of net revenues, selling, general and administrative expense and research and development expense in the Consolidated Statements of Income based on the closing price function of the Class C Common Stock as reported employee. Compensation expense is recognized on the New York Stock Exchange (“NYSE”) on the date of grant. a straight-line basis for equity awards with a service condition and a graded vesting basis for equity awards that contain either a performance or market condition.

The Company utilizes a limited number of contract manufacturers that assemble a portion of its products. The Company purchases components from suppliers and sells those components to such contract manufacturers. The Company reflects the sale of such components by recognizing non-trade receivables from the contract manufacturers and a reduction in inventory when title and risk of loss pass to the manufacturer. Cash flows related to such transactions are recorded within cash flows from operating activities. The Company does not reflect the sale of the components in revenue and does not recognize any profit on the component sales until the Company sells the related products are sold to a the customer. The agreements with the majority of the contract manufacturers permit the Company to offset its payables against the receivables, thus mitigating the credit risk wholly or in part. Such receivables were $13.2 billion and $5.4 billion as of January 30, 2026 and January 31, 2025, respectively, and primarily consisted of receivables from the Company’s three largest contract manufacturers. The Company offset its corresponding payables against $13.0 billion and $4.7 billion of such receivables as of January 30, 2026 and January 31, 2025, respectively. The portion of receivables not offset is included in other current assets in the Consolidated Statements of Financial Position.

We are targeted by criminal and other threat actors that conduct cyber-attacks of our systems and networks on an ongoing basis. We have experienced cyber-attacks that leveraged compromised credentials of our partners, vendors, employees, and customers to gain unauthorized access to Dell Technologies, partner, and vendor systems and confidential information, including information about our customers, employees, and partners. These incidents have caused, and may in the future cause, disruption to parts of our business operations, and to the environments and operations of our partners, vendors, and customers, and such incidents could result in regulatory, investigative, recovery, remediation, contractual, and litigation expenses. We anticipate that our systems systems, networks, and networks employees will continue to be targeted by criminal and other threat actors with increasing frequency and potential harm. In particular, we We expect that attacks by nation state actors and their agents may to intensify during periods of geopolitical conflict. We also expect threat tactics leveraging AI to increase as AI technology availability and capability expand.