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 $2.4 billion for both the three months ended August 2, 2024 and August 4, 2023, and $4.3 billion and $4.2 billion for the six months ended August 2, 2024 and August 4, 2023, respectively.

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.

Prior to the sale of the U.S. consumer revolving customer receivables portfolio on October 4, 2023, described in Note 1 of the Notes to the Condensed Consolidated Financial Statements, the Company offered private label credit financing under the Dell Preferred Account (“DPA”) program. The DPA product was primarily offered to individual consumer customers.

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.


	August 2, 2024						February 2, 2024
	Revolving		Fixed-term		Total		Revolving		Fixed-term		Total

	(in millions)
Financing receivables, net:
Customer receivables, gross (a)	$	154	$	10,938	$	11,092	$	173	$	10,360	$	10,533
Allowances for losses	(8)		(158)		(166)		(9)		(161)		(170)
Customer receivables, net	146		10,780		10,926		164		10,199		10,363
Residual interest	—		166		166		—		157		157
Financing receivables, net	$	146	$	10,946	$	11,092	$	164	$	10,356	$	10,520
Short-term	$	146	$	4,822	$	4,968	$	164	$	4,479	$	4,643
Long-term	$	—	$	6,124	$	6,124	$	—	$	5,877	$	5,877


	Three Months Ended
	August 2, 2024						August 4, 2023
	Revolving		Fixed-term		Total		Revolving		Fixed-term		Total

	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	8	$	187	$	195	$	84	$	135	$	219

Charge-offs, net of recoveries	(4)		(15)		(19)		(16)		(1)		(17)
Provision charged to income statement	4		(14)		(10)		15		6		21
Held for sale adjustment (a)	—		—		—		(74)		—		(74)
Balances at end of period	$	8	$	158	$	166	$	9	$	140	$	149


	Six Months Ended
	August 2, 2024						August 4, 2023
	Revolving		Fixed-term		Total		Revolving		Fixed-term		Total

	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	9	$	161	$	170	$	88	$	113	$	201

Charge-offs, net of recoveries	(6)		(21)		(27)		(33)		(2)		(35)
Provision charged to income statement	5		18		23		28		29		57
Held for sale adjustment (a)	—		—		—		(74)		—		(74)
Balances at end of period	$	8	$	158	$	166	$	9	$	140	$	149

(a) The held for sale adjustment represents the reclassification of the U.S. consumer revolving customer receivables portfolio to current assets held for sale as of August 4, 2023. See Note 1 of the Notes to the Condensed Consolidated Financial Statements for more information about the sale of the U.S. consumer revolving customer receivables portfolio.

The Company recognizes an allowance for financing receivable losses, including both the lease receivable and unguaranteed residual, in an amount equal to the expected losses net of recoveries. The allowance for financing receivable 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.


	August 2, 2024								February 2, 2024
	Current		Past Due 1 — 90 Days		Past Due >90 Days		Total		Current		Past Due 1 — 90 Days		Past Due >90 Days		Total

	(in millions)

Revolving	$	135	$	15	$	4	$	154	$	151	$	17	$	5	$	173
Fixed-term	10,034		815		89		10,938		9,345		889		126		10,360
Total customer receivables, gross	$	10,169	$	830	$	93	$	11,092	$	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 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.


	August 2, 2024

	Fixed-term — Fiscal Year of Origination
	2025		2024		2023		2022		2021		Years Prior		Revolving		Total

	(in millions)
Higher	$	1,377	$	2,626	$	1,519	$	563	$	211	$	14	$	36	$	6,346
Mid	476		940		695		152		35		8		46		2,352
Lower	1,262		530		353		118		48		11		72		2,394
Total	$	3,115	$	4,096	$	2,567	$	833	$	294	$	33	$	154	$	11,092


	February 2, 2024

	Fixed-term — Fiscal Year of Origination
	2024		2023		2022		2021		2020		Years Prior		Revolving		Total

	(in millions)
Higher	$	3,261	$	1,979	$	833	$	345	$	64	$	—	$	47	$	6,529
Mid	1,111		911		290		86		19		—		50		2,467
Lower	703		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 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.


	Three Months Ended				Six Months Ended
	August 2, 2024		August 4, 2023		August 2, 2024		August 4, 2023

	(in millions)


Net revenue — products	$	622	$	292	$	1,350	$	539
Cost of net revenue — products	537		192		1,155		388
Gross margin — products	$	85	$	100	$	195	$	151

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:


	August 2, 2024

	(in millions)
Fiscal 2025 (remaining six months)	$	1,569
Fiscal 2026	2,841
Fiscal 2027	1,853
Fiscal 2028	654
Fiscal 2029 and beyond	347
Total undiscounted cash flows	7,264
Fixed-term loans	4,810
Revolving loans	154
Less: Unearned income	(1,136)
Total customer receivables, gross	$	11,092


	August 2, 2024		February 2, 2024

	(in millions)
Equipment under operating lease, gross	$	4,064	$	4,002
Less: Accumulated depreciation	(1,871)		(1,800)
Equipment under operating lease, net	$	2,193	$	2,202


	Three Months Ended				Six Months Ended
	August 2, 2024		August 4, 2023		August 2, 2024		August 4, 2023

	(in millions)
Income related to lease payments	$	362	$	330	$	718	$	651
Depreciation expense	$	245	$	236	$	485	$	469

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:


	August 2, 2024		February 2, 2024

DFS debt	(in millions)
DFS U.S. debt:
Asset-based financing facility	$	3,067	$	2,730
Fixed-term securitization offerings	2,841		3,157
Other	25		28
Total DFS U.S. debt, principal amount	5,933		5,915
DFS international debt:
Securitization facility	704		761
Other borrowings	877		935
Note payable	—		250
Dell Bank senior unsecured eurobonds	1,619		1,631
Total DFS international debt, principal amount	3,200		3,577
Total DFS debt, principal amount	$	9,133	$	9,492
Total short-term DFS debt	$	5,682	$	5,863
Total long-term DFS debt	$	3,451	$	3,629

Asset-Based Financing Facility — The Company maintains an 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 August 2, 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 August 2, 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 ranges from 2.49% to 6.80% per annum as of August 2, 2024, and the duration of these securities is based on the terms of the underlying lease and loan payment streams.

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 $863 million as of August 2, 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 August 2, 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, the Middle East, and Singapore. The debt under these programs has a variable interest rate.

The duration of the debt in Canada, Europe, Australia, New Zealand, and the Middle East is based on the terms of the underlying loan and lease payment streams. These facilities are collateralized solely by the loan and lease payments and associated equipment in their respective region or country. The Canadian facility had a total debt capacity of $324 million as of August 2, 2024 and is effective through January 16, 2025. The European facility had a total debt capacity of $540 million as of August 2, 2024 and is effective through December 14, 2026. The Australia and New Zealand facility had a total debt capacity of $293 million as of August 2, 2024 and is effective through April 20, 2025. The Middle East facility had a total debt capacity of $150 million as of August 2, 2024 and is effective through March 24, 2025.

On July 3, 2024, the Company entered into two unsecured revolving credit agreements to fund receivables in Singapore. The Singapore facilities have a total debt capacity of $247 million as of August 2, 2024 and are effective through July 3, 2026 and July 3, 2027, respectively.

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

Dell Bank Senior Unsecured Eurobonds — 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. On June 13, 2024, Dell Bank issued 500 million Euro of 3.6% senior unsecured five year eurobonds due June 2029. The issuances of the senior unsecured eurobonds support the expansion of the financing operations in Europe.

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:


	August 2, 2024		February 2, 2024

	(in millions)
Assets held by consolidated VIEs
Other current assets	$	115	$	136
Financing receivables, net of allowance
Short-term	$	3,284	$	3,314
Long-term	$	2,935	$	2,747
Property, plant, and equipment, net	$	1,022	$	1,081
Liabilities held by consolidated VIEs
Debt, net of unamortized debt issuance costs
Short-term	$	4,942	$	4,450
Long-term	$	1,670	$	2,184

Lease and loan payments and associated equipment transferred via securitization through SPEs were $1.2 billion and $1.1 billion for the three months ended August 2, 2024 and August 4, 2023, respectively, and $2.0 billion and $2.6 billion for the six months ended August 2, 2024 and August 4, 2023, respectively.

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 $69 million and $187 million for the six months ended August 2, 2024 and August 4, 2023, respectively. The Company’s continuing involvement in these customer receivables is primarily limited to servicing arrangements.