GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Aug. 02, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The Infrastructure Solutions Group and Client Solutions Group reporting units are consistent with the reportable segments identified in Note 16 of the Notes to the Condensed Consolidated Financial Statements. Other businesses consists of Secureworks, VMware Resale, and Virtustream, each of which represents a separate reporting unit.

The following table presents goodwill allocated to the Company’s reportable segments and changes in the carrying amount of goodwill as of the dates indicated:


	Infrastructure Solutions Group		Client Solutions Group		Other Businesses		Total

	(in millions)
Balances as of February 2, 2024	$	15,041	$	4,232	$	427	$	19,700

Impact of foreign currency translation and other	(46)		—		—		(46)



Balances as of August 2, 2024	$	14,995	$	4,232	$	427	$	19,654

Intangible Assets

The following table presents the Company’s intangible assets as of the dates indicated:


	August 2, 2024						February 2, 2024
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net

	(in millions)
Customer relationships	$	16,968	$	(15,120)	$	1,848	$	16,968	$	(14,930)	$	2,038
Developed technology	9,506		(9,098)		408		9,506		(8,980)		526
Trade names	875		(842)		33		875		(823)		52

Definite-lived intangible assets	27,349		(25,060)		2,289		27,349		(24,733)		2,616
Indefinite-lived trade names	3,085		—		3,085		3,085		—		3,085
Total intangible assets	$	30,434	$	(25,060)	$	5,374	$	30,434	$	(24,733)	$	5,701

Amortization expense related to definite-lived intangible assets was $164 million and $209 million for the three months ended August 2, 2024 and August 4, 2023, respectively, and $327 million and $408 million for the six months ended August 2, 2024 and August 4, 2023, respectively. There were no material impairment charges related to intangible assets during the three or six months ended August 2, 2024 and August 4, 2023.

The following table presents the estimated future annual pre-tax amortization expense of definite-lived intangible assets as of the date indicated:


	August 2, 2024

	(in millions)
Fiscal 2025 (remaining six months)	$	327
Fiscal 2026	495
Fiscal 2027	386
Fiscal 2028	230
Fiscal 2029	190
Thereafter	661
Total	$	2,289

Goodwill and Indefinite-Lived Intangible Assets Impairment Testing

Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third fiscal quarter and whenever events or circumstances may indicate that an impairment has occurred.

For the annual impairment review of the Infrastructure Solutions Group (“ISG”) and Client Solutions Group (“CSG”) reporting units during the third quarter of Fiscal 2024, the Company elected to bypass the assessment of qualitative factors to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount, including goodwill. In electing to bypass the qualitative assessment, the Company proceeded directly to perform a quantitative goodwill impairment test to measure the fair value of each goodwill reporting unit relative to its carrying amount, and to determine the amount of goodwill impairment loss to be recognized, if any. For the remaining reporting units, the Company performed a qualitative assessment of goodwill at the reporting unit level. The qualitative assessment included consideration of the relevant events and circumstances affecting the reporting unit, including macroeconomic, industry and market conditions, overall financial performance, and trends in the public company market valuation, where applicable.

Management exercised significant judgment related to the above assessments, including the identification of goodwill reporting units, assignment of assets and liabilities to goodwill reporting units, assignment of goodwill to reporting units, and determination of the fair value of each goodwill reporting unit. For the quantitative goodwill impairment test, the fair value of each goodwill reporting unit is generally estimated using a combination of public company multiples and discounted cash flow methodologies. The discounted cash flow and public company multiples methodologies require significant judgment, including estimation of future revenues, gross margins, and operating expenses, which are dependent on internal forecasts, current and anticipated economic conditions and trends, selection of market multiples through assessment of the reporting unit’s performance relative to peer competitors, the estimation of the long-term revenue growth rate and discount rate of the Company’s business, and the determination of the Company’s weighted average cost of capital. Changes in these estimates and assumptions could materially affect the fair value of the goodwill reporting unit, potentially resulting in a non-cash impairment charge.

The fair value of the indefinite-lived trade names is generally estimated using discounted cash flow methodologies. These methodologies require significant judgment, including the estimation of future revenue, the estimation of the long-term revenue growth rate of the Company’s business and the determination of the Company’s weighted average cost of capital and royalty rates. Changes in these estimates and assumptions could materially affect the fair value of the indefinite-lived intangible assets, potentially resulting in a non-cash impairment charge.

Based on the results of the annual impairment test performed during Fiscal 2024, the fair values of each of the reporting units and indefinite-lived intangibles exceeded their carrying values. No goodwill or indefinite-lived assets impairment test was performed during the six months ended August 2, 2024.