Dell Technologies Inc.

Previous wording

During the first quarter of Fiscal 2027, 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:

Current wording

During the second quarter and first six months of Fiscal 2027, 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:

Previous wording

•Macroeconomic environment: We experienced substantial demand growth across our ISG offerings, resulting in ISG net revenue growth and a continued shift in the mix of the business towards our ISG offerings. Additionally, the demand environment was significant for our CSG offerings, resulting in CSG net revenue growth.

Current wording

•Macroeconomic environment: We continued to experience substantial demand growth across our ISG offerings, resulting in ISG net revenue growth and a continued shift in the mix of the business towards our ISG offerings. Additionally, the demand environment was significant for our CSG offerings, resulting in CSG net revenue growth.

Previous wording

•Supply Chain: We experienced an increase in input costs, driven primarily by higher component costs. Strong and accelerating industry demand for AI‑optimized solutions, together with current limitations in capacity from memory manufacturers, has resulted in global supply constraints and substantial inflation in memory component costs.

Current wording

•Supply chain: We experienced an increase in input costs, driven by higher component costs. Strong and accelerating industry demand for AI‑optimized solutions, together with current limitations in capacity from memory manufacturers, has resulted in global supply constraints and substantial inflation in memory component costs.

Previous wording

•Revenue: Overall, while customers continue to reassess their spending priorities throughout the year in light of the dynamic commodity supply environment, we expect significant ISG and strong CSG net revenue growth. We expect ISG net revenue growth will be driven largely by increased demand for our servers and networking offerings and, to a lesser extent, our storage offerings. We anticipate CSG net revenue growth to be driven in part by the continuation of the PC refresh cycle.

Current wording

•Revenue: Overall, we expect IT environments to enable growth, productivity, and competitive advantage for our customers. As a result, we anticipate significant ISG and strong CSG net revenue growth. We expect ISG net revenue growth will be driven largely by increased demand for our servers and networking offerings and, to a lesser extent, our storage offerings.

Previous wording

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.

Current wording

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 may create additional challenges in managing demand and supply levels.

Previous wording

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 the first quarter of Fiscal 2027 and the first quarter of Fiscal 2026, respectively. As a result, our operating results can be 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.

Current wording

Foreign Currency Exposure — We manage our business on a U.S. Dollar basis. However, we have a large global presence, generating approximately 40% of our net revenue from sales to customers outside of the United States during both the second quarter and first six months of Fiscal 2027 and 40% and 45% during the second quarter and first six months of Fiscal 2026, respectively. As a result, our operating results can be 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.

Previous wording

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 - diluted, as defined by us, exclude amortization of intangible assets, stock-based compensation expense, other corporate (income) expenses and, for non-GAAP net income and non-GAAP earnings per share - 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.

Current wording

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 - 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 - 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.

Previous wording

•Other Corporate (Income) Expenses — Other corporate (income) 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, and transaction-related expenses. Severance costs are primarily related to severance and benefits for employees impacted by cost management initiatives. During the first quarter of Fiscal 2027, we recognized $0.2 billion of severance expense related to workforce reduction activities. During the first quarter of Fiscal 2026, we recognized a $0.2 billion gain related to the sale of our subsidiary SecureWorks Corp. (“Secureworks”). Although we may incur these types of items in the future, we exclude other corporate (income) 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.

Current wording

•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, and transaction-related expenses. Severance costs are primarily related to severance and benefits for employees impacted by cost management initiatives. During the first six months of Fiscal 2027 and Fiscal 2026, we recognized $0.5 billion and $0.3 billion, respectively, of severance expense related to workforce reduction activities. During the first six months of Fiscal 2026, we recognized a $0.2 billion gain related to the sale of our subsidiary SecureWorks Corp. (“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.

Previous wording

•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. During the first quarter of Fiscal 2027, we recognized a $0.6 billion gain from our strategic investment portfolio related to a single investee. See Note 3 of the Notes to the Condensed 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.

Current wording

•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. During the first six months of Fiscal 2027, we recognized a $0.6 billion gain from our strategic investment portfolio related to a single investee. See Note 3 of the Notes to the Condensed 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.

Previous wording

During the first quarter of Fiscal 2027, net revenue increased by 88%, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue. The increase in ISG net revenue was primarily driven by growth in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings. The increase in CSG net revenue was primarily attributable to an increase in sales of our commercial offerings. Corporate and other net revenue declined primarily due to a decrease in VMware Resale revenue, as we no longer act as a distributor of standalone VMware offerings.

Current wording

During the second quarter and first six months of Fiscal 2027, net revenue increased by 58% and 71%, respectively, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue. The increase in ISG net revenue was driven by growth in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings. The increase in CSG net revenue was primarily attributable to an increase in sales of our commercial offerings. Corporate and other net revenue declined primarily due to a decrease in VMware Resale revenue, as we no longer act as a distributor of standalone VMware offerings.

Previous wording

During the first quarter of Fiscal 2027, operating income and non-GAAP operating income increased by 214% to $3.7 billion and 154% to $4.2 billion, respectively. The increases were primarily attributable to an increase in ISG operating income and, to a lesser extent, CSG operating income. The increase in ISG operating income was driven by our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG operating income was driven primarily by our commercial offerings.

Current wording

During the second quarter of Fiscal 2027, operating income and non-GAAP operating income increased by 204% to $5.4 billion and 160% to $5.9 billion, respectively. During the first six months of Fiscal 2027, operating income and non-GAAP operating income increased by 208% to $9.0 billion and 157% to $10.2 billion, respectively. The increases were attributable to an increase in ISG operating income and, to a lesser extent, CSG operating income. The increase in ISG operating income was driven by our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG operating income was driven primarily by our commercial offerings.

Previous wording

During the first quarter of Fiscal 2027, operating income and non-GAAP operating income as a percentage of net revenue increased 330 basis points to 8.3% and 260 basis points to 9.7%, respectively. Operating income as a percentage of net revenue benefited from the favorable impact of a decline in operating expense rate as a result of substantial net revenue growth. The favorable impact of operating expense rate was partially offset by a decline in gross margin rate due to a shift in mix towards our AI-optimized servers offerings.

Current wording

During the second quarter and first six months of Fiscal 2027, operating income as a percentage of net revenue increased 550 basis points to 11.5% and 450 basis points to 10.0%, respectively. During the second quarter and first six months of Fiscal 2027, non-GAAP operating income as a percentage of net revenue increased 490 basis points to 12.6% and 380 basis points to 11.2%, respectively. Operating income and non-GAAP operating income as a percentage of net revenue benefited from the favorable impact of a decline in operating expense rate as a result of substantial net revenue growth. During the second quarter of Fiscal 2027, operating income and non-GAAP operating income rate also benefited from an increase in gross margin rate driven by disciplined pricing.

Previous wording

Cash provided by operating activities was $4.1 billion during the first quarter of Fiscal 2027 and was driven by net revenue growth and profitability, partially offset by working capital dynamics. Working capital was primarily affected by increased demand for our AI-optimized servers offerings. During the first quarter of Fiscal 2026, cash provided by operating activities was $2.8 billion and was driven by profitability and similar working capital dynamics as well as by other business impacts, including annual incentive-based personnel-related payments. See “Liquidity, Cash Requirements, and Market Conditions” for additional information about our cash flow metrics.

Current wording

Cash provided by operating activities was $6.3 billion during the first six months of Fiscal 2027 and was driven by net revenue growth, profitability, and working capital dynamics, partially offset by higher financing receivables, all of which factors were primarily affected by increased demand for our ISG offerings. During the first six months of Fiscal 2026, cash provided by operating activities was $5.3 billion and was driven by net revenue growth, profitability, and similar working capital dynamics. See “Liquidity, Cash Requirements, and Market Conditions” for additional information about our cash flow metrics.

Previous wording

During the first quarter of Fiscal 2027, net revenue increased 88%, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue. See “Business Unit Results” for further information.

Current wording

During the second quarter and first six months of Fiscal 2027, net revenue increased 58% and 71%, respectively, driven by an increase in ISG net revenue and, to a lesser extent, CSG net revenue that was partially offset by a decrease in Corporate and other net revenue. See “Business Unit Results” for further information.

Previous wording

•Product Net Revenue — Product net revenue includes revenue from the sale of hardware products and software licenses. During the first quarter of Fiscal 2027, product net revenue increased 117% due to an increase in ISG product net revenue and, to a lesser extent, CSG product net revenue. The increase in ISG product net revenue was primarily driven by growth in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings. The increase in CSG product net revenue was primarily attributable to growth in our commercial offerings.

Current wording

•Product Net Revenue — Product net revenue includes revenue from the sale of hardware products and software licenses. During the second quarter and first six months of Fiscal 2027, product net revenue increased 72% and 91%, respectively, due to an increase in ISG product net revenue and, to a lesser extent, CSG product net revenue. The increase in ISG product net revenue was primarily driven by growth in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings. The increase in CSG product net revenue was primarily attributable to growth in our commercial offerings.

Previous wording

•Services Net Revenue — Services net revenue includes revenue from our services offerings and support services related to hardware products and software licenses. During the first quarter of Fiscal 2027, services net revenue decreased 1% due to a decline in Corporate and other services net revenue, which was driven by a decrease in VMware Resale revenue. The decline was largely offset by an increase in ISG services net revenue, which was driven by higher AI-optimized servers offerings and support and maintenance associated with products sold in prior periods.

Current wording

•Services Net Revenue — Services net revenue includes revenue from our services offerings and support services related to hardware products and software licenses. During both the second quarter and first six months of Fiscal 2027, services net revenue remained flat as a decline in Corporate and other services net revenue was offset by an increase in ISG services net revenue.

Previous wording

From a geographical perspective, net revenue increased in the Americas, the Europe, Middle East and Africa region (“EMEA”), and the Asia-Pacific and Japan region (“APJ”) during the first quarter of Fiscal 2027, most notably within the Americas.

Current wording

From a geographical perspective, net revenue increased in the Americas, the Europe, Middle East and Africa region (“EMEA”), and the Asia-Pacific and Japan region (“APJ”) during the second quarter and first six months of Fiscal 2027, most notably within the Americas.

Previous wording

During the first quarter of Fiscal 2027, gross margin and non-GAAP gross margin increased 58% to $7.8 billion and 57% to $7.9 billion, respectively, primarily due to an increase in ISG gross margin and, to a lesser extent, CSG gross margin. The increase in ISG gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG gross margin was primarily driven by growth in our commercial offerings.

Current wording

During the second quarter of Fiscal 2027, gross margin and non-GAAP gross margin increased 80% to $9.8 billion and 78% to $9.9 billion, respectively. During the first six months of Fiscal 2027, gross margin and non-GAAP gross margin increased 70% to $17.6 billion and 68% to $17.9 billion, respectively. The increases in gross margin and non-GAAP gross margin were primarily due to an increase in ISG gross margin and, to a lesser extent, CSG gross margin. The increase in ISG gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG gross margin was primarily driven by growth in our commercial offerings.

Previous wording

During the first quarter of Fiscal 2027, product gross margin percentage and non-GAAP product gross margin percentage decreased 30 basis points to 13.8% and 60 basis points to 13.9%, respectively, primarily due to a shift in mix towards our AI-optimized servers offerings.

Current wording

During the second quarter of Fiscal 2027, gross margin percentage and non-GAAP gross margin percentage increased 260 basis points to 20.9% and 240 basis points to 21.1%, respectively, driven by disciplined pricing. During the first six months of Fiscal 2027, gross margin percentage and non-GAAP gross margin percentage decreased 10 basis points to 19.4% and 30 basis points to 19.7%, respectively, primarily due to a shift in mix towards our AI-optimized servers offerings, the effect of which was largely offset by disciplined pricing.

Previous wording

•Product Gross Margin — During the first quarter of Fiscal 2027, product gross margin and non-GAAP product gross margin increased 112% and 108%, respectively, to $5.3 billion. The increases were attributable to an increase in ISG product gross margin and, to a lesser extent, CSG product gross margin. The increase in ISG product gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG gross margin was primarily attributable to growth in our commercial offerings.

Current wording

•Product Gross Margin — During the second quarter of Fiscal 2027, product gross margin and non-GAAP product gross margin increased 146% to $7.1 billion and 143% to $7.2 billion, respectively. During the first six months of Fiscal 2027, product gross margin and non-GAAP product gross margin increased 130% to $12.4 billion and 127% to $12.5 billion, respectively. The increases were attributable to an increase in ISG product gross margin and, to a lesser extent, CSG product gross margin. The increase in ISG product gross margin was driven by growth in our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG gross margin was primarily attributable to growth in our commercial offerings.

Previous wording

•Services Gross Margin — During the first quarter of Fiscal 2027, services gross margin and non-GAAP services gross margin increased 3% to $2.5 billion and 5% to $2.6 billion, respectively. The increases were attributable to an increase in ISG services gross margin, which was primarily driven by higher support and maintenance associated with products sold in prior periods and increased demand for our servers and networking offerings.

Current wording

•Services Gross Margin — During the second quarter of Fiscal 2027, services gross margin and non-GAAP services gross margin increased 6% to $2.7 billion and 5% to $2.8 billion, respectively. During the first six months of Fiscal 2027, both services gross margin and non-GAAP services gross margin increased 5% to $5.2 billion and $5.4 billion, respectively. The increases were primarily attributable to an increase in ISG services gross margin.

Previous wording

During the first quarter of Fiscal 2027, services gross margin percentage and non-GAAP services gross margin percentage increased 160 basis points to 44.1% and 260 basis points to 46.0%, respectively, primarily driven by a shift in mix, as we no longer act as a distributor of standalone VMware offerings.

Current wording

During the second quarter of Fiscal 2027, services gross margin percentage and non-GAAP services gross margin percentage increased 240 basis points to 46.2% and 210 basis points to 47.0%, respectively. During the first six months of Fiscal 2027, services gross margin percentage and non-GAAP services gross margin percentage increased 210 basis points to 45.2% and 240 basis points to 46.5%, respectively, primarily driven by a shift in mix, as we no longer act as a distributor of standalone VMware offerings.

Previous wording

The terms and conditions of our vendor rebate programs are largely based on product volumes and are generally negotiated either at the beginning of the annual or quarterly period, depending on the program. The timing and amount of vendor rebates and other discounts we receive under the programs may vary from period to period, reflecting changes in the competitive environment. We monitor our component costs and seek to address the effects of any changes to terms that might arise under our vendor rebate programs. Our gross margins for the first quarter of Fiscal 2027 were not materially affected by any changes to the terms of our vendor rebate programs, as the amounts we received under these programs were generally stable relative to our total net cost. We are not aware of any significant changes to our vendor rebate programs that will materially impact our results in the near term.

Current wording

The terms and conditions of our vendor rebate programs are largely based on product volumes and are generally negotiated either at the beginning of the annual or quarterly period, depending on the program. The timing and amount of vendor rebates and other discounts we receive under the programs may vary from period to period, reflecting changes in the competitive environment. We monitor our component costs and seek to address the effects of any changes to terms that might arise under our vendor rebate programs. Our gross margins for the second quarter and first six months of Fiscal 2027 were not materially affected by any changes to the terms of our vendor rebate programs, as the amounts we received under these programs were generally stable relative to our total net cost. We are not aware of any significant changes to our vendor rebate programs that will materially impact our results in the near term.

Previous wording

During the first quarter of Fiscal 2027, total operating expenses increased 9% due to an increase in research and development (“R&D”) expenses and selling, general, and administrative (“SG&A”) expenses.

Current wording

During the second quarter and first six months of Fiscal 2027, total operating expenses increased 21% and 15%, respectively, due to an increase in research and development (“R&D”) expenses and selling, general, and administrative (“SG&A”) expenses.

Previous wording

•Selling, General, and Administrative — During the first quarter of Fiscal 2027, SG&A expenses increased 6%, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.

Current wording

•Selling, General, and Administrative — During the second quarter and first six months of Fiscal 2027, SG&A expenses increased 15% and 11%, respectively, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.

Previous wording

•Research and Development —R&D expenses increased 22% during the first quarter of Fiscal 2027, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.

Current wording

•Research and Development —During the second quarter and first six months of Fiscal 2027, R&D expenses increased 41% and 31%, respectively, principally due to an increase in employee compensation and benefits expense related primarily to an increase in variable compensation.

Previous wording

During the first quarter of Fiscal 2027, operating income and non-GAAP operating income increased by 214% to $3.7 billion and 154% to $4.2 billion, respectively. The increases were primarily attributable to an increase in ISG operating income and, to a lesser extent, CSG operating income. The increase in ISG operating income was driven by our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG operating income was driven primarily by our commercial offerings.

Current wording

During the second quarter of Fiscal 2027, operating income and non-GAAP operating income increased by 204% to $5.4 billion and 160% to $5.9 billion, respectively. During the first six months of Fiscal 2027, operating income and non-GAAP operating income increased by 208% to $9.0 billion and 157% to $10.2 billion, respectively. The increases were attributable to an increase in ISG operating income and, to a lesser extent, CSG operating income. The increase in ISG operating income was driven by our servers and networking offerings and, to a lesser extent, our storage offerings. The increase in CSG operating income was driven primarily by our commercial offerings.

Previous wording

During the first quarter of Fiscal 2027, operating income and non-GAAP operating income as a percentage of net revenue increased 330 basis points to 8.3% and 260 basis points to 9.7%, respectively. Operating income as a percentage of net revenue benefited from the favorable impact of a decline in operating expense rate as a result of substantial net revenue growth. The favorable impact of operating expense rate was partially offset by a decline in gross margin rate due to a shift in mix towards our AI-optimized servers offerings.

Current wording

During the second quarter and first six months of Fiscal 2027, operating income as a percentage of net revenue increased 550 basis points to 11.5% and 450 basis points to 10.0%, respectively. During the second quarter and first six months of Fiscal 2027, non-GAAP operating income as a percentage of net revenue increased 490 basis points to 12.6% and 380 basis points to 11.2%, respectively. Operating income and non-GAAP operating income as a percentage of net revenue benefited from the favorable impact of a decline in operating expense rate as a result of substantial net revenue growth. During the second quarter of Fiscal 2027, operating income and non-GAAP operating income rate also benefited from an increase in gross margin rate driven by disciplined pricing.

Previous wording

Net Revenue —During the first quarter of Fiscal 2027, ISG net revenue increased 181%, driven by strength in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings.

Current wording

Net Revenue —During the second quarter and first six months of Fiscal 2027, ISG net revenue increased 89% and 124%, respectively, driven by strength in our AI-optimized servers offerings and, to a lesser extent, our traditional servers and networking offerings and our storage offerings.

Previous wording

AI-optimized servers net revenue increased 757% during the first quarter of Fiscal 2027, primarily driven by an increase in units sold as a result of significant increased demand for these offerings.

Current wording

AI-optimized servers net revenue increased 100% and 222% during the second quarter and first six months of Fiscal 2027, respectively, primarily driven by an increase in units sold as a result of significant increased demand for our AI-optimized servers offerings, and, to a lesser extent, an increase in the average selling prices of these offerings. The increase in average selling prices was driven by richer configurations and, to a lesser extent, disciplined pricing.

Previous wording

In addition to unit demand growth that exceeded supply, traditional servers and networking net revenue increased 92% during the first quarter of Fiscal 2027, primarily due to an increase in the average selling price of these offerings, driven by disciplined pricing as we navigated the macroeconomic environment and, to a lesser extent, richer configurations.

Current wording

Traditional servers and networking net revenue increased 122% and 108% during the second quarter and first six months of Fiscal 2027, respectively, primarily driven by an increase in the average selling price of these offerings, driven by disciplined pricing and, to a lesser extent, richer configurations.

Previous wording

During the first quarter of Fiscal 2027, storage net revenue increased 8% primarily due to growth in demand for our Dell-IP storage offerings.

Current wording

During the second quarter and first six months of Fiscal 2027, storage net revenue increased 26% and 17%, respectively, primarily due to growth in demand for our Dell-IP storage offerings and disciplined pricing.

Previous wording

From a geographical perspective, ISG net revenue increased in the Americas, EMEA, and APJ during the first quarter of Fiscal 2027, most notably within the Americas.

Current wording

From a geographical perspective, ISG net revenue increased in the Americas, EMEA, and APJ during the second quarter and first six months of Fiscal 2027, most notably within the Americas.

Previous wording

Operating Income —During the first quarter of Fiscal 2027, ISG operating income as a percentage of net revenue increased 80 basis points to 10.5%, due to a decline in operating expense rate that outpaced the decline in gross margin rate. Operating expense rate declined primarily due to substantial ISG net revenue growth. Gross margin rate decreased primarily as the result of a shift in mix towards our AI-optimized servers offerings.

Current wording

During the first six months of Fiscal 2027, ISG operating income as a percentage of net revenue increased 380 basis points to 12.9% due to a decline in operating expense rate that outpaced the decline in gross margin rate. Operating expense rate declined primarily due to substantial ISG net revenue growth. Gross margin rate decreased primarily as the result of a shift in mix towards our AI-optimized servers offerings.

Previous wording

Net Revenue —During the first quarter of Fiscal 2027, CSG net revenue increased 17%, primarily driven by strength in our commercial offerings and, to a lesser extent, our consumer offerings.

Current wording

Net Revenue —During the second quarter and first six months of Fiscal 2027, CSG net revenue increased 20% and 19%, respectively, primarily driven by strength in our commercial offerings.

Previous wording

During the first quarter of Fiscal 2027, commercial net revenue increased 18% primarily due to an increase in the average selling prices of our commercial offerings and an increase in units sold.

Current wording

During the second quarter and first six months of Fiscal 2027, commercial net revenue increased 22% and 20%, respectively, primarily due to an increase in the average selling prices of our commercial offerings. During the second quarter of Fiscal 2027, the increase was partially offset by a decrease in units sold.

Previous wording

Consumer net revenue increased 9% during the first quarter of Fiscal 2027 due to an increase in the average selling prices of our consumer offerings, partially offset by a decline in units sold.

Current wording

Consumer net revenue increased 7% and 8% during the second quarter and first six months of Fiscal 2027, respectively, due to an increase in the average selling prices of our consumer offerings, partially offset by a decline in units sold.

Previous wording

The increase in the average selling prices of our CSG offerings was primarily attributable to disciplined pricing as we navigated the macroeconomic environment.

Current wording

The increase in the average selling prices of our CSG offerings was primarily attributable to disciplined pricing.

Previous wording

From a geographical perspective, CSG net revenue increased in EMEA, APJ, and the Americas during the first quarter of Fiscal 2027, most notably in EMEA.

Current wording

From a geographical perspective, CSG net revenue increased in the Americas, EMEA, and APJ during the second quarter and first six months of Fiscal 2027, most notably in the Americas.

Previous wording

Operating Income — During the first quarter of Fiscal 2027, CSG operating income as a percentage of net revenue increased 280 basis points to 8.0%. The increase in operating income rate during the first quarter of Fiscal 2027 was due to an increase in gross margin rate primarily driven by disciplined pricing as we navigated the macroeconomic environment and, to a lesser extent, a decline in operating expense rate driven by CSG net revenue growth.

Current wording

Operating Income — During the second quarter and first six months of Fiscal 2027, CSG operating income as a percentage of net revenue increased 120 basis points to 7.6% and 200 basis points to 7.8%, respectively, driven by an increase in gross margin rate and, to a lesser extent, a decline in operating expense rate. The increase in gross margin rate was primarily driven by disciplined pricing. The decline in operating expense rate was primarily due to CSG net revenue growth.