DEFERRED REVENUE
Deferred revenue consists of support and deployment services, software maintenance, training, Software-as-a-Service, and undelivered hardware and professional services, consisting of installations and consulting engagements. Deferred revenue is recorded when the Company has invoiced or payments have been received for undelivered products or services, or in situations where revenue recognition criteria have not been met. Revenue is recognized as the Company’s performance obligations under the contract are completed.
The following table presents the changes in the Company’s deferred revenue for the periods indicated:
| | | | | | | | | | | | | | | |
| | | Fiscal Year Ended |
| | | | | January 30, 2026 | | January 31, 2025 |
| | | | | | | |
| | | | | (in millions) |
| Deferred revenue: | | | | | | | |
| Deferred revenue at beginning of period | | | | | $ | 25,965 | | | $ | 29,145 | |
| Revenue deferrals | | | | | 21,014 | | | 18,135 | |
| Revenue recognized | | | | | (20,050) | | | (21,179) | |
| Other (a) | | | | | 1 | | | (136) | |
| Deferred revenue at end of period | | | | | $ | 26,930 | | | $ | 25,965 | |
| Short-term deferred revenue | | | | | $ | 13,334 | | | $ | 13,673 | |
| Long-term deferred revenue | | | | | $ | 13,596 | | | $ | 12,292 | |
____________________
(a) Other represents adjustments to deferred revenue for acquisition and divestiture activities. For the fiscal year ended January 31, 2025, Other represents the reclassification of Secureworks deferred revenue to liabilities held for sale. See Note 1 of the Notes to the Consolidated Financial Statements for more information about the sale of Secureworks.
Remaining Performance Obligations — Remaining performance obligations represent the aggregate amount of the transaction price allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include deferred revenue plus unbilled amounts not yet recorded in deferred revenue. The value of the transaction price allocated to remaining performance obligations as of January 30, 2026 was approximately $82 billion. The Company expects to recognize approximately 78% of remaining performance obligations as revenue in the next twelve months, approximately 11% in the following twelve months, and the remainder thereafter.
The aggregate amount of the transaction price allocated to remaining performance obligations does not include amounts owed under cancelable contracts where there is no substantive termination penalty. The Company applied the practical expedient to exclude the value of remaining performance obligations for contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.
Remaining performance obligation estimates are subject to change and are affected by multiple factors, including terminations, changes in the scope of contracts, periodic revalidation, adjustments for revenue that have not materialized, and adjustments for currency.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.