Implementation Costs Incurred in Cloud Computing Arrangements that are Service Contracts

6 Months Ended

Aug. 03, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Implementation Costs Incurred in Cloud Computing Arrangements that are Service Contracts

Our cloud computing arrangements that are service contracts primarily consist of arrangements with third party vendors for our internal use of their software applications that they host. We defer implementation costs incurred in relation to such arrangements, including costs for software application coding, configuration, integration and customization, while associated process reengineering, training, maintenance and data conversion costs are expensed. Subsequent implementation costs are deferred only to the extent that they constitute major enhancements. The short-term portion of deferred implementation costs are included in prepaid expenses and other current assets in the condensed consolidated balance sheets, while the long-term portion of deferred implementation costs are included in deposits and other noncurrent assets. Amortized implementation costs incurred in cloud computing arrangements that are service contracts are recognized in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

Deferred implementation costs incurred in cloud computing arrangements that are service contracts are summarized as follows (in thousands):


	August 3, 2024		February 3, 2024
Internal use of third party hosted software, gross	$	35,250	$	28,516
Less: Accumulated amortization	(14,607)		(11,360)
Internal use of third party hosted software, net	$	20,643	$	17,156

During the three- and six-month periods ended August 3, 2024, we amortized approximately $1.6 million and $3.2 million, respectively, of implementation costs incurred in cloud computing arrangements that are service contracts. During the three- and six-month periods ended July 29, 2023, we amortized approximately $0.7 million and $1.7 million, respectively, of implementation costs incurred in cloud computing arrangements that are service contracts.