Hewlett Packard Enterprise Co 10-Q for FY2026 Q3
Hewlett Packard Enterprise Co (HPE)
10-Q
2026-09-03
For: 2026-07-31
View Original
Added on
September 03, 2026
About this 10-Q
Hewlett Packard Enterprise Co filed this 10-Q on September 3, 2026, covering the quarter ended July 31, 2026 (FY2026 Q3).
Headline figures
Quarter ended July 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $12.21B
- up 33.7% from $9.14B a year earlier
- Net income
- $1.54B
- up 404.9% from net income of $305M a year earlier
- Diluted EPS
- $1.06
- up 404.8% from $0.21 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| (Mark One) | ||||||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the quarterly period ended: | |||||
| Or | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the transition period from to | ||||||||
| Commission file number | |||||
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) | |||||||
| (Address of principal executive offices) | (Zip code) | |||||||||||||
| (Registrant's telephone number, including area code) | ||||||||||||||
| Securities registered pursuant to Section 12(b) of the Exchange Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of Hewlett Packard Enterprise Company common stock outstanding as of August 27, 2026 was 1,327,464,779 shares, par value $0.01.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Form 10-Q
For the Quarterly Period Ended July 31, 2026
Table of Contents
| Page | |||||||||||
Unless otherwise stated or the context otherwise indicates, all references in this Quarterly Report on Form 10-Q to “HPE,” or “the Company” mean Hewlett Packard Enterprise Company and its consolidated subsidiaries.
3
Forward-Looking Statements
This Quarterly Report on Form 10-Q, including “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I, contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties, and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise Company and its consolidated subsidiaries (“Hewlett Packard Enterprise”) may differ materially from those expressed or implied by such forward-looking statements and assumptions. The words “believe”, “expect”, “anticipate”, “guide”, “optimistic”, “intend”, “aim”, “will”, “estimates”, “may”, “likely”, “could”, “should” and similar expressions are intended to identify such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any statements regarding the ongoing integration of Juniper Networks, Inc., and any projections, estimates, or expectations of savings or synergy realizations in connection therewith; any projections, estimations, or expectations of addressable markets and their sizes, revenue (including annualized revenue run-rate), margins, expenses (including stock-based compensation expenses), investments, effective tax rates, interest rates, the impact of tax law changes and related guidance and regulations, the impact of changes in trade policies and restrictions and the uncertainty created thereby, component costs, commodity shortage, net earnings, net earnings per share, cash flows, liquidity and capital resources, inventory, goodwill, impairment charges, hedges and derivatives and related offsets, order backlog, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates, repayments of debts including our asset-backed debt securities, or other financial items; recent amendments to accounting guidance and any potential impacts on our financial reporting therefrom; any projections or estimations of orders; any projections of the amount, timing, or impact of cost saving actions and anticipated benefits to be realized if any; any statements of the plans, strategies, and objectives of management for future operations, as well as the execution and consummation of corporate transactions or contemplated acquisitions and dispositions, research and development expenditures, and any resulting benefits, cost savings, charges, or revenue or profitability improvements; any statements concerning the expected development, performance, market share, or competitive performance relating to products or services; any statements concerning technological and market trends, the pace of technological innovation, and adoption of new technologies, including quantum- and artificial intelligence-related developments and any impacts of such developments on products and services offered by Hewlett Packard Enterprise; any statements regarding current or future macroeconomic trends or events and the impacts of those trends and events on Hewlett Packard Enterprise and our financial performance, including but not limited to supply chain dynamics (including but not limited to worldwide component availability), uncertain global trade policies and/or restrictions, and demand for our products and services, and our actions to mitigate such impacts to our business; the scope and duration of geopolitical tensions, including but not limited to the ongoing conflict between Russia and Ukraine, instability and conflicts in the Middle East, and the relationship between China and the U.S., and our actions in response thereto, and their impacts on our business, operations, liquidity and capital resources, employees, customers, partners, supply chain, financial results, and the world economy; any statements regarding future regulatory trends and the resulting legal and reputational exposure, including but not limited to those relating to environmental, social, governance, cybersecurity, data privacy, and artificial intelligence issues, among others; any statements regarding pending litigation, investigations, claims, or disputes; any statements of expectation or belief, including those relating to future guidance and the financial performance of Hewlett Packard Enterprise; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties, and assumptions include the need to address the many challenges facing Hewlett Packard Enterprise’s businesses; the competitive pressures faced by Hewlett Packard Enterprise’s businesses; risks associated with executing Hewlett Packard Enterprise’s strategy; the impact of macroeconomic and geopolitical trends and events, including but not limited to those mentioned above; the need to effectively manage third-party suppliers and distribute Hewlett Packard Enterprise's products and services; the protection of Hewlett Packard Enterprise's intellectual property assets, including intellectual property licensed from third parties and intellectual property shared with its former parent; risks associated with Hewlett Packard Enterprise's international operations (including from geopolitical events and macroeconomic uncertainties); the development of and transition to new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution of Hewlett Packard Enterprise’s ongoing transformation and mix shift of its portfolio of offerings; the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers, clients, and partners, including any impact thereon resulting from macroeconomic or geopolitical events, including inflation and rising commodity costs; the prospect of a shutdown of the U.S. federal government; the hiring and retention of key employees; the execution, integration, consummation, and other risks associated with business combination, disposition, and investment transactions, including but not limited to successful integration of Juniper Networks, Inc., including our ability to integrate and implement our plans and forecasts and realize our anticipated financial and operational benefits with respect to the consolidated business; the execution, timing, and results of any cost reduction actions, including estimates and assumptions related to the costs and anticipated benefits of implementing such actions; the impact of changes to privacy, cybersecurity, environmental, global trade, and other governmental regulations; changes in our product, lease, intellectual property, or real estate portfolio; the payment or non-payment of a dividend for any period; the efficacy of using non-GAAP, rather than GAAP, financial measures in business projections and planning; the judgments required in connection with determining certain financial metrics; utility of segment
4
realignments; allowances for recovery of receivables and warranty obligations; provisions for, and resolution of, pending litigation investigations, claims, and disputes; the impacts of tax law changes and related guidance or regulations; and other risks that are described herein, including but not limited to the items discussed in “Risk Factors” in Item 1A of Part I of the Annual Report on Form 10-K for the fiscal year ended October 31, 2025 and that are otherwise described or updated from time to time in Hewlett Packard Enterprise's subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and in other filings made with the Securities and Exchange Commission. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements, except as required by applicable law.
5
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Index
| Page | |||||
6
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions, except per share amounts | |||||||||||||||||||||||
| Net Revenue: | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Financing income | |||||||||||||||||||||||
| Total net revenue | |||||||||||||||||||||||
| Costs and Expenses: | |||||||||||||||||||||||
| Cost of products (exclusive of amortization shown separately below) | |||||||||||||||||||||||
| Cost of services (exclusive of amortization shown separately below) | |||||||||||||||||||||||
| Financing cost | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Impairment charges | |||||||||||||||||||||||
| Acquisition, disposition and other charges | |||||||||||||||||||||||
| Total costs and expenses | |||||||||||||||||||||||
| Earnings (loss) from operations | ( | ||||||||||||||||||||||
| Interest and other, net | ( | ( | |||||||||||||||||||||
| Gain on sale of equity interest | |||||||||||||||||||||||
| Gain on sale of a business | |||||||||||||||||||||||
| Earnings from equity interests | |||||||||||||||||||||||
| Earnings (loss) before provision for taxes | ( | ||||||||||||||||||||||
| (Provision) benefit for taxes | ( | ( | ( | ||||||||||||||||||||
| Net earnings (loss) attributable to HPE | ( | ||||||||||||||||||||||
| Preferred stock dividends | ( | ( | ( | ( | |||||||||||||||||||
| Net earnings (loss) attributable to common stockholders | $ | $ | $ | $ | ( | ||||||||||||||||||
| Net Earnings (Loss) Per Share Attributable to Common Stockholders: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ( | ||||||||||||||||||
| Diluted | $ | $ | $ | $ | ( | ||||||||||||||||||
| Weighted-average Shares Used to Compute Net Earnings (Loss) Per Share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||
| Net earnings (loss) attributable to HPE | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
| Other Comprehensive Income (Loss), Before Taxes | |||||||||||||||||||||||||||||||||||
| Change in Net Unrealized Gains (Losses) on Available-for-sale Securities: | |||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) arising during the period | ( | ( | |||||||||||||||||||||||||||||||||
| ( | ( | ||||||||||||||||||||||||||||||||||
| Change in Net Unrealized Components of Cash Flow Hedges: | |||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) arising during the period | ( | ||||||||||||||||||||||||||||||||||
| Net (gains) losses reclassified into earnings | ( | ||||||||||||||||||||||||||||||||||
| ( | |||||||||||||||||||||||||||||||||||
| Change in Unrealized Components of Defined Benefit Plans: | |||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) arising during the period | ( | ||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss and prior service benefit | |||||||||||||||||||||||||||||||||||
| Curtailments, settlements and other | |||||||||||||||||||||||||||||||||||
| Change in Cumulative Translation Adjustment: | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Other Comprehensive Income (Loss), Before Taxes | ( | ||||||||||||||||||||||||||||||||||
| Provision for Taxes | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Other Comprehensive Income (Loss), Net of Taxes | ( | ||||||||||||||||||||||||||||||||||
| Comprehensive Income (Loss) | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| (Unaudited) | (Audited) | ||||||||||
| In millions, except par value and shares | |||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net of allowances | |||||||||||
| Financing receivables, net of allowances | |||||||||||
| Inventory | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Long-term financing receivables and other assets | |||||||||||
| Investments in equity interests | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Notes payable and short-term borrowings | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Employee compensation and benefits | |||||||||||
| Deferred revenue | |||||||||||
| Other accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Other non-current liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
| HPE Stockholders' Equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total HPE stockholders' equity | |||||||||||
| Non-controlling interests | |||||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
9
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
| For the nine months ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| In millions | |||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net earnings (loss) attributable to HPE | $ | $ | ( | ||||||||
| Adjustments to Reconcile Net Earnings (Loss) Attributable to HPE to Net Cash Provided by Operating Activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Impairment charges | |||||||||||
| Stock-based compensation expense | |||||||||||
| Provision for inventory and credit losses | |||||||||||
| Cost reduction program | |||||||||||
| Deferred taxes on earnings | ( | ( | |||||||||
| Earnings from equity interests | ( | ( | |||||||||
| Gain on sale of a business | ( | ||||||||||
| Gain on sale of equity interest | ( | ||||||||||
| Dividends received from equity investees | |||||||||||
| H3C divestiture related severance costs | |||||||||||
| Amortization of inventory fair value adjustment | |||||||||||
| Other, net | |||||||||||
| Changes in Operating Assets and Liabilities, Net of Acquisitions: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Financing receivables | ( | ( | |||||||||
| Inventory | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Investment in property, plant and equipment and software assets | ( | ( | |||||||||
| Proceeds from sale of property, plant and equipment | |||||||||||
| Purchases of equity investments | ( | ( | |||||||||
| Proceeds from sale of available-for-sale securities and other investments | |||||||||||
| Proceeds from maturities and redemptions of available-for-sale securities | |||||||||||
| Proceeds from sale of equity interest | |||||||||||
| Financial collateral posted | ( | ( | |||||||||
| Financial collateral received | |||||||||||
| Payments made in connection with business acquisitions, net of cash acquired | ( | ||||||||||
| Proceeds from sale of a business | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Short-term borrowings with original maturities less than 90 days, net | |||||||||||
| Proceeds from debt, net of issuance costs | |||||||||||
| Payment of debt | ( | ( | |||||||||
| Net payments related to stock-based award activities | ( | ( | |||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Cash dividends paid to preferred stockholders | ( | ( | |||||||||
| Cash dividends paid to common stockholders | ( | ( | |||||||||
| Other | ( | ( | |||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ||||||||||
| Change in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
10
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the three months ended July 31, 2026 | Number of Shares | Par Value | Number of Series C Mandatory Convertible Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| In millions, except number of shares in thousands | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of April 30, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to HPE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholding related to vesting of employee stock plans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock plans and other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock accrued/declared ($ | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of July 31, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the nine months ended July 31, 2026 | Number of Shares | Par Value | Number of Series C Mandatory Convertible Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||
| In millions, except number of shares in thousands | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of October 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to HPE | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholding related to vesting of employee stock plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock accrued/declared ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of July 31, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
11
| Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the three months ended July 31, 2025 | Number of Shares | Par Value | Number of Series C Mandatory Convertible Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions, except number of shares in thousands | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of April 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to HPE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholding related to vesting of employee stock plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consideration for replacement of Juniper Networks Inc.’s equity awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend on preferred stock accrued / declared ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of July 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the nine months ended July 31, 2025 | Number of Shares | Par Value | Number of Series C Mandatory Convertible Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||
| In millions, except number of shares in thousands | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of October 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) earnings attributable to HPE | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive (loss) income | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholding related to vesting of employee stock plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consideration for replacement of Juniper Networks Inc.’s equity awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividend on preferred stock accrued / declared ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of July 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
12
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
13
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1: Overview and Summary of Significant Accounting Policies
Background
Hewlett Packard Enterprise Company (“HPE,” or the “Company”) is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge-to-cloud. HPE enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future. HPE's customers range from small- and medium-sized businesses to large global enterprises and governmental entities.
Basis of Presentation and Consolidation
The Condensed Consolidated Financial Statements of the Company were prepared in accordance with United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”). The Company’s unaudited Condensed Consolidated Financial Statements include the accounts of the Company and all subsidiaries and affiliates in which the Company has a controlling financial interest or is the primary beneficiary. All intercompany transactions and accounts within the consolidated businesses of the Company have been eliminated. Certain prior period financial statement amounts have been reclassified to conform to current period presentation. This interim information should be read in conjunction with the Consolidated Financial Statements for the fiscal year ended October 31, 2025 in HPE’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on December 18, 2025. The Condensed Consolidated Balance Sheet for October 31, 2025 was derived from audited financial statements.
Segment Realignment
Effective November 1, 2025, HPE implemented an organizational change by (i) merging the Server, Hybrid Cloud, and Financial Services business segments into a new segment named Cloud & Artificial Intelligence (“AI”) and (ii) transferring the Telco and Instant On businesses from the Networking segment to the Corporate Investments and Other segment. As a result, the Company’s organizational structure consists of the following segments: (i) Cloud & AI; (ii) Networking; and (iii) Corporate Investments and Other. The Company has reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the realignment of net revenue and operating profit for each of the segments as described above. These changes had no impact on HPE’s previously reported consolidated net revenue, net earnings, net earnings per share (“EPS”) or total assets. Refer to Note 2, “Segment Information” for further information.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in HPE’s Condensed Consolidated Financial Statements and accompanying notes. Actual results may differ materially from those estimates.
Significant Accounting Policies
There have been no significant changes to the Company's significant accounting policies described in Part II, Item 8, Note 1, “Overview and Summary of Significant Accounting Policies,” of the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
Recently Enacted Accounting Pronouncements
In May 2026, the Financial Accounting Standards Board (“FASB”) issued guidance to provide recognition, measurement, presentation, and disclosure requirements for environmental credits and environmental credit obligations. The amendment is effective for annual and interim periods beginning after December 15, 2027, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In December 2025, the FASB issued guidance to improve the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendment is effective for interim periods with annual reporting periods beginning after December 15, 2027, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
14
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
In December 2025, the FASB issued guidance to establish the accounting for a government grant received by a business entity. The amendment is effective for annual and interim periods beginning after December 15, 2028, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In September 2025, the FASB issued guidance to target improvements to the Accounting for Internal-Use Software, which simplifies the capitalization guidance by removing all references to software development project stages and clarifies the criteria to begin capitalizing cost. The amendment is effective for annual and interim periods beginning after December 15, 2027, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In May 2025, the FASB issued guidance to clarify the accounting for share-based consideration payable to a customer in conjunction with selling goods or services. The amendment is effective for annual and interim periods beginning after December 15, 2026, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In November 2024, the FASB issued guidance to provide disaggregated expense disclosures in the Consolidated Financial Statements. The Company is required to adopt the guidance for its annual period ending October 31, 2028 and all interim periods thereafter, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In December 2023, the FASB issued guidance to provide disaggregated income tax disclosures on the effective tax rate reconciliation and income taxes paid. The guidance is applicable to the Company’s annual filings beginning October 31, 2026. Adoption of this new guidance will result in increased disclosures in the “Taxes on Earnings” note in the Company’s Consolidated Financial Statements but will not impact the consolidated financial results.
Note 2: Segment Information
HPE's operations are organized into three segments for financial reporting purposes: Cloud & AI, Networking, and Corporate Investments and Other. HPE’s organizational structure is based on a number of factors that the Chief Operating Decision Maker (“CODM”), Antonio F. Neri, who is the President and Chief Executive Officer, uses to evaluate, view and run the Company's business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The three segments are based on this structure and information reviewed by HPE's management to evaluate segment results. A summary of the types of products and services within each segment is as follows:
Networking develops and sells high-performance network and security products and services that empower customers of all sizes to build scalable, reliable, secure, agile, and efficient automated networks. HPE’s platforms are purpose-built using AI to deliver secure and sustainable user experiences from the edge to the data center and cloud. Networking’s solutions include hardware products such as Wi-Fi and private cellular access points; QFX, EX, and CX switches; MX and PTX routers; and gateways. Additionally, HPE provides software products, such as Mist and Aruba Central for cloud-based and on-premise management, network access control, software-defined wide area networking, network security, analytics and assurance, and private cellular core software. The Company also offers professional and support services and education and training programs, as well as as-a-service (“aaS”) and flexible consumption models through HPE GreenLake.
Cloud & AI includes server and storage offerings. The Cloud & AI server portfolio includes general-purpose servers for multi-workload computing and workload-optimized servers to deliver the best performance and value for demanding applications, and integrated systems comprised of software and hardware designed to address High-Performance Computing and Supercomputing (including exascale applications), AI, Data Analytics, and Transaction Processing workloads for government and commercial customers globally. The Cloud & AI comprehensive storage portfolio offers a wide variety of cloud-native and hybrid solutions across storage, private cloud and the infrastructure software-as-a-service (“SaaS”) space. The storage product line includes data storage and data management offerings with the HPE Alletra Storage portfolio; unstructured data solutions and analytics for AI; data protection and archiving. Storage offerings also include the Company’s GreenLake Flex and software solutions. Financial services provides flexible investment solutions, such as leasing, financing, IT consumption, utility programs, and asset management services for customers that facilitate unique technology deployment models and the acquisition of complete IT solutions, including hardware, software, and services from HPE and others.
15
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Corporate Investments and Other includes the Advisory and Professional Services (“A & PS”) business, which primarily offers consultative-led services, HPE and partner technology expertise and advice, implementation services as well as complex solution engagement capabilities; Telco, Instant On, and Hewlett Packard Labs.
Segment Policy
HPE does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated operating costs include certain corporate costs and eliminations, stock-based compensation expense, amortization of intangible assets, H3C divestiture related severance costs, severance costs associated with the cost reduction program, acquisition, disposition and other charges, and impairment charges. Total assets by segment are not presented as that information is not used to allocate resources or assess performance at the segment level and is not reviewed by the CODM.
Segment Operating Results
Segment net revenue and operating results were as follows:
| Networking | Cloud & AI | Corporate Investments and Other | Total | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
Three months ended July 31, 2026: | |||||||||||||||||||||||
| Total segment net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Segment cost of sales | |||||||||||||||||||||||
| Segment operating expenses | |||||||||||||||||||||||
| Segment earnings (loss) from operations | $ | $ | $ | ( | $ | ||||||||||||||||||
Three months ended July 31, 2025(1): | |||||||||||||||||||||||
| Total segment net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Segment cost of sales | |||||||||||||||||||||||
| Segment operating expenses | |||||||||||||||||||||||
| Segment earnings (loss) from operations | $ | $ | $ | ( | $ | ||||||||||||||||||
Nine months ended July 31, 2026: | |||||||||||||||||||||||
| Total segment net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Segment cost of sales | |||||||||||||||||||||||
| Segment operating expenses | |||||||||||||||||||||||
| Segment earnings (loss) from operations | $ | $ | $ | ( | $ | ||||||||||||||||||
Nine months ended July 31, 2025(1): | |||||||||||||||||||||||
| Total segment net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Segment cost of sales | |||||||||||||||||||||||
| Segment operating expenses | |||||||||||||||||||||||
| Segment earnings (loss) from operations | $ | $ | $ | ( | $ | ||||||||||||||||||
(1) Effective at the beginning of the first quarter of fiscal 2026, HPE implemented an organizational change by (i) merging the Server, Hybrid Cloud, and Financial Services business segments into a new segment named Cloud & AI and (ii) transferring the Telco and Instant On businesses to Corporate Investments and Other from Networking. The Company reflected these changes to its segment information retrospectively. These changes had no impact on HPE’s previously reported consolidated net revenue, net earnings, net earnings per share or total assets.
16
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Earnings (Loss) Before Taxes: | |||||||||||||||||||||||
| Total segment earnings from operations | $ | $ | $ | $ | |||||||||||||||||||
| Unallocated corporate costs and eliminations | ( | ( | ( | ( | |||||||||||||||||||
| Stock-based compensation expense | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of intangible assets | ( | ( | ( | ( | |||||||||||||||||||
| Impairment charges | ( | ||||||||||||||||||||||
| Gain on sale of a business | |||||||||||||||||||||||
| H3C divestiture related severance costs | ( | ||||||||||||||||||||||
| Cost reduction program | ( | ( | ( | ( | |||||||||||||||||||
Acquisition, disposition and other charges(1) | ( | ( | ( | ( | |||||||||||||||||||
Interest and other, net(2) | ( | ( | |||||||||||||||||||||
| Gain on sale of equity interest | |||||||||||||||||||||||
| Earnings from equity interests | |||||||||||||||||||||||
| Total earnings (loss) before provision for taxes | $ | $ | $ | $ | ( | ||||||||||||||||||
(1) For the three and nine months ended July 31, 2025, Acquisition, disposition and other charges include non-cash amortization of fair value adjustment for inventory in connection with the acquisition of Juniper Networks, which was recorded in cost of sales.
Geographic Information
Net revenue by geographic region was as follows:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Americas: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Americas excluding United States | |||||||||||||||||||||||
| Total Americas | |||||||||||||||||||||||
| Europe, Middle East and Africa | |||||||||||||||||||||||
| Asia Pacific and Japan | |||||||||||||||||||||||
| Total consolidated net revenue | $ | $ | $ | $ | |||||||||||||||||||
17
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Disaggregation of Revenue
Net revenue disaggregated by segment and major product categories was as follows:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Networking: | |||||||||||||||||||||||
| Campus & Branch | $ | $ | $ | $ | |||||||||||||||||||
| Data Center Networking | |||||||||||||||||||||||
| Security | |||||||||||||||||||||||
| Routing | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
| Cloud & AI: | |||||||||||||||||||||||
| Server | |||||||||||||||||||||||
Storage(1) | |||||||||||||||||||||||
| Financial Services | |||||||||||||||||||||||
Other(2) | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
| Corporate Investments and Other | |||||||||||||||||||||||
| Total consolidated net revenue | $ | $ | $ | $ | |||||||||||||||||||
(1) Storage includes revenue from GreenLake Flex and Software.
(2) Other category includes intersegment revenue eliminations and third-party storage solutions.
Note 3: Retirement Benefit Plans
The Company's net pension benefit credit for defined benefit plans recognized in the Condensed Consolidated Statements of Earnings was as follows:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost(1) | |||||||||||||||||||||||
Expected return on plan assets(1) | ( | ( | ( | ( | |||||||||||||||||||
Amortization and deferrals(1): | |||||||||||||||||||||||
| Actuarial loss | |||||||||||||||||||||||
| Prior service cost (benefit) | ( | ( | |||||||||||||||||||||
| Net periodic benefit credit | ( | ( | ( | ( | |||||||||||||||||||
Settlement loss and special termination benefits (1) | |||||||||||||||||||||||
| Total net benefit credit | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(1)These non-service components were included in Interest and other, net in the Condensed Consolidated Statements of Earnings.
Note 4: Taxes on Earnings
(Provision) Benefit for Taxes
For the three months ended July 31, 2026 and 2025, the Company recorded income tax expense of $222 million and income tax benefit of $17 million, respectively, which reflects an effective tax rate of 12.6 % and (6.5 )%, respectively. For the
18
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
nine months ended July 31, 2026 and 2025, the Company recorded income tax expense of $278 million and $94 million, respectively, which reflects an effective tax rate of 9.6 % and (359.9 )%, respectively. The effective tax rate generally differs from the U.S. federal statutory rate of 21% due to favorable tax rates associated with certain earnings from the Company’s operations in lower tax jurisdictions throughout the world but is also impacted by discrete tax adjustments during each fiscal period. For the nine months ended July 31, 2025, the effective tax rate also included the effects of the non-deductible goodwill impairment.
For the three and nine months ended July 31, 2026, the Company recorded $84 million and $41 million of net income tax charges, respectively, related to various items discrete to the period. For the three months ended July 31, 2026, this amount primarily included $118 million of net income tax charges resulting from the gain on the H3C divestiture, partially offset by $44 million of net excess tax benefits related to stock-based compensation. For the nine months ended July 31, 2026, this amount primarily included $118 million of net income tax charges resulting from the gain on the H3C divestiture, partially offset by $66 million of net excess tax benefits related to stock-based compensation.
For the three and nine months ended July 31, 2025, the Company recorded $106 million and $217 million of net income tax benefits, respectively, related to various items discrete to the period. For the three months ended July 31, 2025, this amount primarily included $76 million of net income tax benefits related to the release of certain state valuation allowances, $21 million of net income tax benefits related to costs incurred as a result of the acquisition of Juniper Networks, and $4 million of net income tax benefits related to acquisition, disposition and other related charges. For the nine months ended July 31, 2025, this amount primarily included $76 million of net income tax benefits related to the release of certain state valuation allowances, $33 million of net income tax benefits related to the cost reduction program, $33 million of net income tax benefits related to the favorable resolution of non-U.S. tax litigation matters, $30 million of net excess tax benefits related to stock-based compensation, $29 million of net income tax benefits related to costs incurred as a result of the acquisition of Juniper Networks, $16 million of net income tax benefits related to the settlement of U.S. tax audit matters, and $9 million of net income tax benefits related to acquisition, disposition and other charges, partially offset by $22 million of net income tax charges resulting from the gain on the Communications Technology Group (“CTG”) divestiture.
Uncertain Tax Positions
As of July 31, 2026 and October 31, 2025, the amount of unrecognized tax benefits was $1.1 billion and $474 million, respectively, of which up to $522 million and $326 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods. Unrecognized tax benefits increased $204 million due to the current and prior H3C divestitures.
For tax liabilities pertaining to unrecognized tax benefits, the Company recognizes interest income from favorable settlements and interest expense and penalties in (Provision) benefit for taxes in the Condensed Consolidated Statements of Earnings. The Company recognized $10 million of interest expense and $7 million of interest income for the nine months ended July 31, 2026 and 2025, respectively. As of July 31, 2026 and October 31, 2025, the Company had accrued $52 million and $42 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets.
The Company engages in continuous discussion and negotiation with tax authorities regarding tax matters in various jurisdictions. The Company is no longer subject to U.S. federal tax audits for years prior to 2020. The Internal Revenue Service (“IRS”) is conducting audits of the Company's fiscal 2020 through 2022 and fiscal 2024 through 2025 U.S. federal income tax returns. During the first quarter of fiscal 2026, the IRS issued notices of proposed adjustments (“NOPAs”) for fiscal 2020, 2021, and 2022 relating to the Company’s intercompany transfer pricing. During the second quarter of fiscal 2026, the Company submitted a formal settlement offer to the IRS to facilitate the closing of the audit and recorded increased reserves for unrecognized tax benefits of $318 million. The impact of the increase in reserves is almost entirely offset with a valuation allowance release, and the net impact to income tax expense for the three and nine months ended July 31, 2026 was not material. It is reasonably possible that the IRS audit for fiscal 2020 through 2022 may be concluded in the next 12 months, and it is reasonably possible that existing unrecognized tax benefits related to these years may be reduced by an amount up to $366 million within the next 12 months; the majority of these unrecognized tax benefits are offset by adjustments to foreign tax credits that carry a full valuation allowance, which does not affect the Company’s effective tax rate.
With respect to major state and foreign tax jurisdictions, the Company is no longer subject to tax authority examinations for years prior to 2005. As a result of the IRS audit for fiscal 2020 through 2022, the Company recorded additional state unrecognized tax benefits of $51 million for the changes to federal taxable income. It is reasonably possible that certain foreign and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany
19
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities included in the Condensed Consolidated Balance Sheets were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Deferred tax assets | $ | $ | |||||||||
| Deferred tax liabilities | ( | ( | |||||||||
| Deferred tax assets net of deferred tax liabilities | $ | $ | |||||||||
Note 5: Balance Sheet Details
Cash, Cash Equivalents and Restricted Cash
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Restricted cash(1) | |||||||||||
| Total | $ | $ | |||||||||
(1) The Company included restricted cash in Other current assets in the accompanying Condensed Consolidated Balance Sheets.
Inventory
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Purchased parts and fabricated assemblies | $ | $ | |||||||||
| Finished goods | |||||||||||
| Total | $ | $ | |||||||||
The Company recorded a net provision for excess or obsolete inventory to cost of sales totaling $158 million and $440 million for the three and nine months ended July 31, 2026, respectively.
Property, Plant and Equipment, net
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Land | $ | $ | |||||||||
| Internal use software | |||||||||||
| Buildings and leasehold improvements | |||||||||||
| Machinery and equipment, including equipment held for lease | |||||||||||
| Gross property, plant and equipment | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
Supplier Financing Arrangements
The Company enters into supplier financing arrangements with external financial institutions. Under these arrangements,
20
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
suppliers can choose to settle outstanding payment obligations at a discount. The Company holds no economic interest in suppliers' participation, nor does it provide guarantees or pledge assets under these arrangements. Invoices are settled with the financial institutions based on the original supplier payment terms. These arrangements do not alter the Company's rights and obligations towards suppliers, including scheduled payment terms. Liabilities associated with the funded participation in these arrangements, presented within on the Condensed Consolidated Balance Sheets, amounted to $791 million and $488 million as of July 31, 2026 and October 31, 2025, respectively.
The rollforward of outstanding obligations confirmed as valid under its supplier finance program for the nine months ended July 31, 2026, and the fiscal year ended October 31, 2025 were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
Balance at beginning of period | $ | $ | |||||||||
Invoices confirmed during the year | |||||||||||
Confirmed invoices paid during the year | ( | ( | |||||||||
Balance at end of period | $ | $ | |||||||||
Warranties
The Company's aggregate product warranty liabilities and changes for the nine months ended July 31, 2026, and the fiscal year ended October 31, 2025 were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Charges | |||||||||||
| Adjustments related to pre-existing warranties | ( | ( | |||||||||
| Settlements made | ( | ( | |||||||||
Balance at end of period(1) | $ | $ | |||||||||
(1)The Company included the current portion in Other accrued liabilities, and amounts due after one year in Other non-current liabilities in the accompanying Condensed Consolidated Balance Sheets.
Severance Charges
The Company incurs costs related to employee severance and records a liability for these costs when it is probable that employees will be entitled to termination benefits and the amounts can be reasonably estimated. As of July 31, 2026, $92 million and $29 million was recorded in Other Accrued Liabilities and Other Non-current liabilities, respectively. As of October 31, 2025, $204 million and $34 million was recorded in Other accrued liabilities and Other Non-current liabilities, respectively.
The following table presents the activity related to the Company’s severance liability for the period indicated:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Severance charges | |||||||||||
| Cash paid and other | ( | ( | |||||||||
| Balance at end of period | $ | $ | |||||||||
21
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The following table presents severance charges as included in the Condensed Consolidated Statements of Earnings for the periods indicated:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | |||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Acquisition, disposition and other charges | |||||||||||||||||||||||
| Total severance charges | $ | $ | $ | $ | |||||||||||||||||||
Contract Balances
The Company’s contract balances consist of contract assets, contract liabilities, and costs to obtain a contract with a customer.
Contract Assets
A summary of accounts receivable, net, including unbilled receivables was as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Accounts receivable | $ | $ | |||||||||
| Unbilled receivables | |||||||||||
| Allowances | ( | ( | |||||||||
| Total | $ | $ | |||||||||
The allowances for credit losses related to accounts receivable and changes for the nine months ended July 31, 2026, and the fiscal year ended October 31, 2025 were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Provision for credit losses | |||||||||||
| Adjustments to existing allowances, including write offs | ( | ( | |||||||||
| Balance at end of period | $ | $ | |||||||||
Sale of Trade Receivables
For the three and nine months ended July 31, 2026, the Company sold $1.4 billion and $3.8 billion of trade receivables, respectively. For the fiscal year ended October 31, 2025, the Company sold $3.7 billion of trade receivables. The Company recorded an obligation of $49 million and $59 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of July 31, 2026 and October 31, 2025, respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.
Contract Liabilities and Remaining Performance Obligations
Contract liabilities consist of deferred revenue and customer deposits. A summary of contract liabilities were as follows:
22
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
| As of | ||||||||||||||
| July 31, 2026 | October 31, 2025 | |||||||||||||
| Location | In millions | |||||||||||||
| Customer deposits | Other accrued liabilities | $ | $ | |||||||||||
| Customer deposits - non-current | Other non-current liabilities | |||||||||||||
| Total customer deposits | $ | $ | ||||||||||||
| Deferred revenue | Deferred revenue | $ | $ | |||||||||||
| Deferred revenue - non-current | Other non-current liabilities | |||||||||||||
| Total deferred revenue | $ | $ | ||||||||||||
For the nine months ended July 31, 2026, approximately $4.8 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2025.
Revenue allocated to remaining performance obligations represents contract work that has not yet been performed and does not include contracts where the customer is not committed. Remaining performance obligations estimates are subject to change and are affected by several factors, including contract terminations, changes in the scope of contracts, adjustments for revenue that has not materialized and adjustments for currency. As of July 31, 2026, the aggregate amount of deferred revenue, was $10.9 billion. The Company expects to recognize approximately 26 % of this balance over fiscal 2026, 31 % over fiscal 2027, 20 % over fiscal 2028, 12 % over fiscal 2029, and 10 % over fiscal 2030 and thereafter. The Company receives payments in advance of completion of its contractual obligations; these payments are considered customer deposits. As customer acceptance milestones are met, the Company will recognize revenue and reduce the amount of contract liabilities. As of July 31, 2026, the aggregate amount of customer deposits was $405 million. The Company expects to recognize $348 million over the next twelve months and the remaining balance thereafter.
Costs to Obtain a Contract
As of July 31, 2026, the current and non-current portions of the capitalized costs to obtain a contract were $101 million and $153 million, respectively. As of October 31, 2025, the current and non-current portions of the capitalized costs to obtain a contract were $109 million and $128 million, respectively. The current and non-current portions of the capitalized costs to obtain a contract were included in Other current assets, and Long-term financing receivables and other assets, respectively, in the Condensed Consolidated Balance Sheets. For the three and nine months ended July 31, 2026 the Company amortized $30 million and $86 million, of capitalized costs to obtain a contract. For the three and nine months ended July 31, 2025 the Company amortized $88 million and $142 million, of capitalized costs to obtain a contract. The amortized capitalized costs to obtain a contract are included in Selling, general and administrative expense in the Condensed Consolidated Statements of Earnings.
23
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 6: Accounting for Leases as a Lessor
Financing receivables represent sales-type and direct-financing leases of the Company and third-party products. These receivables typically have terms ranging from to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The allowance for credit losses represents future expected credit losses over the life of the receivables based on past experience, current information and forward-looking economic considerations. The components of financing receivables were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Minimum lease payments receivable | $ | $ | |||||||||
| Unguaranteed residual value | |||||||||||
| Unearned income | ( | ( | |||||||||
| Financing receivables, gross | |||||||||||
Allowance for credit losses | ( | ( | |||||||||
| Financing receivables, net | |||||||||||
| Less: current portion | ( | ( | |||||||||
| Amounts due after one year, net | $ | $ | |||||||||
Sale of Financing Receivables
The Company enters into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions. For the three and nine months ended July 31, 2026, the Company sold $24 million and $127 million, respectively. For the fiscal year ended October 31, 2025, the Company sold $196 million of financing receivables.
Credit Quality Indicators
Due to the homogeneous nature of its leasing transactions, the Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company evaluates the credit quality of an obligor at lease inception and monitors that credit quality over the term of a transaction. The Company assigns risk ratings to each lease based on the creditworthiness of the obligor and other variables that augment or mitigate the inherent credit risk of a particular transaction and periodically updates the risk ratings when there is a change in the underlying credit quality. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits.
The credit risk profile of gross financing receivables, based on internal risk ratings as of July 31, 2026, presented on amortized cost basis by year of origination was as follows:
As of July 31, 2026 | |||||||||||||||||
| Risk Rating | |||||||||||||||||
| Low | Moderate | High | |||||||||||||||
| Fiscal Year | In millions | ||||||||||||||||
| 2026 | $ | $ | $ | ||||||||||||||
| 2025 | |||||||||||||||||
| 2024 | |||||||||||||||||
| 2023 | |||||||||||||||||
| 2022 and prior | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
24
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2025, presented on amortized cost basis by year of origination was as follows:
| As of October 31, 2025 | |||||||||||||||||
| Risk Rating | |||||||||||||||||
| Low | Moderate | High | |||||||||||||||
| Fiscal Year | In millions | ||||||||||||||||
| 2025 | $ | $ | $ | ||||||||||||||
| 2024 | |||||||||||||||||
| 2023 | |||||||||||||||||
| 2022 | |||||||||||||||||
| 2021 and prior | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment. The credit quality indicators do not reflect any mitigation actions taken to transfer credit risk to third parties.
Allowance for Credit Losses
The allowance for credit losses for financing receivables as of July 31, 2026 and October 31, 2025 and the respective changes for the nine and twelve months then ended were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Provision for credit losses | |||||||||||
| Adjustment to the existing allowance | ( | ||||||||||
| Deductions | ( | ( | |||||||||
| Balance at end of period | $ | $ | |||||||||
25
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Non-Accrual and Past-Due Financing Receivables
The following table summarizes the aging and non-accrual status of gross financing receivables:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
Billed:(1) | |||||||||||
| Current 1-30 days | $ | $ | |||||||||
| Past due 31-60 days | |||||||||||
| Past due 61-90 days | |||||||||||
| Past due > 90 days | |||||||||||
| Unbilled sales-type and direct-financing lease receivables | |||||||||||
| Total gross financing receivables | $ | $ | |||||||||
Gross financing receivables on non-accrual status(2) | $ | $ | |||||||||
Gross financing receivables 90 days past due and still accruing interest(2) | $ | $ | |||||||||
(1)Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables.
The following table presents amounts included in the Condensed Consolidated Statements of Earnings related to lessor activity:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Location | In millions | ||||||||||||||||||||||||||||
| Interest income from sales-type leases and direct financing leases | Financing Income | $ | $ | $ | $ | ||||||||||||||||||||||||
| Lease income from operating leases | Services | ||||||||||||||||||||||||||||
| Total lease income | $ | $ | $ | $ | |||||||||||||||||||||||||
Variable Interest Entities
The Company has issued asset-backed debt securities under a fixed-term securitization program to private investors. The asset-backed debt securities are collateralized by the U.S. fixed-term financing receivables and leased equipment in the offering, which is held by a Special Purpose Entity (“SPE”). The SPE meets the definition of a Variable Interest Entity (“VIE”) and is consolidated, along with the associated debt, into the Condensed Consolidated Financial Statements as the Company is the primary beneficiary of the VIE. The SPE is a bankruptcy-remote legal entity with separate assets and liabilities. The purpose of the SPE is to facilitate the funding of customer receivables and leased equipment in the capital markets.
The Company’s risk of loss related to securitized receivables and leased equipment 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.
26
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The following table presents the assets and liabilities held by the consolidated VIE as of July 31, 2026 and October 31, 2025, which are included in the Condensed Consolidated Balance Sheets. The assets in the table below include those that can be used to settle the obligations of the VIE. Additionally, general creditors of the Company do not have recourse to the assets of the VIE.
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| Assets held by VIE: | In millions | ||||||||||
| Other current assets | $ | $ | |||||||||
| Financing receivables | |||||||||||
| Short-term | |||||||||||
| Long-term | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Liabilities held by VIE: | |||||||||||
| Notes payable and short-term borrowings, net of unamortized debt issuance costs | |||||||||||
| Long-term debt, net of unamortized debt issuance costs | $ | $ | |||||||||
For the nine months ended July 31, 2026, the Company did not 1.3 billion and $0.4 billion, respectively.
Note 7: Acquisitions and Dispositions
Telco Solutions Divestiture
On August 1, 2026, the Company completed the sale of its Telco Solutions business to HCLTech pursuant to the divestiture agreement announced on December 18, 2025.
Divestiture of H3C Shares
On November 17, 2025, HPE’s subsidiary, H3C Holdings Limited (“H3C Holdings”), entered into (i) share purchase agreements with five counterparties, including Unisplendour International Technology Limited (“UNIS”), whereby such counterparties, in the aggregate, agreed to purchase 10 % of the total issued share capital of H3C Technologies Co., Limited (“H3C”) for cash consideration of approximately $714 million and (ii) a side letter with UNIS, amending the Agreement on Subsequent Arrangements that was previously entered into on May 24, 2024, whereby, among other things, H3C Holdings and UNIS shall retain their put option and call option, respectively, relating to the remaining issued share capital of H3C held by H3C Holdings and have the right to exercise their respective option rights in respect of such shares up to three times, subject to the timing and terms as set forth therein. The agreement referenced in clause (ii) above revises the arrangements governing the sale of all of the remaining issued share capital of H3C held by us through H3C Holdings. On November 28, 2025, H3C Holdings entered into three additional share purchase agreements, including one with UNIS, whereby such counterparties, in the aggregate, agreed to purchase the remaining 9 % of the total issued share capital of H3C for cash consideration of approximately $643 million.
On May 13, 2026, the Company closed on the sale and disposition of 13.8 % of the total issued share capital of H3C for approximately $987 million. On May 28, 2026, the Company closed on the sale of the remaining 5.2 % of the total issued share capital of H3C for approximately $370 million. In connection with these sales, the Company recorded a gain on sale of equity interest of $444
Acquisition of Juniper Networks
On July 2, 2025, the Company completed the Juniper Networks merger (the “Merger”). Under the terms of the Agreement and Plan of Merger (the “Merger Agreement”), HPE agreed to pay $40.00 per share of Juniper Networks common stock, issued and outstanding as of July 2, 2025, representing a cash consideration of approximately $13.4 billion, which was paid through cash on hand, including proceeds and term loan drawdowns from the financings in fiscal 2024, and commercial paper issuances. During the nine months ended July 31, 2026, the Company finalized the purchase price allocation.
27
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 8: Goodwill
Goodwill is tested for impairment at the reporting unit level. As of November 1, 2025, the Company reassessed its reporting units and determined that the former Server and Hybrid Cloud reporting units met the criteria to qualify as a single Cloud & AI (excluding Financial Services) reporting unit, and Intelligent Edge and Juniper Networks met the criteria to qualify as a single Networking reporting unit. The Cloud & AI segment contains the Cloud & AI (excluding Financial Services) and Financial Services reporting units. The Corporate Investments and Other segment contains the A & PS, Telco Solutions and Instant On reporting units. The following table represents the carrying value of goodwill, by segment as of July 31, 2026 and October 31, 2025.
| Networking | Cloud & AI | Corporate Investments and Other | Total | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
Balance as of October 31, 2025(1) | $ | $ | $ | $ | |||||||||||||||||||
Goodwill reclassified as held for sale(2) | ( | ( | |||||||||||||||||||||
| Purchase price and other currency adjustments | ( | ||||||||||||||||||||||
Balance as of July 31, 2026(1) | $ | $ | $ | $ | |||||||||||||||||||
(1) There has been no change to the accumulated impairment loss from the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
(2) Reclassified to assets held for sale and is reported in Other current assets in the Condensed Consolidated Balance Sheets.
Goodwill is tested annually for impairment, as of the first day of the fourth quarter, at the reporting unit level. Additionally, an interim impairment test was performed as of November 1, 2025 based on organizational changes impacting the reporting units. The interim impairment test did not result in any impairment of goodwill. For all reporting units other than Cloud & AI (excluding Financial Services), a qualitative test was performed and there were no indicators of impairment of goodwill. For the Cloud & AI (excluding Financial Services) reporting unit a quantitative assessment was performed, and the excess of fair value over carrying amount was 10 %. In order to evaluate the sensitivity of the estimated fair value of the reporting units in the goodwill impairment test, the Company applied a 10 % decrease to the fair value of the Cloud & AI, (excluding Financial Services) reporting unit. Based on the results of this hypothetical 10 % decrease, this reporting unit did not have an excess of fair value over carrying value.
28
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 9: Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.
The Company uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use.
The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis:
| As of July 31, 2026 | As of October 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measured Using | Fair Value Measured Using | ||||||||||||||||||||||||||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Remaining Inputs (Level 2) | Significant Other Unobservable Remaining Inputs (Level 3) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Remaining Inputs (Level 2) | Significant Other Unobservable Remaining Inputs (Level 3) | Total | ||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash Equivalents: | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Money market funds | |||||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale Debt Investments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign bonds | |||||||||||||||||||||||||||||||||||||||||||||||
Other debt securities(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale debt investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities in public companies | |||||||||||||||||||||||||||||||||||||||||||||||
| Total equity investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Other derivatives | |||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Other derivatives | |||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
29
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Other Fair Value Disclosures
Short-Term and Long-Term Debt: As of July 31, 2026, the estimated fair value and carrying value of the Company's short-term and long-term debt was $19.9 billion and $20.2 billion, respectively. As of October 31, 2025, the estimated fair value and carrying value of the Company's short-term and long-term debt was $22.5 billion and $22.4 billion, respectively. If measured at fair value in the Condensed Consolidated Balance Sheets, short-term and long-term debt would be classified in Level 2 of the fair value hierarchy.
Other Financial Instruments: For the balance of the Company's financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in other accrued liabilities, the carrying amounts approximate fair value due to their short-term nature. If measured at fair value in the Condensed Consolidated Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy.
Non-Recurring Fair Value Measurements
Equity Investments without Readily Determinable Fair Value: Equity investments are recorded at cost and adjusted for impairments or observable price changes.
Non-Financial Assets: The Company's non-financial assets, such as intangible assets, goodwill, and property, plant and equipment, are recorded at cost. The Company records right-of-use assets based on the lease liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. Fair value adjustments are made to these non-financial assets in the period an impairment charge is recognized.
In the second quarter of fiscal 2025, the Company recorded a goodwill impairment charge of $1.4 billion associated with the Cloud & AI (excluding Financial Services) reporting unit. The fair values of the Company's reporting units were classified in Level 3 of the fair value hierarchy due to the significance of unobservable inputs developed using company-specific information.
30
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 10: Financial Instruments
Cash Equivalents and Available-for-Sale Debt Investments
Cash equivalents and available-for-sale debt investments were as follows:
| As of July 31, 2026 | As of October 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Cost | Gross Unrealized Gains (Losses) | Fair Value | Cost | Gross Unrealized Gains | Fair Value | ||||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash Equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||||||||||||||||||||||||||
| Money market funds | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale Investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt Securities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Total debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity Securities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities in public companies | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||
| Total equity securities | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents and available-for-sale investments | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
As of July 31, 2026 and October 31, 2025, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. Time deposits were primarily issued by institutions outside the U.S. as of July 31, 2026 and October 31, 2025. The estimated fair value of the available-for-sale debt investments may not be representative of values that will be realized in the future.
Contractual maturities of investments in available-for-sale debt securities were as follows:
| As of July 31, 2026 | |||||||||||||||||||||||
| Amortized Cost | Fair Value | ||||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Due in one year | $ | $ | |||||||||||||||||||||
| Due in more than five years | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
31
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets
The gross notional and fair value of derivative instruments in the Condensed Consolidated Balance Sheets were as follows:
| As of July 31, 2026 | As of October 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Gross Notional | Other Current Assets | Long-Term Financing Receivables and Other Assets | Other Accrued Liabilities | Long-Term Other Liabilities | Outstanding Gross Notional | Other Current Assets | Long-Term Financing Receivables and Other Assets | Other Accrued Liabilities | Long-Term Other Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Flow Hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Investment Hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total derivatives not designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total derivatives | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting of Derivative Instruments
The Company recognizes all derivative instruments on a gross basis in the Condensed Consolidated Balance Sheets. The Company's derivative instruments are subject to master netting arrangements and collateral security arrangements. The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under collateral security agreements. The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
| As of July 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| In the Condensed Consolidated Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| (i) | (ii) | (iii) = (i)–(ii) | (iv) | (v) | (vi) = (iii)–(iv)–(v) | |||||||||||||||||||||||||||||||||
| Gross Amounts Not Offset | ||||||||||||||||||||||||||||||||||||||
| Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Derivatives | Financial Collateral | Net Amount | |||||||||||||||||||||||||||||||||
| In millions | ||||||||||||||||||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | $ | (1) | $ | |||||||||||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | $ | (2) | $ | |||||||||||||||||||||||||||||||
32
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
| As of October 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| In the Condensed Consolidated Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| (i) | (ii) | (iii) = (i)–(ii) | (iv) | (v) | (vi) = (iii)–(iv)–(v) | |||||||||||||||||||||||||||||||||
| Gross Amounts Not Offset | ||||||||||||||||||||||||||||||||||||||
| Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Derivatives | Financial Collateral | Net Amount | |||||||||||||||||||||||||||||||||
| In millions | ||||||||||||||||||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | $ | (1) | $ | |||||||||||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | $ | (2) | $ | |||||||||||||||||||||||||||||||
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two
(2)Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two 102 million of collateral posted, $68 million was in cash and $34 million was through the re-use of counterparty collateral. As of October 31, 2025, of the $136 million of collateral posted, $120 million was in cash and $16 million was through the re-use of counterparty collateral.
The amounts recorded on the Condensed Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges were as follows:
| Carrying Amount of the Hedged Liabilities | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities | ||||||||||||||||||||||
| As of | As of | ||||||||||||||||||||||
| July 31, 2026 | October 31, 2025 | July 31, 2026 | October 31, 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Long-term debt | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income (“OCI”) were as follows:
| Gains (Losses) Recognized in OCI on Derivatives | |||||||||||||||||||||||
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationship: | |||||||||||||||||||||||
| Foreign exchange contracts | $ | $ | $ | $ | ( | ||||||||||||||||||
| Derivatives in Net Investment Hedging Relationship: | |||||||||||||||||||||||
| Foreign exchange contracts | ( | ( | ( | ||||||||||||||||||||
| Total | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
As of July 31, 2026, the Company expects to reclassify an estimated net accumulated other comprehensive gain of approximately $28 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges.
33
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings
The following table represents the pre-tax effect of derivative instruments on total amounts of income and expense line items presented in the Condensed Consolidated Statements of Earnings in which the effects of fair value hedges and derivatives not designated as hedging instruments are recorded:
| Gains (Losses) Recognized in Income | |||||||||||||||||||||||||||||||||||||||||||||||
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Net Revenue | Interest and Other, net | Net Revenue | Interest and Other, net | Net Revenue | Interest and Other, net | Net Revenue | Interest and Other, net | ||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||
| Total net revenue and interest and other, net | $ | $ | ( | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Gains (Losses) on Derivatives in Fair Value Hedging Relationships: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest Rate Contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Hedged items | $ | $ | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Gains (Losses) on Derivatives in Cash Flow Hedging Relationships: | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Exchange Contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Amount of gains (losses) reclassified from accumulated other comprehensive income into income | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Interest Rate Locks | |||||||||||||||||||||||||||||||||||||||||||||||
| Amount of losses reclassified from accumulated other comprehensive income into income | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Gains (Losses) on Derivatives not Designated as Hedging Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Other derivatives | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Total gains (losses) | $ | $ | $ | ( | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
Note 11: Borrowings
Notes Payable, Short-Term Borrowings and Long-Term Debt
Notes payable, short-term borrowings, including the current portion of long-term debt, and long-term debt were as follows:
| As of | |||||||||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||||||||
| In millions | |||||||||||||||||
Current portion of long-term debt(1) | $ | $ | |||||||||||||||
| Commercial paper | |||||||||||||||||
| Notes payable to banks, lines of credit and other | |||||||||||||||||
| Total notes payable and short-term borrowings | |||||||||||||||||
| Long-term debt | |||||||||||||||||
| Total | $ | $ | |||||||||||||||
34
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Financing arrangements
The Company maintains two commercial paper programs (the “Parent Programs”) and third program managed by a wholly-owned subsidiary, together with a revolving credit facility, and an uncommitted credit facility. There have been no changes to either of these financing arrangements since October 31, 2025. As of July 31, 2026 and October 31, 2025, no 622 million and $681 million, respectively.
Juniper Networks Acquisition Financing
In March 2026, the Company prepaid $1.25 billion against the outstanding balance under the three-year delayed draw term loan credit facility. In May 2026, the Company repaid the remaining $0.75 billion that was outstanding under this facility. The repayments were made at par, along with accrued interest.
Note 12: Stockholders' Equity
The components of accumulated other comprehensive loss, net of taxes as of July 31, 2026, and changes for the nine months ended July 31, 2026 were as follows:
| Net unrealized gains (losses) on available-for-sale securities | Net unrealized (losses) gains on cash flow hedges | Unrealized components of defined benefit plans | Cumulative translation adjustment | Accumulated other comprehensive loss | |||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||
| Reclassifications of losses into earnings | |||||||||||||||||||||||||||||
| Tax provision | ( | ( | ( | ||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
The components of accumulated other comprehensive loss, net of taxes as of July 31, 2025, and changes for the nine months ended July 31, 2025 were as follows:
| Net unrealized gains (losses) on available-for-sale securities | Net unrealized (losses) gains on cash flow hedges | Unrealized components of defined benefit plans | Cumulative translation adjustment | Accumulated other comprehensive loss | |||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
| Reclassifications of losses into earnings | |||||||||||||||||||||||||||||
| Tax benefit (provision) | ( | ||||||||||||||||||||||||||||
| Balance at end of period | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
Share Repurchase Program
For the nine months ended July 31, 2026, the Company repurchased and settled 16.5 million shares under its share repurchase program through open market repurchases. As of July 31, 2026, the Company’s unsettled open market repurchases were immaterial. Shares repurchased for the nine months ended July 31, 2026 were recorded as a $450 million reduction to stockholders’ equity. As of July 31, 2026, the Company had a remaining authorization of approximately $3.2 billion for future share repurchases.
Warrant
On July 2, 2026, the Company issued a warrant (the "Warrant") to Oracle Corp. ("Holder") to purchase up to an
35
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
aggregate of 4,156,466 shares of the Company’s common stock at an exercise price of $0.01 per share. The Warrant was issued in connection with the Holder entering into a strategic collaboration with the Company to deploy the Company’s networking solutions in the Holder’s AI data centers. The Warrant will vest and become exercisable in tranches, upon the achievement of specific milestones relating to purchases by the Holder and its affiliates of products and support from the Company. Subject to the terms of the Warrant, the Warrant is exercisable through June 25, 2029.
Note 13: Net Earnings (Loss) Per Share
The Company calculates basic EPS using net earnings (loss) and the weighted-average number of shares outstanding during the reporting period.
The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions, except per share amounts | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net earnings (loss) attributable to common stockholders - Basic | $ | $ | $ | $ | ( | ||||||||||||||||||
Plus: | — | ||||||||||||||||||||||
| Net earnings (loss) - Diluted | $ | $ | $ | $ | ( | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average shares used to compute basic net EPS | |||||||||||||||||||||||
Dilutive effect of | |||||||||||||||||||||||
Dilutive effect of employee stock plans(1) | |||||||||||||||||||||||
| Weighted-average shares used to compute diluted net EPS | |||||||||||||||||||||||
| Net EPS: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ( | ||||||||||||||||||
| Diluted | $ | $ | $ | $ | ( | ||||||||||||||||||
Anti-dilutive Share Count(1)(2): | |||||||||||||||||||||||
| Employee stock plans | |||||||||||||||||||||||
| Total anti-dilutive weighted-average stock | |||||||||||||||||||||||
(1)The impact of dilutive effect of employee stock plans is calculated under the treasury stock method, and the impact of dilutive effect of the 7.625 % Series C mandatory convertible preferred stock (“Preferred Stock”) is calculated under the if-converted method. The effect of employee stock plans and Preferred Stock is excluded when calculating diluted net loss per share as it would be anti-dilutive.
(2)The Company excludes shares potentially issuable under employee stock plans and Preferred Stock that could dilute basic net EPS in the future from the calculation of diluted net EPS, as their effect, if included, would have been anti-dilutive for the periods presented.
Note 14: Litigation, Contingencies, and Commitments
Litigation
HPE is involved in various lawsuits, claims, investigations and proceedings including those consisting of intellectual property, commercial, securities, employment, employee benefits, and environmental matters, which arise in the ordinary course of business. In addition, as part of the Separation and Distribution Agreement (the “Separation and Distribution Agreement”) entered into in connection with HPE’s spin-off from HP Inc. (formerly known as “Hewlett-Packard Company”) (the “Separation”), HPE and HP Inc. agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreement included provisions that allocate liability and financial
36
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
responsibility for pending litigation involving the parties, as well as provide for cross-indemnification of the parties against liabilities to one party arising out of liabilities allocated to the other party. The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. arising prior to the Separation. HPE records a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. HPE reviews these matters at least quarterly and adjusts these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other updated information and events pertaining to a particular matter. Litigation is inherently unpredictable. However, HPE believes it has valid defenses with respect to legal matters pending against us. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. HPE believes it has recorded adequate provisions for any such matters and, as of July 31, 2026, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.
Litigation, Proceedings, and Investigations
DOJ Action on the Proposed Acquisition of Juniper Networks. As previously disclosed, on January 9, 2024, the Company entered into the Merger Agreement with Juniper Networks and Jasmine Acquisition Sub, Inc., providing for the acquisition of Juniper Networks by HPE. On January 30, 2025, the Antitrust Division of the United States Department of Justice (“DOJ”) filed a complaint in the United States District Court for the Northern District of California, seeking to enjoin the closing of the Merger, alleging that the Merger is likely to substantially lessen competition in violation of Section 7 of the Clayton Act. On February 10, 2025, HPE and Juniper Networks filed answers to the DOJ’s complaint, disputing these claims. On June 27, 2025, HPE, Juniper, and the DOJ filed an Asset Preservation and Hold Separate Stipulation and Order (“Stipulation”) and Proposed Final Judgment with the Court. Pursuant to the Stipulation, HPE has agreed to divest its global Instant On campus and branch business. HPE also has agreed to grant up to two licenses to the Mist AIOps source code, with the licensees determined through an auction process. In exchange, the DOJ agreed to dismiss its action to enjoin the Merger, subject to the Court’s approval of the Proposed Final Judgment under the Antitrust Procedures and Penalties Act (the “Tunney Act”). On June 30, 2025, the Court signed the Stipulation, allowing the Merger to proceed to closing. On October 14, 2025, the Attorneys General of twelve states and the District of Columbia (the “Attorneys General”) filed a motion to intervene in the Court’s Tunney Act process. Following a November 18, 2025, hearing, the Court issued an order granting the Attorneys General’s motion to intervene and set a status conference for December 16, 2025, to determine next steps, including the scope of the Attorneys General’s intervention rights under the Tunney Act. On November 18, 2025, the Attorneys General filed a motion to hold separate, seeking to enjoin further integration and consolidation of HPE and Juniper during the pendency of the Tunney Act proceedings. Following a January 8, 2026, hearing, the Court denied the Attorneys General’s motion to hold separate, allowing further integration of the companies to proceed. The Tunney Act hearing was held on March 23, 2026, to determine whether the Court will approve the settlement between HPE and the DOJ. On August 12, 2026, the Court issued its ruling finding the settlement to be in the public interest and granting the Motion for Entry of Final Judgment.
India Directorate of Revenue Intelligence Proceedings. On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the “DRI”) issued notices to Hewlett-Packard India Sales Private Ltd (“HP India”), a subsidiary of HP Inc., seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties. On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related notices affirming duties and penalties against HP India and the named individuals for approximately $386 million (plus interest). On April 20, 2012, the Commissioner issued an order on the spare parts-related notice affirming duties and penalties against HP India and certain of the named individuals for approximately $17 million. HP India filed appeals of the Commissioner’s orders before the Customs Tribunal. The Customs Department filed cross-appeals before the Customs Tribunal. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner's orders. The Customs Tribunal rejected HP India's request to return the matter to the Commissioner on procedural grounds. After multiple delays and postponements over the last decade, the Customs Tribunal began hearing the parties’ cross-appeals on April 21, 2025. On June 29, 2026, the Bangalore Customs Tribunal issued its ruling (the “2026 Orders”). The Tribunal overturned several significant duty, interest, penalty and confiscation findings, and eliminated all individual penalties. The revised duty, interest and penalty amounts will be determined through a damage ruling by the Customs Authority. That ruling is expected no earlier than September 2026 and could be issued significantly later. The DRI is expected to appeal the 2026 Orders to the India Supreme Court. HP India has filed its own appeal. Pursuant to the terms of the 2015 Separation and Distribution Agreement, HPE is financially responsible for 43% of HP India’s liability in this matter.
37
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
ECT Proceedings. In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos (“ECT”), notified a former subsidiary of HP Inc. in Brazil (“HP Brazil”) that it had initiated administrative proceedings to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies allegedly coordinated their bids and fixed results for three ECT contracts in 2007 and 2008. In late July 2011, ECT notified HP Brazil it had decided to apply the penalties against HP Brazil and suspend HP Brazil's right to bid and contract with ECT for five years , based upon the evidence before it. In August 2011, HP Brazil appealed ECT’s decision. In April 2013, ECT rejected HP Brazil’s appeal, and the administrative proceedings were closed with the penalties against HP Brazil remaining in place. In parallel, in September 2011, HP Brazil filed a civil action against ECT seeking to have ECT’s decision revoked. HP Brazil also requested an injunction suspending the application of the penalties until a final ruling on the merits of the case, which was denied. HP Brazil appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from to two years . HP Brazil appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT’s sanctions until a final ruling on the merits of the case. In September 2025, the Court of Appeals ruled in favor of HPE’s Civil Appeal, annulling the previously-stayed sanctions that, if enforced, would have barred HPE Brazil from participating in public tenders for five years. HPE has filed a motion to recover legal costs incurred during the appeal. ECT has filed a motion requesting the Court to clarify the merits.
Autonomy-Related Legal Proceedings. In 2015, four HPE subsidiaries (Autonomy Corporation Limited, Hewlett Packard Vision BV, Autonomy Systems Limited, and Autonomy, Inc., hereinafter the “Claimants”) initiated civil proceedings in the U.K. High Court of Justice against two members of Autonomy’s former management, Michael Lynch and Sushovan Hussain, for breach of their fiduciary duties in causing Autonomy group companies to engage in improper transactions and accounting practices before and in connection with the 2011 acquisition of Autonomy. Trial concluded in January 2020. In May 2022, the court issued its liability judgment, finding that the Claimants had succeeded on substantially all claims against Messrs. Lynch and Hussain, and dismissing a counterclaim filed by Mr. Lynch. In February 2024, the court held a two-week trial on damages. The Claimants sought recovery for $4 billion in losses. In May 2025, Claimants reached an agreement with Mr. Hussain to resolve claims against him. On July 22, 2025, the court issued its ruling on the quantum of damages, finding that the Lynch estate owed £740 million. The court held a hearing during the week of November 17, 2025, addressing a number of matters including costs (including attorneys’ fees), pre-judgment interest, issues relating to the currency in which the judgment should be paid, and the Lynch Estate’s right to appeal discrete issues in the Court’s May 2022 liability judgment and its July 2025 quantum judgment. On March 24, 2026, the U.K. High Court entered a ruling that provides a total judgment against the Lynch Estate of approximately $1.24 billion when adding interest and currency effects. The judgment amount reflects an approximately $145 million offset for amounts previously recovered by HPE and does not include attorneys’ fees, which will be determined at a later time. The U.K. High Court also rejected the Estate’s request for permission to appeal the liability and damages judgments. On April 14, 2026, the Lynch Estate filed a request with the Court of Appeal for permission to appeal the liability and damages judgments. On August 25, 2026, the Court of Appeal denied the Lynch Estate’s request for permission to appeal on fourteen of the eighteen issues requested by the Lynch Estate. The issues on which the appeal will go forward relate primarily to the calculation of damages awarded by the U.K. High Court and the currency in which damages will be awarded. Pursuant to the terms of the 2015 Separation and Distribution Agreement, HP and HPE will share equally in any recovery.
Shared Litigation with HP Inc., DXC Technology Company and Micro Focus International plc. As part of the Separation and Distribution Agreements between HPE and HP Inc., HPE and DXC, and HPE and Seattle SpinCo, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties’ businesses. The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of HPE from HP Inc.) or of HPE (in the case of the separation of DXC from HPE and the separation of Micro Focus from HPE), in each case arising prior to the applicable separation.
Environmental
The Company's operations and products are or may in the future become subject to various federal, state, local, and foreign laws and regulations concerning the environment, including laws addressing the discharge of pollutants into the air and water; supply chain due diligence; and sustainability, environment, and emissions-related reporting; environmental claims and statements; the management, movement, and disposal of hazardous substances and wastes; the clean-up of contaminated sites; product safety and compliance; the energy consumption of products, services, and operations; and the operational or financial responsibility for recycling, treatment, and disposal of those products. This includes legislation that makes producers of electrical goods, including servers and networking equipment, responsible for repairability requirements or financially responsible for specified collection, recycling, treatment, and disposal of past and future covered products (sometimes referred
38
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
to as “product take-back legislation”). The Company could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws, including those related to addressing climate change, sustainability, and other environmental related issues, or if its products become non-compliant with such environmental laws. The Company's potential exposure includes impacts on revenue, fines and civil or criminal sanctions, third-party environmental or property damage or personal injury claims or actions, and clean-up costs. The amount and timing of costs to comply with environmental laws are difficult to predict.
In particular, the Company may become a party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as “Superfund,” or other federal, state or foreign laws and regulations addressing the clean-up of contaminated sites, and is and may in the future become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs. The Company is also contractually obligated to make financial contributions to address actions related to certain environmental liabilities, both ongoing and arising in the future, pursuant to its Separation and Distribution Agreement with HP Inc.
Unconditional Purchase Obligations
As of July 31, 2026, the Company had unconditional purchase obligations, including long-term agreements, of approximately $30.4 billion. These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction, as well as settlements that the Company has reached with third parties, requiring it to pay determined amounts over a specified period of time. Amounts payable under certain contracts with variable pricing provisions have been estimated primarily based on prevailing market prices for the underlying products as of the reporting date. These unconditional purchase obligations are related principally to inventory purchases, software maintenance and support services and other items. Unconditional purchase obligations exclude agreements that are cancellable without penalty. The Company expects the commitments to total $4.2 billion, $11.6 billion, $4.4 billion, $4.2 billion, $4.0 billion, and $2.0 billion for fiscal years 2026, 2027, 2028, 2029, 2030, and thereafter, respectively.
Guarantees
In the ordinary course of business, the Company may issue performance guarantees to certain of its clients, customers, and other parties pursuant to which the Company has guaranteed the performance obligations of third parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In general, the Company would be obligated to perform over the term of the guarantee in the event a specified triggering event occurs as defined by the guarantee. The Company believes the likelihood of having to perform under a material guarantee is remote.
The Company has entered into service contracts with certain of its clients that are supported by financing arrangements. If a service contract is terminated as a result of the Company's non-performance under the contract or failure to comply with the terms of the financing arrangement, the Company could, under certain circumstances, be required to acquire certain assets related to the service contract. The Company believes the likelihood of having to acquire a material amount of assets under these arrangements is remote.
The maximum potential future payments under performance guarantees and financing arrangements was $364 million as of July 31, 2026.
Indemnifications
In the ordinary course of business, the Company enters into contractual arrangements under which the Company may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of the Company or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. The Company also provides indemnifications to certain vendors and customers against claims of intellectual property infringement made by third parties arising from the use by such vendors and customers of the Company's software products and support services and certain other matters. Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.
39
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
For purposes of this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section, we use the terms “HPE”, the “Company”, “we”, “us” and “our” to refer to Hewlett Packard Enterprise Company.
We intend the discussion of our financial condition and results of operations that follows to provide information that will assist the reader in understanding our Condensed Consolidated Financial Statements, changes in certain key items in these financial statements from period-to-period and the primary factors that accounted for these changes, as well as how certain accounting principles, policies, and estimates affect our Condensed Consolidated Financial Statements. This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document.
The financial discussion and analysis in the following MD&A compares the three and nine months ended July 31, 2026 to the comparable prior-year period and where appropriate, as of July 31, 2026, unless otherwise noted.
This MD&A is organized as follows:
•Trends and Uncertainties. A discussion of material events and uncertainties known to management, such as the mixed macroeconomic environment and heightening global trade restrictions, increased demand for and adoption of new technologies, supply chain constraints and related cost increases for certain components, increased inventory levels, the conservative (though recovering) customer spending environment, persistent inflation, foreign exchange pressures, recent tax developments, and competitive pricing pressures.
•Executive Overview. A discussion of our business and a summary of our financial performance and other highlights, including Generally accepted accounting Principles (“GAAP”) and non-GAAP financial measures, affecting the Company in order to provide context to the remainder of the MD&A.
•Results of Operations. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations at the segment level.
•Critical Accounting Policies and Estimates. A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.
•Liquidity and Capital Resources. An analysis of changes in our cash flows, financial condition, liquidity, and cash requirements and commitments.
•GAAP to Non-GAAP Reconciliations. Each non-GAAP financial measure has been reconciled to the most directly comparable GAAP financial measure. This section also includes a discussion of the use, usefulness and economic substance of the non-GAAP financial measures, along with a discussion of material limitations, and compensation for those limitations, associated with the use of non-GAAP financial measures.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
TRENDS AND UNCERTAINTIES
During the first nine months of fiscal 2026, the effects of the evolving macroeconomic environment on demand for information technology products and supply for components persisted and certain significant developments impacted our operations, as follows:
Technological Advancements: We have observed market trends and demand (of customers of various segments and sizes) gravitating towards AI, hybrid cloud, edge computing, data security capabilities, and related offerings. The volume of data at the edge continues to grow, driven by the proliferation of devices. As a result, the need for a unified cloud experience everywhere has grown, in order to manage the growth of data at the edge. Increasing demand for AI is also contributing to changes in the competitive landscape. With the abundance of data, there are opportunities to develop AI tools with powerful computational abilities to extract insights and value from the captured data. Secure networking that is purpose-built for AI workloads is the foundation that enables users to seamlessly connect and apply AI learnings to such data that lives in various ecosystems. While we believe our recent acquisition of Juniper Networks Inc. (“Juniper Networks”) positions us to capitalize on the growing market opportunities across AI-accelerated computing, data, cloud and networking, our major competitors and emerging competitors are expanding their product and service offerings with integrated products and solutions and exerting increased competitive pressure. We expect these market dynamics and trends to continue in the longer term.
Macroeconomic Uncertainty: The evolving macroeconomic environment has been impacting industry-wide demand, as customers have been taking longer to work through prior orders and continue to adopt a more strategic approach to discretionary IT spending. While this dynamic has been easing, it has, at times, resulted in uneven demand across our portfolio and geographies, particularly for certain of our hardware offerings, as customers have focused investments on modernizing infrastructure, such as migrating to cloud-based offerings. Additionally, there continues to be significant uncertainty surrounding the tariff environment and import/export regulations due to numerous factors, including but not limited to tariff imposition delays, changes to tariff rates and policies, tariff repeals and refunds, and enactment of reciprocally restrictive trade measures around the world. These have enhanced global trade uncertainty and contributed to higher prices of components and end products and services. While we have sought to mitigate these adverse impacts by relying on our global supply chain, implementing pricing measures, and securing sufficient supply in advance of orders, we nevertheless expect the current macroeconomic environment to continue with the potential to impact revenue and margin growth in the near term.
Supply Chain: We have experienced supply chain constraints for certain components, including graphics processing units (“GPUs”), accelerated processing units, solid-state drives (“SSDs”), and other memory components. We are affected by the worldwide shortage in memory components that began to impact the semiconductor industry throughout fiscal year 2026 primarily due to the accelerating growth in AI usage and demand and the related rapid expansion in AI data centers and compute refresh cycles. Throughout fiscal year 2026, we experienced supply chain constraints due to these component shortages and expect such dynamics to continue in the medium term as memory supply constraints may persist until memory vendors transition greater production allocations towards high performance memory components required by AI workloads. Additionally, logistics costs have been, and may continue to remain, high due to changes in trade policies and ongoing geopolitical uncertainties and tensions. We have experienced higher-than-normal inventory levels, primarily due to frequent component part updates, customers transitioning to the next generation of GPUs, our efforts to secure supply ahead of demand, and longer customer acceptance timelines on AI-related orders. In addition, our current efforts to secure memory components and SSDs in advance to meet forecasted demand may further increase our inventory levels in the medium term. While we have been working to reduce inventory, any or all of the aforementioned factors could contribute to sustained higher-than-normal levels and further uncertainty. The future remains uncertain due to the macroeconomic environment and dynamics discussed above, which have thus far impacted our ability to import and export components and finished products and increased our costs. We are taking actions through continued disciplined cost and pricing management and supply chain diversification to mitigate the impact of these dynamics. However, such actions may not fully mitigate any impact on our financial condition.
Recurring Revenue and Consumption Models: We continue to strengthen our core server and storage-oriented offerings and expand our offerings on the GreenLake cloud platform, to deliver our entire portfolio as-a-service (“aaS”) and become the edge-to-cloud company of choice for our customers and partners. We expect that such flexible consumption model will continue to strengthen our customer relationships and contribute to growth in recurring revenue.
Foreign Currency Exposure: We have a large global presence, with more than half of our revenue generated outside of the U.S. As a result, our financial results can be, and particularly in recent periods have been, 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.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Public Sector: We have a number of engagements with various public sector entities, including the U.S. federal government and its agencies, as direct or indirect customers of our IT services and hardware. Significant staffing and resource reductions at certain public sector entities create an uncertain environment and as a result, our financial results have been, and may continue to be, impacted in the near term.
Recent Tax Developments: Proposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on foreign earnings. Several of the proposals currently being considered, if enacted into law, could have an impact on our effective tax rate, income tax expense, and cash flows. Our future effective tax rate may also be impacted by judicial decisions, changes in interpretation of regulations, as well as additional legislation and guidance. Further, the Organisation for Economic Co-operation and Development (“OECD”), an international association of 38 countries including the United States, has proposed changes to numerous long-standing tax principles, namely, its Pillar Two framework, which imposes a global minimum corporate tax rate of 15%. To date, approximately 65 countries have enacted portions, or all, of the OECD proposal. The adoption and effective dates of these rules may vary by country and could increase tax complexity and uncertainty and may adversely affect our provision for income taxes. While we do not anticipate a material adverse impact to our financial position in fiscal 2026, additional changes to global tax laws are likely to occur. For instance, some countries have enacted, and others have proposed, taxes based on gross receipts applicable to digital services, regardless of profitability. Such changes may adversely affect our tax liability. In addition, the United States has considered, and may adopt, reciprocal tax measures in response to such regimes. These developments could increase our global tax burden, result in double taxation, and adversely affect our tax liability.
The Internal Revenue Service (“IRS”) is conducting audits of our fiscal 2020 through 2022 U.S. federal income tax returns. During the first quarter of fiscal 2026, the IRS issued notices of proposed adjustments (“NOPAs”) for fiscal 2020, 2021, and 2022 relating to our intercompany transfer pricing. During the second quarter of fiscal 2026, we submitted a formal settlement offer to the IRS to facilitate the closing of the audit and recorded increased reserves for unrecognized tax benefits of $318 million. The impact of the increase in reserves is almost entirely offset with a valuation allowance release, and the net impact to income tax expense for the nine months ended July 31, 2026 was not material. It is reasonably possible that the IRS audit for fiscal 2020 through 2022 may be concluded in the next 12 months, and it is reasonably possible that existing unrecognized tax benefits related to these years may be reduced by an amount up to $366 million within the next 12 months; the majority of these unrecognized tax benefits are offset by adjustments to foreign tax credits that carry a full valuation allowance, which does not affect our effective tax rate.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OB3”) into law. OB3 introduced several changes to tax regulations, including the permanent restoration of 100% depreciation and the permanent restoration of immediate deductibility of costs associated with research and development activities performed in the United States. We do not expect a material impact in fiscal 2026, but we will continue to evaluate the full impact of these changes on our future results.
Trade and Tariffs Update: On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). During the three months ended July 31, 2026, we have received certain tariff refunds. We have also applied for and expect to receive more in the future. Such amounts received, and any such amounts applied for, are not nor do we expect they will be material to our financial statements or financial position. However, the ultimate availability, timing, and amount of any refunds of such tariffs remain uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.
Other Trends and Uncertainties: The impacts of geopolitical volatility (including the ongoing geopolitical instability and conflict in the Middle East, the ongoing conflict in Ukraine, and the relationship between China and the U.S.) may impact our operations, financial performance, and ability to conduct business in some non-U.S. markets. We have, in the past, entered into contracts for the sale of certain products and services that reflect discounting due to competitive pressures or were negotiated at prices prior to the recent escalation of component costs, which have resulted in lower margins than expected, and we expect will continue to negatively impact our margins in the near term. We have been monitoring and seeking to mitigate these risks with adjustments to our manufacturing, supply chain, and distribution networks, as well as our pricing and discounting
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
practices. We remain focused on executing our key strategic priorities, building long-term value creation for our stakeholders, and addressing our customers’ needs while continuing to make prudent decisions in response to the environment.
EXECUTIVE OVERVIEW
We are a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze, and act upon data seamlessly from edge-to-cloud. We enable customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future. Our customers range from small-and-medium size businesses to large global enterprises and governmental entities. Our legacy dates to a partnership founded in 1939 by William R. Hewlett and David Packard, and we strive every day to uphold and enhance that legacy through our dedication to providing innovative technological solutions to our customers.
Our operations are organized into three reportable segments for financial reporting purposes: Cloud & AI, Networking, and Corporate Investments and Other. Effective November 1, 2025, HPE implemented an organizational change by (i) merging the Server, Hybrid Cloud, and Financial Services business segments into a new segment named Cloud & AI and (ii) transferring the Telco and Instant On businesses from the Networking segment to the Corporate Investments and Other segment. Refer to Note 2, “Segment Information” to the Condensed Consolidated Financial Statements in Item 1 of Part I for further information.
Acquisition of Juniper Networks
On July 2, 2025, we completed the Juniper Networks merger (the “Merger”). Under the terms of the Agreement and Plan of Merger, dated January 9, 2024, by and among Juniper Networks, HPE and Jasmine Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of HPE (the “Merger Agreement”), HPE agreed to pay $40.00 per share of Juniper Networks common stock, issued and outstanding as of July 2, 2025, representing a cash consideration of approximately $13.4 billion. The results of operations of Juniper Networks are included in the Consolidated Financial Statements commencing on July 2, 2025. See Note 7, “Acquisitions and Dispositions” to the Condensed Consolidated Financial Statements in Item 1 of Part I for additional information.
Divestiture of H3C Technologies Co., Limited Shares
On November 17, 2025, our subsidiary, H3C Holdings Limited (“H3C Holdings”), entered into (i) share purchase agreements with five counterparties, including Unisplendour International Technology Limited (“UNIS”), whereby such counterparties, in the aggregate, agreed to purchase 10% of the total issued share capital of H3C Technologies Co., Limited (“H3C”) for cash consideration of approximately $714 million and (ii) a side letter with UNIS, amending the Agreement on Subsequent Arrangements that was previously entered into on May 24, 2024, whereby, among other things, H3C Holdings and UNIS shall retain their put option and call option, respectively, relating to the remaining issued share capital of H3C held by H3C Holdings and have the right to exercise their respective option rights in respect of such shares up to three times, subject to the timing and terms as set forth therein. The agreement referenced in clause (ii) above revises the arrangements governing the sale of all of the remaining issued share capital of H3C held by us through H3C Holdings. On November 28, 2025, H3C Holdings entered into three additional share purchase agreements, including one with UNIS, whereby such counterparties, in the aggregate, agreed to purchase the remaining 9% of the total issued share capital of H3C for cash consideration of approximately $643 million.
On May 13, 2026, we closed on the sale and disposition of 13.8% of the total issued share capital of H3C for approximately $987 million. On May 28, 2026, the Company closed on the sale of the remaining 5.2% of the total issued share capital of H3C for approximately $370 million.
Cost Savings Actions
On March 6, 2025, the Board of Directors approved a cost reduction program (the "Program") intended to reduce structural operating costs and continue advancing our ongoing commitment to profitable growth. The Program is expected to be implemented through fiscal year 2026 and deliver gross savings of approximately $350 million by fiscal year 2027 through reductions in our workforce. The Program has since become a part of Catalyst, a set of broader company-wide actions to reduce costs and enhance efficiency throughout the Company.
The estimates of the duration of the Program, the charges and expenditures that we expect to incur in connection therewith, and the timing thereof are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
implementation of the Program. In connection with the Program, we incurred charges of $31 million and $84 million for the three and nine months ended July 31, 2026, respectively, and $2 million and $148 million for the three and nine months ended July 31, 2025, respectively.
In addition, the Company expects to achieve at least $600 million in cost savings from synergies by fiscal 2028, related to the integration of Juniper Networks. These synergies are expected to require approximately $800 million of investment, primarily tied to headcount, supply chain optimization, and portfolio rationalization. In connection with the integration of Juniper Networks, we incurred acquisition costs of $69 million and $300 million, for the three and nine months ended July 31, 2026, respectively.
Three months ended July 31, 2026 compared with three months ended July 31, 2025
Net revenue of $12.2 billion represented an increase of 33.7%, primarily due to an increase in the average selling price in the Cloud & AI segment, and higher revenue in the Networking segment from the Merger. The gross profit margin of 40.1% (or $4.9 billion) represents an increase of 10.9 percentage points from the prior-year period, primarily due to higher revenue in the Cloud & AI and Networking segments. The operating profit margin of 11.4% represents an increase of 8.7 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement.
Nine months ended July 31, 2026 compared with nine months ended July 31, 2025
Net revenue of $32.2 billion represented an increase of 30.8%, primarily due to higher revenue in the Networking segment from the Merger, and an increase in the average selling price in the Cloud & AI segment. The gross profit margin of 37.7% (or $12.1 billion) represents an increase of 8.7 percentage points from the prior-year period, primarily due to higher revenue in the Networking and Cloud & AI segments. The operating profit margin of 8.1% represents an increase of 9.8 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement.
Financial Results
The following table summarizes our condensed consolidated GAAP financial results:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Dollars in millions, except per share amounts | |||||||||||||||||||||||||||||||||||
| Net revenue | $ | 12,213 | $ | 9,136 | 33.7% | $ | 32,192 | $ | 24,617 | 30.8% | |||||||||||||||||||||||||
| Gross profit | $ | 4,899 | $ | 2,672 | 83.3% | $ | 12,139 | $ | 7,136 | 70.1% | |||||||||||||||||||||||||
| Gross profit margin | 40.1 | % | 29.2 | % | 10.9pts | 37.7 | % | 29.0 | % | 8.7pts | |||||||||||||||||||||||||
| Earnings (loss) from operations | $ | 1,393 | $ | 247 | 464.0% | $ | 2,610 | $ | (429) | 708.4% | |||||||||||||||||||||||||
| Operating profit margin | 11.4 | % | 2.7 | % | 8.7pts | 8.1 | % | (1.7) | % | 9.8pts | |||||||||||||||||||||||||
| Net earnings (loss) attributable to HPE | $ | 1,540 | $ | 305 | 404.9% | $ | 2,616 | $ | (118) | N/M | |||||||||||||||||||||||||
| Net earnings (loss) attributable to common stockholders | $ | 1,511 | $ | 276 | 447.5% | $ | 2,529 | $ | (205) | N/M | |||||||||||||||||||||||||
Diluted net earnings (loss) per share attributable to common stockholders(1) | $ | 1.06 | $ | 0.21 | $0.85 | $ | 1.82 | $ | (0.16) | $1.98 | |||||||||||||||||||||||||
| Cash flow provided by operations | $ | 1,641 | $ | 1,305 | $336 | $ | 4,229 | $ | 454 | $3,775 | |||||||||||||||||||||||||
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
The following table summarizes our condensed consolidated non-GAAP financial results:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Dollars in millions, except per share amounts | |||||||||||||||||||||||||||||||||||
| Non-GAAP gross profit | $ | 4,928 | $ | 2,732 | 80.4% | $ | 12,268 | $ | 7,286 | 68.4% | |||||||||||||||||||||||||
| Non-GAAP gross profit margin | 40.4 | % | 29.9 | % | 10.5pts | 38.1 | % | 29.6 | % | 8.5pts | |||||||||||||||||||||||||
| Non-GAAP earnings from operations | $ | 1,979 | $ | 777 | 154.7% | $ | 4,584 | $ | 2,170 | 111.2% | |||||||||||||||||||||||||
| Non-GAAP operating profit margin | 16.2 | % | 8.5 | % | 7.7pts | 14.2 | % | 8.8 | % | 5.4pts | |||||||||||||||||||||||||
| Non-GAAP net earnings attributable to HPE | $ | 1,610 | $ | 631 | 155.2% | $ | 3,676 | $ | 1,860 | 97.6% | |||||||||||||||||||||||||
| Non-GAAP net earnings attributable to common stockholders | $ | 1,581 | $ | 602 | 162.6% | $ | 3,589 | $ | 1,773 | 102.4% | |||||||||||||||||||||||||
Non-GAAP diluted net earnings per share attributable to common stockholders(1) | $ | 1.11 | $ | 0.44 | $0.67 | $ | 2.55 | $ | 1.32 | $1.23 | |||||||||||||||||||||||||
| Free cash flow | $ | 958 | $ | 790 | $168 | $ | 2,581 | $ | (934) | $3,515 | |||||||||||||||||||||||||
N/M - Not meaningful
(1)For purposes of calculating diluted net earnings (loss) per share (“EPS”), the 7.625% Series C mandatory convertible preferred stock (“Preferred Stock”) dividends are added back to the net earnings attributable to common stockholders and the diluted weighted-average share calculation assumes the Preferred Stock was converted at issuance or as of the beginning of the reporting period.
Each non-GAAP financial measure has been reconciled to the most directly comparable GAAP financial measure herein. Please refer to the section “GAAP to non-GAAP Reconciliations” included in this MD&A for these reconciliations, a discussion of the use, usefulness and economic substance of the non-GAAP financial measures, along with a discussion of material limitations, and compensation for those limitations, associated with the use of non-GAAP financial measures.
Dividends and Share Repurchase Program
Returning capital to our stockholders remains an important part of our capital allocation framework, which also consists of strategic investments. The holders of HPE common stock are entitled to receive dividends when and as declared by the Board of Directors. Our ability to pay dividends will depend on many factors, such as the Company’s financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in its debt, industry practice, legal requirements, regulatory constraints, and other factors that the Board of Directors deems relevant. Furthermore, so long as any share of our Preferred Stock remains outstanding, no dividend on shares of common stock (or any other class of stock junior to the Preferred Stock) shall be declared or paid unless all accumulated and unpaid dividends for all preceding dividend periods for the Preferred Stock have been declared and paid in full in cash, shares of the Company’s common stock or a combination thereof, or a sufficient sum of cash or number of shares of its common stock has been set apart for the payment of such dividends, on all outstanding shares of the Preferred Stock. During the third quarter of fiscal 2026, we paid a quarterly dividend of $0.1425 per share of common stock. On September 2, 2026, we declared a regular cash dividend of $0.1425 per share of our common stock, payable on or about October 16, 2026, to our holders of record as of the close of business on September 17, 2026. We also declared a cash dividend of $0.953125 per share of our 7.625% Series C Mandatory Convertible Preferred Stock, which was paid on September 1, 2026, to holders of record as of the close of business on August 15, 2026.
As of July 31, 2026, we had a remaining authorization of approximately $3.2 billion for future share repurchases.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
RESULTS OF OPERATIONS
Results of operations in dollars and as a percentage of net revenue were as follows:
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | ||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 12,213 | 100.0 | % | $ | 9,136 | 100.0 | % | $ | 32,192 | 100.0 | % | $ | 24,617 | 100.0 | % | |||||||||||||||||||||||||||||||
| Cost of sales (exclusive of amortization shown separately below) | 7,314 | 59.9 | 6,464 | 70.8 | 20,053 | 62.3 | 17,481 | 71.0 | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 4,899 | 40.1 | 2,672 | 29.2 | 12,139 | 37.7 | 7,136 | 29.0 | |||||||||||||||||||||||||||||||||||||||
| Research and development | 1,158 | 9.5 | 622 | 6.8 | 2,824 | 8.8 | 1,637 | 6.6 | |||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 1,962 | 16.1 | 1,496 | 16.4 | 5,490 | 17.1 | 4,062 | 16.5 | |||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 315 | 2.6 | 126 | 1.4 | 949 | 2.9 | 201 | 0.8 | |||||||||||||||||||||||||||||||||||||||
| Impairment charges | — | — | — | — | — | — | 1,361 | 5.5 | |||||||||||||||||||||||||||||||||||||||
| Acquisition, disposition and other charges | 71 | 0.6 | 181 | 2.0 | 266 | 0.8 | 304 | 1.2 | |||||||||||||||||||||||||||||||||||||||
| Earnings (loss) from operations | 1,393 | 11.4 | 247 | 2.7 | 2,610 | 8.1 | (429) | (1.7) | |||||||||||||||||||||||||||||||||||||||
| Interest and other, net | (75) | (0.6) | 8 | 0.1 | (202) | (0.6) | 86 | 0.3 | |||||||||||||||||||||||||||||||||||||||
| Gain on sale of equity interest | 444 | 3.6 | — | — | 444 | 1.4 | — | — | |||||||||||||||||||||||||||||||||||||||
| Gain on sale of a business | — | — | 1 | — | — | — | 245 | 1.0 | |||||||||||||||||||||||||||||||||||||||
| Earnings from equity interests | — | — | 32 | 0.4 | 42 | 0.1 | 74 | 0.3 | |||||||||||||||||||||||||||||||||||||||
| Earnings (loss) before provision for taxes | 1,762 | 14.4 | 288 | 3.2 | 2,894 | 9.0 | (24) | (0.1) | |||||||||||||||||||||||||||||||||||||||
| (Provision) benefit for taxes | (222) | (1.8) | 17 | 0.2 | (278) | (0.9) | (94) | (0.4) | |||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) attributable to HPE | 1,540 | 12.6 | 305 | 3.3 | 2,616 | 8.1 | (118) | (0.5) | |||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | (29) | (0.2) | (29) | (0.3) | (87) | (0.3) | (87) | (0.4) | |||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) attributable to common stockholders | $ | 1,511 | 12.4 | % | $ | 276 | 3.0 | % | $ | 2,529 | 7.9 | % | $ | (205) | (0.8) | % | |||||||||||||||||||||||||||||||
(1)Certain amounts may not add due to use of rounded numbers.
Three and nine months ended July 31, 2026 compared with the three and nine months ended July 31, 2025
Net revenue
For the three months ended July 31, 2026, total net revenue of $12.2 billion represented an increase of $3.1 billion, or 33.7%. U.S. net revenue increased by $0.5 billion, or 11.9%, to $4.8 billion, and net revenue from outside of the U.S. increased by $2.6 billion, or 52.9%, to $7.4 billion.
For the nine months ended July 31, 2026, total net revenue of $32.2 billion represented an increase of $7.6 billion, or 30.8%. U.S. net revenue increased by $2.5 billion, or 26.4%, to $12.1 billion, and net revenue from outside of the U.S. increased by $5.1 billion, or 33.5%, to $20.1 billion.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
The components of the weighted net revenue change by segment were as follows:
| For the three months ended July 31, 2026 | For the nine months ended July 31, 2026 | ||||||||||
| Percentage Points | |||||||||||
| Networking | 13.6 | 18.2 | |||||||||
| Cloud & AI | 20.0 | 12.6 | |||||||||
Corporate Investments and Other | 0.1 | — | |||||||||
| Total HPE | 33.7 | 30.8 | |||||||||
Three months ended July 31, 2026 compared with three months ended July 31, 2025
From a segment perspective, the primary factors contributing to the change in total net revenue are summarized as follows:
•Networking net revenue increased $1.2 billion, or 74.9%, primarily due to revenue attributable to Juniper Networks
•Cloud & AI net revenue increased $1.8 billion, or 25.4%, primarily due to an increase in the average selling price
Nine months ended July 31, 2026 compared with nine months ended July 31, 2025
From a segment perspective, the primary factors contributing to the change in total net revenue are summarized as follows:
•Networking net revenue increased $4.5 billion, or 117.3%, primarily due to revenue attributable to Juniper Networks
•Cloud & AI net revenue increased $3.1 billion, or 15.4%, primarily due to an increase in the average selling price
Please refer to the section “Segment Information” further below for a discussion of our results of operations for each reportable segment.
Gross profit
For the three months ended July 31, 2026, the total gross profit margin of 40.1% represents an increase of 10.9 percentage points, as compared to the respective prior year period. For the nine months ended July 31, 2026, the total gross profit margin of 37.7% represents an increase of 8.7 percentage points, as compared to the respective prior year period. The increases were primarily due to the favorable mix of higher-margin revenues in the Cloud & AI and Networking segments and the acquisition of Juniper Networks.
Operating expenses
Research and development (“R&D”)
For the three months ended July 31, 2026, R&D expense increased by $536 million, or 86.2%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 80.0 percentage points to the change.
For the nine months ended July 31, 2026, R&D expense increased by $1,187 million, or 72.5%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 64.3 percentage points to the change.
Selling, general and administrative (“SG&A”)
For the three months ended July 31, 2026, SG&A expense increased by $466 million, or 31.1%, primarily due to higher variable employee costs and increased operating expenses associated with Juniper Networks, which contributed 24.7 percentage points to the change.
For the nine months ended July 31, 2026, SG&A expense increased by $1,428 million, or 35.2%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 28.8 percentage points to the change.
47
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Amortization of intangible assets
For the three and nine months ended July 31, 2026, amortization of intangible assets increased by $189 million, or 150.0%, and $748 million, or 372.1%, respectively, primarily due to the amortization expense of the acquired intangibles as a result of the Merger.
Impairment charges
Impairment charges for the nine months ended July 31, 2025 represents a partial goodwill impairment charge of $1.4 billion, as it was determined that the fair value of the Cloud & AI (excluding Financial Services) reporting unit was below the carrying value of its net assets.
Acquisition, disposition and other charges
For the three and nine months ended July 31, 2026, acquisition, disposition and other charges decreased by $110 million or 60.8%, and $38 million or 12.5%, respectively, primarily due to higher costs incurred in connection with the Merger in prior year periods.
Interest and other, net
For the three months ended July 31, 2026, interest and other, net expense increased by $83 million, or 1,037.5%, primarily due to higher net interest expense of $51 million and the absence of a $52 million prior year gain related to the settlement to resolve claims solely against Sushovan Hussain in the ongoing Autonomy litigation.
For the nine months ended July 31, 2026, interest and other, net expense increased by $288 million, or 334.9%, primarily due to higher net interest expense of $283 million.
Gain on sale of equity interest
In May 2026, the Company sold the remaining equity interest in H3C and recognized a $444 million gain on sale.
Gain on sale of a business
On December 1, 2024, we completed the disposition of CTG. We received net proceeds of $210 million and recognized a gain of $245 million.
(Provision) benefit for taxes
For the three months ended July 31, 2026 and 2025, we recorded income tax expense of $222 million and income tax benefit of $17 million, respectively, which reflects an effective tax rate of 12.6% and (6.5)%, respectively. For the nine months ended July 31, 2026 and 2025, we recorded income tax expense of $278 million and $94 million, respectively, which reflects an effective tax rate of 9.6% and (359.9)%, respectively. Our effective tax rate generally differs from the U.S. federal statutory rate of 21% due to favorable tax rates associated with certain earnings from our operations in lower tax jurisdictions throughout the world but is also impacted by discrete tax adjustments during each fiscal period. For the nine months ended July 31, 2025, the effective tax rate also included the effects of the non-deductible goodwill impairment.
For further discussion, refer to Note 4, “Taxes on Earnings” to the Condensed Consolidated Financial Statements in Item 1 of Part I.
Segment Information
HPE's organizational structure is based on a number of factors that the Chief Operating Decision Maker, who is the Chief Executive Officer, uses to evaluate, view, and run our business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this structure and information reviewed by HPE's management to evaluate segment results.
As described in Note 1, “Overview and Summary of Significant Accounting Policies,” effective as of the beginning of the first quarter of fiscal 2026, the Company realigned its five reportable segments to three reportable segments. These changes had no impact to HPE’s previously reported consolidated GAAP results. A description of the products and services for each segment, along with other pertinent information related to segments can be found in Note 2, “Segment Information” to the Condensed Consolidated Financial Statements in Item 1 of Part I.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Segment Results
The following table and ensuing discussion provide an overview of our key financial metrics by segment for the three months ended July 31, 2026, as compared to the prior-year period:
| HPE Consolidated | Networking | Cloud & AI | Corporate Investments and Other | ||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||
| Net revenue | $ | 12,213 | $ | 2,893 | $ | 9,042 | $ | 278 | |||||||||||||||
| Year-over-year change % | 33.7 | % | 74.9 | % | 25.4 | % | 3.0 | % | |||||||||||||||
| Gross profit as a % of net revenue | 40.1 | % | 59.5 | % | 35.2 | % | 8.6 | % | |||||||||||||||
Earnings (loss) from operations(1) | $ | 1,393 | $ | 637 | $ | 1,539 | $ | (67) | |||||||||||||||
| Earnings (loss) from operations as a % of net revenue | 11.4 | % | 22.0 | % | 17.0 | % | (24.1) | % | |||||||||||||||
| Year-over-year change percentage points | 8.7 | pts | (0.1) | pts | 10.0 | pts | (17.1) | pts | |||||||||||||||
The following table and ensuing discussion provide an overview of our key financial metrics by segment for the nine months ended July 31, 2026, as compared to the prior-year period:
| HPE Consolidated | Networking | Cloud & AI | Corporate Investments and Other | ||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||
| Net revenue | $ | 32,192 | $ | 8,289 | $ | 23,083 | $ | 820 | |||||||||||||||
| Year-over-year change % | 30.8 | % | 117.3 | % | 15.4 | % | 1.4 | % | |||||||||||||||
| Gross profit as a % of net revenue | 37.7 | % | 60.5 | % | 30.8 | % | 17.6 | % | |||||||||||||||
Earnings (loss) from operations(1) | $ | 2,610 | $ | 1,858 | $ | 3,138 | $ | (88) | |||||||||||||||
| Earnings (loss) from operations as a % of net revenue | 8.1 | % | 22.4 | % | 13.6 | % | (10.7) | % | |||||||||||||||
| Year-over-year change percentage points | 9.8 | pts | (2.7) | pts | 6.3 | pts | (6.5) | pts | |||||||||||||||
(1)Segment earnings (loss) from operations exclude certain unallocated corporate costs and eliminations, amortization of intangible assets, stock-based compensation expense, acquisition, disposition, and other charges, and severance costs related to the cost reduction program.
Networking
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||
| Networking net revenue: | |||||||||||||||||||||||||||||||||||
| Campus & Branch | $ | 1,442 | $ | 1,101 | 31.0 | % | $ | 3,991 | $ | 2,845 | 40.3 | % | |||||||||||||||||||||||
| Data Center Networking | 382 | 180 | 112.2 | % | 1,146 | 368 | 211.4 | % | |||||||||||||||||||||||||||
| Security | 281 | 160 | 75.6 | % | 809 | 386 | 109.6 | % | |||||||||||||||||||||||||||
| Routing | 788 | 213 | 270.0 | % | 2,343 | 215 | N/M | ||||||||||||||||||||||||||||
| Total Networking net revenue | 2,893 | 1,654 | 74.9 | % | 8,289 | 3,814 | 117.3 | % | |||||||||||||||||||||||||||
| Cost of sales | 1,172 | 661 | 77.3 | % | 3,277 | 1,478 | 121.7 | % | |||||||||||||||||||||||||||
| Gross profit | 1,721 | 993 | 73.3 | % | 5,012 | 2,336 | 114.6 | % | |||||||||||||||||||||||||||
| Operating expenses | 1,084 | 628 | 72.6 | % | 3,154 | 1,380 | 128.6 | % | |||||||||||||||||||||||||||
| Earnings from operations | $ | 637 | $ | 365 | 74.5 | % | $ | 1,858 | $ | 956 | 94.4 | % | |||||||||||||||||||||||
| Earnings from operations as a % of net revenue | 22.0 | % | 22.1 | % | 22.4 | % | 25.1 | % | |||||||||||||||||||||||||||
N/M - Not meaningful
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Three months ended July 31, 2026 compared with three months ended July 31, 2025
Networking segment net revenue increased by $1,239 million, or 74.9%, primarily due to a $803 million, or 68.4%, increase in product revenue, and $436 million, or 90.8%, increase in service revenue. The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.
Networking segment gross profit increased by $728 million, or 73.3%, primarily driven by increased net revenue as mentioned above. The increase was partially offset by higher cost of sales of $511 million, or 77.3%, which was primarily attributable to Juniper Networks.
Networking segment earnings from operations increased by $272 million, or 74.5%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $456 million, or 72.6%. The increase in operating expenses was primarily attributable to Juniper Networks and higher variable employee costs.
Nine months ended July 31, 2026 compared with nine months ended July 31, 2025
Networking segment net revenue increased by $4,475 million, or 117.3%, primarily due to a $2,832 million, or 102.7%, increase in product revenue, and $1,643 million, or 155.4%, increase in service revenue. The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.
Networking segment gross profit increased by $2,676 million, or 114.6%, primarily driven by increased net revenue as mentioned above. The increase was partially offset by higher cost of sales of $1,799 million, or 121.7%, which was primarily attributable to Juniper Networks.
Networking segment earnings from operations increased by $902 million, or 94.4%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $1,774 million, or 128.6%. The increase in operating expenses was primarily attributable to Juniper Networks and higher variable employee costs.
Cloud & AI
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||
| Cloud & AI net revenue: | |||||||||||||||||||||||||||||||||||
| Server | $ | 6,766 | $ | 5,000 | 35.3 | % | $ | 16,452 | $ | 13,457 | 22.3 | % | |||||||||||||||||||||||
Storage(1) | 1,291 | 1,171 | 10.2 | % | 3,527 | 3,374 | 4.5 | % | |||||||||||||||||||||||||||
| Financial Services | 883 | 886 | (0.3) | % | 2,663 | 2,615 | 1.8 | % | |||||||||||||||||||||||||||
Other(2) | 102 | 155 | (34.2) | % | 441 | 548 | (19.5) | % | |||||||||||||||||||||||||||
| Total Cloud & AI net revenue | 9,042 | 7,212 | 25.4 | % | 23,083 | 19,994 | 15.4 | % | |||||||||||||||||||||||||||
| Cost of sales | 5,859 | 5,535 | 5.9 | % | 15,971 | 15,239 | 4.8 | % | |||||||||||||||||||||||||||
| Gross profit | 3,183 | 1,677 | 89.8 | % | 7,112 | 4,755 | 49.6 | % | |||||||||||||||||||||||||||
| Operating expenses | 1,644 | 1,173 | 40.2 | % | 3,974 | 3,290 | 20.8 | % | |||||||||||||||||||||||||||
| Earnings from operations | $ | 1,539 | $ | 504 | 205.4 | % | $ | 3,138 | $ | 1,465 | 114.2 | % | |||||||||||||||||||||||
| Earnings from operations as a % of net revenue | 17.0 | % | 7.0 | % | 13.6 | % | 7.3 | % | |||||||||||||||||||||||||||
(1) Storage includes revenue from GreenLake Flex and Software.
(2) Other category includes intersegment revenue eliminations and third-party storage solutions.
Three months ended July 31, 2026 compared with three months ended July 31, 2025
Cloud & AI segment net revenue increased by $1.8 billion, or 25.4%, primarily due to an increase in Server net revenue. Server net revenue increased by $1.8 billion, or 35.3%, predominantly due to an increase in the average selling price. The increase in average selling price was primarily driven by commodity price increases, especially memory and SSDs.
Cloud & AI gross profit increased by $1.5 billion, or 89.8%, primarily driven by increased net revenue. This increase was due to favorable mix of higher-margin revenues.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Cloud & AI earnings from operations increased by $1.0 billion, or 205.4%, primarily driven by higher gross profit, partially offset by an increase in operating expenses of $0.5 billion, or 40.2%, primarily due to higher variable employee costs.
Nine months ended July 31, 2026 compared with nine months ended July 31, 2025
Cloud & AI segment net revenue increased by $3.1 billion, or 15.4%, primarily due to an increase in Server net revenue. Server net revenue increased by $3.0 billion, or 22.3%, predominantly due to an increase in the average selling price. The increase in average selling price was primarily driven by commodity price increases, especially memory and SSDs.
Cloud & AI gross profit increased by $2.4 billion, or 49.6%, primarily driven by increased net revenue. This increase was due to favorable mix of higher-margin revenues, partially offset by higher commodity and input costs.
Cloud & AI earnings from operations increased by $1.7 billion, or 114.2%, primarily driven by higher gross profit, partially offset by an increase in operating expenses of $0.7 billion, or 20.8%, primarily due to higher variable employee costs.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP which requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses, and the disclosure of contingent liabilities. An accounting policy is deemed to be critical if the nature of the estimate or assumption it incorporates is subject to a material level of judgment related to matters that are highly uncertain, and changes in those estimates and assumptions are reasonably likely to materially impact our Condensed Consolidated Financial Statements.
Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may vary under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis. Accounting policies that are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, or complex judgments include revenue recognition, taxes on earnings, impairment assessment of goodwill and intangible assets, and contingencies.
As of July 31, 2026, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
LIQUIDITY AND CAPITAL RESOURCES
Current Overview
We use cash generated by operations as our primary source of liquidity. We believe that internally generated cash flows will be generally sufficient to support our operating businesses, capital expenditures, product development initiatives, and disposal activities including legal settlements, restructuring activities, indemnifications, maturing debt, interest payments, and income tax payments, in addition to any future investments, share repurchases, and stockholder dividend payments. We expect to supplement this short-term liquidity, if necessary, by accessing the capital markets, issuing commercial paper, and borrowing under credit facilities made available by various domestic and foreign financial institutions. However, our access to capital markets may be constrained and our cost of borrowing may increase under certain business, market and economic conditions. We anticipate that the funds made available, and cash generated from our operations, along with our access to capital markets, will be sufficient to meet our liquidity requirements for at least the next twelve months and for the foreseeable future thereafter. Our liquidity is subject to various risks including the risks identified in the section entitled “Risk Factors” in Item 1A of Part I of the Annual Report on Form 10-K for the fiscal year ended October 31, 2025, as modified by the risk statements in the section titled “Risk Factors” in Item 1A of Part II subsequent Quarterly Reports, and market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 3 of Part I of this Quarterly Report.
Our cash balances are held in numerous locations throughout the world, with a substantial amount held outside the U.S. as of July 31, 2026. We utilize a variety of planning and financing strategies in an effort to ensure that our worldwide cash is available when and where it is needed.
Amounts held outside of the U.S. are generally utilized to support our non-U.S. liquidity needs. Repatriations of amounts held outside the U.S. generally will not be taxable from a U.S. federal tax perspective, but may be subject to state income or foreign withholding tax. Where local restrictions prevent an efficient intercompany transfer of funds, our intent is to keep cash balances outside of the U.S. and to meet liquidity needs through ongoing cash flows, external borrowings, or both. We do not
51
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
expect restrictions or potential taxes incurred on repatriation of amounts held outside of the U.S. to have a material effect on our overall liquidity, financial condition, or results of operations.
In connection with the share repurchase program previously authorized by our Board of Directors, we repurchased and settled an aggregate amount of $447 million, during the first nine months of fiscal 2026. As of July 31, 2026, we had a remaining authorization of approximately $3.2 billion for future share repurchases. For more information on our share repurchase program, refer to the section entitled “Unregistered Sales of Equity Securities and Use of Proceeds” in Item 2 of Part II.
On August 1, 2026, the Company completed the sale of its Telco Solutions business to HCLTech pursuant to the divestiture agreement announced on December 18, 2025.
In November 2025, we announced plans to divest our remaining investment in H3C’s issued share capital for approximately $1.4 billion. In May 2026, we completed the sale of our equity interest in H3C. For more information, see Note 7, “Acquisitions and Dispositions” to the Condensed Consolidated Financial Statements in Item 1 of Part I.
Liquidity
Our cash, cash equivalents, restricted cash, total debt, and available borrowing resources were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Cash, cash equivalents and restricted cash | $ | 6,278 | $ | 5,859 | |||||||
| Total debt | 20,244 | 22,365 | |||||||||
| Available borrowing resources | 6,531 | 6,122 | |||||||||
Commercial paper programs(1) | 5,128 | 5,069 | |||||||||
Uncommitted lines of credit(2) | $ | 1,403 | $ | 1,053 | |||||||
(1) The maximum borrowing amounts available under the commercial paper programs and revolving credit facility are $5.75 billion and $5.25 billion, respectively, as of both July 31, 2026 and October 31, 2025. The combined borrowings between both sources cannot exceed $5.75 billion.
(2) The maximum aggregate capacity under the uncommitted lines of credit is $1.8 billion, of which $0.4 billion was primarily utilized towards issuances of bank guarantees.
The following tables represent the way in which management reviews cash flows:
| For the nine months ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| In millions | |||||||||||
| Net cash provided by operating activities | $ | 4,229 | $ | 454 | |||||||
| Net cash used in investing activities | (195) | (13,614) | |||||||||
| Net cash (used in) provided by financing activities | (3,576) | 2,743 | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (39) | 9 | |||||||||
| Change in cash, cash equivalents and restricted cash | $ | 419 | $ | (10,408) | |||||||
| Free cash flow | $ | 2,581 | $ | (934) | |||||||
Operating Activities
For the nine months ended July 31, 2026, net cash provided by operating activities increased by $3.8 billion, as compared to the corresponding period in fiscal 2025. The increase was primarily due to the timing of vendor payments and higher net cash generated from operations.
52
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Our working capital metrics and cash conversion impacts were as follows:
| As of | As of | ||||||||||||||||||||||||||||||||||||||||
| July 31, 2026 | October 31, 2025 | Change | July 31, 2025 | October 31, 2024 | Change | Y/Y Change | |||||||||||||||||||||||||||||||||||
| Days of sales outstanding in accounts receivable ("DSO") | 46 | 49 | (3) | 56 | 38 | 18 | (10) | ||||||||||||||||||||||||||||||||||
| Days of supply in inventory ("DOS") | 145 | 89 | 56 | 100 | 120 | (20) | 45 | ||||||||||||||||||||||||||||||||||
| Days of purchases outstanding in accounts payable ("DPO") | (169) | (108) | (61) | (121) | (170) | 49 | (48) | ||||||||||||||||||||||||||||||||||
| Cash conversion cycle | 22 | 30 | (8) | 35 | (12) | 47 | (13) | ||||||||||||||||||||||||||||||||||
The cash conversion cycle is the sum of DSO and DOS less DPO. Items which may cause the cash conversion cycle in a particular period to differ include, but are not limited to, changes in business mix, changes in payment terms (including extended payment terms to customers or from suppliers), early or late invoice payments from customers or to suppliers, the extent of receivables factoring, seasonal trends, the timing of the revenue recognition and inventory purchases within the period, the impact of commodity costs, and acquisition activity.
DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for doubtful accounts, by a 90-day average of net revenue. Compared to the corresponding three-month period in fiscal 2025, the decrease in DSO in the current period was primarily due to stronger collections.
DOS measures the average number of days from procurement to sale of our products. DOS is calculated by dividing ending inventory by a 90-day average of cost of goods sold. Compared to the corresponding three-month period in fiscal 2025, the increase in DOS in the current period was primarily due to higher inventory purchases to fulfill planned future shipments.
DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold. Compared to the corresponding three-month period in fiscal 2025, the increase in DPO in the current period was primarily due to higher purchases to secure strategic component supply and fulfill backlog.
Investing Activities
For the nine months ended July 31, 2026, net cash used in investing activities decreased by $13.4 billion, as compared to the corresponding period in fiscal 2025. The decrease was primarily due to payments made in connection with the Juniper Networks acquisition, net of cash acquired of $12.3 billion in the prior-year period and proceeds from sale of equity interests in H3C of $1.4 billion during the current period.
Financing Activities
For the nine months ended July 31, 2026, net cash used in financing activities increased by $6.3 billion, as compared to the corresponding period in fiscal 2025. This increase was primarily due to higher repayments of debt of $3.0 billion, lower proceeds from debt, net of issuance costs of $2.8 billion and higher cash utilized for stock-based award activities and share repurchases of $0.5 billion, as compared to the prior-year period.
Free Cash Flow
Free cash flow (“FCF”) represents cash flow from operations less net capital expenditures (investments in property, plant and equipment (“PP&E”) and software assets less proceeds from the sale of PP&E), and adjusted for the effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash. For the nine months ended July 31, 2026, FCF increased by $3.5 billion, as compared to the corresponding period in fiscal 2025. This was primarily due to higher cash provided by operating activities, as compared to the prior-year period. For more information on our FCF, refer to the section entitled “GAAP to non-GAAP Reconciliations” included in this MD&A.
For more information on the impact of operating assets and liabilities to our cash flows, see Note 5, “Balance Sheet Details” to the Condensed Consolidated Financial Statements in Item 1 of Part I.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Capital Resources
We maintain debt levels that we establish through consideration of several factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital, and targeted capital structure. We maintain a revolving credit facility and two commercial paper programs, “the Parent Programs,” and a wholly-owned subsidiary maintains a third program. There have been no changes to our revolving credit facility and commercial paper programs since October 31, 2025.
In December 2023, we filed a shelf registration statement with the Securities and Exchange Commission that allows us to sell, at any time and from time to time, in one or more offerings, debt securities, preferred stock, common stock, warrants, depository shares, purchase contracts, guarantees or units consisting of any of these securities.
Significant funding and liquidity activities for the nine months ended July 31, 2026 were as follows:
Debt Issuances:
•In March 2026, we issued multiple debt instruments, including: (i) $300 million of floating rate notes due March 23, 2028; (ii) $500 million of 4.5% Senior Notes due March 23, 2028; (iii) $600 million of 4.6% Senior Notes due March 23, 2029; and (iv) $600 million of 5.25% Senior Notes due April 1, 2033.
Debt Repayments:
•In May 2026, we repaid the remaining $750 million outstanding under the three-year delayed draw-down term loan credit facility.
•In April 2026, we repaid $750 million of 1.75% Senior Notes on their original maturity date.
•In March 2026, we prepaid $1.25 billion of the $2.0 billion outstanding balance under the three-year delayed draw term loan credit facility.
•In December 2025, we repaid $400 million of 1.20% Juniper Global Notes on their original maturity date.
•During the nine months ended July 31, 2026, we repaid $929 million of the outstanding asset-backed debt securities.
Cash Requirements and Commitments
Unconditional purchase obligations
As of July 31, 2026, unconditional purchase obligations totaled $30.4 billion, of which $4.2 billion is due within fiscal 2026. These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction, as well as settlements that the Company has reached with third parties, requiring it to pay determined amounts over a specified period of time. Our unconditional purchase obligations are related principally to inventory purchases, software maintenance and support services and other items. Unconditional purchase obligations exclude agreements that are cancellable without penalty. Amounts payable under certain contracts with variable pricing provisions have been estimated primarily based on prevailing market prices for the underlying products as of the reporting date.
Retirement Benefit Plan Funding
For the remainder of fiscal 2026, we anticipate making contributions of approximately $67 million to our non-U.S. pension plans. Our policy is to fund our pension plans so that we meet at least the minimum contribution requirements, as established by various authorities including local government and tax authorities.
Cost Savings Plans
The Program is expected to be implemented through fiscal year 2026. The estimates of the duration of the Program, the charges and expenditures that we expect to incur in connection therewith, and the timing thereof are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In connection with the integration of Juniper Networks, we expect to incur costs by fiscal year 2028 to achieve synergies, actual costs incurred may differ from estimates. As of July 31, 2026, we expect to make future cash payments of approximately $630 million in connection with the cost savings plans, which includes $30 million expected to be paid through the remainder of fiscal 2026 and $600 million expected to be paid thereafter.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Uncertain Tax Positions
As of July 31, 2026, we had approximately $412 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions. These liabilities and related interest and penalties include $10 million expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters. Payments of these obligations would result from settlements with taxing authorities. For more information on our uncertain tax positions, see Note 4, “Taxes on Earnings” to the Condensed Consolidated Financial Statements in Item 1 of Part I.
For further information see “Cash Requirements and Commitments” in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
Off-Balance Sheet Arrangements
As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
GAAP to non-GAAP Reconciliations
The following tables provide a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure for the periods presented:
Reconciliation of GAAP gross profit and gross profit margin to non-GAAP gross profit and gross profit margin.
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP net revenue | $ | 12,213 | 100 | % | $ | 9,136 | 100 | % | $ | 32,192 | 100 | % | $ | 24,617 | 100 | % | |||||||||||||||||||||||||||||||||||||||||||
| GAAP cost of sales | 7,314 | 59.9 | % | 6,464 | 70.8 | % | 20,053 | 62.3 | % | 17,481 | 71.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| GAAP gross profit | 4,899 | 40.1 | % | 2,672 | 29.2 | % | 12,139 | 37.7 | % | 7,136 | 29.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 18 | 0.1 | % | 10 | 0.1 | % | 65 | 0.2 | % | 40 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition, disposition and other charges | (3) | — | % | 50 | 0.5 | % | 37 | 0.1 | % | 47 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost reduction program | 14 | 0.1 | % | — | — | % | 27 | 0.1 | % | 46 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| H3C divestiture related severance costs | — | — | % | — | — | % | — | — | % | 17 | 0.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP gross profit | $ | 4,928 | 40.4 | % | $ | 2,732 | 29.9 | % | $ | 12,268 | 38.1 | % | $ | 7,286 | 29.6 | % | |||||||||||||||||||||||||||||||||||||||||||
(1)Certain amounts may not add due to use of rounded numbers.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Reconciliation of GAAP earnings (loss) from operations and operating profit margin to non-GAAP earnings from operations and operating profit margin.
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | Dollars | % of Revenue(1) | ||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||||||||||||||
| GAAP earnings (loss) from operations | $ | 1,393 | 11.4 | % | $ | 247 | 2.7 | % | $ | 2,610 | 8.1 | % | $ | (429) | (1.7) | % | |||||||||||||||||||||||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 315 | 2.6 | % | 126 | 1.4 | % | 949 | 2.9 | % | 201 | 0.8 | % | |||||||||||||||||||||||||||||||||||
| Impairment charges | — | — | % | — | — | % | — | — | % | 1,361 | 5.5 | % | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 165 | 1.4 | % | 177 | 1.9 | % | 599 | 1.9 | % | 447 | 1.8 | % | |||||||||||||||||||||||||||||||||||
| H3C divestiture related severance costs | — | — | % | — | — | % | — | — | % | 97 | 0.4 | % | |||||||||||||||||||||||||||||||||||
| Cost reduction program | 31 | 0.3 | % | 2 | — | % | 84 | 0.3 | % | 148 | 0.6 | % | |||||||||||||||||||||||||||||||||||
| Acquisition, disposition and other charges | 75 | 0.6 | % | 225 | 2.5 | % | 342 | 1.1 | % | 345 | 1.4 | % | |||||||||||||||||||||||||||||||||||
| Non-GAAP earnings from operations | $ | 1,979 | 16.2 | % | $ | 777 | 8.5 | % | $ | 4,584 | 14.2 | % | $ | 2,170 | 8.8 | % | |||||||||||||||||||||||||||||||
(1)Certain amounts may not add due to use of rounded numbers.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Reconciliation of GAAP net earnings (loss) and diluted net EPS to non-GAAP net earnings and diluted net EPS.
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars | Diluted Net EPS(1) | Dollars | Diluted Net EPS(1) | Dollars | Diluted Net EPS(1) | Dollars | Diluted Net EPS(1)(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollars in millions except per share amounts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP net earnings (loss) attributable to common stockholders | $ | 1,511 | $ | 276 | $ | 2,529 | $ | (205) | $ | (0.16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 29 | 29 | 87 | 87 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP net earnings (loss) attributable to HPE | 1,540 | $ | 1.06 | 305 | $ | 0.21 | 2,616 | $ | 1.82 | (118) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 315 | 0.22 | 126 | 0.09 | 949 | 0.66 | 201 | 0.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment charges | — | — | — | — | — | — | 1,361 | 1.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 165 | 0.11 | 177 | 0.12 | 599 | 0.42 | 447 | 0.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gain on sale of a business | — | — | (1) | — | — | — | (245) | (0.19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| H3C divestiture related severance costs | — | — | — | — | — | — | 97 | 0.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost reduction program | 31 | 0.02 | 2 | — | 84 | 0.06 | 148 | 0.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition, disposition and other charges | 75 | 0.05 | 225 | 0.17 | 342 | 0.24 | 345 | 0.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gain on sale of equity interest | (444) | (0.31) | — | — | (444) | (0.31) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments for equity interests | — | — | — | — | (42) | (0.03) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Litigation judgment | — | — | (52) | (0.04) | — | — | (52) | (0.04) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on equity investments, net | — | — | 1 | — | (11) | (0.01) | (8) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other adjustments(3) | (32) | (0.02) | (24) | (0.02) | (97) | (0.07) | (82) | (0.06) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments for taxes | (40) | (0.02) | (128) | (0.09) | (320) | (0.23) | (234) | (0.19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net earnings attributable to HPE(4) | 1,610 | $ | 1.11 | 631 | $ | 0.44 | 3,676 | $ | 2.55 | 1,860 | $ | 1.32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | (29) | (29) | (87) | (87) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP net earnings attributable to common stockholders | $ | 1,581 | $ | 602 | $ | 3,589 | $ | 1,773 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) The impact of dilutive effect of employee stock plans is calculated under the treasury stock method, and the impact of dilutive effect of the Preferred Stock is calculated under the if-converted method. See Note 13 “Net Earnings (Loss) Per Share”, to the Condensed Consolidated Financial Statements in Item 1 of Part I for further information.
(2) The diluted net EPS adjustment includes the impact to Non-GAAP net earnings attributable to HPE for the dilutive effect of preferred stock.
(3) Other adjustments includes non-service net periodic benefit credit and tax indemnification and other adjustments.
(4) For purposes of calculating Non-GAAP diluted net EPS, the Preferred Stock dividends are added back to the Non-GAAP net earnings attributable to common stockholders, and the diluted weighted-average share calculation assumes the Preferred Stock was converted at issuance or as of the beginning of the reporting period. See the table below for the shares used to calculate Non-GAAP diluted net EPS.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Shares used to calculate Non-GAAP diluted net EPS.
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Weighted-average shares used to compute basic net EPS | 1,336 | 1,325 | 1,335 | 1,321 | |||||||||||||||||||
Dilutive effect of 7.625% Series C mandatory convertible preferred stock | 76 | 80 | 76 | 78 | |||||||||||||||||||
| Dilutive effect of employee stock plans | 37 | 16 | 30 | 14 | |||||||||||||||||||
| Weighted-average shares used to compute Non-GAAP diluted net EPS | 1,449 | 1,421 | 1,441 | 1,413 | |||||||||||||||||||
Reconciliation of net cash provided by operating activities to free cash flow.
| For the three months ended July 31, | For the nine months ended July 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 1,641 | $ | 1,305 | $ | 4,229 | $ | 454 | |||||||||||||||||||||||||||
| Investment in property, plant and equipment and software assets | (745) | (576) | (1,897) | (1,651) | |||||||||||||||||||||||||||||||
| Proceeds from sale of property, plant and equipment | 92 | 90 | 288 | 254 | |||||||||||||||||||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (30) | (29) | (39) | 9 | |||||||||||||||||||||||||||||||
| Free cash flow | $ | 958 | $ | 790 | $ | 2,581 | $ | (934) | |||||||||||||||||||||||||||
Use of Non-GAAP Financial Measures
The non-GAAP financial measures presented non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP earnings from operations, non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue), non-GAAP tax rate, non-GAAP net earnings attributable to HPE, non-GAAP net earnings attributable to common stockholders, non-GAAP diluted net earnings per share attributable to common stockholders, and FCF. These non-GAAP financial measures are not computed in accordance with, or as an alternative to, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP gross profit is gross profit. The GAAP measure most directly comparable to non-GAAP gross profit margin is gross profit margin. The GAAP measure most directly comparable to non-GAAP earnings from operations is earnings from operations. The GAAP measure most directly comparable to non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue) is operating profit margin (earnings from operations as a percentage of net revenue). The GAAP measure most directly comparable to non-GAAP income tax rate is income tax rate. The GAAP measure most directly comparable to non-GAAP net earnings attributable to HPE and non-GAAP net earnings attributable to common stockholders is net earnings attributable to HPE and net earnings attributable to common stockholders. The GAAP measure most directly comparable to non-GAAP diluted net earnings per share attributable to common stockholders is diluted net earnings per share attributable to common stockholders. The GAAP measure most directly comparable to FCF is cash flow from operations.
We believe that providing the non-GAAP measures stated above, in addition to the related GAAP measures provides greater transparency to the information used in our financial and operational decision making and allows the reader of our Condensed Consolidated Financial Statements to see our financial results “through the eyes” of management. We further believe that providing this information provides investors with a supplemental view to understand our historical and prospective operating performance and to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. Disclosure of these non-GAAP financial measures also facilitates comparisons of our operating performance with the performance of other companies in the same industry that supplement their GAAP results with non-GAAP financial measures that may be calculated in a similar manner.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Economic Substance of non-GAAP Financial Measures
We believe that excluding the items mentioned below from the non-GAAP financial measures provides a supplemental view to management and our investors of our consolidated financial performance and presents the financial results of the business without costs that we do not believe to be reflective of our ongoing operating results. Exclusion of these items can have a material impact on the equivalent GAAP measure and cash flows thus limiting the use of such non-GAAP financial measures as analytic tools. See “Compensation for Limitations With Use of Non-GAAP Financial Measures” section below for further information.
Non-GAAP gross profit and non-GAAP gross profit margin are defined to exclude charges related to stock-based compensation expense, acquisition, disposition and other charges, severance costs associated with the cost reduction program, and H3C divestiture related severance costs. See below for the reasons management excludes each item:
•Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date. Although stock-based compensation is a key incentive offered to our employees, we exclude these charges for the purpose of calculating these non-GAAP measures, primarily because they are non-cash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding stock-based compensation expense.
•We incur costs related to our acquisition, disposition and other charges. Charges include expenses associated with acquisitions, non-cash amortization of fair value adjustment for inventory in connection with the Merger, exit costs associated with disposal activities, transformation costs (credits), and disaster (recovery) charges. We exclude these costs because we consider these charges to be discrete events and do not believe they are reflective of normal continuing business operations. Acquisition charges were driven by costs associated with the Merger and miscellaneous disposition related charges.
•We incurred severance and other charges pursuant to cost management initiatives. We exclude these charges because we do not believe they are reflective of normal continuing business operations. We believe eliminating these adjustments for the purposes of calculating non-GAAP measures facilitates the evaluation of our current operating performance.
•We incurred H3C divestiture related severance costs in connection with the disposition of issued share capital of H3C held by HPE. The divestiture resulted in decreased future investment earnings and cash dividend inflows resulting in a decision to implement offsetting cost savings measures. These measures include severance for certain of the Company’s employees. The non-GAAP adjustment represents our costs to execute these related exit actions to offset the loss in equity earnings and related cash flows.
Non-GAAP earnings from operations and non-GAAP operating profit margin consist of earnings from operations or earnings from operations as a percentage of net revenue excluding the items mentioned above and charges relating to the amortization of intangible assets and impairment charges. In addition to the items previously explained above, management excludes these items for the following reasons:
•We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating these non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating these non-GAAP measures, primarily because they are noncash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure.
•In the second quarter of fiscal 2025, we recorded a non-cash impairment charge for the goodwill associated with our Cloud & AI (excluding Financial Services) reporting unit. HPE believes that this non-cash charge does not reflect the Company’s operating results and is not indicative of the underlying performance of the business. HPE excludes these charges for purposes of calculating these non-GAAP measures to facilitate the evaluation of HPE’s current operating performance and comparisons to HPE’s operating performance in other periods. Although this does not directly affect our cash position, the loss in value of goodwill over time can have a material impact on the equivalent GAAP earnings measure.
Non-GAAP net earnings attributable to HPE, non-GAAP net earnings attributable to common stockholders, and non-GAAP diluted net earnings per share attributable to common stockholders consist of net earnings or diluted net earnings per
59
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
share excluding those same charges mentioned above, as well as other items such as gain on sale of a business, gain on sale of equity interest, adjustments for equity interests, gain or loss on equity investments, litigation judgments, other adjustments, and adjustments for taxes. Non-GAAP net earnings attributable to HPE and non-GAAP diluted net earnings per share attributable to common stockholders includes preferred stock dividends added back to non-GAAP net earnings attributable to HPE. The Adjustments for taxes line item includes the impact of tax law changes, structural rate adjustment, excess tax benefit from stock-based compensation, and adjustments for additional taxes or tax benefits associated with each non-GAAP item. In addition to the items previously explained, management excludes these items for the following reasons:
•Gain on sale of a business represents the gain associated with certain disposal activities. On December 1, 2024, we completed the disposition of CTG. We consider this divestiture to be a discrete event and believe eliminating this adjustment for the purposes of calculating non-GAAP measures facilitates the evaluation of our current operating performance.
•Beginning in fiscal 2026, we excluded reporting H3C earnings in our non-GAAP results due to the divestiture of our H3C investment. In May 2026, the Company sold its remaining equity interest in H3C, which resulted in a gain of $444 million and is included in the fiscal 2026 adjustment Gain on sale of equity interest. We believe that eliminating these amounts for purposes of calculating non-GAAP financial measures facilitates the evaluation of our current operating performance.
•In the third quarter of fiscal 2025, HPE received $52 million from a settlement to resolve claims solely against Sushovan Hussain, in the ongoing Autonomy litigation. We exclude the litigation judgment for purposes of calculating non-GAAP measures to facilitate the evaluation of our current operating performance and comparisons to our operating performance in other periods.
•We exclude gains and losses (including impairments) on our non-marketable equity investments because we do not believe they are reflective of normal continuing business operations. These adjustments are reflected in Interest and other, net in the Condensed Consolidated Statements of Earnings. We believe eliminating these adjustments for the purposes of calculating non-GAAP measures facilitates the evaluation of our current operating performance.
•We utilize a structural long-term projected non-GAAP income tax rate in order to provide consistency across the interim reporting periods and to eliminate the effects of items not directly related to our operating structure that can vary in size, frequency and timing. When projecting this long-term rate, we evaluated a three-year financial projection. The projected rate assumes no incremental acquisitions in the three-year projection period and considers other factors including our expected tax structure, our tax positions in various jurisdictions and current impacts from key legislation implemented in major jurisdictions where we operate. For fiscal 2026, we will use a projected non-GAAP income tax rate of 14%, which reflects currently available information as well as other factors and assumptions. For fiscal 2025, we had a non-GAAP income tax rate of 15%. The non-GAAP income tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix including due to acquisition activity, or other changes to our strategy or business operations. We will re-evaluate its long-term rate as appropriate. We believe that making these adjustments for purposes of calculating non-GAAP measures, facilitates a supplemental evaluation of our current operating performance and comparisons to past operating results.
FCF is defined as cash flow from operations, less net capital expenditures (investments in PP&E and software assets less proceeds from the sale of PP&E), and adjusted for the effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash. FCF does not represent the total increase or decrease in cash for the period. Our management and investors can use FCF for the purpose of determining the amount of cash available for investment in our businesses, repurchasing stock and other purposes as well as evaluating our historical and prospective liquidity.
Compensation for Limitations With Use of Non-GAAP Financial Measures
These non-GAAP financial measures have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations in relying on these non-GAAP financial measures are that they can have a material impact on the equivalent GAAP earnings measures and cash flows, they may be calculated differently by other companies (limiting the usefulness of those measures for comparative purposes) and may not reflect the full economic effect of the loss in value of certain assets.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
We compensate for these limitations on the use of non-GAAP financial measures by relying primarily on our GAAP results and using non-GAAP financial measures only as a supplement. We also provide a reconciliation of each non-GAAP financial measure to its most directly comparable GAAP financial measure for this quarter and prior periods, and we encourage investors to review those reconciliations carefully.
61
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
For quantitative and qualitative disclosures about market risk affecting HPE, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, 2025. There have been no material changes in our market risk exposures since October 31, 2025.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information related to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company's management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting during the quarter ended July 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Information with respect to this item may be found in Note 14, “Litigation, Contingencies, and Commitments”.
Item 1A. Risk Factors.
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal period ended October 31, 2025, and Part II, Item IA, “Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal period ended April 30, 2026, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
On July 2, 2026, we issued a warrant (the "Warrant") to Oracle Corp. ("Holder") to purchase up to an aggregate of 4,156,466 shares of our common stock at an exercise price of $0.01 per share. The Warrant was issued in connection with the Holder entering into a strategic collaboration with us to deploy our networking solutions in the Holder’s AI data centers. The Warrant will vest and become exercisable in tranches, upon the achievement of specific milestones relating to purchases by the Holder and its affiliates of products and support from us. Subject to the terms of the Warrant, the Warrant is exercisable through June 25, 2029.
We believe this issuance was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, as a transaction by an issuer not involving a public offering. Appropriate legends were placed upon the Warrant issued in this transaction.
62
Issuer Purchases of Equity Securities
| Period | Total Number of Shares Purchased and Settled | Average Price Paid per Share | Total Number of Shares Purchased and Settled as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs | |||||||||||||||||||
| In thousands, except per share amounts | |||||||||||||||||||||||
| Month 1 (May 2026) | 283 | $ | 29.20 | 283 | $ | 3,291,804 | |||||||||||||||||
| Month 2 (June 2026) | 1,185 | 48.25 | 1,185 | 3,234,637 | |||||||||||||||||||
| Month 3 (July 2026) | 1,520 | 46.02 | 1,520 | $ | 3,164,671 | ||||||||||||||||||
| Total | 2,988 | $ | 45.31 | 2,988 | |||||||||||||||||||
As of July 31, 2026, the Company had a remaining authorization of approximately $3.2 billion for future share repurchases.
Item 5. Other Information
Trading Plans
During the fiscal quarter ended July 31, 2026, the following trading plans were adopted terminated by our directors or officers, as applicable:
| Name & Title | Date of Adoption / Termination | Character of Trading Arrangement(1) | Aggregate Number of Shares of Common Stock to be Purchased/Sold Pursuant to Trading Arrangement | Duration of Plan(2) | ||||||||||||||||||||||
Adopted | Rule 10b5-1 Trading Arrangement | Up to shares to be sold | December 9, 2026- | |||||||||||||||||||||||
Adopted | Rule 10b5-1 Trading Arrangement | Up to shares to be sold | November 3, 2026- | |||||||||||||||||||||||
Adopted | Rule 10b5-1 Trading Arrangement | Up to shares to be sold | December 8, 2026- | |||||||||||||||||||||||
Adopted | Rule 10b5-1 Trading Arrangement | Up to shares to be sold | September 3, 2026- | |||||||||||||||||||||||
Adopted | Rule 10b5-1 Trading Arrangement | Up to shares to be sold | September 29, 2026- | |||||||||||||||||||||||
(1) Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), as amended (the “Rule”).
(2) Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permits transactions after the indicated duration start date and, in any case, upon expiration of the applicable mandatory cooling-off period under the Rule, and until the earlier of the indicated duration end date or completion of all sales contemplated in the Rule 10b5-1 Trading Arrangement.
(3) The Rule 10b5-1 Trading Arrangement is for the Antonio Neri Revocable Trust.
Item 6. Exhibits.
63
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
| Incorporated by Reference | ||||||||||||||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | File No. | Exhibit(s) | Filing Date | |||||||||||||||||||||||||||
| 2.1 | 8-K | 001-37483 | 2.1 | November 5, 2015 | ||||||||||||||||||||||||||||
| 2.2 | 8-K | 001-37483 | 2.2 | November 5, 2015 | ||||||||||||||||||||||||||||
| 2.3 | 8-K | 001-37483 | 2.4 | November 5, 2015 | ||||||||||||||||||||||||||||
| 2.4 | 8-K | 001-37483 | 2.5 | November 5, 2015 | ||||||||||||||||||||||||||||
| 2.5 | 8-K | 001-37483 | 2.6 | November 5, 2015 | ||||||||||||||||||||||||||||
| 2.6 | 8-K | 001-37483 | 2.7 | November 5, 2015 | ||||||||||||||||||||||||||||
| 2.7 | 8-K | 001-37483 | 2.1 | May 26, 2016 | ||||||||||||||||||||||||||||
| 2.8 | 8-K | 001-37483 | 2.2 | May 26, 2016 | ||||||||||||||||||||||||||||
| 2.9 | 8-K | 001-37483 | 2.1 | September 7, 2016 | ||||||||||||||||||||||||||||
| 2.10 | 8-K | 001-37483 | 2.2 | September 7, 2016 | ||||||||||||||||||||||||||||
| 2.11 | 8-K | 001-37483 | 2.1 | November 2, 2016 | ||||||||||||||||||||||||||||
| 2.12 | 8-K | 001-37483 | 2.2 | November 2, 2016 | ||||||||||||||||||||||||||||
| 2.13 | 8-K | 001-38033 | 2.2 | April 6, 2017 | ||||||||||||||||||||||||||||
| 2.14 | 8-K | 001-38033 | 2.3 | April 6, 2017 | ||||||||||||||||||||||||||||
| 2.15 | 8-K | 001-38033 | 2.4 | April 6, 2017 | ||||||||||||||||||||||||||||
64
| 2.16 | 8-K | 001-38033 | 2.5 | April 6, 2017 | ||||||||||||||||||||||||||||
| 2.17 | 8-K | 001-38033 | 2.6 | April 6, 2017 | ||||||||||||||||||||||||||||
| 2.18 | 8-K | 001-37483 | 2.1 | September 1, 2017 | ||||||||||||||||||||||||||||
| 2.19 | 8-K | 001-37483 | 2.2 | September 1, 2017 | ||||||||||||||||||||||||||||
| 2.20 | 8-K | 001-37483 | 2.3 | September 1, 2017 | ||||||||||||||||||||||||||||
| 2.21 | 8-K | 001-37483 | 2.4 | September 1, 2017 | ||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-37483 | 3.2 | April 12, 2024 | ||||||||||||||||||||||||||||
| 3.2 | 8-K | 001-37483 | 3.1 | September 28, 2023 | ||||||||||||||||||||||||||||
| 3.3 | 8-K | 001-37483 | 3.1 | March 20, 2017 | ||||||||||||||||||||||||||||
| 3.4 | 8-K | 001-37483 | 3.2 | March 20, 2017 | ||||||||||||||||||||||||||||
| 3.5 | 8-K | 001-37483 | 3.8 | December 19, 2024 | ||||||||||||||||||||||||||||
| 4.1 | 8-K | 001-37483 | 4.1 | October 13, 2015 | ||||||||||||||||||||||||||||
| 4.2 | 8-K | 001-37483 | 4.7 | October 13, 2015 | ||||||||||||||||||||||||||||
| 4.3 | 8-K | 001-37483 | 4.8 | October 13, 2015 | ||||||||||||||||||||||||||||
| 4.4 | 8-K | 001-37483 | 4.3 | June 14, 2023 | ||||||||||||||||||||||||||||
| 4.5 | 8-K | 001-37483 | 4.2 | September 26, 2024 | ||||||||||||||||||||||||||||
65
| 4.6 | 8-K | 001-37483 | 4.3 | September 26, 2024 | ||||||||||||||||||||||||||||
| 4.7 | 8-K | 001-37483 | 4.4 | September 26, 2024 | ||||||||||||||||||||||||||||
| 4.8 | 8-K | 001-37483 | 4.5 | September 26, 2024 | ||||||||||||||||||||||||||||
| 4.9 | 8-K | 001-37483 | 4.6 | September 26, 2024 | ||||||||||||||||||||||||||||
| 4.10 | 8-K | 001-37483 | 4.7 | September 26, 2024 | ||||||||||||||||||||||||||||
| 4.11 | 8-K | 001-37483 | 4.2 | September 15, 2025 | ||||||||||||||||||||||||||||
| 4.12 | 8-K | 001-37483 | 4.3 | September 15, 2025 | ||||||||||||||||||||||||||||
| 4.13 | 8-K | 001-37483 | 4.4 | September 15, 2025 | ||||||||||||||||||||||||||||
| 4.14 | 8-K | 001-37483 | 4.5 | September 15, 2025 | ||||||||||||||||||||||||||||
66
| 4.15 | 8-K | 001-37483 | 4.2 | March 23, 2026 | ||||||||||||||||||||||||||||
| 4.16 | 8-K | 001-37483 | 4.3 | March 23, 2026 | ||||||||||||||||||||||||||||
| 4.17 | 8-K | 001-37483 | 4.4 | March 23, 2026 | ||||||||||||||||||||||||||||
| 4.18 | 8-K | 001-37483 | 4.5 | March 23, 2026 | ||||||||||||||||||||||||||||
| 4.19 | S-3ASR | 333-222102 | 4.5 | December 15, 2017 | ||||||||||||||||||||||||||||
| 4.20 | 8-K | 001-37483 | 3.1 | September 13, 2024 | ||||||||||||||||||||||||||||
| 4.21 | 10-K | 001-37483 | 4.18 | December 19, 2024 | ||||||||||||||||||||||||||||
| 4.22 | 10-Q | 333-288473 | 4.16 | September 4, 2025 | ||||||||||||||||||||||||||||
| 4.23 | 10-Q | 333-288473 | 4.17 | September 4, 2025 | ||||||||||||||||||||||||||||
| 4.24 | 10-Q | 333-288473 | 4.18 | September 4, 2025 | ||||||||||||||||||||||||||||
| 4.25 | 10-Q | 333-288473 | 4.19 | September 4, 2025 | ||||||||||||||||||||||||||||
| 10.1 | 8-K | 001-37483 | 10.1 | January 30, 2017 | ||||||||||||||||||||||||||||
| 10.2 | S-8 | 333-255839 | 4.4 | May 6, 2021 | ||||||||||||||||||||||||||||
| 10.3 | S-8 | 333-265378 | 4.7 | June 2, 2022 | ||||||||||||||||||||||||||||
67
| 10.4 | 8-K | 001-37483 | 10.1 | April 6, 2023 | ||||||||||||||||||||||||||||
| 10.5 | 8-K | 001-37483 | 10.1 | April 12, 2024 | ||||||||||||||||||||||||||||
| 10.6 | 8-K | 001-37483 | 10.1 | April 4, 2025 | ||||||||||||||||||||||||||||
| 10.7 | 8-K | 001-37483 | 10.1 | April 3, 2026 | ||||||||||||||||||||||||||||
| 10.8 | 10-12B/A | 001-37483 | 10.4 | September 28, 2015 | ||||||||||||||||||||||||||||
| 10.9 | S-8 | 333-207679 | 4.4 | October 30, 2015 | ||||||||||||||||||||||||||||
| 10.10 | S-8 | 333-221254 | 4.3 | November 1, 2017 | ||||||||||||||||||||||||||||
| 10.11 | S-8 | 333-221254 | 4.4 | November 1, 2017 | ||||||||||||||||||||||||||||
| 10.12 | S-8 | 333-226181 | 4.3 | July 16, 2018 | ||||||||||||||||||||||||||||
| 10.13 | 10-Q | 001-37483 | 10.29 | September 4, 2018 | ||||||||||||||||||||||||||||
| 10.14 | 8-K | 001-37483 | 10.2 | April 4, 2025 | ||||||||||||||||||||||||||||
| 10.15 | 10-K | 001-37483 | 10.27 | December 12, 2018 | ||||||||||||||||||||||||||||
| 10.16 | 10-K | 001-37483 | 10.29 | December 12, 2018 | ||||||||||||||||||||||||||||
| 10.17 | S-8 | 333-229449 | 4.3 | January 31, 2019 | ||||||||||||||||||||||||||||
| 10.18 | 10-K | 001-37483 | 10.31 | December 13, 2019 | ||||||||||||||||||||||||||||
| 10.19 | 10-Q | 001-37483 | 10.32 | March 9, 2020 | ||||||||||||||||||||||||||||
| 10.20 | S-8 | 333-249731 | 4.4 | October 29, 2020 | ||||||||||||||||||||||||||||
| 10.21 | 10-K | 001-37483 | 10.30 | December 10, 2021 | ||||||||||||||||||||||||||||
| 10.22 | 10-K | 001-37483 | 10.31 | December 8, 2022 | ||||||||||||||||||||||||||||
| 10.23 | 10-Q | 001-37483 | 10.32 | June 2, 2023 | ||||||||||||||||||||||||||||
| 10.24 | 10-Q | 001-37483 | 10.33 | June 2, 2023 | ||||||||||||||||||||||||||||
| 10.25 | 10-Q | 001-37483 | 10.34 | June 2, 2023 | ||||||||||||||||||||||||||||
| 10.26 | 10-K | 001-37483 | 10.34 | December 22, 2023 | ||||||||||||||||||||||||||||
68
| 10.27 | 10-K | 001-37483 | 10.35 | December 22, 2023 | ||||||||||||||||||||||||||||
| 10.28 | 10-Q | 001-37483 | 10.37 | September 5, 2024 | ||||||||||||||||||||||||||||
| 10.29 | 10-Q | 001-37483 | 10.38 | September 5, 2024 | ||||||||||||||||||||||||||||
| 10.30 | 8-K | 001-37483 | 10.1 | September 12, 2024 | ||||||||||||||||||||||||||||
| 10.31 | 10-Q | 333-288473 | 10.35 | September 4, 2025 | ||||||||||||||||||||||||||||
| 10.32 | S-8 | 333-288473 | 4.3 | July 2, 2025 | ||||||||||||||||||||||||||||
| 10.33 | S-8 | 333-288473 | 4.4 | July 2, 2025 | ||||||||||||||||||||||||||||
| 10.34 | S-8 | 333-288473 | 4.5 | July 2, 2025 | ||||||||||||||||||||||||||||
| 10.35 | S-8 | 333-288473 | 4.6 | July 2, 2025 | ||||||||||||||||||||||||||||
| 10.36 | S-8 | 333-288473 | 4.7 | July 2, 2025 | ||||||||||||||||||||||||||||
| 10.37 | 10-Q | 333-288473 | 10.35 | September 4, 2025 | ||||||||||||||||||||||||||||
| 10.38 | 10-Q | 333-288473 | 10.42 | September 4, 2025 | ||||||||||||||||||||||||||||
| 10.39 | 8-K | 001-37483 | 10.1 | July 16, 2025 | ||||||||||||||||||||||||||||
| 10.40 | ||||||||||||||||||||||||||||||||
| 10.41 | 10-K | 001-37483 | 10.44 | December 12, 2025 | ||||||||||||||||||||||||||||
| 10.42 | 10-K | 001-37483 | 10.45 | December 12, 2025 | ||||||||||||||||||||||||||||
69
| 10.43 | 10-K | 001-37483 | 10.46 | December 12, 2025 | ||||||||||||||||||||||||||||
| 10.44 | 10-K | 001-37483 | 10.47 | December 12, 2025 | ||||||||||||||||||||||||||||
| 10.45 | 10-K | 001-37483 | 10.48 | December 12, 2025 | ||||||||||||||||||||||||||||
| 10.46 | 10-K | 001-37483 | 10.49 | December 12, 2025 | ||||||||||||||||||||||||||||
| 10.47 | 10-K | 001-37483 | 10.50 | December 12, 2025 | ||||||||||||||||||||||||||||
| 10.48 | 10-K | 001-37483 | 10.51 | December 12, 2025 | ||||||||||||||||||||||||||||
| 10.49 | 10-K | 001-37483 | 10.52 | December 12, 2025 | ||||||||||||||||||||||||||||
| 19 | 10-K | 001-37483 | 19 | December 19, 2024 | ||||||||||||||||||||||||||||
| 31.1 | ||||||||||||||||||||||||||||||||
| 31.2 | ||||||||||||||||||||||||||||||||
| 32 | ||||||||||||||||||||||||||||||||
| 97 | 10-K | 001-37483 | 97 | December 22, 2023 | ||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document‡ | |||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document‡ | |||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document‡ | |||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document‡ | |||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document‡ | |||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document‡ | |||||||||||||||||||||||||||||||
70
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
* Indicates management contract or compensation plan, contract or arrangement
‡ Filed herewith
† Furnished herewith
The registrant agrees to furnish to the Commission supplementally upon request a copy of any instrument with respect to long-term debt not filed herewith as to which the total amount of securities authorized thereunder does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis.
71
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HEWLETT PACKARD ENTERPRISE COMPANY | ||||||||
| /s/ Marie Myers | ||||||||
Marie Myers Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||||
Date: September 3, 2026
72
Exhibit 10.40
AMENDMENT TO COOPERATION AGREEMENT
This Amendment to the Cooperation Agreement, effective as of May 29, 2026, between Hewlett Packard Enterprise Company, a Delaware corporation (together with its subsidiaries, “HPE”), Elliott Investment Management L.P., a Delaware limited partnership (“Elliott Investment”), Elliott Associates, L.P., a Delaware limited partnership (“Elliott Associates”), and Elliott International, L.P., a Cayman Islands limited partnership (“Elliott International”) (Elliott Investment, Elliott Associates, and Elliott International each being an “Investor” and collectively the “Investors” herein) is entered into between HPE and each Investor (together, the “Parties,” and each, a “Party”) (the “Amendment”).
WHEREAS, the Parties have entered into the Cooperation Agreement, dated as of July 16, 2025 (the “Cooperation Agreement”); and
WHEREAS, the Parties desire to amend the Cooperation Agreement to effect certain modifications on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1.Definitions. Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Cooperation Agreement.
2.Amendments to the Cooperation Agreement. Effective as of the Amendment Effective Date (as defined below), the Cooperation Agreement is hereby amended or modified as follows:
(a)Section “1. Board Composition.”, paragraph (c) of the Cooperation Agreement is hereby deleted in its entirety and replaced with the following:
“(c) The Company agrees that (i) from the appointment of Mr. Calderoni to the Board to the closing of the 2026 Annual Meeting, the size of the Board will not exceed 13 directors (or 14 directors if the Investor Director is appointed to the Board prior to the closing of the 2026 Annual Meeting) and (ii) from the closing of the 2026 Annual Meeting until the Expiration Date, the size of the Board will not exceed 13 directors (or 14 directors if the Investor Director is appointed to the Board); provided, however, if the Expiration Date has not occurred prior to the closing of the Company’s 2027 Annual Meeting of Stockholders (the “2027 Annual Meeting”), from and after the closing of the 2027 Annual Meeting until the Expiration Date, the size of the Board will not exceed 13 directors.”
3.Date of Effectiveness. This Amendment will become effective on the date first written above (the “Amendment Effective Date”). Except as expressly provided in this Amendment, all of the terms and provisions of the Cooperation Agreement are and will remain in full force and effect and are hereby ratified and confirmed by the Parties. Without limiting the generality of the foregoing, the amendments contained herein shall not by implication or otherwise limit, impair, or affect the rights and remedies of either Party, be construed as an amendment to or waiver of any other provision of the Cooperation Agreement, or as a waiver of or consent to any further or future action on the part of either Party that would require the waiver or consent of the other Party. On and after the Amendment Effective Date, each reference in the
Cooperation Agreement to “this Agreement”, “the Agreement”, “hereunder”, “hereof”, “herein,” or words of similar import, and each reference to the Cooperation Agreement in any other agreements, documents, or instruments executed and delivered pursuant to, or in connection with, the Cooperation Agreement will mean and be a reference to the Cooperation Agreement as amended by this Amendment.
4.Miscellaneous.
(a)The provisions set forth in Section 18. Entire Agreement; Successors and Assigns; Amendment and Waiver, Section 20. Governing Law, Section 22. Notices, and Section 24. Interpretation are hereby incorporated mutatis mutandis with all references to the “Agreement” therein being deemed references to this Amendment.
(b)The headings in this Amendment are for reference only and do not affect the interpretation of this Amendment.
(c)This Amendment may be executed in counterparts, each of which is deemed an original, but all of which constitute one and the same agreement. Delivery of an executed counterpart of this Amendment electronically shall be effective as delivery of an original executed counterpart of this Amendment.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the Parties have executed this Amendment to be effective as of the Amendment Effective Date set forth above.
HEWLETT PACKARD ENTERPRISE COMPANY | |||||
By: /s/ David Antczak Name: Dave Antczak Title: Senior Vice President, General Counsel, and Corporate Secretary | |||||
ELLIOTT INVESTMENT MANAGEMENT L.P. By: /s/ Elliot Greenberg Name: Elliot Greenberg Title: Vice President | |||||
ELLIOTT ASSOCIATES, L.P. By: Elliott Investment Management L.P., as Attorney-in-Fact By: /s/ Elliot Greenberg Name: Elliot Greenberg Title: Vice President | |||||
ELLIOTT INTERNATIONAL, L.P. By: Hambledon, Inc., its General Partner By: Elliott Investment Management L.P., as Attorney-in-Fact By: /s/ Elliot Greenberg Name: Elliot Greenberg Title: Vice President | |||||
3
Exhibit 31.1
CERTIFICATION
I, Antonio F. Neri, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Hewlett Packard Enterprise Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: September 3, 2026
| /s/ Antonio F. Neri | |||||
Antonio F. Neri President and Chief Executive Officer (Principal Executive Officer) | |||||
Exhibit 31.2
CERTIFICATION
I, Marie Myers, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Hewlett Packard Enterprise Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: September 3, 2026
| /s/ Marie Myers | |||||
Marie Myers Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||
Exhibit 32
CERTIFICATION
PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Antonio F. Neri, the Chief Executive Officer, and Marie Myers, the Chief Financial Officer, of Hewlett Packard Enterprise Company hereby certify that, to their knowledge:
1. The Quarterly Report on Form 10-Q of Hewlett Packard Enterprise Company for the fiscal quarter ended July 31, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Hewlett Packard Enterprise Company.
September 3, 2026
| By: | /s/ Antonio F. Neri | |||||||
Antonio F. Neri President and Chief Executive Officer (Principal Executive Officer) | ||||||||
| By: | /s/ Marie Myers | |||||||
Marie Myers Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||||
A signed original of this written statement required by Section 906 has been provided to Hewlett Packard Enterprise Company and will be retained by Hewlett Packard Enterprise Company and furnished to the Securities and Exchange Commission or its staff upon request.