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Item 1. Financial Statements

2025-06-04 compared with 2025-03-07 · 352 added, 210 removed, 815 unchanged (41% of the section changed)

Financial Statements.

Condensed Consolidated Statements of Earnings for the three months ended J anuary 31, 202 5 and 202 4 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three months ended J anuary 31, 202 5 and 202 4 (Unaudited)

Condensed Consolidated Balance Sheets as of J anuary 31, 202 5 (Unaudited) and October 31, 202 4 (Audited)

Condensed Consolidated Statements of Cash Flows for the three months ended J anuary 31, 202 5 and 202 4 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three months ended J anuary 31, 202 5 and 202 4 (Unaudited)

Condensed Consolidated Statements of Earnings for the three and six months ended April 30 , 2025 and 2024 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended April 30 , 2025 and 2024 (Unaudited)

Condensed Consolidated Balance Sheets as of April 30 , 2025 (Unaudited) and October 31, 2024 (Audited)

Condensed Consolidated Statements of Cash Flows for the six months ended April 30 , 2025 and 2024 (Unaudited)

Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended April 30 , 2025 and 2024 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

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Stockholders' Equity

Net Earnings Per Share

Net (Loss) Earnings Per Share

Litigation, Contingencies, and Commitments

Subsequent Events

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1 unchanged sentence

Condensed Consolidated Statements of Earnings

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

In millions, except per share amounts

10 unchanged sentences

Amortization of intangible assets 37 67 75 138

Transformation costs 15 20

Impairment of goodwill 1,361 — 1,361 —

Transformation (credit) costs ( 13 ) 33 2 53

Acquisition, disposition and other charges 55 46 121 89

Total costs and expenses 8,736 6,779 16,157 13,009

Earnings from operations 433 525

(Loss) earnings from operations ( 1,109 ) 425 ( 676 ) 950

Interest and other, net 39 ( 22 ) 78 ( 110 )

1 unchanged sentence

Earnings from equity interests 25 42 42 88

Earnings before provision for taxes 733 483

(Loss) earnings before provision for taxes ( 1,045 ) 445 ( 312 ) 928

Provision for taxes ( 5 ) ( 131 ) ( 111 ) ( 227 )

Net earnings attributable to HPE 627 387

Net (loss) earnings attributable to HPE $ ( 1,050 ) $ 314 ( 423 ) 701

Preferred stock dividends ( 29 ) — ( 58 ) —

Net earnings attributable to common stockholders $ 598 $ 387

Net Earnings Per Share Attributable to Common Stockholders:

Net (loss) earnings attributable to common stockholders $ ( 1,079 ) $ 314 $ ( 481 ) $ 701

Net (Loss) Earnings Per Share Attributable to Common Stockholders:

Basic $ ( 0.82 ) $ 0.24 $ ( 0.36 ) $ 0.54

Diluted $ ( 0.82 ) $ 0.24 $ ( 0.36 ) $ 0.53

Weighted-average Shares Used to Compute Net Earnings Per Share:

Weighted-average Shares Used to Compute Net (Loss) Earnings Per Share:

Basic 1,322 1,311 1,319 1,306

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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended January 31,

Net earnings attributable to HPE $ 627 $ 387

Other Comprehensive Income (Loss) Before Taxes

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

Net (loss) earnings attributable to HPE $ ( 1,050 ) $ 314 $ ( 423 ) $ 701

Other Comprehensive (Loss) Income Before Taxes

Change in Net Unrealized (Losses) Gains on Available-for-sale Securities:

Net unrealized (losses) gains arising during the period ( 5 ) ( 3 ) ( 6 ) 3

Change in Net Unrealized Gains (Losses) on Cash Flow Hedges:

Net unrealized gains (losses) arising during the period 270 ( 204 )

Net (gains) losses reclassified into earnings ( 213 ) 114

( 5 ) ( 3 ) ( 6 ) 3

Change in Net Unrealized (Losses) Gains on Cash Flow Hedges:

Net unrealized (losses) gains arising during the period ( 465 ) 169 ( 195 ) ( 35 )

Net losses (gains) reclassified into earnings 244 ( 115 ) 31 ( 1 )

( 221 ) 54 ( 164 ) ( 36 )

Change in Unrealized Components of Defined Benefit Plans:

Net unrealized losses arising during the period ( 20 ) ( 1 ) ( 20 ) ( 1 )

Amortization of net actuarial loss and prior service benefit 29 34 59 68

Curtailments, settlements and other 3 1 3 1

Change in Cumulative Translation Adjustment:

Other Comprehensive Income (Loss) Before Taxes 64 ( 37 )

(Provision) Benefit for Taxes ( 14 ) 13

Other Comprehensive Income (Loss), Net of Taxes 50 ( 24 )

Comprehensive Income $ 677 $ 363

10 ( 21 ) ( 12 ) ( 8 )

Other Comprehensive (Loss) Income Before Taxes ( 204 ) 64 ( 140 ) 27

Benefit (Provision) for Taxes 37 ( 14 ) 23 ( 1 )

Other Comprehensive (Loss) Income, Net of Taxes ( 167 ) 50 ( 117 ) 26

Comprehensive (Loss) Income $ ( 1,217 ) $ 364 $ ( 540 ) $ 727

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Condensed Consolidated Balance Sheets

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

(Unaudited) (Audited)

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HPE Stockholders' Equity:

7.625 % Series C mandatory convertible preferred stock, $ 0.01 par value ( 30,000,000 shares issued and outstanding as of January 31, 2025 and October 31, 2024, respectively)

7.625 % Series C mandatory convertible preferred stock, $ 0.01 par value ( 30,000,000 shares issued and outstanding as of April 30, 2025 and October 31, 2024, respectively)

Common stock, $ 0.01 par value ( 9,600,000,000 shares authorized;

1,313,391,109 and 1,297,258,235 shares issued and outstanding as of January 31, 2025 and October 31, 2024, respectively)

1,310,531,962 and 1,297,258,235 shares issued and outstanding as of April 30, 2025 and October 31, 2024, respectively)

Additional paid-in capital 29,840 29,848

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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the three months ended January 31,

For the six months ended April 30,

Cash Flows from Operating Activities:

Net earnings attributable to HPE $ 627 $ 387

Adjustments to Reconcile Net Earnings Attributable to HPE to Net Cash (Used in) Provided by Operating Activities:

Net (loss) earnings attributable to HPE $ ( 423 ) $ 701

Adjustments to Reconcile Net (Loss) Earnings Attributable to HPE to Net Cash (Used in) Provided by Operating Activities:

Depreciation and amortization 1,173 1,299

Impairment of goodwill 1,361 —

Stock-based compensation expense 270 261

Provision for inventory and credit losses 190 113

Restructuring charges — 7

Restructuring (credit) charges ( 13 ) 18

Cost reduction program 146 —

Deferred taxes on earnings ( 43 ) —

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Cash dividends paid to common stockholders ( 342 ) ( 338 )

Net cash (used in) provided by financing activities ( 797 ) 53

Net cash used in financing activities ( 1,492 ) ( 1,676 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 38 ( 31 )

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Common Stock Preferred Stock

For the three months ended January 31, 2025 Number of Shares Par Value Number of 7.625 %

For the three months ended April 30, 2025 Number of Shares Par Value Number of 7.625 %

Series C Mandatory

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In millions, except number of shares in thousands

Balance as of January 31, 2025 1,313,391 $ 13 30,000 $ 29,780 $ ( 1,642 ) $ ( 2,927 ) $ 25,224 $ 58 $ 25,282

Net (loss) earnings attributable to HPE ( 1,050 ) ( 1,050 ) 2 ( 1,048 )

Other comprehensive loss ( 167 ) ( 167 ) ( 167 )

Comprehensive (loss) income ( 1,217 ) 2 ( 1,215 )

Stock-based compensation expense 116 116 116

Tax withholding related to vesting of employee stock plans ( 5 ) ( 5 ) ( 5 )

Issuance of common stock in connection with employee stock plans and other 473 ( 1 ) ( 1 ) ( 1 )

Repurchases of common stock ( 3,332 ) ( 50 ) ( 50 ) ( 50 )

Dividends on preferred stock accrued/declared

($ 0.95 per preferred share)

( 29 ) ( 29 ) ( 29 )

Cash dividends declared ($ 0.13 per share)

( 171 ) ( 171 ) ( 171 )

Balance as of April 30, 2025 1,310,532 $ 13 30,000 $ 29,840 $ ( 2,892 ) $ ( 3,094 ) $ 23,867 $ 60 $ 23,927

Common Stock Preferred Stock

For the six months ended April 30, 2025 Number of Shares Par Value Number of 7.625 %

Series C Mandatory

Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

Interests Total

In millions, except number of shares in thousands

Balance as of October 31, 2024 1,297,258 $ 13 30,000 $ 29,848 $ ( 2,068 ) $ ( 2,977 ) $ 24,816 $ 64 $ 24,880

Net earnings attributable to HPE 627 627 2 629

Other comprehensive income 50 50 50

Comprehensive income 677 2 679

Net (loss) earnings attributable to HPE ( 423 ) ( 423 ) 4 ( 419 )

Other comprehensive loss ( 117 ) ( 117 ) ( 117 )

Comprehensive (loss) income ( 540 ) 4 ( 536 )

Stock-based compensation expense 270 270 270

2 unchanged sentences

Repurchases of common stock ( 5,627 ) ( 98 ) ( 2 ) ( 100 ) ( 100 )

Dividend on preferred stock accrued / declared

Dividends on preferred stock accrued/declared

$ 1.91 per preferred share)

2 unchanged sentences

( 342 ) ( 342 ) ( 8 ) ( 350 )

Balance as of April 30, 2025 1,310,532 $ 13 30,000 $ 29,840 $ ( 2,892 ) $ ( 3,094 ) $ 23,867 $ 60 $ 23,927

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For the three months ended April 30, 2024 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

Interests Total

In millions, except number of shares in thousands

Balance as of January 31, 2024 1,299,768 $ 13 $ 28,239 $ ( 3,728 ) $ ( 3,108 ) $ 21,416 $ 52 $ 21,468

For the three months ended January 31, 2024 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Net earnings attributable to HPE 314 314 2 316

Other comprehensive income 50 50 50

Comprehensive income 364 2 366

Stock-based compensation expense 120 120 120

Tax withholding related to vesting of employee stock plans ( 4 ) ( 4 ) ( 4 )

Issuance of common stock in connection with employee stock plans and other 1,024 3 — 3 3

Repurchases of common stock ( 2,861 ) ( 50 ) ( 50 ) ( 50 )

Cash dividends declared ($ 0.13 per share)

( 169 ) ( 169 ) ( 169 )

Balance as of April 30, 2024 1,297,931 $ 13 $ 28,308 $ ( 3,583 ) $ ( 3,058 ) $ 21,680 $ 54 $ 21,734

For the six months ended April 30, 2024 Number of Shares Par Value Additional Paid-in Capital Accumulated Deficit Accumulated

Comprehensive

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Net earnings attributable to HPE 701 701 6 707

Other comprehensive loss ( 24 ) ( 24 ) ( 24 )

Other comprehensive income 26 26 26

Comprehensive income 727 6 733

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( 338 ) ( 338 ) ( 8 ) ( 346 )

Balance as of January 31, 2024 1,299,768 $ 13 $ 28,239 $ ( 3,728 ) $ ( 3,108 ) $ 21,416 $ 52 $ 21,468

Balance as of April 30, 2024 1,297,931 $ 13 $ 28,308 $ ( 3,583 ) $ ( 3,058 ) $ 21,680 $ 54 $ 21,734

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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All intercompany transactions and accounts within the consolidated businesses of the Company have been eliminated.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of January 31, 2025 and October 31, 2024, its results of operations, cash flows, and statements of stockholders' equity for the three months ended January 31, 2025 and 2024.

The results of operations and the cash flows for the three months ended January 31, 2025 are not necessarily indicative of the results to be expected for the full year.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2024, as filed with the U.S.

This interim information should be read in conjunction with the Consolidated Financial Statements for the fiscal year ended October 31, 2024 in HPE’s Annual Report on Form 10-K, filed with the U.S.

Securities and Exchange Commission (“SEC”) on December 19, 2024.

The Condensed Consolidated Balance Sheet for October 31, 2024 was derived from audited financial statements.

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

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The five segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.

A summary of the types of products and services within each segment is as follows:

A summary of the types of

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Notes to Condensed Consolidated Financial Statements (Continued)

products and services within each segment is as follows:

Server consists of 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), Artificial Intelligence (“AI”), Data Analytics, and Transaction Processing workloads for government and commercial customers globally.

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a full suite of private cloud offerings that enable customers to self-manage or choose a fully managed experience;

and a portfolio of world-class AI infrastructure delivered as-a-service (“aaS”).

This segment also provides self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition.

and a portfolio of world-class Private Cloud AI infrastructure delivered as-a-service (“aaS”).

This segment also provides self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition, which includes an integrated VM Essentials virtualization software.

Infrastructure software includes monitoring and observability for day two operations and beyond through the Company’s acquisition of OpsRamp and unified data access through HPE Ezmeral Data Fabric and analytics suite, which helps move and transform data for use in AI and other applications.

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Intelligent Edge offers wired and wireless local area networks, campus, branch, and data center switching, software-defined wide-area-networks, private and public cellular network software, network security, and associated services that enable secure connectivity for businesses of any size.

The HPE Aruba Networking product portfolio includes hardware products such as Wi-Fi access points, switches, and gateways.

The HPE Aruba Networking software and services portfolio includes cloud-based management, network management, network access control, software-defined wide-area networking, network security, analytics and assurance, location services software, private and public cellular core software, and professional and support services, as well as aaS and consumption models through the HPE GreenLake cloud for the Intelligent Edge portfolio of products.

The HPE Networking product portfolio includes hardware products such as Wi-Fi access points, switches, and gateways.

The HPE Networking software and services portfolio includes cloud-based management, network management, network access control, software-defined wide-area networking, network security, analytics and assurance, location services software, private and public cellular core software, and professional and support services, as well as aaS and consumption models through the HPE GreenLake cloud for the Intelligent Edge portfolio of products.

Intelligent Edge offerings are consolidated in the edge service platform, which takes a cloud-native approach that provides customers with a unified framework to meet their connectivity, security, and financial needs across campus, branch, data center, and remote worker environments.

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Hewlett Packard Enterprise 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, transformation (credit) costs, H3C divestiture related severance costs, severance costs associated with the cost reduction program, acquisition, disposition and other charges and impairment of goodwill.

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.

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Investments and Other Total

Three months ended January 31, 2025:

Three months ended April 30, 2025:

Net revenue $ 4,028 $ 1,393 $ 1,156 $ 857 $ 193 $ 7,627

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Segment earnings (loss) from operations $ 241 $ 78 $ 274 $ 89 $ ( 10 ) $ 672

Three months ended January 31, 2024:

Three months ended April 30, 2024:

Net revenue (1)

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$ 423 $ 13 $ 237 $ 81 $ ( 9 ) $ 745

Six months ended April 30, 2025:

Net revenue $ 8,299 $ 2,760 $ 2,303 $ 1,729 $ 390 $ 15,481

Intersegment net revenue 49 98 5 — 1 153

Total segment net revenue $ 8,348 $ 2,858 $ 2,308 $ 1,729 $ 391 $ 15,634

Segment earnings (loss) from operations $ 589 $ 177 $ 588 $ 171 $ ( 12 ) $ 1,513

Six months ended April 30, 2024:

Net revenue (1)

$ 7,007 $ 2,449 $ 2,274 $ 1,739 $ 490 $ 13,959

Intersegment net revenue 161 106 13 1 — 281

Total segment net revenue (1)

$ 7,168 $ 2,555 $ 2,287 $ 1,740 $ 490 $ 14,240

Segment earnings (loss) from operations (1)

$ 802 $ 64 $ 590 $ 155 $ ( 19 ) $ 1,592

(1) Effective at the beginning of the first quarter of fiscal 2025, in order to align its segment financial reporting more closely with its current business structure, HPE implemented an organizational change with the transfer of certain managed services, previously reported within the Server reportable segment, to the Hybrid Cloud reportable segment.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The reconciliation of segment operating results to Condensed Consolidated Statements of Earnings was as follows:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

Total segments $ 7,723 $ 7,328 $ 15,634 $ 14,240

1 unchanged sentence

Total consolidated net revenue $ 7,627 $ 7,204 $ 15,481 $ 13,959

Earnings Before Taxes:

(Loss) Earnings Before Taxes:

Total segment earnings from operations $ 672 $ 745 $ 1,513 $ 1,592

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Amortization of intangible assets ( 37 ) ( 67 ) ( 75 ) ( 138 )

Transformation costs ( 15 ) ( 20 )

Transformation credit (costs) 13 ( 33 ) ( 2 ) ( 53 )

Gain on sale of a business — — 244 —

H3C divestiture related severance costs ( 20 ) — ( 97 ) —

Cost reduction program ( 146 ) — ( 146 ) —

Acquisition, disposition and other charges ( 55 ) ( 39 ) ( 118 ) ( 57 )

Impairment of goodwill ( 1,361 ) — ( 1,361 ) —

Interest and other, net 39 ( 22 ) 78 ( 110 )

Earnings from equity interests 25 42 42 88

Total earnings before provision for taxes $ 733 $ 483

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Total (loss) earnings before provision for taxes $ ( 1,045 ) $ 445 $ ( 312 ) $ 928

Geographic Information

Net revenue by geographic region was as follows:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

United States $ 2,739 $ 2,584 $ 5,257 $ 4,878

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Total consolidated net revenue $ 7,627 $ 7,204 $ 15,481 $ 13,959

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Transformation Programs

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During the third quarter of fiscal 2020, the Company launched the Cost Optimization and Prioritization Plan, which focused on realigning the workforce to areas of growth, a new hybrid workforce model called Edge-to-Office, real estate strategies, and simplifying and evolving the Company’s product portfolio strategy.

The transformation costs predominantly related to labor restructuring, non-labor restructuring, IT investments, design and execution charges and real estate initiatives.

The transformation (credit) costs predominantly related to labor restructuring, non-labor restructuring, IT investments, design and execution charges and real estate initiatives.

During the third quarter of fiscal 2017, the Company launched the HPE Next Plan to put in place a purpose-built company designed to compete and win in the markets where it participates.

Through this program, the Company simplified the operating model, and streamlined its offerings, business processes and business systems to improve its strategy execution.

The transformation charges relating to both plans were $ 15 million and $ 21 million for the three months ended January 31, 2025 and 2024, respectively.

For the three months ended April 30, 2025, the transformation credit relating to both plans was $ 13 million.

For the six months ended April 30, 2025, the transformation charges relating to both plans was $ 2 million.

For the three and six months ended April 30, 2024, the transformation charges relating to both plans were $ 34 million and $ 55 million, respectively.

Restructuring activities related to the Company's employees and infrastructure under the Cost Optimization and Prioritization Plan and HPE Next Plan are presented in the table below:

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$ 67 $ 94 $ 23

Charges (credits) — ( 10 ) ( 3 )

Cash payments ( 18 ) ( 10 ) ( 4 )

Non-cash items 1 — —

Liability as of January 31, 2025

Liability as of April 30, 2025

$ 50 $ 74 $ 16

Total costs incurred to date, as of January 31, 2025

Total costs incurred to date, as of April 30, 2025

$ 823 $ 553 $ 268

Total expected costs to be incurred as of January 31, 2025

Total expected costs to be incurred as of April 30, 2025

$ 823 $ 553 $ 268

The current restructuring liability related to the transformation programs, reported in the Condensed Consolidated Balance Sheets as of January 31, 2025 and October 31, 2024, was $ 46 million and $ 61 million, respectively, in Accrued restructuring, and $ 15 million and $ 17 million, respectively, in Other accrued liabilities.

The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of January 31, 2025 and October 31, 2024, was $ 103 million and $ 106 million, respectively.

The current restructuring liability related to the transformation programs, reported in the Condensed Consolidated Balance Sheets as of April 30, 2025 and October 31, 2024, was $ 38 million and $ 61 million, respectively, in Accrued restructuring, and $ 14 million and $ 17 million, respectively, in Other accrued liabilities.

The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of April 30, 2025 and October 31, 2024, was $ 88 million and $ 106 million, respectively.

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Retirement Benefit Plans

The Company's net pension benefit cost for defined benefit plans recognized in the Condensed Consolidated Statements of Earnings was as follows:

For the three months ended January 31,

The Company's net pension benefit (credit) cost for defined benefit plans recognized in the Condensed Consolidated Statements of Earnings was as follows:

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

Service cost $ 12 $ 12 $ 24 $ 24

Interest cost (1)

89 102 178 203

Expected return on plan assets (1)

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Provision for Taxes

For the three months ended January 31, 2025 and 2024, the Company recorded income tax expense of $ 106 million and $ 96 million, respectively, which reflects an effective tax rate of 14.5 % and 19.9 %, 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 three months ended January 31, 2025, the Company recorded $ 17 million of net income tax benefits related to various items discrete to the period.

The amount primarily included $ 30 million of net excess tax benefits related to stock-based compensation and $ 10 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 CTG divestiture.

For the three months ended January 31, 2024, the Company recorded immaterial net income tax charges related to various items discrete to the period.

For the three months ended April 30, 2025 and 2024, the Company recorded income tax expense of $ 5 million and $ 131 million, respectively, which reflects an effective tax rate of ( 0.5 )% and 29.4 %, respectively.

For the six months ended April 30, 2025 and 2024, the Company recorded income tax expense of $ 111 million and $ 227 million, respectively, which reflects an effective tax rate of ( 35.6 )% and 24.5 %, respectively.

For the three and six months ended April 30, 2025, 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 and the effects of the non-deductible goodwill impairment.

For the three and six months ended April 30, 2024, the effective tax rate differs from the U.S.

federal statutory rate of 21% due to the geographic mix of forecasted earnings and net unfavorable permanent differences from U.S.

income tax on non-U.S.

For the three and six months ended April 30, 2025, the Company recorded $ 94 million and $ 111 million of net income tax benefits, respectively, related to various items discrete to the period.

For the three months ended April 30, 2025, this amount primarily included $ 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, and $ 16 million of net income tax benefits related to the settlement of U.S.

tax audit matters.

For the six months ended April 30, 2025, this amount primarily included $ 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, $ 31 million of net excess tax benefits related to stock-based compensation, $ 16 million of net income tax benefits related to the settlement of U.S.

tax audit matters, and $ 14 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.

For the three and six months ended April 30, 2024, the Company recorded immaterial net income tax benefits related to various items discrete to the period.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Uncertain Tax Positions

As of January 31, 2025 and October 31, 2024, the amount of unrecognized tax benefits was $ 717 million and $ 724 million, respectively, of which up to $ 337 million and $ 344 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

As of April 30, 2025 and October 31, 2024, the amount of unrecognized tax benefits was $ 365 million and $ 724 million, respectively, of which up to $ 265 million and $ 344 million, respectively, would affect the Company's effective tax rate if realized as of their respective periods.

During the second quarter of fiscal 2025, the Company effectively settled with the U.S.

Internal Revenue Service ("IRS") regarding its audit of the Company’s fiscal 2017 through 2019 U.S.

federal income tax returns, resulting in a reduction in the Company's unrecognized tax benefits of approximately $ 340 million;

however, the effective settlement did not result in a material impact to the Company’s Condensed Consolidated Statement of Earnings and Condensed Consolidated Balance Sheet.

The resolution of the audit resulted in the release of tax reserves that were predominantly related either to adjustments to foreign tax credits that carried a full valuation allowance or to the timing of intercompany royalty revenue recognition, neither of which affected the Company’s effective tax rate.

For tax liabilities pertaining to unrecognized tax benefits, the Company recognizes interest income from favorable settlements and interest expense and penalties in Provision for taxes in the Condensed Consolidated Statements of Earnings.

As of January 31, 2025 and October 31, 2024, the Company had accrued $ 57 million and $ 58 million, respectively, for interest and penalties in the Condensed Consolidated Balance Sheets.

The Company recognized $ 19 million of interest income and $ 1 million of interest expense for the six months ended April 30, 2025 and 2024, respectively.

The increase in interest income resulted from the favorable resolution of non-U.S.

tax litigation matters.

As of April 30, 2025 and October 31, 2024, the Company had accrued $ 39 million and $ 58 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.

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federal tax audits for years prior to 2020.

The Internal Revenue Service (“IRS”) is conducting audits of the Company's fiscal 2017 through 2022 U.S.

The IRS is conducting audits of the Company's fiscal 2020 through 2022 U.S.

federal income tax returns.

Subsequent to the close of the first quarter of fiscal 2025, the IRS issued a Revenue Agent Report (“RAR”) with which the Company agreed.

The final determination will not result in a material impact to the Company’s financial statements.

The audit cycle for fiscal 2017 through 2019 will be considered effectively settled during the second quarter of fiscal 2025 resulting in a reduction of existing unrecognized tax benefits of approximately $ 358 million.

A significant majority of these unrecognized tax benefits relates

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

either to adjustments to foreign tax credits that carry a full valuation allowance or to the timing of intercompany royalty revenue recognition, neither of which will affect the Company’s effective tax rate.

The IRS audit for fiscal 2020 through 2022 remains open.

The Company does not expect complete resolution of any IRS audit cycle within the next 12 months.

With respect to major state and foreign tax jurisdictions, the Company is no longer subject to tax authority examinations for years prior to 2005.

Additionally, 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 transactions and other matters;

accordingly, the Company believes it is reasonably possible that its existing unrecognized tax benefits for these matters may be reduced by an amount up to $ 5 million within the next 12 months.

It is reasonably possible that certain foreign tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions and other matters.

The Company believes it is reasonably possible that its existing unrecognized tax benefits for these matters may be reduced by an amount up to $ 5 million within the next 12 months.

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities included in the Condensed Consolidated Balance Sheets were as follows:

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Deferred tax assets $ 2,498 $ 2,396

3 unchanged sentences

Cash, Cash Equivalents and Restricted Cash

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Cash and cash equivalents $ 11,667 $ 14,846

2 unchanged sentences

(1) The Company included restricted cash in Other current assets in the accompanying Condensed Consolidated Balance Sheets.

January 31, 2025 October 31, 2024

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

April 30, 2025 October 31, 2024

Purchased parts and fabricated assemblies $ 5,108 $ 5,441

6 unchanged sentences

If in any period the Company anticipates a change in those factors to be less favorable than its previous estimates, additional inventory write-downs may be required and could materially impact gross margin.

The write down for excess or obsolescence is charged to the provision of inventory, which is a component of Cost of Products and Cost of Services in the Condensed Consolidated Statements of Earnings.

The write down for excess or obsolescence is charged to the provision of inventory, which is a component of cost of sales in the Condensed Consolidated Statements of Earnings.

At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The Company recorded a net provision for excess or obsolete inventory to cost of sales totaling $ 105 million and $ 149 million for the three and six months ended April 30, 2025, respectively.

For the fiscal year ended October 31, 2024, the Company recorded a net provision for excess or obsolete inventory to cost of sales totaling $ 89 million.

Property, Plant and Equipment, net

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Land $ 66 $ 66

10 unchanged sentences

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, are presented within Accounts Payable on the Consolidated Balance Sheets, amounted to $ 475 million, and $ 466 million as of January 31, 2025 and October 31, 2024, respectively.

The Company's aggregate product warranty liabilities and changes for the three months ended January 31, 2025, and the fiscal year ended October 31, 2024 were as follows:

January 31, 2025 October 31, 2024

Liabilities associated with the funded participation in these arrangements, are presented within Accounts Payable on the Consolidated Balance Sheets, amounted to $ 490 million, and $ 466 million as of April 30, 2025 and October 31, 2024, respectively.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The Company's aggregate product warranty liabilities and changes for the six months ended April 30, 2025, and the fiscal year ended October 31, 2024 were as follows:

April 30, 2025 October 31, 2024

Balance at beginning of period $ 301 $ 318

4 unchanged sentences

(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 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 April 30, 2025, $ 197 million and $ 42 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:

April 30, 2025

Balance at beginning of period $ 49

Severance charges 241

Cash paid and other ( 51 )

Balance at end of period $ 239

The following table presents severance charges as included in the Condensed Consolidated Statements of Earnings for the periods indicated:

For the three months ended April 30, 2025 For the six months ended April 30, 2025

Cost of sales $ 62 $ 63

Research and development 23 31

Selling, general and administrative 79 147

Total severance charges $ 164 $ 241

Contract Balances

5 unchanged sentences

A summary of accounts receivable, net, including unbilled receivables was as follows:

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Accounts receivable $ 3,574 $ 3,236

2 unchanged sentences

Total $ 3,899 $ 3,550

The allowances for credit losses related to accounts receivable and changes for the three months ended January 31, 2025, and the fiscal year ended October 31, 2024 were as follows:

January 31, 2025 October 31, 2024

The allowances for credit losses related to accounts receivable and changes for the six months ended April 30, 2025, and the fiscal year ended October 31, 2024 were as follows:

April 30, 2025 October 31, 2024

Balance at beginning of period $ 10 $ 37

4 unchanged sentences

The Company has third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers.

For the three months ended January 31, 2025, the Company sold $ 0.9 billion and for the fiscal year ended October 31, 2024, the Company sold $ 3.1 billion of trade receivables.

The Company recorded an obligation of $ 53 million and $ 62 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of January 31, 2025 and October 31, 2024, respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred.

For the three and six months ended April 30, 2025, the Company sold $ 0.9 billion and $ 1.8 billion of trade receivables, respectively.

F or the fiscal year ended October 31, 2024, the Company sold $ 3.1 billion of trade receivables.

The Company recorded an obligation of $ 59 million and $ 62 million within Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of April 30, 2025 and October 31, 2024, 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

1 unchanged sentence

A summary of contract liabilities were as follows:

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Location In millions

5 unchanged sentences

Total deferred revenue $ 7,802 $ 7,482

For the three months ended January 31, 2025, approximately $ 1.1 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2024.

For the six months ended April 30, 2025, approximately $ 1.8 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2024.

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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 January 31, 2025, the aggregate amount of deferred revenue, was $ 7.5 billion.

As of April 30, 2025, the aggregate amount of deferred revenue, was $ 7.8 billion.

The Company expects to recognize approximately 35 % of this balance over fiscal 2025 with the remainder to be recognized thereafter.

1 unchanged sentence

As customer acceptance milestones are met, the Company will recognize revenue and reduce the amount of contract liabilities.

As of January 31, 2025, the aggregate amount of customer deposits was $ 409 million.

As of April 30, 2025, the aggregate amount of customer deposits was $ 670 million.

The Company expects to recognize $ 601 million over the next twelve months and the remaining balance thereafter.

Costs to Obtain a Contract

As of January 31, 2025, the current and non-current portions of the capitalized costs to obtain a contract were $ 88 million and $ 136 million, respectively.

As of April 30, 2025, the current and non-current portions of the capitalized costs to obtain a contract were $ 86 million and $ 132 million, respectively.

As of October 31, 2024, the current and non-current portions of the capitalized costs to obtain a contract were $ 88 million and $ 136 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 months ended January 31, 2025 and 2024, the Company amortized $ 27 million and $ 26 million, of capitalized costs to obtain a contract.

For the three and six months ended April 30, 2025, the Company amortized $ 27 million and $ 54 million, of capitalized costs to obtain a contract.

For the three and six months ended April 30, 2024 the Company amortized $ 26 million and $ 52 million respectively, 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.

5 unchanged sentences

The components of financing receivables were as follows:

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Minimum lease payments receivable $ 10,182 $ 10,266

9 unchanged sentences

The Company enters into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions.

For the three months ended January 31, 2025 and the fiscal year ended October 31, 2024, the Company sold $ 124 million and $ 93 million of financing receivables, respectively.

For the three and six months ended April 30, 2025 the Company sold $ 23 million and $ 147 million of financing receivables, respectively.

For the fiscal year ended October 31, 2024, the Company sold $ 93 million of financing receivables.

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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 January 31, 2025, presented on amortized cost basis by year of origination was as follows:

As of January 31, 2025

The credit risk profile of gross financing receivables, based on internal risk ratings as of April 30, 2025, presented on amortized cost basis by year of origination was as follows:

As of April 30, 2025

Low Moderate High

23 unchanged sentences

Allowance for Credit Losses

The allowance for credit losses for financing receivables as of January 31, 2025 and October 31, 2024 and the respective changes for the three and twelve months then ended were as follows:

January 31, 2025 October 31, 2024

The allowance for credit losses for financing receivables as of April 30, 2025 and October 31, 2024 and the respective changes for the six and twelve months then ended were as follows:

April 30, 2025 October 31, 2024

Balance at beginning of period $ 194 $ 243

5 unchanged sentences

The following table summarizes the aging and non-accrual status of gross financing receivables:

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Current 1-30 days $ 333 $ 334

9 unchanged sentences

The following table presents amounts included in the Condensed Consolidated Statements of Earnings related to lessor activity:

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

Location In millions

Interest income from sales-type leases

and direct financing leases Financing Income $ 186 $ 156

Interest income from sales-type leases and direct financing leases Financing Income $ 188 $ 162 $ 374 $ 318

Lease income from operating leases Services 539 594 1,086 1,193

12 unchanged sentences

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.

The following table presents the assets and liabilities held by the consolidated VIE as of January 31, 2025 and October 31, 2024, which are included in the Condensed Consolidated Balance Sheets.

The following table presents the assets and liabilities held by the consolidated VIE as of April 30, 2025 and October 31, 2024, 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 do not have recourse to the assets of the VIE.

January 31, 2025 October 31, 2024

Additionally, general creditors of the Company do not have recourse to the assets of the VIE.

April 30, 2025 October 31, 2024

Assets held by VIE:

7 unchanged sentences

Long-term debt, net of unamortized debt issuance costs $ 605 $ 965

For the three months ended January 31, 2025, the Company did not transfer any financing receivables and leased equipment via securitization through the SPE.

For the six months ended April 30, 2025, the Company did not transfer any financing receivables and leased equipment via securitization through the SPE.

For the fiscal year ended October 31, 2024, financing receivables and leased equipment transferred via securitization through the SPE were $ 1.2 billion and $ 0.6 billion, respectively.

19 unchanged sentences

• If (i) the proposed acquisition of Juniper Networks does not close on or before the later of (a) the date that is five business days after October 9, 2025 and (b) the date that is five business days after any later date to which Juniper Networks and HPE may agree to extend the “End Date” (as defined in the Merger Agreement) or (ii) HPE notifies the holders of the Preferred Stock in writing that HPE will not pursue the consummation of the proposed acquisition of Juniper Networks, HPE may, at its option, redeem the Preferred Stock, in whole but not in part.

Disposition of Communications Technology Group (“CTG”)

Disposition of Communications Technology Group

On May 23, 2024, HPE announced plans to divest the CTG business to HCL Tech.

5 unchanged sentences

As of November 1, 2024, the Company reassessed its reporting units and determined that the former Compute and High Performance Computing & Artificial Intelligence reporting units (within the Server segment) met the criteria to qualify as a single Server reporting unit.

As of January 31, 2025, the Company's reporting units are consistent with the reportable segments identified in Note 2, “Segment Information”, with the exception of Corporate Investments and Other, which contains the A & PS reporting unit.

The following table represents the carrying value of goodwill, by reportable segment as of January 31, 2025 and October 31, 2024.

As of April 30, 2025, the Company's reporting units are consistent with the reportable segments identified in Note 2, “Segment Information”, with the exception of Corporate Investments and Other, which contains the A & PS reporting unit.

The following table represents the carrying value of goodwill, by reportable segment as of April 30, 2025 and October 31, 2024.

Server Hybrid Cloud Intelligent Edge Financial Services Corporate Investments and Other Total

Balance as of October 31, 2024 and January 31, 2025 (1)

Balance as of October 31, 2024

$ 10,194 $ 4,839 $ 2,909 $ 144 $ — $ 18,086

(1) Goodwill is net of accumulated impairment losses of $ 1.8 billion, which decreased by $ 0.1 billion from October 31, 2024, due to the disposition of CTG (the Communications and Media Solutions reporting unit).

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, 2024 based on organizational changes impacting the Hybrid Cloud and Server reporting units.

Goodwill impairment — ( 1,361 ) — — — ( 1,361 )

Balance as of April 30, 2025 (1)

$ 10,194 $ 3,478 $ 2,909 $ 144 $ — $ 16,725

(1) Goodwill is net of accumulated impairment losses of $ 3.1 billion.

Accumulated impairment increased by $ 1.2 billion from October 31, 2024 due to a $ 1.4 billion Hybrid Cloud reporting unit impairment, partially offset by a decrease due to the disposition of CTG (the Communications and Media Solutions reporting unit).

Goodwill is tested annually for impairment, as of the first day of the fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

The Company performed interim goodwill impairment tests as of November 1, 2024 and April 30, 2025.

November 1, 2024 Interim Impairment Test

An interim impairment test was performed as of November 1, 2024 based on organizational changes impacting the Hybrid Cloud and Server reporting units.

The interim impairment test did not result in an impairment of goodwill.

The excess of fair value over carrying amount for the Hybrid Cloud reporting unit was 6 %.

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 each reporting unit.

Based on the results of this hypothetical 10 % decrease, Hybrid Cloud did not have an excess of fair value over carrying value.

The Hybrid Cloud reporting unit has goodwill of $ 4.8 billion as of January 31, 2025.

Although the Hybrid Cloud business is on a positive trajectory, the Company is managing both a sales model transition and product transition within this business.

The Company’s product model transition is to a more cloud-native, software-defined platform with HPE Alletra.

Translating this growth to revenue and operating income will take time because a greater mix of high margin business, such as ratable software and services, are deferred and recognized in future periods.

If the global macroeconomic or geopolitical conditions worsen, projected revenue growth rates or operating margins decline, weighted average cost of capital increases, or if the Company has significant or sustained decline in its stock price, it is possible its estimates about the Hybrid Cloud reporting unit's ability to successfully address the current challenges may change, which could result in the carrying value of the Hybrid Cloud reporting unit exceeding its estimated fair value and potential impairment charges.

April 30, 2025 Interim Impairment Test

During the second quarter of fiscal 2025, the macroeconomic environment experienced a rapid deterioration, primarily driven by the announcement and subsequent modifications of international tariffs, an escalation in global trade tensions, and increasing geopolitical uncertainty.

These events have contributed to significant movement in inputs used to determine the weighted-average cost of capital.

As of April 30, 2025, the Company determined that an indicator of potential impairment existed to require an interim quantitative goodwill impairment test for its reporting units.

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Notes to Condensed Consolidated Financial Statements (Continued)

Based on the results of the interim quantitative impairment test performed as of April 30, 2025, the fair value of the Hybrid Cloud reporting unit was below the carrying value assigned to Hybrid Cloud.

The decline in the fair value of the Hybrid Cloud reporting unit was primarily driven by an increase in the discount rate used in the discounted cash flows analysis, which reflected heightened macroeconomic uncertainty and changes in market conditions.

The fair value of the Hybrid Cloud reporting unit was based on a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach.

Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows which HPE considers to be a level 3 unobservable input in the fair value hierarchy.

Prior to the quantitative goodwill impairment test, the Company tested the recoverability of long-lived assets and other assets of the Hybrid Cloud reporting unit and concluded that such assets were not impaired.

The quantitative goodwill impairment test indicated that the carrying value of the Hybrid Cloud reporting unit exceeded its fair value by $ 1.4 billion.

As a result, the Company recorded a goodwill impairment charge of $ 1.4 billion in the second quarter of fiscal 2025.

Subsequent to the impairment of Hybrid Cloud reporting unit, the indicated fair values of the reporting units exceeded their respective carrying amounts by a range of 0 % to 112 %.

In order to evaluate the sensitivity of the estimated fair value of the reporting units in the goodwill impairment test, the Company applied a hypothetical 10 % decrease to the fair value of each reporting unit.

Based on the results of this hypothetical 10 % decrease, all of the reporting units had an excess of fair value over carrying amount, except Server and Hybrid Cloud.

The Hybrid Cloud reporting unit has remaining goodwill of $ 3.5 billion as of April 30, 2025 and an excess of fair value over carrying value of net assets of 0 % as of the interim test date.

Hybrid Cloud business is transitioning to a more cloud-native, software-defined platform with HPE Alletra.

The excess of fair value over carrying amount for the Server reporting unit was 3 %.

The fair value of the Server reporting unit was also impacted by an increase in the discount rate used in the discounted cash flow analysis, driven by heightened macroeconomic uncertainty.

The Server reporting unit has a goodwill balance of $ 10.2 billion as of April 30, 2025.

In the current macroeconomic and inflationary environment, customers have invested selectively, resulting in moderate unit growth and competitive pricing in the traditional servers business.

While the AI servers business is growing at a faster pace, because graphics processing units represent a large portion of the solutions, the pricing is very competitive and margins are limited.

The Server business continues to focus on capturing market share in both traditional and AI servers, while maintaining operating margin and leveraging its strong portfolio of products.

If the global macroeconomic or geopolitical conditions worsen, projected revenue growth rates or operating margins decline, weighted average cost of capital increases, or if the Company has significant or sustained decline in its stock price, it is possible its estimates about the Hybrid Cloud and Server reporting units’ ability to successfully address the current challenges may change, which could result in the carrying value of the Hybrid Cloud and Server reporting units exceeding their estimated fair value and potential impairment charges.

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.

1 unchanged sentence

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.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis:

As of January 31, 2025 As of October 31, 2024

As of April 30, 2025 As of October 31, 2024

Measured Using Fair Value

25 unchanged sentences

Short-Term and Long-Term Debt:

As of January 31, 2025, the estimated fair value of the Company's short-term and long-term debt approximated its carrying value of $ 17.9 billion.

As of April 30, 2025, the estimated fair value and carrying value of the Company's short-term and long-term debt was $ 17.4 billion and $ 17.5 billion, respectively.

As of October 31, 2024, the estimated fair value and carrying value of the Company's short-term and long-term debt was $ 18.3 billion and $ 18.2 billion, respectively.

3 unchanged sentences

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.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

Non-Recurring Fair Value Measurements

1 unchanged sentence

Equity investments are recorded at cost and measured at fair value when they are deemed to be impaired or when there is an adjustment from observable price changes.

For the three months ended January 31, 2025 and 2024, the Company recognized a realized net loss of $ 2 million resulting from an impairment and an unrealized net loss of $ 7 million, respectively, on these investments.

For the six months ended April 30, 2025 and 2024, the Company recognized a loss of $ 2 million resulting from an impairment and an unrealized net loss of $ 7 million, respectively, on these investments.

If measured at fair value in the Condensed Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy.

For investments still held as of January 31, 2025, the cumulative upward adjustments for observable price changes was $ 82 million and cumulative downward adjustments for observable price changes and impairments was $ 89 million.

For investments still held as of April 30, 2025, the cumulative upward adjustments for observable price changes was $ 82 million and cumulative downward

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

adjustments for observable price changes and impairments was $ 89 million.

Refer to Note 11 “Financial Instruments,” for further information about equity investments.

3 unchanged sentences

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 Hybrid Cloud 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.

For more information on the goodwill impairment, see Note 9 “Goodwill”.

Financial Instruments

1 unchanged sentence

Cash equivalents and available-for-sale debt investments were as follows:

As of January 31, 2025 As of October 31, 2024

As of April 30, 2025 As of October 31, 2024

Cost Gross Unrealized Gains Fair

9 unchanged sentences

Total cash equivalents and available-for-sale debt investments $ 10,418 $ 2 $ 10,420 $ 13,349 $ 8 $ 13,357

As of January 31, 2025 and October 31, 2024, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity.

Time deposits were primarily issued by institu t ions outside of the U.S.

as of January 31, 2025 and October 31, 2024.

As of April 30, 2025 and October 31, 2024, 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 in the U.S.

as of April 30, 2025 and outside the U.S.

as of October 31, 2024.

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 January 31, 2025

As of April 30, 2025

Amortized Cost Fair Value

4 unchanged sentences

Measurement alternative equity investments are recorded at cost and measured at fair value when they are deemed to be impaired or when there is an adjustment from observable price changes.

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 54 million and $ 88 million as of April 30, 2025 and October 31, 2024, respectively.

For the three months ended April 30, 2025, the Company recognized a realized gain of $ 1 million on these investments.

For the six months ended April 30, 2025, the

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Notes to Condensed Consolidated Financial Statements (Continued)

The carrying amount of those non-marketable equity investments accounted for under the fair value option was $ 92 million and $ 88 million as of January 31, 2025 and October 31, 2024, respectively.

For the three months ended January 31, 2025 and 2024, the Company recognized an unrealized gain of $ 4 million and an unrealized loss of $ 54 million, respectively, on these investments.

Company recognized a total gain of $ 5 million on these investments, of which $ 4 million was unrealized and $ 1 million was realized.

For the six months ended April 30, 2024, the Company recognized an unrealized loss of $ 54 million on these investments.

This amount is reflected in Interest and other, net in the Condensed Consolidated Statements of Earnings.

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 198 million and $ 200 million as of January 31, 2025 and October 31, 2024, respectively.

During the three and six months ended April 30, 2025, the Company sold $ 38 million of these investments.

The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $ 197 million and $ 200 million as of April 30, 2025 and October 31, 2024, respectively.

These amounts are reflected in Interest and other, net in the Condensed Consolidated Statements of Earnings.

1 unchanged sentence

The gross notional and fair value of derivative instruments in the Condensed Consolidated Balance Sheets were as follows:

As of January 31, 2025 As of October 31, 2024

As of April 30, 2025 As of October 31, 2024

Fair Value Fair Value

27 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Continued)

As of January 31, 2025

As of April 30, 2025

In the Condensed Consolidated Balance Sheets

19 unchanged sentences

(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 business days prior to the respective reporting date.

As of January 31, 2025, $ 1 million of collateral posted was entirely through the re-use of counterparty collateral.

As of April 30, 2025, of the $ 292 million of collateral posted, $ 288 million was in cash and $ 4 million was through the re-use of counterparty collateral.

As of October 31, 2024, $ 27 million of collateral posted was entirely through the re-use of counterparty collateral.

1 unchanged sentence

Carrying Amount of the Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets

January 31, 2025 October 31, 2024 January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024 April 30, 2025 October 31, 2024

Notes payable and short-term borrowings $ ( 2,471 ) $ ( 2,440 ) $ 28 $ 58

4 unchanged sentences

Gains (Losses) Recognized in OCI on Derivatives

For the three months ended January 31,

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

Derivatives in Cash Flow Hedging Relationship:

3 unchanged sentences

Total $ ( 529 ) $ 189 $ ( 216 ) $ ( 54 )

As of January 31, 2025, the Company expects to reclassify an estimated net accumulated other comprehensive gain of approximately $ 71 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.

As of April 30, 2025, the Company expects to reclassify an estimated net accumulated other comprehensive loss of approximately $ 113 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.

Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

1 unchanged sentence

Gains (Losses) Recognized in Income

For the three months ended January 31,

Net Revenue Interest and Other, net Net Revenue Interest and Other, net

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

Net Revenue Interest and Other, net Net Revenue Interest and Other, net Net Revenue Interest and Other, net Net Revenue Interest and Other, net

Total net revenue and interest and other, net $ 7,627 $ 39 $ 7,204 $ ( 22 ) $ 15,481 $ 78 $ 13,959 $ ( 110 )

17 unchanged sentences

Notes payable, short-term borrowings, including the current portion of long-term debt, and long-term debt were as follows:

January 31, 2025 October 31, 2024

April 30, 2025 October 31, 2024

Current portion of long-term debt (1)

5 unchanged sentences

Total $ 17,530 $ 18,246

(1) As of January 31, 2025, the Current portion of long-term debt, net of discount and issuance costs, included $ 1.2 billion associated with the asset-backed debt securities issued by the Company.

(1) As of April 30, 2025, the Current portion of long-term debt, net of discount and issuance costs, included $ 1.0 billion associated with the asset-backed debt securities issued by the Company.

Commercial Paper

8 unchanged sentences

In addition, the Hewlett Packard Enterprise subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $ 1.0 billion.

As of January 31, 2025 and October 31, 2024, no borrowings were outstanding under the Parent Programs.

As of January 31, 2025 and October 31, 2024, $ 665 million and $ 649 million, respectively, were outstanding under the subsidiary’s program.

As of April 30, 2025 and October 31, 2024, no borrowings were outstanding under the Parent Programs.

As of April 30, 2025 and October 31, 2024, $ 662 million and $ 649 million, respectively, were outstanding under the subsidiary’s program.

Revolving Credit Facility

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The commitment comprised of (i) $ 4.75 billion of commitments available immediately and (ii) $ 500 million of commitments available from and subject to the closing of the proposed acquisition of Juniper Networks and refinancing of Juniper Networks’ credit agreement in connection with the closing of such proposed acquisition.

As of January 31, 2025 and October 31, 2024, no borrowings were outstanding under this credit facility.

As of April 30, 2025 and October 31, 2024, no borrowings were outstanding under this credit facility.

Uncommitted Credit Facility

The Company maintains an uncommitted short-term advance facility with Societe Generale that was entered into in September 2023 with a principal amount of up to $ 500 million for a period of 5 years.

As of January 31, 2025 and October 31, 2024, no borrowings were outstanding under this credit facility.

As of April 30, 2025 and October 31, 2024, no borrowings were outstanding under this credit facility.

Juniper Acquisition Financing

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days after the Juniper Outside Date (as defined in such term loan agreements), (ii) the occurrence of the closing of the acquisition of Juniper Networks without the funding of any borrowings under either of the term loan agreements, and (iii) the termination of the Merger Agreement by HPE in writing in accordance with its terms.

As of January 31, 2025, no borrowings were outstanding under these agreements.

As of April 30, 2025, no borrowings were outstanding under these agreements.

Stockholders' Equity

The components of accumulated other comprehensive loss, net of taxes as of January 31, 2025, and changes for the three months ended January 31, 2025 were as follows:

The components of accumulated other comprehensive loss, net of taxes as of April 30, 2025, and changes for the six months ended April 30, 2025 were as follows:

Net unrealized gains (losses)

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Balance at beginning of period $ 8 $ ( 16 ) $ ( 2,342 ) $ ( 627 ) $ ( 2,977 )

Other comprehensive (loss) income before reclassifications ( 1 ) 270 — ( 22 ) 247

Reclassifications of (gains) losses into earnings — ( 213 ) 30 — ( 183 )

Tax (provision) benefit — ( 10 ) ( 5 ) 1 ( 14 )

Other comprehensive loss before reclassifications ( 6 ) ( 195 ) ( 20 ) ( 12 ) ( 233 )

Reclassifications of losses into earnings — 31 62 — 93

Tax benefit (provision) — 30 ( 6 ) ( 1 ) 23

Balance at end of period $ 2 $ ( 150 ) $ ( 2,306 ) $ ( 640 ) $ ( 3,094 )

The components of accumulated other comprehensive loss, net of taxes as of January 31, 2024, and changes for the three months ended January 31, 2024 were as follows:

The components of accumulated other comprehensive loss, net of taxes as of April 30, 2024, and changes for the six months ended April 30, 2024 were as follows:

Net unrealized

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Other comprehensive income (loss) before reclassifications 3 ( 35 ) ( 1 ) ( 8 ) ( 41 )

Reclassifications of losses into earnings — 114 34 — 148

Reclassifications of (gains) losses into earnings — ( 1 ) 69 — 68

Tax benefit (provision) — 6 ( 8 ) 1 ( 1 )

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Share Repurchase Program

For the three months ended January 31, 2025, the Company repurchased and settled 2.4 million shares under its share repurchase program through open market repurchases, which included 0.1 million shares that were unsettled open market repurchases as of October 31, 2024.

As of January 31, 2025, the Company did not have any unsettled open market repurchases.

Shares repurchased for the three months ended January 31, 2025 were recorded as a $ 50 million reduction to stockholders' equity.

As of January 31, 2025, the Company had a remaining authorization of approximately $ 0.8 billion for future share repurchases.

Net Earnings Per Share

The Company calculates basic net earnings per share (“EPS”) using net earnings and the weighted-average number of shares outstanding during the reporting period.

For the six months ended April 30, 2025, the Company repurchased and settled 5.7 million shares under its share repurchase program through open market repurchases, which included 0.1 million shares that were unsettled open market repurchases as of October 31, 2024.

As of April 30, 2025, the Company did not have any unsettled open market repurchases.

Shares repurchased for the six months ended April 30, 2025 were recorded as a $ 100 million reduction to stockholders' equity.

As of April 30, 2025, the Company had a remaining authorization of approximately $ 0.7 billion for future share repurchases.

Net (Loss) Earnings Per Share

The Company calculates basic net (loss) earnings per share (“EPS”) using net (loss) earnings and the weighted-average number of shares outstanding during the reporting period.

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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 January 31,

For the three months ended April 30, For the six months ended April 30,

2025 2024 2025 2024

In millions, except per share amounts

Net earnings attributable to common stockholders - Basic $ 598 $ 387

Net (loss) earnings attributable to common stockholders - Basic $ ( 1,079 ) $ 314 $ ( 481 ) $ 701

7.625 % Series C mandatory convertible preferred stock dividends

Net earnings - Diluted $ 627 $ 387

Net (loss) earnings - Diluted $ ( 1,079 ) $ 314 $ ( 481 ) $ 701

Weighted-average shares used to compute basic net EPS 1,322 1,311 1,319 1,306

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Weighted-average shares used to compute diluted net EPS 1,322 1,325 1,319 1,320

Net Earnings per Share:

Basic $ ( 0.82 ) $ 0.24 $ ( 0.36 ) $ 0.54

Diluted $ ( 0.82 ) $ 0.24 $ ( 0.36 ) $ 0.53

Anti-dilutive weighted-average stock awards (2)

Anti-dilutive Share Count (1)(2) :

Employee stock plans 49 — 51 —

7.625 % Series C mandatory convertible preferred stock

Total anti-dilutive weighted-average stock 136 — 127 —

(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.

(2) The Company excludes shares potentially issuable under employee stock plans that could dilute basic net EPS in the future from the calculation of diluted net earnings per share, as their effect, if included, would have been anti-dilutive for the periods presented.

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 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.

Litigation, Contingencies, and Commitments

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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 January 31, 2025, 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.

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Notes to Condensed Consolidated Financial Statements (Continued)

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 April 30, 2025, 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

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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 has scheduled the cross-appeals for final hearing on April 21-25, 2025.

After multiple delays and postponements over the last decade, the Customs Tribunal began hearing the parties’ cross-appeals on April 21, 2025.

The hearing on the cross-appeals is expected to be completed in June 2025.

The Company expects a ruling from the Customs Tribunal in fiscal 2025.

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As part of the Separation and Distribution Agreements between HPE and HP Inc., HPE and DXC Technology Company (“DXC”), and HPE and Seattle SpinCo (“Micro Focus”), 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

The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general

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Notes to Condensed Consolidated Financial Statements (Continued)

corporate matters of HP Inc.

Environmental

supply chain due diligence;

sustainability, environment, and emissions-related reporting;

environmental claims and statements;

the management, movement, and disposal of hazardous substances and wastes;

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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 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 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 property damage or personal injury claims and clean-up costs.

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.

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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 $ 279 million as of January 31, 2025.

The maximum potential future payments under performance guarantees and financing arrangements was $ 314 million as of April 30, 2025.

Indemnifications

3 unchanged sentences

Historically, payments made related to these indemnifications have been immaterial.

Subsequent Events

On March 6, 2025, the Board of Directors approved a cost reduction program (the "Program") intended to reduce structural operating costs and continue advancing the Company's 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 the Company's workforce.

In order to achieve this level of cost savings, HPE estimates cash charges of approximately $ 350 million over the next two years in connection with the Program, with approximately $ 250 million to be incurred in fiscal year 2025, and the remaining $ 100 million to be incurred in the fiscal year 2026.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

The estimates of the duration of the Program, the charges and expenditures that HPE expects 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, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements