What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-12-18 compared with 2024-12-19 · 442 added, 363 removed, 488 unchanged (62% of the section changed)

7 unchanged sentences

• Trends and Uncertainties.

A discussion of material events and uncertainties known to management, such as the mixed macroeconomic environment of supply chain constraints (though easing), uneven demand across our portfolio, increased demand for and adoption of new technologies, conservative (though recovering) customer spending environment, persistent inflation, foreign exchange pressures, recent tax developments, and pending merger with Juniper Networks, Inc.

(“Juniper Networks”).

A discussion of material events and uncertainties known to management, such as the mixed macroeconomic environment and heightening global trade restrictions, uneven demand across our portfolio, increased demand for and adoption of new technologies, increased inventory levels, conservative customer spending environment (though recovering), persistent inflation, foreign exchange pressures, recent tax developments, and competitive pricing pressures.

• Executive Overview.

12 unchanged sentences

Technological Advancements:

We have observed market trends and demand (of customers of various segments and sizes) gravitating towards artificial intelligence (“AI”), hybrid cloud, edge computing, data security capabilities, and related offerings.

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 more devices.

The need for a unified cloud experience everywhere has grown, as well, in order to manage the growth of data at the edge.

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.

Increasing demand for AI is also contributing to changes in the competitive landscape.

Our major competitors and emerging competitors are expanding their product and service offerings with integrated products and solutions and exerting increased competitive pressure.

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 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 effect of the evolving macroeconomic environment has been impacting industry-wide demand, as customers take longer to work through prior orders and have been adopting a more conservative approach to discretionary IT spending.

This has 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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

offerings, including our own.

We expect such mixed macroeconomic environment to largely continue (though ease slightly) and possibly limit revenue growth in the near term.

Macroeconomic Uncertainty:

The evolving macroeconomic environment has impacted industry-wide demand, as customers have been taking longer to work through prior orders and, to this day, have been adopting a more strategic approach to discretionary IT spending.

While this dynamic has been easing, this has 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, including our own.

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, and enactment of reciprocally restrictive trade policies and 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 and implementing pricing measures, we expect such a mixed macroeconomic environment to largely continue and possibly limit revenue and margin growth in the near term.

Supply Chain:

During fiscal 2024, we experienced supply chain constraints for certain components, including graphics processing units (“GPUs”) and accelerated processing units, but they have since eased, in part due to increased availability of supply and lower material and logistics costs.

Logistics costs decreased from previously elevated levels as a result of declines in both expedited shipments and overall rate costs in the freight network.

We have, in fact, been experiencing higher-than-normal inventory levels, primarily due to customers transitioning to the next generation of GPUs, our securing supply ahead of demand, and longer customer acceptance timelines on AI-related orders;

we expect this trend to continue in the medium term.

We have experienced, and expect to continue experiencing, rising input component costs and a competitive pricing environment, which may impact our financial results.

We plan to mitigate the impact of these dynamics through continued disciplined cost and pricing management.

We experienced supply chain constraints for certain components, including graphics processing units (“GPUs”) and accelerated processing units.

Though they have eased at times during the fiscal year, we are once again experiencing such constraints and expect such dynamics to continue in the medium term.

The future remains uncertain due to the macroeconomic dynamics discussed above, which have thus far impacted our ability to import and export components and finished products and the costs of doing so.

Additionally, logistics costs have been, and may continue to remain, high with such changes in trade policies.

We have been experiencing higher-than-normal inventory levels, primarily due to frequent component part updates, customers transitioning to the next generation of GPUs, our securing supply ahead of demand, and longer customer acceptance timelines on AI-related orders.

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.

We have experienced, and expect to continue experiencing, rising input component costs due to various factors, including but not limited to the global trade uncertainties referenced above and a competitive pricing environment, all of which may impact our financial results.

We plan to mitigate the impact of these dynamics through continued disciplined cost and pricing management and supply chain diversification;

however, such actions may not be successful.

Recurring Revenue and Consumption Models:

5 unchanged sentences

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.

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:

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, 43 countries have enacted portions, or all, of the OECD proposal and a further 22 countries have drafted, or have announced an intent to draft, legislation enacting the proposed rules.

Where enacted, the rules begin to be effective for us in fiscal 2025.

Under US GAAP, the OECD Pillar Two rules are considered an alternative minimum tax and therefore deferred taxes would not be recognized or adjusted for the estimated effects of the future minimum tax.

As a result, there was no impact to our fiscal 2024 results.

Proposals to reform U.S.

and foreign tax laws could significantly impact how U.S.

multinational corporations are taxed on foreign earnings and could increase the U.S.

corporate tax rate.

Several of the proposals currently being considered, if enacted into law, could have an adverse 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, 60 countries have enacted portions, or all, of the OECD proposal.

Where enacted, the rules are effective for us in fiscal 2025.

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.

We currently do not expect a material impact to our fiscal 2025 results.

There was not a material impact to our fiscal 2025 results from Pillar Two legislation.

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.

The Internal Revenue Service (“IRS”) is conducting audits of our fiscal 2020 through 2022 U.S.

federal income tax returns.

During fiscal 2023, the IRS issued notices of proposed adjustments (“NOPAs”) for 2017, 2018, and 2019 relating to our intercompany transfer pricing.

During the first quarter of fiscal 2024, the IRS issued a Revenue Agent Report finalizing their position on the NOPAs for the same issues and same fiscal years.

However, we disagreed with the IRS’ adjustments and believe the positions taken on our tax returns are more likely than not to prevail on technical merits and have continued with settlement discussions with the IRS.

During the third quarter of fiscal 2024, 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 $122 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 fiscal 2024 was not material.

It is reasonably possible that the IRS audit for fiscal 2017 through 2019 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 $358 million within the next 12 months, the majority of which relates to adjustments to foreign tax credits that carry a full valuation allowance or to the timing of intercompany royalty revenue recognition, neither of which affects the Company’s effective tax rate.

Other Trends and Uncertainties:

The impacts of trade protection measures, including increases in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility (including the ongoing conflict in the Middle East), and global macroeconomic challenges (including the relationship between China and the U.S.), may impact our operations, financial performance, and ability to conduct business in some non-U.S.

We monitor and seek to mitigate these risks with adjustments to our manufacturing, supply chain, and distribution networks.

In the second quarter of fiscal 2025, the IRS issued a Revenue Agent Report (“RAR”) regarding the audit of our fiscal

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

Pending Merger with Juniper Networks, Inc:

On January 9, 2024 , we entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) under which we will acquire Juniper Networks in an all-cash transaction for $40.00 per share (the “Merger”), representing an equity value of approximately $14 billion.

On April 2, 2024, Juniper Networks shareholders approved the transaction.

The transaction is expected to be funded based on senior unsecured delayed draw term loans from a syndicate of banks, the post-tax proceeds from our sale to Unisplendour International Technology Limited (“UNIS”) of 30% of the total issued share capital of H3C Technologies Co., Limited (“H3C”), the net proceeds (including after repayments of maturing debt) of our September 2024 issuances of senior unsecured notes and the Preferred Stock (as further described in Note 15, “Stockholders’ Equity” to the Consolidated Financial Statements in Item 8 of Part II), and cash on the balance sheet.

The closing of the transaction remains subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.

For further information about the Merger, see Note 10, “ Acquisitions and Dispositions ” to the Consolidated Financial Statements in Item 8 of Part II, and for further discussion about the risks related to the Merger, see the section titled “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K.

The foregoing summary of the Merger, the adoption of the Merger Agreement, and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 10, 2024.

2017 through 2019 U.S.

federal income tax returns, with which we agreed.

The audit cycle for fiscal 2017 through 2019 is now considered effectively settled, resulting in a reduction of existing unrecognized tax benefits of approximately $340 million, which did not result in a material impact to our Consolidated Statement of Earnings and our 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 our effective tax rate.

On July 4, 2025, the U.S.

government enacted the One Big Beautiful Bill Act (“OB3”) into law.

OB3 introduces 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.

There was not a material impact of OB3 to our fiscal 2025 results, and 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.

Other Trends and Uncertainties:

The impacts of geopolitical volatility (including the continued instability 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.

We have, in the past, entered into contracts for the sale of certain products and services that reflect heavier-than-normal discounting due to competitive pressures, 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 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.

The following “Executive Overview,” “Results of Operations,” and “Liquidity” discussions and analysis compare fiscal 2025 to fiscal 2024 , unless otherwise noted.

1 unchanged sentence

EXECUTIVE OVERVIEW

Net revenue of $30.1 billion represented an increase of 3.4% (increased 3.3% on a constant currency basis) primarily due to higher average unit prices (“AUPs”) in the Server segment, moderated by lower volume and product mix effect in the Intelligent Edge segment.

The gross profit margin of 32.8% (or $9.9 billion) represents a decrease of 2.3 percentage points from the prior-year period due to decline in revenue in the Intelligent Edge segment and higher mix of lower margin products in the Server segment.

The operating profit margin of 7.3% was relatively flat as compared to the prior-year period.

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 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 10, “Acquisitions and Dispositions,” to the Consolidated Financial Statements for additional information.

Pending 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.

Such transactions and the transactions referenced in clause (i) remain subject to regulatory approvals.

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

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

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 implementation of the Program.

In connection with the Program, we incurred charges of $275 million in fiscal 2025.

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 will require approximately $800 million of investment, primarily tied to headcount, supply chain optimization, and portfolio rationalization.

Fiscal 2025 compared with fiscal 2024

Net revenue of $34.3 billion represented an increase of 13.8%, primarily due to higher revenue in the Networking segment from the Merger and higher average unit prices (“AUPs”) in the Server segment.

The gross profit margin of 30.3% (or $10.4 billion) represents a decrease of 2.5 percentage points from the prior-year period, primarily due to an increase in cost of sales in the Server, Networking, and Hybrid Cloud segments.

The operating profit margin of (1.3)%, represents a decrease of 8.6 percentage points from the prior-year period, primarily due to the impairment of goodwill and costs associated with the Merger.

Financial Results

6 unchanged sentences

Gross profit margin 30.3 % 32.8 % (2.5)pts

Earnings from operations $ 2,190 $ 2,089 4.8%

(Loss) earnings from operations

$ (437) $ 2,190 (120.0)%

Operating profit margin (1.3) % 7.3 % (8.6)pts

1 unchanged sentence

$ 57 $ 2,579 (97.8)%

Net earnings attributable to common stockholders

Net (loss) earnings attributable to common stockholders

$ (59) $ 2,554 (102.3)%

Diluted net earnings per share attributable to common stockholders (1)

Diluted net (loss) earnings per share attributable to common stockholders (1)

$ (0.04) $ 1.93 $(1.97)

Cash flow from operations $ 4,341 $ 4,428 $(87)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Cash flow provided by operations

$ 2,919 $ 4,341 $(1,422)

The following table summarizes our consolidated non-GAAP financial results:

2 unchanged sentences

In millions, except per share amounts

Net revenue in constant currency $ 30,107 $ 29,135 3.3%

Non-GAAP gross profit $ 10,805 $ 9,893 9.2%

9 unchanged sentences

Free cash flow $ 986 $ 2,297 $(1,311)

(1) For purposes of calculating diluted net EPS, the 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.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

(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 (loss) 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.

For GAAP diluted net EPS, the effect of employee stock plans and Preferred Stock is excluded when calculating diluted net loss per share as it would be anti-dilutive.

Each non-GAAP financial measure has been reconciled to the most directly comparable GAAP financial measure herein.

1 unchanged sentence

Annualized Revenue Run-rate (“ARR”)

Our pivot to aaS continues its strong momentum with the addition of HPE GreenLake cloud services.

Our mix of ARR is becoming more software-rich as we build our HPE GreenLake cloud, which is improving our margin profile.

We will continue to invest aggressively in HPE GreenLake cloud services to provide a true cloud experience and operating model, whether at the edge, on-premises or across multiple clouds.

ARR represents the annualized revenue of all net HPE GreenLake cloud services revenue, related financial services revenue (which includes rental income from operating leases and interest income from finance leases), and software-as-a-service (“SaaS”), software consumption revenue, and other aaS offerings, recognized during a quarter and multiplied by four.

ARR represents the annualized revenue of all net HPE GreenLake cloud services revenue, related financial services revenue (which includes rental income from operating leases and interest income from finance leases), and software-as-a-service, software consumption revenue, and other aaS offerings, by taking such revenue recognized during a quarter and multiplying by four.

To better align the calculation of ARR with Juniper Networks’ business and offerings, beginning with the quarter ended July 31, 2025, we also included revenue from software licenses support and maintenance in our ARR calculation, and will continue to do so going forward.

The impact of this change was not material to the current and prior periods presented.

We believe that ARR is a metric that allows management to better understand and highlight the potential future performance of our aaS business.

8 unchanged sentences

Year-over-year growth rate 63 % 49 %

The 49% year over year increase in ARR was primarily due to growth in our Hybrid Cloud, Server and Intelligent Edge segments, which was due to an expanding customer installed base, an expanded range of HPE GreenLake Flex Solutions, Server aaS, and Intelligent Edge aaS activity.

The 63% year over year increase in ARR was primarily due to growth in the Networking segment due to the Merger and an expanding customer installed base.

The ARR attributed to the Hybrid Cloud and Server segments increased due to an expanded range of HPE GreenLake Flex Solutions and increased Server aaS activity.

Capital Returns to Stockholders

Returning capital to our stockholders remains an important part of our capital allocation framework, which also consists of strategic investments.

We believe our existing balance of cash and cash equivalents, along with commercial paper and other short-term liquidity arrangements, are sufficient to satisfy our working capital needs, capital asset purchases, dividends, debt repayments, and other liquidity requirements associated with our existing operations.

As of October 31, 2025, our cash, cash equivalents and restricted cash were $5.9 billion, compared to $15.1 billion as of October 31, 2024, representing a decrease of $9.2 billion.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

Capital Returns to Shareholders

Returning capital to our shareholders remains an important part of our capital allocation framework, which also consists of strategic investments.

As of October 31, 2024, our cash, cash equivalents and restricted cash were $15.1 billion, compared to $4.6 billion as of October 31, 2023, representing an increase of $10.5 billion.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

10 unchanged sentences

The majority of our revenue is derived from sales of products and services and the associated support and maintenance, and such revenue is recognized when, or as, control of promised products or services is transferred to the customer at the transaction price.

Transaction price is adjusted for variable consideration which may be offered in contracts with customers, partners, and distributors and may include rebates, volume-based discounts, price protection, and other incentive programs.

Transaction price is adjusted for variable consideration, including rebates, which may be offered in contracts with customers, partners, and distributors.

Significant judgment is applied in determining the transaction price as we may be required to estimate variable consideration at the time of revenue recognition.

6 unchanged sentences

The Company establishes SSP ranges for its products and services and reassesses them periodically.

Taxes on Earnings

We calculate our current and deferred tax provisions based on estimates and assumptions that could differ from the final positions reflected in our income tax returns.

We adjust our current and deferred tax provisions based on our tax returns which are generally filed in the third or fourth quarters of the subsequent fiscal year.

Business Combinations

We account for acquired businesses using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition.

The determination of fair values of identifiable assets and liabilities requires significant judgment in determining critical estimates and assumptions.

Critical estimates in valuing intangible assets include the projected revenues, technology obsolescence rate, royalty rates, and discount rates for developed technology and IPR&D;

the projected revenues, customer retention rate, forecasted growth in earnings before interest, taxes, depreciation & amortization, and discount rate for the customer contracts, customer lists and distribution agreements.

Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.

Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the determination of the fair value of the intangible assets acquired.

Third-party valuation specialists are utilized for certain estimates.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

We recognize deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which we expect the differences to reverse.

Taxes on Earnings

We are subject to income taxes in the U.S.

and approximately 75 other countries.

Significant judgment is required in determining the consolidated provision for income taxes.

We record a valuation allowance to reduce deferred tax assets to the amount that we are more likely than not to realize.

1 unchanged sentence

In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income, of the appropriate character, in the jurisdictions in which the deferred tax assets are located, prior to their expiration under applicable tax laws.

Our effective tax rate includes the impact of certain undistributed foreign earnings and basis differences for which we have not provided for U.S.

federal taxes because we plan to reinvest such earnings and basis differences indefinitely outside the U.S.

We will remit non-indefinitely reinvested earnings of our non-U.S.

subsidiaries for which deferred U.S.

state income and foreign withholding taxes have been provided where excess cash has accumulated and when we determine that it is advantageous for business operations, tax, or cash management reasons.

We are subject to income taxes in the U.S.

and approximately 80 other countries, and we are subject to routine corporate income tax audits in many of these jurisdictions.

We are subject to routine corporate income tax audits in the U.S.

and numerous foreign jurisdictions.

We believe that positions taken on our tax returns are fully supported, but tax authorities may challenge these positions, which may not be fully sustained on examination by the relevant tax authorities.

1 unchanged sentence

Determining the income tax provision for these potential assessments and recording the related effects requires management judgments and estimates.

The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on our Provision for taxes, Net earnings and cash flows.

Our accrual for uncertain tax positions is attributable primarily to uncertainties concerning the tax treatment of our international operations, including the allocation of income among different jurisdictions, intercompany transactions and related interest, and uncertain tax positions from acquired companies.

2 unchanged sentences

We are permitted to conduct a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test.

As of October 31, 2024, our reporting units with goodwill are consistent with the reportable segments identified in Note 2, “Segment Information” to the Consolidated Financial Statements in Item 8 of Part II, with the exception of Server, which contains two reporting units:

Compute and High Performance Computing & AI (“HPC & AI”), and Corporate Investments and Other which contains two reporting units:

Advisory and Professional Services, and legacy Communications and Media Solutions.

We performed interim goodwill impairment tests as of November 1, 2024 and April 30, 2025 and our annual impairment test as of August 1, 2025.

As of October 31, 2025, our reporting units with goodwill are consistent with the reportable segments identified in Note 2, “Segment Information,” to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K, with the exception of Networking and Corporate Investments and Other segments.

The Networking segment contains two reporting units:

Intelligent Edge and Juniper Networks.

The Corporate Investments and Other segment contains the A & PS reporting unit.

When performing the goodwill impairment test, we compare the fair value of each reporting unit to its carrying amount.

12 unchanged sentences

Financial Condition and Results of Operations (Continued)

Annual Goodwill Impairment Review

Our annual goodwill impairment analysis, which we performed as of the first day of the fourth quarter of fiscal 2024, did not result in any impairment charges.

The excess of fair value over carrying amount for our reporting units ranged from approximately 8% to 198% of the respective carrying amounts.

2025 Interim and Annual Goodwill Impairment Reviews

During fiscal 2025, we performed the following goodwill impairment tests, two of which resulted in goodwill impairment:

• Impairment test performed as of November 1, 2024 based on organizational changes impacting the composition of reporting units as of that date did not result in an impairment;

• Interim test performed as of April 30, 2025 due to indicators of potential impairment resulted in the Hybrid Cloud reporting unit being impaired;

• Annual impairment test, which was performed as of August 1, 2025, resulted in the Hybrid Cloud reporting unit being impaired.

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

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

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, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows which we consider to be a level 3 unobservable input in the fair value hierarchy.

Prior to the quantitative goodwill impairment test, we 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, we recorded a goodwill impairment charge of $1.4 billion in the second quarter of fiscal 2025.

August 1, 2025 Annual Impairment Test

Based on the results of the annual quantitative impairment test performed as of August 1, 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 a strategic shift away from the Non-IP storage business.

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.

The quantitative goodwill impairment test indicated that the carrying value of the Hybrid Cloud reporting unit exceeded its fair value by $0.2 billion.

As a result, we recorded a goodwill impairment charge of $0.2 billion in the fourth 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 240%.

In order to evaluate the sensitivity of the estimated fair value of our reporting units in the goodwill impairment test, we 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 for HPC & AI and Hybrid Cloud.

The HPC & AI reporting unit has goodwill of $2.0 billion as of October 31, 2024, and excess of fair value over carrying value of 11% as of the annual test date.

The HPC & AI business is growing at a very fast pace driven primarily by the AI demand from model builders, but as GPUs represent a large portion of the solutions, the pricing is very competitive and margins are limited.

With the growth of AI in enterprise and sovereign customer segments and key strategic differentiators, such as direct liquid cooling, we believe that there is a potential for continued growth over time.

Interim Goodwill Impairment Reviews

In September 2024, HPE sold 30% of the total issued share capital of H3C to UNIS.

The equity investment in H3C primarily benefits the Compute and Hybrid Cloud reporting units.

Subsequent to the sale, on September 30, 2024, we performed an interim goodwill impairment analysis for Compute and Hybrid Cloud reporting units.

The excess of fair value over carrying amount for these reporting units was 6% for Compute and 5% for Hybrid Cloud.

We also applied a hypothetical 10% decrease to the fair value of Compute and Hybrid Cloud, noting that neither had an excess of fair value over carrying amount.

The Compute reporting unit has goodwill of $8.2 billion as of October 31, 2024, and excess of fair value over carrying value of 6% as of the September 30, 2024 interim test date.

The Compute business is cyclical in nature.

Over the last several years, digital transformation drove increased investment to modernize infrastructure.

However, in the current macroeconomic and inflationary environment, customers have invested selectively resulting in moderate unit growth and competitive pricing.

The Compute business continues to focus on capturing market share while maintaining operating margin, leveraging its strong portfolio of ProLiant Gen11 products.

The Hybrid Cloud reporting unit has goodwill of $4.8 billion as of October 31, 2024, and excess of fair value over carrying value of 5% as of the September 30, 2024 interim test date.

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

Our 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, is deferred and recognized in future periods.

Our interim 2024 goodwill impairment test performed as of November 1, 2023 based on organizational changes impacting the composition of reporting units as of that date did not result in any impairment charges.

RESULTS OF OPERATIONS

Revenue from our international operations has historically represented, and we expect will continue to represent, a majority of our overall net revenue.

As a result, our revenue growth has been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates.

In order to provide a framework for assessing performance excluding the impact of foreign currency fluctuations, we present the year-over-year percentage change in revenue on a constant currency basis, which assumes no change in foreign currency exchange rates from the prior-year period and does not adjust for any repricing or demand impacts from changes in foreign currency exchange rates.

This change in revenue on a constant currency basis is calculated as the quotient of (a) current year revenue converted to U.S.

dollars using the prior-year period's foreign currency exchange rates divided by (b) the prior-year period revenue.

This information is provided so that revenue can be viewed without the effect of fluctuations in foreign currency exchange rates, which is consistent with how management evaluates our revenue results and trends.

This constant currency disclosure is provided in addition to, and not as a substitute for, the year-over-year percentage change in revenue on a GAAP basis.

Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of this measure for comparative purposes.

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 $3.3 billion as of October 31, 2025 and an excess of fair value over carrying value of 0% as of the annual test date.

Hybrid Cloud business is transitioning 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.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

The excess of fair value over carrying amount for the Server reporting unit was 11%.

The Server reporting unit has a goodwill balance of $10.2 billion as of October 31, 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 we have a significant or sustained decline in our stock price, it is possible the estimates for our 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.

RESULTS OF OPERATIONS

Results of operations in dollars and as a percentage of net revenue were as follows:

9 unchanged sentences

Amortization of intangible assets 511 1.5 267 0.9 288 1.0

Impairment of goodwill — — % — — % 905 3.2 %

Impairment charges

1,621 4.7 — — — —

Transformation costs 2 — 93 0.3 283 1.0

Disaster charges 7 — % 1 — % 48 0.2 %

Acquisition, disposition and other related charges 204 0.6 % 69 0.1 % 19 0.1 %

Earnings from operations 2,190 7.3 % 2,089 7.2 % 782 2.7 %

Acquisition, disposition and other charges

458 1.3 211 0.7 70 0.2

(Loss) earnings from operations

(437) (1.3) 2,190 7.3 2,089 7.2

Interest and other, net (175) (0.5) (117) (0.4) (104) (0.4)

Gain on sale of equity interest — — 733 2.4 — —

Gain on sale of a business

248 0.7 — — — —

Earnings from equity interests 79 0.2 147 0.5 245 0.8

Earnings before provision for taxes 2,953 9.8 % 2,230 7.8 % 876 3.1 %

Provision for taxes (374) (1.2) % (205) (0.7) % (8) (0.1) %

(Loss) earnings before provision for taxes

(285) (0.9) 2,953 9.8 2,230 7.6

Benefit (provision) for taxes

342 1.0 (374) (1.2) (205) (0.7)

Net earnings attributable to HPE 57 0.2 2,579 8.6 2,025 7.0

Preferred stock dividends (116) (0.3) (25) (0.1) — —

Net earnings attributable to common stockholders $ 2,554 8.5 % $ 2,025 7.0 % $ 868 3.0 %

Net (loss) earnings attributable to common stockholders

$ (59) (0.2) % $ 2,554 8.5 % $ 2,025 7.0 %

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Fiscal 2025 compared with fiscal 2024

In fiscal 2024, total net revenue of $30.1 billion represented an increase of $992 million, or 3.4% (increased 3.3% on a constant currency basis).

net revenue increased by $521 million, or 5.0% to $10.9 billion, and net revenue from outside of the U.S.

increased by $471 million, or 2.5%, to $19.2 billion.

In fiscal 2025, total net revenue of $34.3 billion represented an increase of $4.2 billion, or 13.8%.

net revenue increased by $2.5 billion, or 23.1% to $13.4 billion, and net revenue from outside of the U.S.

increased by $1.7 billion, or 8.6%, to $20.9 billion.

The components of the weighted net revenue change by segment were as follows:

3 unchanged sentences

Hybrid Cloud 0.9 (0.3)

Intelligent Edge (2.9) 5.3

Networking 7.7 (2.9)

Financial Services — 0.1

3 unchanged sentences

Total HPE 13.8 3.4

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Fiscal 2025 compared with fiscal 2024

From a segment perspective, the primary factors contributing to the change in total net revenue are summarized as follows:

• Server net revenue increased $1,844 million, or 12.8%, primarily due to higher AUPs

• Hybrid Cloud net revenue decreased $107 million, or 1.9%, primarily due to lower AUPs

• Intelligent Edge net revenue decreased $847 million, or 15.7%, primarily due to lower volume and product mix effect

• Financial Services net revenue increased $32 million, or 0.9%, primarily due to higher finance income

• Corporate Investments and Other net revenue increased $29 million, or 2.9%, primarily due to revenue growth from Advisory and Professional Services (“A & PS”)

Fiscal 2023 compared with fiscal 2022

From a segment perspective, the primary factors contributing to the change in total net revenue are summarized as follows:

• Server net revenue decreased $1,111 million, or 7.2%, primarily due to lower server unit volume and unfavorable currency fluctuations

• Hybrid Cloud net revenue increased $260 million, or 5.0%, primarily due to higher unit volume

• Intelligent Edge net revenue increased $1,522 million, or 39.5%, primarily due to increased AUPs and volume and product mix effect

• Financial Services net revenue increased $141 million, or 4.2%, primarily due to higher rental revenue from higher average operating leases and higher finance income on finance leases due to an increasing interest rate environment

• Corporate Investments and Other net revenue decreased $27 million, or 2.7%, primarily due to unfavorable currency fluctuations

• Server net revenue increased $1,641 million, or 10.2%, primarily due to higher net AUPs

• Hybrid Cloud net revenue increased $267 million, or 4.9%, primarily due to higher Hybrid Cloud service revenue

• Networking net revenue increased $2,318 million, or 51.1%, primarily due to revenue attributable to Juniper Networks

• Financial Services net revenue decreased $8 million, or 0.2%, primarily due to lower rental revenue on lower average operating leases

• Corporate Investments and Other net revenue decreased $238 million, or 23.5%, primarily due to the divestiture of the Communications Technology Group (“CTG”) business

Fiscal 2025 total gross profit margin of 30.3% represents a decrease of 2.5 percentage points as compared to the respective prior year period.

The decrease was primarily due to decline in revenue in the Intelligent Edge segment and higher mix of lower margin products in the Server segment.

The decrease was primarily due to an increase in cost of sales in the Server, Networking, and Hybrid Cloud segments.

Operating expenses

Research and development (“R&D”)

R&D expense decreased by $103 million, or 4.4%, primarily due to capitalization of software costs, which contributed 4.2 percentage points to the change.

R&D expense increased by $272 million, or 12.1%, primarily due to operating expenses associated with Juniper Networks, which contributed 17.3 percentage points to the change.

The increase was partially offset by lower operating expenses due to higher mix of capital versus expense investment, which contributed 8.6 percentage points to the change.

Selling, general and administrative (“SG&A”)

SG&A expense decreased by $289 million, or 5.6%, primarily due to lower employee costs, which contributed 3.3 percentage points, lower travel and marketing expenses and lower consulting costs, both of which contributed 1.4 percentage points to the change.

Transformation programs and costs

Our transformation programs consist of the Cost Optimization and Prioritization Plan (launched in 2020) and the HPE Next Plan (launched in 2017).

Transformation costs decreased by $190 million, or 67.1%, due to lower charges incurred in the current period as the primary elements of these plans have been substantially completed by the end of fiscal 2023.

Refer to Note 3, “Transformation Programs” to the Consolidated Financial Statements in Item 8 of Part II for further discussion.

Acquisition, disposition and other related charges

Acquisition, disposition and other related charges increased by $135 million or 195.7%, primarily due to costs incurred in connection with the pending acquisition of Juniper Networks.

SG&A expense increased by $833 million, or 17.1%, primarily due to increased operating expenses associated with Juniper Networks and higher employee costs, which contributed 14.1 percentage points to the change, and the expenses incurred related to the cost reduction program, which contributed 3.1 percentage points to the change.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

Amortization of intangible assets

Amortization of intangible assets increased by $244 million, or 91%, primarily due to the amortization expense of the acquired intangibles as a result of the Merger.

The increase was partially offset by certain intangible assets associated with prior acquisitions reaching the end of their amortization periods.

Impairment charges

In fiscal 2025, we recorded goodwill impairment charges and the impairment of certain fixed assets of $1.6 billion.

It was determined that the fair value of the Hybrid Cloud reporting unit was below the carrying value of its net assets.

The decline in the fair value was primarily driven by an increase in the discount rate used in the discounted cash flows analysis, driven by heightened macroeconomic uncertainty.

Refer to Note 11, “Goodwill and Intangible Assets,” to the Consolidated Financial Statements in Item 8 of Part II for more information.

Acquisition, disposition and other charges

Acquisition, disposition and other charges increased by $247 million, or 117.1%, primarily due to the Merger.

Interest and other, net

Interest and other, net expense increased by $13 million or 12.5%, primarily due to lower gain from sale of certain investments and unfavorable currency fluctuations in the current year and the previous year containing tax indemnification income due to an audit settlement.

The increase was partially offset by a decrease in net interest expense and lower loss on equity investments in the current year.

Interest and other, net expense increased by $58 million, or 49.6%, primarily due to higher loss on equity investments of $122 million in the current fiscal year and increase in net interest expense of $114 million.

The increase was partially offset by an increase in the non-service net periodic benefit credit of $104 million and the gain of $52 million from the settlement to resolve claims solely against Sushovan Hussain in the ongoing Autonomy litigation.

Gain on sale of equity interest

On September 4, 2024, the Company divested 30% of the total issued share capital of H3C to UNIS.

We continue to possess the option to sell the remaining 19% of the total issued share capital of H3C at a later date.

In connection with this sale, we recorded a gain on sale of equity interest of $733 million.

In connection with this sale, we recorded a gain on sale of equity interest of $733 million in fiscal 2024.

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 $248 million.

Earnings from equity interests

In fiscal 2024, Earnings from equity interests decreased by $98 million or 40%, primarily due to lower net income earned by H3C and the disposition of 30% of the total issued share capital of H3C, partially offset by lower amortization expense from basis difference in the current period.

Provision for taxes

For fiscal 2024 and 2023, we recorded income tax expense of $374 million and $205 million, respectively, which reflect effective tax rates of 12.7% and 9.2%, respectively.

In fiscal 2025, Earnings from equity interests decreased by $68 million, or 46.3%, primarily due to lower earnings from our equity interest in H3C as a result of the disposition of 30% of the total issued share capital of H3C in fiscal 2024.

Benefit (provision) for taxes

For fiscal 2025 and 2024, we recorded income tax benefit of $342 million and income tax expense of $374 million, respectively, which reflect effective tax rates of 120.0% and 12.7%, 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 may also be materially impacted by discrete tax adjustments during the fiscal year.

The jurisdictions with favorable tax rates that had the most significant impact on our effective tax rate in the periods presented include Puerto Rico and Singapore.

In fiscal 2024, we recorded $43 million of net income tax charges related to items discrete to the year.

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 the fiscal year.

The effective tax rate for fiscal 2025 also included the effects of the non-deductible goodwill impairment.

In fiscal 2025, we recorded $693 million of net income tax benefits related to various items discrete to the year.

These amounts primarily included:

• $402 million of net income tax benefits related to costs incurred as a result of the Merger which was inclusive of a $327 million net income tax benefit from the tax impact of integration transactions,

• $76 million of net income tax benefits related to the release of certain state valuation allowances due to changes in tax law,

• $61 million of net income tax benefits related to the reduction in uncertain tax positions due to statute of limitations expirations, and

• $55 million of net income tax benefits related to the cost reduction program.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

In fiscal 2024, we recorded $43 million of net income tax charges related to various items discrete to the year.

These amounts primarily included:

• $104 million of net income tax charges resulting from the gain on the H3C divestiture, which includes $215 million of U.S.

and foreign income tax charges offset by $111 million of income tax benefit for the release of an uncertain tax benefit related to the prior divestiture, partially offset by

• $54 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and

• $11 million of net excess tax benefits related to stock-based compensation.

In fiscal 2023, we recorded $131 million of net income tax benefits related to items discrete to the year.

These amounts primarily included:

• $104 million of income tax benefits related to transformation costs and acquisition, disposition and other related charges and

• $54 million of income tax benefits related to transformation costs, and acquisition, disposition and other charges and

• $11 million of net excess tax benefits related to stock-based compensation.

Segment Information

Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker, who is the CEO, uses to evaluate, view, and run our business operations, which include, but are not limited to, customer base and homogeneity of products and technology.

Hewlett Packard Enterprise'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 organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment 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 Consolidated Financial Statements in Item 8 of Part II.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Segment Results

The following provides an overview of our key financial metrics by segment for fiscal 2025 as compared to fiscal 2024:

Consolidated Server Hybrid Cloud Intelligent Edge Financial Services Corporate

Consolidated Server Hybrid Cloud Networking Financial Services Corporate

Investments and Other

3 unchanged sentences

Year-over-year change % 13.8% 10.2% 4.9% 51.1% (0.2)% (23.5)%

Earnings (loss) from operations (2)

Gross Profit as a % of net revenue

30.3% 20.9% 37.0% 59.8% 18.5% 22.9%

Earnings (loss) from operations as a % of net revenue 7.3% 11.2% 4.5% 24.6% 9.0% (2.5)%

(Loss) earnings from operations (2)

$ (437) $ 1,343 $ 335 $ 1,596 $ 361 $ (32)

(Loss) earnings from operations as a % of net revenue

(1.3)% 7.6% 5.8% 23.3% 10.3% (4.1)%

Year-over-year change percentage points (8.6) pts (3.6) pts 1.1 pts (1.3) pts 1.3 pts (1.6) pts

(1) HPE consolidated net revenue excludes inter-segment net revenue.

(2) Segment earnings from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense, amortization of intangible assets, impairment of goodwill, transformation costs, disaster charges, divestiture related exit costs, and acquisition, disposition and other related charges.

(2) Segment earnings (loss) from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense, amortization of intangible assets, impairment charges, transformation costs, H3C divestiture related severance costs, severance costs related to the cost reduction program, and acquisition, disposition and other charges.

For the fiscal years ended October 31,

2025 2024 2023 2025 vs 2024

2023 vs 2022 % Change

Dollars in millions

Net revenue $ 17,745 $ 16,104 $ 14,266 10.2 %

Cost of sales 14,038 12,060 10,071 16.4 %

3,707 4,044 4,195 (8.3) %

Operating expenses

2,364 2,240 2,380 5.5 %

Earnings from operations $ 1,343 $ 1,804 $ 1,815 (25.6) %

Earnings from operations as a % of net revenue 7.6 % 11.2 % 12.7 %

Fiscal 2024 compared with fiscal 2023

Server net revenue increased by $1,844 million, or 12.8% in actual dollars and constant currency, primarily due to a $1,812 million, or 16.7%, increase in product revenue.

The increase in product revenue was primarily due to higher AUPs of $1,769 million, or 16.3%.

Server earnings from operations as a percentage of net revenue decreased 1.5 percentage points primarily due to an increase in costs of products as a percentage of net revenue, moderated by a decrease in operating expenses as a percentage of net revenue.

The increase in costs of products as a percentage of net revenue was primarily due to higher mix of lower margin products and competitive pricing pressure.

The decrease in operating expenses as a percentage of net revenue was primarily due to lower total operating expenses as a result of cost containment measures.

Fiscal 2023 compared with fiscal 2022

Server net revenue decreased by $1,111 million, or 7.2% (decreased 3.5% on a constant currency basis), primarily due to a $1,061 million, or 8.9%, decrease in product revenue.

The decline in product revenue was primarily due to lower server unit volume of $1,281 million, or 10.7%, and unfavorable currency fluctuations of $458 million, or 3.8%.

The product revenue decline was moderated by an increase in AUPs of $683 million, or 5.7%, led by higher sales of server configurations with more complex component architectures in our next generation products.

Server earnings from operations as a percentage of net revenue remained relatively flat.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

Fiscal 2025 compared with fiscal 2024

Server net revenue increased by $1,641 million, or 10.2%, primarily due to a $1,691 million, or 13.3%, increase in product revenue.

The increase in product revenue was primarily due to higher net AUPs of $2,556 million, or 20.1%, partially offset by a decrease in net unit volume of $827 million, or 6.5%.

Server gross profit decreased by $337 million, or 8.3%, primarily driven by an increase in cost of sales by $1,978 million, or 16.4%, due to the input cost increases and higher mix of lower margin products.

Earnings from operations decreased by $461 million, or 25.6%, primarily driven by lower gross profit and an increase in operating expenses by $124 million, or 5.5%, due to higher SG&A expenses.

For the fiscal years ended October 31,

2 unchanged sentences

Net revenue $ 5,754 $ 5,487 $ 5,588 4.9 %

Cost of sales

3,624 3,302 3,314 9.8 %

2,130 2,185 2,274 (2.5) %

Operating expenses

1,795 1,926 2,027 (6.8) %

Earnings from operations $ 335 $ 259 $ 247 29.3 %

1 unchanged sentence

Fiscal 2025 compared with fiscal 2024

Hybrid Cloud net revenue decreased by $107 million, or 1.9% (decreased 2.0% on a constant currency basis) primarily due to a decrease in AUPs, partially offset by an increase in unit volume.

Hybrid Cloud product revenue decreased $267 million, or 8.1%, primarily due to a decrease in AUPs of $831 million, or 25.2%, led by private cloud and storage products, partially offset by a unit volume increase of $543 million or 16.5%, led by private cloud and storage products.

Hybrid Cloud services revenue increased by $160 million, or 7.3%, primarily due to a unit volume increase of $275 million, or 12.5%, led by private cloud and infrastructure SaaS.

This increase was partially offset by lower AUPs of $107 million, or 4.9%.

Hybrid Cloud earnings from operations as a percentage of net revenue remained relatively flat as compared to the prior-year period.

Fiscal 2023 compared with fiscal 2022

Hybrid Cloud net revenue increased by $260 million, or 5.0% (increased 8.2% on a constant currency basis) primarily due to an increase in unit volume, partially offset by unfavorable currency fluctuations and decrease in AUPs.

Hybrid Cloud product revenue increased by $180 million, or 5.8%, primarily due to an increase in unit volume of $371 million or 11.9%, led by private cloud and infrastructure SaaS.

The increase in product revenue was moderated by unfavorable currency fluctuations of $130 million or 4.2%, and a decrease in AUPs of $39 million or 1.3%.

Hybrid Cloud services revenue increased by $80 million, or 3.8%, primarily due to a unit volume increase of $178 million, or 8.4%, led by private cloud and infrastructure SaaS.

The increase in service revenue was partially offset by decrease in AUPs of $43 million or 2.0% and unfavorable currency fluctuations of $40 million or 1.9%.

Hybrid Cloud earnings from operations as a percentage of net revenue decreased 4.7 percentage points due to an increase in cost of products sold as a percentage of net revenue and an increase in operating expenses as a percentage of net revenue.

The increase in cost of products and services as a percentage of net revenue was primarily due to lower margin GreenLake Flex Solutions deals and decrease in storage subscription revenue.

The increase in operating expenses as a percentage of net revenue was primarily due to the unfavorable currency fluctuations.

Intelligent Edge

Hybrid Cloud net revenue increased by $267 million, or 4.9%, due to an increase in Hybrid Cloud service revenue by $285 million, or 11.7%.

The increase was primarily driven by higher services contribution from private cloud solutions.

Hybrid Cloud product revenue was relatively flat.

Hybrid Cloud gross profit decreased by $55 million, or 2.5%, primarily driven by an increase in cost of products as we transition to a more software-defined platform with HPE Alletra.

Hybrid Cloud earnings from operations increased by $76 million, or 29.3%, due to a decrease in operating expenses by $131 million, or 6.8%, primarily driven by capitalization of software costs and cost containment measures, partially offset by a decrease in gross profit as mentioned above.

For the fiscal years ended October 31,

2 unchanged sentences

Net revenue $ 6,850 $ 4,532 $ 5,379 51.1 %

Cost of sales

2,756 1,706 2,228 61.5 %

4,094 2,826 3,151 44.9 %

Operating expenses

2,498 1,711 1,808 46.0 %

Earnings from operations $ 1,596 $ 1,115 $ 1,343 43.1 %

4 unchanged sentences

Fiscal 2025 compared with fiscal 2024

Intelligent Edge net revenue decreased by $847 million, or 15.7% (decreased 15.9% on a constant currency basis).

Product revenue decreased by $1,050 million, or 23.9%, led by lower volume and product mix effect of $876 million, or 19.9%, and lower AUPs of $183 million, or 4.2%.

The product revenue decrease was led by switching products and wireless local area network products due to softened demand.

Services net revenue increased $203 million, or 20.6%, primarily led by our aaS and attached support service offerings.

Intelligent Edge earnings from operations as a percentage of net revenue decreased 0.4 percentage points primarily due to increase in operating expenses as a percentage of net revenue, partially offset by a decrease in cost of products and services as a percentage of net revenue.

Operating expenses as a percentage of net revenue increased primarily due to scale of net revenue decline, higher employee costs related to acquisitions and investments to enhance Aruba offerings in GreenLake.

The decrease in cost of product and services as a percentage of net revenue was primarily due to favorable revenue mix and cost containment measures.

Fiscal 2023 compared with fiscal 2022

Intelligent Edge net revenue increased by $1,522 million, or 39.5% (increased 42.5% on a constant currency basis).

Product revenue increased by $1,396 million, or 46.5%, led by higher AUPs of $1,284 million, or 42.8%, and a volume and product mix effect of $217 million, or 7.2%, moderated by unfavorable currency fluctuations of $106 million, or 3.5%.

The product revenue increase was led by switching and wireless local area network products, which benefited from improvements in the supply availability, and elevated order book levels at the beginning of the period.

Services net revenue increased $127 million, or 14.8%, primarily led by our aaS and attached support service offerings.

Intelligent Edge earnings from operations as a percentage of net revenue increased 10.9 percentage points primarily due to decreases in cost of products and services as a percentage of net revenue and operating expenses as a percentage of net revenue.

The decrease in cost of product and services as a percentage of net revenue was primarily due to lower supply chain costs, moderating the decrease was a lower mix of higher-margin support services revenue.

Operating expenses as a percentage of net revenue decreased primarily due to our cost containment measures.

Networking net revenue increased by $2,318 million, or 51.1%, primarily due to a $1,444 million, or 43.2%, increase in product revenue, and $874 million, or 73.6%, increase in service revenue.

The increase in product revenue was primarily led by revenue attributable to Juniper Networks of $1,367 million, or 40.9%, higher volume and product mix effect of $152 million, or 4.5%, partially offset by lower AUPs of $72 million, or 2.2%.

The increase in service revenue was primarily led by revenue attributable to Juniper Networks of $729 million, or 61.4%, and increased services net revenue primarily from our aaS offerings of $144 million, or 12.1%.

Networking gross profit increased by $1,268 million, or 44.9%, primarily driven by increased net revenue as mentioned above.

The increase was partially offset by higher cost of sales of $1,050 million, or 61.5%, which was primarily attributable to Juniper Networks and higher input cost.

Networking earnings from operations increased by $481 million, or 43.1%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $787 million, or 46.0%.

The increase in operating expenses was primarily attributable to Juniper Networks.

Financial Services

3 unchanged sentences

Net revenue $ 3,504 $ 3,512 $ 3,480 (0.2) %

Cost of sales

2,856 2,923 2,919 (2.3) %

648 589 561 10.0 %

Operating expenses

287 273 280 5.1 %

Earnings from operations $ 361 $ 316 $ 281 14.2 %

1 unchanged sentence

Fiscal 2025 compared with fiscal 2024

FS net revenue increased by $32 million, or 0.9% (increased 0.6% on a constant currency basis) primarily due to higher finance income from higher average finance leases in a higher interest rate environment, along with favorable currency fluctuations, partially offset by lower rental revenue on lower average operating leases and lower asset management lease buyout revenue.

FS earnings from operations as a percentage of net revenue increased 0.9 percentage points, although the cost of services as a percentage of net revenue and operating expenses as a percentage of net revenue were relatively flat.

Fiscal 2023 compared with fiscal 2022

FS net revenue increased by $141 million, or 4.2% (increased 5.4% on a constant currency basis) due primarily to higher rental revenue from higher average operating leases and higher finance income on finance leases due to an increasing interest rate environment, partially offset by lower asset management revenue primarily from lower pre-owned asset sales and unfavorable currency fluctuations.

FS earnings from operations as a percentage of net revenue decreased 3.5% percentage points due primarily to an increase in cost of services as a percentage of net revenue, while operating expenses as a percentage of net revenue were

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

relatively flat.

The increase to cost of services as a percentage of net revenue resulted primarily from a combination of higher borrowing costs and higher depreciation expense, partially offset by lower bad debt expense.

FS net revenue decreased by $8 million, or 0.2%, primarily due to lower rental revenue on lower average operating leases, largely offset by higher finance income from higher average finance leases, higher asset management remarketing revenue, and asset recovery services revenue.

FS gross profit increased by $59 million, or 10.0%, primarily driven by a decrease in cost of sales of $67 million, or 2.3%, largely due to lower depreciation expense, partially offset by higher bad debt expense.

FS earnings from operations increased by $45 million, or 14.2%, primarily due to higher gross profits, partially offset by an increase in operating expenses by $14 million, or 5.1% resulting from higher SG&A expenses.

Financing Volume

2 unchanged sentences

Financing volume $ 5,475 $ 6,616 $ 6,412

Financing volume, which represents the amount of financing provided to customers for equipment and related software and services, including intercompany activity, increased by 3.2% in fiscal 2024 as compared to the prior-year period.

The increase was primarily driven by higher financing of HPE product sales and services, partially offset by lower financing of third-party product sales and services.

Financing volume, which represents the amount of financing provided to customers for equipment and related software and services, including intercompany activity, decreased by 17.2% in fiscal 2025 as compared to the prior-year period.

The decrease was primarily driven by lower financing of both HPE and third-party product sales and services.

Portfolio Assets and Ratios

1 unchanged sentence

The accounting policies used to derive FS amounts are substantially the same as those used by the Company.

However, intercompany loans and certain accounts that are reflected in the segment balances are eliminated in our Consolidated Financial Statements.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

intercompany loans and certain accounts that are reflected in the segment balances are eliminated in our Consolidated Financial Statements.

The portfolio assets and ratios derived from the segment balance sheets for FS were as follows:

16 unchanged sentences

Debt benefiting FS totaled $11.6 billion and $11.8 billion at October 31, 2025 and 2024, respectively, and was determined by applying an assumed debt-to-equity ratio, which management believes to be comparable to that of other similar financing companies.

FS equity at October 31, 2024 and 2023, was $1.7 billion and $1.7 billion, respectively.

FS equity at October 31, 2025 and 2024, was $1.7 billion.

As of October 31, 2025 and 2024, FS net cash and cash equivalents balances were $727 million and $533 million, respectively.

Net portfolio assets as of October 31, 2024 increased 3.9% from October 31, 2023.

The increase generally resulted from new financing volume exceeding portfolio runoff during the period, along with favorable currency fluctuations.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Net portfolio assets as of October 31, 2025 decreased 3.0% from October 31, 2024.

The decrease generally resulted from portfolio runoff exceeding new financing volume during the period.

FS bad debt expense includes charges to general reserves, specific reserves and write-offs for sales-type, direct-financing and operating leases.

3 unchanged sentences

2025 2024 2023 2025 vs 2024

% Change 2023 vs 2022

Dollars in millions

Net revenue $ 776 $ 1,014 $ 985 (23.5) %

Cost of sales

598 795 808 (24.8) %

178 219 177 (18.7) %

Operating expenses

210 244 254 (13.9) %

Loss from operations $ (32) $ (25) $ (77) (28.0) %

1 unchanged sentence

Fiscal 2025 compared with fiscal 2024

Corporate Investments and Other net revenue increased by $29 million, or 2.9% (increased 4.3% on a constant currency basis) primarily due to revenue growth from A & PS, partially offset by unfavorable currency fluctuations.

Corporate Investments and Other loss from operations as a percentage of net revenue decreased 5.3 percenta ge points primarily due to decreases in cost of services as a percentage of net revenue resulting from our cost containment measures, and decreases in operating expenses as a percentage of net revenue due to the scale of net revenue growth and lower total operating expenses.

Fiscal 2023 compared with fiscal 2022

Corporate Investments and Other net revenue decreased by $27 million, or 2.7% (increased 2.1% on a constant currency basis) primarily due to unfavorable currency fluctuations.

Corporate Investments and Other loss from operations as a percentage of net revenue increased 5.2 percentage points primarily due to increases in cost of services as a percentage of net revenue while operating expenses as a percentage of net revenue remained relatively flat.

Cost of services as a percentage of net revenue increased primarily due to the scale of net revenue decline and increases in cost of services due to unfavorable currency fluctuations and higher expenses.

Corporate Investments and Other net revenue decreased by $238 million, or 23.5%, primarily due to the divestiture of the CTG business effective December 1, 2024.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Gross profit decreased by $41 million, or 18.7%, primarily due to lower net revenue driven by the divestiture of the CTG business, partially offset by a decrease in cost of sales.

Loss from operations increased by $7 million, or 28.0%, primarily driven by lower gross profit, partially offset by a decrease in operating expenses due to the divestiture of the CTG business.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

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, acquisitions and disposal activities including legal settlements, restructuring activities, transformation costs, indemnifications, maturing debt, interest payments, and income tax payments, in addition to any future investments, share repurchases, and shareholder dividend payments.

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, transformation costs, 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, including the debt funding related to the pending merger with Juniper Networks, proceeds from issuance of the Preferred Stock and proceeds from the sale of 30% of the total issued share capital of H3C, 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 (including for the payment of consideration to consummate the Juniper Networks transaction) and for the foreseeable future thereafter.

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 and market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A.

Our cash balances are held in numerous locations throughout the world, with a substantial amount held in the U.S.

Our cash balances are held in numerous locations throughout the world, with a substantial amount held outside the U.S.

as of October 31, 2025.

5 unchanged sentences

generally will not be taxable from a U.S.

federal tax perspective, but may be subject to state income or

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

foreign withholding tax.

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.

5 unchanged sentences

For more information on our share repurchase program, refer to Note 15, “Stockholders' Equity,” to the Consolidated Financial Statements in Item 8 of Part II.

On May 23, 2024, we announced plans to divest our Communications Technology Group (“CTG”) business to HCLTech.

CTG is included in our Communications and Media Solutions business, which is reported in the Corporate Investments and Other segment.

On November 17, 2025 and November 28, 2025, we announced plans to divest our remaining investment in H3C’s issued share capital for approximately $1.4 billion.

For more information on the pending divestiture of H3C shares, refer to Note 19, “Equity Interests,” to the Consolidated Financial Statements in Item 8 of Part II.

On May 23, 2024, we announced plans to divest our CTG business to HCLTech.

CTG was included in our Communications and Media Solutions business, which was reported in the Corporate Investments and Other segment.

This divestiture includes the platform-based software solutions portions of the CTG portfolio, including systems integration, network applications, data intelligence, and the business support systems groups.

As of October 31, 2024, assets and liabilities to be sold have been presented in our Consolidated Balance Sheets as assets and liabilities held for sale.

On December 1, 2024, we completed the disposition of CTG.

We received net proceeds of $210 million and expect to recognize a gain of approximately $230 million.

On January 9, 2024, we entered into the Merger Agreement, under which HPE will acquire Juniper Networks in an all-cash transaction for $40.00 per share, representing an equity value of approximately $14 billion.

The transaction was unanimously approved by the boards of directors of both companies.

On April 2, 2024, Juniper Networks shareholders approved the transaction.

The closing of the transaction remains subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.

In connection with the merger, we entered into a commitment letter whereby we obtained a commitment from Citigroup Global Markets Inc., JPMorgan Chase Bank, N.A.

and Mizuho Bank, Ltd.

for a $14.0 billion senior unsecured delayed draw term loan facility, comprised of an $11.0 billion 364-day tranche and a $3.0 billion three-year tranche, subject to customary conditions (the “Term Loan Commitment Letter”).

In September 2024, we issued $9.0 billion of senior unsecured notes and $1.5 billion of Preferred Stock, the net proceeds of which we intend to use to fund a portion of the consideration for the acquisition of Juniper Networks and for other general corporate purposes, which may include, among other uses, repaying certain indebtedness of HPE, Juniper Networks and our and its respective subsidiaries.

In addition, in furtherance of the Term Loan Commitment Letter, we entered into term loan agreements with JPMorgan Chase Bank, N.A, Citibank, N.A., and Mizuho Bank, Ltd.

for approximately $12.0 billion of senior unsecured delayed draw term loan facilities, comprised of an approximately $9.0 billion 364-day tranche (which was reduced from the original commitment of $11.0 billion, upon receipt and application of approximately $2.0 billion in post-tax proceeds from our sale to UNIS of 30% of the total issued share capital of H3C, as further described below) and a $3.0 billion three-year tranche, subject to customary conditions.

We have since further reduced the commitments under the 364-day term loan to $1.0 billion upon receipt and application of certain proceeds from the aforementioned issuance of senior unsecured notes and the Preferred Stock.

Unless previously terminated, commitments under both the 364-day term loan and the three-year term loan will terminate upon the earliest of (i) five business 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.

In connection with the entry into the aforementioned 364-day term loan and the three-year term loan, on September 12, 2024, we terminated the Term Loan Commitment Letter.

In September 2024, we issued 30 million shares of the Preferred Stock, par value $0.01 per share, for an aggregate purchase price of $1.5 billion, less issuance costs of $38 million.

As of October 31, 2024, 30 million shares of the Preferred Stock was outstanding.

We intend to use these net proceeds as indicated above.

For more information on our Preferred Stock, refer to Note 15, “Stockholders' Equity,” to the Consolidated Financial Statements in Item 8 of Part II.

Pursuant to the Shareholders' Agreement among our relevant subsidiaries, UNIS, and H3C dated as of May 1, 2016, as amended from time to time, and most recently on October 28, 2022, we delivered a notice to UNIS on December 30, 2022, to exercise our right to put to UNIS, for cash consideration, all of the H3C shares held by us, which represent 49% of the total issued share capital of H3C.

On May 26, 2023, our relevant subsidiaries entered into a Put Share Purchase Agreement with UNIS, whereby UNIS has agreed to purchase all of the H3C shares held by us, through our subsidiaries.

On May 24, 2024, our relevant subsidiaries entered into (i) an Amended and Restated Put Share Purchase Agreement with UNIS, whereby our relevant subsidiaries shall sell to UNIS 30% of the total issued share capital of H3C for pre-tax cash consideration of approximately $2.1 billion by August 31, 2024 (the “Sale Transaction”), and (ii) an Agreement on Subsequent Arrangements with UNIS, whereby upon closing of the Sale Transaction, our relevant subsidiary shall have a put option to sell to UNIS and

We received net proceeds of $210 million and recognized a gain of $248 million included in Gain on sale of a business in the Consolidated Statements of Earnings.

HPE funded the aggregate consideration for the Merger through a combination of cash from its balance sheet, commercial paper issuances, and borrowings pursuant to the three-year delayed-draw term loan credit facility of $3.0 billion and the 364-day delayed-draw term loan credit facility of $1.0 billion entered into in September 2024.

As of October 31, 2025, $2.0 billion was outstanding against the three-year delayed-draw term loan credit facility while no balances were outstanding against the 364-day delayed-draw term loan credit facility.

For more information on the drawdown term loan facility, see Note 14, “Borrowings,” to the Consolidated Financial Statements in Item 8 of Part II.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

UNIS shall have a call option to purchase from our relevant subsidiary 19% of the total issued share capital of H3C for pre-tax cash consideration of approximately $1.4 billion between the 16 th month and until the 36 th month after the Sale Transaction.

The transactions referenced in clauses (i) and (ii) above, taken together, revise the arrangements governing the aforementioned sale of all of the H3C shares held by us, through our subsidiaries and are subject to certain grace periods and regulatory approvals.

On September 4, 2024, pursuant to the Amended and Restated Put Share Purchase Agreement with UNIS, we received $2.1 billion of pre-tax consideration ($2.0 billion post-tax), in connection with the sale to UNIS of 30% of the total issued share capital of H3C.

Our cash, cash equivalents, restricted cash, total debt and available borrowing resources were as follows:

9 unchanged sentences

$ 1,053 $ 908 $ 1,517

(1) Excludes the financing commitment for the Juniper Networks acquisition.

The maximum aggregate commitment under this facility is $4.0 billion, however, no balances were outstanding under this facility as of October 31, 2024.

(2) The maximum aggregate borrowing amount of the commercial paper programs and revolving credit facility is $5.75 billion.

(3) The maximum aggregate capacity under the uncommitted lines of credit is $1.5 billion of which $0.6 billion was primarily utilized towards issuances of bank guarantees.

(1) The fiscal 2024 period excludes the financing commitment for the Merger.

The maximum aggregate commitment under those facilities was $4.0 billion, however, no balances were outstanding under these facilities as of October 31, 2024.

These facilities were not available as of the end of fiscal 2023.

(2) The maximum borrowing amounts available under the commercial paper programs and revolving credit facility are $5.75 billion and $5.25 billion, respectively, as at October 31, 2025.

The combined borrowings between both sources cannot exceed $5.75 billion.

(3) The maximum aggregate capacity under the uncommitted lines of credit is $1.4 billion of which $0.4 billion was primarily utilized towards issuances of bank guarantees as of October 31, 2025.

The following tables represent the way in which management reviews cash flows:

8 unchanged sentences

Operating Activities

Net cash provided by operating activities decreased by $87 million for fiscal 2024, as compared to fiscal 2023.

The decrease was primarily due to higher cash payouts for variable compensation, unfavorable impacts from financing receivables, and lower cash generated from operations.

The decrease was moderated by favorable working capital, as compared to the prior-year period.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Net cash provided by operating activities decreased by $1.4 billion for fiscal 2025, as compared to fiscal 2024.

The decrease was primarily due to unfavorable working capital, largely resulting from timing of vendor payments moderated by lower inventory purchases.

The decrease was partially offset by lower financing lease volume and higher net cash generated from operations in the current period.

Our working capital metrics and cash conversion impacts were as follows:

4 unchanged sentences

Days of purchases outstanding in accounts payable (“DPO”)

(108) (170) (134)

Cash conversion cycle 30 (12) (4)

1 unchanged sentence

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.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

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 2023, the decrease in DSO by 5 days in the current period was primarily due to higher early collections.

Compared to the corresponding three-month period in fiscal 2024, the increase in DSO by 11 days in the current period was primarily due to a decrease in early payments, along with the impact of incremental receivables as a result of the Merger.

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 2023, the increase in DOS by 33 days in the current period was primarily due to higher inventory levels caused by strategic purchases of key components to support growth in AI systems.

Compared to the corresponding three-month period in fiscal 2024, the decrease in DOS by 31 days in the current period was primarily due to higher shipments for large deals and lower purchases due to seasonality.

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 2023, the increase in DPO by 36 days in the current period was primarily due to higher inventory purchases.

Compared to the corresponding three-month period in fiscal 2024, the decrease in DPO by 62 days in the current period was primarily due to lower purchases, along with higher payments to outsourced manufacturers.

Investing Activities

Net cash used in investing activities decreased by $3.2 billion in fiscal 2024, as compared to the corresponding period in fiscal 2023.

The decrease was primarily due to proceeds from UNIS in connection with the sale of 30% of the total issued share capital of H3C of $2.1 billion, lower net payments made in connection with business acquisitions of $0.6 billion, lower cash utilized in net financial collateral activities of $0.2 billion, and lower investments in property, plant and equipment and software assets, net of sales proceeds of $0.2 billion, as compared to the prior-year period.

Net cash used in investing activities increased by $13.1 billion in fiscal 2025, as compared to fiscal 2024.

The increase was primarily due to a payment of $12.3 billion (net of cash acquired) made during the current period for the Merger, and proceeds of $2.1 billion from the prior-year sale of 30% of the total issued share capital of H3C.

The increase was moderated by higher proceeds from the sale of available-for-sale securities of $0.9 billion and proceeds from the divestiture of our CTG business for $0.2 billion during the current period, as compared to the prior-year period.

Financing Activities

Net cash provided by financing activities increased by $7.6 billion in fiscal 2024, as compared to the corresponding period in fiscal 2023.

This was primarily due to higher proceeds from debt issuance (net of issuance costs) of $6.5 billion, proceeds from the issuance of the Preferred Stock (net of issuance costs) of $1.5 billion, and lower share repurchases of $0.3 billion, partially offset by higher repayments of debt of $0.6 billion, as compared to the prior-year period.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Net cash provided by financing activities decreased by $5.2 billion in fiscal 2025, as compared to fiscal 2024.

This decrease was primarily due to lower proceeds from debt of $2.1 billion (net of issuance costs), higher repayments of debt of $1.4 billion, and higher cash utilized for stock-based award activities of $0.2 billion during the current period, as compared to the prior-year period.

In addition, the prior-year period included proceeds from the issuance of the Preferred Stock (net of issuance costs) of $1.5 billion.

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.

FCF increased by $0.1 billion, as compared to the corresponding period in fiscal 2023.

This was primarily due to lower net capital expenditures, as compared to the prior-year period.

FCF decreased by $1.3 billion in fiscal 2025, as compared to fiscal 2024, primarily due to lower cash provided by operating activities.

For more information on our FCF, refer to the section entitled “GAAP to non-GAAP Reconciliations” included in this MD&A.

7 unchanged sentences

Weighted-average interest rate 4.8 % 5.4 % 5.4 %

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

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.

In September 2024, we terminated the prior senior unsecured revolving credit facility that was entered into in December 2021, and entered into a new senior unsecured revolving credit facility with an aggregate lending commitment of $5.25 billion for a period of five years.

The commitment is 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 Juniper Networks acquisition and refinancing of Juniper Networks’ credit agreement in connection with the closing of the Juniper Networks acquisition.

In September 2024, we terminated our prior senior unsecured revolving credit facility that was entered into in December 2021, and entered into a new senior unsecured revolving credit facility with an aggregate lending commitment of $5.25 billion for a period of five years.

The commitment initially 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 Merger and refinancing of Juniper Networks’ credit agreement.

With the completion of the Merger and the associated refinancing, the full $5.25 billion commitment under the new facility is now available to us.

There have been no changes to our commercial paper programs since October 31, 2024.

As noted above, we are also party to two senior unsecured delayed draw term loan facilities, comprised of a $1.0 billion 364-day tranche and a $3.0 billion three-year tranche, subject to customary conditions.

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.

1 unchanged sentence

Debt Issuances:

• In September 2024, we issued (i) $1.25 billion of 4.45% Senior Notes due September 25, 2026, (ii) $1.25 billion of 4.40% Senior Notes due September 25, 2027, (iii) $1.75 billion of 4.55% Senior Notes due October 15, 2029, (iv) $1.25 billion of 4.85% Senior Notes due October 15, 2031, (v) $2.0 billion of 5.00% Senior Notes due October 15, 2034, and (vi) $1.5 billion of 5.60% Senior Notes due October 15, 2054.

• In June 2024, we issued $818 million of asset-backed debt securities in six tranches with a weighted average interest rate of 5.593% and final maturity date of April 2032.

• In January 2024, we issued $796 million of asset-backed debt securities in six tranches with a weighted average interest rate of 5.476% and final maturity date of November 2031.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

• In October 2025, we issued $660 million of asset-backed debt securities in six tranches at a weighted-average interest rate of 4.314% and a final maturity date of May 2033.

• In September 2025, we issued (i) $900 million of 4.05% Senior Notes due September 15, 2027, (ii) $300 million of Floating Rate Notes due September 15, 2028, (iii) $850 million of 4.15% Senior Notes due September 15, 2028, and (iv) $850 million of 4.40% Senior Notes due October 15, 2030.

• In July 2025, we assumed fixed-rate Senior Notes of Juniper Networks with par value of $1.7 billion as a part of the Merger.

For further information see Note 10, “Acquisitions and Dispositions,” to the Consolidated Financial Statements in Item 8 of Part II.

• In July 2025, to support the funding of the Merger, we drew $3.0 billion under the three-year delayed-draw term loan credit facility and $1.0 billion under the 364-day delayed-draw term loan credit facility.

The 364-day loan is scheduled for full repayment on July 1, 2026.

The three-year loan is subject to quarterly amortization at 1.25%, with the remaining balance due at maturity on June 30, 2028.

• In July 2025, we issued $900 million of asset-backed debt securities in six tranches at a weighted-average interest rate of 4.673% and a final maturity date of March 2033.

Debt Repayments:

• In October 2024, we redeemed $400 million of 6.102% Senior Notes with an original maturity date of April 1, 2026, utilizing the par call option on the debt, with no redemption penalties.

• In October 2024, we repaid $1.6 billion of 5.90% Senior Notes on their original maturity date.

• In April 2024, we repaid $1.0 billion of 1.45% Senior Notes on their original maturity date.

• During fiscal 2024, we repaid $1,691 million of the outstanding asset-backed debt securities.

• In October 2025, we prepaid $1 billion against the $3.0 billion we initially borrowed under the three-year delayed-draw term loan credit facility.

The repayment was made at par, along with accrued interest.

• In September 2025, we repaid the entire $1 billion under the 364-day delayed-draw term loan credit facility.

The repayment was made at par, along with accrued interest.

• In September 2025, we redeemed the entire $2.5 billion aggregate principal amount of its outstanding 4.900% Notes with an original maturity date of October 15, 2025.

The Notes were redeemed at par, plus accrued and unpaid interest up to, but not including, the redemption date of September 17, 2025.

• During fiscal 2025, we repaid $1.5 billion of the outstanding asset-backed debt securities.

Our weighted-average interest rate reflects the average effective rate on our borrowings prevailing during the period and reflects the impact of interest rate swaps.

1 unchanged sentence

For more information on our available borrowing resources and the impact of operating assets and liabilities to cash flows, see Note 14, “Borrowings,” and Note 7, “Balance Sheet Details,” respectively, to the Consolidated Financial Statements in Item 8 of Part II.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Cash Requirements and Commitments

13 unchanged sentences

Unconditional purchase obligations exclude agreements that are cancellable without penalty.

As of October 31, 2024, unconditional purchase obligations totaled $1.3 billion, of which $556 million is due within one year.

As of October 31, 2025, unconditional purchase obligations totaled $3.3 billion, of which $2.0 billion is due within one year.

In connection with the Merger, our unconditional purchase obligations increased by $1.5 billion.

For more information on our unconditional purchase obligations, see Note 17, “Litigation, Contingencies, and Commitments,” to the Consolidated Financial Statements in Item 8 of Part II.

5 unchanged sentences

For more information on our retirement and post-retirement benefit plans, see Note 4, “Retirement and Post-Retirement Benefit Plans,” to the Consolidated Financial Statements in Item 8 of Part II.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Restructuring Plans

As of October 31, 2024, we expect future cash payments of approximately $185 million in connection with our approved restructuring plans, which includes $80 million expected to be paid in fiscal 2025 and $105 million expected to be paid thereafter.

As of October 31, 2025, we expect to make future cash payments of approximately $112 million in connection with our approved restructuring plans, which includes $28 million expected to be paid in fiscal 2026 and $84 million expected to be paid thereafter.

Payments for restructuring activities are not considered as contractual obligations, because they do not represent contractual cash outflows and there is uncertainty as to the timing of these payments.

For more information on our restructuring activities, see Note 3, “Transformation Programs,” to the Consolidated Financial Statements in Item 8 of Part II.

Cost Savings Plans

The Program is expected to be implemented through fiscal year 2026.

In connection with the integration of Juniper Networks, we expect to incur costs over the next three fiscal years to achieve synergies, actual costs incurred may differ from estimates.

As of October 31, 2025, we expect to make future cash payments of approximately $1.1 billion in connection with these cost savings plans, which includes $690 million expected to be paid through the remainder of fiscal 2026 and $420 million expected to be paid thereafter.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Uncertain Tax Positions

As of October 31, 2024, we had approximately $186 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions that could result in a cash payment.

As of October 31, 2025, we had approximately $194 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions.

These liabilities and related interest and penalties include $2 million expected to be paid within one year.

11 unchanged sentences

Revenue Dollars % of

Dollars In millions

GAAP net revenue $ 34,296 100.0 % $ 30,127 100.0 %

3 unchanged sentences

Stock-based compensation expense 49 0.1 % 49 0.2 %

Disaster recovery (43) (0.1) % (13) — %

Divestiture related exit costs 9 — % — — %

Acquisition, disposition and other charges (1)

236 0.7 % (34) (0.1) %

Cost reduction program 126 0.4 % — — %

H3C divestiture related severance costs 17 — % — — %

Non-GAAP gross profit $ 10,805 31.5 % $ 9,893 32.8 %

(1) Includes disaster recovery and divestiture related exit costs.

For fiscal 2025, Acquisition, disposition and other charges include non-cash amortization of fair value adjustment for inventory in connection with the Merger, which was recorded in cost of sales.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

Reconciliation of GAAP earnings from operations and operating profit margin to non-GAAP earnings from operations and operating profit margin.

Reconciliation of GAAP earnings (loss) from operations and operating profit margin to non-GAAP earnings from operations and operating profit margin.

For the fiscal years ended October 31,

Revenue Dollars % of

GAAP earnings from operations $ 2,190 7.3 % $ 2,089 7.2 %

Dollars In millions

GAAP (loss) earnings from operations

$ (437) (1.3) % $ 2,190 7.3 %

Non-GAAP adjustments:

Amortization of intangible assets 511 1.5 % 267 0.9 %

Impairment charges

1,621 4.7 % — — %

Transformation costs 2 — % 93 0.3 %

Disaster recovery (51) (0.2) % (12) — %

Stock-based compensation expense 643 1.9 % 430 1.4 %

Divestiture related exit costs 35 0.1 % — — %

Acquisition, disposition and other related charges 204 0.7 % 69 0.2 %

H3C divestiture related severance costs 97 0.3 % — — %

Cost reduction program 275 0.8 % — — %

Acquisition, disposition and other charges (1)

641 1.9 % 188 0.6 %

Non-GAAP earnings from operations $ 3,353 9.8 % $ 3,168 10.5 %

(1) Includes disaster recovery and divestiture related exit costs.

For fiscal 2025, Acquisition, disposition and other charges include non-cash amortization of fair value adjustment for inventory in connection with the Merger, which was recorded in cost of sales.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Reconciliation of GAAP net earnings and diluted net earnings per share to non-GAAP net earnings and diluted net earnings per share.

For the fiscal years ended October 31,

Dollars Diluted net earnings per share Dollars Diluted net earnings per share

Dollars in millions

Dollars Diluted Net EPS (1)

Dollars Diluted Net EPS

Dollars in millions except per share amounts

GAAP net (loss) earnings attributable to common stockholders $ (59) $ (0.04) $ 2,554 $ 1.93

Preferred stock dividends 116 25

GAAP net earnings attributable to HPE 57 $ (0.04) 2,579 $ 1.93

1 unchanged sentence

Amortization of intangible assets 511 0.39 267 0.20

Impairment charges

1,621 1.22 — —

Transformation costs 2 — 93 0.07

Disaster recovery (51) (0.04) (12) (0.01)

Stock-based compensation expense 643 0.49 430 0.32

Divestiture related exit costs 35 0.03 — —

Acquisition, disposition and other related charges 204 0.16 69 0.05

Gain on sale of a business (248) (0.19) — —

H3C divestiture related severance costs 97 0.07 — —

Cost reduction program 275 0.21 — —

Acquisition, disposition and other charges (2)

641 0.49 188 0.15

Litigation judgment (52) (0.04) — —

Gain on sale of equity interest — — (733) (0.55)

Adjustments for equity interests (107) (0.08) 18 0.01

Loss on equity investments, net 140 0.10 (94) (0.07)

6 unchanged sentences

Non-GAAP net earnings attributable to common stockholders $ 2,637 $ 2,630

(1) Other adjustments includes non-service net periodic benefit cost and tax indemnification and other adjustments.

(1) Non-GAAP diluted net EPS reflects any dilutive effect of outstanding convertible preferred stock and employee stock plans, but that effect is excluded when calculating GAAP diluted net EPS as that would be anti-dilutive.

See Note 16 “Net (Loss) Earnings Per Share,” to the Condensed Consolidated Financial Statements in Item 1 of Part I for further information.

(2) Includes disaster recovery and divestiture related exit costs.

For fiscal 2025, Acquisition, disposition and other charges include non-cash amortization of fair value adjustment for inventory in connection with the Merger, which was recorded in cost of sales.

(3) Other adjustments includes non-service net periodic benefit credit and tax indemnification and other adjustments.

(4) For fiscal 2025, the diluted net EPS adjustment includes the impact to Non-GAAP net earnings attributable to HPE for the dilutive effect of preferred stock and the employee stock plans.

(5) 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.

Shares used to calculate Non-GAAP diluted net EPS.

For the fiscal years ended October 31,

Weighted-average shares used to compute basic net EPS 1,324 1,309

Dilutive effect of employee stock plans 18 18

Dilutive effect of 7.625% Series C mandatory convertible preferred stock

Weighted-average shares used to compute Non-GAAP diluted net EPS 1,418 1,337

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

10 unchanged sentences

Use of non-GAAP Financial Measures

The non-GAAP financial measures presented are net revenue on a constant currency basis (including at the business segment level), 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, non-GAAP diluted net earnings per share, and FCF.

The non-GAAP financial measures presented are 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 net revenue on a constant currency basis is net revenue.

The GAAP measure most directly comparable to non-GAAP gross profit is gross profit.

3 unchanged sentences

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 is net earnings.

The GAAP measure most directly comparable to non-GAAP diluted net earnings per share is diluted net earnings per share.

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.

3 unchanged sentences

Economic Substance of non-GAAP Financial Measures

Net revenue on a constant currency basis assumes no change to the foreign exchange rate utilized in the comparable prior-year period.

This measure assists investors with evaluating our past and future performance, without the impact of foreign exchange rates, as more than half of our revenue is generated outside of the U.S.

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.

1 unchanged sentence

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 the amortization of initial direct costs, stock-based compensation expense, and disaster charges.

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:

4 unchanged sentences

Financial Condition and Results of Operations (Continued)

• Disaster recoveries include direct costs or recovery of these costs related to the exit of the Company’s businesses in Russia and Belarus.

Hewlett Packard Enterprise excludes disaster recoveries from these non-GAAP measures as the specific net recoveries are non-recurring charges and not indicative of the operational performance of our business.

• Divestiture related exit costs include expenses associated with certain disposal activities.

On May 23, 2024, HPE announced plans to divest the Company’s CTG business, which was completed on December 1, 2024.

We consider this divestiture to be a discrete event.

We exclude these costs as these expenses are non-recurring exit costs to eliminate stranded costs of this business.

In addition, our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding these charges.

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, transformation costs and acquisition, disposition and other related charges.

• 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, 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.

For fiscal 2025, acquisition charges were driven by costs associated with the Merger and miscellaneous disposition related charges.

For fiscal 2024, acquisition charges were driven by the Merger and prior acquisitions of Axis and Athonet.

• 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.

On September 4, 2024, we divested 30% of the total issued share capital of H3C and received proceeds of $2.1 billion of pre-tax consideration ($2.0 billion post-tax).

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.

We expect future annualized cost savings of approximately $120 million following the completion of these actions.

In addition to the items previously explained above, management excludes these items for the following reasons:

3 unchanged sentences

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.

• Transformation costs represent net costs related to the (i) HPE Next Plan and (ii) Cost Optimization and Prioritization Plan and include restructuring charges, program design and execution costs, costs incurred to transform our IT infrastructure, net gains from the sale of real estate and any impairment charges on real estate identified as part of the initiatives.

We exclude these costs as they are discrete costs related to two specific transformation programs that were announced in 2017 and 2020, respectively, as multi-year programs necessary to transform the business and IT infrastructure following material divestiture transactions in 2017 and in response to COVID-19 and an evolving product portfolio in fiscal 2020.

• In fiscal 2025, we recorded non-cash impairment charges for the goodwill associated with our Hybrid Cloud reporting unit and the impairment of certain fixed assets.

HPE believes that these non-cash charges do 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 a supplemental evaluation of the Company’s current operating performance and comparisons to past operating results.

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.

• Transformation costs represent net costs related to the (i) HPE Next Plan and (ii) Cost Optimization and Prioritization Plan.

The primary elements of the HPE Next and the Cost Optimization and Prioritization Plan have been substantially completed by October 31, 2024.

The exclusion of the transformation program costs from our non-GAAP financial measures as stated above is to provide a supplemental measure of our operating results that does not include material HPE Next Plan and Cost Optimization and Prioritization Plan costs as we do not believe such costs to be reflective of our ongoing operating cost structure.

Further as our transformation costs for these plans have materially fluctuated since 2017, have been materially declining since 2021 and we do not expect to incur material transformation costs related to these programs beyond fiscal 2024, we believe non-GAAP measures excluding these costs are useful to management and investors for comparing operating performance across multiple periods.

• We incur costs related to our acquisition, disposition and other related charges.

The charges are direct expenses, such as professional fees and retention costs, most of which are treated as non-cash or non-capitalized expenses.

For fiscal 2024, these charges were driven by costs associated with the pending merger with Juniper Networks and the acquisition of Morpheus Data, in addition to prior acquisitions of Axis, Athonet and OpsRamp.

For fiscal 2023, these charges were driven by acquisitions of Axis, Zerto, OpsRamp and Athonet.

Charges may also include expenses associated with disposal activities including legal and arbitration settlements in connection with certain dispositions.

We consider these acquisitions and divestitures to be discrete events.

We exclude these costs as these expenses are inconsistent in amount and frequency and are significantly impacted by the timing and nature of our acquisitions and divestitures.

In addition, our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding these charges.

Non-GAAP net earnings and non-GAAP diluted net earnings per share consist of net earnings or diluted net earnings per share excluding those same charges mentioned above, as well as other items such as adjustments for equity interests, gain or loss on equity investments, other adjustments, and adjustments for taxes.

The Adjustments for taxes line item includes certain income tax valuation allowances and separation taxes, the impact of tax reform, structural rate adjustment, excess tax benefit from stock-based compensation, and adjustments for additional taxes or tax benefits associated with each non-GAAP item.

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 share excluding those same charges mentioned above, as well as other items such as gain on sale of a business, adjustments for equity interests, gain or loss on equity investments, 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 certain income tax valuation allowances and separation taxes, 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:

• During the six months ended April 30, 2024, we stopped reporting H3C earnings in our non-GAAP results due to the planned divestiture of the H3C investment.

Per the terms of the original Put Share Purchase Agreement, we weren’t anticipating receiving dividends from this investment prospectively.

However, on May 24, 2024, we entered into an

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Financial Condition and Results of Operations (Continued)

Amended and Restated Put Share Purchase Agreement and an Agreement on Subsequent Arrangements, both with UNIS, as described in Note 19 “Equity Interests” to the Consolidated Financial Statements in Item 8 of Part II, which, taken together, revise the arrangements governing the aforementioned sale as previously set forth in the original Put Share Purchase Agreement.

On September 4, 2024, we divested 30% of the total issued share capital of H3C, which resulted in a gain of $733 million and is included in the fiscal 2024 adjustment Gain on sale of equity interest.

We continue to possess the option to sell the remaining 19% of the total issued share capital of H3C at a later date.

For the second half of fiscal 2024, the adjustment for equity interests incorporated the completed divestment of 30% of the total issued share capital of H3C.

All periods presented include the amortization of the basis difference in our investment.

For fiscal 2023, this adjustment also included our portion of intangible asset impairment charges from H3C.

• Gain on sale of a business represents the gain associated with certain disposal activities.

On December 1, 2024, we completed the disposition of CTG which resulted in a gain of $248 million.

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.

• During the six months ended April 30, 2024, we stopped reporting H3C earnings in our non-GAAP results due to the planned divestiture of the H3C investment.

Per the terms of the original Put Share Purchase Agreement, we weren’t anticipating receiving dividends from this investment prospectively.

However, on May 24, 2024, we entered into an Amended and Restated Put Share Purchase Agreement and an Agreement on Subsequent Arrangements, both with UNIS, which, taken together, revise the arrangements governing the aforementioned sale as previously set forth in the original Put Share Purchase Agreement.

On September 4, 2024, we divested 30% of the total issued share capital of H3C.

As of October 31, 2025, we continued to possess the option to sell the remaining 19% of the total issued share capital of H3C.

Subsequent to fiscal year end, however, we entered into share purchase agreements to divest all of the remaining issued share capital of H3C held by HPE through its subsidiaries.

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, Hewlett Packard Enterprise 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 a supplemental evaluation of the Company’s current operating performance and comparisons to past operating results.

• 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.

4 unchanged sentences

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 2024, we used a projected non-GAAP income tax rate of 15%, which reflects currently available information as well as other factors and assumptions.

For fiscal 2023 we used a non-GAAP income tax rate of 14%.

For fiscal 2025 and 2024, we used a projected non-GAAP income tax rate of 15%, which reflects currently available information as well as other factors and assumptions.

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.

10 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis