What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-02 compared with 2026-03-10 · 273 added, 228 removed, 442 unchanged (53% of the section changed)

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

For purposes of this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section, we use the terms “Hewlett Packard Enterprise”, “HPE”, the “Company”, “we”, “us” and “our” to refer to Hewlett Packard Enterprise Company.

For purposes of this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section, we use the terms “HPE”, the “Company”, “we”, “us” and “our” to refer to Hewlett Packard Enterprise Company.

We intend the discussion of our financial condition and results of operations that follows to provide information that will assist the reader in understanding our Condensed Consolidated Financial Statements, changes in certain key items in these financial statements from period-to-period and the primary factors that accounted for these changes, as well as how certain accounting principles, policies, and estimates affect our Condensed Consolidated Financial Statements.

This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document.

The financial discussion and analysis in the following MD&A compares the three months ended January 31, 2026 to the comparable prior-year period and where appropriate, as of January 31, 2026, unless otherwise noted.

The financial discussion and analysis in the following MD&A compares the three and six months ended April 30, 2026 to the comparable prior-year period and where appropriate, as of April 30, 2026, unless otherwise noted.

This MD&A is organized as follows:

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• Executive Overview.

A discussion of our business and a summary of our financial performance and other highlights, including non-GAAP financial measures, affecting the Company in order to provide context to the remainder of the MD&A.

A discussion of our business and a summary of our financial performance and other highlights, including Generally accepted accounting Principles (“GAAP”) and non-GAAP financial measures, affecting the Company in order to provide context to the remainder of the MD&A.

• Results of Operations.

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TRENDS AND UNCERTAINTIES

During the first three months of fiscal 2026, the effects of the evolving macroeconomic environment on demand persisted and certain significant developments impacted our operations, as follows:

During the first six months of fiscal 2026, the effects of the evolving macroeconomic environment on demand for information technology products and supply for components persisted and certain significant developments impacted our operations, as follows:

Technological Advancements:

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

The volume of data at the edge continues to grow, driven by the proliferation of more devices.

The volume of data at the edge continues to grow, driven by the proliferation of devices.

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

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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.

While we believe our recent acquisition of Juniper Networks Inc.

(“Juniper Networks”) positions us to capitalize on the growing market opportunities across AI-accelerated computing, data, cloud and networking, our major competitors and emerging competitors are expanding their product and service offerings with integrated products and solutions and exerting increased competitive pressure.

We expect these market dynamics and trends to continue in the longer term.

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We experienced supply chain constraints for certain components, including graphics processing units (“GPUs”), accelerated processing units, solid-state drives (“SSDs”), and other memory components.

We are affected by the worldwide shortage in memory components that began to impact the semiconductor industry in the first quarter of fiscal year 2026 primarily due to the accelerating growth in AI usage and the related rapid expansion in AI data centers and compute refresh cycles.

In the first quarter of fiscal year 2026, we experienced supply chain constraints due to these component shortages and expect such dynamics to continue in the medium term as memory supply constraints may continue until memory vendors transition greater production allocations towards high performance memory components required by AI.

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

Additionally, logistics costs have been, and may continue to remain, high due to changes in trade policies and ongoing geopolitical uncertainties.

We are affected by the worldwide shortage in memory components that began to impact the semiconductor industry in the first half of fiscal year 2026 primarily due to the accelerating growth in AI usage and the related rapid expansion in AI data centers and compute refresh cycles.

In the first half of fiscal year 2026, we experienced supply chain constraints due to these component shortages and expect such dynamics to continue in the medium term as memory supply constraints may continue until memory vendors transition greater production allocations towards high performance memory components required by AI.

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

Additionally, logistics costs have been, and may continue to remain, high due to changes in trade policies and ongoing geopolitical uncertainties and tensions.

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

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Recurring Revenue and Consumption Models:

We continue to strengthen our core server and storage-oriented offerings and expand our offerings on the HPE GreenLake cloud, to deliver our entire portfolio as-a-service (“aaS”) and become the edge-to-cloud company for our customers and partners.

We expect that such flexible consumption model will continue to strengthen our customer relationships and contribute to growth in recurring revenue.

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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, 65 countries have enacted portions, or all, of the OECD proposal.

To date, approximately 65 countries have enacted portions, or all, of the OECD proposal.

The adoption and effective dates of these rules may vary by country and could increase tax complexity and uncertainty and may adversely affect our provision for income taxes.

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Such changes may adversely affect our tax liability.

In addition, the United States has considered, and may adopt, reciprocal tax measures in response to such regimes.

These developments could increase our global tax burden, result in double taxation, and adversely affect our tax liability.

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

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During the first quarter of fiscal 2026, the IRS issued notices of proposed adjustments (“NOPAs”) for fiscal 2020, 2021, and 2022 relating to our intercompany transfer pricing.

The IRS is seeking to materially increase taxable income across the three fiscal years.

However, we disagree with the IRS’ adjustments and believe the positions taken on our tax returns are more likely than not to prevail on technical merits, and we will defend these positions through the IRS administrative processes, as necessary.

Accordingly, no changes have been made to our reserves for uncertain tax positions in fiscal 2026 relating to the IRS’ adjustments.

During the second quarter of fiscal 2026, we submitted a formal settlement offer to the IRS to facilitate the closing of the audit and recorded increased reserves for unrecognized tax benefits of $318 million.

The impact of the increase in reserves is almost entirely offset with a valuation allowance release, and the net impact to income tax expense for the three and six months ended April 30, 2026 was not material.

It is reasonably possible that the IRS audit for fiscal 2020 through 2022 may be concluded in the next 12 months, and it is reasonably possible that existing unrecognized tax benefits related to these years may be reduced by an amount up to $369 million within the next 12 months;

the majority of these unrecognized tax benefits are offset by adjustments to foreign tax credits that carry a full valuation allowance, which does not affect our effective tax rate.

On July 4, 2025, the U.S.

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We do not expect a material impact in fiscal 2026, but we will continue to evaluate the full impact of these changes on our future results.

Trade and Tariffs Update:

On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”).

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Other Trends and Uncertainties:

The impacts of geopolitical volatility (including the continued uncertainty 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.

EXECUTIVE OVERVIEW

We are a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze, and act upon data seamlessly from edge-to-cloud.

We enable customers to accelerate business outcomes by driving new

The impacts of geopolitical volatility (including the ongoing geopolitical instability and conflict in the Middle East, the ongoing conflict in Ukraine, and the relationship between China and the U.S.) may impact our operations, financial performance, and ability to conduct business in some non-U.S.

We have, in the past, entered into contracts for the sale of certain products and services that reflect discounting due to competitive pressures or were negotiated at prices prior to the recent escalation of component costs, which have resulted in lower margins than expected, and we expect will continue to negatively impact our margins in the near term.

We have been monitoring and seeking to mitigate these risks with adjustments to our manufacturing, supply chain, and distribution networks, as well as our pricing and discounting

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Financial Condition and Results of Operations (Continued)

business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.

EXECUTIVE OVERVIEW

We are a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze, and act upon data seamlessly from edge-to-cloud.

We enable customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.

Our customers range from small-and-medium size businesses to large global enterprises and governmental entities.

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See Note 7, “Acquisitions and Dispositions” to the Condensed Consolidated Financial Statements in Item 1 of Part I for additional information.

Pending Divestiture of H3C Technologies Co., Limited Shares

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.

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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.

On May 13, 2026, we closed on the sale and disposition of 13.8% of the total issued share capital of H3C for approximately $987 million.

On May 28, 2026, the Company closed on the sale of the remaining 5.2% of the total issued share capital of H3C for approximately $370 million.

Cost Savings Actions

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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 $23 million for the three months ended January 31, 2026.

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.

In connection with the integration of Juniper Networks, we incurred acquisition costs of $123 million for the three months ended January 31, 2026.

In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the

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Financial Condition and Results of Operations (Continued)

Three months ended January 31, 2026 compared with three months ended January 31, 2025

Net revenue of $9.3 billion represented an increase of 18.4%, primarily due to higher revenue in the Networking segment from the Merger.

The gross profit margin of 35.9% (or $3.3 billion), represents an increase of 6.7 percentage points from the prior-year period, primarily due to higher revenue in the Networking segment.

The operating profit margin of 5.1% represents a decrease of 0.4 percentage points from the prior-year period, primarily due to an increase in operating expenses associated with the Merger.

implementation of the Program.

In connection with the Program, we incurred charges of $30 million and $53 million for the three and six months ended April 30, 2026, respectively, and $146 million for the three and six months ended April 30, 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 are expected to require approximately $800 million of investment, primarily tied to headcount, supply chain optimization, and portfolio rationalization.

In connection with the integration of Juniper Networks, we incurred acquisition costs of $108 million and $231 million, for the three and six months ended April 30, 2026, respectively.

Three months ended April 30, 2026 compared with three months ended April 30, 2025

Net revenue of $10.7 billion represented an increase of 40.0%, primarily due to higher revenue in the Networking segment from the Merger, and an increase in the average selling price in the Cloud & AI segment.

The gross profit margin of 36.5% (or $3.9 billion), represents an increase of 8.1 percentage points from the prior-year period, primarily due to higher revenue in the Networking and Cloud & AI segments.

The operating profit margin of 7.0% represents an increase of 21.5 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement and the absence of goodwill impairment recorded in the prior-year period.

Six months ended April 30, 2026 compared with six months ended April 30, 2025

Net revenue of $20.0 billion represented an increase of 29.1%, primarily due to higher revenue in the Networking segment from the Merger, and an increase in the average selling price in the Cloud & AI segment.

The gross profit margin of 36.2% (or $7.2 billion), represents an increase of 7.4 percentage points from the prior-year period, primarily due to higher revenue in the Networking and Cloud & AI segments.

The operating profit margin of 6.1% represents an increase of 10.5 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement and the absence of goodwill impairment recorded in the prior-year period.

Financial Results

The following table summarizes our condensed consolidated GAAP financial results:

For the three months ended January 31,

2026 2025 Change

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

2026 2025 Change 2026 2025 Change

Dollars in millions, except per share amounts

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Gross profit $ 3,900 $ 2,169 79.8% $ 7,240 $ 4,464 62.2%

Gross profit margin 35.9 % 29.2 % 6.7pts

Earnings from operations $ 470 $ 433 8.5%

Operating profit margin 5.1 % 5.5 % (0.4)pts

Net earnings attributable to HPE $ 452 $ 627 (27.9)%

Net earnings attributable to common stockholders $ 423 $ 598 (29.3)%

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

Gross profit margin 36.5 % 28.4 % 8.1pts 36.2 % 28.8 % 7.4pts

Earnings (loss) from operations $ 747 $ (1,109) 167.4% $ 1,217 $ (676) 280.0%

Operating profit margin 7.0 % (14.5) % 21.5pts 6.1 % (4.4) % 10.5pts

Net earnings (loss) attributable to HPE $ 624 $ (1,050) 159.4% $ 1,076 $ (423) 354.4%

Net earnings (loss) attributable to common stockholders $ 595 $ (1,079) 155.1% $ 1,018 $ (481) 311.6%

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

$ 0.44 $ (0.82) $1.26 $ 0.75 $ (0.36) $1.11

Cash flow provided by (used in) operations $ 1,410 $ (461) $1,871 $ 2,588 $ (851) $3,439

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

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

For the three months ended January 31,

2026 2025 Change

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

2026 2025 Change 2026 2025 Change

Dollars in millions, except per share amounts

Non-GAAP gross profit $ 3,937 $ 2,244 75.4% $ 7,340 $ 4,554 61.2%

Non-GAAP gross profit margin 36.6 % 29.4 % 7.2pts

Non-GAAP gross profit margin 36.9 % 29.4 % 7.5pts 36.7 % 29.4 % 7.3pts

Non-GAAP earnings from operations $ 1,423 $ 613 132.1% $ 2,605 $ 1,393 87.0%

Non-GAAP operating profit margin 12.7 % 9.9 % 2.8pts

Non-GAAP operating profit margin 13.3 % 8.0 % 5.3pts 13.0 % 9.0 % 4.0pts

Non-GAAP net earnings attributable to HPE $ 1,136 $ 545 108.4% $ 2,066 $ 1,229 68.1%

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Free cash flow $ 915 $ (847) $1,762 $ 1,623 $ (1,724) $3,347

(1) For purposes of calculating diluted net earnings per share (“EPS”), the 7.625% Series C mandatory convertible preferred stock (“Preferred Stock”) dividends are added back to the net earnings attributable to common stockholders and the diluted weighted-average share calculation assumes the Preferred Stock was converted at issuance or as of the beginning of the reporting period.

(1) For purposes of calculating diluted net earnings (loss) per share (“EPS”), the 7.625% Series C mandatory convertible preferred stock (“Preferred Stock”) dividends are added back to the net earnings attributable to common stockholders and the diluted weighted-average share calculation assumes the Preferred Stock was converted at issuance or as of the beginning of the reporting period.

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

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Dividends and Share Repurchase Program

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

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

The holders of HPE common stock are entitled to receive dividends when and as declared by the Board of Directors.

Our ability to pay dividends will depend on many factors, such as the Company’s financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in its debt, industry practice, legal requirements, regulatory constraints, and other factors that the Board of Directors deems relevant.

Furthermore, so long as any share of our Preferred Stock remains outstanding, no dividend on shares of common stock (or any other class of stock junior to the Preferred Stock) shall be declared or paid unless all accumulated and unpaid dividends for all preceding dividend periods for the Preferred Stock have been declared and paid in full in cash, shares of the Company’s common stock or a combination thereof, or a sufficient sum of cash or number of shares of its common stock has been set apart for the payment of such dividends, on all outstanding shares of the Preferred Stock.

During the second quarter of fiscal 2026, we paid a quarterly dividend of $0.1425 per share of common stock.

On June 1, 2026, we declared a regular cash dividend of $0.1425 per share of our common stock, payable on or about July 15, 2026, to our holders of record as of the close of business on June 16, 2026.

We also declared a cash dividend of $0.953125 per share of our 7.625% Series C Mandatory Convertible Preferred Stock, which was paid on June 1, 2026, to holders of record as of the close of business on May 15, 2026.

As of April 30, 2026, we had a remaining authorization of approximately $3.3 billion for future share repurchases.

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Financial Condition and Results of Operations (Continued)

of strategic investments.

The holders of HPE common stock are entitled to receive dividends when and as declared by the Board of Directors.

During the first quarter of fiscal 2026, we paid a quarterly dividend of $0.1425 per share of common stock.

On March 9, 2026, we declared a regular cash dividend of $0.1425 per share of our common stock, payable on or about April 23, 2026, to our holders of record as of the close of business on March 24, 2026.

We also declared a cash dividend of $0.953125 per share of our 7.625% Series C Mandatory Convertible Preferred Stock, which was paid on March 1, 2026, to holders of record as of the close of business on February 15, 2026.

As of January 31, 2026, we had a remaining authorization of approximately $3.4 billion for future share repurchases.

RESULTS OF OPERATIONS

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

For the three months ended January 31,

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

2026 2025 2026 2025

Dollars % of Revenue (1)

Dollars in millions

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Amortization of intangible assets 323 3.0 37 0.5 634 3.2 75 0.5

Transformation costs — — 15 0.2

Impairment charges — — 1,361 17.8 — — 1,361 8.8

Acquisition, disposition and other charges 78 0.7 42 0.6 195 1.0 123 0.8

Earnings from operations 470 5.1 433 5.5

Earnings (loss) from operations 747 7.0 (1,109) (14.5) 1,217 6.1 (676) (4.4)

Interest and other, net (73) (0.7) 39 0.5 (127) (0.6) 78 0.5

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Earnings from equity interests 25 0.2 25 0.3 42 0.2 42 0.3

Earnings before provision for taxes 433 4.7 733 9.3

Benefit (provision) for taxes 19 0.2 (106) (1.3)

Net earnings attributable to HPE 452 4.9 627 8.0

Earnings (loss) before provision for taxes 699 6.5 (1,045) (13.7) 1,132 5.7 (312) (2.0)

Provision for taxes (75) (0.7) (5) (0.1) (56) (0.3) (111) (0.7)

Net earnings (loss) attributable to HPE 624 5.8 (1,050) (13.8) 1,076 5.4 (423) (2.7)

Preferred stock dividends (29) (0.3) (29) (0.4) (58) (0.3) (58) (0.4)

Net earnings attributable to common stockholders $ 423 4.5 % $ 598 7.6 %

Net earnings (loss) attributable to common stockholders $ 595 5.6 % $ (1,079) (14.2) % $ 1,018 5.1 % $ (481) (3.1) %

(1) Certain amounts may not add due to use of rounded numbers.

Three months ended January 31, 2026 compared with the three months ended January 31, 2025

For the three months ended January 31, 2026, total net revenue of $9.3 billion represented an increase of $1.4 billion, or 18.4%.

net revenue increased by $802 million, or 31.9%, to $3.3 billion, and net revenue from outside of the U.S.

increased by $645 million, or 12.1%, to $6.0 billion.

Three and six months ended April 30, 2026 compared with the three and six months ended April 30, 2025

For the three months ended April 30, 2026, total net revenue of $10.7 billion represented an increase of $3.1 billion, or 40.0%.

net revenue increased by $1.2 billion, or 44.3%, to $4.0 billion, and net revenue from outside of the U.S.

increased by $1.8 billion, or 37.6%, to $6.7 billion.

For the six months ended April 30, 2026, total net revenue of $20.0 billion represented an increase of $4.5 billion, or 29.1%.

net revenue increased by $2.0 billion, or 38.3%, to $7.3 billion, and net revenue from outside of the U.S.

increased by $2.5 billion, or 24.3%, to $12.7 billion.

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

For the three months ended January 31, 2026

For the three months ended April 30, 2026 For the six months ended April 30, 2026

Percentage Points

Cloud & AI (2.3)

Networking 21.1 20.9

Cloud & AI 18.8 8.1

Corporate Investments and Other

Total HPE 40.0 29.1

Three months ended April 30, 2026 compared with three months ended April 30, 2025

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

• Cloud & AI net revenue decreased $177 million, or 2.7%, primarily due to lower net unit volume and net AUPs from the Server business

• Networking net revenue increased $1,630 million, or 151.5%, primarily due to revenue attributable to Juniper Networks

• Networking net revenue increased $1.6 billion, or 148.2%, primarily due to revenue attributable to Juniper Networks

• Cloud & AI net revenue increased $1.4 billion, or 22.9%, primarily due to an increase in the average selling price

Six months ended April 30, 2026 compared with six months ended April 30, 2025

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

• Networking net revenue increased $3.2 billion, or 149.8%, primarily due to revenue attributable to Juniper Networks

• Cloud & AI net revenue increased $1.3 billion, or 9.8%, primarily due to an increase in the average selling price

Please refer to the section “Segment Information” further below for a discussion of our results of operations for each reportable segment.

For the three months ended January 31, 2026, the total gross profit margin of 35.9% represents an increase of 6.7 percentage points, as compared to the respective prior year period.

The increase was primarily due to higher revenue in the Networking segment.

For the three months ended April 30, 2026, the total gross profit margin of 36.5%, represents an increase of 8.1 percentage points, as compared to the respective prior year period.

For the six months ended April 30, 2026, the total gross profit margin of 36.2%, represents an increase of 7.4 percentage points, as compared to the respective prior year period.

The increases were primarily due to the favorable mix of higher-margin revenues in the Networking and Cloud & AI segments and the acquisition of Juniper Networks.

Operating expenses

Research and development (“R&D”)

For the three months ended January 31, 2026, R&D expense increased by $269 million, or 56.6%, primarily due to operating expenses associated with Juniper Networks, which contributed 38.5 percentage points to the change, and higher employee costs, which contributed 9.6 percentage points to the change.

For the three months ended April 30, 2026, R&D expense increased by $382 million, or 70.7%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 61.1 percentage points to the change.

For the six months ended April 30, 2026, R&D expense increased by $651 million, or 64.1%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 54.7 percentage points to the change.

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

For the three months ended January 31, 2026, SG&A expense increased by $430 million, or 33.9%, primarily due to increased operating expenses associated with Juniper Networks, which contributed 34.9 percentage points to the change.

For the three months ended April 30, 2026, SG&A expense increased by $532 million, or 41.0%, primarily due to higher variable employee costs and increased operating expenses associated with Juniper Networks, which contributed 35.3 percentage points to the change.

For the six months ended April 30, 2026, SG&A expense increased by $962 million, or 37.5%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 31.2 percentage points to the change.

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Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Amortization of intangible assets

Amortization of intangible assets increased by $273 million, or 718.4%, 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.

For the three and six months ended April 30, 2026, amortization of intangible assets increased by $286 million, or 773.0%, and $559 million, or 745.3%, respectively, primarily due to the amortization expense of the acquired intangibles as a result of the Merger.

Impairment charges

Impairment charges for the three and six months ended April 30, 2025 represents a partial goodwill impairment charge of $1.4 billion, as it was determined that the fair value of the Cloud & AI (excluding Financial Services) reporting unit was below the carrying value of its net assets.

Acquisition, disposition and other charges

For the three months ended January 31, 2026, acquisition, disposition and other charges increased by $51 million or 77.3% primarily due to costs incurred in connection with the Merger.

For the three and six months ended April 30, 2026, acquisition, disposition and other charges increased by $36 million or 85.7%, and $72 million or 58.5%, respectively, primarily due to costs incurred in connection with the Merger.

Interest and other, net

For the three months ended January 31, 2026, interest and other, net expense increased by $93 million, or 238.5%, primarily due to higher net interest expense of $109 million.

For the three and six months ended April 30, 2026, interest and other, net expense increased by $112 million, or 287.2%, and $205 million, or 262.8%, respectively, primarily due to higher net interest expense of $108 million and $232 million, respectively.

Gain on sale of a business

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We received net proceeds of $210 million and recognized a gain of $244 million.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Benefit (provision) for taxes

For the three months ended January 31, 2026 and 2025, we recorded income tax benefit of $19 million and income tax expense of $106 million, respectively, which reflects an effective tax rate of (4.4)% and 14.5%, respectively.

Provision for taxes

For the three months ended April 30, 2026 and 2025, we recorded income tax expense of $75 million and $5 million, respectively, which reflects an effective tax rate of 10.7% and (0.5)%, respectively.

For the six months ended April 30, 2026 and 2025, we recorded income tax expense of $56 million and $111 million, respectively, which reflects an effective tax rate of 4.9% and (35.6)%, respectively.

Our effective tax rate generally differs from the U.S.

federal statutory rate of 21% due to favorable tax rates associated with certain earnings from our operations in lower tax jurisdictions throughout the world but is also impacted by discrete tax adjustments during each fiscal period.

For the three and six months ended April 30, 2025, the effective tax rate also included the effects of the non-deductible goodwill impairment.

For further discussion, refer to Note 4, “Taxes on Earnings” to the Condensed Consolidated Financial Statements in Item 1 of Part I.

Segment Information

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 structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.

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

The segments are based on this structure and information reviewed by HPE's management to evaluate segment results.

As described in Note 1, “Overview and Summary of Significant Accounting Policies,” effective as of the beginning of the first quarter of fiscal 2026, the Company realigned its five reportable segments to three reportable segments.

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A description of the products and services for each segment, along with other pertinent information related to segments can be found in Note 2, “Segment Information” to the Condensed Consolidated Financial Statements in Item 1 of Part I.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Segment Results

The following table and ensuing discussion provide an overview of our key financial metrics by segment for the three months ended January 31, 2026, as compared to the prior-year period:

The following table and ensuing discussion provide an overview of our key financial metrics by segment for the three months ended April 30, 2026, as compared to the prior-year period:

HPE Consolidated Networking Cloud & AI Corporate Investments and Other

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Year-over-year change percentage points 21.5 pts (3.4) pts 5.8 pts (0.6) pts

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

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

For the three months ended January 31,

2026 2025 % Change

The following table and ensuing discussion provide an overview of our key financial metrics by segment for the six months ended April 30, 2026, as compared to the prior-year period:

HPE Consolidated Networking Cloud & AI Corporate Investments and Other

Dollars in millions

Net revenue $ 19,979 $ 5,396 $ 14,041 $ 542

Year-over-year change % 29.1 % 149.8 % 9.8 % 0.6 %

Gross profit as a % of net revenue 36.2 % 61.0 % 28.0 % 22.3 %

Earnings (loss) from operations (1)

$ 1,217 $ 1,221 $ 1,599 $ (21)

Earnings (loss) from operations as a % of net revenue 6.1 % 22.6 % 11.4 % (3.9) %

Year-over-year change percentage points 10.5 pts (4.8) pts 3.9 pts (1.1) pts

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

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

2026 2025 % Change 2026 2025 % Change

Dollars in millions

Networking net revenue:

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Security 273 107 155.1 % 528 226 133.6 %

Routing 780 1 N/M

Routing 775 1 N/M 1,555 2 N/M

Total Networking net revenue 2,690 1,084 148.2 % 5,396 2,160 149.8 %

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N/M - Not meaningful

Three months ended January 31, 2026 compared with three months ended January 31, 2025

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Three months ended April 30, 2026 compared with three months ended April 30, 2025

Networking segment net revenue increased by $1,606 million, or 148.2%, primarily due to a $998 million, or 125.7%, increase in product revenue, and $608 million, or 209.7%, increase in service revenue.

The increase in product revenue was primarily led by revenue attributable to Juniper Networks of $1,061 million, or 134.5%.

The increase in service revenue was primarily led by revenue attributable to Juniper Networks of $568 million, or 197.9%.

The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.

Networking segment gross profit increased by $972 million, or 146.8%, primarily driven by increased net revenue as mentioned above.

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Networking segment earnings from operations increased by $310 million, or 114.4%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $662 million, or 169.3%.

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

For the three months ended January 31,

2026 2025 % Change

The increase in operating expenses was primarily attributable to Juniper Networks and higher variable employee costs.

Six months ended April 30, 2026 compared with six months ended April 30, 2025

Networking segment net revenue increased by $3,236 million, or 149.8%, primarily due to a $2,029 million, or 128.2%, increase in product revenue, and $1,207 million, or 209.2%, increase in service revenue.

The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.

Networking segment gross profit increased by $1,948 million, or 145.0%, primarily driven by increased net revenue as mentioned above.

The increase was partially offset by higher cost of sales of $1,288 million, or 157.6%, which was primarily attributable to Juniper Networks.

Networking segment earnings from operations increased by $630 million, or 106.6%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $1,318 million, or 175.3%.

The increase in operating expenses was primarily attributable to Juniper Networks and higher variable employee costs.

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

2026 2025 % Change 2026 2025 % Change

Dollars in millions

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Earnings from operations as a % of net revenue 12.4 % 6.6 % 11.4 % 7.5 %

(1) Storage includes revenue from GreenLake Flex and Software.

(2) Other category includes intersegment revenue eliminations and third-party storage solutions.

Three months ended April 30, 2026 compared with three months ended April 30, 2025

Cloud & AI segment net revenue increased by $1,436 million, or 22.9%, primarily due to an increase in Server net revenue.

Server net revenue increased by $1,345 million, or 32.7%, predominantly due to an increase in the average selling price.

The increase in average selling price was due to commodity price increases, especially memory and SSDs.

Cloud & AI gross profit increased by $728 million, or 48.2%, primarily driven by increased net revenue.

This increase was due to favorable mix of higher-margin revenues, partially offset by higher commodity and input costs.

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Financial Condition and Results of Operations (Continued)

(1) Storage includes revenue from GreenLake Flex and Software.

(2) Other category includes intersegment revenue eliminations and third-party storage solutions.

Three months ended January 31, 2026 compared with three months ended January 31, 2025

Cloud & AI segment net revenue decreased by $177 million, or 2.7%, primarily due to a $150 million, or 3.6%, decrease in product revenue, and $27 million, or 1.2%, decrease in service revenue.

Server net revenue decreased by $116 million, or 2.7%, primarily due to lower net unit volume of $142 million, or 4.0%, and lower net AUPs of $33 million, or 0.9%.

This decrease was partially offset by favorable currency fluctuations of $63 million, or 1.8%.

Storage net revenue increased by $6 million, or 0.6%, due to a unit volume increase of $73 million, or 6.9%, led by software and storage products, and favorable currency fluctuations of $19 million, or 1.8%.

This increase was partially offset by a decrease in AUPs of $86 million, or 8.1%, led by software products and services.

Cloud & AI gross profit increased by $123 million, or 7.8%, primarily driven by a decrease in cost of sales by $300 million, or 6.1%, due to favorable mix of higher-margin revenues and currency fluctuations, partially offset by higher commodity and input costs.

Cloud & AI earnings from operations increased by $98 million, or 17.9%, primarily driven by higher gross profit, partially offset by an increase in operating expenses of $25 million, or 2.5%, due to higher employee costs.

Corporate Investments and Other

For the three months ended January 31,

2026 2025 % Change

Dollars in millions

Net revenue $ 261 $ 267 (2.2) %

Cost of sales 204 202 1.0 %

Gross profit 57 65 (12.3) %

Operating expenses 69 73 (5.5) %

Loss from operations $ (12) $ (8) (50.0) %

Loss from operations as a % of net revenue (4.6) % (3.0) %

Three months ended January 31, 2026 compared with three months ended January 31, 2025

Corporate Investments and Other segment reported immaterial fluctuations in net revenue, gross profit and loss from operations, which had no significant impact on the overall performance of the segment.

Cloud & AI earnings from operations increased by $540 million, or 130.4%, primarily driven by higher gross profit, partially offset by an increase in operating expenses of $188 million, or 17.1%, due to higher variable employee costs.

Six months ended April 30, 2026 compared with six months ended April 30, 2025

Cloud & AI segment net revenue increased by $1,259 million, or 9.8%, primarily due to an increase in Server net revenue.

Server net revenue increased by $1,229 million, or 14.5%, predominantly due to an increase in the average selling price.

The increase in average selling price was due to commodity price increases, especially memory and SSDs.

Cloud & AI gross profit increased by $851 million, or 27.6%, primarily driven by increased net revenue.

This increase was due to favorable mix of higher-margin revenues, partially offset by higher commodity and input costs.

Cloud & AI earnings from operations increased by $638 million, or 66.4%, primarily driven by higher gross profit, partially offset by an increase in operating expenses of $213 million, or 10.1%, due to higher variable employee costs.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Condensed Consolidated Financial Statements are prepared in accordance with U.S.

Generally Accepted Accounting Principles (“GAAP”), which requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses, and the disclosure of contingent liabilities.

GAAP which requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses, and the disclosure of contingent liabilities.

An accounting policy is deemed to be critical if the nature of the estimate or assumption it incorporates is subject to a material level of judgment related to matters that are highly uncertain, and changes in those estimates and assumptions are reasonably likely to materially impact our Condensed Consolidated Financial Statements.

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Accounting policies that are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, or complex judgments include revenue recognition, taxes on earnings, impairment assessment of goodwill and intangible assets, and contingencies.

As of January 31, 2026, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, except as set forth below.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Goodwill is tested for impairment at the reporting unit level.

As of November 1, 2025, we reassessed our reporting units and determined that the former Server and Hybrid Cloud reporting units met the criteria to qualify as a single Cloud & AI (excluding Financial Services) reporting unit, and Intelligent Edge and Juniper Networks met the criteria to qualify as a single Networking reporting unit.

The Cloud & AI segment contains the Cloud & AI (excluding Financial Services) and Financial Services reporting units.

The Corporate Investments and Other segment contains the A & PS, Telco and Instant On reporting units.

Goodwill is tested annually for impairment, as of the first day of the fourth quarter, at the reporting unit level.

Additionally, an interim impairment test was performed as of November 1, 2025 based on organizational changes impacting the reporting units.

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

For all reporting units other than Cloud & AI (excluding Financial Services), a qualitative test was performed and there were no indicators of impairment of goodwill.

For the Cloud & AI (excluding Financial Services) reporting unit a quantitative assessment was performed, and the excess of fair value over carrying amount was 10%.

In order to evaluate the sensitivity of the estimated fair value of the reporting units in the goodwill impairment test, we applied a 10% decrease to the fair value of the Cloud & AI, (excluding Financial Services) reporting unit.

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

The Cloud & AI (excluding Financial Services) reporting unit has goodwill of $13.5 billion as of January 31, 2026.

In the current macroeconomic and inflationary environment, customers are investing selectively.

This has resulted in moderate unit growth and competitive pricing in traditional servers offerings.

While AI servers 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.

In addition, the business is managing a storage product model transition 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.

The Cloud & AI (excluding Financial Services) reporting unit continues to focus on capturing market share in both traditional and AI servers and storage while maintaining operating margin and leveraging its strong portfolio of products and services.

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 significant or sustained decline in its stock price, it is possible its estimates about this reporting unit's ability to successfully address the current challenges may change, which could result in the carrying value of the Cloud & AI (excluding Financial Services) reporting unit exceeding its estimated fair value and potential impairment charges.

As of April 30, 2026, there have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.

LIQUIDITY AND CAPITAL RESOURCES

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We use cash generated by operations as our primary source of liquidity.

We believe that internally generated cash flows will be generally sufficient to support our operating businesses, capital expenditures, product development initiatives, and disposal activities including legal settlements, restructuring activities, transformation costs, indemnifications, maturing debt, interest payments, and income tax payments, in addition to any future investments, share repurchases, and stockholder 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, 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.

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We anticipate that the funds made available, and cash generated from our operations, along with our access to capital markets, will be sufficient to meet our liquidity requirements for at least the next twelve months and for the foreseeable future thereafter.

Our liquidity is subject to various risks including the risks identified in the section entitled “Risk Factors” in Item 1A of Part I of the Annual Report on Form 10-K for the fiscal year ended October 31, 2025, and market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 3 of Part I of this Quarterly Report.

Our liquidity is subject to various risks including the risks identified in the section entitled “Risk Factors” in Item 1A of Part I of the Annual Report on Form 10-K for the fiscal year ended October 31, 2025, as modified by the risk statements in the section titled “Risk Factors” in Item 1A of Part II subsequent Quarterly Reports, and market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 3 of Part I of this Quarterly Report.

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

as of January 31, 2026.

as of April 30, 2026.

We utilize a variety of planning and financing strategies in an effort to ensure that our worldwide cash is available when and where it is needed.

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generally will not be taxable from a U.S.

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

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

Where local restrictions prevent an efficient intercompany transfer of funds, our intent is to keep cash balances outside of the U.S.

and to meet liquidity needs through ongoing cash flows, external borrowings, or both.

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Financial Condition and Results of Operations (Continued)

foreign withholding tax.

Where local restrictions prevent an efficient intercompany transfer of funds, our intent is to keep cash balances outside of the U.S.

and to meet liquidity needs through ongoing cash flows, external borrowings, or both.

We do not expect restrictions or potential taxes incurred on repatriation of amounts held outside of the U.S.

expect restrictions or potential taxes incurred on repatriation of amounts held outside of the U.S.

to have a material effect on our overall liquidity, financial condition, or results of operations.

In connection with the share repurchase program previously authorized by our Board of Directors, we repurchased and settled an aggregate amount of $158 million, during the first three months of fiscal 2026.

As of January 31, 2026, we had a remaining authorization of approximately $3.4 billion for future share repurchases.

In connection with the share repurchase program previously authorized by our Board of Directors, we repurchased and settled an aggregate amount of $312 million, during the first six months of fiscal 2026.

As of April 30, 2026, we had a remaining authorization of approximately $3.3 billion for future share repurchases.

For more information on our share repurchase program, refer to the section entitled “Unregistered Sales of Equity Securities and Use of Proceeds” in Item 2 of Part II.

On December 18, 2025, the Company announced an agreement to divest its Telco Solutions business to HCLTech.

In May 2026, we repaid the entire $0.75 billion outstanding under the three-year delayed draw-down term loan credit facility at par, along with accrued interest.

On December 18, 2025, we announced an agreement to divest our Telco Solutions business to HCLTech.

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.

On May 13, 2026, we closed on the sale and disposition of 13.8% of the total issued share capital of H3C for approximately $987 million.

On May 28, 2026, the Company closed on the sale of the remaining 5.2% of the total issued share capital of H3C for approximately $370 million.

For more information, see Note 7, “Acquisitions and Dispositions” to the Condensed Consolidated Financial Statements in Item 1 of Part I.

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

January 31, 2026 October 31, 2025

April 30, 2026 October 31, 2025

Cash, cash equivalents and restricted cash $ 5,354 $ 5,859

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$ 1,384 $ 1,053

(1) The maximum borrowing amounts available under the commercial paper programs and revolving credit facility are $5.75 billion and $5.25 billion, respectively, as at both January 31, 2026 and October 31, 2025.

(1) The maximum borrowing amounts available under the commercial paper programs and revolving credit facility are $5.75 billion and $5.25 billion, respectively, as of both April 30, 2026 and October 31, 2025.

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

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

For the three months ended January 31,

For the six months ended April 30,

Net cash provided by (used in) operating activities $ 2,588 $ (851)

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Free cash flow $ 1,623 $ (1,724)

Operating Activities

For the three months ended January 31, 2026, net cash provided by operating activities increased by $1.6 billion, as compared to the corresponding period in fiscal 2025.

The increase was primarily due to favorable working capital movements, largely reflecting the timing of vendor payments, lower inventory purchases and higher customer collections, as well as higher net cash generated from operations, as compared to the prior-year period, primarily due to the acquisition of Juniper Networks.

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Financial Condition and Results of Operations (Continued)

Operating Activities

For the six months ended April 30, 2026, net cash provided by operating activities increased by $3.4 billion, as compared to the corresponding period in fiscal 2025.

The increase was primarily due to the timing of vendor payments and higher net cash generated from operations, primarily due to the acquisition of Juniper Networks.

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

January 31, 2026 October 31, 2025 Change January 31, 2025 October 31, 2024 Change Y/Y Change

April 30, 2026 October 31, 2025 Change April 30, 2025 October 31, 2024 Change Y/Y Change

Days of sales outstanding in accounts receivable ("DSO") 53 49 4 46 38 8 7

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DSO is calculated by dividing ending accounts receivable, net of allowance for doubtful accounts, by a 90-day average of net revenue.

Compared to the corresponding three-month period in fiscal 2025, the increase in DSO in the current period was primarily due to the impact of incremental receivables as a result of the Merger.

Compared to the corresponding three-month period in fiscal 2025, the increase in DSO in the current period was primarily due to a decrease in early payments, along with the impact 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 2025, the decrease in DOS in the current period was primarily due to higher shipments and lower inventory purchases.

Compared to the corresponding three-month period in fiscal 2025, the decrease in DOS in the current period was primarily due to higher shipments.

DPO measures the average number of days our accounts payable balances are outstanding.

DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold.

Compared to the corresponding three-month period in fiscal 2025, the decrease in DPO in the current period was primarily due to lower purchases along with higher payments to outsourced manufacturers.

Compared to the corresponding three-month period in fiscal 2025, the decrease in DPO in the current period was primarily due to higher payments to contract manufacturers.

Investing Activities

For the three months ended January 31, 2026, net cash used in investing activities increased by $0.8 billion, as compared to the corresponding period in fiscal 2025.

The increase was primarily due to higher cash utilized in net financial collateral activities in the current period of $0.5 billion and proceeds from the divestiture of our CTG business received in the prior period of $0.2 billion.

For the six months ended April 30, 2026, there was no material change in net cash used in investing activities, as compared to the corresponding period in fiscal 2025.

Financing Activities

For the three months ended January 31, 2026, net cash used in financing activities increased by $0.6 billion, as compared to the corresponding period in fiscal 2025.

This increase was primarily due to higher repayments of debts of $0.4 billion and higher cash utilized for share repurchases of $0.1 billion, as compared to the prior-year period.

For the six months ended April 30, 2026, net cash used in financing activities increased by $0.6 billion, as compared to the corresponding period in fiscal 2025.

This increase was primarily due to higher repayments of debt of $2.3 billion, partially offset by higher proceeds from debt, net of issuance costs of $2.0 billion, and higher cash utilized for share repurchases of $0.2 billion, as compared to the prior-year period.

Free Cash Flow

Free cash flow (“FCF”) represents cash flow from operations less net capital expenditures (investments in property, plant and equipment (“PP&E”) and software assets less proceeds from the sale of PP&E), and adjusted for the effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash.

For the three months ended January 31, 2026, FCF increased by $1.6 billion, as compared to the corresponding period in fiscal 2025.

For the six months ended April 30, 2026, FCF increased by $3.3 billion, as compared to the corresponding period in fiscal 2025.

This was primarily due to higher cash provided by operating activities, as compared to the prior-year period.

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

For more information on the impact of operating assets and liabilities to our cash flows, see Note 5, “Balance Sheet Details” to the Condensed Consolidated Financial Statements in Item 1 of Part I.

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Financial Condition and Results of Operations (Continued)

Capital Resources

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In December 2023, we filed a shelf registration statement with the Securities and Exchange Commission that allows us to sell, at any time and from time to time, in one or more offerings, debt securities, preferred stock, common stock, warrants, depository shares, purchase contracts, guarantees or units consisting of any of these securities.

Significant funding and liquidity activities for the three months ended January 31, 2026 were as follows:

Significant funding and liquidity activities for the six months ended April 30, 2026 were as follows:

Debt Issuances:

• In March 2026, we issued multiple debt instruments, including:

(i) $300 million of floating rate notes due March 23, 2028;

(ii) $500 million of 4.5% Senior Notes due March 23, 2028;

(iii) $600 million of 4.6% Senior Notes due March 23, 2029;

and (iv) $600 million of 5.25% Senior Notes due April 1, 2033.

Debt Repayments:

• In April 2026, we repaid $750 million of 1.75% Senior Notes on their original maturity date.

• In March 2026, we prepaid $1.25 billion of the $2.0 billion outstanding balance under the three-year delayed draw term loan credit facility.

• In December 2025, we repaid $400 million of 1.20% Juniper Global Notes on their original maturity date.

• During the three months ended January 31, 2026, we repaid $0.4 billion of the outstanding asset-backed debt securities.

• During the six months ended April 30, 2026, we repaid $0.7 billion of the outstanding asset-backed debt securities.

Cash Requirements and Commitments

Unconditional purchase obligations

As of January 31, 2026, unconditional purchase obligations totaled $3.8 billion, of which $1.8 billion is due within fiscal 2026.

As of April 30, 2026, unconditional purchase obligations totaled $5.7 billion, of which $3.4 billion is due within fiscal 2026.

Our unconditional purchase obligations are related principally to inventory purchases, software maintenance and support services and other items.

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Restructuring Plans

As of January 31, 2026, we expect to make future cash payments of approximately $100 million in connection with our approved restructuring plans, which includes $19 million expected to be paid through the remainder of fiscal 2026 and $81 million expected to be paid thereafter.

As of April 30, 2026, we expect to make future cash payments of approximately $89 million in connection with our approved restructuring plans, which includes $17 million expected to be paid through the remainder of fiscal 2026 and $72 million expected to be paid thereafter.

Cost Savings Plans

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In connection with the integration of Juniper Networks, we expect to incur costs by fiscal year 2028 to achieve synergies, actual costs incurred may differ from estimates.

As of January 31, 2026, we expect to make future cash payments of approximately $877 million in connection with the cost savings plans, which includes $393 million expected to be paid through the remainder of fiscal 2026 and $484 million expected to be paid thereafter.

As of April 30, 2026, we expect to make future cash payments of approximately $726 million in connection with the cost savings plans, which includes $229 million expected to be paid through the remainder of fiscal 2026 and $497 million expected to be paid thereafter.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Uncertain Tax Positions

As of January 31, 2026, we had approximately $201 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions.

As of April 30, 2026, we had approximately $233 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions.

These liabilities and related interest and penalties include $10 million expected to be paid within one year.

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For further information see “Cash Requirements and Commitments” in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Off-Balance Sheet Arrangements

As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

We have third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers.

For more information on our third-party revolving short-term financing arrangements, see Note 5, “Balance Sheet Details”, to the Condensed Consolidated Financial Statements in Item 1 of Part I.

GAAP to non-GAAP Reconciliations

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Reconciliation of GAAP gross profit and gross profit margin to non-GAAP gross profit and gross profit margin.

For the three months ended January 31,

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

2026 2025 2026 2025

Dollars in millions

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(1) Certain amounts may not add due to use of rounded numbers.

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

For the three months ended January 31,

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

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

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

2026 2025 2026 2025

Dollars in millions

GAAP earnings from operations $ 470 5.1 % $ 433 5.5 %

GAAP earnings (loss) from operations $ 747 7.0 % $ (1,109) (14.5) % $ 1,217 6.1 % $ (676) (4.4) %

Non-GAAP Adjustments:

Amortization of intangible assets 323 3.0 % 37 0.5 % 634 3.2 % 75 0.5 %

Transformation costs — — % 15 0.2 %

Impairment charges — — % 1,361 17.8 % — — % 1,361 8.8 %

Stock-based compensation expense 218 2.0 % 116 1.5 % 434 2.2 % 270 1.7 %

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Non-GAAP earnings from operations $ 1,423 13.3 % $ 613 8.0 % $ 2,605 13.0 % $ 1,393 9.0 %

(1) Certain amounts may not add due to use of rounded numbers.

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Financial Condition and Results of Operations (Continued)

(1) Certain amounts may not add due to use of rounded numbers.

Reconciliation of GAAP net earnings and diluted net EPS to non-GAAP net earnings and diluted net EPS.

For the three months ended January 31,

Reconciliation of GAAP net earnings (loss) and diluted net EPS to non-GAAP net earnings and diluted net EPS.

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

2026 2025 2026 2025

Dollars Diluted Net EPS (1)

Dollars in millions except per share amounts

GAAP net earnings attributable to common stockholders $ 423 $ 0.31 $ 598

GAAP net earnings (loss) attributable to common stockholders $ 595 $ (1,079) $ (0.82) $ 1,018 $ 0.75 $ (481) $ (0.36)

Preferred stock dividends 29 29 58 58

GAAP net earnings attributable to HPE 452 627 $ 0.44

GAAP net earnings (loss) attributable to HPE 624 $ 0.44 (1,050) 1,076 (423)

Non-GAAP Adjustments:

Amortization of intangible assets 323 0.23 37 0.03 634 0.47 75 0.06

Transformation costs — — 15 0.01

Impairment charges — — 1,361 1.03 — — 1,361 1.03

Stock-based compensation expense 218 0.15 116 0.09 434 0.32 270 0.20

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Adjustments for equity interests (25) (0.02) — — (42) (0.03) — —

Gain on equity investments, net (14) (0.01) (2) —

Loss (gain) on equity investments, net 3 — (7) (0.01) (11) (0.01) (9) (0.01)

Other adjustments (2)

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(1) The impact of dilutive effect of employee stock plans is calculated under the treasury stock method, and the impact of dilutive effect of the Preferred Stock is calculated under the if-converted method.

For the three months ended January 31, 2026, the effect of Preferred Stock is excluded as it would be anti-dilutive.

See Note 13 “Net Earnings Per Share”, to the Condensed Consolidated Financial Statements in Item 1 of Part I for further information.

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

See Note 13 “Net Earnings (Loss) Per Share”, to the Condensed Consolidated Financial Statements in Item 1 of Part I for further information.

The diluted net EPS adjustment includes the impact to Non-GAAP net earnings attributable to HPE for the dilutive effect of preferred stock.

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

(3) For purposes of calculating Non-GAAP diluted net EPS, the Preferred Stock dividends are added back to the Non-GAAP net earnings attributable to common stockholders, and the diluted weighted-average share calculation assumes the Preferred Stock was converted at issuance or as of the beginning of the reporting period.

See the table below for the shares used to calculate Non-GAAP diluted net EPS.

Shares used to calculate Non-GAAP diluted net EPS.

For the three months ended January 31,

Weighted-average shares used to compute basic net EPS 1,334 1,316

Dilutive effect of employee stock plans 22 17

Dilutive effect of 7.625% Series C mandatory convertible preferred stock

Weighted-average shares used to compute Non-GAAP diluted net EPS 1,432 1,409

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Financial Condition and Results of Operations (Continued)

Reconciliation of net cash provided by operating activities to free cash flow.

For the three months ended January 31,

Shares used to calculate Non-GAAP diluted net EPS.

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

2026 2025 2026 2025

Weighted-average shares used to compute basic net EPS 1,335 1,322 1,335 1,319

Dilutive effect of 7.625% Series C mandatory convertible preferred stock

Dilutive effect of employee stock plans 21 10 21 14

Weighted-average shares used to compute Non-GAAP diluted net EPS 1,432 1,419 1,432 1,409

Reconciliation of net cash provided by (used in) operating activities to free cash flow.

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

2026 2025 2026 2025

Net cash provided by (used in) operating activities $ 1,410 $ (461) $ 2,588 $ (851)

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Disclosure of these non-GAAP financial measures also facilitates comparisons of our operating performance with the performance of other companies in the same industry that supplement their GAAP results with non-GAAP financial measures that may be calculated in a similar manner.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Economic Substance of non-GAAP Financial Measures

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Although stock-based compensation is a key incentive offered to our employees, we exclude these charges for the purpose of calculating these non-GAAP measures, primarily because they are non-cash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding stock-based compensation expense.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

• 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 the three months ended January 31, 2026, acquisition charges were driven by costs associated with the Merger and miscellaneous disposition related charges.

For the three months ended January 31, 2025, were driven by costs associated with the proposed acquisition of Juniper Networks and miscellaneous disposition related charges.

For the three and six months ended April 30, 2026, acquisition charges were driven by costs associated with the Merger and miscellaneous disposition related charges.

For the three and six months ended April 30, 2025, acquisition charges were driven by costs associated with the pending acquisition of Juniper Networks and miscellaneous disposition related charges.

• We incurred severance and other charges pursuant to cost management initiatives.

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

Non-GAAP earnings from operations and non-GAAP operating profit margin consist of earnings from operations or earnings from operations as a percentage of net revenue excluding the items mentioned above and charges relating to the amortization of intangible assets, and transformation costs.

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

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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.

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.

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.

• In the second quarter of fiscal 2025, we recorded a non-cash impairment charge for the goodwill associated with our Cloud & AI (excluding Financial Services) reporting unit.

HPE believes that this non-cash charge does not reflect the Company’s operating results and is not indicative of the underlying performance of the business.

HPE excludes these charges for purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation of HPE’s current operating performance and comparisons to HPE’s operating performance in other periods.

Although this does

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

not directly affect our cash position, the loss in value of goodwill over time can have a material impact on the equivalent GAAP earnings measure.

Non-GAAP net earnings attributable to HPE, non-GAAP net earnings attributable to common stockholders, and non-GAAP diluted net earnings per share attributable to common stockholders consist of net earnings or diluted net earnings per 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 on equity investments, other adjustments, and adjustments for taxes.

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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.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

• As of January 31, 2026, we possess a 19% equity interest in H3C, however, we entered into share purchase agreements to divest all of the remaining issued share capital of H3C held by HPE through its subsidiaries.

• As of April 30, 2026, we possess a 19% equity interest in H3C, however, we entered into share purchase agreements to divest all of the remaining issued share capital of H3C held by HPE through its subsidiaries.

Beginning in fiscal 2026, we stopped reporting H3C earnings in our non-GAAP results due to the planned divestiture of our H3C investment.

In May 2026, the Company sold the remaining equity interest in H3C.

We believe that eliminating these amounts for purposes of calculating non-GAAP financial measures facilitates the evaluation of our current operating performance.

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Some of the limitations in relying on these non-GAAP financial measures are that they can have a material impact on the equivalent GAAP earnings measures and cash flows, they may be calculated differently by other companies (limiting the usefulness of those measures for comparative purposes) and may not reflect the full economic effect of the loss in value of certain assets.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

We compensate for these limitations on the use of non-GAAP financial measures by relying primarily on our GAAP results and using non-GAAP financial measures only as a supplement.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis