What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-09-03 compared with 2026-06-02 · 140 added, 134 removed, 581 unchanged (32% of the section changed)

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

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

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

This MD&A is organized as follows:

• Trends and Uncertainties.

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

A discussion of material events and uncertainties known to management, such as the mixed macroeconomic environment and heightening global trade restrictions, increased demand for and adoption of new technologies, supply chain constraints and related cost increases for certain components, increased inventory levels, the conservative (though recovering) customer spending environment, persistent inflation, foreign exchange pressures, recent tax developments, and competitive pricing pressures.

• Executive Overview.

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TRENDS AND UNCERTAINTIES

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:

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

Technological Advancements:

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Macroeconomic Uncertainty:

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

While this dynamic has been easing, it has resulted in uneven demand across our portfolio and geographies, particularly for certain of our hardware offerings, as customers have focused investments on modernizing infrastructure, such as migrating to cloud-based offerings.

Additionally, there continues to be significant uncertainty surrounding the tariff environment and import/export regulations due to numerous factors, including but not limited to tariff imposition delays, changes to tariff rates and policies, and enactment of reciprocally restrictive trade policies and measures around the world.

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

While this dynamic has been easing, it has, at times, resulted in uneven demand across our portfolio and geographies, particularly for certain of our hardware offerings, as customers have focused investments on modernizing infrastructure, such as migrating to cloud-based offerings.

Additionally, there continues to be significant uncertainty surrounding the tariff environment and import/export regulations due to numerous factors, including but not limited to tariff imposition delays, changes to tariff rates and policies, tariff repeals and refunds, and enactment of reciprocally restrictive trade measures around the world.

These have enhanced global trade uncertainty and contributed to higher prices of components and end products and services.

While we have sought to mitigate these adverse impacts by relying on our global supply chain and implementing pricing measures, we expect the current macroeconomic environment to continue with the potential to impact revenue and margin growth in the near term.

While we have sought to mitigate these adverse impacts by relying on our global supply chain, implementing pricing measures, and securing sufficient supply in advance of orders, we nevertheless expect the current macroeconomic environment to continue with the potential to impact revenue and margin growth in the near term.

Supply Chain:

We 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 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.

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

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

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

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

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

In addition, our current efforts to secure memory components and SSDs to meet forecasted demand may further increase our inventory levels in the medium term.

In addition, our current efforts to secure memory components and SSDs in advance to meet forecasted demand may further increase our inventory levels in the medium term.

While we have been working to reduce inventory, any or all of the aforementioned factors could contribute to sustained higher-than-normal levels and further uncertainty.

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

We are taking actions through continued disciplined cost pricing management and supply chain diversification to mitigate the impact of these dynamics.

We are taking actions through continued disciplined cost and pricing management and supply chain diversification to mitigate the impact of these dynamics.

However, such actions may not fully mitigate any impact on our financial condition.

Recurring Revenue and Consumption Models:

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

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

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

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We have a large global presence, with more than half of our revenue generated outside of the U.S.

As a result, our financial results can be, and particularly in recent periods have been, impacted by fluctuations in

As a result, our financial results can be, and particularly in recent periods have been, impacted by fluctuations in foreign currency exchange rates.

We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.

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Financial Condition and Results of Operations (Continued)

foreign currency exchange rates.

We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.

Public Sector :

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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.

The impact of the increase in reserves is almost entirely offset with a valuation allowance release, and the net impact to income tax expense for the nine months ended July 31, 2026 was not material.

It is reasonably possible that the IRS audit for fiscal 2020 through 2022 may be concluded in the next 12 months, and it is reasonably possible that existing unrecognized tax benefits related to these years may be reduced by an amount up to $366 million within the next 12 months;

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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”).

The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

During the three months ended July 31, 2026, we have received certain tariff refunds.

We have also applied for and expect to receive more in the future.

Such amounts received, and any such amounts applied for, are not nor do we expect they will be material to our financial statements or financial position.

However, the ultimate availability, timing, and amount of any refunds of such tariffs remain uncertain and are subject to further legal, regulatory, and administrative developments.

Following the Supreme Court’s decision, the U.S.

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Acquisition of Juniper Networks

On July 2, 2025, we completed the Juniper Networks 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 Merger Agreement, HPE agreed to pay $40.00 per share of Juniper Networks common stock, issued and outstanding as of July 2, 2025, representing a cash consideration of approximately $13.4 billion.

On July 2, 2025, we completed the Juniper Networks merger (the “Merger”).

Under the terms of the Agreement and Plan of Merger, dated January 9, 2024, by and among Juniper Networks, HPE and Jasmine Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of HPE (the “Merger Agreement”), HPE agreed to pay $40.00 per share of Juniper Networks common stock, issued and outstanding as of July 2, 2025, representing a cash consideration of approximately $13.4 billion.

The results of operations of Juniper Networks are included in the Consolidated Financial Statements commencing on July 2, 2025.

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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 connection with the Program, we incurred charges of $31 million and $84 million for the three and nine months ended July 31, 2026, respectively, and $2 million and $148 million for the three and nine months ended July 31, 2025, respectively.

In addition, the Company expects to achieve at least $600 million in cost savings from synergies by fiscal 2028, related to the integration of Juniper Networks.

These synergies are expected to require approximately $800 million of investment, primarily tied to headcount, supply chain optimization, and portfolio rationalization.

In connection with the integration of Juniper Networks, we incurred acquisition costs of $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

In connection with the integration of Juniper Networks, we incurred acquisition costs of $69 million and $300 million, for the three and nine months ended July 31, 2026, respectively.

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

Net revenue of $12.2 billion represented an increase of 33.7%, primarily due to an increase in the average selling price in the Cloud & AI segment, and higher revenue in the Networking segment from the Merger.

The gross profit margin of 40.1% (or $4.9 billion) represents an increase of 10.9 percentage points from the prior-year period, primarily due to higher revenue in the Cloud & AI and Networking segments.

The operating profit margin of 11.4% represents an increase of 8.7 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement.

Nine months ended July 31, 2026 compared with nine months ended July 31, 2025

Net revenue of $32.2 billion represented an increase of 30.8%, primarily due to higher revenue in the Networking segment from the Merger, and an increase in the average selling price in the Cloud & AI segment.

The gross profit margin of 37.7% (or $12.1 billion) represents an increase of 8.7 percentage points from the prior-year period, primarily due to higher revenue in the Networking and Cloud & AI segments.

The operating profit margin of 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.

The operating profit margin of 8.1% represents an increase of 9.8 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement.

Financial Results

The following table summarizes our condensed consolidated GAAP financial results:

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

For the three months ended July 31, For the nine months ended July 31,

2026 2025 Change 2026 2025 Change

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Operating profit margin 11.4 % 2.7 % 8.7pts 8.1 % (1.7) % 9.8pts

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%

Net earnings (loss) attributable to HPE $ 1,540 $ 305 404.9% $ 2,616 $ (118) N/M

Net earnings (loss) attributable to common stockholders $ 1,511 $ 276 447.5% $ 2,529 $ (205) N/M

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

$ 1.06 $ 0.21 $0.85 $ 1.82 $ (0.16) $1.98

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

Cash flow provided by operations $ 1,641 $ 1,305 $336 $ 4,229 $ 454 $3,775

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

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

For the three months ended July 31, For the nine months ended July 31,

2026 2025 Change 2026 2025 Change

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Free cash flow $ 958 $ 790 $168 $ 2,581 $ (934) $3,515

N/M - Not meaningful

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

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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.

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

On September 2, 2026, we declared a regular cash dividend of $0.1425 per share of our common stock, payable on or about October 16, 2026, to our holders of record as of the close of business on September 17, 2026.

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

As of July 31, 2026, we had a remaining authorization of approximately $3.2 billion for future share repurchases.

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

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

For the three months ended July 31, For the nine months ended July 31,

2026 2025 2026 2025

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Interest and other, net (75) (0.6) 8 0.1 (202) (0.6) 86 0.3

Gain on sale of equity interest 444 3.6 — — 444 1.4 — —

Gain on sale of a business — — 1 — — — 245 1.0

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Earnings (loss) before provision for taxes 1,762 14.4 288 3.2 2,894 9.0 (24) (0.1)

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

(Provision) benefit for taxes (222) (1.8) 17 0.2 (278) (0.9) (94) (0.4)

Net earnings (loss) attributable to HPE 1,540 12.6 305 3.3 2,616 8.1 (118) (0.5)

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

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%.

Three and nine months ended July 31, 2026 compared with the three and nine months ended July 31, 2025

For the three months ended July 31, 2026, total net revenue of $12.2 billion represented an increase of $3.1 billion, or 33.7%.

net revenue increased by $0.5 billion, or 11.9%, to $4.8 billion, and net revenue from outside of the U.S.

increased by $2.6 billion, or 52.9%, to $7.4 billion.

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

For the nine months ended July 31, 2026, total net revenue of $32.2 billion represented an increase of $7.6 billion, or 30.8%.

net revenue increased by $2.5 billion, or 26.4%, to $12.1 billion, and net revenue from outside of the U.S.

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

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

For the three months ended July 31, 2026 For the nine months ended July 31, 2026

Percentage Points

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Total HPE 33.7 30.8

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

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

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

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• Cloud & AI net revenue increased $1.8 billion, or 25.4%, primarily due to an increase in the average selling price

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

Nine months ended July 31, 2026 compared with nine months ended July 31, 2025

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

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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 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.

For the three months ended July 31, 2026, the total gross profit margin of 40.1% represents an increase of 10.9 percentage points, as compared to the respective prior year period.

For the nine months ended July 31, 2026, the total gross profit margin of 37.7% represents an increase of 8.7 percentage points, as compared to the respective prior year period.

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

Operating expenses

Research and development (“R&D”)

For the three months ended 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.

For the three months ended July 31, 2026, R&D expense increased by $536 million, or 86.2%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 80.0 percentage points to the change.

For the nine months ended July 31, 2026, R&D expense increased by $1,187 million, or 72.5%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 64.3 percentage points to the change.

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

For the three months ended 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.

For the three months ended July 31, 2026, SG&A expense increased by $466 million, or 31.1%, primarily due to higher variable employee costs and increased operating expenses associated with Juniper Networks, which contributed 24.7 percentage points to the change.

For the nine months ended July 31, 2026, SG&A expense increased by $1,428 million, or 35.2%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 28.8 percentage points to the change.

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Amortization of intangible assets

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.

For the three and nine months ended July 31, 2026, amortization of intangible assets increased by $189 million, or 150.0%, and $748 million, or 372.1%, respectively, primarily due to the amortization expense of the acquired intangibles as a result of the Merger.

Impairment charges

Impairment charges for the 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.

Impairment charges for the nine months ended July 31, 2025 represents a partial goodwill impairment charge of $1.4 billion, as it was determined that the fair value of the Cloud & AI (excluding Financial Services) reporting unit was below the carrying value of its net assets.

Acquisition, disposition and other charges

For the three and 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.

For the three and nine months ended July 31, 2026, acquisition, disposition and other charges decreased by $110 million or 60.8%, and $38 million or 12.5%, respectively, primarily due to higher costs incurred in connection with the Merger in prior year periods.

Interest and other, net

For the three 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.

For the three months ended July 31, 2026, interest and other, net expense increased by $83 million, or 1,037.5%, primarily due to higher net interest expense of $51 million and the absence of a $52 million prior year gain related to the settlement to resolve claims solely against Sushovan Hussain in the ongoing Autonomy litigation.

For the nine months ended July 31, 2026, interest and other, net expense increased by $288 million, or 334.9%, primarily due to higher net interest expense of $283 million.

Gain on sale of equity interest

In May 2026, the Company sold the remaining equity interest in H3C and r ecognized a $444 million gain on sale.

Gain on sale of a business

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We received net proceeds of $210 million and recognized a gain of $245 million.

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.

(Provision) benefit for taxes

For the three months ended July 31, 2026 and 2025, we recorded income tax expense of $222 million and income tax benefit of $17 million, respectively, which reflects an effective tax rate of 12.6% and (6.5)%, respectively.

For the nine months ended July 31, 2026 and 2025, we recorded income tax expense of $278 million and $94 million, respectively, which reflects an effective tax rate of 9.6% and (359.9)%, respectively.

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

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

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

For the nine months ended July 31, 2025, the effective tax rate also included the effects of the non-deductible goodwill impairment.

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

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Segment Results

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:

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

HPE Consolidated Networking Cloud & AI Corporate Investments and Other

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Year-over-year change percentage points 8.7 pts (0.1) pts 10.0 pts (17.1) pts

The following table and ensuing discussion provide an overview of our key financial metrics by segment for the six months ended April 30, 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 nine months ended July 31, 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 9.8 pts (2.7) pts 6.3 pts (6.5) pts

(1) Segment earnings (loss) from operations exclude certain unallocated corporate costs and eliminations, 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,

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

For the three months ended July 31, For the nine months ended July 31,

2026 2025 % Change 2026 2025 % Change

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Security 281 160 75.6 % 809 386 109.6 %

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

Routing 788 213 270.0 % 2,343 215 N/M

Total Networking net revenue 2,893 1,654 74.9 % 8,289 3,814 117.3 %

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Financial Condition and Results of Operations (Continued)

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

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

Networking segment net revenue increased by $1,239 million, or 74.9%, primarily due to a $803 million, or 68.4%, increase in product revenue, and $436 million, or 90.8%, increase in service revenue.

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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

Nine months ended July 31, 2026 compared with nine months ended July 31, 2025

Networking segment net revenue increased by $4,475 million, or 117.3%, primarily due to a $2,832 million, or 102.7%, increase in product revenue, and $1,643 million, or 155.4%, increase in service revenue.

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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,

For the three months ended July 31, For the nine months ended July 31,

2026 2025 % Change 2026 2025 % Change

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(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.

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

Cloud & AI segment net revenue increased by $1.8 billion, or 25.4%, primarily due to an increase in Server net revenue.

Server net revenue increased by $1.8 billion, or 35.3%, predominantly due to an increase in the average selling price.

The increase in average selling price was primarily driven by commodity price increases, especially memory and SSDs.

Cloud & AI gross profit increased by $1.5 billion, or 89.8%, primarily driven by increased net revenue.

This increase was due to favorable mix of higher-margin revenues.

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Financial Condition and Results of Operations (Continued)

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.

Cloud & AI earnings from operations increased by $1.0 billion, or 205.4%, primarily driven by higher gross profit, partially offset by an increase in operating expenses of $0.5 billion, or 40.2%, primarily due to higher variable employee costs.

Nine months ended July 31, 2026 compared with nine months ended July 31, 2025

Cloud & AI segment net revenue increased by $3.1 billion, or 15.4%, primarily due to an increase in Server net revenue.

Server net revenue increased by $3.0 billion, or 22.3%, predominantly due to an increase in the average selling price.

The increase in average selling price was primarily driven by commodity price increases, especially memory and SSDs.

Cloud & AI gross profit increased by $2.4 billion, or 49.6%, primarily driven by increased net revenue.

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

Cloud & AI earnings from operations increased by $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.

Cloud & AI earnings from operations increased by $1.7 billion, or 114.2%, primarily driven by higher gross profit, partially offset by an increase in operating expenses of $0.7 billion, or 20.8%, primarily due to higher variable employee costs.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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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 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.

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

LIQUIDITY AND CAPITAL RESOURCES

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

as of April 30, 2026.

as of July 31, 2026.

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

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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 $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.

In connection with the share repurchase program previously authorized by our Board of Directors, we repurchased and settled an aggregate amount of $447 million, during the first nine months of fiscal 2026.

As of July 31, 2026, we had a remaining authorization of approximately $3.2 billion for future share repurchases.

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

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.

On August 1, 2026, the Company completed the sale of its Telco Solutions business to HCLTech pursuant to the divestiture agreement announced on December 18, 2025.

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

In May 2026, we completed the sale of our equity interest in H3C.

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

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

April 30, 2026 October 31, 2025

July 31, 2026 October 31, 2025

Cash, cash equivalents and restricted cash $ 6,278 $ 5,859

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$ 1,403 $ 1,053

(1) The maximum borrowing amounts available under the commercial paper programs and revolving credit facility are $5.75 billion and $5.25 billion, respectively, as of both April 30, 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 July 31, 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 six months ended April 30,

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

For the nine months ended July 31,

Net cash provided by operating activities $ 4,229 $ 454

Net cash used in investing activities (195) (13,614)

Net cash used in financing activities (2,091) (1,492)

Net cash (used in) provided by financing activities (3,576) 2,743

Effect of exchange rate changes on cash, cash equivalents, and restricted cash (39) 9

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Free cash flow $ 2,581 $ (934)

Operating Activities

For the nine months ended July 31, 2026, net cash provided by operating activities increased by $3.8 billion, as compared to the corresponding period in fiscal 2025.

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

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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:

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

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

Days of sales outstanding in accounts receivable ("DSO") 46 49 (3) 56 38 18 (10)

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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 a decrease in early payments, along with the impact of the Merger.

Compared to the corresponding three-month period in fiscal 2025, the decrease in DSO in the current period was primarily due to stronger collections.

DOS measures the average number of days from procurement to sale of our products.

DOS is calculated by dividing ending inventory by a 90-day average of cost of goods sold.

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

Compared to the corresponding three-month period in fiscal 2025, the increase in DOS in the current period was primarily due to higher inventory purchases to fulfill planned future shipments.

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

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

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

Compared to the corresponding three-month period in fiscal 2025, the increase in DPO in the current period was primarily due to higher purchases to secure strategic component supply and fulfill backlog.

Investing Activities

For the 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.

For the nine months ended July 31, 2026, net cash used in investing activities decreased by $13.4 billion, as compared to the corresponding period in fiscal 2025.

The decrease was primarily due to payments made in connection with the Juniper Networks acquisition, net of cash acquired of $12.3 billion in the prior-year period and proceeds from sale of equity interests in H3C of $1.4 billion during the current period.

Financing Activities

For the 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.

For the nine months ended July 31, 2026, net cash used in financing activities increased by $6.3 billion, as compared to the corresponding period in fiscal 2025.

This increase was primarily due to higher repayments of debt of $3.0 billion, lower proceeds from debt, net of issuance costs of $2.8 billion and higher cash utilized for stock-based award activities and share repurchases of $0.5 billion, as compared to the prior-year period.

Free Cash Flow

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

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

For the nine months ended July 31, 2026, FCF increased by $3.5 billion, as compared to the corresponding period in fiscal 2025.

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

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

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

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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 six months ended April 30, 2026 were as follows:

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

Debt Issuances:

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Debt Repayments:

• In May 2026, we repaid the remaining $750 million outstanding under the three-year delayed draw-down term loan credit facility.

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

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

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

• During the nine months ended July 31, 2026, we repaid $929 million of the outstanding asset-backed debt securities.

Cash Requirements and Commitments

Unconditional purchase obligations

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

As of July 31, 2026, unconditional purchase obligations totaled $30.4 billion, of which $4.2 billion is due within fiscal 2026.

These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction, as well as settlements that the Company has reached with third parties, requiring it to pay determined amounts over a specified period of time.

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

Unconditional purchase obligations exclude agreements that are cancellable without penalty.

Amounts payable under certain contracts with variable pricing provisions have been estimated primarily based on prevailing market prices for the underlying products as of the reporting date.

Retirement Benefit Plan Funding

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Our policy is to fund our pension plans so that we meet at least the minimum contribution requirements, as established by various authorities including local government and tax authorities.

Restructuring Plans

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 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.

As of July 31, 2026, we expect to make future cash payments of approximately $630 million in connection with the cost savings plans, which includes $30 million expected to be paid through the remainder of fiscal 2026 and $600 million expected to be paid thereafter.

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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.

As of July 31, 2026, we had approximately $412 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions.

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

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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 April 30, For the six months ended April 30,

For the three months ended July 31, For the nine months ended July 31,

2026 2025 2026 2025

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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,

For the three months ended July 31, For the nine months ended July 31,

2026 2025 2026 2025

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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,

For the three months ended July 31, For the nine months ended July 31,

2026 2025 2026 2025

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Acquisition, disposition and other charges 75 0.05 225 0.17 342 0.24 345 0.26

Gain on sale of equity interest (444) (0.31) — — (444) (0.31) — —

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

Litigation judgment — — (52) (0.04) — — (52) (0.04)

Loss (gain) on equity investments, net — — 1 — (11) (0.01) (8) —

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Shares used to calculate Non-GAAP diluted net EPS.

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

For the three months ended July 31, For the nine months ended July 31,

2026 2025 2026 2025

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Weighted-average shares used to compute Non-GAAP diluted net EPS 1,449 1,421 1,441 1,413

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

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

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

For the three months ended July 31, For the nine months ended July 31,

2026 2025 2026 2025

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

Net cash provided by operating activities $ 1,641 $ 1,305 $ 4,229 $ 454

Investment in property, plant and equipment and software assets (745) (576) (1,897) (1,651)

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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 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.

Acquisition charges were driven by costs associated with the Merger and miscellaneous disposition related charges.

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

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• 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.

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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.

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

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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

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

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

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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.

share excluding those same charges mentioned above, as well as other items such as gain on sale of a business, gain on sale of equity interest, adjustments for equity interests, gain or loss on equity investments, litigation judgments, other adjustments, and adjustments for taxes.

Non-GAAP net earnings attributable to HPE and non-GAAP diluted net earnings per share attributable to common stockholders includes preferred stock dividends added back to non-GAAP net earnings attributable to HPE.

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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.

• 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.

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

In May 2026, the Company sold its remaining equity interest in H3C, which resulted in a gain of $444 million and is included in the fiscal 2026 adjustment Gain on sale of equity interest.

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

• In the third quarter of fiscal 2025, HPE received $52 million from a settlement to resolve claims solely against Sushovan Hussain, in the ongoing Autonomy litigation.

We exclude the litigation judgment for purposes of calculating non-GAAP measures to facilitate the evaluation of our current operating performance and comparisons to our operating performance in other periods.

• We exclude gains and losses (including impairments) on our non-marketable equity investments because we do not believe they are reflective of normal continuing business operations.

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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