Hewlett Packard Enterprise Company

    HPE$C ·NYSE ·Computer & office Equipment ·Inc. in DE
    Other securities: HPE
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    From 10-Q filed 2026-03-10 (period ending 2026-01-31).

    Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    For purposes of this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section, we use the terms “Hewlett Packard Enterprise”, “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.
    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.
    •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.
    •Results of Operations. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations at the segment level.
    •Critical Accounting Policies and Estimates. A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.
    •Liquidity and Capital Resources. An analysis of changes in our cash flows, financial condition, liquidity, and cash requirements and commitments.
    •GAAP to Non-GAAP Reconciliations. Each non-GAAP financial measure has been reconciled to the most directly comparable GAAP financial measure. This section also includes a discussion of the use, usefulness and economic substance of the non-GAAP financial measures, along with a discussion of material limitations, and compensation for those limitations, associated with the use of non-GAAP financial measures.
    37
    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    Management's Discussion and Analysis of
    Financial Condition and Results of Operations (Continued)
    TRENDS AND UNCERTAINTIES
    During the first three months of fiscal 2026, the effects of the evolving macroeconomic environment on demand 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. As a result, the need for a unified cloud experience everywhere has grown, in order to manage the growth of data at the edge. Increasing demand for AI is also contributing to changes in the competitive landscape. With the abundance of data, there are opportunities to develop AI tools with powerful computational abilities to extract insights and value from the captured data. Secure networking that is purpose-built for AI workloads is the foundation that enables users to seamlessly connect and apply AI learnings to such data that lives in various ecosystems. While we believe our recent acquisition of Juniper Networks positions us to capitalize on the growing market opportunities across AI-accelerated computing, data, cloud and networking, our major competitors and emerging competitors are expanding their product and service offerings with integrated products and solutions and exerting increased competitive pressure. We expect these market dynamics and trends to continue in the longer term.
    Macroeconomic Uncertainty: The evolving macroeconomic environment has 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. 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.
    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 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 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. 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. 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 for our customers and partners. We expect that such flexible consumption model will continue to strengthen our customer relationships and contribute to growth in recurring revenue.
    Foreign Currency Exposure: We have a large global presence, with more than half of our revenue generated outside of the U.S. As a result, our financial results can be, and particularly in recent periods have been, impacted by fluctuations in
    38
    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    Management's Discussion and Analysis of
    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: We have a number of engagements with various public sector entities, including the U.S. federal government and its agencies, as direct or indirect customers of our IT services and hardware. Significant staffing and resource reductions at certain public sector entities create an uncertain environment and as a result, our financial results have been, and may continue to be, impacted in the near term.
    Recent Tax Developments: Proposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on foreign earnings. Several of the proposals currently being considered, if enacted into law, could have an impact on our effective tax rate, income tax expense, and cash flows. Our future effective tax rate may also be impacted by judicial decisions, changes in interpretation of regulations, as well as additional legislation and guidance. Further, the Organisation for Economic Co-operation and Development (“OECD”), an international association of 38 countries including the United States, has proposed changes to numerous long-standing tax principles, namely, its Pillar Two framework, which imposes a global minimum corporate tax rate of 15%. To date, 65 countries have enacted portions, or all, of the OECD proposal. The adoption and effective dates of these rules may vary by country and could increase tax complexity and uncertainty and may adversely affect our provision for income taxes. While we do not anticipate a material adverse impact to our financial position in fiscal 2026, additional changes to global tax laws are likely to occur. For instance, some countries have enacted, and others have proposed, taxes based on gross receipts applicable to digital services, regardless of profitability. Such changes may adversely affect our tax liability.
    The Internal Revenue Service (“IRS”) is conducting audits of our fiscal 2020 through 2022 U.S. federal income tax returns. During the first quarter of fiscal 2026, the IRS issued notices of proposed adjustments (“NOPAs”) for fiscal 2020, 2021, and 2022 relating to our intercompany transfer pricing. 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.
    On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OB3”) into law. OB3 introduced several changes to tax regulations, including the permanent restoration of 100% depreciation and the permanent restoration of immediate deductibility of costs associated with research and development activities performed in the United States. We do not expect a material impact in fiscal 2026, but we will continue to evaluate the full impact of these changes on our future results.
    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. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.
    Other Trends and Uncertainties: The impacts of geopolitical volatility (including the 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. markets. 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
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    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    Management's Discussion and Analysis of
    Financial Condition and Results of Operations (Continued)
    business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future. Our customers range from small-and-medium size businesses to large global enterprises and governmental entities. Our legacy dates to a partnership founded in 1939 by William R. Hewlett and David Packard, and we strive every day to uphold and enhance that legacy through our dedication to providing innovative technological solutions to our customers.
    Our operations are organized into three reportable segments for financial reporting purposes: Cloud & AI, Networking, and Corporate Investments and Other. Effective November 1, 2025, HPE implemented an organizational change by (i) merging the Server, Hybrid Cloud, and Financial Services business segments into a new segment named Cloud & AI and (ii) transferring the Telco and Instant On businesses from the Networking segment to the Corporate Investments and Other segment. Refer to Note 2, “Segment Information” to the Condensed Consolidated Financial Statements in Item 1 of Part I for further information.
    Acquisition of Juniper Networks
    On July 2, 2025, we completed the Juniper Networks Merger. 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. The results of operations of Juniper Networks are included in the Consolidated Financial Statements commencing on July 2, 2025. See Note 7, “Acquisitions and Dispositions” to the Condensed Consolidated Financial Statements in Item 1 of Part I for additional information.
    Pending Divestiture of H3C Technologies Co., Limited Shares
    On November 17, 2025, our subsidiary, H3C Holdings Limited (“H3C Holdings”), entered into (i) share purchase agreements with five counterparties, including Unisplendour International Technology Limited (“UNIS”), whereby such counterparties, in the aggregate, agreed to purchase 10% of the total issued share capital of H3C Technologies Co., Limited (“H3C”) for cash consideration of approximately $714 million and (ii) a side letter with UNIS, amending the Agreement on Subsequent Arrangements that was previously entered into on May 24, 2024, whereby, among other things, H3C Holdings and UNIS shall retain their put option and call option, respectively, relating to the remaining issued share capital of H3C held by H3C Holdings and have the right to exercise their respective option rights in respect of such shares up to three times, subject to the timing and terms as set forth therein. The agreement referenced in clause (ii) above revises the arrangements governing the sale of all of the remaining issued share capital of H3C held by us through H3C Holdings. On November 28, 2025, H3C Holdings entered into three additional share purchase agreements, including one with UNIS, whereby such counterparties, in the aggregate, agreed to purchase the remaining 9% of the total issued share capital of H3C for cash consideration of approximately $643 million. Such transactions and the transactions referenced in clause (i) remain subject to regulatory approvals.
    Cost Savings Actions
    On March 6, 2025, the Board of Directors approved a cost reduction program (the "Program") intended to reduce structural operating costs and continue advancing our ongoing commitment to profitable growth. The Program is expected to be implemented through fiscal year 2026 and deliver gross savings of approximately $350 million by fiscal year 2027 through reductions in our workforce. The Program has since become a part of Catalyst, a set of broader company-wide actions to reduce costs and enhance efficiency throughout the Company.
    The estimates of the duration of the Program, the charges and expenditures that we expect to incur in connection therewith, and the timing thereof are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Program. In connection with the Program, we incurred charges of $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.
    40
    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    Management's Discussion and Analysis of
    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.
    Financial Results
    The following table summarizes our condensed consolidated GAAP financial results:
    For the three months ended January 31,
    20262025Change
    Dollars in millions, except per share amounts
    Net revenue$9,301 $7,854 18.4%
    Gross profit$3,340 $2,295 45.5%
    Gross profit margin35.9 %29.2 %6.7pts
    Earnings from operations$470 $433 8.5%
    Operating profit margin5.1 %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)
    		$0.31 $0.44 $(0.13)
    Cash flow provided by (used in) operations$1,178 $(390)$1,568
    The following table summarizes our condensed consolidated non-GAAP financial results:
    For the three months ended January 31,
    20262025Change
    Dollars in millions, except per share amounts
    Non-GAAP gross profit$3,403 $2,310 47.3%
    Non-GAAP gross profit margin36.6 %29.4 %7.2pts
    Non-GAAP earnings from operations$1,182 $780 51.5%
    Non-GAAP operating profit margin12.7 %9.9 %2.8pts
    Non-GAAP net earnings attributable to HPE$930 $684 36.0%
    Non-GAAP net earnings attributable to common stockholders$901 $655 37.6%
    Non-GAAP diluted net earnings per share attributable to common stockholders(1)
    		$0.65 $0.49 $0.16
    Free cash flow$708 $(877)$1,585
    (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.
    Each non-GAAP financial measure has been reconciled to the most directly comparable GAAP financial measure herein. Please refer to the section “GAAP to non-GAAP Reconciliations” included in this MD&A for these reconciliations, a discussion of the use, usefulness and economic substance of the non-GAAP financial measures, along with a discussion of material limitations, and compensation for those limitations, associated with the use of non-GAAP financial measures.
    Dividends and Share Repurchase Program
    Returning capital to our stockholders remains an important part of our capital allocation framework, which also consists
    41
    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    Management's Discussion and Analysis of
    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. 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 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,
     20262025
     Dollars
    % of Revenue(1)
    		Dollars
    % of Revenue(1)
     Dollars in millions
    Net revenue$9,301 100.0 %$7,854 100.0 %
    Cost of sales (exclusive of amortization shown separately below)5,961 64.1 5,559 70.8 
    Gross profit3,340 35.9 2,295 29.2 
    Research and development744 8.0 475 6.0 
    Selling, general and administrative1,698 18.3 1,268 16.1 
    Amortization of intangible assets311 3.3 38 0.5 
    Transformation costs— — 15 0.2 
    Acquisition, disposition and other charges117 1.3 66 0.8 
    Earnings from operations 470 5.1 433 5.5 
    Interest and other, net(54)(0.6)39 0.5 
    Gain on sale of a business— — 244 3.1 
    Earnings from equity interests17 0.2 17 0.2 
    Earnings before provision for taxes433 4.7 733 9.3 
    Benefit (provision) for taxes19 0.2 (106)(1.3)
    Net earnings attributable to HPE452 4.9 627 8.0 
    Preferred stock dividends(29)(0.3)(29)(0.4)
    Net earnings attributable to common stockholders$423 4.5 %$598 7.6 %
    (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
    Net revenue
    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%. U.S. 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.
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    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    Management's Discussion and Analysis of
    Financial Condition and Results of Operations (Continued)
    The components of the weighted net revenue change by segment were as follows:
    For the three months ended January 31, 2026
    Percentage Points
    Cloud & AI(2.3)
    Networking20.8 
    Corporate Investments and Other
    		(0.1)
    Total HPE18.4 
    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
    Please refer to the section “Segment Information” further below for a discussion of our results of operations for each reportable segment.
    Gross profit
    For the three months ended 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.
    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.
    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.
    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.
    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.
    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.
    Gain on sale of a business
    On December 1, 2024, we completed the disposition of CTG. We received net proceeds of $210 million and recognized a gain of $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. 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 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.
    As described in Note 1, “Overview and Summary of Significant Accounting Policies,” effective as of the beginning of the first quarter of fiscal 2026, the Company realigned its five reportable segments to three reportable segments. These changes had no impact to HPE’s previously reported consolidated GAAP results. A description of the products and services for each segment, along with other pertinent information related to segments can be found in Note 2, “Segment Information” to the Condensed Consolidated Financial Statements in Item 1 of Part I.
    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:
    HPE ConsolidatedNetworkingCloud & AICorporate Investments and Other
    Dollars in millions
    Net revenue$9,301$2,706$6,334$261
    Year-over-year change %18.4 %151.5 %(2.7)%(2.2)%
    Gross profit as a % of net revenue35.9 %61.2 %26.7 %21.8 %
    Earnings (loss) from operations(1)
    		$470 $640 $645 $(12)
    Earnings (loss) from operations as a % of net revenue5.1 %23.7 %10.2 %(4.6)%
    Year-over-year change percentage points(0.4)pts(6.0)pts1.8 pts(1.6)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.
    44
    HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
    Management's Discussion and Analysis of
    Financial Condition and Results of Operations (Continued)
    Networking
     For the three months ended January 31,
     20262025% Change
     Dollars in millions
    Networking net revenue:
    Campus & Branch$1,227 $864 42.0 %
    Data Center Networking444 92 382.6 %
    Security255 119 114.3 %
    Routing780 1 N/M
    Total Networking net revenue2,706 1,076 151.5 %
    Cost of sales1,049 395 165.6 %
    Gross profit1,657 681 143.3 %
    Operating expenses1,017 361 181.7 %
    Earnings from operations$

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    Recent SEC filings

    • 2026-04-03 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
    • 2026-03-23 8-K Other Events; Financial Statements and Exhibits
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    • 2026-03-10 10-Q Quarterly Report
    • 2026-03-09 8-K Earnings Release; Regulation FD Disclosure
    • 2026-02-06 8-K Officer/Director Change
    • 2025-12-18 10-K Annual Report
    • 2025-12-04 8-K Earnings Release; Regulation FD Disclosure
    • 2025-12-01 8-K Material Agreement Entered
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    • 2025-11-12 8-K Officer/Director Change
    • 2025-10-15 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
    • 2025-09-22 8-K Officer/Director Change
    • 2025-09-15 8-K Other Events; Financial Statements and Exhibits
    • 2025-09-10 8-K Other Events; Financial Statements and Exhibits