# Hewlett Packard Enterprise Company (HPE) — Business, Risks and Management's Discussion Sources: Annual Report on Form 10-K for fiscal 2025 (fiscal year ended October 31, 2025), accession 0001645590-25-000130, filed December 18, 2025; Quarterly Report on Form 10-Q for the quarter ended July 31, 2026 (third quarter of fiscal 2026), accession 0001645590-26-000080, filed September 3, 2026. **A note on segments before anything else.** HPE reorganized its reporting structure effective November 1, 2025, the first day of fiscal 2026. The fiscal 2025 annual report describes and reports **five** segments — Server, Hybrid Cloud, Networking, Financial Services, and Corporate Investments and Other. Beginning with the first quarter of fiscal 2026 the company reports **three** — Networking, Cloud & AI (the former Server, Hybrid Cloud and Financial Services segments merged), and Corporate Investments and Other (which received the Telco and Instant On businesses from Networking). Prior-period segment figures in the quarterly report have been recast onto the three-segment basis; the annual figures below are on the older five-segment basis and are not directly comparable to the quarterly segment figures. The company states the change had no impact on previously reported consolidated net revenue, net earnings, EPS or total assets. --- ## Business *From the fiscal 2025 Form 10-K, accession 0001645590-25-000130.* HPE is a global enterprise technology company selling infrastructure — servers, storage, networking — together with the software, services and financing that surround them. Its stated purpose is to let customers "capture, analyze and act upon data seamlessly from edge to cloud." Customers range from small and medium businesses to large global enterprises and governments. The company traces its legacy to the partnership founded in 1939 by William R. Hewlett and David Packard, and was itself separated from HP Inc. in 2015. **Strategy.** Management organizes the portfolio around three megatrends it believes are reshaping enterprise IT: networking, cloud, and AI. In networking, the stated aim is both "AI for Networks" (using AI to make networks smarter) and "Networks for AI" (building the high-throughput, low-latency fabric that AI training and inference require); the Juniper Networks acquisition is described as the move that gave HPE a full networking technology stack. In cloud, the HPE GreenLake cloud is the centerpiece — a pay-per-use, hybrid-by-design platform spanning public clouds, data centers, colocation and the edge — and the company is pushing a transition toward proprietary HPE-developed storage (Alletra) to improve margin and reduce reliance on third-party product. In AI infrastructure, the focus is sovereign and enterprise customers, leveraging the supercomputing heritage (HPE Cray EX) and turnkey systems such as HPE Private Cloud AI. The financial services business sits alongside all of this, financing customer adoption. **Segments as reported for fiscal 2025 (five-segment basis):** - **Server** — general-purpose and workload-optimized servers and integrated systems for high-performance computing, supercomputing (including exascale), AI, analytics and transaction processing. Brands include HPE ProLiant, Synergy, Scale Up Servers, Edgeline, Cray EX, Cray XD and NonStop, plus attached support services. - **Hybrid Cloud** — storage and private cloud: the HPE Alletra Storage portfolio, unstructured data and analytics for AI, data protection and archiving, storage networking, HPE GreenLake private cloud (virtual machines, containers, bare metal), Private Cloud AI delivered as-a-service, and infrastructure software including OpsRamp observability, Ezmeral Data Fabric and Zerto disaster recovery. - **Networking** — Wi-Fi and private cellular access points; QFX, EX and CX switches; MX and PTX routers; gateways; software including Mist and Aruba Central, network access control, SD-WAN, network security, analytics and assurance; professional, maintenance and support services. - **Financial Services** — leasing, financing, IT consumption and utility programs and asset management, including support for GreenLake consumption models and IT asset disposition through Technology Renewal Centers. - **Corporate Investments and Other** — the Advisory and Professional Services business and Hewlett Packard Labs. **How the revenue is distributed.** Approximately 61% of fiscal 2025 net revenue came from sales outside the United States. Sales run through a mix of direct coverage and a large indirect channel — resellers, distributors, master area partners, OEMs, independent software vendors, systems integrators and advisory firms — with the mix differing substantially by business and region. One distributor represented approximately 10% of total net revenue in fiscal 2025, primarily within the Server and Networking segments. The product categories exceeding 10% of consolidated net revenue in fiscal 2025 were Server products and Networking products. **Manufacturing and supply.** HPE relies heavily on outsourced design and contract manufacturers worldwide, with manufacturing, final assembly and other critical operations concentrated in the United States, Puerto Rico, Vietnam, Thailand, Costa Rica, Brazil, Czech Republic, Malaysia, Mexico, China, Taiwan, India, South Korea, Saudi Arabia and Singapore. Components are typically ordered against 90-to-120-day demand forecasts. Certain parts come from single-source suppliers that are single sources for the entire market — Intel and AMD for certain x86 processors, Broadcom and others for application-specific standard products, NVIDIA for GPUs. **Backlog.** Management describes the overall demand pipeline as stable but AI demand as uneven, driven by the lumpiness of large deals. AI systems demand against constrained data center space continued to drive significant AI backlog, while the GPU supply/demand environment remained uneven through the transition to next-generation parts. These dynamics left inventory elevated at times during fiscal 2025. **R&D and intellectual property.** R&D expenditure was $2.5 billion in fiscal 2025, $2.2 billion in fiscal 2024 and $2.3 billion in fiscal 2023. Current initiatives span next-generation compute and liquid-cooled leadership-class systems; storage and private cloud (including software-defined deployment into AWS, turnkey systems co-engineered with NVIDIA, and the HPE VM Essentials hypervisor); and a broad networking and security roadmap covering campus, branch, data center, wide-area and SASE, Wi-Fi 7 and private cellular, firewalls and AI-based network operations. Hewlett Packard Labs works on AI, networking and fabrics, security, novel accelerators, quantum computing, future system architectures and sustainability. As of October 31, 2025 the worldwide patent portfolio comprised approximately 21,000 issued and pending patents; no single patent is described as essential. **People.** Approximately 67,000 team members, who completed over 721,000 online and instructor-led courses over the past year. Leadership includes President and CEO Antonio Neri; EVP and CFO Marie Myers; EVP and Chief Operating and Legal Officer John F. Schultz; and Rami Rahim, the former Juniper Networks CEO, as EVP, President and General Manager of Networking. **Competition.** In servers and data center infrastructure: Dell Technologies, Super Micro Computer, Cisco Systems and Lenovo, plus local and white-box manufacturers; in high-performance infrastructure also Fujitsu and Atos. In hybrid cloud and storage: Broadcom, Cisco, Dell, IBM, NetApp, Nutanix and Pure Storage, plus public cloud vendors Amazon Web Services, Google Cloud and Microsoft Azure. In networking: Cisco, Arista Networks, Nokia, Huawei, Ciena, NVIDIA, Extreme Networks, Palo Alto Networks, Fortinet, Zscaler, Netskope, Ruckus and Ubiquiti, and network-as-a-service vendors such as Nile and Meter. In financial services: IBM Global Financing, Dell Financial Services, Cisco Capital, banks, and ITAD competitors ERI, Ingram Micro, Sage Sustainable Electronics and Sims Recycling Solutions. **The Juniper Networks acquisition.** HPE completed the Juniper Networks merger on July 2, 2025, paying $40.00 per Juniper share — cash consideration of approximately $13.4 billion, funded from cash on hand, term loan drawdowns and commercial paper. Juniper's results are consolidated from July 2, 2025, which is why fiscal 2025 and the first three quarters of fiscal 2026 contain very large Networking growth rates that are acquisition-driven rather than organic. Management targets at least $600 million of cost synergies by fiscal 2028, requiring approximately $800 million of investment in headcount, supply chain optimization and portfolio rationalization. The company notes it is carrying a larger-than-normal debt balance because of the acquisition and is prioritizing de-leveraging while committing to retain its investment-grade credit rating. --- ## Risk factors *Condensed from the fiscal 2025 Form 10-K, accession 0001645590-25-000130. The quarterly report for the period ended July 31, 2026 incorporates these risks by reference and adds no new ones beyond those in the report for the period ended April 30, 2026.* **Supply chain, components and inventory.** HPE depends on outsourced and contract manufacturers and on single-source suppliers for certain customized parts and for market-wide components such as processors and GPUs. It has experienced shortages and delays, higher component and logistics prices, and periods of excess or obsolete inventory from advance purchasing and from delayed or cancelled large orders. Long-term or non-cancellable purchase commitments can leave the company buying above market price. Manufacturing concentration in specific countries exposes it to trade restrictions, sanctions, natural disasters and regional conflict. **Competition and pricing.** The markets are intensely competitive and consolidating, with short product cycles. HPE spreads R&D across a wide portfolio while competing against specialists with larger resources in individual lines. Price competition is aggressive; the company at times discounts heavily or declines to pass through cost increases, which has hurt results. Vertical partners can become competitors. **AI-specific exposure.** AI both drives demand and creates risk. AI systems have historically been bought by a small number of large customers and cloud service providers, so orders are lumpy, intensely competed and margin-constrained; large AI orders tie up working capital and can swing quarterly results. Separately, HPE faces risk from its own development and use of AI — flawed models, ethical and reputational exposure, an unsettled legal and regulatory landscape (including the EU AI Act), and infringement claims arising from AI-generated or AI-incorporated material. **Acquisitions, divestitures and integration.** The company may fail to realize expected benefits from business combinations, may fail to integrate technology, systems, controls or people, and may face litigation, impairment of acquired goodwill and intangibles, dilution or added debt. Integration of Juniper Networks specifically has required and will continue to require sustained management attention; the report notes that procedural developments in the court's Tunney Act review of the DOJ settlement could disrupt or delay integration and the realization of synergies. Divestitures may not find buyers on acceptable terms and may leave continuing financial involvement. **Cybersecurity and IT dependence.** HPE stores sensitive data and has experienced security incidents and breaches, which it states have not resulted in material negative impacts. It cites nation-state and criminal actors, ransomware and DDoS, advanced persistent threats that can go undetected, zero-day vulnerabilities, generative-AI-enabled attacks and deepfakes, and the future risk quantum computing poses to existing cryptography. Third-party and supply-chain systems introduce further exposure, as does the growing as-a-service business. **Macroeconomic, geopolitical and trade.** Demand depends on general economic conditions and IT spending. Tariffs, export controls, sanctions and retaliatory measures have raised costs and softened demand. Named exposures include the Russia-Ukraine conflict (HPE is executing an exit from Russia and Belarus), instability in the Middle East, and the China-U.S. relationship, where heightened trade restrictions and the enforceability and timing of contract payments are specific concerns. **Uneven sales cycles and quarter-end concentration.** Long procurement and deployment cycles, a disproportionate share of sales falling late in the quarter, and seasonality make revenue, earnings, cash flow and working capital hard to forecast and put pressure on inventory and logistics. **Financial risks.** Revenue, gross margin and profitability vary by product, customer and geography. Foreign currency movements affect reported results and hedges may be ineffective. The company carries substantial debt incurred to fund the Juniper merger; it holds investment-grade ratings from Moody's, S&P and Fitch, but warns a downgrade would raise borrowing costs, reduce commercial paper capacity, possibly require collateral posting, and reduce the competitiveness of the financing business. Debt service limits flexibility, capital expenditure, dividends and repurchases. Dividend declaration and amount are uncertain; no common dividend may be paid unless all accumulated preferred dividends have been paid. **Legal, regulatory and tax.** Litigation and investigations are ongoing and inherently unpredictable. Patent assertion entities are active in the industry, and acquisitions raise infringement exposure because of reduced visibility into acquired technology. Government contracts carry termination, funding, scope and procurement-policy risk, and the report specifically cites U.S. federal spending and workforce reductions producing contract terminations, delays and reduced scope. Tax exposures include intercompany transfer pricing audits, changes in tax law, and the OECD Pillar Two 15% global minimum tax. **Prior separations.** HPE continues to face risk from its separation from HP Inc., including ongoing indemnification obligations and shared use of certain intellectual property rights. **Other named risks.** Failure to attract and retain key personnel; failure to realize the cost reduction program's savings; dependence on third-party licensed technology and open source terms; reliance on its own and third parties' business systems; product quality and warranty exposure; sustainability ("Living Progress") commitments and the conflicting regulatory expectations around them; and stock price volatility. --- ## Management's discussion — fiscal 2025 *From the fiscal 2025 Form 10-K, accession 0001645590-25-000130. Segment figures here are on the five-segment basis.* **Headline.** Net revenue of $34.3 billion rose 13.8%, driven primarily by Networking revenue from the Juniper merger and higher average unit prices in Server. But gross margin fell 2.5 percentage points to 30.3% ($10.4 billion) on higher cost of sales in Server, Networking and Hybrid Cloud, and the operating margin fell 8.6 percentage points to **negative 1.3%** — an operating loss for the year — which management attributes primarily to the goodwill impairment and to costs associated with the merger. U.S. revenue grew 23.1% to $13.4 billion; revenue outside the U.S. grew 8.6% to $20.9 billion. **By segment (fiscal 2025 vs. fiscal 2024):** - **Server** revenue +$1,641 million (+10.2%), on product revenue +$1,691 million (+13.3%): higher net average unit prices contributed +$2,556 million (+20.1%), partly offset by a $827 million (-6.5%) decline in net unit volume. Gross profit fell $337 million (-8.3%) as cost of sales rose $1,978 million (+16.4%) on input cost increases and a higher mix of lower-margin product. Earnings from operations fell $461 million (-25.6%). - **Hybrid Cloud** revenue +$267 million (+4.9%), on service revenue +$285 million (+11.7%) from private cloud; product revenue was roughly flat. Gross profit fell $55 million (-2.5%) as product cost rose through the transition to the software-defined Alletra platform. Earnings from operations rose $76 million (+29.3%) on a $131 million (-6.8%) reduction in operating expenses from software capitalization and cost containment. - **Networking** revenue +$2,318 million (+51.1%): product +$1,444 million (+43.2%), of which Juniper contributed $1,367 million; service +$874 million (+73.6%), of which Juniper contributed $729 million and as-a-service offerings $144 million. Gross profit +$1,268 million (+44.9%); earnings from operations +$481 million (+43.1%) after a $787 million (+46.0%) increase in operating expenses attributable mainly to Juniper. - **Financial Services** revenue -$8 million (-0.2%) on lower rental revenue, largely offset by higher finance income and remarketing revenue; earnings from operations +$45 million (+14.2%). Financing volume declined 17.2%. Net portfolio assets fell 3.0% as runoff exceeded new volume. Net bad debt expense was $96 million, versus $57 million in fiscal 2024. - **Corporate Investments and Other** revenue -$238 million (-23.5%), driven by the divestiture of the Communications Technology Group business effective December 1, 2024. **Operating expense and below-the-line items.** R&D rose $272 million (+12.1%), with Juniper contributing 17.3 points offset by 8.6 points from a higher mix of capitalized versus expensed investment. SG&A rose $833 million (+17.1%) — Juniper and higher employee costs contributed 14.1 points, cost reduction program expense 3.1 points. Amortization of intangibles rose $244 million (+91%) on acquired Juniper intangibles. Acquisition, disposition and other charges rose $247 million (+117.1%), primarily the merger. Interest and other, net expense rose $58 million (+49.6%) on a $122 million higher loss on equity investments and $114 million higher net interest, partly offset by a $104 million higher non-service pension credit and a $52 million gain from the settlement resolving claims against Sushovan Hussain in the Autonomy litigation. The CTG disposition on December 1, 2024 produced net proceeds of $210 million and a gain of $248 million. **The impairment.** This is the central fact of fiscal 2025's GAAP loss. HPE recorded $1.6 billion of goodwill impairment and impairment of certain fixed assets, all tied to the **Hybrid Cloud** reporting unit, across two tests: - An interim test at April 30, 2025, triggered by what management describes as a rapid deterioration in the macroeconomic environment — the announcement and subsequent modification of international tariffs, escalating trade tensions and geopolitical uncertainty — which moved the inputs to the weighted-average cost of capital. The decline in Hybrid Cloud's fair value was driven primarily by the higher discount rate, and carrying value exceeded fair value by $1.4 billion, recorded as a goodwill impairment in the second quarter. - The annual test at August 1, 2025, where the decline was driven primarily by a strategic shift away from the non-IP storage business, producing a further $0.2 billion goodwill impairment in the fourth quarter. After the impairment, Hybrid Cloud retained $3.3 billion of goodwill with **zero percent** excess of fair value over carrying value at the annual test date, and the Server reporting unit had $10.2 billion of goodwill with an 11% excess. A hypothetical 10% decrease in fair value would leave every reporting unit above carrying value **except Server and Hybrid Cloud**. Management explicitly flags that worsening macro conditions, lower projected growth or margins, a higher cost of capital or a sustained share-price decline could produce further impairment in those two units. **Taxes.** Fiscal 2025 produced an income tax *benefit* of $342 million against a pretax loss, an effective rate of 120.0% (fiscal 2024: $374 million expense, 12.7%), distorted by the non-deductible goodwill impairment. Discrete net benefits of $693 million included $402 million related to merger costs (inclusive of a $327 million benefit from integration transactions), $76 million from state valuation allowance releases, $61 million from statute expirations and $55 million tied to the cost reduction program. The IRS audit of fiscal 2017–2019 was effectively settled, reducing unrecognized tax benefits by approximately $340 million with no material earnings impact. **Cost actions.** The board approved a cost reduction program on March 6, 2025 intended to deliver approximately $350 million of gross savings by fiscal 2027 through workforce reductions, to be implemented through fiscal 2026; it has since been folded into "Catalyst," a broader company-wide efficiency effort. Charges of $275 million were incurred in fiscal 2025. Combined with the Juniper synergy plan, the company expected approximately $1.1 billion of future cash payments related to cost savings plans as of October 31, 2025. **Liquidity.** Cash, cash equivalents and restricted cash fell $9.2 billion during fiscal 2025 to $5.9 billion, from $15.1 billion. Investing outflows rose $13.1 billion, dominated by the $12.3 billion net payment for the merger (and the absence of $2.1 billion of prior-year H3C sale proceeds), moderated by $0.9 billion higher proceeds from available-for-sale securities and $0.2 billion from the CTG divestiture. Financing inflows fell $5.2 billion. Free cash flow declined $1.3 billion on lower operating cash. Fiscal 2025 debt activity included assuming $1.7 billion of Juniper senior notes, drawing $3.0 billion and $1.0 billion under the three-year and 364-day delayed-draw term loans, issuing $2.9 billion of senior notes in September 2025 and $660 million and $900 million of asset-backed securities, against redemption of $2.5 billion of 4.900% notes, repayment of the entire 364-day term loan, a $1 billion prepayment on the three-year term loan and $1.5 billion of asset-backed repayments. Future principal payments on long-term debt totaled $21.7 billion at year end, $3.8 billion due within one year, with estimated future interest of approximately $8.1 billion. HPE repurchased $202 million of stock during fiscal 2025, leaving approximately $3.6 billion authorized. Annualized revenue run-rate for as-a-service offerings grew 63% year over year, primarily from Networking following the merger. --- ## Current quarter — third quarter of fiscal 2026 (ended July 31, 2026) *From the Form 10-Q for the quarter ended July 31, 2026, accession 0001645590-26-000080. Segment figures here are on the three-segment basis, with prior periods recast.* **The turn.** Net revenue of $12.2 billion rose 33.7%, an increase of $3.1 billion, which management attributes primarily to a higher average selling price in Cloud & AI and to Networking revenue from the merger. Gross margin of 40.1% ($4.9 billion) was **10.9 percentage points** above the prior-year quarter, and the operating margin of 11.4% was 8.7 points higher — management ties the operating margin expansion to the gross margin improvement, and the gross margin improvement to the favorable mix of higher-margin revenue in Cloud & AI and Networking and to the Juniper acquisition. U.S. revenue rose 11.9% to $4.8 billion; revenue outside the U.S. rose 52.9% to $7.4 billion. Diluted EPS was $1.06, against $0.21 a year earlier. For the nine months, revenue of $32.2 billion rose 30.8%, gross margin of 37.7% rose 8.7 points, and the operating margin of 8.1% rose 9.8 points — the prior-year nine-month period carried the $1.4 billion goodwill impairment, recorded against what is now the Cloud & AI (excluding Financial Services) reporting unit. Nine-month diluted EPS was $1.82 against a $(0.16) loss. **Segment results for the quarter (prior-year quarter in parentheses):** | | Net revenue | Earnings (loss) from operations | |---|---|---| | Networking | $2,893M ($1,654M) | $637M ($365M) | | Cloud & AI | $9,042M ($7,212M) | $1,539M ($504M) | | Corporate Investments and Other | $278M ($270M) | $(67)M ($(19)M) | | **Total segments** | **$12,213M ($9,136M)** | **$2,109M ($850M)** | - **Networking** revenue rose $1,239 million (+74.9%) — product +$803 million (+68.4%) and service +$436 million (+90.8%), led by Juniper. Gross profit rose $728 million (+73.3%); operating expenses rose $456 million (+72.6%), leaving segment earnings +$272 million (+74.5%). For the nine months, Networking revenue more than doubled, up $4,475 million (+117.3%). - **Cloud & AI** revenue rose $1.8 billion (+25.4%), driven by Server revenue up $1.8 billion (+35.3%) **predominantly on higher average selling price, which management attributes to commodity price increases, especially memory and SSDs**. Gross profit rose $1.5 billion (+89.8%) on favorable mix; operating expenses rose $0.5 billion (+40.2%) on higher variable employee costs; segment earnings rose $1.0 billion (+205.4%). **Operating expenses and below the line.** R&D rose $536 million (+86.2%) and SG&A $466 million (+31.1%), both on Juniper operating expenses and higher variable employee costs. Amortization of intangibles rose $189 million (+150.0%) on acquired Juniper intangibles. Acquisition, disposition and other charges fell $110 million (-60.8%) against a prior year that carried heavier merger costs; merger-related acquisition costs were $69 million in the quarter and $300 million for the nine months. Interest and other, net expense rose $83 million, from $51 million of higher net interest and the absence of the prior-year $52 million Autonomy settlement gain. The completed exit from H3C Technologies Co., Limited — the China-based joint venture in which HPE had held a 49% equity-method stake and had been selling down in stages since 2024, the last shares going in May 2026 — produced a $444 million gain on sale of equity interest recorded in the quarter. Income tax expense was $222 million, a 12.6% effective rate, against a $17 million benefit and a negative 6.5% rate a year earlier. **Tax matters in progress.** The IRS is auditing fiscal 2020 through 2022 and issued notices of proposed adjustment on intercompany transfer pricing in the first quarter of fiscal 2026. HPE submitted a formal settlement offer in the second quarter and recorded a $318 million increase in reserves for unrecognized tax benefits, almost entirely offset by a valuation allowance release, so the net nine-month income tax effect was not material. The audit may conclude within twelve months, and existing unrecognized tax benefits for those years may fall by up to $366 million, mostly offset by foreign tax credit adjustments carrying a full valuation allowance. **The memory and SSD squeeze.** The most important operating condition described in the quarter is a worldwide shortage in memory components that began affecting the semiconductor industry during fiscal 2026, driven by accelerating AI demand, rapid AI data center expansion and compute refresh cycles. HPE expects these constraints to persist in the medium term until memory vendors shift production allocation toward the high-performance parts AI workloads require. This cuts both ways in the results: rising commodity costs are what lifted Server average selling prices and revenue, and the company is also securing memory and SSDs in advance, which it expects may further increase inventory in the medium term. Days of supply in inventory reached 145 at July 31, 2026 against 89 at October 31, 2025, while days of purchases outstanding in payables widened to 169 from 108, leaving the cash conversion cycle at 22 days versus 30. Unconditional purchase obligations stood at **$30.4 billion** as of July 31, 2026, of which $4.2 billion is due within fiscal 2026 — against $3.3 billion disclosed at the prior fiscal year end, October 31, 2025. **Tariffs.** On February 20, 2026 the United States Supreme Court struck down certain tariffs previously imposed under the International Emergency Economic Powers Act. HPE received certain tariff refunds during the quarter and has applied for more, but states the amounts are not and are not expected to be material. Following the decision the U.S. administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, leaving substantial uncertainty. **Cash and balance sheet.** Nine-month operating cash flow was $4,229 million, against $454 million a year earlier — an increase of $3.8 billion that management attributes to the timing of vendor payments and higher cash generated from operations. Nine-month free cash flow was $2,581 million against negative $934 million. Cash, cash equivalents and restricted cash were $6,278 million at July 31, 2026, up from $5,859 million at October 31, 2025. Total debt fell to $20,244 million from $22,365 million. Investing outflows fell $13.4 billion year over year, reflecting the prior-year $12.3 billion Juniper payment and $1.4 billion of current-period H3C proceeds; financing outflows rose $6.3 billion on $3.0 billion higher debt repayment, $2.8 billion lower debt proceeds and $0.5 billion more spent on stock-based award activity and repurchases. The company prepaid $1.25 billion of the three-year delayed-draw term loan in March 2026 and repaid the remaining $0.75 billion in May 2026, retiring that facility; it also repaid $750 million of 1.75% senior notes at maturity in April 2026, $400 million of 1.20% Juniper global notes at maturity in December 2025, and $929 million of asset-backed securities. HPE repurchased and settled $447 million of stock in the first nine months, leaving approximately $3.2 billion authorized. **Cost actions.** Cost reduction program charges were $31 million in the quarter and $84 million for the nine months (prior year: $2 million and $148 million). As of July 31, 2026 HPE expected approximately $630 million of future cash payments under its cost savings plans, $30 million through the remainder of fiscal 2026 and $600 million thereafter. **Oracle collaboration.** On July 2, 2026 HPE issued a warrant to Oracle Corp. to purchase up to 4,156,466 shares of HPE common stock at an exercise price of $0.01 per share, issued in connection with Oracle entering a strategic collaboration to deploy HPE's networking solutions in Oracle's AI data centers. The warrant vests in tranches on the achievement of specific milestones relating to purchases of HPE products and support by Oracle and its affiliates, and is exercisable through June 25, 2029. **Juniper antitrust settlement obligations.** Under the June 2025 stipulation with the U.S. Department of Justice that permitted the merger to close, HPE agreed to divest its global Instant On campus and branch business and to grant up to two licenses to the Mist AIOps source code, with licensees determined by auction. Instant On remains within the Corporate Investments and Other segment in this report. The Attorneys General of twelve states and the District of Columbia intervened in the court's Tunney Act review; their motion to halt further integration was denied in January 2026, and the Tunney Act hearing was held on March 23, 2026. **Autonomy judgment.** On March 24, 2026 the U.K. High Court entered a total judgment against the Lynch Estate of approximately $1.24 billion including interest and currency effects, reflecting an approximately $145 million offset for amounts previously recovered and excluding attorneys' fees still to be determined. The court rejected the Estate's request for permission to appeal; the Estate applied to the Court of Appeal on April 14, 2026. Under the 2015 separation agreement, HP Inc. and HPE share equally in any recovery. **India customs.** On June 29, 2026 the Bangalore Customs Tribunal overturned several significant duty, interest, penalty and confiscation findings against HP India and eliminated all individual penalties. Revised amounts will be set by a damage ruling from the Customs Authority. HPE is financially responsible for 43% of HP India's liability in this matter under the 2015 separation agreement. --- ## Subsequent events *Events occurring after the July 31, 2026 quarter end, as disclosed in the Form 10-Q for that quarter, accession 0001645590-26-000080.* - **Telco Solutions divestiture completed — August 1, 2026.** HPE completed the sale of its Telco Solutions business to HCLTech, pursuant to the divestiture agreement announced on December 18, 2025. The report does not disclose the consideration received or a gain or loss on the sale. Telco Solutions had been reported within the Corporate Investments and Other segment; $40 million of goodwill was reclassified to assets held for sale and reported in other current assets on the July 31, 2026 balance sheet. - **Juniper antitrust settlement approved — August 12, 2026.** The court issued its ruling finding the settlement between HPE and the Department of Justice to be in the public interest and granting the motion for entry of final judgment, concluding the Tunney Act review that the Attorneys General of twelve states and the District of Columbia had intervened in. - **Autonomy appeal largely refused — August 25, 2026.** The U.K. Court of Appeal denied the Lynch Estate permission to appeal on fourteen of the eighteen issues it raised. The issues on which appeal will go forward relate primarily to the calculation of the damages awarded by the U.K. High Court and to the currency in which damages will be awarded. - **Dividends declared — September 2, 2026.** HPE declared a regular cash dividend of $0.1425 per share of common stock, payable on or about October 16, 2026 to holders of record as of September 17, 2026. It also declared a cash dividend of $0.953125 per share on the 7.625% Series C Mandatory Convertible Preferred Stock, paid September 1, 2026 to holders of record as of August 15, 2026. - **India customs damage ruling pending.** The Customs Authority ruling that will determine revised duty, interest and penalty amounts following the June 29, 2026 Tribunal orders is expected no earlier than September 2026 and could be issued significantly later. The India Directorate of Revenue Intelligence is expected to appeal the 2026 orders to the India Supreme Court, and HP India has filed its own appeal. - **Pension funding.** HPE anticipates contributing approximately $67 million to its non-U.S. pension plans over the remainder of fiscal 2026.