EARNINGS REVIEW
Server revenue recovery includes a pricing effect
Historical earnings report · Management guidance reflects expectations at the time of the release, not subsequent outcomes. The financial comparison uses the site’s normalized dataset, including comparative figures restated in later filings.
Networking revenue rose 148.2% and Cloud & AI rose 22.9%. The filing identified higher average selling prices as the main server growth driver, particularly commodity-price increases in memory and SSDs. Revenue growth should not be treated as unit growth.
Assessment · Sales and cash improved together, but demand strength must be decomposed into price, volume and acquisitions. Passing component inflation to customers, underlying volumes and sustained cash collection are the relevant follow-up indicators.
01 Drivers by business
Networking revenue rose 148.2% and Cloud & AI rose 22.9%. The filing identified higher average selling prices as the main server growth driver, particularly commodity-price increases in memory and SSDs. Revenue growth should not be treated as unit growth.
02 Margins and earnings quality
First-half operating cash-flow improvement reflected vendor-payment timing and cash generation associated with Juniper. Payment timing is not the same as recurring structural earnings, so quarterly and cumulative FCF should be read together.
03 Cash conversion and funding
Quarterly OCF of $1.410 billion less gross cash PP&E/software investment of $0.583 billion plus asset-sale proceeds of $0.130 billion gives common-basis FCF of $0.957 billion. Net cash CapEx is $0.453 billion; acquisition payments are excluded.
Company-defined FCF of $0.915 billion equals common-basis FCF plus the signed FX cash effect of $-0.042 billion. Asset-sale proceeds are already included in net investment and are not added again. Total liabilities are not interest-bearing debt.
04 RPO versus order backlog
The RPO note describes the amount as deferred revenue, so a comparable total-RPO value is not displayed. Deferred revenue, customer deposits and product backlog are not added or treated as equivalent.
05 Guidance at the announcement date
On June 1, management raised FY26 revenue growth guidance to 29–33% and FCF to at least $3.5 billion. Next-quarter revenue guidance was $11.5–12.1 billion. It also introduced a FY27 FCF target of at least $4.5 billion; all are management forecasts at that date.
06 Investment checkpoints
Sales and cash improved together, but demand strength must be decomposed into price, volume and acquisitions. Passing component inflation to customers, underlying volumes and sustained cash collection are the relevant follow-up indicators.
Quarterly results · CY-aligned view
| Metric · B$ | 2025 full-year total | 1Q FY25 Q2 2025-04-30 | 2Q FY25 Q3 2025-07-31 | 3Q FY25 Q4 2025-10-31 | 4Q FY26 Q1 2026-01-31 | 2026 total of 1 included quarters | 1Q FY26 Q2 2026-04-30 | QoQ Δ | YoY Δ |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 35.743 | 7.627 | 9.136 | 9.679 | 9.301 | 10.678 | 10.678 | 1.377 | 3.051 |
| Operating income | −0.400 | −1.109 | 0.247 | −0.008 | 0.470 | 0.747 | 0.747 | 0.277 | 1.856 |
| Operating margin (%) | −1.119 | −14.540 | 2.704 | −0.083 | 5.053 | 6.996 | 6.996 | 1.942 pp | 21.536 pp |
| Net income | −0.118 | −1.050 | 0.305 | 0.175 | 0.452 | 0.624 | 0.624 | 0.172 | 1.674 |
| FCF · company definition | 2.571 | −0.847 | 0.790 | 1.920 | 0.708 | 0.915 | 0.915 | 0.207 | 1.762 |
| Operating cash flow · total | 4.487 | −0.461 | 1.305 | 2.465 | 1.178 | 1.410 | 1.410 | 0.232 | 1.871 |
| Net cash CapEx · common | 1.971 | 0.467 | 0.486 | 0.515 | 0.503 | 0.453 | 0.453 | −0.050 | −0.014 |
| Cash CapEx · Chinese company definition | — | — | — | — | — | — | — | — | — |
| FCF · total calculation | 2.516 | −0.928 | 0.819 | 1.950 | 0.675 | 0.957 | 0.957 | 0.282 | 1.885 |
| Net cash · liquid assets less borrowings | −16.736 | −5.863 | −18.760 | −16.592 | −16.736 | −15.920 | −15.920 | 0.816 | −10.057 |
| Liquid assets · including short-term investments | 4.875 | 11.667 | 4.893 | 5.773 | 4.875 | 5.326 | 5.326 | 0.451 | −6.341 |
| Borrowings · interest-bearing debt | 21.611 | 17.530 | 23.653 | 22.365 | 21.611 | 21.246 | 21.246 | −0.365 | 3.716 |
| Cash and cash equivalents | 4.841 | 11.667 | 4.571 | 5.773 | 4.841 | 5.292 | 5.292 | 0.451 | −6.375 |
| Total liabilities · accounting liabilities | 50.934 | 43.927 | 52.873 | 51.152 | 50.934 | 54.159 | 54.159 | 3.225 | 10.232 |
CY denotes the calendar quarter with the greatest overlap with the fiscal period. If the first period has no start date, 89 days before its end is used only for calendar mapping. Financial values are not recalculated into calendar quarters. Incomplete years show totals of included quarters; cash, liabilities, borrowings and net cash use the last period-end balance. QoQ and YoY show absolute changes; margin changes are percentage points. Dashes indicate missing evidence or incomparable periods or definitions. Total liabilities never substitute for borrowings.
Definitions and evidence coverage
A dash means unavailable or undisclosed, not zero. Company-defined FCF may differ from total operating cash flow less common-basis CapEx. Total liabilities are accounting liabilities, not interest-bearing debt.
Tables use SEC-filed comparative values verified through 2026-10-17. Guidance retains the original announcement date; later outcomes are not backdated into past forecasts. This report does not claim a complete conference-call Q&A review.