EARNINGS REVIEW
Revenue and margin gains with price and acquisition effects
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 reached approximately $2.9 billion, up 74.9%, and Cloud & AI approximately $9.0 billion, up 25.4%. Server revenue was approximately $6.8 billion, up 35.3%. The filing identifies higher average selling prices, driven by memory and SSD costs, as an important contributor.
Assessment · Profitability improved, but HPE revenue cannot be explained by AI servers alone. Separate Juniper and pricing effects, then track server and networking volumes alongside the durability of company FCF.
01 Drivers by business
Networking reached approximately $2.9 billion, up 74.9%, and Cloud & AI approximately $9.0 billion, up 25.4%. Server revenue was approximately $6.8 billion, up 35.3%. The filing identifies higher average selling prices, driven by memory and SSD costs, as an important contributor.
02 Margins and earnings quality
GAAP operating margin was 11.4%. Common-basis FCF of $0.988 billion plus the negative $0.030 billion FX cash effect gives company-defined FCF of $0.958 billion. The common basis deducts net cash CapEx from OCF and already includes $0.092 billion of asset-sale proceeds, which must not be added again.
Pretax income of $1.762 billion includes a $0.444 billion gain on the sale of the remaining H3C equity interest. This nonoperating item represents about 25% of pretax income and should be separated from recurring server and networking operating profitability. Subtracting the pretax gain directly from after-tax net income would not produce a valid adjusted net-income figure.
03 Cash conversion and funding
Quarterly OCF of $1.641 billion less gross cash PP&E/software investment of $0.745 billion plus asset-sale proceeds of $0.092 billion gives common-basis FCF of $0.988 billion. Net cash CapEx is $0.653 billion; acquisition payments are excluded.
Company-defined FCF of $0.958 billion equals common-basis FCF plus the signed FX cash effect of $-0.030 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 September 2, management raised FY26 revenue growth guidance to 34–37% and company FCF guidance to at least $3.75 billion, with next-quarter revenue of $13.9–14.8 billion. It also raised FY27 company FCF guidance to at least $5.0 billion. These are management forecasts at that date, to be tested against subsequent deliveries and collections.
06 Investment checkpoints
Profitability improved, but HPE revenue cannot be explained by AI servers alone. Separate Juniper and pricing effects, then track server and networking volumes alongside the durability of company FCF.
Quarterly results · CY-aligned view
| Metric · B$ | 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 2 included quarters | 1Q FY26 Q2 2026-04-30 | 2Q FY26 Q3 2026-07-31 | QoQ Δ | YoY Δ |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 35.743 | 7.627 | 9.136 | 9.679 | 9.301 | 22.891 | 10.678 | 12.213 | 1.535 | 3.077 |
| Operating income | −0.400 | −1.109 | 0.247 | −0.008 | 0.470 | 2.140 | 0.747 | 1.393 | 0.646 | 1.146 |
| Operating margin (%) | −1.119 | −14.540 | 2.704 | −0.083 | 5.053 | 9.349 | 6.996 | 11.406 | 4.410 pp | 8.702 pp |
| Net income | −0.118 | −1.050 | 0.305 | 0.175 | 0.452 | 2.164 | 0.624 | 1.540 | 0.916 | 1.235 |
| FCF · company definition | 2.571 | −0.847 | 0.790 | 1.920 | 0.708 | 1.873 | 0.915 | 0.958 | 0.043 | 0.168 |
| Operating cash flow · total | 4.487 | −0.461 | 1.305 | 2.465 | 1.178 | 3.051 | 1.410 | 1.641 | 0.231 | 0.336 |
| Net cash CapEx · common | 1.971 | 0.467 | 0.486 | 0.515 | 0.503 | 1.106 | 0.453 | 0.653 | 0.200 | 0.167 |
| Cash CapEx · Chinese company definition | — | — | — | — | — | — | — | — | — | — |
| FCF · total calculation | 2.516 | −0.928 | 0.819 | 1.950 | 0.675 | 1.945 | 0.957 | 0.988 | 0.031 | 0.169 |
| Net cash · liquid assets less borrowings | −16.736 | −5.863 | −18.760 | −16.592 | −16.736 | −13.992 | −15.920 | −13.992 | 1.928 | 4.768 |
| Liquid assets · including short-term investments | 4.875 | 11.667 | 4.893 | 5.773 | 4.875 | 6.252 | 5.326 | 6.252 | 0.926 | 1.359 |
| Borrowings · interest-bearing debt | 21.611 | 17.530 | 23.653 | 22.365 | 21.611 | 20.244 | 21.246 | 20.244 | −1.002 | −3.409 |
| Cash and cash equivalents | 4.841 | 11.667 | 4.571 | 5.773 | 4.841 | 6.216 | 5.292 | 6.216 | 0.924 | 1.645 |
| Total liabilities · accounting liabilities | 50.934 | 43.927 | 52.873 | 51.152 | 50.934 | 57.020 | 54.159 | 57.020 | 2.861 | 4.147 |
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.