Hewlett Packard Enterprise Co

Previous wording

The financial discussion and analysis in the following MD&A compares the three and six months ended April 30, 2025 to the comparable prior-year period and where appropriate, as of April 30, 2025, unless otherwise noted.

Current wording

The financial discussion and analysis in the following MD&A compares the three and nine months ended July 31, 2025 to the comparable prior-year period and where appropriate, as of July 31, 2025, unless otherwise noted.

Previous wording

•Trends and Uncertainties. A discussion of material events and uncertainties known to management, such as the mixed macroeconomic environment of supply chain constraints (though easing) and heightening global trade restrictions, uneven demand across our portfolio, increased demand for and adoption of new technologies, conservative customer spending environment (though recovering), persistent inflation, foreign exchange pressures, recent tax developments, competitive pricing pressures, and proposed acquisition of Juniper Networks, Inc. (“Juniper Networks”).

Current wording

•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, increased inventory levels, conservative customer spending environment (though recovering), persistent inflation, foreign exchange pressures, recent tax developments, and competitive pricing pressures.

Previous wording

During the first six months of fiscal 2025, the effects of the evolving macroeconomic environment on demand persisted and certain significant developments impacted our operations, as follows:

Current wording

During the first nine months of fiscal 2025, the effects of the evolving macroeconomic environment on demand persisted and certain significant developments impacted our operations, as follows:

Previous wording

Technological Advancements: We have observed market trends and demand (of customers of various segments and sizes) gravitating towards artificial intelligence (“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. The need for a unified cloud experience everywhere has grown, as well, in order to manage the growth of data at the edge. 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. Increasing demand for AI is also contributing to changes in the competitive landscape. 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.

Current wording

Technological Advancements: We have observed market trends and demand (of customers of various segments and sizes) gravitating towards artificial intelligence (“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. The need for a unified cloud experience everywhere has grown, as well, 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, Inc. positions us to capitalize on the growing market opportunities across AI-accelerated computing, data, 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.

Previous wording

Macroeconomic Uncertainty: The evolving macroeconomic environment has impacted industry-wide demand, as customers take longer to work through prior orders and have been adopting a more strategic approach to discretionary IT spending. This 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, including our own. Additionally, there is growing uncertainty surrounding the tariff environment and import/export regulations, which has resulted in trading partners enacting reciprocally restrictive trade policies and measures. These have enhanced global trade uncertainty and contributed to higher prices of components and end products and services. We expect such mixed macroeconomic environment to largely continue and possibly limit revenue and margin growth in the near term.

Current wording

Macroeconomic Uncertainty: The evolving macroeconomic environment has impacted industry-wide demand, as, until recently, customers took longer to work through prior orders and, to this day, have been adopting a more strategic approach to discretionary IT spending. While this dynamic has been easing, this 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, including our own. 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. These have enhanced global trade uncertainty and contributed to higher prices of components and end products and services. While we have relied on our global supply chain and pricing measures in an attempt to mitigate adverse impacts, we expect such a mixed macroeconomic environment to largely continue and possibly limit revenue and margin growth in the near term.

Previous wording

Supply Chain: We experienced supply chain constraints for certain components, including graphics processing units, (“GPUs”) and accelerated processing units. Though, they have since eased, in part due to increased availability of supply and lower material and logistics costs, the future remains uncertain due to continuous shifts in U.S. trade policy, which have thus far impacted our ability to import and export components and finished products and the costs of doing so. Additionally, logistics costs may rise with the aforementioned changes in trade policies. We have been experiencing higher-than-normal inventory levels, primarily due to customers transitioning to the next generation of GPUs, our securing supply ahead of demand, and longer customer acceptance timelines on AI-related orders; we expect this trend to continue in the medium term. We have experienced, and expect to continue experiencing, rising input component costs due to the global trade uncertainties referenced above and a competitive pricing environment, all of which may impact our financial results. We plan to mitigate the impact of these dynamics through continued disciplined cost and pricing management and supply chain diversification.

Current wording

Supply Chain: We experienced supply chain constraints for certain components, including graphics processing units, (“GPUs”) and accelerated processing units. Though they have since eased, in part due to increased availability of supply and lower material and logistics costs, the future remains uncertain due to continuous shifts in U.S. trade policy, which has thus far impacted our ability to import and export components and finished products and the costs of doing so. Additionally, logistics costs may rise with the aforementioned changes in trade policies. We have been experiencing higher-than-normal inventory levels, primarily due to frequent component part updates, customers transitioning to the next generation of GPUs, our securing supply ahead of demand, and longer customer acceptance timelines on AI-related orders. 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 the global trade uncertainties referenced above and a competitive pricing environment, all of which may impact our financial results. We plan to mitigate the impact of these dynamics through continued disciplined cost and pricing management and supply chain diversification.

Previous wording

Recent Tax Developments: 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, 59 countries have enacted portions, or all, of the OECD proposal and a further 6 countries have drafted, or have announced an intent to draft, legislation enacting the proposed rules. Where enacted, the rules are effective for us in fiscal 2025. Under US GAAP, the OECD Pillar Two rules are considered an alternative minimum tax and therefore deferred taxes would not be recognized or adjusted for the estimated effects of the future minimum tax. 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. We do not expect a material impact to our fiscal 2025 results.

Current wording

Recent Tax Developments: 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, 60 countries have enacted portions, or all, of the OECD proposal and a further 5 countries have drafted, or have announced an intent to draft, legislation enacting the proposed rules. Where enacted, the rules are effective for us in fiscal 2025. Under US GAAP, the OECD Pillar Two rules are considered an alternative minimum tax and therefore deferred taxes would not be recognized or adjusted for the estimated effects of the future minimum tax. 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. We do not expect a material impact to our fiscal 2025 results.

Previous wording

The Internal Revenue Service (“IRS”) is conducting audits of our fiscal 2020 through 2022 U.S. federal income tax returns. In the second quarter of fiscal 2025, the IRS issued a Revenue Agent Report (“RAR”) regarding the audit of our fiscal 2017 through 2019 U.S. federal income tax returns with which we agreed. The audit cycle for fiscal 2017 through 2019 is now considered effectively settled, resulting in a reduction of existing unrecognized tax benefits of approximately $340 million, which did not result in a material impact to our Condensed Consolidated Statement of Earnings and our Condensed Consolidated Balance Sheet. The resolution of the audit resulted in the release of tax reserves that were predominantly related either to adjustments to foreign tax credits that carried a full valuation allowance or to the timing of intercompany royalty revenue recognition, neither of which affected our effective tax rate.

Current wording

The Internal Revenue Service (“IRS”) is conducting audits of our fiscal 2020 through 2022 U.S. federal income tax returns. In the second quarter of fiscal 2025, the IRS issued a Revenue Agent Report regarding the audit of our fiscal 2017 through 2019 U.S. federal income tax returns with which we agreed. The audit cycle for fiscal 2017 through 2019 is now considered effectively settled, resulting in a reduction of existing unrecognized tax benefits of approximately $340 million, which did not result in a material impact to our Condensed Consolidated Statement of Earnings and our Condensed Consolidated Balance Sheet. The resolution of the audit resulted in the release of tax reserves that were predominantly related either to adjustments to foreign tax credits that carried a full valuation allowance or to the timing of intercompany royalty revenue recognition, neither of which affected our effective tax rate.

Previous wording

Other Trends and Uncertainties: The impacts ofgeopolitical volatility (including the ongoing conflict in the Middle East and 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 are 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.

Current wording

Other Trends and Uncertainties: The impacts ofgeopolitical volatility (including the ongoing conflict in the Middle East and 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.

Previous wording

Our operations are organized into five reportable segments for financial reporting purposes: Server, Hybrid Cloud, Intelligent Edge, Financial Services (“FS”), and Corporate Investments and Other. Effective at the beginning of the first quarter of fiscal 2025, in order to align its segment financial reporting more closely with its current business structure, HPE implemented an organizational change with the transfer of certain managed services, previously reported within the Server reportable segment, to the Hybrid Cloud reportable segment.

Current wording

Our operations are organized into five reportable segments for financial reporting purposes: Server, Hybrid Cloud, Networking, Financial Services (“FS”), and Corporate Investments and Other. During the third quarter of fiscal 2025, the Intelligent Edge segment was renamed to Networking. The segment name change did not result in any change to the composition of the Company’s segments and therefore no prior information was recast; further, the designation change did not impact the Company’s condensed consolidated financial statements. Effective at the beginning of the first quarter of fiscal 2025, in order to align its segment financial reporting more closely with its current business structure, HPE implemented an organizational change with the transfer of certain managed services, previously reported within the Server segment, to the Hybrid Cloud segment.

Previous wording

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 $146 million for the three and six months ended April 30, 2025.

Current wording

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 $2 million and $148 million for the three and nine months ended July 31, 2025, respectively.

Previous wording

Net revenue of $7.6 billion represented an increase of 5.9% (increased 7.1% on a constant currency basis) primarily due to higher average unit prices (“AUPs”) in the Server segment and higher unit volume and AUPs in the Hybrid Cloud segment. The gross profit margin of 28.4% (or $2.2 billion), represents a decrease of 4.6 percentage points from the prior-year period primarily due to an increase in cost of sales in the Server, Hybrid Cloud and Intelligent Edge segments. The operating profit margin of (14.5)% represents a decrease of 20.4 percentage points from the prior-year period primarily due to the impairment of goodwill.

Current wording

Net revenue of $9.1 billion represented an increase of 18.5% (increased 17.7% on a constant currency basis) primarily due to higher average unit prices (“AUPs”) in the Server segment, higher revenue from the Merger in the Networking segment, and higher unit volume in the Hybrid Cloud segment. The gross profit margin of 29.2% (or $2.7 billion), represents a decrease of 2.4 percentage points from the prior-year period primarily due to an increase in cost of sales in the Server, Networking and Hybrid Cloud segments. The operating profit margin of 2.7% represents a decrease of 4.4 percentage points from the prior-year period primarily due to the costs associated with the Merger.

Previous wording

Net revenue of $15.5 billion represented an increase of 10.9% (increased 12.0% on a constant currency basis) primarily due to higher AUPs in the Server segment and higher unit volume in the Hybrid Cloud segment. The gross profit margin of 28.8% (or $4.5 billion), represents a decrease of 5.8 percentage points from the prior-year period primarily due to an increase in cost of sales in the Server, Intelligent Edge and Hybrid Cloud segments. The operating profit margin of (4.4)% represents a decrease of 11.2 percentage points from the prior-year period primarily due to the impairment of goodwill.

Current wording

Net revenue of $24.6 billion represented an increase of 13.6% (increased 14.0% on a constant currency basis) primarily due to higher AUPs in the Server segment, higher revenue from the Merger in the Networking segment, and higher unit volume in the Hybrid Cloud segment. The gross profit margin of 29.0% (or $7.1 billion), represents a decrease of 4.6 percentage points from the prior-year period, primarily due to an increase in cost of sales in the Server, Hybrid Cloud and Networking segments. The operating profit margin of (1.7)% represents a decrease of 8.6 percentage points from the prior-year period primarily due to the impairment of goodwill and costs associated with the Merger.

Previous wording

(1)For purposes of calculating diluted net (loss) earnings per share (“EPS”), the preferred stock dividends are added back to the net (loss) 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. For GAAP diluted net EPS, the effect of employee stock plans and preferred stock is excluded when calculating diluted net loss per share as it would be anti-dilutive.

Current wording

(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 (loss) 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. For GAAP diluted net EPS, the effect of employee stock plans and Preferred Stock is excluded when calculating diluted net loss per share as it would be anti-dilutive.

Previous wording

ARR represents the annualized revenue of all net HPE GreenLake cloud services revenue, related financial services revenue (which includes rental income from operating leases and interest income from finance leases), and software-as-a-service, software consumption revenue, and other aaS offerings, recognized during a quarter and multiplied by four. We believe that ARR is a metric that allows management to better understand and highlight the potential future performance of our aaS business. We also believe ARR provides investors with greater transparency to our financial information and of the performance metric used in our financial and operational decision making and allows investors to see our results “through the eyes of management.” We use ARR as a performance metric. ARR should be viewed independently of net revenue and is not intended to be combined with it.

Current wording

ARR represents the annualized revenue of all net HPE GreenLake cloud services revenue, related financial services revenue (which includes rental income from operating leases and interest income from finance leases), and software-as-a-service, software consumption revenue, and other aaS offerings, by taking such revenue recognized during a quarter and multiplying by four. To better align the calculation of ARR with Juniper Networks’ business and offerings, beginning with the quarter ended July 31, 2025, we also included revenue from software licenses support and maintenance in our ARR calculation, and will continue to do so going forward. The impact of this change was not material to the current and prior periods presented. We believe that ARR is a metric that allows management to better understand and highlight the potential future performance of our aaS business. We also believe ARR provides investors with greater transparency to our financial information and of the performance metric used in our financial and operational decision making and allows investors to see our results “through the eyes of management.” We use ARR as a performance metric. ARR should be viewed independently of net revenue and is not intended to be combined with it.

Previous wording

The 46% year-over year increase in ARR was primarily due to growth in our Hybrid Cloud, Server and Intelligent Edge segments, which was due to an expanding customer installed base, an expanded range of HPE GreenLake Flex Solutions, Server aaS and Intelligent Edge aaS activity.

Current wording

The 77% year-over year increase in ARR was primarily due to growth in the Networking segment due to the Merger and an expanding customer installed base. The Hybrid Cloud and Server segments increased due to an expanded range of HPE GreenLake Flex Solutions and Server aaS activity.

Previous wording

Returning capital to our stockholders remains an important part of our capital allocation framework, which also consists 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 its 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 second quarter of fiscal 2025, we paid a quarterly dividend of $0.13 per share of common stock. On June 3, 2025, we declared a regular cash dividend of $0.13 per share of our common stock, payable on or about July 17, 2025, to our holders of record as of the close of business on June 18, 2025. 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, 2025, to holders of record as of the close of business on May 15, 2025.

Current wording

Returning capital to our stockholders remains an important part of our capital allocation framework, which also consists 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 third quarter of fiscal 2025, we paid a quarterly dividend of $0.13 per share of common stock. On September 3, 2025, we declared a regular cash dividend of $0.13 per share of our common stock, payable on or about October 17, 2025, to our holders of record as of the close of business on September 18, 2025. 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, 2025, to holders of record as of the close of business on August 15, 2025.

Previous wording

Three and six months ended April 30, 2025 compared with the three and six months ended April 30, 2024

Current wording

Three and nine months ended July 31, 2025 compared with the three and nine months ended July 31, 2024

Previous wording

For the three months ended April 30, 2025, total net revenue of $7.6 billion represented an increase of $0.4 billion, or 5.9% (increased 7.1% on a constant currency basis). U.S. net revenue increased by $155 million, or 6.0%, to $2.7 billion, and net revenue from outside of the U.S. increased by $268 million, or 5.8%, to $4.9 billion.

Current wording

For the three months ended July 31, 2025, total net revenue of $9.1 billion represented an increase of $1.4 billion, or 18.5% (increased 17.7% on a constant currency basis). U.S. net revenue increased by $1.4 billion, or 48.4%, to $4.3 billion, and net revenue from outside of the U.S. increased by $30 million, or 0.6%, to $4.8 billion.

Previous wording

For the six months ended April 30, 2025, total net revenue of $15.5 billion represented an increase of $1.5 billion, or 10.9% (increased 12.0% on a constant currency basis). U.S. net revenue increased by $379 million, or 7.8%, to $5.3 billion, and net revenue from outside of the U.S. increased by $1.1 billion, or 12.6%, to $10.2 billion.

Current wording

For the nine months ended July 31, 2025, total net revenue of $24.6 billion represented an increase of $2.9 billion, or 13.6% (increased 14.0% on a constant currency basis). U.S. net revenue increased by $1.8 billion, or 22.9%, to $9.5 billion, and net revenue from outside of the U.S. increased by $1.1 billion, or 8.4%, to $15.1 billion.

Previous wording

•Hybrid Cloud net revenue increased $171 million, or 13.3%, primarily due to increase in unit volume and AUPs

Current wording

•Hybrid Cloud net revenue increased $159 million, or 12.0%, primarily due to increase in unit volume

Previous wording

•Corporate Investments and Other net revenue decreased $58 million, or 23.0%, primarily due to the divestiture of the Communications Technology Group (“CTG”) business

Current wording

•Corporate Investments and Other net revenue decreased $68 million, or 26.0%, primarily due to the divestiture of the Communications Technology Group (“CTG”) business

Previous wording

•Hybrid Cloud net revenue increased $303 million, or 11.9%, primarily due to an increase in unit volume

Current wording

•Hybrid Cloud net revenue increased $462 million, or 11.9%, primarily due to an increase in unit volume

Previous wording

For the three and six months ended April 30, 2025, the total gross profit margin of 28.4% and 28.8%, respectively, represents a decrease of 4.6 and 5.8 percentage points, respectively, as compared to the respective prior year periods. The decrease for the three and six months ended April 30, 2025, was primarily due to an increase in cost of sales in the Server, Hybrid Cloud and Intelligent Edge segments.

Current wording

For the three and nine months ended July 31, 2025, the total gross profit margin of 29.2% and 29.0%, respectively, represents a decrease of 2.4 and 4.6 percentage points, respectively, as compared to the respective prior year periods. The decrease for the three and nine months ended July 31, 2025, was primarily due to an increase in cost of sales in the Server, Networking, and Hybrid Cloud segments.

Previous wording

For thethree months ended April 30, 2025, R&D expense decreased by $50 million, or 8.5%, primarily due to higher mix of capital versus expense investment, which contributed 12.9 percentage points to the change. The decrease was partially offset by the cost reduction program, which contributed 4.1 percentage points to the change.

Current wording

For thenine months ended July 31, 2025, R&D expense decreased by $82 million, or 4.8%, primarily due to higher mix of capital versus expense investment, which contributed 11.0 percentage points to the change. The decrease was partially offset by higher operating expenses associated with Juniper Networks, which contributed 5.5 percentage points to the change.

Previous wording

Impairment of goodwill for thethree 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 Hybrid Cloud reporting unit was below the carrying value of its net assets. The decline in the fair value was primarily driven by an increase in the discount rate used in the discounted cash flows analysis, driven by heightened macroeconomic uncertainty. Refer to Note 9, “Goodwill” to the Condensed Consolidated Financial Statements in Item 1 of Part I for more information.

Current wording

Impairment of goodwill for thenine 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 Hybrid Cloud reporting unit was below the carrying value of its net assets. The decline in the fair value was primarily driven by an increase in the discount rate used in the discounted cash flows analysis, driven by heightened macroeconomic uncertainty. Refer to Note 9, “Goodwill” to the Condensed Consolidated Financial Statements in Item 1 of Part I for more information.

Previous wording

For the three months ended April 30, 2025, acquisition, disposition and other charges increased by $9 million or 19.6%, primarily due to costs incurred in connection with the proposed acquisition of Juniper Networks.

Current wording

For the three and nine months ended July 31, 2025, acquisition, disposition and other charges increased by $139 million or 331.0%, and $171 million, or 130.5%, respectively, primarily due to costs incurred in connection with the Merger.

Previous wording

For the six months ended April 30, 2025, interest and other, net income increased by $188 million, or 170.9%, primarily due to an increase in net interest income, a gain on equity investments recognized in the current period compared to a loss on equity investments in the prior-year period, and an increase in the non-service net periodic benefit credit.

Current wording

For the nine months ended July 31, 2025, interest and other, net income increased by $208 million, or 170.5%, primarily due to an increase in the non-service net periodic benefit credit, the gain from the settlement to resolve claims solely against Sushovan Hussain in the ongoing Autonomy litigation, a gain on equity investments recognized in the current period compared to a loss on equity investments in the prior-year period, and increase in net interest income.

Previous wording

On December 1, 2024, we completed the disposition of CTG. We received net proceeds of $210 million and recognized a gain of $244 million.

Current wording

On December 1, 2024, we completed the disposition of CTG. We received net proceeds of $210 million and recognized a gain of $245 million.

Previous wording

For thethree and six months ended April 30, 2025, earnings from equity interests decreased $17 million, or 40.5%, and $46 million, or 52.3%, respectively, primarily due to lower earnings from our equity interest in H3C as a result of the disposition of 30% of the total issued share capital of H3C.

Current wording

For thethree and nine months ended July 31, 2025, earnings from equity interests decreased $41 million, or 56.2%, and $87 million, or 54.0%, respectively, primarily due to lower earnings from our equity interest in H3C Technologies Co., Limited (“H3C”) as a result of the disposition of 30% of the total issued share capital of H3C.

Previous wording

For the three months ended April 30, 2025 and 2024, we recorded income tax expense of $5 million and $131 million, respectively, which reflects an effective tax rate of (0.5)% and 29.4%, respectively. For the six months ended April 30, 2025 and 2024, we recorded income tax expense of $111 million and $227 million, respectively, which reflects an effective tax rate of (35.6)% and 24.5%, respectively. For the three and six months ended April 30, 2025, 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 and the effects of the non-deductible goodwill impairment. For the three and six months ended April 30, 2024, our effective tax rate differs from the U.S. federal statutory rate of 21% due to the geographic mix of forecasted earnings and net unfavorable permanent differences from U.S. income tax on non-U.S. earnings.

Current wording

For the three months ended July 31, 2025 and 2024, we recorded income tax benefit of $17 million and income tax expense of $96 million, respectively, which reflects an effective tax rate of (6.5)% and 15.8%, respectively. For the nine months ended July 31, 2025 and 2024, we recorded income tax expense of $94 million and $323 million, respectively, which reflects an effective tax rate of (359.9)% and 21.0%, respectively. For the three and nine months ended July 31, 2025 and the three months ended July 31, 2024, the 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. The effective tax rate for the nine months ended July 31, 2025 also included the effects of the non-deductible goodwill impairment.

Previous wording

The following table and ensuing discussion provide an overview of our key financial metrics by segment for the six months ended April 30, 2025, as compared to the prior-year period:

Current wording

The following table and ensuing discussion provide an overview of our key financial metrics by segment for the nine months ended July 31, 2025, as compared to the prior-year period:

Previous wording

(2)Segment earnings (loss) from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense, amortization of intangible assets, transformation (credit) costs, H3C divestiture related severance costs, severance costs related to the cost reduction program, acquisition, disposition and other charges and impairment of goodwill.

Current wording

(2)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, acquisition, disposition and other charges, and impairment of goodwill.

Previous wording

Server net revenue increased by $217 million, or 5.6% (increased 6.8% on a constant currency basis), primarily due to a $235 million, or 7.9%, increase in product revenue. The increase in product revenue was primarily due to higher net AUPs of $601 million, or 20.1%, partially offset by a decrease in net unit volume of $348 million, or 11.6%.

Current wording

Server segment net revenue increased by $685 million, or 16.1% (increased 15.7% on a constant currency basis), primarily due to a $698 million, or 20.5%, increase in product revenue. The increase in product revenue was primarily due to higher net AUPs of $750 million, or 22.0%, partially offset by a decrease in net unit volume of $50 million, or 1.5%.

Previous wording

Server earnings from operations as a percentage of net revenue decreased 5.1 percentage points due to an increase in cost of products as a percentage of net revenue resulting from input cost increases and competitive pricing pressure. Operating expenses as a percentage of net revenue remained relatively flat as compared to the prior-year period.

Current wording

Server segment earnings from operations as a percentage of net revenue decreased 4.4 percentage points due to an increase in cost of products as a percentage of net revenue resulting from higher mix of lower margin products and input cost increases. Operating expenses as a percentage of net revenue remained relatively flat as compared to the prior-year period.

Previous wording

Server net revenue increased by $1,180 million, or 16.5% (increased 17.5% on a constant currency basis), primarily due to a $1,180 million, or 21.5%, increase in product revenue. The increase in product revenue was primarily due to higher net AUPs of $1,607 million, or 29.3%, partially offset by a decrease in net unit volume of $377 million, or 6.9%, and unfavorable currency fluctuations of $50 million, or 0.9%.

Current wording

Server segment net revenue increased by $1,865 million, or 16.3% (increased 16.8% on a constant currency basis), primarily due to a $1,878 million, or 21.1%, increase in product revenue. The increase in product revenue was primarily due to higher net AUPs of $2,357 million, or 26.5%, partially offset by a decrease in net unit volume of $427 million, or 4.8%, and unfavorable currency fluctuations of $52 million, or 0.6%.

Previous wording

Server earnings from operations as a percentage of net revenue decreased 4.1 percentage points due to an increase in costs of products as a percentage of net revenue, moderated by a decrease in operating expenses as a percentage of net revenue. The increase in cost of products as a percentage of net revenue was primarily due to competitive pricing pressure, input cost increases, and higher mix of lower margin products. The decrease in operating expenses as a percentage of net revenue was primarily due to the scale of the net revenue increase while total operating expenses remained relatively flat.

Current wording

Server segment earnings from operations as a percentage of net revenue decreased 4.3 percentage points due to an increase in costs of products as a percentage of net revenue, moderated by a decrease in operating expenses as a percentage of net revenue. The increase in cost of products as a percentage of net revenue was primarily due to input cost increases, competitive pricing pressure, and higher mix of lower margin products. The decrease in operating expenses as a percentage of net revenue was primarily due to the scale of the net revenue increase, partially offset by higher SG&A expenses.

Previous wording

Hybrid Cloud net revenue increased by $303 million, or 11.9%, (increased 12.8% on a constant currency basis) primarily due to an increase in unit volume. Hybrid Cloud product revenue increased by $159 million, or 11.7%, primarily due to a unit volume increase of $132 million, or 9.7%, led by private cloud products. Hybrid Cloud services revenue increased by $144 million, or 12.0%, primarily driven by higher services contribution from private cloud products and storage subscription services.

Current wording

Hybrid Cloud segment net revenue increased by $159 million, or 12.0% (increased 10.9% on a constant currency basis), primarily due to an increase in unit volume, partially offset by a decrease in AUPs. Hybrid Cloud product revenue increased by $62 million, or 8.5%, primarily due to a unit volume increase of $260 million, or 35.5%, led by private cloud and storage products. This increase was partially offset by decrease in AUPs of $200 million, or 27.3%, led by private cloud and storage products. Hybrid Cloud services revenue increased by $97 million, or 16.3%, primarily driven by higher services contribution from private cloud solutions.

Previous wording

Hybrid Cloud earnings from operations as a percentage of net revenue increased 4.4 percentage points, due to a decrease in operating expenses as a percentage of net revenue. Operating expenses decreased due to capitalization of software costs and cost containment measures. Cost of products and services as a percentage of net revenue increased due to a higher contribution from our products portfolio, as we transition to a more software-defined platform with HPE Alletra.

Current wording

Hybrid Cloud segment earnings from operations as a percentage of net revenue increased 0.7 percentage points, due to a decrease in operating expenses as a percentage of net revenue, partially offset by an increase in cost of products and services as a percentage of net revenue. Operating expenses as a percentage of net revenue decreased due to the scale of net revenue growth. Cost of products and services as a percentage of net revenue increased due to a higher contribution from our products portfolio, as we transition to a more software-defined platform with HPE Alletra.

Previous wording

Hybrid Cloud net revenue increased by $171 million, or 13.3% (increased 14.6% on a constant currency basis), primarily due to increases in unit volume and AUPs. Hybrid Cloud product revenue increased by $106 million, or 15.9%, primarily due to a unit volume increase of $96 million, or 14.4%, led by private cloud products. Hybrid Cloud services revenue increased by $65 million, or 10.6%, primarily driven by higher services contribution from private cloud products and storage subscription services.

Current wording

Hybrid Cloud segment net revenue increased by $462 million, or 11.9%, (increased 12.2% on a constant currency basis) primarily due to an increase in unit volume, partially offset by a decrease in AUPs. Hybrid Cloud product revenue increased by $221 million, or 10.6%, primarily due to a unit volume increase of $392 million, or 18.8%, led by private cloud and storage products. This increase was partially offset by a decrease in AUPs of $157 million, or 7.5%, led by private cloud products. Hybrid Cloud services revenue increased by $241 million, or 13.5%, primarily driven by higher services contribution from private cloud solutions.