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, 2026 to the comparable prior-year period and where appropriate, as of April 30, 2026, unless otherwise noted.

Current wording

The financial discussion and analysis in the following MD&A compares the three and nine months ended July 31, 2026 to the comparable prior-year period and where appropriate, as of July 31, 2026, unless otherwise noted.

Previous 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, 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.

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, increased demand for and adoption of new technologies, supply chain constraints and related cost increases for certain components, increased inventory levels, the conservative (though recovering) customer spending environment, persistent inflation, foreign exchange pressures, recent tax developments, and competitive pricing pressures.

Previous wording

During the first six months of fiscal 2026, the effects of the evolving macroeconomic environment on demand for information technology products and supply for components persisted and certain significant developments impacted our operations, as follows:

Current wording

During the first nine months of fiscal 2026, the effects of the evolving macroeconomic environment on demand for information technology products and supply for components persisted and certain significant developments impacted our operations, as follows:

Previous wording

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.

Current wording

Macroeconomic Uncertainty: The evolving macroeconomic environment has been impacting 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, at times, 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, tariff repeals and refunds, and enactment of reciprocally restrictive trade 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, implementing pricing measures, and securing sufficient supply in advance of orders, we nevertheless expect the current macroeconomic environment to continue with the potential to impact 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”), 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 half 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 half 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 environment 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 and tensions. 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.

Current wording

Supply Chain: We have 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 throughout fiscal year 2026 primarily due to the accelerating growth in AI usage and demand and the related rapid expansion in AI data centers and compute refresh cycles. Throughout 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 persist until memory vendors transition greater production allocations towards high performance memory components required by AI workloads. Additionally, logistics costs have been, and may continue to remain, high due to changes in trade policies and ongoing geopolitical uncertainties and tensions. 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 in advance 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. The future remains uncertain due to the macroeconomic environment and dynamics discussed above, which have thus far impacted our ability to import and export components and finished products and increased our costs. We are taking actions through continued disciplined cost and 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.

Previous wording

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 of choice 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.

Current wording

Recurring Revenue and Consumption Models: We continue to strengthen our core server and storage-oriented offerings and expand our offerings on the GreenLake cloud platform, to deliver our entire portfolio as-a-service (“aaS”) and become the edge-to-cloud company of choice 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.

Previous wording

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. During the second quarter of fiscal 2026, we submitted a formal settlement offer to the IRS to facilitate the closing of the audit and recorded increased reserves for unrecognized tax benefits of $318 million. The impact of the increase in reserves is almost entirely offset with a valuation allowance release, and the net impact to income tax expense for the three and six months ended April 30, 2026 was not material. It is reasonably possible that the IRS audit for fiscal 2020 through 2022 may be concluded in the next 12 months, and it is reasonably possible that existing unrecognized tax benefits related to these years may be reduced by an amount up to $369 million within the next 12 months; the majority of these unrecognized tax benefits are offset by adjustments to foreign tax credits that carry a full valuation allowance, which does not affect 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. 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. During the second quarter of fiscal 2026, we submitted a formal settlement offer to the IRS to facilitate the closing of the audit and recorded increased reserves for unrecognized tax benefits of $318 million. The impact of the increase in reserves is almost entirely offset with a valuation allowance release, and the net impact to income tax expense for the nine months ended July 31, 2026 was not material. It is reasonably possible that the IRS audit for fiscal 2020 through 2022 may be concluded in the next 12 months, and it is reasonably possible that existing unrecognized tax benefits related to these years may be reduced by an amount up to $366 million within the next 12 months; the majority of these unrecognized tax benefits are offset by adjustments to foreign tax credits that carry a full valuation allowance, which does not affect our effective tax rate.

Previous wording

Trade and Tariffs Update: 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.

Current wording

Trade and Tariffs Update: 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”). During the three months ended July 31, 2026, we have received certain tariff refunds. We have also applied for and expect to receive more in the future. Such amounts received, and any such amounts applied for, are not nor do we expect they will be material to our financial statements or financial position. However, the ultimate availability, timing, and amount of any refunds of such tariffs remain 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.

Previous wording

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.

Current wording

On July 2, 2025, we completed the Juniper Networks merger (the “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 (the “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.

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 $30 million and $53 million for the three and six months ended April 30, 2026, respectively, and $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 $31 million and $84 million for the three and nine months ended July 31, 2026, respectively, and $2 million and $148 million for the three and nine months ended July 31, 2025, respectively.

Previous wording

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 are expected to 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 $108 million and $231 million, for the three and six months ended April 30, 2026, respectively.

Current wording

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 are expected to 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 $69 million and $300 million, for the three and nine months ended July 31, 2026, respectively.

Previous wording

Net revenue of $10.7 billion represented an increase of 40.0%, primarily due to higher revenue in the Networking segment from the Merger, and an increase in the average selling price in the Cloud & AI segment. The gross profit margin of 36.5% (or $3.9 billion), represents an increase of 8.1 percentage points from the prior-year period, primarily due to higher revenue in the Networking and Cloud & AI segments. The operating profit margin of 7.0% represents an increase of 21.5 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement and the absence of goodwill impairment recorded in the prior-year period.

Current wording

Net revenue of $12.2 billion represented an increase of 33.7%, primarily due to an increase in the average selling price in the Cloud & AI segment, and higher revenue in the Networking segment from the Merger. The gross profit margin of 40.1% (or $4.9 billion) represents an increase of 10.9 percentage points from the prior-year period, primarily due to higher revenue in the Cloud & AI and Networking segments. The operating profit margin of 11.4% represents an increase of 8.7 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement.

Previous wording

Net revenue of $20.0 billion represented an increase of 29.1%, primarily due to higher revenue in the Networking segment from the Merger, and an increase in the average selling price in the Cloud & AI segment. The gross profit margin of 36.2% (or $7.2 billion), represents an increase of 7.4 percentage points from the prior-year period, primarily due to higher revenue in the Networking and Cloud & AI segments. The operating profit margin of 6.1% represents an increase of 10.5 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement and the absence of goodwill impairment recorded in the prior-year period.

Current wording

Net revenue of $32.2 billion represented an increase of 30.8%, primarily due to higher revenue in the Networking segment from the Merger, and an increase in the average selling price in the Cloud & AI segment. The gross profit margin of 37.7% (or $12.1 billion) represents an increase of 8.7 percentage points from the prior-year period, primarily due to higher revenue in the Networking and Cloud & AI segments. The operating profit margin of 8.1% represents an increase of 9.8 percentage points from the prior-year period, primarily due to aforementioned gross margin improvement.

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 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 second quarter of fiscal 2026, we paid a quarterly dividend of $0.1425 per share of common stock. On June 1, 2026, we declared a regular cash dividend of $0.1425 per share of our common stock, payable on or about July 15, 2026, to our holders of record as of the close of business on June 16, 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 June 1, 2026, to holders of record as of the close of business on May 15, 2026.

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 2026, we paid a quarterly dividend of $0.1425 per share of common stock. On September 2, 2026, we declared a regular cash dividend of $0.1425 per share of our common stock, payable on or about October 16, 2026, to our holders of record as of the close of business on September 17, 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 September 1, 2026, to holders of record as of the close of business on August 15, 2026.

Previous wording

As of April 30, 2026, we had a remaining authorization of approximately $3.3 billion for future share repurchases.

Current wording

As of July 31, 2026, we had a remaining authorization of approximately $3.2 billion for future share repurchases.

Previous wording

Three and six months ended April 30, 2026 compared with the three and six months ended April 30, 2025

Current wording

Three and nine months ended July 31, 2026 compared with the three and nine months ended July 31, 2025

Previous wording

For the three months ended April 30, 2026, total net revenue of $10.7 billion represented an increase of $3.1 billion, or 40.0%. U.S. net revenue increased by $1.2 billion, or 44.3%, to $4.0 billion, and net revenue from outside of the U.S. increased by $1.8 billion, or 37.6%, to $6.7 billion.

Current wording

For the three months ended July 31, 2026, total net revenue of $12.2 billion represented an increase of $3.1 billion, or 33.7%. U.S. net revenue increased by $0.5 billion, or 11.9%, to $4.8 billion, and net revenue from outside of the U.S. increased by $2.6 billion, or 52.9%, to $7.4 billion.

Previous wording

For the six months ended April 30, 2026, total net revenue of $20.0 billion represented an increase of $4.5 billion, or 29.1%. U.S. net revenue increased by $2.0 billion, or 38.3%, to $7.3 billion, and net revenue from outside of the U.S. increased by $2.5 billion, or 24.3%, to $12.7 billion.

Current wording

For the nine months ended July 31, 2026, total net revenue of $32.2 billion represented an increase of $7.6 billion, or 30.8%. U.S. net revenue increased by $2.5 billion, or 26.4%, to $12.1 billion, and net revenue from outside of the U.S. increased by $5.1 billion, or 33.5%, to $20.1 billion.

Previous wording

•Networking net revenue increased $1.6 billion, or 148.2%, primarily due to revenue attributable to Juniper Networks

Current wording

•Networking net revenue increased $1.2 billion, or 74.9%, primarily due to revenue attributable to Juniper Networks

Previous wording

•Cloud & AI net revenue increased $1.4 billion, or 22.9%, primarily due to an increase in the average selling price

Current wording

•Cloud & AI net revenue increased $1.8 billion, or 25.4%, primarily due to an increase in the average selling price

Previous wording

•Networking net revenue increased $3.2 billion, or 149.8%, primarily due to revenue attributable to Juniper Networks

Current wording

•Networking net revenue increased $4.5 billion, or 117.3%, primarily due to revenue attributable to Juniper Networks

Previous wording

•Cloud & AI net revenue increased $1.3 billion, or 9.8%, primarily due to an increase in the average selling price

Current wording

•Cloud & AI net revenue increased $3.1 billion, or 15.4%, primarily due to an increase in the average selling price

Previous wording

For the three months ended April 30, 2026, the total gross profit margin of 36.5%, represents an increase of 8.1 percentage points, as compared to the respective prior year period. For the six months ended April 30, 2026, the total gross profit margin of 36.2%, represents an increase of 7.4 percentage points, as compared to the respective prior year period. The increases were primarily due to the favorable mix of higher-margin revenues in the Networking and Cloud & AI segments and the acquisition of Juniper Networks.

Current wording

For the three months ended July 31, 2026, the total gross profit margin of 40.1% represents an increase of 10.9 percentage points, as compared to the respective prior year period. For the nine months ended July 31, 2026, the total gross profit margin of 37.7% represents an increase of 8.7 percentage points, as compared to the respective prior year period. The increases were primarily due to the favorable mix of higher-margin revenues in the Cloud & AI and Networking segments and the acquisition of Juniper Networks.

Previous wording

For thethree months ended April 30, 2026, R&D expense increased by $382 million, or 70.7%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 61.1 percentage points to the change.

Current wording

For thethree months ended July 31, 2026, R&D expense increased by $536 million, or 86.2%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 80.0 percentage points to the change.

Previous wording

For thesix months ended April 30, 2026, R&D expense increased by $651 million, or 64.1%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 54.7 percentage points to the change.

Current wording

For thenine months ended July 31, 2026, R&D expense increased by $1,187 million, or 72.5%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 64.3 percentage points to the change.

Previous wording

For the three months ended April 30, 2026, SG&A expense increased by $532 million, or 41.0%, primarily due to higher variable employee costs and increased operating expenses associated with Juniper Networks, which contributed 35.3 percentage points to the change.

Current wording

For the three months ended July 31, 2026, SG&A expense increased by $466 million, or 31.1%, primarily due to higher variable employee costs and increased operating expenses associated with Juniper Networks, which contributed 24.7 percentage points to the change.

Previous wording

For thesix months ended April 30, 2026, SG&A expense increased by $962 million, or 37.5%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 31.2 percentage points to the change.

Current wording

For thenine months ended July 31, 2026, SG&A expense increased by $1,428 million, or 35.2%, primarily due to increased operating expenses associated with Juniper Networks and higher variable employee costs, which contributed 28.8 percentage points to the change.

Previous wording

For the three and six months ended April 30, 2026, amortization of intangible assets increased by $286 million, or 773.0%, and $559 million, or 745.3%, respectively, primarily due to the amortization expense of the acquired intangibles as a result of the Merger.

Current wording

For the three and nine months ended July 31, 2026, amortization of intangible assets increased by $189 million, or 150.0%, and $748 million, or 372.1%, respectively, primarily due to the amortization expense of the acquired intangibles as a result of the Merger.

Previous wording

Impairment charges for the three 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 Cloud & AI (excluding Financial Services) reporting unit was below the carrying value of its net assets.

Current wording

Impairment charges for the nine 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 Cloud & AI (excluding Financial Services) reporting unit was below the carrying value of its net assets.

Previous wording

For the three and six months ended April 30, 2026, acquisition, disposition and other charges increased by $36 million or 85.7%, and $72 million or 58.5%, respectively, primarily due to costs incurred in connection with the Merger.

Current wording

For the three and nine months ended July 31, 2026, acquisition, disposition and other charges decreased by $110 million or 60.8%, and $38 million or 12.5%, respectively, primarily due to higher costs incurred in connection with the Merger in prior year periods.

Previous wording

For the three and six months ended April 30, 2026, interest and other, net expense increased by $112 million, or 287.2%, and $205 million, or 262.8%, respectively, primarily due to higher net interest expense of $108 million and $232 million, respectively.

Current wording

For the nine months ended July 31, 2026, interest and other, net expense increased by $288 million, or 334.9%, primarily due to higher net interest expense of $283 million.

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 the three months ended April 30, 2026 and 2025, we recorded income tax expense of $75 million and $5 million, respectively, which reflects an effective tax rate of 10.7% and (0.5)%, respectively. For the six months ended April 30, 2026 and 2025, we recorded income tax expense of $56 million and $111 million, respectively, which reflects an effective tax rate of 4.9% and (35.6)%, 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 the three and six months ended April 30, 2025, the effective tax rate also included the effects of the non-deductible goodwill impairment.

Current wording

For the three months ended July 31, 2026 and 2025, we recorded income tax expense of $222 million and income tax benefit of $17 million, respectively, which reflects an effective tax rate of 12.6% and (6.5)%, respectively. For the nine months ended July 31, 2026 and 2025, we recorded income tax expense of $278 million and $94 million, respectively, which reflects an effective tax rate of 9.6% and (359.9)%, 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 the nine months ended July 31, 2025, the effective tax rate 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, 2026, 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, 2026, as compared to the prior-year period:

Previous wording

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

Current wording

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

Previous wording

Networking segment net revenue increased by $1,606 million, or 148.2%, primarily due to a $998 million, or 125.7%, increase in product revenue, and $608 million, or 209.7%, increase in service revenue. The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.

Current wording

Networking segment net revenue increased by $1,239 million, or 74.9%, primarily due to a $803 million, or 68.4%, increase in product revenue, and $436 million, or 90.8%, increase in service revenue. The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.

Previous wording

Networking segment gross profit increased by $972 million, or 146.8%, primarily driven by increased net revenue as mentioned above. The increase was partially offset by higher cost of sales of $634 million, or 150.2%, which was primarily attributable to Juniper Networks.

Current wording

Networking segment gross profit increased by $728 million, or 73.3%, primarily driven by increased net revenue as mentioned above. The increase was partially offset by higher cost of sales of $511 million, or 77.3%, which was primarily attributable to Juniper Networks.

Previous wording

Networking segment earnings from operations increased by $310 million, or 114.4%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $662 million, or 169.3%. The increase in operating expenses was primarily attributable to Juniper Networks and higher variable employee costs.

Current wording

Networking segment earnings from operations increased by $272 million, or 74.5%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $456 million, or 72.6%. The increase in operating expenses was primarily attributable to Juniper Networks and higher variable employee costs.

Previous wording

Networking segment net revenue increased by $3,236 million, or 149.8%, primarily due to a $2,029 million, or 128.2%, increase in product revenue, and $1,207 million, or 209.2%, increase in service revenue. The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.

Current wording

Networking segment net revenue increased by $4,475 million, or 117.3%, primarily due to a $2,832 million, or 102.7%, increase in product revenue, and $1,643 million, or 155.4%, increase in service revenue. The increase in product and service revenue was primarily led by revenue attributable to Juniper Networks.

Previous wording

Networking segment gross profit increased by $1,948 million, or 145.0%, primarily driven by increased net revenue as mentioned above. The increase was partially offset by higher cost of sales of $1,288 million, or 157.6%, which was primarily attributable to Juniper Networks.

Current wording

Networking segment gross profit increased by $2,676 million, or 114.6%, primarily driven by increased net revenue as mentioned above. The increase was partially offset by higher cost of sales of $1,799 million, or 121.7%, which was primarily attributable to Juniper Networks.