Hewlett Packard Enterprise Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
June 1, 2026

Key Takeaways

  • Positive Sentiment: HPE reported record Q2 revenue of $10.7 billion, non-GAAP EPS of $0.79, and $915 million in free cash flow, all well above outlook. Management said orders more than doubled and backlog hit a record, signaling strong demand visibility.
  • Positive Sentiment: The company raised fiscal 2026 guidance, now expecting non-GAAP EPS of $3.35 to $3.45 and free cash flow of at least $3.5 billion. HPE also lifted consolidated revenue growth and operating profit targets, saying Catalyst savings and Juniper synergies are running ahead of schedule.
  • Positive Sentiment: Networking was a standout, with revenue up on a normalized basis and strong growth in campus/branch, data center switching, routing, and security. Management increased its cumulative Networks for AI order target to at least $2 billion for fiscal 2026 and said Juniper integration is strengthening its market position.
  • Positive Sentiment: Cloud and AI demand accelerated sharply, driven by traditional servers, AI systems, Alletra MP storage, and private cloud offerings. HPE booked $1.8 billion in new AI systems orders in the quarter and said AI revenue should improve in the back half of the year, peaking in Q4.
  • Neutral Sentiment: Management gave an early fiscal 2027 framework calling for consolidated revenue growth of 8% to 12%, EPS growth of 12% to 16%, and free cash flow of at least $4.5 billion. HPE said it expects to reach its 2x net leverage goal by the end of fiscal 2026, one year ahead of schedule.
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Earnings Conference Call
Hewlett Packard Enterprise Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Good day, and welcome to the fiscal 2026 second quarter Hewlett Packard Enterprise Company earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Paul Glaser, Head of Investor Relations. Please go ahead, sir.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Good afternoon. I'm Paul Glaser, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2026 second quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer, and Marie Myers, HPE's Chief Financial Officer. Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations webpage. Elements of the financial information referenced on this call are forward-looking and are based on our best view of our business and the external factors affecting us as we see them today. HPE assumes no obligation and does not intend to update any such forward-looking statements.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE's quarterly report on Form 10-Q for the fiscal quarter ended April 30th, 2026. Figures used in verbal remarks are rounded for ease of discussion. For more detailed information, please see the earnings materials as well as disclaimers relating to forward-looking statements that involve risks, uncertainties, and assumptions. Please refer to HPE's filings with the SEC for more detailed discussion of these risks. For financial information that we are showing on a non-GAAP basis, we have provided reconciliations to the comparable GAAP information on our website. Please refer to the tables and slide presentation accompanying today's earnings release on our website for details. Throughout this conference call, all revenue growth rates, unless noted otherwise, are presented on a year-over-year basis.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Unless otherwise noted, all financial metrics and growth rates discussed today are non-GAAP, and EPS refers to non-GAAP diluted net earnings per share. Certain financial information featured in the presentation today has been normalized to include Juniper Networks' results as of the beginning of HPE's fiscal 2025. Antonio and Marie will reference our earnings presentation in their prepared comments. With that, let me turn it over to Antonio.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Thank you, Paul. Good afternoon, everyone. HPE delivered an exceptional quarter with record-breaking results, disciplined execution, and clear proof that our strategy is working. We made excellent progress in our Juniper integration and in our Catalyst initiative, with both running ahead of schedule. Revenue in the quarter reached $10.7 billion, up 40%. Non-GAAP earnings per share of $0.79 increased 108%, significantly above the high end of our outlook. We generated $915 million in free cash flow, an improvement of $1.8 billion, driven by strong cash from operations and improved cash conversion cycle performance. Demand was even stronger than revenue growth. Orders more than doubled, significantly outpacing revenue, resulting in a record company backlog. Customer investments in agentic AI and AI inferencing accelerated. We also saw broad-based demand strength across the portfolio, driven by ongoing investment in compute infrastructure modernization, unstructured storage data growth, and private cloud adoption for AI.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Last year at our Securities Analyst Meeting in New York, we laid out our strategy and fiscal 2028 financial commitments. Based on our strong first half 2026 results, our record backlog, and our visibility into the second half demand, we now expect to deliver $3.40 in non-GAAP earnings per share at the midpoint and at least $3.5 billion in free cash flow in fiscal 2026. That is two years ahead of our committed long-term plan. Marie will provide more detail on our third quarter and full year fiscal 2026 outlook, as well as our fiscal 2027 framework, which is grounded on durable customer demand and the profitability of both business segments. Now let me turn to our business segment highlights, starting with networking. I am particularly pleased with the progress we are making on the Juniper integration.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

We are ahead of our integration milestones and synergies commitments, and the unified portfolio and sales force are already strengthening our market position and growth momentum. Our combined networking portfolio and vision for self-driving networks is resonating with customers, and that enthusiasm, together with strong go-to-market execution, is reflected in our results. Networking delivered revenue of $2.7 billion, up double digits on a normalized basis, with orders growing significantly faster than revenue. We saw increased demand in campus and branch, networks for AI, and security. I am pleased with the strong demand we saw from enterprise customers for our networking portfolio. Campus and branch orders reach a new record high, growing in the upper 20% range on a normalized basis. We won multimillion-dollar deals across multiple verticals, including retail, automotive, government, and technology. Wi-Fi 7 access points sales increased more than seven times, reflecting a clear shift toward network modernization.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

HPE, for the 20th time in a row, was named a leader in the Gartner Magic Quadrant for Enterprise Wired and Wireless LAN Infrastructure. We believe this independent industry analyst validation reinforces how far ahead we are in enterprise networking beyond even incumbents. Customers trust us with their most critical networking infrastructure decisions as they expand their digital initiatives and AI investments. One customer taking advantage of the power of our combined campus and branch networking portfolio is Lowe's. With over 1,750 stores across North America, Lowe's chose HPE to deliver the network foundation for a major technology transformation to support its digital on-ramp and AI-enabled operations. The solution is built on our HPE Mist AI platform for wired and wireless networking infrastructure, alongside our HPE EdgeConnect SD-WAN solution.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Last month, we reached a milestone with the launch of new autonomous agents powered by agentic AI for optimizing networking performance. The self-driving network is no longer a concept. It is a reality. The U.K. Ministry of Justice is an early adopter example. It was able to reduce the number of incidents seen by its network operation center by approximately 75% after deploying a suite of solutions that included our new HPE self-driving network capabilities. In enterprise data center switching, orders increased nearly 20% on a normalized basis. Our data center switching pipeline remains strong. Cross-portfolio product integration and sales across server storage and networking are driving deeper customer engagement and larger deals. Security orders grew in the mid-teens on a normalized basis. We continue to make the network a first line of defense that responds to threats in real time.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

This quarter, we launched the HPE Juniper SRX400 Series, bringing carrier-grade firewall protection to the branch for large distributed environments. We see significant runway as more customers consolidate networking and security with a single vendor, forcing convergence all the way to the silicon layer of the stack, where HPE will have further differentiation. In our service provider customer segment, revenue increased double digits on a normalized basis, with routing orders growing significantly faster than revenue. Routing orders increased nearly 30% on a normalized basis, driven by data center interconnect deployments in large cloud service providers. Customers are choosing HPE because we help them scale in every dimension. Scale up by increasing the performance and density of individual platforms for the most demanding AI workloads. Scale out by expanding the networking fabric to connect thousands of GPUs and accelerators within a single data center.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Scale across by extending high bandwidth interconnectivity between data centers, across campuses, and into the wide area network, so AI services can run wherever they are needed. HPE is developing a scale-up Ethernet switch and software designed specifically for the AMD Helios AI rack-scale architecture, which we expect will be introduced in the fall. In scale out, we lead with our AI-driven QFX Series switching fabric. HPE is the first OEM to productize a Tomahawk 6-based 100% liquid-cooled switch with industry-leading performance and power efficient for AI infrastructure. Our leading fabric management and AIOps capabilities reduce congestion, latency, as well as operational complexity. We expect our roadmap to extend this leadership through co-packaged optics, resulting in lower overall power consumption. In scale across, the Juniper PTX Series delivers 800 Gb density with exceptional power efficiency, leveraging our distinct express silicon and simplified AI native automation.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Because of our leading innovation and market momentum in Networks for AI, we are raising our cumulative fiscal 2026 Networks for AI order target to at least $2 billion. We are laser-focused on building the best networking business in the industry. Our priorities are clear. Extend AI-driven automation across the portfolio, help customers scale modern AI infrastructure with secure high-performance networking, and lead in the convergence of networking and security. We have the team, the capabilities, and the momentum to convert the opportunity in this segment into durable shareholder value. In our Cloud and AI business segment, we executed with strong discipline across all business lines. Revenue was $7.7 billion, up 23%, driven by exceptional traditional server orders and very strong demand in AI systems, Alletra MP Storage, Private Cloud, and GreenLake software and services.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Traditional server orders increased triple digits as customers continue to modernize their compute infrastructure and invest in AI inferencing. We are working very closely with our silicon and memory partners to continue to secure supply, which we factor into our new fiscal 2026 guide. We're also engaging customers and channel partners on lead times and configuration options to help them plan effectively. We saw strong demand in AI training throughout the quarter. We booked $1.8 billion in new AI systems orders, bringing cumulative AI systems bookings to $16.4 billion. We enter Q3 with $5.9 billion in backlog, primarily composed of enterprise and sovereign orders. We are seeing a broad pattern across industries. Enterprises want the flexibility of choosing multiple AI models with the governance and control of on-premises. We will continue to manage AI systems opportunities with a focus on profitable growth and prudent working capital management.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Storage had an outstanding quarter. Alletra MP storage orders increased triple digits, the sixth consecutive quarter of strong growth. Several weeks ago, we expanded the platform with new file storage and agentic AIOps capabilities. This extends Alletra MP into the growing unstructured data market. Our HPE Morpheus Enterprise and HPE VM Essentials software offerings continue to build momentum. Revenue grew sequentially for the fourth consecutive quarter. VM Essentials customer count increased 43% in the first half, with a notable rise in net new logos. Private Cloud AI orders increased again this quarter with a growing base of new customer wins. We recently launched our second-generation PCAI offering designed for enterprise AI inferencing and cloud gap sovereign environments, which position us for continued growth. More broadly, we are embedding agentic AI capabilities across our storage and data protection portfolio to help customers automate AI data pipelines and operations.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

We continue to add new cloud and AI agentic services to our GreenLake cloud platform, acquiring new customers and increasing the net retention rates for our HPE GreenLake services business, which remains near 110%. We exited Q2 with approximately 50,000 customers operating their IT in our GreenLake cloud, managing more than 6.7 million systems, up from 5.3 million a year ago. One win that brings the power of the full HPE portfolio together is the Dallas Cowboys, the most valuable sports franchise in the world. They came to HPE with a clear objective: modernize their infrastructure, simplify operations, and build the right secure foundation for AI. We delivered a comprehensive solution anchored on our HPE GreenLake for Private Cloud offering, spanning HPE ProLiant servers, Alletra Storage MP, and HPE Morpheus Enterprise. The Cowboys are also adopting HPE Morpheus VM Essentials as their preferred virtualization layer.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

This is a strong example of the value customers can unlock when they choose HPE as an end-to-end technology partner. Lastly, HPE Financial Services delivered another outstanding quarter with record return on equity. Financial Services deepens customer relationships, supports our GreenLake cloud adoption, and remains a meaningful competitive advantage as customers ramp their investment in AI. Before I close, I want to highlight two important upcoming events. In two weeks, we are hosting HPE Discover in Las Vegas. We will share updates on our networking, cloud, and AI strategies, including major product announcements along with a live Q&A for investors and analysts. I hope to see you there. Later this fall, we will host a dedicated Networking Investor Day. In closing, HPE delivered an exceptional quarter. Our results demonstrate that our strategy continues to pay off.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

We now expect to significantly exceed our original fiscal 2028 non-GAAP earnings per share target and generate at least $3.5 billion in free cash flow in fiscal 2026, two years ahead of plan. The market trends driving our performance remain strong and well-aligned to our strategy. We expect demand strength to continue into fiscal 2027 and beyond, which will accelerate durable shareholder value as we continue to scale profitably.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

We are executing with strong discipline, creating meaningful value from the Juniper acquisition and strengthening our position at the intersection of networking, cloud, and AI. With the combined strength of HPE and Juniper, we have the portfolio, the talent, and the go-to-market scale to lead in the market. I want to thank our team members for their focus and strong execution. With that, let me turn it to Marie to take you through the financial results and our 2026 and 2027 outlook.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Marie?

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Thank you, Antonio, and good afternoon, everyone. I'm pleased with our outstanding second quarter results. We exceeded our commitments, delivering record revenue and EPS, driven by disciplined execution and a strong demand environment. Our large backlog, favorable industry tailwinds, and improved demand visibility support a higher growth outlook. In addition, we are achieving Catalyst cost savings and Juniper synergies ahead of schedule. As a result, we are increasing our fiscal 2026 EPS outlook by over 40%. I will address the drivers behind the strong EPS and free cash flow outlook shortly. First, let's take a look at our Q2 performance. Revenue of $10.7 billion was above the high end of our guidance range, led by traditional server, as customers accelerated investments in agentic AI and AI inferencing, and by Networking, where we saw broad-based growth across the portfolio.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Sequentially, revenue grew 15%, reflecting higher average selling prices within our server business, driven by ongoing DRAM and NAND inflationary costs and supply constraints. We continue to work with our partners to secure long-term agreements while executing the pricing actions we discussed last quarter. Gross margin improved to 36.9%, driven by mix as we shape demand to higher margin products. Catalyst savings and Juniper-related Synergies also contributed to improvement on a year-over-year basis. Operating profit was $1.4 billion, above our expectations, representing a 13.3% operating margin. As the company scales and we continue to capture accelerated Catalyst cost savings and Juniper Synergies, we expect operating profit growth to continue to outpace our top line. EPS was $0.79, well above the high end of our guidance. GAAP EPS was $0.44. We delivered Q2 free cash flow of $915 million, fueled by strong operating profit.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Now let's turn to our segment results. Networking delivered another solid quarter. Revenue of $2.7 billion was up 10% on a normalized basis as growth accelerated. Our backlog continues to grow given elevated demand and supply constraints. This is reflected in the greater than 40% sequential growth we saw in our purchase commitments. We continue to see strong demand for our networks for AI portfolio. Now expect cumulative orders to reach at least $2 billion by fiscal year-end 2026. Within our product categories, campus and branch normalized revenue growth accelerated to 10%, anchored by large deals across multiple industries. Security growth inflected positively to 18%, benefiting from improved backlog conversion and solid in-quarter demand. Data center networking and routing grew 6% and 9% respectively, reflecting robust networks for AI demand. We are optimistic about the demand momentum we are seeing based on our growing pipeline.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Across customer verticals, service provider revenue grew 13%, and enterprise grew 9% on a normalized basis. Our AI native self-driving network solution is clearly resonating as customers prioritize AI use cases and simplify their network operations. Network operating margin of 21.6% was in line with guidance, reflecting improved operating leverage as Juniper synergies continue to ramp. The sequential decline in margin reflected two factors. First, Q1 benefited from certain one-time items, and second, Q2 absorbed higher variable compensation expense. We remain focused on disciplined execution, operational efficiencies, and synergy realization to improve profitability and expand margins in the second half and beyond. Moving to cloud and AI, we delivered revenue of $7.7 billion, up 23%, as strong order activity and pass-through of higher costs of new orders and traditional server and storage drove the upside, partially offset by supply constraints and timing of AI server shipments.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Financial Services continues to perform well. Scale benefits drove operating profit of nearly $1 billion, up 48% sequentially and triple digits year-over-year, pushing operating margin to 12.4%, up 220 basis points sequentially. Server revenue increased 33% as ASP growth in traditional server more than offset supply-constrained unit volumes. Demand remained broad-based as orders more than doubled year-over-year and increased strong double digits sequentially. We see accelerating demand in high memory configured servers targeted at agentic AI workloads, supporting our expectation of sustainable growth. AI systems orders of $1.8 billion were more balanced and broad-based this quarter. Demand is expanding beyond AI server factories into broader AI workloads like orchestration, data movement, and agentic AI. Service provider orders exceeded the combined total of its prior four quarters, underscoring the inherently lumpy nature of our large-scale AI deals.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Our backlog increased nearly 20% sequentially to a new high, and our pipeline remains multiples of our backlog. We continue to expect AI revenue to improve in the back half of the year, now peaking in Q4. Storage revenue grew 2%, driven by strong orders, the ongoing mix shift towards higher-value owned IP, and disciplined pricing execution. Alletra MP customer migration momentum accelerated sequentially, driving triple-digit year-over-year growth in both orders and revenue. Continued demand strength in Private Cloud and our expanding backlog are driving improved revenue visibility. Lastly, Financial Services revenue was up 6% and generated an all-time high in return on equity exceeding 30%. Turning to our Catalyst initiatives and Juniper Synergies, I'm pleased that we are running ahead of plan as we work on a range of programs to reduce cost of sales and OpEx across our business.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

As a result of these programs, at quarter end, we reported an employee base of just over 65,000, the lowest level at which we have operated as a combined company and reflecting an over 9% decline since both programs began. Within Juniper Synergies, we continue to focus on the four pillars we laid out at SAM. Phase 1 of the integration, which we completed in January, focused on reducing overlap in corporate functions and optimizing sales and service organizations. As our Mist and Aruba portfolios converge, we expect to optimize our R&D spend. In addition, we plan to continue to leverage overall HPE scale to improve commodity prices and consolidate our vendor footprint to drive savings through supply chain integration. Finally, regarding customer support, we intend to leverage scale and digital capabilities inherited from Juniper to further improve efficiency and the customer experience.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

We expect to exceed our annual target of $200 million by the end of fiscal year 2026. I'm pleased with our progress on Catalyst, and we are ahead of plan. Workforce transformation continues to drive the majority of our savings, and GenAI-enabled process simplification now represents nearly 20% of our fiscal 2026 initiative savings. We are leaning into GenAI to increase productivity and reduce costs across the organization, including customer support, HR, and marketing. Our teams are driving greater automation, redefining work management, and reducing costs. We are also rationalizing our global lab footprint by more than 2/3 and reducing our contractor base and supply chain customer service by over 90% through targeted consolidation. Taken together, we are building a leaner, more efficient organization and delivering meaningful benefit to our operating margin. Turning to free cash flow, we delivered operating cash flow of $1.4 billion.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Free cash flow totaled $915 million in Q2, bringing our first-half fiscal 2026 total to $1.6 billion, about 75% above our prior comparable period high reported in fiscal 2021. Our cash conversion cycle improved by two days from Q1, driven primarily by an increase in days payable due to higher purchases to support future shipments. This was offset by an increase in days of inventory due to higher inventory in anticipation of second-half AI service shipments. Days receivable increased by five days from the prior quarter due to strong revenue performance towards the end of the quarter. Inventory ended the quarter at $9 billion, up year-over-year and sequentially, supporting second-half AI installations and targeted commodity purchases. We remain committed to our capital allocation strategy. During Q2, we returned $343 million to shareholders, including $189 million in common dividends and $154 million via share repurchases.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

We refinanced $2 billion of debt, received gross proceeds of approximately $1.4 billion after closing our previously announced H3C transactions last month, and used cash on hand to retire our term loan. We expect the net impact will reduce annual net interest expense by approximately $75 million. Importantly, we improved our pro forma net leverage ratio to 2.3x at quarter end, down from 2.6x last quarter. Turning to guidance, we are taking up our outlook on the back of Q2 results and greater visibility into the second-half demand environment. Starting with Q3, we expect total revenue will be between $11.5 billion and $12.1 billion, driven by strong demand. For Networking, we expect revenue to grow 73%-78% year-over-year and on a reported basis or approaching 10% on a normalized basis.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

We expect revenue performance and synergy realization to help offset the impact of inflationary component costs, driving an operating margin rate in line with our full-year guidance. In Cloud and AI, we expect revenue to grow in the high teens, reflecting demand durability, elevated pricing, and improved AI systems revenue. We expect operating margins to be in the low to mid-teens. On a consolidated basis, we expect Q3 total operating expense to increase sequentially, supporting seasonal marketing expense and networking R&D investments. We expect our operating margin rate to be up on a sequential basis, driven by improved operating leverage. Consequently, we expect EPS between $0.88 and $0.93 and GAAP EPS between $0.84 and $0.89. For fiscal year 2026, we are raising our EPS outlook range to $3.35 to $3.45. We are also raising our GAAP EPS range to $2.42 to $2.52.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

We are making the following updates to our outlook. We are raising our full-year consolidated revenue growth to 29%-33% on a reported basis or high teens on a normalized basis. We are also raising our full-year consolidated operating profit growth outlook to 80%-85% on a reported basis. For Cloud and AI, we expect server demand and pricing to remain durable, driving sustainable revenue growth. Consequently, we are raising our full-year Cloud and AI revenue growth to the low 20% range from our prior mid to high single-digit range, driven by higher ASPs in our traditional server business and improved AI systems revenue. We are also raising our operating margin rate outlook to low to mid-teens.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

We are raising our full-year networking revenue growth to 72%-75% on a reported basis or approaching 10% on a normalized basis, reflecting accelerated business performance as our integration efforts take hold. We are lowering our OID outlook to a range of $420 million-$460 million, reflecting lower net interest expense expectations. Lastly, we are increasing our free cash flow outlook to at least $3.5 billion, up from our prior outlook of at least $2 billion. We are confident in our new fiscal 2026 outlook as we see continued order momentum in the business thus far in Q3. Based on the durability of demand we are seeing in our results, we are providing an initial framework for fiscal 2027. We see sustained secular tailwinds driving consolidated revenue growth of 8%-12%, with a similar range for both of our networking and cloud and AI segments.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Our outlook assumes an acceleration in AI systems revenue growth. We see improved operating margins of 12%-16% for the company and expect to see a year-over-year reduction in OpEx. We forecast networking margin in the mid to high 20% range, driven by scale mix and Synergies. With cloud and AI operating margin in the range of 10%-15%, depending on the mix of AI business and the pace of Catalyst savings. We expect revenue growth and operating leverage to deliver EPS growth of 12%-16% and free cash flow of at least $4.5 billion. Our outlook is expected to enable faster debt paydown. As a result, we now expect to reach our 2x net leverage goal by the end of fiscal year 2026, one year ahead of schedule.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Once we reach our leverage target, we expect to return at least 75% of free cash flow to our shareholders via dividends and share repurchases. To close, Q2 was an outstanding quarter for HPE. We scaled the business, expanded margins, and generated significant free cash flow. We raised our outlook and are building a stronger, more profitable HPE. I'm confident in our ability to create long-term value for our shareholders. With that, I'll turn the call back to the operator to begin the Q&A.

Operator

Thank you. We will now begin the question-and-answer session. The first question will come from Asiya Merchant with Citi. Please go ahead.

Asiya Merchant
Asiya Merchant
Analyst at Citi

Great. Thank you for taking my question. Outstanding results and guidance. Marie and Antonio, I guess, folks are kind of talking about enterprise budgets. Just given the price inflation that you guys are seeing through and being passed through, where do you see enterprise budgets still sustaining themselves? Obviously your guide, you're now into FY2027. Thank you very much for that as well. Many people are concerned that there is some kind of demand cliff that you could see even past the more near-term outlooks and growth forecasts that you're seeing. What gives you this confidence to now provide FY2027 guide? If you could help us understand, I see it's between networking as well as cloud and AI. What gives you the confidence that you're seeing in being able to provide an early outlook into 2027? That would be great. Thank you.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Thank you, Asiya, for the question. I think it's multiple factors. Factor number one, and probably the most important one, is the durability of the demand based on what my conversations are with customers and the large pipeline, which remains multiples of the current backlog. When you look at that demand and the pipeline, it's driven by the new use cases we see with deployment of AI or the buildouts of new data centers for AI, obviously, and then the modernization taking place in enterprise. It's a combination of multiple things that ultimately give us the confidence to not only provide the new guide for 2026 but an early view of 2027. When you think about our results in the first half and the backlog we have and the supply that we have on hand and what is coming, that solidifies the 2026.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Then in 2027, the momentum we have in networking is outstanding across all customer segments and as well product segments. We talked about some of the demand that we see today in campus and branch, up there 20%, and cloud networking, which is in the 30%, and so forth. Customers, when you think about budgets, obviously, they are challenged because of the price increases we have seen driven by the cost of commodity. I can tell you, we have not seen any pull-in. We don't see a cliff. In many ways, I think customers are prioritizing getting access to technology now faster than ever before, because nobody wants to be left behind when it comes down to deploying AI. I give an example in our own company. We have 1,200 use cases in AI.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Marie, which is next to me here, is one of the early adopters, and I will say an aggressive adopter. We have more than 250 use cases, mostly agentic AI, which has been already deployed. Now we see this across the entire spectrum. I was last week in Chicago. I met with a number of customers and partners, and they see this. When you go through that motion, AI inference is growing. We expect that AI inference is going to be an accelerator of our demand as we go forward. Therefore, points to be durable in our demand, in our ability to convert that.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Thank you. Asiya, next question, please.

Operator

The next question will come from Wamsi Mohan with Bank of America. Please go ahead.

Wamsi Mohan
Wamsi Mohan
Analyst at Bank of America

Yes, thank you. A really impressive set of results here and guide. Antonio, can you give us maybe some rough mix of the opportunity that you see? You mentioned scale up, scale out, scale across, especially as you look into fiscal 2027. How do you see that evolve? If I could, Marie, the growth in free cash flow as well in excess of EPS for 2027, hoping you might be able to share some color on the drivers of that. Thank you so much.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Well, thank you, Wamsi. I think it's fairly balanced across the four product segments, Wamsi. Let's start with campus and branch, which has been, and is, the lion's share of our networking mix. I think the self-driving network vision and now the execution of it is absolutely resonating with customers. We announced our roadmap last December at the HPE Discover in Barcelona. You will see new announcements here in two weeks. Our ability to support Aruba switches with Mist and cross-pollinating the two platforms. Ultimately, that AI-driven experience is resonating, and I mentioned one of the customers as an example, taking advantage of that. When I think about data center networking, we grew 20% in enterprise. That obviously is driving synergies with the rest of the portfolio because now we have a full conversation with customers across server, storage, and networking.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

We are introducing, in the fall, the new switch with a Helios stack reference architecture. That's the first time to market. Tomahawk 6, 1.6 Tb. That will be a tailwind as 2027 start adopting that footprint in large service providers. Then obviously scale across. The PTX platform is, I will say, the reference when it comes down for data center interconnect, and that PTX10000 and PTX12000 is resonating to drive data center interconnect. It's fairly balanced, I will say, and we are early in the process. Obviously, you have to win the reference architecture and the discussion with the customers at that level. Then it's going to be synergies across the rest of the portfolio with compute. I feel very good about the momentum. Kudos to the team who has executed flawlessly.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

When you think about an integration of this scale, done so fast, because if you put in perspective, we integrated R&D teams, we announced the roadmap, we didn't miss a bit on networking innovation. We integrated the sales force in January, we're ahead of the integration milestones and synergy. I think this is a reference for how to do large acquisitions in the market. Marie, you want to do the free cash flow?

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Absolutely. Wamsi, I'll answer your question on the strong free cash flow guide for 2027, and it's pretty simple. It's really just based around the expectations that we have of the operating profit growth, and obviously that supports higher profitability and that's translating, frankly, into cash flow. Just one other thing just to bear in mind, our 2026 baseline actually has the charges associated with the Juniper Synergies, which obviously you're not going to see that level of magnitude repeated in 2027. That's also one of the benefits that's playing as well into the free cash flow guide. Just to close, as I said in my prepared remarks, that'll get us to 2x leverage by the end of 2026, and I think I mentioned that we will pull in our share repo now into early 2027 as well.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Just wanted to sort of close with that comment.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Very good. Let's please limit questions to one per analyst. Next question please.

Operator

The next question will come from Amit Daryanani with Evercore. Please go ahead.

Amit Daryanani
Amit Daryanani
Analyst at Evercore

I can't ask a multi-part question. Paul just called us out on that, I guess, now. Maybe I'll stick to one. Antonio, this may sound like a bit of a silly question, but given these numbers are so strong, especially when I look at the fiscal 2027 guide, can you just talk about what's the bigger gating factor to growth as you go forward? Is it customer demand or is it more component availability? I'm really trying to understand whether the outlook reflects the level of demand you're actually seeing today, or is there actually additional demand that could be served if component supply and availability becomes a bit more easier? Just love to understand just on the component side what's going on. Thank you.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Well, thank you, Amit. I think demand to me equals bookings or orders, and so we expect that demand to be strong and durable well into 2027. I think we have an amazing portfolio, perfectly aligned to the inflection point that we see today across networking, Cloud, and AI. We are uniquely positioned when it comes to demand and bookings. As I said in my prepared remarks, the pipeline remains multiples of the current backlog, which is record-breaking at the company level. When it comes down to potential upside on the revenue and the ability to convert that, it really comes down to availability of supply. What we factor both in 2026 and 2027, first is the allocation that we already got in our supply for 2026.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

I will say our teams have got much more proficient, by the way, using AI to really do a better supply matching with the demand that we have versus the supply that we have in terms of what type of mix you want to drive based on the capacity you got allocated. That's why with Marie, we provide that new revenue guidance. There is no incremental supply in 2026 at this point in time unless somebody cancels something, and then we are able to get that. In 2027, as you know, we have long-term agreements where we lock capacity, and we divide that capacity every quarter based on the mix of orders and backlog and what we see in the pipeline. All of that, Amit, has been factored in our guide.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

If supply improves in 2027, with the momentum and demand we have, we may have an upside. I will tell you, I don't expect the supply availability to change in 2027 that much. Neither the cost will continue to be elevated until these new factories will provide the yields to compensate for the incredible demand that we see across the portfolio.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Thank you, Amit. Next question, please.

Operator

The next question will come from Katherine Murphy with Goldman Sachs. Please go ahead.

Katherine Murphy
Katherine Murphy
Analyst at Goldman Sachs

Thank you for the question. Can you talk more about the improved AI systems outlook that you talked to? If there's anything you can share on the demand outlook across customer types and if expectations for AI systems profitability are improved relative to 90 days ago. Thank you.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Thank you, Katherine. I will start, and then Marie, if you want to add something. Look, we have been very deliberate in our strategy to focus on the markets related to the AI, where HPE can drive value and can drive the portfolio that we have. Not just pursuing just revenue for the sake of revenue. Those markets have been three. One is enterprise, you can see the momentum in enterprise, and in particular with our AI factory for enterprise, which is Private Cloud AI. By the way, deep integration with NVIDIA, you're going to see more of that in a couple of weeks, which includes a lot related to software. It's not just taking the GPUs and distributing a server.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

By the way, that now includes storage, which is the first platform to be fully certified by NVIDIA, when it comes down to the file kind of structural data. Second part, obviously, is sovereign. Those are long cycles. When we think about sovereign, I don't think about just large 1-GW factory. I think about deployments that act as a sovereign and ultimately are governed under the sovereign law or air-gapped to meet the sovereign requirements. Then there are large pursuits in the large scale that may take longer to achieve. What we see right now, Katherine, is a huge growth in inferencing. Inferencing clearly is accelerating, and that's a combination of both GPUs and CPUs.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

This is why we see the momentum also on the traditional server, because a lot of these inferencing deployments will be done on CPUs, and it will be done in locations where the customer feels confident in terms of governance, data privacy, and so forth. That's why I think we all need to realize there is a new market there. It's not the traditional market that we know or have been used to. This gives us the confidence that we have the right portfolio at the right time to capture this market. I believe by the end of the decade, much of the demand will be in the inferencing space.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

That's why combination with networking and compute and storage, and memory, by the way, will give us the ability to be more competitive and honestly harvest more of the value of the gross margin as we go forward.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Maybe I'll just add a comment, Katherine, on the margin. We typically don't break out our AI systems margins, but as Antonio alluded to, we do see enterprise and sovereign typically being a more profitable part of the mix compared to, say, your classic service provider or model builder. That's just some context to how to think about margins.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Last, what we'll say, on the service provider, we play selectively in our market, and we have been prioritizing prudent working capital management. This is one of the reasons, together with the cash commercial cycle, which obviously is slower on the AI system side compared to the traditional business side, and the fact that we have now sold 100% of the H3C stake, that we can pay down that debt faster to return to the 2x leverage commitment that we gave a year earlier. That will allow us to make the right investment and return approximately 75% of capital in 2027.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Thank you, Katherine. Next question, please.

Operator

The next question will come from Samik Chatterjee with JPMorgan. Please go ahead.

Samik Chatterjee
Samik Chatterjee
Analyst at JPMorgan

Hi. Thanks for taking my question, and congrats on the strong results and outlook here. Antonio, if I can just on the growth outlook that you have this year and trying to compare that to next year. This year, you're expecting cloud and AI to accelerate relative to networking, but when we get to your guidance for next year, you're expecting similar growth rates, so the growth rates to converge. I'm just wondering, is that more a function you think about

Samik Chatterjee
Samik Chatterjee
Analyst at JPMorgan

The individual drivers being slightly different in terms of timing with their customers, or is there more of a supply component in there as the growth rates converge next year? If you can sort of help me out in terms of what changes in the drivers. Thank you.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Yeah, I think, in the cloud and AI outlook, there is the usual lumpiness, I will say, of the AI system conversion. That's one aspect. Across both segments, there is the timing of supply availability. Look, if you think about networking for a moment, right? You think about on an average, we grew 10% this past quarter, but we grew 2x or 3x the orders, the bookings in some of the product segments. That tells you we are growing much faster than the revenue. On the cloud AI, obviously, we have a very large backlog in servers, and then we have the lumpiness of the AI systems, and also we have constraints on the NAND side of the equation for storage. It's a combination of many things.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

There is no one specific number, but as memory becomes available, then we should see an acceleration of conversion. Again, don't expect that to happen early on in the cycle in 2027. Fair to say maybe at the end of 2027. Once again, we factor all of that in our 8%-12% guide for 2027.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Thank you, Samik. Next question, please.

Operator

The next question will come from David Vogt with UBS. Please go ahead.

David Vogt
David Vogt
Analyst at UBS

Great. Thanks, guys, for all the details. Really appreciate it. Maybe Antonio, can we touch on Networking for a second? Obviously strong results there, really strong orders. Just trying to get a sense for how we think about how those orders flow into the business, because you guided to approaching double-digit normalized growth for this year and effectively double-digit growth at the midpoint for next year. Is there a reason why we're not seeing an acceleration? Along those lines, what's driving the margin uplift next year in fiscal 2027 in the Networking business, particularly given the supply chain constraints and cost inflation that you've mentioned earlier? Thanks.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Yeah. Thanks, David. Look, it's all about supply chain. Supply chain is the name of the game in networking. Some of these products have DDR4, some have DDR5, some have other components that are constrained by the wafer capacity. We continue to work with our suppliers. By the way, we believe now we are the largest OEM partner of Broadcom in the networking space, and also combined with the rest of the business. It's all about the supply availability in that moment in time to convert these orders. I think that's the opportunity, I will say. I think one hand is a challenge, but on the other hand, it's an opportunity. Something unlocks there, then it will be faster conversion of this amazing momentum we have in networking into revenue. That's what it is. Marie, you want to talk about the-

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Yeah. On the op margins themselves, David. Good afternoon. What you're seeing in 2027 is actually the full-year benefit of the Juniper Synergies program, which you recall we started when we closed the deal. All of that we expect is going to flow on a full year basis from 2026 into 2027. Frankly, that's what's driving the margins. I might add it actually also helps us on cost of sales as well. As we sort of buffer some of the impact that we've discussed here today on commodity costs, we're seeing some of those benefits help us out on gross margins as well.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

That's right.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Thank you, David. Can we have our next question, please?

Operator

The next question will come from Erik Woodring with Morgan Stanley. Please go ahead.

Erik Woodring
Erik Woodring
Analyst at Morgan Stanley

Hey, guys. Thank you for taking my questions, and echo the congrats on the quarter and the outlook. Antonio, when you take a step back, can you just help us better understand exactly what has happened over the last 90 days in Cloud and AI? What I really mean by that is, your significant price hikes were already well-known last quarter, so that's not a surprise. Now you're looking obviously at low 20% year-over-year cloud and AI revenue growth versus 90 days you thought it would be mid to high single digits. Exactly what changed so abruptly in the last 90 days? Can you help us understand what customer base cohort did this inflection come from? Thanks so much.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Thanks, Erik. I will say at the core is demand acceleration. I think that demand acceleration was manifested on a number of categories in the cloud AI business. The traditional server, I talked before about the concern to get access to products, don't wait for things to improve. I think that was very clear. Second is the agentic AI. Definitely that has been a key driver of demand acceleration. On the storage side, we have our own benefits we are forcing a transition to our Alletra MP, also we are end of life in legacy products. Then we introduced new data platforms with Object, which we expect to accelerate now with introduction of File. There is a combination of virtualization modernization customers with the new commercial terms, they're very concerned about cost.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

When you modernize your software virtualization estate, by definition, you're modernizing the infrastructure that sits underneath. That's a combination of our Morpheus draging the Private Cloud for virtualization. As we grow HPE Private Cloud AI, call it AI factory for enterprise-That infrastructure and software is pretty much the same. The only really changes is the GPUs in the server and the Alletra MP X10000 in the storage. HPE GreenLake also is a driver of additional adoption of technology, because once you're on the platform, as I said earlier, we have a net retention rate of near 110%. Obviously, as budget gets constrained, we expect, obviously, the consumption model to grow over the next few quarters because you move to more an OpEx model. It's a combination of many things. The pipeline and the customer engagement are super strong.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Obviously, the networking provides a core foundation to drive cross synergies as we go forward.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Very good. Thank you, Erik. Next question, please.

Operator

The next question will come from Matthew Niknam with Truist. Please go ahead.

Matthew Niknam
Matthew Niknam
Analyst at Truist

Hey, guys. I will echo the congrats everyone has relayed as well. Phenomenal results. Antonio, you mentioned cross-portfolio sales, I'm wondering how prevalent these are right now. Is it in the context of more security and networking among enterprise customers, or are you seeing more cross-portfolio purchasing across server storage and networking product sets to really bring some of these Juniper revenue synergies to fruition? Thanks.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Well, thank you. I think it's the latter, and I will say it's early, even. As I said in my opening remarks, our enterprise data center switching orders grew 20%. That's very early. Very early in the process. We see now larger deals and larger engagement because we have the scale of our sales force where the networking sales force can get access to customers that in the past they were not able to get to. Then there is the product integration. To give a sense of the product integration, we are integrating what is called the Apstra lifecycle management or intent-based provisioning for data center switching with Morpheus. What that allows to do is to provide a full hybrid control plane for server storage and networking, and also integrating the software-defined networking into the VM Essentials stack.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

That also will drive the data center switching inside the private cloud reference architecture. When we move into the Ethernet-based storage, as the speeds continue to grow, that's going to be, of course, a Juniper switch at the 1.6 TB. I will say we're early. Networking and security. That's a more insulated with the networking, because obviously, if you think about the edge, deploying a SASE or a secure service edge, that will drive convergence between network and security. There, we are not thinking about driving security convergence just at a software level. We are taking a bold approach, which is to drive it at a silicon level. You're going to see more of that as we go forward with Rami and team.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Thank you, Matt. Next question, please.

Operator

The next question will come from Aaron Rakers with Wells Fargo. Please go ahead.

Aaron Rakers
Aaron Rakers
Analyst at Wells Fargo

Yeah. Thanks for taking a question. Also, congrats on the results. Very impressive. I guess my question, some of it's been a little bit asked, I want to go back to the traditional server business. 40%+ year-over-year growth. Very impressive. I'm curious if you could unpack how much we're seeing in terms of the ability to price through some of the inflationary component costs relative to underlying unit demand. I guess when we look forward, does the guidance reflect a continued expectation of price increases to mitigate any margin impact? Any kind of color of what you've done on the pricing strategy would be helpful. Thank you.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Thank you, Aaron. Units are up, and we expect units to increase as we go forward because as prices normalize, obviously the AUP and units will rebalance. Units were up slightly this quarter. The second part of this is that the pricing, we have been very disciplined, right? Obviously, we have seen significant dislocation on the cost. We expect that to moderate in the second half, and eventually normalize. I will say, Aaron, that cost environment and pricing environment will continue to be very elevated in 2027. The units will rebalance and as we said earlier, we expect the demand to continue to be very strong as we look into 2027. Especially the content's going to change because of agentic AI deployment.

Marie Myers
Marie Myers
CFO at Hewlett Packard Enterprise

Maybe I'll just add a couple of comments just on the margin durability. We do also see the impact of our Catalyst Program helping us out both on gross and operating margins, and I think I commented in my prepared remarks we're slightly ahead. That's giving us confidence around the durability of those margins, and we do expect to see some improvement in unit volumes in the back half of the year as well.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Question, Aaron. Next question, please.

Operator

The next question will come from Tim Long with Barclays. Please go ahead.

Tim Long
Tim Long
Analyst at Barclays

Thank you. Was hoping to touch on storage for a minute here. Maybe if you could just talk a little bit about kind of seeing the outsized growth in server, but not in storage. What you would think about pull through there? I know there's a lot of ASP increase in servers because of DRAM, but I would think also some in storage because of NAND. Maybe could you touch on that dynamic around the storage business? Thank you.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Yeah, sure. Look, the Alletra MP block customer migration accelerated. We talk about driving triple digits year-over-year growth on the Alletra MP, which is a go-forward platform, in both orders and revenue. Marie talked about that. Obviously, that takes time to see in the total number, but because we have other stuff in the storage, but overall, the storage was up 2%. The Alletra MP, which is the platform that has both block file with object, is growing triple digits both revenue and orders. Remember that revenue is also somewhat impacted by the fact that we are deferring a portion of the revenue over a longer period of time. Why that's the case? Because our software is a SaaS-based solution on that CapEx, which is the hardware. The takeaway, our go-forward platform is growing triple digits both orders and revenue.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Over time, that's going to fuel the growth in the total storage as it become the biggest part of the portfolio.

Paul Glaser
Paul Glaser
Head of Investor Relations at Hewlett Packard Enterprise

Okay. Thank you. Tim, operator, this will be the last question, please.

Operator

Okay. The final question will come from Simon Leopold with Raymond James. Please go ahead.

Simon Leopold
Simon Leopold
Analyst at Raymond James

Hi, guys. I think most of the questions have been asked. I guess, we've heard some contradictory commentary from some of your peers regarding pull-through orders. Just curious, what's giving you the confidence that the strength this quarter doesn't reflect any of that? What's giving you confidence in the sustainability going forward?

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Yeah. Simon, we have no evidence in our orders or backlog of any pulls in. Honestly, unlike COVID, where people maybe were also doing double booking, we don't see that at all. We have no cancellations. That's the answer related to that question. Because of the pipeline that we have, we feel confident about the durability of that demand, which will drive this sustained momentum. That's why Marie and I went on, and we provided the guidance for 2026 as we did, and the financial framework for 2027. That's what we see. Well, good. I know there's more questions, but I know the team will follow up with you. I just want to wrap by saying we delivered an exceptional quarter with record-breaking results. Those results were driven by the strong demand that we see in the market, strong discipline execution, and honestly, our strategy.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

Our strategy is more encompassing when it comes down to networking, cloud, and AI. The Juniper acquisition, in my mind, has been a home run, and it's proven to be a big source of shareholder value creation. Therefore, we believe the strategy is working. I think our portfolio is the strongest it has ever been, and you're going to see more of that here in two weeks because I will encourage you to log in, either the keynote or to be in person there. We're going to have seven acres of technology on display, just to put it in perspective, and you're going to see the synergies across the portfolio as we were talking about it. The most important part is that we are building durable momentum for the future. These results is not a one-time thing.

Antonio Neri
Antonio Neri
President and CEO at Hewlett Packard Enterprise

It's the combination of the quality of earnings that we are driving across the portfolio, and my view is that we're just unlocking the value that was always here in the company. I think there is more to be done, but I'm very proud of what the team has delivered this quarter and the guide that we provided as we think about 2026 and 2027. Thank you again for your time. Hope to see you soon or at HPE Discover.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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