Hewlett Packard Enterprise Company

HPE reported Q2 revenue of $10.7 billion, up 40% year over year, and non-GAAP EPS of $0.79, up 108%. Gross margin was 36.9%, operating profit was $1.4 billion with a 13.3% operating margin, and free cash flow was $915 million. Networking revenue was $2.7 billion, up double digits on a normalized basis; Cloud and AI revenue was $7.7 billion, up 23%. For Q3, HPE guided total revenue to $11.5 billion to $12.1 billion, EPS to $0.88 to $0.93, and GAAP EPS to $0.84 to $0.89. For FY26, it raised non-GAAP EPS to $3.35 to $3.45, GAAP EPS to $2.42 to $2.52, revenue growth to 29% to 33% reported, operating profit growth to 80% to 85% reported, and free cash flow to at least $3.5 billion. It also introduced an FY27 framework for consolidated revenue growth of 8% to 12%, EPS growth of 12% to 16%, free cash flow of at least $4.5 billion, and a goal to reach 2x net leverage by end of FY26.

Antonio Neri’s message was that HPE is seeing broad, durable demand across networking, servers, storage, private cloud, and AI, and that the Juniper acquisition is already strengthening the portfolio and go-to-market engine. He emphasized that orders and backlog are growing faster than revenue and repeatedly said he does not see a demand cliff or evidence of cancellations/pull-ins. His tone was highly confident and strategic, framing the quarter as proof that HPE’s networking-cloud-AI strategy is working and that the company is ahead of its long-term financial plan.

Marie Myers emphasized the financial beat and the improved outlook, noting revenue above the high end of guidance, gross margin of 36.9%, operating margin of 13.3%, and free cash flow of $915 million. She said FY26 EPS outlook is being raised by over 40% and that catalyst savings and Juniper synergies are ahead of schedule. She also cited Q2 shareholder returns of $343 million, debt refinancing and H3C-related proceeds of about $1.4 billion, and pro forma net leverage improved to 2.3x from 2.6x. On guidance, she pointed to Q3 revenue of $11.5 billion to $12.1 billion and FY26 free cash flow of at least $3.5 billion, plus an FY27 framework built on higher operating profit, lower interest expense, and full-year synergy benefits.

Analysts focused on whether enterprise budgets could hold up despite price inflation, whether HPE sees any demand cliff in FY27, and what is driving the sharp step-up in the FY27 framework. Management answered that demand is supported by a pipeline that is still multiples of backlog, with AI inferencing, data center buildouts, and enterprise modernization all contributing; they said they see no evidence of pull-ins or cancellations. Questions also probed supply constraints, AI systems mix and profitability, and why networking and Cloud/AI growth rates converge in FY27; HPE said supply availability and component constraints remain the main gating factor, while FY27 margins should benefit from a full year of Juniper synergies and lower synergy charges versus FY26.