Hewlett Packard Enterprise Fiscal Year 2026 Q2 Results:
Revenue of $10.7 billion, up 40% year-over-year;
Adjusted EPS of $0.79, an increase of $0.41 year-over-year.
Gross Profit Margin:
GAAP gross margin was 36.5%, up 810 basis points year-over-year and up 60 basis points sequentially.Non-GAAP (1) gross margin was 36.9%, up 750 basis points year-over-year and up 30 basis points sequentially.
Dividend
The HPE Board of Directors declared a regular cash dividend of $0.1425 per share on the company’s common stock, payable on or about July 15, 2026, to shareholders of record as of the close of business on June 16, 2026.
Q2 Performance Highlights:
Networking segment revenue was $2.7 billion, an increase of 148.2% year-over-year, with an operating profit margin of 21.6%, compared to 25.0% in the prior-year period.
Networking segment revenue breakdown:
Revenue from campus and branch operations amounted to $1.3 billion, an increase of 50.2% compared to the same period last year.
Data center networking revenue was $320 million, up 233.3% year-over-year.
Security-related expenses totaled $273 million, a 155.1% increase compared to the same period last year.
Routing expenses amounted to $775 million, compared to just $1 million in the same period last year.
Revenue from cloud computing and artificial intelligence businesses reached $7.7 billion, up 22.9% year-over-year, with an operating profit margin of 12.4%, compared to 6.6% in the same period last year.
In the cloud computing and artificial intelligence segment, revenue primarily came from:
Server business revenue reached $5.5 billion, an increase of 32.7% compared to the same period last year.
Storage business revenue was $1.2 billion, up 2.4% year-over-year.
Financial services revenue was $900 million, an increase of 5.6% compared to the same period last year.
Enterprise investments and other revenue amounted to $281 million, up 3.3% year-over-year, with an operating profit margin of -3.2%, compared to -2.6% in the same period last year.
Third Quarter Fiscal Year 2026 Outlook:
Revenue is expected to be between $11.5 billion and $12.1 billion.
HPE expects GAAP diluted net earnings per share to be in the range of $0.84 to $0.89, and non-GAAP diluted net earnings per share to be in the range of $0.88 to $0.93.
The non-GAAP diluted net earnings per share guidance for the third quarter of fiscal year 2026 excludes approximately $0.04 of after-tax adjustments, primarily related to amortization of intangible assets, stock-based compensation expenses, acquisition- and divestiture-related costs and other expenses, restructuring charges, and adjustments associated with the sale of H3C.
Full-Year Fiscal Year 2026 Outlook:
HPE has raised its fiscal year 2026 revenue growth outlook to a range of 29% to 33%.
HPE has raised its revenue growth outlook for the Networking segment to a range of 72% to 75%.
HPE expects GAAP operating profit growth of 885% to 930% and non-GAAP operating profit growth of 80% to 85%.
HPE has raised its fiscal year 2026 GAAP diluted net earnings per share guidance to $2.42 to $2.52 and non-GAAP diluted net earnings per share guidance to $3.35 to $3.45.
The non-GAAP diluted net earnings per share guidance for fiscal year 2026 excludes approximately $0.93 of after-tax adjustments, primarily related to amortization of intangible assets, stock-based compensation expenses, acquisition- and divestiture-related costs and other expenses, restructuring charges, and adjustments associated with the sale of H3C.
HPE also raised its free cash flow outlook and now expects free cash flow of at least $3.5 billion.
The updated non-GAAP diluted net earnings per share and free cash flow guidance range for fiscal year 2026 exceeds HPE’s expectations for fiscal year 2028 performance, which were provided during the HPE Securities Analyst Meeting in October 2025 when the company issued its long-term financial targets.
At that time, the company projected non-GAAP diluted net earnings per share of at least $3.00 and free cash flow exceeding $3.5 billion by fiscal year 2028.
Fiscal Year 2027 Outlook:
The company is now introducing a growth framework for fiscal year 2027. HPE expects revenue growth of 8% to 12%.
HPE expects non-GAAP diluted net earnings per share growth of 12% to 16%, non-GAAP operating margin expansion of 12% to 16%, and anticipates generating at least $4.5 billion in free cash flow.
Editor/Liam