HPE Delivers Record Q3 FY26 Results, Raises Full-Year and FY27 Outlook

Executive Summary

Hewlett Packard Enterprise Co ($HPE) filed an 8-K under Items 2.02 and 7.01 reporting financial results for its third quarter ended July 31, 2026, and announcing an increased financial outlook for both FY2026 and FY2027.

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Key Financial Highlights

• Net Revenue: Reached a record $12.2 billion, up 34% YoY (compared to $9.14 billion in Q3 FY25 and $10.68 billion in Q2 FY26).
• Gross Margin:
  • GAAP Gross Margin: 40.1% (+1,090 bps YoY, +360 bps QoQ)
  • Non-GAAP Gross Margin: 40.4% (+1,050 bps YoY, +350 bps QoQ)
• Operating Profit Margin:
  • GAAP Operating Profit Margin: 11.4% (+870 bps YoY, +440 bps QoQ)
  • Non-GAAP Operating Profit Margin: 16.2% (+770 bps YoY, +290 bps QoQ)
• Diluted EPS:
  • GAAP EPS: $1.06 (up $0.85 YoY; exceeded outlook range of $0.84–$0.89)
  • Non-GAAP EPS: $1.11 (up $0.67 YoY; exceeded outlook range of $0.88–$0.93)
• Cash Flow & Capital Return:
  • Cash Flow from Operations: $1.6 billion (+$0.3 billion YoY)
  • Free Cash Flow: $1.0 billion (+$0.2 billion YoY)
  • Capital Returned: $324 million returned to common shareholders via dividends and share repurchases

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Segment Performance Highlights

• Networking Segment: Revenue rose 74.9% YoY to $2.9 billion with a 22.0% operating profit margin.
  • Campus & Branch: $1.4 billion (+31.0% YoY)
  • Data Center Networking: $382 million (+112.2% YoY)
  • Security: $281 million (+75.6% YoY)
  • Routing: $788 million (+270.0% YoY)
• Cloud & AI Segment: Revenue rose 25.4% YoY to $9.0 billion with an operating profit margin expanding to 17.0% (vs. 7.0% YoY).
  • Server: $6.8 billion (+35.3% YoY)
  • Storage: $1.3 billion (+10.2% YoY)
  • Financial Services: $0.9 billion (-0.3% YoY)
• Corporate Investments & Other: Revenue of $278 million (+3.0% YoY).

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Guidance & Outlook

Q4 FY2026 Outlook

• Revenue: $13.9 billion to $14.8 billion
• GAAP Diluted EPS: $1.12 to $1.22
• Non-GAAP Diluted EPS: $1.20 to $1.30

Full-Year FY2026 Outlook (Raised)

• Revenue Growth: 34% to 37%
• Networking Segment Revenue Growth: 73% to 74%
• GAAP Operating Profit Growth: 1,070% to 1,105%
• Non-GAAP Operating Profit Growth: 100% to 105%
• GAAP Diluted EPS: $2.93 to $3.03
• Non-GAAP Diluted EPS: $3.75 to $3.85
• Free Cash Flow: At least $3.75 billion

FY2027 Framework (Raised)

• Revenue Growth: 13% to 17%
• Non-GAAP Diluted EPS Growth: 16% to 20%
• Non-GAAP Operating Margin: 14% to 15%
• Free Cash Flow: At least $5.0 billion

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Capital Allocation / Dividend

• Declared a regular quarterly cash dividend of $0.1425 per common share, payable on or about October 16, 2026, to stockholders of record as of September 17, 2026.
• Management indicated plans to return at least 75% of free cash flow to shareholders in Q4 FY26.