HPE Hewlett Packard Enterprise Co - 10-K

ITEM 1A. Risk Factors.

You should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating Hewlett Packard Enterprise. Any of the following risks could materially and adversely affect our results of operations or financial condition. Some of the factors, events, and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past and instead reflect our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future. The following risk factors should be read in conjunction with Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operation,” and the Consolidated Financial Statements and related notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report Form 10-K.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.

Risks Related to Our Business Strategy and Industry

• Our success depends on our ability to successfully execute our go-to-market strategy, including offering solutions as-a-Service, effectively planning and managing our resources, and continuing to develop and manage our offerings to integrate new features and solutions.

• We depend on third-party suppliers, contract manufacturers (including original equipment and original design manufacturers), as well as single-source and limited source suppliers, and our financial results could suffer if we fail to manage these third party relationships effectively.

• System security risks, data protection incidents, cyberattacks and systems integration issues could disrupt our internal operations or IT services provided to customers, and any such disruption could reduce our revenue, increase our expenses, damage our reputation, and adversely affect our stock price.

• We operate in an intensely competitive industry, and competitive pressures could harm our business and financial performance

• Any failure by us to identify, manage, and complete acquisitions and subsequent integrations (including the integration of Juniper Networks following the Merger), divestitures, and other significant transactions successfully could harm our financial results, business, prospects, and stock price.

• Uncertainty and fluctuations in geopolitical and macroeconomic conditions may adversely impact our business, financial condition, and operating results.

• If we experience or fail to properly manage disruption in the distribution of our products and services properly, our business and financial performance could suffer.

• Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

• Long sales and implementation cycles for our offerings and dynamics related to large orders may cause our revenues and operating results to vary significantly from quarter-to-quarter.

• Our uneven sales cycle and supply chain disruptions make planning and inventory management difficult and future financial results less predictable.

• Our ability to achieve our strategy could be harmed if we are unable to attract, retain, train, motivate, develop, and transition key personnel.

• Risks arising from climate change and the transition to a lower-carbon economy may impact our business.

Risks Related to Our Technology and Business Operations

• Issues in the development and use of artificial intelligence may result in reputational harm, liability, or impact to our results of operations.

• Our financial performance may suffer if we cannot continue to develop, license, or enforce the intellectual property rights on which our businesses depend.

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• Due to the international nature of our business, political or economic changes and the laws and regulatory regimes applying to international transactions or other factors could harm our future revenue, costs and expenses, financial condition, and results of operations.

• We may not achieve some or all of the expected benefits of our cost reduction actions, some or all of which may be disruptive to our business.

• Our products and services depend in part on intellectual property and technology licensed from third parties.

• We rely on the performance of our business systems and processes, as well as those of third-parties with whom we do business.

• If we cannot continue to produce quality products and services, our reputation, business, and financial performance may suffer.

• Our sustainable and responsible business expectations and actions towards achieving our Living Progress objectives may expose us to operational, legal, or reputational risks and could adversely affect our business, results of operations, financial condition, or stock price.

Financial Risks

• Our revenue, profitability, and margins have historically varied, and we expect them to continue to vary over time.

• We are exposed to fluctuations in foreign currency exchange rates.

• Adverse developments affecting our liquidity, capital position, borrowing costs, and access to capital markets could adversely impact our business, financial condition, and results of operations or those of the third parties with whom we do business.

• Our debt obligations may adversely affect our business and our ability to meet our obligations and pay dividends.

• We make estimates and assumptions in connection with the preparation of our Consolidated Financial Statements and any changes to those estimates and assumptions could adversely affect our results of operations.

• Declaration, payment and amounts of dividends, if any, to holders of our shares will be uncertain.

Legal, Regulatory, and Compliance Risks

• Unfavorable results of legal proceedings, investigations, and other disputes could harm our business and result in substantial costs.

• Third-party claims of intellectual property infringement, including patent infringement, are commonplace in our industry and successful third-party claims may limit or disrupt our ability to sell our products and services.

• Our business is subject to various federal, state, local, and foreign laws and regulations that could result in costs or other sanctions that adversely affect our business and results of operations.

• Contracts with federal, state, provincial, and local governments are subject to a number of challenges and risks that may adversely impact our business.

• Unanticipated changes in our tax provisions, the adoption of new tax legislation, or exposure to additional tax liabilities could affect our financial performance.

Risks Related to Prior Separations

• We continue to face a number of risks related to our separation from HP Inc., our former parent, including those associated with ongoing indemnification obligations, which could adversely affect our financial condition and results of operations, and shared use of certain intellectual property rights, which could in the future adversely impact our reputation.

General Risks

• Our stock price has fluctuated and may continue to fluctuate, which may make future prices of our stock difficult to predict.

For a more complete discussion of the material risks facing our business, see below.

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Risks Related to Our Business Strategy and Industry

Our success depends on our ability to successfully execute our go-to-market strategy, including offering solutions as-a-Service, effectively planning and managing our resources, and continuing to develop and manage our offerings to integrate new features and solutions.

Our long-term go-to-market strategy is focused on leveraging our portfolio composed of hardware, software, and services as we deliver global edge-to-cloud platform as-a-Service (“aaS”) to help customers accelerate outcomes by unlocking value from their data, everywhere. We offer a substantial portion of our portfolio through a range of subscription and consumption-based offerings. We will also continue to provide our hardware and software in capital expenditure and license-based models, to give our customers choices in consuming HPE products and services. Following the acquisition of Juniper Networks on July 2, 2025 (the “Merger”), we seek to enhance our networking solutions by offering secure, unified cloud and AI-native networking to enhance innovation across edge to cloud.

To successfully execute our strategy in a rapidly evolving market, we must maintain effective planning, forecasting, and management processes to enable us to continue to improve cost structures, align sales coverage with strategic goals, improve channel execution, and strengthen our capabilities in our areas of strategic focus, while continuing to pursue new product innovation in areas such as edge computing, hybrid cloud, AI, high performance computing, and networking. We must also make sufficient long-term investments in strategic growth areas to develop, obtain, and protect our intellectual property, and commit to transition significant research and development (“R&D”) and other resources before knowing whether our projections will align with customer demand for our solutions.

We anticipate adapting our go-to-market structure from time-to-time with new approaches to sales and marketing, to better align with aaS business models and to capture unique market opportunities, such as in hybrid cloud, AI, and AI-native networking. This incremental capital investment approach may require additional sales, marketing, or other expenses that negatively impact cash flows in the near term. Further, should such efforts fail to produce actionable insights, or our offerings not perform as designed or promised, our business results and financial condition may be adversely affected.

Our ongoing process of improving HPE GreenLake; expanding our offerings across all our businesses (including cloud, AI, and networking offerings); enhancing existing hardware, software, and cloud-based solutions; and developing and improving the systems necessary for new and evolving data-intensive AI-based workloads are all complex, costly, and uncertain, and any failure by us to anticipate customers’ changing needs and emerging technological trends accurately, to invest sufficiently in strategic growth areas, or to otherwise successfully execute this strategy could significantly harm our market share, results of operations, and financial performance.

Having developed a cloud platform product in HPE GreenLake and the hardware capabilities to support AI computing, we must be able to continue integrating new features that are relevant to our customers and to scale quickly, while also managing costs and preserving margins, which means accurately forecasting volumes, mixes of products, and configurations that meet customer requirements. In addition, through HPE Networking we now offer a full networking IP stack: from silicon, to infrastructure, to the operating system, to security, to software and services, in a cloud-native and AI-driven approach following the Merger. The process of integrating and streamlining our offerings (including integrating Juniper Networks’ offerings with ours) or developing new solutions based on our respective technological portfolios may be complex, costly, time-consuming, and uncertain, and failure by us to successfully do so could adversely impact our future results of operations and financial performance. These offerings face competition from peer companies, and any delay in our development, production, or marketing of a new product, service, or solution could result in our offerings being late to reach the market, which could harm our competitive position. These offerings also depend on the continued growth of demand for secure network and internet protocol (“IP”) infrastructure from customers that are able to build their network capacity, grow their IP services, and choose to deploy our products in their networks and IP infrastructures. There is no assurance that we will be able to implement these adjustments in a timely or cost-effective manner, or that we will be able to realize all or any of the expected benefits from them.

Our HPE GreenLake and networking solutions generally are multiyear agreements, which result in recurring revenue streams over the term of the arrangement. As customer demand for our aaS offerings increases, we have experienced, and will continue to experience, differences in the timing of revenue recognition between our traditional offerings (for which revenue is generally recognized at the time of delivery) and our aaS offerings (for which revenue is generally recognized ratably over the term of the contract). As such, our financial results and growth depend, in part, on customers continuing to purchase our services and solutions over the contract life on the agreed terms. Additionally, implementing this business model means that our historical results, especially those from before the Merger, may not be indicative of future results, which may adversely affect our ability to accurately forecast our future operating results. Our aaS offerings also could subject us to increased risk of liability related to the provision of services as well as operational, technical, legal, regulatory, or other costs.

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We depend on third-party suppliers, contract manufacturers (including original equipment and original design manufacturers), as well as single-source and limited source suppliers, and our financial results could suffer if we fail to manage these third party relationships effectively.

Our operations depend on our ability to anticipate our needs for components, products, and services, as well as the ability of our manufacturers (including original equipment manufacturers, original and outsourced design manufacturers, and contract manufacturers), and suppliers to deliver sufficient quantities of quality components, products, and services at reasonable prices and in time for us to meet critical schedules for the delivery of our own products and services. Given the wide variety of solutions that we offer; the large and diverse distribution of our suppliers and contract manufacturers; and the long lead times required to manufacture, assemble, and deliver certain products and solutions, problems in production, planning, and inventory management have harmed our business at times, and may do so again in the future. Any delay in our ability to produce and deliver our products could cause our customers to purchase alternative products from our competitors. Manufacturing and supply problems that we have faced, and could face in the future, are described below.

• Manufacturing Issues. We may experience supply shortfalls or delays in shipping products to our customers if our manufacturers experience delays, disruptions, or quality control problems in their manufacturing operations, or if we have to change or add manufacturers or contract manufacturing locations. We have contracts with our manufacturers that include terms to protect us in the event of an early termination or breach, yet we may not have adequate time to transition all of our manufacturing needs to an alternative manufacturer under comparable commercial terms. We have experienced in the past, and may experience in the future, an increase in the expected time required to manufacture our products or ship products. Moreover, a significant portion of our manufacturing is performed in foreign countries. The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including the United States, Puerto Rico, Vietnam, Thailand, Costa Rica, Brazil, Czech Republic, Malaysia, Mexico, China, Taiwan, India, South Korea, Saudi Arabia, and Singapore. We also rely on major logistics hubs, which are strategically located near manufacturing facilities in the major regions and in proximity to HPE’s distribution channels and customers. These operations are therefore subject to risks associated with doing business outside of the U.S., including trade restrictions and related costs, government sanctions, disruptions to our supply chain, cyberattacks, cyberwarfare, pandemics, regional health emergencies, regional climate-related events, or regional conflicts. Other critical business operations and some of our suppliers are located in California and Asia, near major earthquake faults known for seismic activity. Our operations could be adversely affected if manufacturing, logistics, or other operations in these locations are disrupted for any reason or due to natural disasters and public health issues in the United States, Puerto Rico, and China.

• Supply Chain Disruption. Any disruptions to our supply chain, significant increase in component costs or logistics costs, or shortages of critical components, could decrease our sales, earnings, and liquidity or otherwise adversely affect our business and result in increased costs. Disruptions could occur as a result of any number of events, including, but not limited to: an extended closure of, or any slowdown at our suppliers' plants or shipping delays; market shortages due to the surge in demand from other purchasers for critical components; increases in prices (including fuel prices and increases in prices due to inflation); the imposition of regulations, quotas, embargoes, or tariffs on components; labor stoppages; transportation delays, including due to labor strikes; third-party interference in the integrity of the products sourced through the supply chain; cyberattacks; the unavailability of raw materials; severe weather conditions and adverse effects of climate change, or natural disasters; geopolitical developments, war or terrorism; and disruptions in utilities and other services, some of which we have experienced. In addition, the development, licensing, or acquisition of new products in the future may increase the complexity of supply chain management. Failure to effectively manage the supply of components and products would adversely affect our business. Our ongoing efforts to geographically diversify and optimize the efficiency of our supply chain could cause supply disruptions and be more expensive, time-consuming, and resource-intensive than expected, and such impacts may be more pronounced as a result of increased tariffs between the U.S. and its trading partners. In this environment of heightened trade restrictions, we have experienced, and may continue to experience, cost increases from certain of our suppliers that result in price increases for some of our offerings and could subsequently limit demand for such offerings. If we are unable to pass on all or some of such cost increases to our customers, such increased prices may reduce our current margins and future margins. Furthermore, certain of our suppliers have discontinued conducting business with us or failed to perform under their contracts with us.

• Component Supply Shortages . We provide demand forecasts for our products to our manufacturers, who order components and plan capacity based on these forecasts. We have experienced, and may experience again in the future, delays and shortages of certain components as a result of strong demand, supplier transitions, raw material or capacity constraints, and other problems experienced by suppliers in certain geographies and markets, resulting in insufficient

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supply to meet total market demand. We have experienced shortages or delays, which led to higher prices of certain components and exposure to quality issues and delivery delays, and may experience such delays and associated impacts in the future. We may not be able to secure enough components at reasonable prices, of acceptable quality, or at all, to build products or provide services in a timely manner in the quantities needed or according to our specifications. Accordingly, our business and financial performance could suffer from a loss of time-sensitive sales, additional freight costs incurred, or the inability to pass on price increases to our customers. If we cannot adequately address supply issues, we may have to reengineer some product or service offerings, which could result in further costs and delays.

• Excess Supply. In order to secure components for our products or services, at times we have made advance payments to suppliers or entered into long term agreements, non-cancellable commitments, or other inventory management arrangements with vendors. In addition, we have also, at times, purchased components strategically in advance of demand to take advantage of favorable pricing, to address concerns about the availability of future components, or to prepare to fulfill large orders. If our manufacturers assess charges, we have liabilities for excess inventory or raw materials (each of which could negatively affect our gross margins), we fail to adequately anticipate customer demand and overestimate our requirements, continue to take actions to make strategic purchases in advance of demand, or these dynamics are exacerbated due to order delays or cancellations, a temporary oversupply may result in excess or obsolete components, which may result in additional charges from our manufacturers, or we may have liabilities for excess inventory or raw materials, each of which could negatively affect our gross margins. We have experienced adverse impacts to our business and financial performance due to excess supply and could do so again in the future.

• Contractual Terms . As a result of binding long-term price or purchase commitments with vendors, we may be obligated to purchase components or services at prices that are higher than those available in the current market and be limited in our ability to respond to changing market conditions. If we commit to purchasing components or services for prices in excess of the then-current market price, we may be at a disadvantage to competitors who have access to components or services at lower prices, our gross margin could suffer, and we could incur charges relating to inventory obsolescence.

• Single-Source Suppliers. We obtain certain components from single-source suppliers due to technology, availability, price, quality, scale, or customization needs. Certain single source suppliers have discontinued, and may again in the future discontinue, manufacturing components used in our products, which may cause us to discontinue certain products, incur additional costs to redesign our products so as not to incorporate such discontinued components, or incur time and expense to find replacement suppliers. Replacing a single-source supplier has at times delayed, and could delay, production of some products as replacement suppliers may initially be unable to meet demand or be subject to other output limitations. In addition, we may purchase components from single-source suppliers under agreements that contain favorable pricing and other terms for us, but allow the supplier to modify or terminate the contract with limited notice to us and with little or no penalty. The performance of such single-source suppliers under those agreements (and the renewal or extension of those agreements upon similar terms) may affect the quality, quantity, and price of our components. The loss of a single-source supplier, the deterioration of our relationship with a single-source supplier, or any unilateral modification to the contractual terms under which we receive components from a single-source supplier could adversely affect our business and financial performance.

• Alternative Sources of Supply . The development of alternate sources for components is time-consuming, complex, and costly. For some components, such as customized components, alternative sources may not exist, we may not be able to locate alternative sources in a timely manner, or we may be unable to secure quantities of those components necessary to satisfy our production requirements. As a result, if an existing source of supply is unable to provide components in quantities sufficient to meet our requirements on a timely basis, we may not be able to deliver, or be delayed in delivering, products and services to our customers, which may affect present and future sales. If we are unable to buy components in quantities sufficient to meet our requirements on a timely basis, we will not be able to deliver products and services to our customers, which would seriously affect present and future sales, and would, in turn, adversely affect our business, financial condition, and results of operations.

• Contingent Workers. We also rely on third-party suppliers for the provision of contingent workers, and our failure to effectively manage our use of such workers could adversely affect our results of operations. We have been exposed to various legal claims relating to the status of contingent workers in the past and could face similar claims in the future. We may be subject to shortages, oversupply, or fixed contractual terms relating to contingent workers. Our ability to manage the size and cost of our contingent workforce may be subject to additional constraints imposed by local laws.

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System security risks, data protection incidents, cyberattacks and systems integration issues could disrupt our internal operations or IT services provided to customers, and any such disruption could reduce our revenue, increase our expenses, damage our reputation, and adversely affect our stock price.

In the ordinary course of business, we store sensitive data, including intellectual property, personal data, our proprietary business information and that of our employees, contractors, customers, vendors, partners, suppliers, and other third parties with whom we do business. In addition, we store sensitive data through cloud-based services that may be hosted by third parties and in data center infrastructure maintained by third parties. We have been, and expect to be, subject to cyberattacks and other attempted intrusions into our networks and systems by a wide range of actors, including, but not limited to, nation state actors, criminal enterprises, terrorist organizations, and other organizations or individuals, as well as errors, wrongful conduct or malfeasance by employees and third-party service providers, (collectively, “malicious parties”) who have at times been able to circumvent or bypass our cyber security measures. Geopolitical tensions or conflicts may also heighten the risk of such cyberattacks or exacerbate system vulnerabilities, considering our continued hybrid work environment and our globally dispersed operations, employees, contractors, suppliers, developers, partners, and other third parties.

Despite our security measures, our information systems, infrastructure, and data have experienced security incidents and breaches and may be subject to or vulnerable to security incidents and breaches in the future, including ransomware and distributed denial-of-service attacks. These attacks have not resulted in material negative impacts to HPE, nor have any of HPE’s consumers, customers, or employees informed HPE that these attacks resulted in material harm to them. While we investigate and remediate incidents, there can be no assurance that we can remediate all incidents completely, that we won’t make errors or fail to take necessary actions, or that the threat actor will not identify alternative means of intrusion or opportunities to otherwise utilize the information it accessed to adversely affect our business or results of operations. It may take considerable time for us to investigate and evaluate the full impact of incidents, particularly for sophisticated attacks, limiting our ability to provide prompt, full, and reliable information about the incident to our customers, partners, regulators, and the public. The costs associated with cybersecurity tools and infrastructure and competition for cybersecurity and IT talent have limited, and may in the future continue to limit, our ability to efficiently identify, eliminate, or remediate cyber or other security vulnerabilities or problems or enact changes to minimize the attack surface of our network. Furthermore, our efforts to address these problems, at times, have not been, and may in the future not be, successful and have resulted and could result in interruptions, delays, cessation of service, compromise of sensitive information, and loss of existing or potential customers, any of which may impede our sales, manufacturing, distribution or other critical functions.

Additional impacts from cybersecurity incidents have included and could include reimbursement of remediation costs to our customers, suppliers, or distributors; lost revenue resulting from the unauthorized use of proprietary information or the failure to retain or attract business partners following an incident; increased insurance premiums; and damage to our competitiveness, reputation, stock price, and long-term shareholder value. To the extent we carry insurance coverage for such possibilities, we cannot be certain that any such coverage will be adequate or otherwise protect us with respect to claims, expenses, fines, penalties, business loss, data loss, litigation, regulatory actions, or other impacts arising from security breaches or incidents, or that such coverage will continue to be available on acceptable terms or at all.

The cybersecurity threat landscape is rapidly evolving and becoming increasingly sophisticated, and there can be no assurance that our controls and procedures will be sufficient to address future threats or remediate future incidents. Further, there has been an increase in the frequency and sophistication of attacks, and we expect these activities to continue to increase, including malicious actors potentially leveraging AI to develop malicious code or sophisticated phishing attempts. It is possible that such incidents may embolden other malicious actors to perpetrate future attacks that may result in material misappropriation, system disruptions or shutdowns, malicious alteration, or destruction of our confidential or personal information or that of third parties. Additionally, the proliferation of generative AI models within the internal systems, processes, and tools of HPE, our suppliers, our customers, or other third parties with whom we do business may create new attack methods for threat actors. The emergence of deepfakes and advanced social engineering tactics presents new challenges in preventing deception and unauthorized access, underscoring the importance of advanced verification and detection mechanisms. Zero-day vulnerabilities may include newly discovered security flaws in software that are exploited before patches are released, requiring proactive monitoring and immediate remediation efforts. Quantum computing may in the future present a risk to our business by potentially breaking traditional cryptographic methods on which we rely, thereby necessitating the shift to quantum-resistant encryption techniques.

Malicious parties may also be able to otherwise develop and deploy viruses, worms, ransomware, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products, including within our cloud-based environments and offerings, such that we may be unable to anticipate such malicious parties’ techniques, implement adequate preventative measures, or remediate any intrusion on a timely or effective basis even if our security measures are appropriate, reasonable, and comply with applicable legal requirements. Advanced persistent threats can include

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highly sophisticated intrusions by threat actors aiming to establish prolonged access within our network. Such intrusions have in the past gone, and could in the future go, undetected in our environments for a period of time, and we may discover additional impacts of earlier incidents that we believe were remediated. Given resource limitations, operational constraints, and our broad and diverse network environment, when vulnerabilities are discovered, we evaluate the risk, prioritize our responses, apply patches or take other remediation actions and notify customers, business partners, and suppliers, as appropriate. Exploitation of vulnerabilities and critical security defects have occurred and may occur in the future if we fail to patch certain security vulnerabilities in time to prevent successful disruptions of our infrastructure or exposure of information, or the failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services or solutions, could, in each case, result in claims of liability against us, damage our reputation or otherwise harm our business.

With our business increasingly providing aaS offerings, malicious parties could target such services, potentially resulting in an increased risk of compromise of customer or employee data resulting in regulatory exposure. Incidents involving our cyber or physical security measures or the accidental loss, inadvertent disclosure, or unapproved dissemination of proprietary information, intellectual property, or sensitive, confidential, or personal data about us, our clients, or our customers, including the potential loss or disclosure of such data as a result of fraud or other forms of deception, could expose us, our customers, or the individuals affected to a risk of loss or misuse of this information; result in regulatory fines, litigation, and potential liability for us; damage our brand and reputation; or otherwise harm our business. We also could lose existing or potential customers of services or other IT solutions or incur significant expenses in connection with our customers’ system failures or any actual or perceived security vulnerabilities in our products and services. In addition, the cost and operational consequences of managing an incident and implementing further data protection measures could be significant.

Additionally, we have acquired and may continue to acquire companies with cybersecurity vulnerabilities, gaps or different security standards, which exposes us to related cybersecurity, operational, and financial risks. Further, as our products and services in some instances are integrated with our customers' systems and processes, even if we are successful in identifying vulnerabilities, a successful attack on us could compromise customers’ IT systems and sensitive data, despite active monitoring and development of tools designed to identify and remediate such vulnerabilities. There is no guarantee that a series of issues may not be determined to be material in the aggregate at a future date even if they may not be material individually at the time of their occurrence.

Our suppliers, vendors, partners, and other third parties with whom we do business also face similar cybersecurity threats, risks, and concerns as those set forth above, which introduces vulnerabilities to our business and operations, including our manufacturing supply chain. Although HPE requires strict cybersecurity and data controls through its contractual agreements with third parties, if these third parties do not have adequate safeguards or their safeguards fail, it may result in breaches of their systems, networks, or applications, potentially leading to breaches of our networks and systems or unauthorized access to or disclosure of our and/or our customers' confidential data, thereby compromising us and our customers. While HPE relies on independent audit reports, in addition to our own security assessments and diligence of third parties with whom we do business as part of our third-party risk management practices, these efforts may not detect or identify all cybersecurity risks or vulnerabilities.

We operate in an intensely competitive industry, and competitive pressures could harm our business and financial performance.

The markets that we serve are rapidly evolving and highly competitive and include well-established companies. We also compete with other companies that are developing technologies that compete with our products. Our ability to implement solutions for our customers, anticipate and respond to rapid and continuing changes in technology (such as cloud-, AI-, networking- and security-related offerings), and develop new service offerings or incorporate technological improvements into our existing offerings that meet our customers’ needs and evolving industry standards, is critical to our competitiveness and success. We encounter aggressive competition from numerous competitors in all areas of our business (which we expect will continue across a wider array of networking offerings due to the Merger), and our competitors have targeted and are expected to continue targeting our key market segments. We compete primarily on the basis of technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use of our products, account relationships, customer training, service and support, security, and the availability of our IT infrastructure offerings. If our products, services, support, and cost structure do not enable us to compete successfully based on any of those criteria, our results of operations and business prospects could be harmed.

We have a large portfolio of products and services and must allocate our financial, personnel, and other resources, including R&D efforts, across all of our products and services while competing with companies that have smaller portfolios or specialize in one or more of our product or service lines. As a result, we may invest less in certain areas of our business than our

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competitors do, and our competitors may have greater financial, technical, and marketing resources available to them compared to the resources allocated to our products and services that compete against theirs. We may also spend a proportionately greater amount of our revenues on R&D than some of our competitors. If we do not sufficiently manage our cost structure and R&D priorities while investing in new technologies, successfully adapt to industry developments and changing demand, and evolve and expand our business at sufficient speed and scale to keep pace with the demands of the markets we serve, we may be unable to develop and maintain a competitive advantage and execute on our growth strategy, which would adversely affect our business, results of operations, and financial condition. Industry consolidation may also affect competition by creating larger, more homogeneous, and potentially stronger competitors in the markets in which we operate. Additionally, our competitors may affect our business by entering into exclusive arrangements with our existing or potential customers or suppliers.

Companies with whom we have vertical relationships in certain areas may be or become our competitors in other areas. In addition, companies with whom we have vertical relationships also may acquire or form relationships with our competitors, which could reduce their business with us. If we are unable to effectively manage these complicated relationships with vertical partners, our business and results of operations could be adversely affected.

We face aggressive price competition. As a consequence of inflation and higher supply chain and manufacturing costs, from time-to-time we take pricing actions to increase the prices of many of our products and services to maintain or improve our revenue and gross margin. In addition, competitors who have a greater presence in some of the lower-cost markets in which we compete, or who can obtain better pricing, more favorable contractual terms and conditions, or more favorable allocations of products and components during periods of limited supply, may be able to offer lower prices than we are able to offer. As a consequence, and to maintain our competitive position, from time-to-time we take pricing actions to offer heavier than normal discounts or elect not to pass on cost increases to customers on the sale of certain products and services, which has had and could have a negative impact on our financial results. Additionally, we have at times purchased, and may continue to purchase components strategically in advance of demand to take advantage of favorable pricing to lower costs and secure supply for future orders, which have and could in the future negatively affect our margins, especially if we don’t accurately anticipate customer demand.

Our results of operations (particularly revenue, margins, and cash flows) and financial condition may be adversely affected by these and other industry-wide pricing pressures and our actions in response thereto.

Any failure by us to identify, manage, and complete acquisitions and subsequent integrations (including the integration of Juniper Networks following the Merger), divestitures, and other significant transactions successfully could harm our financial results, business, prospects, and stock price.

As part of our strategy, we may acquire businesses, divest businesses or assets, enter into strategic alliances and joint ventures, and make investments to further our business (collectively, “business combination and investment transactions”). Risks associated with business combination and investment transactions include the following, any of which could adversely affect our financial results, including our effective tax rate: Any of these risks could be more significant due to the size and complexity of the business combination and investment transactions. Further, there can be no assurance that we will realize all or any of the anticipated benefits that we expect from any acquisition or other significant transaction (including the Merger) or realize them within the anticipated timeframe. Achieving these benefits will depend, in part, on our ability to integrate such acquired company or asset successfully and efficiently with our existing business and portfolio of offerings.

• We may not successfully combine product or service offerings or realize all of the anticipated benefits of any particular business combination and investment transaction, which may result in (1) failure to execute on our business strategy; (2) failure to integrate disparate technological offerings into a coherent portfolio of solutions; (3) failure to coordinate sales and marketing efforts to effectively position our capabilities; (4) failure to retain employees, customers, distributors, suppliers, and other important relationships, or attract new business and operational relationships; and (5) unanticipated delays or failure to meet contractual obligations which may cause financial results to differ from expectations.

• We may fail to successfully and efficiently (1) integrate financial forecasting and controls, procedures and reporting cycles; (2) consolidate and integrate corporate, information technology, finance and administrative infrastructures; (3) coordinate and integrate operations, including in countries in which we have not previously operated; (4) integrate employees and related human capital management systems and benefits; or (5) address redundant processes and functions in an adequate manner (thereby impacting our ability to achieve all or any of the anticipated synergies).

• Our ability to conduct due diligence with respect to business combination and investment transactions, and our ability to evaluate the results of such due diligence, is dependent upon the veracity and completeness of statements and

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disclosures made or actions taken by third parties or their representatives. We may fail to identify significant issues with the acquired company’s product quality, financial disclosures, workplace culture, accounting practices or internal control deficiencies or all of the factors necessary to estimate reasonably accurate costs, timing and other matters.

• In order to complete a business combination and investment transaction, we may (1) issue common stock, potentially creating dilution for our existing stockholders, (2) enter into financing arrangements, which could affect our liquidity and financial condition, or (3) incur early retirement costs, employee benefit costs, charges from the elimination of duplicative facilities and contracts, inventory adjustments, assumed litigation and other liabilities, legal, accounting and financial advisory fees, and required payments to executive officers and key employees under retention plans.

• For an acquisition or other combination, the acquisition partner may have differing or inadequate cybersecurity and data protection controls or vulnerabilities, which could expose us to cybersecurity, operational, and financial risk; increase the likelihood of data security incidents; and potentially increase anticipated costs or time to integrate the business. In addition, sophisticated hardware, operating system software, and applications that we integrate from acquired companies may contain defects that could interfere with the operations of our systems. We may also face other risks if acquired companies use technology that is managed outside the scope of our information technology organization, resulting in incomplete coverage by our cybersecurity threat risk management tools.

• Business combination and investment transactions may lead to litigation, which could impact our financial condition and results of operations.

• We have incurred and will incur additional depreciation and amortization expense over the useful lives of certain assets acquired in connection with business combination and investment transactions and, to the extent that the value of goodwill or intangible assets acquired in connection with a business combination and investment transaction becomes impaired, we may be required to incur additional material charges relating to the impairment of those assets.

• For a divestiture, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, or we may dispose of a business at a price or on terms that are less desirable than we had anticipated.

• The impact of divestitures on our revenue growth may be larger than projected, as we may experience greater dis-synergies than expected. If we do not satisfy pre-closing conditions and necessary regulatory and governmental approvals on acceptable terms, it may prevent us from completing the transaction. Dispositions may also involve continued financial involvement in the divested business, such as through continuing equity ownership, guarantees, indemnities or other financial obligations. Under these arrangements, performance by the divested businesses or other conditions outside of our control could affect our future financial results.

• Our certificate of incorporation and bylaws could make it difficult or discourage an acquisition of Hewlett Packard Enterprise if our Board of Directors deems it to be undesirable. Provisions such as indemnification, meeting requirements, and blank check stock authorizations could deter or delay hostile takeovers, proxy contests, or changes in control or management of Hewlett Packard Enterprise.

Management’s attention or other resources may be diverted during business combination and investment transactions and may be further impacted if we fail to successfully complete or integrate such transactions that further our strategic objectives. In particular, the integration of Juniper Networks has required significant management attention both before and after the completion of the Merger and will continue to require sustained management attention, diverting the attention of management from other areas of our business and operational issues. Furthermore, recent procedural developments in the court’s Tunney Act review of the settlement reached by HPE and the United States Department of Justice in the litigation relating to the Merger may disrupt or delay our ongoing integration efforts and our ability to realize some or all of the anticipated benefits or synergies from the Merger. Such disruptions or delays to the integration may also damage our reputation in the market and result in uncertainty from customers, partners, and other third parties with whom we do business regarding our offerings and go-to-market strategy. See also the risk factors below under the heading “Risks Related to Prior Separations.”

Uncertainty and fluctuations in geopolitical and macroeconomic conditions may adversely impact our business, financial condition, and operating results.

Our business, financial condition, and operating results depend significantly on general macroeconomic conditions and the demand for our solutions and offerings. Economic weakness or uncertainty has contributed, and may contribute, to customer financial difficulties, thereby constraining customer spending on IT projects or upgrades, including through reduced, postponed, or cancelled orders. Such dynamics have resulted in, and may result in, decreased revenue and earnings. These factors could

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make it difficult to accurately forecast revenues and operating results, effectively plan business actions and allocate resources, and manage our contract manufacturer relationships and other expenses and to make decisions about future investments. In addition, economic and/or geopolitical instability or uncertainty resulting from inflationary pressures, recessionary risks, tariffs and other trade restrictions in the U.S. and internationally, trade conflicts, the effects of global health emergencies, the ongoing conflict between Russia and Ukraine, the continuous geopolitical instability in the Middle East, and efforts of governments to stimulate or stabilize the economy have, and may continue to, put pressure on economic conditions, including volatility in global and regional financial markets, which has led and could lead to reduced income or asset values, reduced demand for our offerings, delays or reductions in spending on and implementation of IT investments, and/or higher costs of production which could have an adverse effect on our business, financial condition, and results of operations. Such geopolitical and macroeconomic changes can happen rapidly, and we may not be able to react quickly to prevent or limit our losses or exposures. Additionally, any of the above dynamics could result in price concessions in certain markets, with certain customer groups, and/or for certain offerings. These events have at times impacted, and may in the future impact our business in an adverse manner, whether directly or indirectly, such as through their impacts on the financial positions and operations of our customers, suppliers, and other third parties with whom we do business or on whom we rely, and as a consequence, their ability to perform their obligations under their agreements with us. In addition, we may not be able to react quickly enough to prevent or limit our losses or exposures from such geopolitical or macroeconomic events or changes, and any mitigation plans or response we do employ may not mitigate the adverse impacts on our business completely, or at all. Any such failure could have an adverse effect on our reputation, demand for our products, and consequently, our financial condition.

If we experience or fail to properly manage disruption in the distribution of our products and services properly, our business and financial performance could suffer.

We use a variety of direct and indirect distribution methods that differ by business and region to sell our products and services to end-users around the world. Successfully managing the interaction of our direct and indirect channel efforts to reach our customer segments is a complex process and each distribution method has distinct risks and potential impacts on our financial performance. Failure to implement the most advantageous balance in the delivery model for our products and services could adversely affect our revenue and gross margins and therefore our profitability.

Our financial results could be adversely affected due to distribution channel conflicts, if the financial conditions of our channel partners were to weaken, if we experience the loss or deterioration of any alliance or distribution arrangement, or if our wholesale distributors are not able to withstand changes in business conditions, including economic weakness, industry consolidation, tariffs, and/or market trends. Considerable trade receivables that are not covered by collateral or credit insurance are outstanding with our distribution channel partners. Revenue from indirect sales could suffer, and we could experience disruptions in distribution, if our distributors’ financial conditions, abilities to borrow funds in the credit markets, or operations weaken.

Our inventory management is complex, as we continue to sell a significant mix of products through distributors. We must manage both owned and channel inventory effectively, particularly with respect to sales to distributors, which involves forecasting demand and meeting pricing challenges. Our distributors may adjust orders during periods of product shortages, cancel orders if their inventory is too high, or delay orders in anticipation of new products. They may also adjust their orders in response to the supply of our products and the products of our competitors and seasonal fluctuations in end-user demand. As a result of these considerations, we have experienced, and may in the future again experience, abnormally high inventory levels. When we have excess or obsolete inventory, which we have experienced from time to time, we may have to reduce our prices and/or write down inventory, either of which may adversely impact our gross margin and our results of operations. These dynamics are accentuated for larger orders, including some orders for our AI systems, and particularly so if they are delayed or cancelled. Moreover, our use of indirect distribution channels may limit our willingness or ability to adjust prices quickly and otherwise to respond to pricing changes or tariffs.

Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our worldwide operations and supply chain could be disrupted by natural or human-induced events including, but not limited to, earthquakes; tsunamis; floods; hurricanes, cyclones or typhoons; fires; other extreme weather conditions; power or water shortages; telecommunications failures; materials scarcity and price volatility; terrorist acts, civil unrest, conflicts or wars; trade tensions, tariffs, quotas, or import or export restrictions, and changes thereto, which are difficult to accurately predict; and health epidemics or pandemics. The impacts and frequency of any of the above could be further exacerbated by climate change, particularly in countries where we operate that have limited infrastructure and disaster recovery resources. While we are predominantly self-insured to mitigate the impact of most catastrophic events, the occurrence of business disruptions could, among other impacts, harm our revenue, profitability, and financial condition; cause derivative impacts on our employees; adversely affect our competitive position; increase our costs and expenses; make it difficult or impossible to provide our offerings to our customers or to receive components from our suppliers; create delays and inefficiencies in our supply chain; or

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require substantial expenditures and recovery time in order to fully resume operations. To the extent such disruptions adversely affect our business, results of operations, financial condition, and stock price, they may also have the effect of heightening many of the other risks described in this Item 1A of Part I of this Annual Report on Form 10-K.

Long sales and implementation cycles for our offerings and dynamics related to large orders may cause our revenues and operating results to vary significantly from quarter-to-quarter.

We have experienced, and may continue experiencing, lengthy sales cycles because our customers' decisions to purchase certain of our products, particularly new products, involve a significant commitment of their resources and a lengthy evaluation and product qualification process. Customers design and implement large IT deployments following lengthy procurement processes, which may impact expected future orders. Following a purchase, customers may also deploy our products and offerings slowly and deliberately. Furthermore, larger orders, including some orders for our AI systems, have typically required, and may continue to require, greater commitments of working capital, such as for purchases of key components, which could introduce variability in our quarterly cash flow and results of operations more generally. While we have seen the customer base for our AI systems offerings expand and expect it to continue expanding, our AI solutions have historically been purchased primarily by a small number of larger customers and cloud service providers. Sales of AI systems to such customers have caused, and may continue to cause, fluctuations in our results of operations, as such large orders may occur in some periods and not others and are generally subject to intense competition and pricing pressure, which can have an impact on our margins and results of operations. If we are not successful in continuing to expand sales to a broader base of customers, our financial results may be adversely affected. These sales and similar implementation cycle-related factors, including our expectation that customers may place large orders with the potential for widely varying implementation timelines, may cause our revenues and operating results to vary significantly from quarter-to-quarter.

Our uneven sales cycle and supply chain disruptions make planning and inventory management difficult and future financial results less predictable.

In some of our businesses, our quarterly sales have periodically reflected a pattern in which a disproportionate percentage of each quarter's total sales occurs towards the end of the quarter. This uneven sales pattern makes predicting revenue, earnings, cash flow from operations, and working capital for each financial period difficult, increases the risk of unanticipated variations in our quarterly results and financial condition, and places pressure on our inventory management and logistics systems. If predicted demand is substantially greater than orders, there may be excess inventory and greater risk of inventory write downs, which we have experienced from time to time. Larger orders, including some orders for our AI systems, may be particularly susceptible to this risk. Alternatively, if orders substantially exceed predicted demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be canceled. As a result of such variations in predicted demand, we have experienced these impacts from time to time and may do so again in the future. Depending on when they occur in a quarter, developments such as a systems failure, component pricing movements, component shortages, or global logistics disruptions, have in the past adversely impacted, and could in the future adversely impact, our inventory levels and results of operations in a manner that is disproportionate to the number of days in the quarter affected. We experience some seasonal trends in the sale of our solutions that also have produced, and may in the future produce, variations in our quarterly results and financial condition. Many of the factors that create and affect seasonal trends are beyond our control.

Separately, periodic supply chain shortages and constraints have, in some instances, resulted in, and may result in, increases to the costs of production of our hardware products that we have, at times, not been able to, and may, in the future, not be able to pass on to our customers. For a further discussion of such risks, see also the risk factor titled “We depend on third-party suppliers, contract manufacturers (including original equipment and original design manufacturers), as well as single-source and limited source suppliers, and our financial results could suffer if we fail to manage these third party relationships effectively.”

Our ability to achieve our strategy could be harmed if we are unable to attract, retain, train, motivate, develop, and transition key personnel.

In order to achieve our growth strategy and capture the market opportunities presented by networking, hybrid cloud, and AI, we must attract, retain, train, motivate, develop, and transition qualified executives and other key employees, including those in managerial, technical, development, sales, marketing, and IT positions. We must provide a competitive compensation package, including cash and equity-based compensation to attract and retain executives and other key employees in a competitive marketplace. Our ability to attract, retain, and motivate highly qualified executives and key employees could be adversely affected if the anticipated value of our equity-based incentive awards does not materialize, if our equity-based compensation otherwise ceases to be viewed as a valuable benefit, if our total compensation package is not viewed as being

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competitive, or if we do not obtain the stockholder approval required to continue granting equity-based incentive awards in the amounts we believe are necessary.

Our failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations and our ability to execute our strategy. Further, changes in our management team may be disruptive to our business, and any failure to successfully transition and assimilate key new hires or promoted employees could adversely affect our business and results of operations. As competition for highly skilled employees in our industry has grown increasingly intense, we have in the past experienced, and may in the future experience, higher than anticipated levels of employee attrition, which has resulted in increased costs to hire new employees with desired skills. In addition, significant or prolonged turnover or revised hiring priorities may negatively impact our operations and our ability to successfully maintain our processes and procedures, including due to the loss of historical, technical, and other expertise.

These risks to attracting and retaining highly qualified talent may be exacerbated by labor constraints, such as immigration policies which may impair the ability to recruit technical and professional talent, and inflationary pressures, which impact employee wages and benefits. Further, integration of employees and businesses as a result of our acquisitions, including the Merger, may present additional or unanticipated challenges, which could negatively affect our ability to achieve our future success. In addition, changes to our go-to-market structure may affect employee compensation models and ultimately our ability to retain employees. A number of our team members are foreign nationals who rely on visas and entry permits in order to legally work in the U.S. and other countries. In recent years, the U.S. has increased the level of scrutiny in granting such documentation. Compliance with new and unexpected U.S. immigration and labor laws could also require us to incur additional, and unexpected labor costs and expenses, or could restrain our ability to retain and attract skilled professionals. Any of these restrictions could have an adverse effect on our business, results of operations, and financial condition.

Risks arising from climate change and the transition to a lower-carbon economy may impact our business.

Climate change serves as a risk multiplier that could increase both the frequency and severity of natural disasters that may affect our worldwide business operations and those of suppliers and customers. Our corporate headquarters is located in Spring, Texas, which suffers from floods, hurricanes, and other extreme weather, and a portion of our research and development activities are located in California, which suffers from drought conditions and catastrophic wildfires, each potentially affecting the health and safety of our employees and our business in these locations. In California, to mitigate wildfire risk, electric utilities have periodically deployed, and may in the future, periodically deploy public safety power shutoffs, which affect electricity reliability to our facilities and our communities. Certain sites located in the United States, Middle East, China, and India experience exposure to extreme heat and water stress, which could potentially strain our operational continuity and also jeopardize the health and well-being of our employees, both of which may consequently impact our operations. Furthermore, our data centers depend on predictable and reliable energy and networking capabilities, the cost or availability of which could be adversely affected or disrupted by a variety of factors, including, but not limited to, the effects of climate change. Increased energy consumption, including as a result of AI-related growth, climate-related events, energy market volatility, and power grid disruptions, may increase the operational costs related to inputs across our value chain. While we seek to mitigate business risks, through site selection, infrastructure technological investments, business continuity planning, and robust environmental programs, this may require us to incur substantial costs, and we may be unsuccessful in doing so as there are inherent climate-related risks wherever business is conducted. Furthermore, climate change may reduce the availability or increase the cost of insurance for these negative impacts of natural disasters by contributing to an increase in the incidence and severity of such natural disasters.

The increasing concerns over climate change could also result in transition risks, such as efforts and expenditures related to carbon abatement, shifting customer preferences, or compliance risks from changing regulatory and legal requirements. We continue to observe increased customer demand for more sustainable and energy-efficient solutions, products, and services. While we have been integrating such trends into our business and sales strategies thus far, we may not be able to successfully do so in the future. Further, continually changing customer preferences may cause us to incur additional costs, invest more in R&D, or make other changes to other operations to respond to such demands, which may not be carried out successfully, and if so, could adversely affect our financial results. We may also confront higher electricity prices, and higher costs for supplies or components that comply with certain environmental regulatory thresholds, potentially impacting our margins or the pricing of our offerings. If we fail to manage these and other transition risks in an effective manner, customer demand for our solutions, products, and services could diminish, and our profitability could suffer.

Risks Related to Our Technology and Business Operations

Issues in the development and use of artificial intelligence may result in reputational harm, liability, or impact to our results of operations.

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We believe the proliferation of AI, especially as it relates to our products and solutions that enable AI workloads, has had a significant impact on customer preferences and market dynamics in our industry, and our ability to effectively compete in this space has been and will remain critical to our financial performance. We incorporate AI capabilities into certain product and service offerings and internal operations, and this technology will increasingly become a more significant element of our business and certain of our partners’ businesses. As with many developing technologies, AI presents risks and challenges and may result in unintended consequences that could affect its further development, adoption, and use, and therefore our business and our overall strategy. We manufacture hardware designed to support AI capabilities, and our research into and continued development of such capabilities and manufacturing processes remain ongoing. We have invested, and expect to continue to invest, significant resources to use, acquire, build, and support the development of these capabilities and manufacturing processes, and if our AI-related offerings fail to operate as anticipated or as well as competing offerings or otherwise do not meet customer needs or if we are unable to bring AI-related offerings to market as effectively as our competitors, we may fail to recoup our investments in AI, our competitive position may be harmed, and our business and reputation may be adversely impacted. We may also be exposed to these and other risks through the increased use of AI by our manufacturers, suppliers, and other business partners. Reliance on AI by these third parties could introduce operational vulnerabilities, disrupt our supply chain management, increase cybersecurity risks, and impact our relationships with customers, partners, and suppliers.

While we review proposed implementations and use cases ahead of deployment, we may not always identify the risks or deficiencies of an AI capability or offering and the market may respond differently than we anticipate, potentially impacting our results of operations. AI algorithms and training methodologies may be flawed. Ineffective or inadequate AI development or deployment practices by us or others could result in incidents that impair the acceptance of AI solutions or cause harm to individuals or society. These deficiencies and other failures of AI systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm. If we enable or offer AI solutions that are controversial because of their impact on human rights, privacy, employment, or other social, economic, or political issues, we may experience competitive, brand, or reputational harm or legal and/or regulatory action.

Additionally, leveraging AI capabilities to potentially improve internal functions and operations presents further risks and challenges. While we aim to use AI ethically and attempt to identify and mitigate ethical or legal issues presented by its use, we may nevertheless be unsuccessful in identifying or resolving issues before they arise. The use of AI to support business operations carries inherent risks related to data privacy and security, such as intended, unintended, or inadvertent transmission of proprietary or sensitive information, as well as challenges related to implementing and maintaining AI tools, such as developing and maintaining appropriate datasets for such support. Further, dependence on AI without adequate safeguards to make certain business decisions may introduce additional operational vulnerabilities by impacting our relationships with customers, partners, and suppliers; by producing inaccurate outcomes based on flaws in the underlying data; or other unintended results.

Further, incorporating AI gives rise to litigation risk and risk of non-compliance and unknown cost of compliance, as AI is an emerging technology for which the legal and regulatory landscape is not fully developed and which may vary from jurisdiction to jurisdiction, creating complex compliance issues (including potential liability for breaching intellectual property or privacy rights or laws or for the misuse of personal data and the lack of effective legal protections for software source code created with the assistance of AI). While new AI initiatives, laws, and regulations are emerging and evolving, including in the U.S. from a statewide and federal perspective as well as globally (such as the EU's Artificial Intelligence Act that became effective in August 2024), what they ultimately will look like remains uncertain. We may not always be able to anticipate how to respond to these legal frameworks, and our obligation to comply with them could entail significant costs, negatively affect our business, or entirely limit our ability to incorporate certain AI capabilities into our offerings and operations. The resulting impact of such regulations on our customers’ desire for AI capabilities and demand for our offerings more generally could negatively impact our results of operations.

Our financial performance may suffer if we cannot continue to develop, license, or enforce the intellectual property rights on which our businesses depend.

We rely upon patent, copyright, trademark, trade secret, and other intellectual property laws in the United States, similar laws in other countries, and agreements with our employees, customers, suppliers, and other parties, to establish and maintain intellectual property rights in the products and services we sell, provide, or otherwise use in our operations. However, from time to time our intellectual property rights have been challenged, infringed, or circumvented, and any of such rights could be further challenged, invalidated, infringed, or circumvented or such intellectual property rights may not be sufficient to permit us to take advantage of current market trends or to otherwise provide competitive advantages. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States. Therefore, in certain jurisdictions we may be unable to protect our proprietary technology adequately against unauthorized third-party copying or use; this, too, could

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adversely affect our ability to sell products or services and our competitive position. Furthermore, changes in intellectual property laws or their interpretation may impact our ability to protect and assert our intellectual property rights, increase costs and uncertainties in the prosecution of patent applications or related enforcement actions, and diminish the value and competitive advantage conferred by our intellectual property assets.

Monitoring and detecting any unauthorized access, use or disclosure of our intellectual property is complex, and we cannot be certain to discover such unauthorized use or that the protective measures we have implemented will completely prevent misuse. Our ability to enforce our intellectual property rights is subject to litigation risks and uncertainty as to the protection and enforceability of those rights in some countries. If we seek to enforce our intellectual property rights, we may be subject to claims that those rights are invalid or unenforceable, and others may seek counterclaims against us, which could have a negative impact on our business. Effective protection of intellectual property rights is expensive and difficult to maintain, both in terms of application and maintenance costs, as well as the costs of defending and enforcing those rights.

Due to the international nature of our business, political or economic changes and the laws and regulatory regimes applying to international transactions or other factors could harm our future revenue, costs and expenses, financial condition, and results of operations.

We derive a substantial portion of our revenues from our international operations, and we plan to continue our business in international markets. As a result, our business and financial performance depend significantly on worldwide economic conditions and the demand for technology hardware, software, and services in, and continued access to, the markets in which we compete. Economic weakness and uncertainty and the volatile inflationary and geopolitical environment have constrained spending on enterprise infrastructure. This has in the past adversely affected the demand for our products, services, and solutions, which has impacted our financial condition and results of operations. We may experience similarly adverse impacts in the future. These have, at times in the past, resulted in increased expenses due to higher allowances for doubtful accounts and potential goodwill and asset impairment charges (among other financial impacts), and made it more difficult for us to manage inventory and accurately forecast financial performance and/or expenses, and may have such effects again in the future.

In addition, economic weakness, tariffs, and geopolitical uncertainty have, at times caused, and could, in the future cause our financial performance to vary materially from our expectations. Turmoil affecting the financial markets or any significant financial services institution failures could negatively impact our treasury operations. Interest and other expenses have varied, and could continue to vary, materially from expectations depending on changes in borrowing costs, currency exchange rates, costs of hedging activities, and the fair value of derivative instruments. It is difficult to predict the impact of such events on us, our third-party partners, our customers, or economic markets more broadly, which have been and will continue to be highly dependent upon the actions of governments and businesses in response to macroeconomic events, and the effectiveness of those actions. Such actions have impacted, and may further impact our ability, desire, or the timing of funding decisions for various investment opportunities. Further, reduced spending by governments and their agencies may limit demand for our products, services, and solutions from such entities, as well as organizations that receive funding from such governments, around the world, and could negatively affect macroeconomic conditions in the countries which we operate, which could further reduce demand for our products, services, and solutions.

Our business and financial performance have been adversely affected by changes in U.S. and international trade policies, export controls, and sanctions, U.S. regulations concerning imports, tariffs, and resultant retaliatory countermeasures from other countries, as well as international laws and regulations relating to global trade and access to global markets. As a result, our business has, from time to time, been impacted by forced price increases of materials and higher barriers and costs to import and export certain components and/or our products to and from particular countries, which in turn has resulted in price increases to customers, and consequently has softened demand for our offerings and/or reduced our margins. We may experience all of these impacts in the future, especially in light of the current international tariff environment. While we have been evaluating, and continue to evaluate, supply chain diversification and resilience strategies to mitigate the adverse impacts of such measures, the actions we’ve taken or may take in the future may not be effective or able to be effectuated in a timely manner, or at all. Trade policy remains fluid and has changed rapidly at times. As such, changes in U.S. and international trade policy and any countermeasures, to any existing trade agreements, and to the scope and timing of any such actions and the ultimate impact of these measures are difficult to predict and may adversely affect our operations and financial condition. In addition, changes in requirements relating to making foreign direct investments could increase our cost of doing business in certain jurisdictions, prevent us from shipping products to particular countries or markets, affect our ability to obtain favorable terms for components, increase our operating costs, or lead to penalties or restrictions. While we have policies and procedures designed to facilitate compliance with global trade laws and regimes around the world, such measures may not guarantee compliance.

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Sales outside the United States constituted approximately 61% of our net revenue in fiscal year 2025. As such, our future business and financial performance could suffer due to a variety of international factors in addition to those otherwise already disclosed, including:

• the imposition of government controls (including for critical infrastructure protection) and any related licensing requirements (particularly for certain AI enabling products) that could affect the timing of shipments of our products and/or our ability to sell certain products in other countries;

• impact of ongoing uncertainties as a result of instability or changes in geopolitical tensions, including trade protection measures, such as import tariffs or import or export restrictions (which may limit our access to raw material and/or components for our products); the revocation or material modification of trade agreements; and political and armed conflicts, such as those caused by the ongoing conflict between Russia and Ukraine or the continuous geopolitical instability in the Middle East (the potential escalation or geographic expansion of which could heighten other risks identified in this report), or the relationship between China and the U.S. (which could, among other things, impact trade dynamics and the enforceability of certain contracts or the timing and form of certain payments);

• inflationary pressures, which have in the past increased, and may in the future increase costs for materials, supplies, and services, including those of third parties with whom we do business;

• adverse or uncertain macroeconomic conditions, including a changing interest rate environment and fears of a potential global economic downturn or recession, which have at times in the past slowed customer demand for our products and services, and may do so again;

• network security, privacy, geopolitical, and data sovereignty concerns, which could make foreign customers reluctant to purchase products and services from U.S.-based technology companies;

• longer collection cycles and financial instability among customers, which could impact our ability to collect on accounts receivable and consequently recognize revenue;

• local labor conditions and regulations, including local labor issues faced by specific suppliers, vendors, and manufacturers, or changes to immigration and labor law policies which may adversely impact our access to technical and professional talent;

• managing our geographically dispersed workforce, which has necessitated, and may in the future require, incurring costs to promote seamless workforce connectivity and to comply with changing laws, regulations, and our obligations to engage with works councils or other employee representation bodies across multiple jurisdictions;

• differing technology regulations, standards, or customer requirements, which have required us to incur additional development and production costs to modify or adapt our offerings, and may do so again in the future;

• local content and manufacturing requirements and trade protection measures such as import tariffs or import or export restrictions, which have impacted, and could further impact, our ability to sell into those markets;

• difficulties associated with repatriating earnings in restricted countries, and changes in tax policies, treaties, or laws that could have an unfavorable business impact, or which introduces uncertainty to our results of operations and financial performance; and

• fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure at important geographic points of exit and entry for our products and shipments, which have from time to time adversely impacted, and any of which could in the future adversely impact, our results of operations and ability to meet customer demand.

Any or all of these factors has or could have an adverse impact on our business, financial condition, and results of operations. Certain of the factors have disrupted the operations of, and adversely impacted our product and component manufacturing and key suppliers, customers, or vendors located outside of the United States, and could do so again. For example, we rely on suppliers in Asia for product assembly and manufacture, the operations of whom are subject to local labor laws and other requirements. Any loss of or limitations on their output or their inability to operate could have an adverse effect on our ability to timely deliver our products and services, which would in turn negatively impact our financial performance.

Further, the ongoing conflict between Russia and Ukraine and the trade sanctions imposed by the U.S., the European Union (the “EU”), and other countries in response have negatively impacted business and financial performance in that region. HPE is continuing to execute on the exit of our remaining business in Russia and Belarus as planned; however, we cannot provide any assurance that such exit will be efficient or uninterrupted, which may negatively impact our operational expenses.

We implement policies, procedures, and training designed to facilitate compliance with anti-corruption laws around the world, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, as well as U.S. and foreign export controls and trade sanctions. However, such measures do not guarantee compliance, and our employees and third parties with whom we work may take actions in violation of such policies or such laws. Furthermore, in many foreign countries, particularly in those with developing economies, people may engage in business practices prohibited by anti-corruption laws or our policies and procedures. Violations or alleged violations of such laws or key control policies by our employees, contractors, channel

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partners, or agents could result in termination of our relationship, financial reporting problems, fines, and/or penalties for us, or prohibition on the importation or exportation of our products, may result in investigations or severe criminal or civil sanctions and penalties, and we may be subject to those and other liabilities that could have an adverse effect on our business, results of operations, and financial condition.

We may not achieve some or all of the expected benefits of our cost reduction actions, some or all of which may be disruptive to our business.

We have announced a cost reduction program and a series of other cost-saving initiatives as part of our ongoing efforts to reduce structural operating costs, streamline how we operate and do business, and continue advancing the Company's ongoing commitment to profitable growth (which we are calling Catalyst). We may not be able to obtain the cost savings and benefits that are initially anticipated in connection with such actions. Additionally, as a result of these initiatives and the actions contemplated thereby, we may experience a loss of continuity, loss of accumulated knowledge and/or inefficiency during transitional periods. Implementing and overseeing such actions can require a significant amount of management and other employees' time and focus, which may divert attention from operating and growing our business. If we fail to achieve some or all of the expected benefits of these measures, it could have a material adverse effect on our competitive position, business, financial condition, results of operations, and cash flows.

Our products and services depend in part on intellectual property and technology licensed from third parties.

Much of our business and many of our products rely on key technologies developed or licensed by third parties. For example, many of our software offerings are developed using software components or other intellectual property licensed from third parties, including through both proprietary and open source licenses. These third-party software components may become obsolete, defective, or incompatible with future versions of our products, our relationship with the third party may deteriorate or cease, or our agreements with the third party may expire or be terminated. We may face legal or business disputes with licensors that may threaten or lead to the disruption of inbound licensing relationships. In order to remain in compliance with the terms of our licenses, we must carefully monitor and manage our use of third-party software components, including both proprietary and open source license terms that may require the licensing or public disclosure of our intellectual property without compensation or on undesirable terms. Additionally, some of these licenses may not be available to us in the future on terms that are acceptable or that allow our product offerings to remain competitive. Our inability to obtain licenses or rights on favorable terms could have a material effect on our business, including our financial condition and results of operations. In addition, it is possible that as a consequence of a merger or acquisition, we may acquire intellectual property subject to licensing obligations to third parties, other third parties may obtain licenses to some of our intellectual property rights or our business may be subject to certain restrictions that were not in place prior to such transaction. Because the availability and cost of licenses from third parties depends upon the willingness of third parties to deal with us on the terms we request, there is a risk that third parties who license to our competitors will either refuse to license us at all, or refuse to license us on terms equally favorable to those granted to our competitors. Consequently, we may lose a competitive advantage with respect to these intellectual property rights or we may be required to enter into costly arrangements in order to terminate or limit these rights.

We rely on the performance of our business systems and processes, as well as those of third-parties with whom we do business.

Some of our business processes depend upon our IT systems. Portions of our IT infrastructure have experienced, and may experience, interruptions, delays, or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. As our IT environment continues to evolve, we have, at times, been unsuccessful, and may in the future be unsuccessful, in adopting or implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive, and resource intensive. Such disruptions could adversely impact our ability to fulfill orders and respond to customer requests and interrupt other processes. Delayed sales, lower margins, or lost customers resulting from these events could reduce our revenue, increase our expenses, and adversely affect our reputation and stock price.

Additionally, some of our business processes depend upon the IT systems and processes of third parties, and the interfaces between those and our IT systems, as well as hosted SaaS applications from third parties. For example, we receive a broad range of information technology services, such as applications, including support, development and maintenance; infrastructure management and support, including for server storage and network devices; and end user support. Some of these services are provided to us through cloud providers, third party providers, and off-site facilities that may be vulnerable to damage or interruption, including performance problems from earthquakes, hurricanes, floods, fires, power loss, telecommunications failures, equipment failures, adverse events caused by operator error, cybersecurity attacks, pandemics, and similar events. In addition, because we lease certain off-site data center facilities, we cannot be assured that we will be able to

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expand our data center infrastructure to meet user demand in a timely manner, or on favorable financial terms. If we have issues receiving and processing data, this may delay our ability to provide products and services to our customers and business partners and damage our business. We also rely upon the performance of the systems and processes of our contract manufacturers to build and ship our products. If those systems and processes experience interruption or delay, the manufacture and shipment of our products in a timely manner may be impaired. Since IT is critical to our operations, in addition to the risks outlined above, problems with any of the third parties we rely on for our IT systems and services could result in liabilities to our customers and business partners, lower revenue and unexecuted efficiencies, and impact our results of operations and our stock price. We could also face significant additional costs or business disruption if our arrangements with these third parties are terminated or impaired and we cannot find alternative services or support on commercially reasonable terms or on a timely basis or if we are unable to hire new employees in order to provide these services in-house.

If we cannot continue to produce quality products and services, our reputation, business, and financial performance may suffer.

In the course of conducting our business, we must adequately address quality issues associated with our products, services, and solutions (whether developed by us or by a company we acquire), including defects in our engineering, design, and manufacturing processes and unsatisfactory performance under service contracts, as well as defects in third-party components included in our products and unsatisfactory performance or malicious acts by third-party contractors or subcontractors. We work with our customers and suppliers and engage in product testing to identify the causes of quality issues and to develop and implement appropriate solutions. However, the solutions that we offer are complex, and our regular testing and quality control efforts may not be effective in controlling or detecting all quality issues or errors, particularly with respect to faulty components manufactured by third parties. If we are unable to determine the cause, find an appropriate solution or offer a temporary fix (or “patch”) to address quality issues with our offerings, we may delay shipment to customers, which could delay revenue recognition and receipt of customer payments and could adversely affect our revenue, cash flows, and profitability. In addition, after products are delivered, quality issues may require us to repair or replace such products. Addressing quality issues can be expensive and may result in additional warranty, repair, replacement, and other costs, adversely affecting our financial performance. In addition, the accelerated rate of innovation of components from our suppliers, particularly for AI-related offerings, may result in higher defects or failure of our offerings to perform, which could cause us to incur increased warranty costs, inventory provisions or impairments and could impact future sales. If new or existing customers have difficulty operating our products or are dissatisfied with our services or solutions, our results of operations could be adversely affected, and we could face possible claims if we fail to meet our customers' expectations. In addition, quality issues, including the actual or perceived security or reliability of our offerings or ability to address other data security concerns, can impair our relationships with new or existing customers and adversely affect our brand and reputation, which could adversely affect our results of operations.

Our sustainable and responsible business expectations and actions towards achieving our Living Progress objectives may expose us to operational, legal, or reputational risks and could adversely affect our business, results of operations, financial condition, or stock price.

We actively manage sustainability and corporate responsibility issues through our established and publicly announced Living Progress Strategy. This strategy reflects our current plans and aspirations, is based on available data and estimates, and is not a guarantee that we will be able to achieve such plans and aspirations or that we will not refine or modify such plans and aspirations in the future. Our ability to meet our sustainability and/or corporate responsibility ambitions is also subject to external factors outside of our control, including the ability and willingness of our suppliers to take action and the advancement of new technologies. Moreover, actions or statements that we may take based on expectations, assumptions, or third-party information that we currently believe to be reasonable may subsequently be determined to be erroneous or be subject to misinterpretation, which may expose us to enforcement actions or legal proceedings and the reputational and financial costs associated therewith. Initiatives to address sustainability and corporate responsibility issues may be costly and may not have the desired effect.

Evolving stakeholder expectations and our efforts and ability to manage these issues present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which may be outside of our control or could have adverse impacts on our business, including on our stock price. Regulators and stakeholders have evolving, varied, and sometimes conflicting expectations regarding sustainability and corporate responsibility matters, leading to heightened scrutiny of such corporate programs a. Additionally, there is an increasing number of federal, state, and local initiatives that may conflict with other regulatory requirements or priorities, such as those of the U.S. federal government, resulting in regulatory uncertainty. We may also increasingly see similar conflict between U.S. policy and the regulatory positions taken in other non-U.S. jurisdictions. Not only is there uncertainty due to the patchwork of environmental, social, and governance-related laws and regulations (especially as they may sometimes conflict), but also there remains uncertainty around the accounting standards and

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required disclosures associated with such laws and regulations (including the scope of reporting requirements and the related costs to comply with the emerging regulations).

Our failure or perceived failure to achieve our Living Progress objectives, maintain responsible and sustainable business practices, integrate newly acquired companies into our sustainability programs, continue monitoring or pursuing certain goals, or comply with emerging laws and regulations that meet evolving and potentially conflicting regulatory or stakeholder expectations could harm our reputation, adversely impact our ability to attract and retain customers and talent, and expose us to increased scrutiny from the investment community and enforcement authorities. Additionally, we could become the target of litigation, investigations, or other proceedings initiated by government authorities or private actors alleging that our activities or positions related to sustainability and corporate responsibility matters are anti-competitive, discriminatory or otherwise unlawful. Our reputation also may be harmed by the perceptions that our stakeholders have about our action or inaction on certain sustainability- and corporate responsibility-related issues, or because they may disagree with our strategy and initiatives, either of which may cause us to face scrutiny, legal and/or regulatory proceedings, or other market access restrictions from certain parties related to our action or inaction on such issues. Integrating acquired companies, and the time and resources devoted to such efforts, may also temporarily slow our progress toward certain goals or require us to update our targets, methodologies, or underlying practices to promote alignment across the combined company. Damage to our reputation and loss of brand equity may reduce demand for our products and services and thus have an adverse effect on our future financial performance, as well as require additional resources to rebuild our reputation.

Financial Risks

Our revenue, profitability, and margins have historically varied, and we expect them to continue to vary over time.

Our revenue, gross margin, and profitability have historically varied among our diverse products and services, customer groups, and geographic markets. Therefore, it is likely that these financial metrics will continue demonstrating variability in the future and may deviate from our historical results. Our revenue depends on the overall demand for our products and services, which is difficult to accurately predict, varies from time to time, may be uneven across our portfolio of offerings and our geographies, and is subject to industry-wide or broader macroeconomic market dynamics, all of which have in the past adversely impacted, and may in the future adversely impact, our business and financial condition. Additionally, the varying sizes of customer contracts or orders, variations in customer acceptances of delivered orders, the timing thereof, and cancellations and/or de-bookings of such orders (due to various reasons, including, but not limited to, failure to satisfy terms and compliance matters, whether initiated by us or the customer) can be uneven across our portfolio and have at times impacted, and in the future could impact, our pipeline, bookings, and our ability to recognize revenue, if at all (particularly with respect to contracts and orders involving our AI offerings). Further, larger orders, including some orders for our AI systems, may involve larger amounts of credit or longer payment terms than typical for our business, increasing our risk when customers do not pay in a timely fashion, or at all, particularly where payment terms with major suppliers differ from the terms with our customers. Such variables have in the past negatively impacted our financial performance, and may do so again in the future. Delays or reductions in discretionary IT spending by our customers or potential customers have had, and in the future, could have an adverse effect on demand for our products and services, which could result in a significant decline in revenue. In addition, revenue declines in some of our businesses may affect revenue in our other businesses as we may lose cross-selling opportunities.

Our margins and profitability in any given period are dependent on numerous factors, many of which are unpredictable or challenging to anticipate in advance, such as the product, service, customer, and geographic mix reflected in that period's revenue; variability in price competition in one or more of the markets in which we compete; modifications to our pricing strategy due to inaccurately forecasting demand; currency fluctuations that impact our costs; impacts of inflation; increases in material, labor, logistics, warranty costs, or inventory carrying costs; issues with manufacturing or component availability, including excess product component or obsolescence charges; issues relating to the distribution of our products and provision of our services; or the impact of trade policies, tariffs, or other trade restrictions. In addition, entry into new markets may be relatively less profitable, due to high upfront investments associated with entering those markets and the need to operate within local pricing and cost structures, and we may have difficulty establishing and/or maintaining the operating infrastructure necessary to support margin-rich growth in some of those markets. Failure to sustain or improve our gross margins reduces our profitability and may have a material adverse effect on our business, results of operations, and stock price. Moreover, our efforts to address the challenges facing our business could increase the level of variability in our financial results because the rate at which we are able to realize the benefits from those efforts may vary from period to period.

Furthermore, the relationship between China and the U.S., and any subsequent action that may be taken by either country, may significantly vary the results our operations and financial performance from that region. There could be additional

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uncertainty surrounding heightened trade restrictions or the enforceability of contract obligations, as well as the timing and form of payments from China.

We are exposed to fluctuations in foreign currency exchange rates.

Conducting business in currencies other than the U.S. dollar has, from time to time, adversely impacted, and could in the future, have an adverse impact on our results as expressed in U.S. dollars. Currency volatility contributes to variations in our sales of products and services in impacted jurisdictions. Fluctuations in foreign currency exchange rates have, from time to time, adversely affected, and could in future periods adversely affect our revenue recognition and our revenue growth. In addition, currency variations can adversely affect our ability to implement price increases, margins on sales of our products in countries outside of the United States and margins on sales of products that include components obtained from suppliers located outside of the United States.

From time to time, we use forward contracts and options designated as cash flow hedges to protect against foreign currency exchange rate risks, and may continue to do so in the future. The effectiveness of our hedges depends on our ability to accurately forecast future cash flows, which is particularly difficult during periods of uncertain demand for our products and services and highly volatile exchange rates. We may incur significant losses from our hedging activities due to factors such as volatility and currency variations. In addition, certain or all of our hedging activities may be ineffective, may expire and not be renewed or may not offset any or more than a portion of the adverse financial impact resulting from currency variations. Losses associated with hedging activities also may impact our revenue and to a lesser extent our cost of sales and financial condition.

Adverse developments affecting our liquidity, capital position, borrowing costs, and access to capital markets could adversely impact our business, financial condition, and results of operations or those of the third parties with whom we do business.

We currently maintain investment grade credit ratings with Moody's Investors Service, Standard & Poor's Ratings Services, and Fitch Ratings Services. Despite these investment grade credit ratings at this time, we may experience downgrades in our credit ratings for various reasons, including but not limited to for reasons in connection with the substantial amount of debt we have incurred in connection with the Merger. Any such downgrades could increase the cost of borrowing under any indebtedness we may incur, jeopardize our ability to incur debt on terms acceptable to us, reduce market capacity for our commercial paper, or require the posting of additional collateral under our derivative contracts. Additionally, increased borrowing costs, including those arising from a credit rating downgrade, can potentially reduce the competitiveness of our financing business. There can be no assurance that we will be able to maintain our credit ratings, and any additional actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade, may have a negative impact on our liquidity, capital position, and access to capital markets.

In addition, volatility and disruption in the financial sector and capital markets and other events negatively affecting macroeconomic conditions or contributing to the instability or volatility thereof, such as changing interest rates, have from time to time in the past impacted, and may in the future impact, our liquidity, capital position, and access to capital markets. Our total liquidity depends in part on the availability of funds under the revolving credit facility and our other financing agreements. The failure of any lender's ability to fund future draws on our revolving credit facility or our other financing arrangements could reduce the amount of cash we have available for operations and additional capital for future needs. The future effects of such events are unknown and difficult to predict at this time, and could adversely affect us, our customers, financial institutions, transactional counterparties, or others with which we do business, which may in turn have adverse impacts on our current and/or projected business operations, financial condition, and our results of operations.

Our debt obligations may adversely affect our business and our ability to meet our obligations and pay dividends.

In addition to our current total carrying debt, we may also incur additional indebtedness in the future. In order to consummate the Merger, we have incurred a substantial amount of debt. This collective amount of debt could have important adverse consequences to us and our investors, including requiring a substantial portion of our cash flow from operations to make principal and interest payments; making it more difficult to satisfy other obligations; increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing; increasing our vulnerability to general adverse economic and industry conditions; reducing the cash flows available to fund capital expenditures and other corporate purposes and to grow our business; limiting our flexibility in planning for, or reacting to, changes in our business and industry; and limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase our common stock.

Macroeconomic circumstances are subject to change, resulting in delays or reversals of such policy positions and actions by governments, including by central banks around the world, which may result in a prolonged unfavorable interest rate or

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economic environment and affect our ability to incur debt at reasonable prices or our desire to incur further debt at all. To the extent that we incur additional indebtedness, the risks described above could increase, including requiring additional expected cash flows from operations to service our debt. In addition, our actual cash requirements to operate our business in the future may be greater than expected. Our cash flow from operations may not be sufficient to service our outstanding debt or to repay our outstanding debt as it becomes due, and we may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at all, to service or refinance our debt.

We make estimates and assumptions in connection with the preparation of our Consolidated Financial Statements and any changes to those estimates and assumptions could adversely affect our results of operations.

In connection with the preparation of our Consolidated Financial Statements, we use certain estimates and assumptions based on historical experience and other factors. Our most critical accounting estimates are described in the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K. In addition, as discussed in Note 1, “Overview and Summary of Significant Accounting Policies—Use of Estimates” and Note 17, “Litigation, Contingencies, and Commitments,” to our Condensed Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K, we make certain estimates, including decisions related to purchase price and purchase price adjustments, as well as provisions for legal proceedings and other contingencies. While we believe that these estimates and assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could adversely affect our results of operations.

We periodically evaluate goodwill and intangible assets to determine whether all or a portion of their carrying values may be impaired, in which case an impairment charge may be necessary. The value of goodwill may be materially and adversely affected if businesses that we acquire perform in a manner that is inconsistent with our assumptions at the time of acquisition. In addition, from time to time, we divest businesses, and any such divestiture could result in significant asset impairment and disposition charges, including those related to goodwill and intangible assets. During fiscal 2025, we recognized an impairment charge of $1.6 billion (which includes the $1.4 billion impairment charge disclosed in our Form 10-Q for the fiscal period ended April 30, 2025) for goodwill related to the Hybrid Cloud reporting unit, which was predominantly driven by an increase in the discount rate used in the analysis, as well as a strategic shift away from Non-IP storage business. Any future evaluations resulting in an impairment of goodwill or intangible assets could materially and adversely affect our results of operations and financial condition in the period in which the impairment is recognized.

Declaration, payment and amounts of dividends, if any, to holders of our shares will be uncertain.

Our board of directors has the discretion to determine whether any dividends on our common stock will be declared, when dividends, if any, are declared, and the amount of such dividends. We expect that such determination would be based on a number of considerations, including our results of operations and capital management plans, availability of funds, our access to capital markets, as well as industry practice, and other factors deemed relevant by our board of directors.

In addition, on September 13, 2024, we issued 30,000,000 shares of 7.625% Series C Mandatory Convertible Preferred Stock with a dividend rate of 7.625% per annum on the liquidation preference of $50 per share (the “Preferred Stock”). The Preferred Stock ranks senior to our common stock with respect to the payment of dividends. As long as any share of Preferred Stock is outstanding, unless all accumulated and unpaid dividends on the Preferred Stock for all preceding dividend periods have been declared and paid in full or declared and set apart for payment, we may not declare, pay or set apart for payment any dividends on our common stock or any other class or series of stock that ranks junior to the Preferred Stock. Dividends on the Preferred Stock are discretionary and cumulative. Holders of Preferred Stock will only receive dividends on their shares when and if declared by our board of directors. If dividends on the Preferred Stock have not been declared and paid for the equivalent of six or more quarterly dividend periods, whether or not consecutive, holders of Preferred Stock, together as a class with holders of any other series of parity stock with like voting rights, will be entitled to vote for the election of two additional directors to our board of directors. This right to elect additional directors to our board of directors will dilute the representation of our stockholders on our board of directors and may adversely affect the market price of our common stock. When quarterly dividends have been declared and set apart for payment in full, the right of the holders of Preferred Stock to elect these two additional directors will cease, the terms of office of these two directors will forthwith terminate and the number of directors constituting our board of directors will be reduced accordingly. Additional risks related to the Preferred Stock are contained in the prospectus supplement dated September 10, 2024.

Legal, Regulatory, and Compliance Risks

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Unfavorable results of legal proceedings, investigations, and other disputes could harm our business and result in substantial costs.

We are involved in various claims, suits, investigations, and legal proceedings that arise from time to time in the ordinary course of business or otherwise. Additional legal claims or regulatory matters affecting us and our subsidiaries may arise in the future and could involve stockholder, consumer, regulatory, compliance, intellectual property, antitrust, tax, trade, privacy, employment, warranty or product claims, and other issues on a global basis. In addition, we have received inquiries, and may be subject to demands, claims, lawsuits, regulatory investigations, and additional inquiries (including those from U.S. or foreign governmental authorities). Litigation is inherently unpredictable. Regardless of the merits of a claim, the expense of initiating and defending, and in some cases entering into settlements of claims, such litigation and investigations may be costly, and may cause us to suffer reputational harm, divert management’s attention from day-to-day operations of our business, and may require us to implement certain remedial measures that could disrupt our business, operations, results of operations, financial condition, or cash flows. In addition, if we fail to comply with the terms of any settlement agreement, we could face more substantial penalties. An unfavorable resolution of one or more of these matters could adversely affect our business, results of operations, financial condition, or cash flows. Even if we are not named a party to a particular suit, we may be subject to indemnification obligations to the named parties, including our directors and executive officers as well as other third parties, that could subject us to liability for damages or other amounts payable as a result of such judgments or settlements.

Third-party claims of intellectual property infringement, including patent infringement, are commonplace in our industry and successful third-party claims may limit or disrupt our ability to sell our products and services.

Third parties may claim that we or customers indemnified by us are infringing upon or otherwise violating their intellectual property rights. Patent assertion entities frequently purchase intellectual property assets for the purpose of extracting infringement settlements. Furthermore, our exposure to these risks associated with the use of intellectual property may be increased as a result of acquisitions; not only do we have a lower level of visibility into the development process with respect to such technology or the care taken to safeguard against infringement risks, but also third parties may make infringement and similar claims only after we have acquired technology that had not been asserted prior to our acquisition. If we cannot license, or replace, allegedly infringed intellectual property on reasonable terms, our operations could be adversely affected. In addition, there is uncertainty around the validity and enforceability of intellectual property rights related to our use, development, and deployment of AI and AI systems and solutions. Our use of AI technologies, whether created by us for internal or customer use cases or otherwise incorporated from external sources into our offerings, could lead to claims of infringement of third-party intellectual property rights, or allegations of non-compliance with the law. Even if we believe that intellectual property and non-compliance claims are without merit, they can be time-consuming and costly to defend against and may divert management's attention and resources away from our business. Claims of intellectual property infringement also might require us to redesign affected products, discontinue certain product offerings, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from importing, marketing, or selling certain of our products. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations to us.

Our business is subject to various federal, state, local, and foreign laws and regulations that could result in costs or other sanctions that adversely affect our business and results of operations.

We are subject to various US (federal, state, and local), and foreign laws, regulations, executive orders and policies affecting the sale of our products and services in a number of areas. Laws and regulations may change in ways that will require us to modify our business model and objectives or affect our returns on investments by restricting existing activities and products, subjecting them to escalating costs or prohibiting them outright.

For example, as a result of laws and regulations concerning responsible and sustainable business practices, we face increasing complexity related to product design, safety and compliance; the use of regulated, hazardous, and scarce materials; the management, movement and disposal of hazardous substances and waste; the associated energy consumption and efficiency related to operations and the use of products, services, and solutions; the transportation and shipping of products and other materials; supply chain due diligence; climate change adaptation and mitigation; greenhouse gas emissions; sustainability-related regulations and reporting requirements; and the reuse, recycling and/or disposal of products and their components at end-of-use or useful life and associated operational or financial responsibility. Since a significant portion of our hardware revenues come from international sales, any changes to current environmental legal requirements may increase our cost of doing business internationally and impact our hardware revenues from the EU, U.S., China, India and/or other countries proposing or adopting similar environmental legal requirements. In addition, other sustainability reporting-related laws, regulations, treaties, and similar initiatives and programs are being proposed, adopted, and implemented in U.S. states, including California, and throughout the world. If we were to violate or become liable under environmental or certain

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sustainability-related laws or if our products become non-compliant with such laws or market access requirements, it could result in loss of market access or limit offerings in those markets or our customers may refuse to purchase our products, and we could incur costs or face other sanctions, such as restrictions on our products entering certain jurisdictions, fines, and/or civil or criminal sanctions. Environmental regulations may also impact the availability and cost of energy or emissions related to energy consumption which may increase our cost of manufacturing and/or the cost of powering and cooling owned IT infrastructures.

In addition, a wide variety of provincial, state, national, foreign, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data. Furthermore, our business is also subject to an ever-growing number of laws and regulations addressing privacy and information security, including the use of AI. In particular, we face an increasingly complex global regulatory environment and patchwork of state laws in the U.S., increasing the risks associated with addressing these regulatory requirements and in responding to potential security and data incidents. The increase in aaS offerings may also be impacted by data localization and international data transfer requirements under various global data protection laws that may continue to impose additional restrictions and compliance costs on us. Furthermore, the rapid development and deployment of tools that leverage AI are also causing governments to accelerate efforts to regulate AI and restrict purchases that include AI, even for AI that does not pertain to personal data, which is impacting and may further impact the use and incorporation of AI capabilities in our offerings and in our customers’ demand for such offerings. In addition, the interpretation and application of privacy and data protection-related laws in some cases is uncertain, and our legal and regulatory obligations are subject to frequent changes, including the potential for various regulators or other governmental bodies to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations, or to increase penalties. Further, evolving and changing definitions of personal data and personal information, within the EU, the U.S., the U.K., and elsewhere, to include IP addresses, machine identification information, location data, and other information, may limit or inhibit our ability to operate or expand our business, including limiting business relationships and partnerships that may involve the sharing or uses of data. All of these dynamics create a legal landscape where compliance with these laws and regulations can be costly, distract management and technical personnel, and can delay or impede the development and offering of new products and services, which may ultimately negative impact our business and operating results.

If we were to violate or become liable or subject to enforcement action under laws or regulations associated with any of the above laws or regulations, we could incur substantial costs or be exposed to potential regulatory fines, civil or criminal sanctions, third-party claims, and reputational damage. Our actual or perceived failure to comply with applicable laws and regulations or other obligations relating to these topics could subject us to liability to our customers, data subjects, suppliers, business partners, employees, and others; give rise to legal and/or regulatory action; could damage our reputation; could limit or restrict our ability to sell to government customers in the U.S. and abroad; or could otherwise materially harm our business, any of which could have an adverse effect on our business, operating results, and financial condition.

Jurisdictions in which we have significant operations and assets, such as the U.S., China, India, and the E.U., each have exercised and continue to exercise significant influence over many aspects of their domestic economies including, but not limited to fair competition, tax practices, anti-corruption, anti-trust, responsible sourcing and human rights (including the use of conflict minerals), price controls and international trade, which have had and may continue to have an adverse effect on our business operations and financial condition.

Contracts with federal, state, provincial, and local governments are subject to a number of challenges and risks that may adversely impact our business.

Our contracts with federal, state, provincial, and local governmental customers are subject to various government procurement laws and regulations, required contract provisions, and other requirements relating to contract formation, administration, and performance, as well as local content, manufacturing, information security and security requirements. Furthermore, as a contractor and subcontractor to the U.S. government, our IT systems are subject to federal regulations that require compliance with security and privacy controls. Any violation of government contracting laws and regulations or contract terms could result in the imposition of various civil and criminal penalties, termination of federal government contracts, forfeiture of profits, suspension of payments and fines, treble damages, and suspension from future government contracting. Additionally, changes in underlying regulatory requirements that vary across the geographies in which we operate could increase compliance costs and risks. Such failures could also cause reputational damage to our business. In addition, in the U.S., we will continue to be subject to qui tam litigation brought by private individuals on behalf of the government relating to our government contracts. If we are suspended or disbarred from government work or if our ability to compete for new government contracts is adversely affected, our financial performance could suffer.

Government contracts impose additional challenges and risks to our sales efforts. Political factors, such as election outcomes, changes in leadership in one or more branches of government, and the resulting potential changes in government policies have affected, and may in the future affect, the number and terms of government contracts entered into, the

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authorizations for programs that we bid on, spending priorities, or how compliance with relevant rules or laws is assessed, and may do so again in the future. Government demand for our products and services has been impacted by public sector staffing and available resources, and government payments may in the future be impacted or delayed for the same reasons (including recent actions taken to reduce the size of the U.S. federal workforce), budgetary cycles and funding authorizations, including in connection with an extended government shutdown, with funding reductions, or delays adversely affecting public sector demand for our products and services. The current U.S. administration's efforts to reduce federal spending and the size of the federal workforce have resulted in and are likely to continue to result in contract terminations, delays, and cancellations of new procurements, and reductions in price and contract scope. While our contracts with government entities are often planned and executed as multi-year projects, government entities usually reserve the right to change the scope of or terminate these projects for any or some of the aforementioned reasons. As such, such developments may adversely impact the results of operations and financial condition of government contractors with whom we conduct business, which may in turn cause those government contractors to become unable to meet their obligations under contracts with us, resulting in material payment delays, payment reductions, or contract terminations by our governmental customers, among other adverse consequences. All of the above would negatively impact our results of operations and financial condition.

The current U.S. administration has issued executive orders and taken actions to curtail certain policies and programs that violate federal anti-discrimination laws, including requiring U.S. federal contractors and subcontractors to certify that they do not operate any such programs. A violation of these orders or similar federal or state orders, laws or regulations or becoming subject to adverse actions could expose us to penalties and sanctions or jeopardize our ability to continue to do work for the U.S. federal government, which may adversely affect our future results of operations. An allegation of a violation could result in reputational harm and subject us to increased litigation risk. Additionally, conflicting laws and regulations between federal, state and local governments may make it increasingly difficult for us to do business in every government jurisdiction.

Further, some government customers have implemented and could continue to implement procurement policies that impact our profitability. Procurement policies favoring more non-commercial purchases, different pricing, or evaluation criteria or government contract negotiation offers based upon the customer’s view of what our pricing should be, could affect the margins on such contracts or make it more difficult to compete on certain types of programs. Government customers are continually evaluating their contract pricing and financing practices, and we have no assurance regarding what changes will be proposed, if any, and their impact on our financial position, cash flows, or results of operations.

Unanticipated changes in our tax provisions, the adoption of new tax legislation, or exposure to additional tax liabilities could affect our financial performance.

We are subject to income and other taxes in the United States and numerous foreign jurisdictions. Our tax liabilities are affected by the amounts we charge in intercompany transactions for inventory, services, licenses, funding, and other items. We are subject to ongoing tax audits in various jurisdictions. Tax authorities may disagree with our intercompany charges, cross-jurisdictional transfer pricing or other matters, and may assess additional taxes as a result. There can be no assurance that we will accurately predict the outcomes of these audits, and the amounts ultimately paid upon resolution of audits could be materially different from the amounts previously included in our income tax expense and therefore could have a material impact on our tax provision, net income and cash flows. In addition, our effective tax rate in the future could be adversely affected by acquisitions, changes to our operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and the discovery of new information in the course of our tax return preparation process. The carrying value of our deferred tax assets is dependent on our ability to generate future taxable income.

Proposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on foreign earnings and could increase the U.S. corporate tax rate. Several of the proposals currently being considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense, and cash flows. Our future effective tax rate may also be impacted by judicial decisions, changes in interpretation of regulations, as well as additional legislation and guidance. Further, the Organisation for Economic Co-operation and Development (“OECD”), an international association of 38 countries including the United States, has proposed changes to numerous long-standing tax principles, namely, its Pillar Two framework, which imposes a global minimum corporate tax rate of 15%. To date, 60 countries have enacted portions, or all, of the OECD proposal. Where enacted, the rules are effective for us in fiscal 2025. The adoption and effective dates of these rules may vary by country and could increase tax complexity and uncertainty and may adversely affect our provision for income taxes. There was not a material impact to our fiscal 2025 results from Pillar Two legislation. While we do not anticipate a material adverse impact to our financial position in fiscal 2026, additional changes to global tax laws are likely to occur. For instance, some countries have enacted, and others have proposed, taxes based on gross receipts applicable to digital services, regardless of profitability. Such changes may adversely affect our tax liability.

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Risks Related to Our Prior Separations

We continue to face a number of risks related to our separation from HP Inc., our former parent, including those associated with ongoing indemnification obligations, which could adversely affect our financial condition and results of operations, and shared use of certain intellectual property rights, which could in the future adversely impact our reputation.

In connection with our separation from HP Inc. on November 1, 2015 (the “Separation”), Hewlett Packard Enterprise and HP Inc. entered into several agreements that determine the allocation of assets and liabilities between the companies following the Separation and include any necessary indemnifications related to liabilities and obligations. In these agreements, HP Inc. agreed to indemnify us for certain liabilities, and we agreed to indemnify HP Inc. for certain liabilities, including cross-indemnities that are designed and intended to place financial responsibility for the obligations and liabilities of our business with us, and financial responsibility for the obligations and liabilities of HP Inc.'s business with HP Inc. We may be obligated to fully indemnify HP Inc. for certain liabilities under the Separation agreements or HP Inc. may not be able to fully cover their indemnification obligations to us under the same Separation agreements. Each of these risks could negatively affect our business, financial position, results of operations, and cash flows.

In addition, the terms of the Separation also include licenses and other arrangements to provide for certain ongoing use of intellectual property in the operations of both businesses. For example, through a joint brand holding structure, both Hewlett Packard Enterprise and HP Inc. retain the ability to make ongoing use of certain variations of the legacy Hewlett-Packard and HP branding, respectively. As a result of this continuing shared use of the legacy branding there is a risk that conduct or events adversely affecting the reputation of HP Inc. could also adversely affect our reputation.

During fiscal 2019, we executed a Termination and Mutual Release Agreement which terminated our Tax Matters Agreement with HP Inc. Because we now have limited indemnity rights from HP Inc., we potentially bear more economic risk for certain potential unfavorable tax assessments.

General Risks

Our stock price has fluctuated and may continue to fluctuate, which may make future prices of our stock difficult to predict.

Investors should not rely on recent or historical trends to predict future stock prices, financial condition, results of operations, or cash flows. Our stock price, like that of other technology companies, can be volatile and can be affected by, among other things, speculation, coverage, or sentiment in the media or the investment community; the announcement and anticipated timing of new, planned or contemplated products, services, technological innovations, acquisitions, divestitures, or other significant transactions by us or our competitors; developments in our aaS business model; our perceived progress in integrating acquired companies; our quarterly financial results and comparisons to estimates by the investment community or financial outlook provided by us; the financial results and business strategies of our competitors; inflation; market volatility or downturns caused by outbreaks, epidemics, pandemics, geopolitical tensions or conflicts, or other macroeconomic dynamics; developments relating to pending investigations, claims, and disputes; or the timing and amount of our share repurchases. General or industry specific market conditions or stock market performance or domestic or international macroeconomic and geopolitical factors unrelated to our performance also may affect the price of our stock. Volatility in the price of our securities could result in the filing of securities class action litigation matters, which could result in substantial costs and the diversion of management time and resources.

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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

For purposes of this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section, we use the terms “Hewlett Packard Enterprise,” “HPE,” “the Company,” “we,” “us,” and “our” to refer to Hewlett Packard Enterprise Company.

This section of this Form 10-K generally discusses fiscal 2025 and fiscal 2024 items and year-to-year comparisons between fiscal 2025 and fiscal 2024. Discussions of fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Form 10-K can be found in “Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations” of the Company's Annual Report on Form 10-K for the fiscal year October 31, 2024, as filed with the SEC on December 19, 2024, which is available on the SEC's website at www.sec.gov.

We intend the discussion of our financial condition and results of operations that follows to provide information that will assist the reader in understanding our Consolidated Financial Statements, changes in certain key items in these financial statements from year to year, and the primary factors that accounted for these changes, as well as how certain accounting principles, policies and estimates affect our Consolidated Financial Statements. This discussion should be read in conjunction with our Consolidated Financial Statements and the related notes that appear elsewhere in this document.

This MD&A is organized as follows:

• 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, increased inventory levels, conservative customer spending environment (though recovering), persistent inflation, foreign exchange pressures, recent tax developments, and competitive pricing pressures.

• Executive Overview. A discussion of our business and a summary of our financial performance and other highlights, including non-GAAP financial measures, affecting the Company in order to provide context to the remainder of the MD&A.

• Critical Accounting Policies and Estimates. A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

• Results of Operations. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations at the segment level.

• Liquidity and Capital Resources.  An analysis of changes in our cash flows, financial condition, liquidity, and cash requirements and commitments.

• GAAP to Non-GAAP Reconciliations . Each non-GAAP financial measure has been reconciled to the most directly comparable GAAP financial measure. This section also includes a discussion of the use, usefulness and economic substance of the non-GAAP financial measures, along with a discussion of material limitations, and compensation for those limitations, associated with the use of non-GAAP financial measures.

TRENDS AND UNCERTAINTIES

During fiscal 2025, the effects of the evolving macroeconomic environment on demand persisted and certain significant developments impacted our operations as follows:

Technological Advancements: We have observed market trends and demand (of customers of various segments and sizes) gravitating towards AI, hybrid cloud, edge computing, data security capabilities, and related offerings. The volume of data at the edge continues to grow, driven by the proliferation of more devices. The need for a unified cloud experience everywhere has grown, as well, in order to manage the growth of data at the edge. Increasing demand for AI is also contributing to changes in the competitive landscape. With the abundance of data, there are opportunities to develop AI tools with powerful computational abilities to extract insights and value from the captured data. Secure networking that is purpose-built for AI workloads is the foundation that enables users to seamlessly connect and apply AI learnings to such data that lives in various ecosystems. While we believe our recent acquisition of Juniper Networks positions us to capitalize on the growing market opportunities across AI-accelerated computing, data, cloud and networking, our major competitors and emerging competitors are expanding their product and service offerings with integrated products and solutions and exerting increased competitive pressure. We expect these market dynamics and trends to continue in the longer term.

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Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Macroeconomic Uncertainty: The evolving macroeconomic environment has impacted industry-wide demand, as customers have been taking longer to work through prior orders and, to this day, have been adopting a more strategic approach to discretionary IT spending. While this dynamic has been easing, this 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, including our own. 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 such a mixed macroeconomic environment to largely continue and possibly limit revenue and margin growth in the near term.

Supply Chain: We experienced supply chain constraints for certain components, including graphics processing units (“GPUs”) and accelerated processing units. Though they have eased at times during the fiscal year, we are once again experiencing such constraints and expect such dynamics to continue in the medium term. The future remains uncertain due to the macroeconomic dynamics discussed above, which have thus far impacted our ability to import and export components and finished products and the costs of doing so. Additionally, logistics costs have been, and may continue to remain, high with such changes in trade policies. We have been experiencing higher-than-normal inventory levels, primarily due to frequent component part updates, customers transitioning to the next generation of GPUs, our securing supply ahead of demand, and longer customer acceptance timelines on AI-related orders. 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 the global trade uncertainties referenced above and a competitive pricing environment, all of which may impact our financial results. We plan to mitigate the impact of these dynamics through continued disciplined cost and pricing management and supply chain diversification; however, such actions may not be successful.

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 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.

Foreign Currency Exposure: We have a large global presence, with more than half of our revenue generated outside of the U.S. As a result, our financial results can be, and particularly in recent periods have been, impacted by fluctuations in foreign currency exchange rates. We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.

Public Sector : We have a number of engagements with various public sector entities, including the U.S. federal government and its agencies, as direct or indirect customers of our IT services and hardware. Significant staffing and resource reductions at certain public sector entities create an uncertain environment and as a result, our financial results have been, and may continue to be, impacted in the near term.

Recent Tax Developments: Proposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on foreign earnings and could increase the U.S. corporate tax rate. Several of the proposals currently being considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense, and cash flows. Our future effective tax rate may also be impacted by judicial decisions, changes in interpretation of regulations, as well as additional legislation and guidance. Further, the Organisation for Economic Co-operation and Development (“OECD”), an international association of 38 countries including the United States, has proposed changes to numerous long-standing tax principles, namely, its Pillar Two framework, which imposes a global minimum corporate tax rate of 15%. To date, 60 countries have enacted portions, or all, of the OECD proposal. Where enacted, the rules are effective for us in fiscal 2025. The adoption and effective dates of these rules may vary by country and could increase tax complexity and uncertainty and may adversely affect our provision for income taxes. There was not a material impact to our fiscal 2025 results from Pillar Two legislation. While we do not anticipate a material adverse impact to our financial position in fiscal 2026, additional changes to global tax laws are likely to occur. For instance, some countries have enacted, and others have proposed, taxes based on gross receipts applicable to digital services, regardless of profitability. Such changes may adversely affect our tax liability.

The Internal Revenue Service (“IRS”) is conducting audits of our fiscal 2020 through 2022 U.S. federal income tax returns. In the second quarter of fiscal 2025, the IRS issued a Revenue Agent Report (“RAR”) regarding the audit of our fiscal

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Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

2017 through 2019 U.S. federal income tax returns, with which we agreed. The audit cycle for fiscal 2017 through 2019 is now considered effectively settled, resulting in a reduction of existing unrecognized tax benefits of approximately $340 million, which did not result in a material impact to our Consolidated Statement of Earnings and our Consolidated Balance Sheet. The resolution of the audit resulted in the release of tax reserves that were predominantly related either to adjustments to foreign tax credits that carried a full valuation allowance or to the timing of intercompany royalty revenue recognition, neither of which affected our effective tax rate.

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OB3”) into law. OB3 introduces several changes to tax regulations, including the permanent restoration of 100% depreciation and the permanent restoration of immediate deductibility of costs associated with research and development activities performed in the United States. There was not a material impact of OB3 to our fiscal 2025 results, and we do not expect a material impact in fiscal 2026, but we will continue to evaluate the full impact of these changes on our future results.

Other Trends and Uncertainties: The impacts of geopolitical volatility (including the continued instability in the Middle East, the ongoing conflict in Ukraine, and the relationship between China and the U.S.) may impact our operations, financial performance, and ability to conduct business in some non-U.S. markets. We have, in the past, entered into contracts for the sale of certain products and services that reflect heavier-than-normal discounting due to competitive pressures, which have resulted in lower margins than expected, and we expect will continue to negatively impact our margins in the near term. We have been monitoring and seeking to mitigate these risks with adjustments to our manufacturing, supply chain, and distribution networks, as well as our pricing and discounting practices. We remain focused on executing our key strategic priorities, building long-term value creation for our stakeholders, and addressing our customers’ needs while continuing to make prudent decisions in response to the environment.

The following “Executive Overview,” “Results of Operations,” and “Liquidity” discussions and analysis compare fiscal 2025 to fiscal 2024 , unless otherwise noted. The “Capital Resources” and “Cash Requirements and Commitments” sections present information as of October 31, 2025, unless otherwise noted.

EXECUTIVE OVERVIEW

Acquisition of Juniper Networks

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 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 10, “Acquisitions and Dispositions,” to the Consolidated Financial Statements for additional information.

Pending Divestiture of H3C Technologies Co., Limited Shares

On November 17, 2025, our subsidiary, H3C Holdings Limited (“H3C Holdings”), entered into (i) share purchase agreements with five counterparties, including Unisplendour International Technology Limited (“UNIS”), whereby such counterparties, in the aggregate, agreed to purchase 10% of the total issued share capital of H3C Technologies Co., Limited (“H3C”) for cash consideration of approximately $714 million and (ii) a side letter with UNIS, amending the Agreement on Subsequent Arrangements that was previously entered into on May 24, 2024, whereby, among other things, H3C Holdings and UNIS shall retain their put option and call option, respectively, relating to the remaining issued share capital of H3C held by H3C Holdings and have the right to exercise their respective option rights in respect of such shares up to three times, subject to the timing and terms as set forth therein. The agreement referenced in clause (ii) above revises the arrangements governing the sale of all of the remaining issued share capital of H3C held by us through H3C Holdings. On November 28, 2025, H3C Holdings entered into three additional share purchase agreements, including one with UNIS, whereby such counterparties, in the aggregate, agreed to purchase the remaining 9% of the total issued share capital of H3C for cash consideration of approximately $643 million. Such transactions and the transactions referenced in clause (i) remain subject to regulatory approvals.

Cost Savings Actions

On March 6, 2025, the Board of Directors approved a cost reduction program (the "Program") intended to reduce structural operating costs and continue advancing our ongoing commitment to profitable growth. The Program is expected to be

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

implemented through fiscal year 2026 and deliver gross savings of approximately $350 million by fiscal year 2027 through reductions in our workforce. The Program has since become a part of Catalyst, a set of broader company-wide actions to reduce costs and enhance efficiency throughout the Company.

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 $275 million in fiscal 2025.

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 will require approximately $800 million of investment, primarily tied to headcount, supply chain optimization, and portfolio rationalization.

Fiscal 2025 compared with fiscal 2024

Net revenue of $34.3 billion represented an increase of 13.8%, primarily due to higher revenue in the Networking segment from the Merger and higher average unit prices (“AUPs”) in the Server segment. The gross profit margin of 30.3% (or $10.4 billion) represents a decrease of 2.5 percentage points from the prior-year period, primarily due to an increase in cost of sales in the Server, Networking, and Hybrid Cloud segments. The operating profit margin of (1.3)%, represents a decrease of 8.6 percentage points from the prior-year period, primarily due to the impairment of goodwill and costs associated with the Merger.

Financial Results

The following table summarizes our consolidated GAAP financial results:

For the fiscal years ended October 31,

Change

In millions, except per share amounts

Net revenue

Gross profit

Gross profit margin

(2.5)pts

(Loss) earnings from operations

Operating profit margin

(8.6)pts

Net earnings attributable to HPE

Net (loss) earnings attributable to common stockholders

Diluted net (loss) earnings per share attributable to common stockholders (1)

Cash flow provided by operations

The following table summarizes our consolidated non-GAAP financial results:

For the fiscal years ended October 31,

Change

In millions, except per share amounts

Non-GAAP gross profit

Non-GAAP gross profit margin

(1.3)pts

Non-GAAP earnings from operations

Non-GAAP operating profit margin

(0.7)pts

Non-GAAP net earnings attributable to HPE

Non-GAAP net earnings attributable to common stockholders

Non-GAAP diluted net earnings per share attributable to common stockholders (1)

Free cash flow

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

(1) For purposes of calculating diluted net earnings (loss) per share (“EPS”), the 7.625% Series C mandatory convertible preferred stock (“Preferred Stock”) dividends are added back to the net earnings (loss) attributable to common stockholders and the diluted weighted-average share calculation assumes the Preferred Stock was converted at issuance or as of the beginning of the reporting period. For GAAP diluted net EPS, the effect of employee stock plans and Preferred Stock is excluded when calculating diluted net loss per share as it would be anti-dilutive.

Each non-GAAP financial measure has been reconciled to the most directly comparable GAAP financial measure herein. Please refer to the section “GAAP to non-GAAP Reconciliations” included in this MD&A for these reconciliations, a discussion of the use, usefulness and economic substance of the non-GAAP financial measures, along with a discussion of material limitations, and compensation for those limitations, associated with the use of non-GAAP financial measures.

Annualized Revenue Run-rate (“ARR”)

ARR represents the annualized revenue of all net HPE GreenLake cloud services revenue, related financial services revenue (which includes rental income from operating leases and interest income from finance leases), and software-as-a-service, software consumption revenue, and other aaS offerings, by taking such revenue recognized during a quarter and multiplying by four. To better align the calculation of ARR with Juniper Networks’ business and offerings, beginning with the quarter ended July 31, 2025, we also included revenue from software licenses support and maintenance in our ARR calculation, and will continue to do so going forward. The impact of this change was not material to the current and prior periods presented. We believe that ARR is a metric that allows management to better understand and highlight the potential future performance of our aaS business. We also believe ARR provides investors with greater transparency to our financial information and of the performance metric used in our financial and operational decision making and allows investors to see our results “through the eyes of management.” We use ARR as a performance metric. ARR should be viewed independently of net revenue and is not intended to be combined with it.

ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

The following table presents our ARR:

For the fiscal years ended October 31,

Dollars in millions

ARR

Year-over-year growth rate

The 63% year over year increase in ARR was primarily due to growth in the Networking segment due to the Merger and an expanding customer installed base. The ARR attributed to the Hybrid Cloud and Server segments increased due to an expanded range of HPE GreenLake Flex Solutions and increased Server aaS activity.

Capital Returns to Stockholders

Returning capital to our stockholders remains an important part of our capital allocation framework, which also consists of strategic investments. We believe our existing balance of cash and cash equivalents, along with commercial paper and other short-term liquidity arrangements, are sufficient to satisfy our working capital needs, capital asset purchases, dividends, debt repayments, and other liquidity requirements associated with our existing operations. As of October 31, 2025, our cash, cash equivalents and restricted cash were $5.9 billion, compared to $15.1 billion as of October 31, 2024, representing a decrease of $9.2 billion.

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Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Consolidated Financial Statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), which requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities. A summary of significant accounting policies and a summary of recent accounting pronouncements applicable to our Consolidated Financial Statements are included in Note 1, “Overview and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements in Item 8 of Part II. An accounting policy is deemed to be critical if the nature of the estimate or assumption it incorporates is subject to material level of judgment related to matters that are highly uncertain and changes in those estimates and assumptions are reasonably likely to materially impact our Consolidated Financial Statements.

Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may vary under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.

We believe the accounting policies below are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, or complex judgments.

Revenue Recognition

We enter into contracts with customers that may include combinations of products and services, resulting in arrangements containing multiple performance obligations for hardware and software products and/or various services.

The majority of our revenue is derived from sales of products and services and the associated support and maintenance, and such revenue is recognized when, or as, control of promised products or services is transferred to the customer at the transaction price. Transaction price is adjusted for variable consideration, including rebates, which may be offered in contracts with customers, partners, and distributors.

Significant judgment is applied in determining the transaction price as we may be required to estimate variable consideration at the time of revenue recognition. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. Variable consideration is recognized only to the extent that it is probable that a significant reversal of revenue will not occur. We also consider the customers' right of return in determining the transaction price, where applicable.

To recognize revenue for the products and services for which control has been transferred, we allocate the transaction price for the contract among the performance obligations on a relative standalone selling price (“SSP”) basis. For products and services sold as a bundle, the SSP is generally not directly observable and requires the Company to estimate SSP based on management judgment by considering available data such as internal margin objectives, pricing strategies, market/competitive conditions, historical profitability data, as well as other observable inputs. For certain products and services, the Company establishes SSP based on the observable price when sold separately in similar circumstances to similar customers. The Company establishes SSP ranges for its products and services and reassesses them periodically.

Business Combinations

We account for acquired businesses using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. The determination of fair values of identifiable assets and liabilities requires significant judgment in determining critical estimates and assumptions. Critical estimates in valuing intangible assets include the projected revenues, technology obsolescence rate, royalty rates, and discount rates for developed technology and IPR&D; the projected revenues, customer retention rate, forecasted growth in earnings before interest, taxes, depreciation & amortization, and discount rate for the customer contracts, customer lists and distribution agreements. Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the determination of the fair value of the intangible assets acquired. Third-party valuation specialists are utilized for certain estimates.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Taxes on Earnings

We are subject to income taxes in the U.S. and approximately 75 other countries. Significant judgment is required in determining the consolidated provision for income taxes.

We record a valuation allowance to reduce deferred tax assets to the amount that we are more likely than not to realize. In determining the need for a valuation allowance, we consider future market growth, forecasted earnings, future sources of taxable income, the mix of earnings in the jurisdictions in which we operate, and prudent and feasible tax planning strategies. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income, of the appropriate character, in the jurisdictions in which the deferred tax assets are located, prior to their expiration under applicable tax laws.

We are subject to routine corporate income tax audits in the U.S. and numerous foreign jurisdictions. We believe that positions taken on our tax returns are fully supported, but tax authorities may challenge these positions, which may not be fully sustained on examination by the relevant tax authorities. Accordingly, our income tax provision includes amounts intended to satisfy assessments that may result from these challenges. Determining the income tax provision for these potential assessments and recording the related effects requires management judgments and estimates. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on our Benefit (provision) for taxes, Net earnings and cash flows. Our accrual for uncertain tax positions is attributable primarily to uncertainties concerning the tax treatment of our international operations, including the allocation of income among different jurisdictions, intercompany transactions and related interest, and uncertain tax positions from acquired companies. For further discussion on taxes on earnings, refer to Note 6, “Taxes on Earnings,” to the Consolidated Financial Statements in Item 8 of Part II.

Goodwill

We review goodwill for impairment at the reporting unit level annually on the first day of the fourth quarter, or whenever events or circumstances indicate the carrying amount of goodwill may not be recoverable. We are permitted to conduct a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. We performed interim goodwill impairment tests as of November 1, 2024 and April 30, 2025 and our annual impairment test as of August 1, 2025.

As of October 31, 2025, our reporting units with goodwill are consistent with the reportable segments identified in Note 2, “Segment Information,” to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K, with the exception of Networking and Corporate Investments and Other segments. The Networking segment contains two reporting units: Intelligent Edge and Juniper Networks. The Corporate Investments and Other segment contains the A & PS reporting unit.

When performing the goodwill impairment test, we compare the fair value of each reporting unit to its carrying amount. An impairment exists if the fair value of the reporting unit is less than its carrying amount.

Estimating the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We estimate the fair value of our reporting units using a weighting of fair values derived mostly from the income approach and, to a lesser extent, the market approach. Under the income approach, the fair value of a reporting unit is based on discounted cash flow analysis of management's short-term and long-term forecast of operating performance. This analysis includes significant assumptions regarding revenue growth rates, expected operating margins, and timing of expected future cash flows based on market conditions and customer acceptances. The discount rate used is based on the weighted-average cost of capital of comparable public companies adjusted for the relevant risk associated with business specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, the fair value is based on market multiples of revenue and earnings derived from comparable publicly traded companies with operating and investment characteristics similar to the reporting unit. We weight the fair value derived from the market approach commensurate with the level of comparability of these publicly traded companies to the reporting unit. When market comparables are not meaningful or not available, we estimate the fair value of a reporting unit using the income approach. In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to individual reporting units to determine the carrying amount of each reporting unit.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

2025 Interim and Annual Goodwill Impairment Reviews

During fiscal 2025, we performed the following goodwill impairment tests, two of which resulted in goodwill impairment:

• Impairment test performed as of November 1, 2024 based on organizational changes impacting the composition of reporting units as of that date did not result in an impairment;

• Interim test performed as of April 30, 2025 due to indicators of potential impairment resulted in the Hybrid Cloud reporting unit being impaired; and

• Annual impairment test, which was performed as of August 1, 2025, resulted in the Hybrid Cloud reporting unit being impaired.

April 30, 2025 Interim Impairment Test

During the second quarter of fiscal 2025, the macroeconomic environment experienced a rapid deterioration, primarily driven by the announcement and subsequent modifications of international tariffs, an escalation in global trade tensions, and increasing geopolitical uncertainty. These events contributed to significant movement in inputs used to determine the weighted-average cost of capital. As of April 30, 2025, we determined that an indicator of potential impairment existed to require an interim quantitative goodwill impairment test for its reporting units.

Based on the results of the interim quantitative impairment test performed as of April 30, 2025, the fair value of the Hybrid Cloud reporting unit was below the carrying value assigned to Hybrid Cloud. The decline in the fair value of the Hybrid Cloud reporting unit was primarily driven by an increase in the discount rate used in the discounted cash flows analysis, which reflected heightened macroeconomic uncertainty and changes in market conditions. The fair value of the Hybrid Cloud reporting unit was based on a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows which we consider to be a level 3 unobservable input in the fair value hierarchy.

Prior to the quantitative goodwill impairment test, we tested the recoverability of long-lived assets and other assets of the Hybrid Cloud reporting unit and concluded that such assets were not impaired. The quantitative goodwill impairment test indicated that the carrying value of the Hybrid Cloud reporting unit exceeded its fair value by $1.4 billion. As a result, we recorded a goodwill impairment charge of $1.4 billion in the second quarter of fiscal 2025.

August 1, 2025 Annual Impairment Test

Based on the results of the annual quantitative impairment test performed as of August 1, 2025, the fair value of the Hybrid Cloud reporting unit was below the carrying value assigned to Hybrid Cloud. The decline in the fair value of the Hybrid Cloud reporting unit was primarily driven by a strategic shift away from the Non-IP storage business. The fair value of the Hybrid Cloud reporting unit was based on a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows which we consider to be a level 3 unobservable input in the fair value hierarchy.

Prior to the quantitative goodwill impairment test, we tested the recoverability of long-lived assets and other assets of the Hybrid Cloud reporting unit and concluded that such assets were not impaired. The quantitative goodwill impairment test indicated that the carrying value of the Hybrid Cloud reporting unit exceeded its fair value by $0.2 billion. As a result, we recorded a goodwill impairment charge of $0.2 billion in the fourth quarter of fiscal 2025.

Subsequent to the impairment of Hybrid Cloud reporting unit, the indicated fair values of the reporting units exceeded their respective carrying amounts by a range of 0% to 240%. In order to evaluate the sensitivity of the estimated fair value of our reporting units in the goodwill impairment test, we applied a hypothetical 10% decrease to the fair value of each reporting unit. Based on the results of this hypothetical 10% decrease all of the reporting units had an excess of fair value over carrying amount, except Server and Hybrid Cloud.

The Hybrid Cloud reporting unit has remaining goodwill of $3.3 billion as of October 31, 2025 and an excess of fair value over carrying value of 0% as of the annual test date. Hybrid Cloud business is transitioning to a more cloud-native, software-defined platform with HPE Alletra. Translating this growth to revenue and operating income will take time because a greater mix of high margin business, such as ratable software and services, are deferred and recognized in future periods.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

The excess of fair value over carrying amount for the Server reporting unit was 11%. The Server reporting unit has a goodwill balance of $10.2 billion as of October 31, 2025. In the current macroeconomic and inflationary environment, customers have invested selectively, resulting in moderate unit growth and competitive pricing in the traditional servers business. While the AI servers business is growing at a faster pace, because graphics processing units represent a large portion of the solutions, the pricing is very competitive and margins are limited. The Server business continues to focus on capturing market share in both traditional and AI servers, while maintaining operating margin and leveraging its strong portfolio of products.

If the global macroeconomic or geopolitical conditions worsen, projected revenue growth rates or operating margins decline, weighted-average cost of capital increases, or if we have a significant or sustained decline in our stock price, it is possible the estimates for our Hybrid Cloud and Server reporting units’ ability to successfully address the current challenges may change, which could result in the carrying value of the Hybrid Cloud and Server reporting units exceeding their estimated fair value and potential impairment charges.

RESULTS OF OPERATIONS

Results of operations in dollars and as a percentage of net revenue were as follows:

For the fiscal years ended October 31,

Dollars

% of Revenue

Dollars

% of Revenue

Dollars

% of Revenue

Dollars in millions

Net revenue

Cost of sales (exclusive of amortization shown separately below)

Gross profit

Research and development

Selling, general and administrative

Amortization of intangible assets

Impairment charges

Transformation costs

Acquisition, disposition and other charges

(Loss) earnings from operations

Interest and other, net

Gain on sale of equity interest

Gain on sale of a business

Earnings from equity interests

(Loss) earnings before provision for taxes

Benefit (provision) for taxes

Net earnings attributable to HPE

Preferred stock dividends

Net (loss) earnings attributable to common stockholders

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Fiscal 2025 compared with fiscal 2024

Net revenue

In fiscal 2025, total net revenue of $34.3 billion represented an increase of $4.2 billion, or 13.8%. U.S. net revenue increased by $2.5 billion, or 23.1% to $13.4 billion, and net revenue from outside of the U.S. increased by $1.7 billion, or 8.6%, to $20.9 billion.

The components of the weighted net revenue change by segment were as follows:

For the fiscal years ended October 31,

Percentage Points

Server

Hybrid Cloud

Networking

Financial Services

Corporate Investments and Other

Total segment

Elimination of intersegment net revenue and other

Total HPE

Fiscal 2025 compared with fiscal 2024

From a segment perspective, the primary factors contributing to the change in total net revenue are summarized as follows:

• Server net revenue increased $1,641 million, or 10.2%, primarily due to higher net AUPs

• Hybrid Cloud net revenue increased $267 million, or 4.9%, primarily due to higher Hybrid Cloud service revenue

• Networking net revenue increased $2,318 million, or 51.1%, primarily due to revenue attributable to Juniper Networks

• Financial Services net revenue decreased $8 million, or 0.2%, primarily due to lower rental revenue on lower average operating leases

• Corporate Investments and Other net revenue decreased $238 million, or 23.5%, primarily due to the divestiture of the Communications Technology Group (“CTG”) business

Gross profit

Fiscal 2025 total gross profit margin of 30.3% represents a decrease of 2.5 percentage points as compared to the respective prior year period. The decrease was primarily due to an increase in cost of sales in the Server, Networking, and Hybrid Cloud segments.

Operating expenses

Research and development (“R&D”)

R&D expense increased by $272 million, or 12.1%, primarily due to operating expenses associated with Juniper Networks, which contributed 17.3 percentage points to the change. The increase was partially offset by lower operating expenses due to higher mix of capital versus expense investment, which contributed 8.6 percentage points to the change.

Selling, general and administrative (“SG&A”)

SG&A expense increased by $833 million, or 17.1%, primarily due to increased operating expenses associated with Juniper Networks and higher employee costs, which contributed 14.1 percentage points to the change, and the expenses incurred related to the cost reduction program, which contributed 3.1 percentage points to the change.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Amortization of intangible assets

Amortization of intangible assets increased by $244 million, or 91%, primarily due to the amortization expense of the acquired intangibles as a result of the Merger. The increase was partially offset by certain intangible assets associated with prior acquisitions reaching the end of their amortization periods.

Impairment charges

In fiscal 2025, we recorded goodwill impairment charges and the impairment of certain fixed assets of $1.6 billion. It was determined that the fair value of the Hybrid Cloud reporting unit was below the carrying value of its net assets. The decline in the fair value was primarily driven by an increase in the discount rate used in the discounted cash flows analysis, driven by heightened macroeconomic uncertainty. Refer to Note 11, “Goodwill and Intangible Assets,” to the Consolidated Financial Statements in Item 8 of Part II for more information.

Acquisition, disposition and other charges

Acquisition, disposition and other charges increased by $247 million, or 117.1%, primarily due to the Merger.

Interest and other, net

Interest and other, net expense increased by $58 million, or 49.6%, primarily due to higher loss on equity investments of $122 million in the current fiscal year and increase in net interest expense of $114 million. The increase was partially offset by an increase in the non-service net periodic benefit credit of $104 million and the gain of $52 million from the settlement to resolve claims solely against Sushovan Hussain in the ongoing Autonomy litigation.

Gain on sale of equity interest

On September 4, 2024, the Company divested 30% of the total issued share capital of H3C to UNIS. In connection with this sale, we recorded a gain on sale of equity interest of $733 million in fiscal 2024.

Gain on sale of a business

On December 1, 2024, we completed the disposition of CTG. We received net proceeds of $210 million and recognized a gain of $248 million.

Earnings from equity interests

In fiscal 2025, Earnings from equity interests decreased by $68 million, or 46.3%, primarily due to lower earnings from our equity interest in H3C as a result of the disposition of 30% of the total issued share capital of H3C in fiscal 2024.

Benefit (provision) for taxes

For fiscal 2025 and 2024, we recorded income tax benefit of $342 million and income tax expense of $374 million, respectively, which reflect effective tax rates of 120.0% and 12.7%, 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 the fiscal year. The effective tax rate for fiscal 2025 also included the effects of the non-deductible goodwill impairment.

In fiscal 2025, we recorded $693 million of net income tax benefits related to various items discrete to the year. These amounts primarily included:

• $402 million of net income tax benefits related to costs incurred as a result of the Merger which was inclusive of a $327 million net income tax benefit from the tax impact of integration transactions,

• $76 million of net income tax benefits related to the release of certain state valuation allowances due to changes in tax law,

• $61 million of net income tax benefits related to the reduction in uncertain tax positions due to statute of limitations expirations, and

• $55 million of net income tax benefits related to the cost reduction program.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

In fiscal 2024, we recorded $43 million of net income tax charges related to various items discrete to the year. These amounts primarily included:

• $104 million of net income tax charges resulting from the gain on the H3C divestiture, which includes $215 million of U.S. and foreign income tax charges offset by $111 million of income tax benefit for the release of an uncertain tax benefit related to the prior divestiture, partially offset by

• $54 million of income tax benefits related to transformation costs, and acquisition, disposition and other charges and

• $11 million of net excess tax benefits related to stock-based compensation.

Segment Information

Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker, who is the Chief Executive Officer, uses to evaluate, view, and run our business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.

A description of the products and services for each segment, along with other pertinent information related to Segments can be found in Note 2, “Segment Information,” to the Consolidated Financial Statements in Item 8 of Part II.

Segment Results

The following provides an overview of our key financial metrics by segment for fiscal 2025 as compared to fiscal 2024:

HPE

Consolidated

Server

Hybrid Cloud

Networking

Financial Services

Corporate

Investments and Other

Dollars in millions, except for per share amounts

Net revenue (1)

Year-over-year change %

Gross Profit as a % of net revenue

(Loss) earnings from operations (2)

(Loss) earnings from operations as a % of net revenue

Year-over-year change percentage points

pts

pts

pts

pts

pts

pts

(1) HPE consolidated net revenue excludes inter-segment net revenue.

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

Server

For the fiscal years ended October 31,

% Change

Dollars in millions

Net revenue

Cost of sales

Gross profit

Operating expenses

Earnings from operations

Earnings from operations as a % of net revenue

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Fiscal 2025 compared with fiscal 2024

Server net revenue increased by $1,641 million, or 10.2%, primarily due to a $1,691 million, or 13.3%, increase in product revenue. The increase in product revenue was primarily due to higher net AUPs of $2,556 million, or 20.1%, partially offset by a decrease in net unit volume of $827 million, or 6.5%.

Server gross profit decreased by $337 million, or 8.3%, primarily driven by an increase in cost of sales by $1,978 million, or 16.4%, due to the input cost increases and higher mix of lower margin products.

Earnings from operations decreased by $461 million, or 25.6%, primarily driven by lower gross profit and an increase in operating expenses by $124 million, or 5.5%, due to higher SG&A expenses.

Hybrid Cloud

For the fiscal years ended October 31,

% Change

Dollars in millions

Net revenue

Cost of sales

Gross profit

Operating expenses

Earnings from operations

Earnings from operations as a % of net revenue

Fiscal 2025 compared with fiscal 2024

Hybrid Cloud net revenue increased by $267 million, or 4.9%, due to an increase in Hybrid Cloud service revenue by $285 million, or 11.7%. The increase was primarily driven by higher services contribution from private cloud solutions. Hybrid Cloud product revenue was relatively flat.

Hybrid Cloud gross profit decreased by $55 million, or 2.5%, primarily driven by an increase in cost of products as we transition to a more software-defined platform with HPE Alletra.

Hybrid Cloud earnings from operations increased by $76 million, or 29.3%, due to a decrease in operating expenses by $131 million, or 6.8%, primarily driven by capitalization of software costs and cost containment measures, partially offset by a decrease in gross profit as mentioned above.

Networking

For the fiscal years ended October 31,

% Change

Dollars in millions

Net revenue

Cost of sales

Gross profit

Operating expenses

Earnings from operations

Earnings from operations as a % of net revenue

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Fiscal 2025 compared with fiscal 2024

Networking net revenue increased by $2,318 million, or 51.1%, primarily due to a $1,444 million, or 43.2%, increase in product revenue, and $874 million, or 73.6%, increase in service revenue. The increase in product revenue was primarily led by revenue attributable to Juniper Networks of $1,367 million, or 40.9%, higher volume and product mix effect of $152 million, or 4.5%, partially offset by lower AUPs of $72 million, or 2.2%. The increase in service revenue was primarily led by revenue attributable to Juniper Networks of $729 million, or 61.4%, and increased services net revenue primarily from our aaS offerings of $144 million, or 12.1%.

Networking gross profit increased by $1,268 million, or 44.9%, primarily driven by increased net revenue as mentioned above. The increase was partially offset by higher cost of sales of $1,050 million, or 61.5%, which was primarily attributable to Juniper Networks and higher input cost.

Networking earnings from operations increased by $481 million, or 43.1%, primarily due to higher gross profit, which was partially offset by an increase in operating expenses of $787 million, or 46.0%. The increase in operating expenses was primarily attributable to Juniper Networks.

Financial Services

For the fiscal years ended October 31,

% Change

Dollars in millions

Net revenue

Cost of sales

Gross profit

Operating expenses

Earnings from operations

Earnings from operations as a % of net revenue

Fiscal 2025 compared with fiscal 2024

FS net revenue decreased by $8 million, or 0.2%, primarily due to lower rental revenue on lower average operating leases, largely offset by higher finance income from higher average finance leases, higher asset management remarketing revenue, and asset recovery services revenue.

FS gross profit increased by $59 million, or 10.0%, primarily driven by a decrease in cost of sales of $67 million, or 2.3%, largely due to lower depreciation expense, partially offset by higher bad debt expense.

FS earnings from operations increased by $45 million, or 14.2%, primarily due to higher gross profits, partially offset by an increase in operating expenses by $14 million, or 5.1% resulting from higher SG&A expenses.

Financing Volume

For the fiscal years ended October 31,

In millions

Financing volume

Financing volume, which represents the amount of financing provided to customers for equipment and related software and services, including intercompany activity, decreased by 17.2% in fiscal 2025 as compared to the prior-year period. The decrease was primarily driven by lower financing of both HPE and third-party product sales and services.

Portfolio Assets and Ratios

The FS business model is asset intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive FS amounts are substantially the same as those used by the Company. However,

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

intercompany loans and certain accounts that are reflected in the segment balances are eliminated in our Consolidated Financial Statements.

The portfolio assets and ratios derived from the segment balance sheets for FS were as follows:

As of October 31

Dollars in millions

Financing receivables, gross

Net equipment under operating leases

Capitalized profit on intercompany equipment transactions (1)

Intercompany leases (1)

Gross portfolio assets

Allowance for doubtful accounts (2)

Operating lease equipment reserve

Total reserves

Net portfolio assets

Reserve coverage

Debt-to-equity ratio (3)

(1) Intercompany activity is eliminated in consolidation.

(2) Allowance for credit losses for financing receivables includes both the short- and long-term portions.

(3) Debt benefiting FS consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt, and borrowing- and funding-related activity associated with FS and its subsidiaries. Debt benefiting FS totaled $11.6 billion and $11.8 billion at October 31, 2025 and 2024, respectively, and was determined by applying an assumed debt-to-equity ratio, which management believes to be comparable to that of other similar financing companies. FS equity at October 31, 2025 and 2024, was $1.7 billion.

As of October 31, 2025 and 2024, FS net cash and cash equivalents balances were $727 million and $533 million, respectively.

Net portfolio assets as of October 31, 2025 decreased 3.0% from October 31, 2024. The decrease generally resulted from portfolio runoff exceeding new financing volume during the period.

FS bad debt expense includes charges to general reserves, specific reserves and write-offs for sales-type, direct-financing and operating leases. FS recorded net bad debt expense of $96 million, $57 million and $59 million in fiscal 2025, 2024 and 2023, respectively.

Corporate Investments and Other

For the fiscal years ended October 31,

% Change

Dollars in millions

Net revenue

Cost of sales

Gross profit

Operating expenses

Loss from operations

Loss from operations as a % of net revenue

Fiscal 2025 compared with fiscal 2024

Corporate Investments and Other net revenue decreased by $238 million, or 23.5%, primarily due to the divestiture of the CTG business effective December 1, 2024.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Gross profit decreased by $41 million, or 18.7%, primarily due to lower net revenue driven by the divestiture of the CTG business, partially offset by a decrease in cost of sales.

Loss from operations increased by $7 million, or 28.0%, primarily driven by lower gross profit, partially offset by a decrease in operating expenses due to the divestiture of the CTG business.

LIQUIDITY AND CAPITAL RESOURCES

Current Overview

We use cash generated by operations as our primary source of liquidity. We believe that internally generated cash flows will be generally sufficient to support our operating businesses, capital expenditures, product development initiatives, and disposal activities including legal settlements, restructuring activities, transformation costs, indemnifications, maturing debt, interest payments, and income tax payments, in addition to any future investments, share repurchases, and stockholder dividend payments. We expect to supplement this short-term liquidity, if necessary, by accessing the capital markets, issuing commercial paper, and borrowing under credit facilities made available by various domestic and foreign financial institutions. However, our access to capital markets may be constrained and our cost of borrowing may increase under certain business, market and economic conditions. We anticipate that the funds made available and cash generated from our operations, along with our access to capital markets, will be sufficient to meet our liquidity requirements for at least the next twelve months and for the foreseeable future thereafter. Our liquidity is subject to various risks including the risks identified in the section entitled “Risk Factors” in Item 1A and market risks identified in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A.

Our cash balances are held in numerous locations throughout the world, with a substantial amount held outside the U.S. as of October 31, 2025. We utilize a variety of planning and financing strategies in an effort to ensure that our worldwide cash is available when and where it is needed.

Amounts held outside of the U.S. are generally utilized to support our non-U.S. liquidity needs. Repatriations of amounts held outside the U.S. generally will not be taxable from a U.S. federal tax perspective, but may be subject to state income or foreign withholding tax. Where local restrictions prevent an efficient intercompany transfer of funds, our intent is to keep cash balances outside of the U.S. and to meet liquidity needs through ongoing cash flows, external borrowings, or both. We do not expect restrictions or potential taxes incurred on repatriation of amounts held outside of the U.S. to have a material effect on our overall liquidity, financial condition, or results of operations.

In connection with the share repurchase program previously authorized by our Board of Directors, during fiscal 2025, we repurchased and settled an aggregate amount of $202 million. As of October 31, 2025, we had a remaining authorization of approximately $3.6 billion for future share repurchases. For more information on our share repurchase program, refer to Note 15, “Stockholders' Equity,” to the Consolidated Financial Statements in Item 8 of Part II.

On November 17, 2025 and November 28, 2025, we announced plans to divest our remaining investment in H3C’s issued share capital for approximately $1.4 billion. For more information on the pending divestiture of H3C shares, refer to Note 19, “Equity Interests,” to the Consolidated Financial Statements in Item 8 of Part II.

On May 23, 2024, we announced plans to divest our CTG business to HCLTech. CTG was included in our Communications and Media Solutions business, which was reported in the Corporate Investments and Other segment. This divestiture includes the platform-based software solutions portions of the CTG portfolio, including systems integration, network applications, data intelligence, and the business support systems groups. On December 1, 2024, we completed the disposition of CTG. We received net proceeds of $210 million and recognized a gain of $248 million included in Gain on sale of a business in the Consolidated Statements of Earnings.

HPE funded the aggregate consideration for the Merger through a combination of cash from its balance sheet, commercial paper issuances, and borrowings pursuant to the three-year delayed-draw term loan credit facility of $3.0 billion and the 364-day delayed-draw term loan credit facility of $1.0 billion entered into in September 2024. As of October 31, 2025, $2.0 billion was outstanding against the three-year delayed-draw term loan credit facility while no balances were outstanding against the 364-day delayed-draw term loan credit facility.

For more information on the drawdown term loan facility, see Note 14, “Borrowings,” to the Consolidated Financial Statements in Item 8 of Part II.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Liquidity

Our cash, cash equivalents, restricted cash, total debt and available borrowing resources were as follows:

As of October 31,

In millions

Cash, cash equivalents and restricted cash

Total debt

Available borrowing resources (1)

Commercial paper programs (2)

Uncommitted lines of credit (3)

(1) The fiscal 2024 period excludes the financing commitment for the Merger. The maximum aggregate commitment under those facilities was $4.0 billion, however, no balances were outstanding under these facilities as of October 31, 2024. These facilities were not available as of the end of fiscal 2023.

(2)     The maximum borrowing amounts available under the commercial paper programs and revolving credit facility are $5.75 billion and $5.25 billion, respectively, as at October 31, 2025. The combined borrowings between both sources cannot exceed $5.75 billion.

(3)    The maximum aggregate capacity under the uncommitted lines of credit is $1.4 billion of which $0.4 billion was primarily utilized towards issuances of bank guarantees as of October 31, 2025.

The following tables represent the way in which management reviews cash flows:

For the fiscal years ended October 31,

In millions

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

Change in cash, cash equivalents and restricted cash

Free cash flow

Operating Activities

Net cash provided by operating activities decreased by $1.4 billion for fiscal 2025, as compared to fiscal 2024. The decrease was primarily due to unfavorable working capital, largely resulting from timing of vendor payments moderated by lower inventory purchases. The decrease was partially offset by lower financing lease volume and higher net cash generated from operations in the current period.

Our working capital metrics and cash conversion impacts were as follows:

As of October 31,

Days of sales outstanding in accounts receivable (“DSO”)

Days of supply in inventory (“DOS”)

Days of purchases outstanding in accounts payable (“DPO”)

Cash conversion cycle

The cash conversion cycle is the sum of DSO and DOS less DPO. Items which may cause the cash conversion cycle in a particular period to differ include, but are not limited to, changes in business mix, changes in payment terms (including extended payment terms to customers or from suppliers), early or late invoice payments from customers or to suppliers, the extent of receivables factoring, seasonal trends, the timing of the revenue recognition and inventory purchases within the period, the impact of commodity costs and acquisition activity.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for doubtful accounts, by a 90-day average of net revenue. Compared to the corresponding three-month period in fiscal 2024, the increase in DSO by 11 days in the current period was primarily due to a decrease in early payments, along with the impact of incremental receivables as a result of the Merger.

DOS measures the average number of days from procurement to sale of our products. DOS is calculated by dividing ending inventory by a 90-day average of cost of goods sold. Compared to the corresponding three-month period in fiscal 2024, the decrease in DOS by 31 days in the current period was primarily due to higher shipments for large deals and lower purchases due to seasonality.

DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold. Compared to the corresponding three-month period in fiscal 2024, the decrease in DPO by 62 days in the current period was primarily due to lower purchases, along with higher payments to outsourced manufacturers.

Investing Activities

Net cash used in investing activities increased by $13.1 billion in fiscal 2025, as compared to fiscal 2024. The increase was primarily due to a payment of $12.3 billion (net of cash acquired) made during the current period for the Merger, and proceeds of $2.1 billion from the prior-year sale of 30% of the total issued share capital of H3C. The increase was moderated by higher proceeds from the sale of available-for-sale securities of $0.9 billion and proceeds from the divestiture of our CTG business for $0.2 billion during the current period, as compared to the prior-year period.

Financing Activities

Net cash provided by financing activities decreased by $5.2 billion in fiscal 2025, as compared to fiscal 2024. This decrease was primarily due to lower proceeds from debt of $2.1 billion (net of issuance costs), higher repayments of debt of $1.4 billion, and higher cash utilized for stock-based award activities of $0.2 billion during the current period, as compared to the prior-year period. In addition, the prior-year period included proceeds from the issuance of the Preferred Stock (net of issuance costs) of $1.5 billion.

Free Cash Flow

Free cash flow (“FCF”) represents cash flow from operations less net capital expenditures (investments in property, plant and equipment (“PP&E”) and software assets less proceeds from the sale of PP&E), and adjusted for the effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash. FCF decreased by $1.3 billion in fiscal 2025, as compared to fiscal 2024, primarily due to lower cash provided by operating activities. For more information on our FCF, refer to the section entitled “GAAP to non-GAAP Reconciliations” included in this MD&A.

For more information on the impact of operating assets and liabilities to our cash flows, see Note 7, “Balance Sheet Details,” to the Consolidated Financial Statements in Item 8 of Part II.

Capital Resources

Debt Levels

As of October 31,

Dollars in millions

Short-term debt

Long-term debt

Weighted-average interest rate

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

We maintain debt levels that we establish through consideration of several factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital, and targeted capital structure. We maintain a revolving credit facility and two commercial paper programs, “the Parent Programs,” and a wholly-owned subsidiary maintains a third program. In September 2024, we terminated our prior senior unsecured revolving credit facility that was entered into in December 2021, and entered into a new senior unsecured revolving credit facility with an aggregate lending commitment of $5.25 billion for a period of five years. The commitment initially comprised of (i) $4.75 billion of commitments available immediately and (ii) $500 million of commitments available from and subject to the closing of the Merger and refinancing of Juniper Networks’ credit agreement. With the completion of the Merger and the associated refinancing, the full $5.25 billion commitment under the new facility is now available to us. There have been no changes to our commercial paper programs since October 31, 2024.

In December 2023, we filed a shelf registration statement with the Securities and Exchange Commission that allows us to sell, at any time and from time to time, in one or more offerings, debt securities, preferred stock, common stock, warrants, depository shares, purchase contracts, guarantees or units consisting of any of these securities.

Significant funding and liquidity activities for fiscal 2025 were as follows:

Debt Issuances:

• In October 2025, we issued $660 million of asset-backed debt securities in six tranches at a weighted-average interest rate of 4.314% and a final maturity date of May 2033.

• In September 2025, we issued (i) $900 million of 4.05% Senior Notes due September 15, 2027, (ii) $300 million of Floating Rate Notes due September 15, 2028, (iii) $850 million of 4.15% Senior Notes due September 15, 2028, and (iv) $850 million of 4.40% Senior Notes due October 15, 2030.

• In July 2025, we assumed fixed-rate Senior Notes of Juniper Networks with par value of $1.7 billion as a part of the Merger. For further information see Note 10, “Acquisitions and Dispositions,” to the Consolidated Financial Statements in Item 8 of Part II.

• In July 2025, to support the funding of the Merger, we drew $3.0 billion under the three-year delayed-draw term loan credit facility and $1.0 billion under the 364-day delayed-draw term loan credit facility. The 364-day loan is scheduled for full repayment on July 1, 2026. The three-year loan is subject to quarterly amortization at 1.25%, with the remaining balance due at maturity on June 30, 2028.

• In July 2025, we issued $900 million of asset-backed debt securities in six tranches at a weighted-average interest rate of 4.673% and a final maturity date of March 2033.

Debt Repayments:

• In October 2025, we prepaid $1 billion against the $3.0 billion we initially borrowed under the three-year delayed-draw term loan credit facility. The repayment was made at par, along with accrued interest.

• In September 2025, we repaid the entire $1 billion under the 364-day delayed-draw term loan credit facility. The repayment was made at par, along with accrued interest.

• In September 2025, we redeemed the entire $2.5 billion aggregate principal amount of its outstanding 4.900% Notes with an original maturity date of October 15, 2025. The Notes were redeemed at par, plus accrued and unpaid interest up to, but not including, the redemption date of September 17, 2025.

• During fiscal 2025, we repaid $1.5 billion of the outstanding asset-backed debt securities.

Our weighted-average interest rate reflects the average effective rate on our borrowings prevailing during the period and reflects the impact of interest rate swaps. For more information on our interest rate swaps, see Note 13, “Financial Instruments,” to the Consolidated Financial Statements in Item 8 of Part II.

For more information on our available borrowing resources and the impact of operating assets and liabilities to cash flows, see Note 14, “Borrowings,” and Note 7, “Balance Sheet Details,” respectively, to the Consolidated Financial Statements in Item 8 of Part II.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Cash Requirements and Commitments

Long-term debt and interest payments on debt

As of October 31, 2025, future principal payment obligations on our long-term debt including asset-backed debt securities totaled $21.7 billion of which $3.8 billion is due within one year. As of October 31, 2025, our finance lease obligations, including interest, was $35 million, of which $7 million is to be due within one year. For more information on our debt, see Note 14, “Borrowings,” to the Consolidated Financial Statements in Item 8 of Part II.

As of October 31, 2025, future interest payments relating to our long-term debt is estimated to be approximately $8.1 billion, of which $1.0 billion is expected to be due within one year. We use interest rate swaps to mitigate the exposure of our fixed rate debt to changes in fair value resulting from changes in interest rates, or hedge the variability of cash flows in the interest payments associated with our variable-rate debt. The impact of our outstanding interest rate swaps as of October 31, 2025 was factored into the calculation of the future interest payments on long-term debt.

Operating lease obligations

We enter into various leases as a lessee for assets including office buildings, data centers, vehicles, and aviation. As of October 31, 2025, operating lease obligations, net of sublease rental income totaled $1.8 billion, of which $342 million is due within one year. For more information on our leases, see Note 8, “Accounting for Leases as a Lessee,” to the Consolidated Financial Statements in Item 8 of Part II.

Unconditional purchase obligations

Our unconditional purchase obligations are related principally to inventory purchases, software maintenance and support services and other items. Unconditional purchase obligations exclude agreements that are cancellable without penalty. As of October 31, 2025, unconditional purchase obligations totaled $3.3 billion, of which $2.0 billion is due within one year. In connection with the Merger, our unconditional purchase obligations increased by $1.5 billion. For more information on our unconditional purchase obligations, see Note 17, “Litigation, Contingencies, and Commitments,” to the Consolidated Financial Statements in Item 8 of Part II.

Retirement Benefit Plan Funding

In fiscal 2026, we anticipate making contributions of $220 million to our non-U.S. pension plans. Our policy is to fund pension plans to meet at least the minimum contribution requirements, as established by various authorities including local government and taxing authorities. Expected contributions and payments to our pension and post-retirement benefit plans are not considered as contractual obligations because they do not represent contractual cash outflows, as they are dependent on numerous factors which may result in a wide range of outcomes. For more information on our retirement and post-retirement benefit plans, see Note 4, “Retirement and Post-Retirement Benefit Plans,” to the Consolidated Financial Statements in Item 8 of Part II.

Restructuring Plans

As of October 31, 2025, we expect to make future cash payments of approximately $112 million in connection with our approved restructuring plans, which includes $28 million expected to be paid in fiscal 2026 and $84 million expected to be paid thereafter. Payments for restructuring activities are not considered as contractual obligations, because they do not represent contractual cash outflows and there is uncertainty as to the timing of these payments. For more information on our restructuring activities, see Note 3, “Transformation Programs,” to the Consolidated Financial Statements in Item 8 of Part II.

Cost Savings Plans

The Program is expected to be implemented through fiscal year 2026. 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 connection with the integration of Juniper Networks, we expect to incur costs over the next three fiscal years to achieve synergies, actual costs incurred may differ from estimates. As of October 31, 2025, we expect to make future cash payments of approximately $1.1 billion in connection with these cost savings plans, which includes $690 million expected to be paid through the remainder of fiscal 2026 and $420 million expected to be paid thereafter.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Uncertain Tax Positions

As of October 31, 2025, we had approximately $194 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions. These liabilities and related interest and penalties include $2 million expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters. Payments of these obligations would result from settlements with taxing authorities. For more information on our uncertain tax positions, see Note 6, “Taxes on Earnings,” to the Consolidated Financial Statements in Item 8 of Part II.

Off-Balance Sheet Arrangements

As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

We have third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers. For more information on our third-party revolving short-term financing arrangements, see Note 7, “Balance Sheet Details,” to the Consolidated Financial Statements in Item 8 of Part II.

GAAP TO NON-GAAP RECONCILIATIONS

The following tables provide a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure for the periods presented:

Reconciliation of GAAP gross profit and gross profit margin to non-GAAP gross profit and gross profit margin.

For the fiscal years ended October 31,

Dollars

Revenue

Dollars

Revenue

Dollars In millions

GAAP net revenue

GAAP cost of sales

GAAP gross profit

Non-GAAP adjustments

Stock-based compensation expense

Acquisition, disposition and other charges (1)

Cost reduction program

H3C divestiture related severance costs

Non-GAAP gross profit

(1)     Includes disaster recovery and divestiture related exit costs. For fiscal 2025, Acquisition, disposition and other charges include non-cash amortization of fair value adjustment for inventory in connection with the Merger, which was recorded in cost of sales.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Reconciliation of GAAP earnings (loss) from operations and operating profit margin to non-GAAP earnings from operations and operating profit margin.

For the fiscal years ended October 31,

Dollars

Revenue

Dollars

Revenue

Dollars In millions

GAAP (loss) earnings from operations

Non-GAAP adjustments:

Amortization of intangible assets

Impairment charges

Transformation costs

Stock-based compensation expense

H3C divestiture related severance costs

Cost reduction program

Acquisition, disposition and other charges (1)

Non-GAAP earnings from operations

(1)     Includes disaster recovery and divestiture related exit costs. For fiscal 2025, Acquisition, disposition and other charges include non-cash amortization of fair value adjustment for inventory in connection with the Merger, which was recorded in cost of sales.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Reconciliation of GAAP net earnings and diluted net earnings per share to non-GAAP net earnings and diluted net earnings per share.

For the fiscal years ended October 31,

Dollars

Diluted Net EPS (1)

Dollars

Diluted Net EPS

Dollars in millions except per share amounts

GAAP net (loss) earnings attributable to common stockholders

Preferred stock dividends

GAAP net earnings attributable to HPE

Non-GAAP adjustments:

Amortization of intangible assets

Impairment charges

Transformation costs

Stock-based compensation expense

Gain on sale of a business

H3C divestiture related severance costs

Cost reduction program

Acquisition, disposition and other charges (2)

Litigation judgment

Gain on sale of equity interest

Loss on equity investments, net

Adjustments for taxes

Other adjustments (3)(4)

Non-GAAP net earnings attributable to HPE (5)

Preferred stock dividends

Non-GAAP net earnings attributable to common stockholders

(1)     Non-GAAP diluted net EPS reflects any dilutive effect of outstanding convertible preferred stock and employee stock plans, but that effect is excluded when calculating GAAP diluted net EPS as that would be anti-dilutive. See Note 16 “Net (Loss) Earnings Per Share,” to the Condensed Consolidated Financial Statements in Item 1 of Part I for further information.

(2)    Includes disaster recovery and divestiture related exit costs. For fiscal 2025, Acquisition, disposition and other charges include non-cash amortization of fair value adjustment for inventory in connection with the Merger, which was recorded in cost of sales.

(3)    Other adjustments includes non-service net periodic benefit credit and tax indemnification and other adjustments.

(4)    For fiscal 2025, the diluted net EPS adjustment includes the impact to Non-GAAP net earnings attributable to HPE for the dilutive effect of preferred stock and the employee stock plans.

(5)    For purposes of calculating Non-GAAP diluted net EPS, the preferred stock dividends are added back to the Non-GAAP net earnings attributable to common stockholders and the diluted weighted average share calculation assumes the preferred stock was converted at issuance or as of the beginning of the reporting period.

Shares used to calculate Non-GAAP diluted net EPS.

For the fiscal years ended October 31,

In millions

Weighted-average shares used to compute basic net EPS

Dilutive effect of employee stock plans

Dilutive effect of 7.625% Series C mandatory convertible preferred stock

Weighted-average shares used to compute Non-GAAP diluted net EPS

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

Reconciliation of net cash provided by operating activities to free cash flow.

For the fiscal years ended October 31,

In millions

Net cash provided by operating activities

Investment in property, plant and equipment and software assets

Proceeds from sale of property, plant and equipment

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

Free cash flow

Use of non-GAAP Financial Measures

The non-GAAP financial measures presented are non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP earnings from operations, non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue), non-GAAP tax rate, non-GAAP net earnings attributable to HPE, non-GAAP net earnings attributable to common stockholders, non-GAAP diluted net earnings per share attributable to common stockholders, and FCF. These non-GAAP financial measures are not computed in accordance with, or as an alternative to, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP gross profit is gross profit. The GAAP measure most directly comparable to non-GAAP gross profit margin is gross profit margin. The GAAP measure most directly comparable to non-GAAP earnings from operations is earnings from operations. The GAAP measure most directly comparable to non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue) is operating profit margin (earnings from operations as a percentage of net revenue). The GAAP measure most directly comparable to non-GAAP income tax rate is income tax rate. The GAAP measure most directly comparable to non-GAAP net earnings attributable to HPE and non-GAAP net earnings attributable to common stockholders is net earnings attributable to HPE and net earnings attributable to common stockholders. The GAAP measure most directly comparable to non-GAAP diluted net earnings per share attributable to common stockholders is diluted net earnings per share attributable to common stockholders. The GAAP measure most directly comparable to FCF is cash flow from operations.

We believe that providing the non-GAAP measures stated above, in addition to the related GAAP measures provides greater transparency to the information used in our financial and operational decision making and allows the reader of our Consolidated Financial Statements to see our financial results “through the eyes” of management. We further believe that providing this information provides investors with a supplemental view to understand our historical and prospective operating performance and to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. Disclosure of these non-GAAP financial measures also facilitates comparisons of our operating performance with the performance of other companies in the same industry that supplement their GAAP results with non-GAAP financial measures that may be calculated in a similar manner.

Economic Substance of non-GAAP Financial Measures

We believe that excluding the items mentioned below from the non-GAAP financial measures provides a supplemental view to management and our investors of our consolidated financial performance and presents the financial results of the business without costs that we do not believe to be reflective of our ongoing operating results. Exclusion of these items can have a material impact on the equivalent GAAP measure and cash flows thus limiting the use of such non-GAAP financial measures as analytic tools. See “Compensation for Limitations With Use of Non-GAAP Financial Measures” section below for further information.

Non-GAAP gross profit and non-GAAP gross profit margin are defined to exclude charges related to stock-based compensation expense, acquisition, disposition and other charges, severance costs associated with the cost reduction program, and H3C divestiture related severance costs. See below for the reasons management excludes each item:

• Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date. Although stock-based compensation is a key incentive offered to our employees, we exclude these charges for the purpose of calculating these non-GAAP measures, primarily because they are non-cash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding stock-based compensation expense.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

• We incur costs related to our acquisition, disposition and other charges. Charges include expenses associated with acquisitions, non-cash amortization of fair value adjustment for inventory in connection with the Merger, exit costs associated with disposal activities, and disaster (recovery) charges. We exclude these costs because we consider these charges to be discrete events and do not believe they are reflective of normal continuing business operations. For fiscal 2025, acquisition charges were driven by costs associated with the Merger and miscellaneous disposition related charges. For fiscal 2024, acquisition charges were driven by the Merger and prior acquisitions of Axis and Athonet.

• We incurred severance and other charges pursuant to cost management initiatives. We exclude these charges because we do not believe they are reflective of normal continuing business operations. We believe eliminating these adjustments for the purposes of calculating non-GAAP measures facilitates the evaluation of our current operating performance.

• We incurred H3C divestiture related severance costs in connection with the disposition of issued share capital of H3C held by HPE. On September 4, 2024, we divested 30% of the total issued share capital of H3C and received proceeds of $2.1 billion of pre-tax consideration ($2.0 billion post-tax). The divestiture resulted in decreased future investment earnings and cash dividend inflows resulting in a decision to implement offsetting cost savings measures. These measures include severance for certain of the Company’s employees. The non-GAAP adjustment represents our costs to execute these related exit actions to offset the loss in equity earnings and related cash flows. We expect future annualized cost savings of approximately $120 million following the completion of these actions.

Non-GAAP earnings from operations and non-GAAP operating profit margin consist of earnings from operations or earnings from operations as a percentage of net revenue excluding the items mentioned above and charges relating to the amortization of intangible assets, impairment charges, and transformation costs. In addition to the items previously explained above, management excludes these items for the following reasons:

• We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating these non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating these non-GAAP measures, primarily because they are noncash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure.

• In fiscal 2025, we recorded non-cash impairment charges for the goodwill associated with our Hybrid Cloud reporting unit and the impairment of certain fixed assets. HPE believes that these non-cash charges do not reflect the Company’s operating results and is not indicative of the underlying performance of the business. HPE excludes these charges for purposes of calculating these non-GAAP measures to facilitate a supplemental evaluation of the Company’s current operating performance and comparisons to past operating results. Although this does not directly affect our cash position, the loss in value of goodwill over time can have a material impact on the equivalent GAAP earnings measure.

• Transformation costs represent net costs related to the (i) HPE Next Plan and (ii) Cost Optimization and Prioritization Plan. We exclude these costs as they are discrete costs related to two specific transformation programs that were announced in 2017 and 2020, respectively, as multi-year programs necessary to transform the business and IT infrastructure. The primary elements of the HPE Next and the Cost Optimization and Prioritization Plan have been substantially completed by October 31, 2024. The exclusion of the transformation program costs from our non-GAAP financial measures as stated above is to provide a supplemental measure of our operating results that does not include material HPE Next Plan and Cost Optimization and Prioritization Plan costs as we do not believe such costs to be reflective of our ongoing operating cost structure.

Non-GAAP net earnings attributable to HPE, non-GAAP net earnings attributable to common stockholders, and non-GAAP diluted net earnings per share attributable to common stockholders consist of net earnings or diluted net earnings per share excluding those same charges mentioned above, as well as other items such as gain on sale of a business, adjustments for equity interests, gain or loss on equity investments, other adjustments, and adjustments for taxes. Non-GAAP net earnings attributable to HPE and non-GAAP diluted net earnings per share attributable to common stockholders includes preferred stock dividends added back to non-GAAP net earnings attributable to HPE. The Adjustments for taxes line item includes certain income tax valuation allowances and separation taxes, the impact of tax law changes, structural rate adjustment, excess tax benefit from stock-based compensation, and adjustments for additional taxes or tax benefits associated with each non-GAAP item. In addition to the items previously explained, management excludes these items for the following reasons:

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

Management's Discussion and Analysis of

Financial Condition and Results of Operations (Continued)

• Gain on sale of a business represents the gain associated with certain disposal activities. On December 1, 2024, we completed the disposition of CTG which resulted in a gain of $248 million. We consider this divestiture to be a discrete event and believe eliminating this adjustment for the purposes of calculating non-GAAP measures facilitates the evaluation of our current operating performance.

• During the six months ended April 30, 2024, we stopped reporting H3C earnings in our non-GAAP results due to the planned divestiture of the H3C investment. Per the terms of the original Put Share Purchase Agreement, we weren’t anticipating receiving dividends from this investment prospectively. However, on May 24, 2024, we entered into an Amended and Restated Put Share Purchase Agreement and an Agreement on Subsequent Arrangements, both with UNIS, which, taken together, revise the arrangements governing the aforementioned sale as previously set forth in the original Put Share Purchase Agreement. On September 4, 2024, we divested 30% of the total issued share capital of H3C. As of October 31, 2025, we continued to possess the option to sell the remaining 19% of the total issued share capital of H3C. Subsequent to fiscal year end, however, we entered into share purchase agreements to divest all of the remaining issued share capital of H3C held by HPE through its subsidiaries. We believe that eliminating these amounts for purposes of calculating non-GAAP financial measures facilitates the evaluation of our current operating performance.

• In the third quarter of fiscal 2025, Hewlett Packard Enterprise received $52 million from a settlement to resolve claims solely against Sushovan Hussain, in the ongoing Autonomy litigation. We exclude the litigation judgment for purposes of calculating non-GAAP measures to facilitate a supplemental evaluation of the Company’s current operating performance and comparisons to past operating results.

• We exclude gains and losses (including impairments) on our non-marketable equity investments because we do not believe they are reflective of normal continuing business operations. These adjustments are reflected in Interest and other, net in the Consolidated Statements of Earnings. We believe eliminating these adjustments for the purposes of calculating non-GAAP measures facilitates the evaluation of our current operating performance.

• We utilize a structural long-term projected non-GAAP income tax rate in order to provide consistency across the interim reporting periods and to eliminate the effects of items not directly related to our operating structure that can vary in size, frequency and timing. When projecting this long-term rate, we evaluated a three-year financial projection. The projected rate assumes no incremental acquisitions in the three-year projection period and considers other factors including our expected tax structure, our tax positions in various jurisdictions and current impacts from key legislation implemented in major jurisdictions where we operate. For fiscal 2025 and 2024, we used a projected non-GAAP income tax rate of 15%, which reflects currently available information as well as other factors and assumptions. The non-GAAP income tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix including due to acquisition activity, or other changes to our strategy or business operations. We will re-evaluate its long-term rate as appropriate. We believe that making these adjustments for purposes of calculating non-GAAP measures, facilitates a supplemental evaluation of our current operating performance and comparisons to past operating results.

FCF is defined as cash flow from operations, less net capital expenditures (investments in PP&E and software assets less proceeds from the sale of PP&E), and adjusted for the effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash. FCF does not represent the total increase or decrease in cash for the period. Our management and investors can use FCF for the purpose of determining the amount of cash available for investment in our businesses, repurchasing stock and other purposes as well as evaluating our historical and prospective liquidity.

Compensation for Limitations With Use of Non-GAAP Financial Measures

These non-GAAP financial measures have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations in relying on these non- GAAP financial measures are that they can have a material impact on the equivalent GAAP earnings measures and cash flows, they may be calculated differently by other companies (limiting the usefulness of those measures for comparative purposes) and may not reflect the full economic effect of the loss in value of certain assets.

We compensate for these limitations on the use of non-GAAP financial measures by relying primarily on our GAAP results and using non-GAAP financial measures only as a supplement. We also provide a reconciliation of each non-GAAP financial measure to its most directly comparable GAAP financial measure for this fiscal year and prior periods, and we encourage investors to review those reconciliations carefully.

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