Hewlett Packard Enterprise Company (HPE) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue reached $9.3 billion, up 18% year-over-year, driven by strong Networking segment growth and the Juniper Networks acquisition, with Networking now nearly 30% of total revenue and over half of operating profit.

• Non-GAAP diluted EPS hit a record $0.65, exceeding guidance, while GAAP EPS was $0.31; free cash flow was $708 million, a significant improvement for a seasonally outflow-heavy quarter.

• Orders outpaced revenue across all segments, reflecting robust demand fueled by AI deployment, infrastructure modernization, and customer pull-ins due to supply constraints.

• Integration of Juniper Networks is on track, with phase one complete and unified sales teams; operational discipline and faster-than-expected synergies contributed to profitability.

• Net earnings attributable to common stockholders fell 29.3% to $423 million, impacted by higher operating expenses from the merger.

Financial highlights

• Q1 revenue: $9.3 billion, up 18% year-over-year, but down 4% sequentially due to seasonality.

• Networking segment revenue surged 151.5% year-over-year to $2.7 billion, with a 23.7% operating margin.

• Cloud & AI segment revenue was $6.3 billion, down 2.7% year-over-year, with a 10.2% operating margin.

• Gross margin improved to 36.6% non-GAAP (up 7.2 pts year-over-year); GAAP gross margin was 35.9%.

• Free cash flow was $708 million; operating cash flow was $1.2 billion; $348 million returned to shareholders via dividends and buybacks.

Outlook and guidance

• FY26 non-GAAP EPS outlook raised to $2.30–$2.50; GAAP EPS raised to $1.02–$1.22; free cash flow guidance raised to at least $2.0 billion.

• FY26 revenue growth expected at 17%–22% reported, 5%–10% normalized; Networking segment growth outlook increased to 68%–73%.

• Q2 FY26 revenue expected between $9.6–$10.0 billion; non-GAAP diluted EPS $0.51–$0.55.

• Profitability expected to be weighted toward Q4, with majority of AI backlog recognized in 2H FY26 and beyond.

• Cost reduction and synergy programs underway, targeting $350 million in gross savings by FY27 and $600 million in Juniper-related synergies by FY28.