Hewlett Packard Enterprise Company (HPE) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 revenue of $10.7 billion, up 40% year-over-year, with record gross margin and non-GAAP EPS of $0.79, up 108%, both above guidance, driven by strong AI, networking demand, and Juniper Networks integration.

• Free cash flow reached $915 million for the quarter, up $1.8 billion year-over-year, with cash flow from operations at $1.4 billion.

• Orders more than doubled, resulting in a record backlog, with strong demand across AI, compute modernization, storage, and private cloud.

• Juniper Networks and Catalyst cost initiatives are ahead of schedule, contributing to improved profitability and synergies.

• Raised fiscal 2026 non-GAAP EPS outlook to $3.35–$3.45 and free cash flow to at least $3.5 billion, two years ahead of prior commitments, and introduced a fiscal 2027 growth framework.

Financial highlights

• Q2 revenue of $10.7 billion, up 40% year-over-year and 15% sequentially, exceeded guidance.

• Gross margin improved to 36.9% non-GAAP (up 7.5 pts YoY) and 36.5% GAAP (up 8.1 pts YoY); operating profit was $1.4 billion non-GAAP (13.3% margin), GAAP operating margin 7.0%.

• Q2 non-GAAP EPS was $0.79; GAAP EPS was $0.44, up $1.26 year-over-year.

• Free cash flow for Q2 was $915 million; first-half 2026 free cash flow totaled $1.62 billion, up $3.3 billion from prior year.

• Returned $343 million to shareholders in Q2 via dividends and share repurchases.

Outlook and guidance

• Q3 FY26 revenue guidance: $11.5–$12.1 billion; non-GAAP EPS: $0.88–$0.93.

• Fiscal 2026 revenue growth outlook raised to 29%–33% reported; non-GAAP EPS guidance $3.35–$3.45; free cash flow at least $3.5 billion.

• Networking segment growth outlook raised to 72%–75% reported; Cloud & AI revenue growth outlook in low 20% range.

• Fiscal 2027 framework: revenue growth 8%–12%, non-GAAP EPS growth 12%–16%, free cash flow at least $4.5 billion.

• Targeting net leverage of ~2x by end of fiscal 2026 and plan to return at least 75% of free cash flow to shareholders after reaching this level.