HPE Delivers Solid Quarter, Raises FY26 Goals

Summary Hewlett Packard Enterprise closed its fiscal year with strong fourth‑quarter results, showing higher revenue and improved profitability.

Gains were driven by networking expansion and continued progress in AI and cloud services.
Management raised its fiscal 2026 outlook, signaling confidence in sustained growth despite mixed performance across segments.
Fourth‑Quarter Results and Cash Flow

HPE reported fourth‑quarter revenue of $9.7 billion, a 14% increase year over year in both actual and constant currency. Recurring services demand lifted the company’s annualized revenue run‑rate to $3.2 billion. Gross margins improved, with GAAP margins reaching 33.5% and non‑GAAP margins at 36.4%. Operating cash flow rose to $2.465 billion, while free cash flow climbed to $1.92 billion.

Server revenue declined 5% to $4.5 billion, though margins remained close to double digits. Networking revenue surged 150% to $2.8 billion following the Juniper Networks acquisition. Hybrid Cloud revenue fell 12% to $1.4 billion, reflecting softer demand and portfolio transitions. Financial Services held steady at $889 million, achieving stronger operating margins and a 20.8% return on equity.

Guidance for Fiscal 2026

The company projects first‑quarter revenue between $9 billion and $9.4 billion. Non‑GAAP diluted EPS is expected in the $0.57 to $0.61 range. Full‑year guidance calls for 17% to 22% revenue growth, supported by expansion in non‑GAAP operating profit. GAAP diluted EPS is forecast at $0.62 to $0.82, while non‑GAAP EPS is projected at $2.25 to $2.45.

Free cash flow assumptions were raised, with the midpoint now between $1.7 billion and $2 billion. Management emphasized spending discipline and portfolio streamlining as central to its financial strategy. The board declared a quarterly cash dividend of $0.1425 per share, payable in mid‑January to shareholders of record as of December 19. Capital returns totaled $271 million during the quarter, combining dividends and share repurchases.

Industry Context and Outlook

HPE’s rapid networking growth reflects broader enterprise investment in AI‑optimized infrastructure. The integration of Juniper’s portfolio strengthens the company’s position in software‑defined networking and automation. Analysts note that hybrid cloud softness is common across infrastructure vendors during platform transitions. Continued demand for high‑performance AI and edge‑to‑cloud systems will be critical to sustaining momentum.

English summary

Additional insight shows that enterprises are increasingly prioritizing AI‑driven infrastructure to support workloads at scale. Networking growth aligns with industry trends toward automation and software‑defined solutions. Hybrid cloud challenges highlight the complexity of balancing legacy systems with new architectures. HPE’s raised guidance suggests confidence that its portfolio mix will support long‑term growth despite near‑term volatility.