filings.toolsItem 8. Financial Statements and Supplementary Data.
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Item 8. Financial Statements and Supplementary Data.
Table of Contents
Unless otherwise stated or the context otherwise indicates, all references in this Annual Report on Form 10-K to “HPE,” or “the Company” mean Hewlett Packard Enterprise Company and its consolidated subsidiaries.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Hewlett Packard Enterprise Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Hewlett Packard Enterprise Company and subsidiaries (the Company) as of October 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended October 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated December 18, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Valuation of Goodwill | ||||||||
| Description of the Matter | At October 31, 2025, the Company’s goodwill was $23.8 billion, of which $3.3 billion and $10.2 billion related to the Hybrid Cloud, and Server reporting units, respectively. As discussed in Note 11 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level and more frequently when warranted based on indicators of impairment. Auditing management’s goodwill impairment test for the Hybrid Cloud and Server reporting units was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting units. In particular, the fair value estimate of the Hybrid Cloud and Server reporting units was sensitive to significant assumptions, such as the terminal revenue growth rate and operating margin, which are affected by expectations about future market or economic conditions. | |||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over the significant assumptions described above. To test the estimated fair value of the Company’s Hybrid Cloud and Server reporting units, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company’s business model, product mix and other factors would affect the significant assumptions. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. In addition, we tested management’s reconciliation of the fair value of all the reporting units to the market capitalization of the Company. We involved our valuation professionals to evaluate the application of valuation methodologies in the Company’s annual impairment test. | |||||||
| Estimation of variable consideration | ||||||||
| Description of the Matter | As described in Note 1 to the consolidated financial statements, the Company recognizes revenue for sales to its customers after deducting management’s estimates of variable consideration which may include various rebates, volume-based discounts, price protection, and other incentive programs that are offered to customers, partners, and distributors. Estimated variable consideration is presented within other accrued liabilities on the consolidated balance sheet and totaled $1.0 billion at October 31, 2025. Auditing the estimates of variable consideration for certain rebates within the Networking segment included in this amount was complex and judgmental due to the level of uncertainty involved in management’s estimate of expected usage of these programs. | |||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating rebates, including controls over the significant assumptions described below. To test the Company’s determination of variable consideration, we performed audit procedures that included, among others, evaluating the methodologies, testing the significant assumptions including revenue eligible for rebates and expected rebate rates and testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions to historical experience of the Company to develop an expectation of future rebates on eligible revenue as of October 31, 2025, which we compared to management’s recorded amount. In addition, we inspected the underlying agreements and compared the incentive rates used in the Company’s analyses with contractual rates. We assessed the historical accuracy of management’s estimates by comparing previous estimates of rebate liabilities to the amount of actual payments in subsequent periods. | |||||||
| Acquisition of Juniper Networks – Valuation of customer contracts, customer lists and distribution agreements | ||||||||
| Description of the Matter | As disclosed in Notes 1 and 10 to the consolidated financial statements, on July 2, 2025, the Company completed the acquisition of Juniper Networks, Inc. for total consideration of $13.6 billion. The Company allocated the net purchase price to assets acquired and liabilities assumed based on their respective fair values as of the date of acquisition, including intangible assets of $6.2 billion, of which $2.4 billion relate to customer contracts, customer lists and distribution agreements. Auditing the valuation of acquired customer contracts, customer lists and distribution agreements was complex and highly judgmental due to significant judgment and estimation by management when developing the fair value estimate of the customer contracts, customer lists & distribution agreement. Specifically, there was a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenue, and forecasted growth in earnings before interest, taxes, depreciation & amortization, both of which are affected by expectations about future market and operational decisions and the discount rate used in estimating the fair value. | |||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s valuation of acquired intangible assets, including controls over the significant assumptions described above. To test the estimated fair value of the customer contracts, customer lists and distribution agreements intangible asset, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to current industry and economic trends and evaluated whether and the degree to which changes to the Company’s forecast and other factors would affect the significant assumptions. Our testing also included comparing the significant assumptions used to the current and historical results of the acquired business and to other guideline companies within the same industry. We involved our valuation professionals to evaluate the application of valuation methodologies and test the discount rate used in the determination of the fair value estimate. | |||||||
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2014.
Houston, Texas
December 18, 2025
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Hewlett Packard Enterprise Company
Opinion on Internal Control Over Financial Reporting
We have audited Hewlett Packard Enterprise Company and subsidiaries’ internal control over financial reporting as of October 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hewlett Packard Enterprise Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2025, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Juniper Networks, Inc., which is included in the 2025 consolidated financial statements of the Company and constituted 5% of total assets, after excluding goodwill and intangible assets acquired, as of October 31, 2025 and 6% of revenues, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Juniper Networks, Inc.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended October 31, 2025, and the related notes and our report dated December 18, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Houston, Texas
December 18, 2025
Management's Report on Internal Control Over Financial Reporting
Hewlett Packard Enterprise's management is responsible for establishing and maintaining adequate internal control over financial reporting for Hewlett Packard Enterprise. Hewlett Packard Enterprise's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Hewlett Packard Enterprise's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Hewlett Packard Enterprise; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Hewlett Packard Enterprise are being made only in accordance with authorizations of management and directors of Hewlett Packard Enterprise; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Hewlett Packard Enterprise's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Hewlett Packard Enterprise's management assessed the effectiveness of Hewlett Packard Enterprise's internal control over financial reporting as of October 31, 2025, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Management's evaluation of internal control over financial reporting excluded the internal control activities of Juniper Networks, Inc. which is included in the 2025 consolidated financial statements of Hewlett Packard Enterprise and constituted 5 percent of total assets excluding goodwill and intangible assets as of October 31, 2025, and 6 percent of net revenues for the year then ended. Based on the assessment by Hewlett Packard Enterprise's management, we determined that Hewlett Packard Enterprise's internal control over financial reporting was effective as of October 31, 2025. The effectiveness of Hewlett Packard Enterprise's internal control over financial reporting as of October 31, 2025 has been audited by Ernst & Young LLP, Hewlett Packard Enterprise's independent registered public accounting firm, as stated in their report on the preceding pages.
| /s/ Antonio F. Neri | /s/ Marie Myers | |||||||
| Antonio F. Neri President and Chief Executive Officer (Principal Executive Officer) | Marie Myers Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||||
| December 18, 2025 | December 18, 2025 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions, except per share amounts | |||||||||||||||||
| Net Revenue: | |||||||||||||||||
| Products | $ | 21,956 | $ | 18,587 | $ | 18,100 | |||||||||||
| Services | 11,573 | 10,872 | 10,488 | ||||||||||||||
| Financing income | 767 | 668 | 547 | ||||||||||||||
| Total net revenue | 34,296 | 30,127 | 29,135 | ||||||||||||||
| Costs and Expenses: | |||||||||||||||||
| Cost of products (exclusive of amortization shown separately below) | 16,151 | 12,961 | 11,958 | ||||||||||||||
| Cost of services (exclusive of amortization shown separately below) | 7,268 | 6,793 | 6,555 | ||||||||||||||
| Financing cost | 500 | 495 | 383 | ||||||||||||||
| Research and development | 2,518 | 2,246 | 2,349 | ||||||||||||||
| Selling, general and administrative | 5,704 | 4,871 | 5,160 | ||||||||||||||
| Amortization of intangible assets | 511 | 267 | 288 | ||||||||||||||
| Impairment charges | 1,621 | — | — | ||||||||||||||
| Transformation costs | 2 | 93 | 283 | ||||||||||||||
| Acquisition, disposition and other charges | 458 | 211 | 70 | ||||||||||||||
| Total costs and expenses | 34,733 | 27,937 | 27,046 | ||||||||||||||
| (Loss) earnings from operations | (437) | 2,190 | 2,089 | ||||||||||||||
| Interest and other, net | (175) | (117) | (104) | ||||||||||||||
| Gain on sale of equity interest | — | 733 | — | ||||||||||||||
| Gain on sale of a business | 248 | — | — | ||||||||||||||
| Earnings from equity interests | 79 | 147 | 245 | ||||||||||||||
| (Loss) earnings before provision for taxes | (285) | 2,953 | 2,230 | ||||||||||||||
| Benefit (provision) for taxes | 342 | (374) | (205) | ||||||||||||||
| Net earnings attributable to HPE | 57 | 2,579 | 2,025 | ||||||||||||||
| Preferred stock dividends | (116) | (25) | — | ||||||||||||||
| Net (loss) earnings attributable to common stockholders | $ | (59) | $ | 2,554 | $ | 2,025 | |||||||||||
| Net (Loss) Earnings Per Share Attributable to Common Stockholders: | |||||||||||||||||
| Basic | $ | (0.04) | $ | 1.95 | $ | 1.56 | |||||||||||
| Diluted | $ | (0.04) | $ | 1.93 | $ | 1.54 | |||||||||||
| Weighted-average Shares Used to Compute Net (Loss) Earnings Per Share: | |||||||||||||||||
| Basic | 1,324 | 1,309 | 1,299 | ||||||||||||||
| Diluted | 1,324 | 1,337 | 1,316 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Net earnings attributable to HPE | $ | 57 | $ | 2,579 | $ | 2,025 | |||||||||||
| Other Comprehensive Income (Loss) Before Taxes | |||||||||||||||||
| Change in Net Unrealized Gains (Losses) on Available-for-sale Securities: | |||||||||||||||||
| Net unrealized gains (losses) arising during the period | (3) | 8 | 1 | ||||||||||||||
| Losses reclassified into earnings | 1 | — | — | ||||||||||||||
| (2) | 8 | 1 | |||||||||||||||
| Change in Net Unrealized Components of Cash Flow Hedges: | |||||||||||||||||
| Net unrealized losses arising during the period | (168) | (115) | (177) | ||||||||||||||
| Net losses reclassified into earnings | 156 | 16 | 116 | ||||||||||||||
| (12) | (99) | (61) | |||||||||||||||
| Change in Unrealized Components of Defined Benefit Plans: | |||||||||||||||||
| Net unrealized gains (losses) arising during the period | 177 | 34 | (99) | ||||||||||||||
| Amortization of net actuarial loss and prior service benefit | 124 | 136 | 144 | ||||||||||||||
| Curtailments, settlements and other | 10 | 2 | 3 | ||||||||||||||
| 311 | 172 | 48 | |||||||||||||||
| Change in Cumulative Translation Adjustment: | |||||||||||||||||
| Net losses arising during the period | (44) | (23) | (32) | ||||||||||||||
| Net loss reclassified into earnings | — | 32 | — | ||||||||||||||
| (44) | 9 | (32) | |||||||||||||||
| Other Comprehensive Income (Loss) Before Taxes | 253 | 90 | (44) | ||||||||||||||
| (Provision) Benefit for Taxes | (24) | 17 | 58 | ||||||||||||||
| Other Comprehensive Income, Net of Taxes | 229 | 107 | 14 | ||||||||||||||
| Comprehensive Income | $ | 286 | $ | 2,686 | $ | 2,039 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
| As of October 31 | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions, except par value and shares | |||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 5,773 | $ | 14,846 | |||||||
| Accounts receivable, net of allowances | 5,290 | 3,550 | |||||||||
| Financing receivables, net of allowances | 3,826 | 3,870 | |||||||||
| Inventory | 6,352 | 7,810 | |||||||||
| Assets held for sale | — | 1 | |||||||||
| Other current assets | 3,753 | 3,380 | |||||||||
| Total current assets | 24,994 | 33,457 | |||||||||
| Property, plant and equipment, net | 6,002 | 5,664 | |||||||||
| Long-term financing receivables and other assets | 13,817 | 12,616 | |||||||||
| Investments in equity interests | 955 | 929 | |||||||||
| Goodwill | 23,770 | 18,086 | |||||||||
| Intangible assets, net | 6,368 | 510 | |||||||||
| Total assets | $ | 75,906 | $ | 71,262 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Notes payable and short-term borrowings | $ | 4,609 | $ | 4,742 | |||||||
| Accounts payable | 7,731 | 11,064 | |||||||||
| Employee compensation and benefits | 1,871 | 1,356 | |||||||||
| Taxes on earnings | 319 | 284 | |||||||||
| Deferred revenue | 5,358 | 3,904 | |||||||||
| Liabilities held for sale | — | 32 | |||||||||
| Other accrued liabilities | 4,755 | 4,591 | |||||||||
| Total current liabilities | 24,643 | 25,973 | |||||||||
| Long-term debt | 17,756 | 13,504 | |||||||||
| Other non-current liabilities | 8,753 | 6,905 | |||||||||
| Commitments and Contingencies | |||||||||||
| HPE stockholders' Equity: | |||||||||||
| 7.625% Series C mandatory convertible preferred stock, $0.01 par value (30,000,000 issued and outstanding at October 31, 2025 and October 31, 2024) | — | — | |||||||||
| Common stock, $0.01 par value (9,600,000,000 shares authorized; 1,318,292,428 and 1,297,258,235 issued and outstanding at October 31, 2025 and October 31, 2024, respectively) | 13 | 13 | |||||||||
| Additional paid-in capital | 30,234 | 29,848 | |||||||||
| Accumulated deficit | (2,811) | (2,068) | |||||||||
| Accumulated other comprehensive loss | (2,748) | (2,977) | |||||||||
| Total HPE stockholders' equity | 24,688 | 24,816 | |||||||||
| Non-controlling interests | 66 | 64 | |||||||||
| Total stockholders' equity | 24,754 | 24,880 | |||||||||
| Total liabilities and stockholders' equity | $ | 75,906 | $ | 71,262 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||||
| Net earnings attributable to HPE | $ | 57 | $ | 2,579 | $ | 2,025 | |||||||||||
| Adjustments to Reconcile Net Earnings Attributable to HPE to Net Cash Provided by Operating Activities: | |||||||||||||||||
| Depreciation and amortization | 2,737 | 2,564 | 2,616 | ||||||||||||||
| Impairment charges | 1,621 | — | — | ||||||||||||||
| Stock-based compensation expense | 643 | 430 | 428 | ||||||||||||||
| Provision for inventory and credit losses | 511 | 175 | 230 | ||||||||||||||
| Restructuring (credit) charges | (13) | 33 | 242 | ||||||||||||||
| Cost reduction program | 275 | — | — | ||||||||||||||
| Deferred taxes on earnings | (565) | (64) | (67) | ||||||||||||||
| Earnings from equity interests | (90) | (147) | (245) | ||||||||||||||
| Gain on sale of a business | (248) | — | — | ||||||||||||||
| Gain on sale of equity interest | — | (733) | — | ||||||||||||||
| Dividends received from equity investees | 29 | 43 | 200 | ||||||||||||||
| H3C divestiture related severance costs | 97 | — | — | ||||||||||||||
| Amortization of inventory fair value adjustment | 244 | — | — | ||||||||||||||
| Loss on equity investments, net | 147 | 13 | 31 | ||||||||||||||
| Other, net | 181 | 136 | — | ||||||||||||||
| Changes in Operating Assets and Liabilities, Net of Acquisitions: | |||||||||||||||||
| Accounts receivable | (700) | (83) | 577 | ||||||||||||||
| Financing receivables | (153) | (909) | (607) | ||||||||||||||
| Inventory | 1,783 | (3,358) | 400 | ||||||||||||||
| Accounts payable | (3,468) | 3,927 | (1,655) | ||||||||||||||
| Taxes on earnings | (200) | 190 | (34) | ||||||||||||||
| Restructuring | (58) | (164) | (275) | ||||||||||||||
| Other assets and liabilities | 89 | (291) | 562 | ||||||||||||||
| Net cash provided by operating activities | 2,919 | 4,341 | 4,428 | ||||||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||||
| Investment in property, plant and equipment and software assets | (2,292) | (2,367) | (2,828) | ||||||||||||||
| Proceeds from sale of property, plant and equipment | 380 | 370 | 602 | ||||||||||||||
| Purchases of equity investments | (9) | (16) | (15) | ||||||||||||||
| Proceeds from sale of available-for-sale securities and other investments | 934 | 6 | 8 | ||||||||||||||
| Proceeds from maturities and redemptions of available-for-sale securities | 48 | — | — | ||||||||||||||
| Proceeds from sale of equity interest | — | 2,143 | 1 | ||||||||||||||
| Financial collateral posted | (764) | (1,020) | (1,443) | ||||||||||||||
| Financial collateral received | 581 | 978 | 1,152 | ||||||||||||||
| Payments made in connection with business acquisitions, net of cash acquired | (12,278) | (147) | (761) | ||||||||||||||
| Proceeds from sale of a business | 210 | — | — | ||||||||||||||
| Net cash used in investing activities | (13,190) | (53) | (3,284) | ||||||||||||||
| Cash Flows from Financing Activities: | |||||||||||||||||
| Short-term borrowings with original maturities less than 90 days, net | (8) | (31) | (47) | ||||||||||||||
| Proceeds from debt, net of issuance costs | 9,188 | 11,245 | 4,725 | ||||||||||||||
| Payment of debt | (6,837) | (5,475) | (4,887) | ||||||||||||||
| Net payments related to stock-based award activities | (289) | (84) | (106) | ||||||||||||||
| Proceeds from issuance of 7.625% Series C mandatory convertible preferred stock, net of issuance costs | — | 1,462 | — | ||||||||||||||
| Repurchases of common stock | (202) | (150) | (421) | ||||||||||||||
| Cash dividends paid to preferred stockholders | (112) | — | — | ||||||||||||||
| Cash dividends paid to common stockholders | (684) | (676) | (619) | ||||||||||||||
| Other | (10) | (8) | (7) | ||||||||||||||
| Net cash provided by (used in) financing activities | 1,046 | 6,283 | (1,362) | ||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (21) | (47) | 36 | ||||||||||||||
| Change in cash, cash equivalents and restricted cash | (9,246) | 10,524 | (182) | ||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 15,105 | 4,581 | 4,763 | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 5,859 | $ | 15,105 | $ | 4,581 | |||||||||||
| Supplemental Cash Flow Disclosures: | |||||||||||||||||
| Income taxes paid, net of refunds | $ | 425 | $ | 248 | $ | 307 | |||||||||||
| Interest expense paid | $ | 1,018 | $ | 772 | $ | 677 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions, except number of shares in thousands | Number of Shares | Par Value | Number of 7.625% Series C Mandatory Convertible Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| In millions, except number of shares in thousands | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2022 | 1,281,037 | $ | 13 | — | $ | 28,299 | $ | (5,350) | $ | (3,098) | $ | 19,864 | $ | 45 | $ | 19,909 | ||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to HPE | 2,025 | 2,025 | 11 | 2,036 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | 14 | 14 | — | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | 2,039 | 11 | 2,050 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 428 | 428 | 428 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholding related to vesting of employee stock plans | (165) | (165) | (165) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock plans and other | 28,684 | 56 | (2) | 54 | 54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (27,091) | (419) | (419) | (419) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared ($0.48 per common share) | (619) | (619) | (619) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2023 | 1,282,630 | $ | 13 | — | $ | 28,199 | $ | (3,946) | $ | (3,084) | $ | 21,182 | $ | 56 | $ | 21,238 | ||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to HPE | 2,579 | 2,579 | 16 | 2,595 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | 107 | 107 | — | 107 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | 2,686 | 16 | 2,702 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 430 | 430 | 430 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholding related to vesting of employee stock plans | (145) | (145) | (145) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity issued in connection with the 7.625% Series C mandatory convertible preferred stock | 30,000 | 1,462 | 1,462 | 1,462 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock plans and other | 22,385 | 52 | — | 52 | 52 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (7,757) | (150) | (150) | (150) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend on preferred stock accrued / declared ($0.83 per preferred share) | (25) | (25) | (25) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared ($0.52 per common share) | (676) | (676) | (8) | (684) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2024 | 1,297,258 | $ | 13 | 30,000 | $ | 29,848 | $ | (2,068) | $ | (2,977) | $ | 24,816 | $ | 64 | $ | 24,880 | ||||||||||||||||||||||||||||||||||||||||
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions, except number of shares in thousands | Number of Shares | Par Value | Number of 7.625% Series C Mandatory Convertible Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2024 | 1,297,258 | $ | 13 | 30,000 | $ | 29,848 | $ | (2,068) | $ | (2,977) | $ | 24,816 | $ | 64 | $ | 24,880 | ||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to HPE | 57 | 57 | 12 | 69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | 229 | 229 | 229 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | 286 | 12 | 298 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 643 | 643 | 643 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholding related to vesting of employee stock plans | (333) | (333) | (333) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consideration for replacement of Juniper Networks Inc.’s equity awards | 239 | 239 | 239 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with employee stock plans and other | 30,758 | 35 | 2 | 37 | (2) | 35 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (9,724) | (198) | (2) | (200) | (200) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend on preferred stock accrued / declared ($3.81 per preferred share) | (116) | (116) | (116) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared ($0.52 per common share) | (684) | (684) | (8) | (692) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2025 | 1,318,292 | $ | 13 | 30,000 | $ | 30,234 | $ | (2,811) | $ | (2,748) | $ | 24,688 | $ | 66 | $ | 24,754 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1: Overview and Summary of Significant Accounting Policies
Background
Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise,” “HPE,” or the “Company”) is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge-to-cloud. Hewlett Packard Enterprise enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future. Hewlett Packard Enterprise's customers range from small- and medium-sized businesses to large global enterprises and governmental entities.
On July 2, 2025, the Company completed the Juniper Networks, Inc. (“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 a 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.
Basis of Presentation and Principles of Consolidation
The Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries and affiliates in which the Company has a controlling financial interest or is the primary beneficiary. All intercompany transactions and accounts within the consolidated businesses of the Company have been eliminated.
The Company consolidates a Variable Interest Entity (“VIE”) where it has been determined that the Company is the primary beneficiary of the entity's operation. The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of the entity and the risks the entity was designed to create and pass through to its variable interest holders. The Company also evaluates its economic interests in the VIE.
The Company accounts for investments in companies over which it has the ability to exercise significant influence but does not hold a controlling interest under the equity method of accounting, and the Company records its proportionate share of income or losses in Earnings from equity interests in the Consolidated Statements of Earnings.
Non-controlling interests are presented as a separate component within Total stockholders' equity in the Consolidated Balance Sheets. Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Consolidated Statements of Earnings and are not presented separately, as they were not material for any periods presented.
Segment Realignment
Effective at the beginning of the first quarter of fiscal 2025, in order to align its segment financial reporting more closely with its current business structure, HPE implemented an organizational change with the transfer of certain managed services, previously reported within the Server segment, to the Hybrid Cloud segment.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are assessed each period and updated to reflect current information, including those related to revenue recognition, stock-based compensation, net periodic benefit costs, restructuring accruals, provision for taxes, valuation allowance for deferred taxes, provision for expected credit losses, inventory reserves, and impairment assessments of goodwill, intangible assets and other long-lived assets. The Company believes that these estimates, judgments and assumptions are reasonable under the circumstances, and are subject to significant uncertainties, some of which are beyond the Company's control. Should any of
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
these estimates change, it could adversely affect the Company's results of operations. Actual results could differ materially from these estimates under different assumptions or conditions.
Foreign Currency Translation
The Company predominately uses the U.S. dollar as its functional currency. Assets and liabilities denominated in non-U.S. currencies are remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. Net revenue, costs and expenses denominated in non-U.S. currencies are recorded in U.S. dollars at the average rates of exchange prevailing during the period. The Company includes gains or losses from foreign currency remeasurement in Interest and other, net in the Consolidated Statements of Earnings and gains and losses from cash flow hedges in Net revenue as the hedged revenue is recognized. Certain non-U.S. subsidiaries designate the local currency as their functional currency, and the Company records the translation of their assets and liabilities into U.S. dollars at the balance sheet date as translation adjustments and includes them as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets.
Revenue Recognition
The Company accounts for a contract with a customer when both parties have provided written approval and are committed to perform, each party's rights including payment terms are identified, the contract has commercial substance, and collection of consideration is probable.
The Company enters into contracts with customers that typically include combinations of products and services, resulting in arrangements containing multiple performance obligations for hardware and software products and/or various services. The Company determines whether each product or service is distinct in order to identify the performance obligations in the contract and allocate the contract transaction price among the distinct performance obligations. Arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether the commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. The Company classifies its hardware, perpetual software licenses, service arrangements and software-as-a-service (“SaaS”) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where the Company delivers hardware or software, it is typically the principal and records revenue and costs of goods sold on a gross basis.
The majority of the Company's 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, in an amount that reflects the consideration to which the Company expects to be entitled, in exchange for those products or services. Variable consideration offered in contracts with customers, partners and distributors may include rebates, volume-based discounts, price protection, and other incentive programs. Variable consideration is estimated at contract inception and updated at the end of each reporting period as additional information becomes available and recognized only to the extent that it is probable that a significant reversal of revenue will not occur.
Transfer of control occurs once the customer has the contractual right to use the product, generally upon delivery once title and risk of loss has transferred to the customer. Transfer of control can also occur over time for maintenance and services as the customer receives the benefit over the contract term. The Company's hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On its product sales, the Company records consideration from shipping and handling on a gross basis within net product sales. Revenue is recorded net of any associated sales taxes.
The Company allocates the transaction price for the contract among the performance obligations on a relative standalone selling price basis (“SSP”). 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.
Judgment is applied in determining the transaction price as the Company may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration may include various rebates,
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
volume-based discounts, price protection, and other incentive programs that are offered to customers, partners and distributors. When determining the amount of revenue to recognize, the Company estimates the expected usage of these programs, applying the expected value or most likely estimate and updates the estimate at each reporting period as actual utilization becomes available. The Company also considers the customers' right of return in determining the transaction price, where applicable.
Contract Balances
Accounts receivable and contract assets
A receivable is a right to consideration in exchange for products or services the Company has transferred to a customer that is unconditional. A contract asset is a right to consideration in exchange for products or services transferred to a customer that is conditional on something other than the passage of time. A receivable is recorded when the right to consideration becomes unconditional.
The Company's contract assets include unbilled receivables which are recorded when the Company recognizes revenue in advance of billings. Unbilled receivables generally relate to services contracts where a service has been performed and control has transferred, but invoicing to the customer is subject to future milestone billings or other contractual payment schedules. The Company classifies unbilled receivables as Accounts receivable.
Contract liabilities
A contract liability is an obligation to transfer products or services to a customer for which the Company has received consideration, or the amount is due, from the customer. The Company's contract liabilities primarily consist of deferred revenue and customer deposits. Deferred revenue is recorded when amounts invoiced to customers are in excess of revenue that can be recognized because performance obligations have not been satisfied and control of the promised products or services has not transferred to the customer. Deferred revenue largely represents amounts invoiced in advance for product (hardware/software) support contracts, consulting projects and product sales where revenue cannot be recognized yet. Customer deposits largely represent payments received from customers in advance of the Company’s completion of its contractual obligations. As customer acceptance milestones are met, the Company will recognize revenue and reduce the amount of contract liabilities.
Costs to obtain a contract with a customer
The Company capitalizes the incremental costs of obtaining a contract with a customer, primarily sales commissions, if the Company expects to recover those costs. The Company has elected, as a practical expedient, to expense the costs of obtaining a contract as incurred for contracts with terms of one year or less. The typical amortization periods used range from two to five years. The Company periodically reviews the capitalized sales commission costs for possible impairment losses. The amortization of capitalized costs to obtain a contract are included in Selling, general and administrative expense. Refer to Note 7, “Balance Sheet Details,” for additional information.
Shipping and Handling
The Company includes costs related to shipping and handling in Cost of products.
Stock-Based Compensation
Stock-based compensation expense is based on the measurement date fair value of the award and is recognized only for those awards expected to meet the service and performance vesting conditions. Stock-based compensation expense for stock options and restricted stock units with only a service condition is recognized on a straight-line basis over the requisite service period of the award. For stock options and restricted stock units with both a service condition and a performance or market condition, the expense is recognized on a graded vesting basis over the requisite service period of the award. Stock-based compensation expense is determined at the aggregate grant level for service-based awards and at the individual vesting tranche level for awards with performance and/or market conditions. The forfeiture rate is estimated based on historical experience.
Retirement and Post-Retirement Plans
The Company has various defined benefit, other contributory and noncontributory, retirement and post-retirement plans. The costs and obligations for these plans depend on various assumptions. Major assumptions relate primarily to discount rates, mortality rates, expected increases in compensation levels and the expected long-term return on plan assets. These assumptions vary by plan, and the weighted-average rates used are set forth in Note 4, “Retirement and Post-Retirement Benefit Plans.”
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The discount rate assumption is based on current investment yields of high-quality fixed-income securities with maturities similar to the expected benefits payment period. Mortality rates help predict the expected life of plan participants and are based on a historical demographic study of the plan. The expected increase in the compensation levels assumption reflects long-term actual experience and future expectations. The expected long-term return on plan assets is determined based on asset allocations, historical portfolio results, historical asset correlations and management's expected returns for each asset class. In any fiscal year, significant differences may arise between the actual return and the expected long-term return on plan assets. Historically, differences between the actual return and expected long-term return on plan assets have resulted from changes in target or actual asset allocation, short-term performance relative to expected long-term performance, and to a lesser extent, differences between target and actual investment allocations, the timing of benefit payments compared to expectations, and the use of derivatives intended to effect asset allocation changes or hedge certain investment or liability exposures.
The following table provides the impact changes in the weighted-average assumptions of discount rates, the expected increase in compensation levels and the expected long-term return on plan assets would have had on the net periodic benefit cost for fiscal 2025:
| Change in basis points | Change in Net Periodic Benefit Cost | ||||||||||
| In millions | |||||||||||
| Assumptions: | |||||||||||
| Discount rate | (25) | $ | 17 | ||||||||
| Expected increase in compensation levels | 25 | 2 | |||||||||
| Expected long-term return on plan assets | (25) | $ | 28 |
The Company generally amortizes unrecognized actuarial gains and losses on a straight-line basis over the average remaining estimated service life or, in the case of closed plans, life expectancy of participants. In limited cases, actuarial gains and losses are amortized using the corridor approach.
Advertising
Costs to produce advertising are expensed as incurred during production. Costs to communicate advertising are expensed when the advertising is first run. Advertising expense totaled approximately $179 million, $117 million, and $173 million in fiscal 2025, 2024, and 2023, respectively.
Restructuring and Severance
The Company's transformation programs include charges for approved restructuring plans; the primary elements of the transformation programs were completed by the end of fiscal 2024. Restructuring charges include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. In addition, these restructuring actions require management to estimate the timing and amount of severance and other employee separation costs for workforce reduction and enhanced early retirement programs, the fair value of assets made redundant or obsolete, and the value of lease and contract cancellation and other exit costs. The Company records restructuring charges based on estimated employee terminations and site closure and consolidation plans. The Company accrues for severance and other employee separation costs under these actions when it is probable that benefits will be paid and the amount is reasonably estimable. The rates used in determining severance accruals are based on existing plans, historical experiences and negotiated settlements. For a full description of the Company's restructuring and severance actions, refer to the discussions in Note 3, “Transformation Programs” and Note 7, “Balance Sheet Details.”
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Taxes on Earnings
The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In determining the need for a valuation allowance, the Company considers future market growth, forecasted earnings, future sources of taxable income, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies. In the event the Company were to determine that it is more likely than not that the Company will be unable to realize all or part of its deferred tax assets in the future, the Company would increase the valuation allowance and recognize a corresponding charge to earnings in the period in which such a determination was made. Likewise, if the Company later determines that the deferred tax assets are more likely than not to be realized, the Company would reverse the applicable portion of the previously recognized valuation allowance. In order for the Company to realize deferred tax assets, the Company 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.
The Company records accruals for uncertain tax positions when the Company believes that it is not more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The provision for income taxes includes the effects of adjustments for uncertain tax positions as well as any related interest and penalties. The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in Benefit (provision) for taxes in the Consolidated Statements of Earnings.
The Company is subject to the Global Intangible Low Taxed Income (“GILTI”) tax in the U.S. The Company elected to treat taxes on future GILTI inclusions in U.S. taxable income as a current period expense when incurred.
Allowance for Doubtful Accounts
Accounts Receivable
The allowance for expected credit losses related to accounts receivable is comprised of a general reserve and a specific reserve. The Company may record a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer's operating results or financial position. If there are additional changes in circumstances related to the specific customer, the Company further adjusts estimates of the recoverability of receivables. The Company maintains an allowance for credit losses for all other customers based on a variety of factors, including the financial condition of customers and the length of time receivables are past due. These qualitative factors are subjective and require a degree of management judgment. The past due or delinquency status of a receivable is based on the contractual payment terms of the receivable. The Company establishes an allowance for expected credit losses related to accounts receivable, including unbilled receivables.
Financing Receivables
The allowance for expected credit losses related to financing receivables is comprised of a general reserve and a specific reserve. The Company establishes a specific reserve for financing receivables with identified exposures, such as customer defaults, bankruptcy or other events, that make it unlikely the Company will recover its investment. For individually evaluated receivables, the Company determines the expected cash flow for the receivable, which includes consideration of estimated proceeds from disposition of the collateral and calculates an estimate of the potential loss and the probability of loss. For those accounts where a loss is considered probable, the Company records a specific reserve. The Company maintains a general reserve using a credit loss model on a regional basis and bases such percentages on several factors, including consideration of historical credit losses and portfolio delinquencies, trends in the overall weighted-average risk rating of the portfolio, current economic conditions, and forward-looking information, including reasonable and supportable forecasts. The Company excludes accounts evaluated as part of the specific reserve from the general reserve analysis. The Company generally writes off a receivable or records a specific reserve when a receivable becomes 180 days past due, or sooner if the Company determines that the receivable is not collectible.
Non-Accrual and Past-Due Financing Receivables
The Company considers a financing receivable to be past due when the minimum payment is not received by the contractually specified due date. The Company generally places financing receivables on non-accrual status, which is the suspension of interest accrual, and considers such receivables to be non-performing at the earlier of the time at which full payment of principal and interest becomes doubtful or the receivable becomes 90 days past due. Subsequently, the Company may recognize revenue on non-accrual financing receivables as payments are received, which is on a cash basis, if the Company deems the recorded financing receivable to be fully collectible; however, if there is doubt regarding the ultimate collectability of
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
the recorded financing receivable, all cash receipts are applied to the carrying amount of the financing receivable, which is the cost recovery method. In certain circumstances, such as when the Company deems a delinquency to be of an administrative nature, financing receivables may accrue interest after becoming 90 days past due. The non-accrual status of a financing receivable may not impact a customer's risk rating. After all of a customer's delinquent principal and interest balances are settled, the Company may return the related financing receivable to accrual status.
Concentrations of Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and restricted cash, investments, receivables from trade customers and contract manufacturers, financing receivables and derivatives.
The Company maintains cash, cash equivalents and restricted cash, investments, derivatives, and certain other financial instruments with various financial institutions. These financial institutions are located in many different geographic regions, and the Company's policy is designed to limit exposure from any particular institution. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. The Company utilizes derivative contracts to protect against the effects of foreign currency and interest rate exposures. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss. For more details on the collateral program, see Note 13, “Financial Instruments.”
Credit risk with respect to accounts receivable from trade customers and financing receivables is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company performs ongoing credit evaluations of the financial condition of its customers and may require collateral, such as letters of credit and bank guarantees, in certain circumstances. As of October 31, 2025, one distributor accounted for 10% of the Company's accounts receivable balance and no single customer accounted for more than 10% of the Company’s financing receivables. As of October 31, 2024, no single customer accounted for more than 10% of the Company's receivable from trade customers and financing receivables.
Restricted Cash
Restricted cash is included within Other current assets in the accompanying Consolidated Balance Sheets and is primarily related to cash received under the Company's collateral securities agreements for its derivative instruments and cash restricted under the fixed-term securitization program for the issuance of asset-backed debt securities.
Inventory
The Company values inventory at the lower of cost or net realizable value. Cost is computed using standard cost which approximates actual cost on a first-in, first-out basis. At each reporting period, the Company assesses the value of its inventory and writes down the cost of inventory to its net realizable value if required, for estimated excess or obsolescence. Factors influencing these adjustments include changes in future demand forecasts, market conditions, technological changes, product life-cycle and development plans, component cost trends, product pricing, physical deterioration, and quality issues. If in any period the Company anticipates a change in those factors to be less favorable than its previous estimates, additional inventory write-downs may be required and could materially impact gross margin. The write down for excess or obsolescence is charged to the provision of inventory, which is a component of Cost of Sales in the Consolidated Statements of Earnings. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
Property, Plant and Equipment, net
The Company states property, plant and equipment at cost less accumulated depreciation. The Company capitalizes additions and improvements and expenses maintenance and repairs as incurred. Depreciation expense is recognized on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives are five to 40 years for buildings and improvements and three to 15 years for machinery and equipment. The Company depreciates leasehold improvements over the life of the lease or the asset, whichever is shorter. The Company depreciates equipment held for lease over the initial term of the lease to the equipment's estimated residual value. The estimated useful lives of assets used solely to support a customer services contract generally do not exceed the term of the customer contract. On retirement or disposition, the asset cost and related accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated Statements of Earnings.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The Company capitalizes certain internal and external costs incurred to acquire or create internal use software, principally related to software coding, designing system interfaces and installation and testing of the software. The Company amortizes capitalized internal use software costs using the straight-line method over the estimated useful lives of the software, generally from three to five years.
Leases
Lessee Accounting
The Company enters into various leases as a lessee for assets including office buildings, data centers, vehicles, and aviation. The Company determines if an arrangement is a lease at inception. An arrangement contains a lease when the arrangement conveys the right to control the use of an identified asset over the lease term. Upon lease commencement, the Company records a lease liability for the obligation to make lease payments and right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term in the Consolidated Balance Sheets. The lease liability is measured at commencement date based on the present value of lease payments not yet paid over the lease term and the Company's incremental borrowing rate. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate which approximates the rate at which the Company would borrow, on a secured basis, in the country where the lease was executed. The ROU asset is based on the lease liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. Fixed payments are included in the recognition of ROU assets and liabilities, while non-lease components, such as maintenance or utility charges are expensed as incurred. The Company has agreements that include both lease and non-lease components. For the majority of these agreements, the non-lease components are accounted for separately and therefore are not included in the Company’s recognized leased assets and liabilities. The Company allocates consideration to the lease and non-lease components using their relative standalone values. The lease term may include options to extend or to terminate the lease that the Company is reasonably certain to exercise. The Company has elected not to record leases with an initial term of twelve months or less on the Consolidated Balance Sheets.
For finance leases, the ROU asset is amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the lease liability is recorded separately using the interest method. For operating leases, lease expense is generally recognized on a straight-line basis over the lease term.
Lessor Accounting
The Company's lease offerings are non-cancelable, and the payment schedule primarily consists of fixed payments. Variable payments that are based on an index are included in lease receivables. The Company allocates consideration amongst lease components and non-lease components on a relative standalone selling price basis, when lease arrangements include multiple performance obligations. At the end of the lease term, the Company allows the client to either return the equipment, purchase the equipment or renew the lease based on mutually agreed upon terms.
The Company retains a residual position in equipment through lease and finance agreements which is equivalent to an estimated market value. The residual amount is established prior to lease inception, based upon estimated equipment values at end of lease using product road map trends, historical analysis, future projections and remarketing experience. The Company's residual amounts are evaluated at least annually to assess the appropriateness of the carrying values. Any anticipated declines in specific future residual values that are considered to be other-than-temporary would be recorded in current earnings. The Company is able to optimize the recovery of residual values by selling equipment in place, extending lease arrangements on a fixed term basis, entering into a monthly usage rental term beyond the initial lease term, and selling lease returned equipment in the secondary market. The contractual lease agreement also identifies return conditions that ensures the leased equipment will be in good operating condition upon return minus any normal wear and tear. During the residual review process, product changes, product updates, as well as market conditions are reviewed and adjustments if other than temporary are made to residual values in accordance with the impact of any such changes. The remarketing sales organization closely manages the sale of equipment lease returns to optimize the recovery of outstanding residual by product.
Business Combinations
The Company includes the results of operations of acquired businesses in the Company's consolidated results prospectively from the date of acquisition. Upon the acquisition of a business, the fair value of the assets acquired and liabilities assumed are estimated, which may require judgment regarding the identification of acquired assets and liabilities assumed. Once the acquired assets and assumed liabilities are identified, the fair value of the assets and liabilities are estimated using a variety of approaches, including relief from royalty and multi-period excess earnings method that require significant judgments. For intangible assets, significant judgments include, but are not limited to, future revenue and operating margins, customer
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
attrition, selection of discount and royalty rates, and estimated technological useful life. For tangible assets, significant judgments include, but are not limited to, current market values, physical and functional obsolescence of the assets, and remaining useful lives. The Company allocates the fair value of purchase consideration to the assets acquired including in-process research and development (“IPR&D”), liabilities assumed, and non-controlling interests in the acquired entity based on their fair values at the acquisition date. IPR&D is initially measured at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. The excess of the fair value of purchase consideration over the fair value of the assets acquired, liabilities assumed and non-controlling interests in the acquired entity is recorded as goodwill. The primary items that generate goodwill include the value of the synergies between the acquired company and the Company and the value of the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. Acquisition-related expenses and post-acquisition restructuring costs are recognized separately from the business combination and are expensed as incurred.
Goodwill
The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. In evaluating goodwill for impairment, the Company has the option to first perform a qualitative test to determine whether further impairment testing is necessary or to perform a qualitative assessment by comparing the fair value of the reporting unit to its carrying amount. Under the qualitative assessment, the Company is not required to calculate the fair value of a reporting unit unless it determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Qualitative factors include, but are not limited to, the macroeconomic and industry environment as well as Company-specific factors. The Company used the qualitative assessment for the Juniper reporting unit. For all other reporting units, the Company elects to perform a quantitative test as part of its annual goodwill impairment assessment in the fourth quarter of each fiscal year.
In the quantitative assessment, the Company estimates the fair value of its reporting units using a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows covering discrete forecast periods as well as terminal value determinations. The Company prepares cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The Company bases the discount rate on the weighted-average cost of capital 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 Company estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. The Company weights 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, the Company estimates the fair value of a reporting unit using only the income approach.
If the fair value of a reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than its carrying amount, goodwill is impaired. The goodwill impairment loss is measured as the excess of the reporting unit's carrying value over its fair value (not to exceed the total goodwill allocated to that reporting unit).
Intangible Assets and Long-Lived Assets
The Company reviews intangible assets with finite lives, long-lived assets and ROU assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For lease assets such circumstances would include a decision to abandon the use of all or part of an asset, or subleases that do not fully recover the costs of the associated lease. The Company assesses the recoverability of assets based on the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the undiscounted future cash flows are less than the carrying amount, the asset is impaired. The Company measures the amount of impairment loss, if any, as the difference between the carrying amount of the asset and its fair value using an income approach or, when available and appropriate, using a market approach. The Company amortizes intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from one to ten years. Intangible assets purchased as part of an acquisition are included in Intangible assets, net in the Consolidated Balance Sheets. All other separately purchased intangible assets are included in Long-term financing receivables and other assets in the Consolidated Balance Sheets.
Software development costs related to the development of new product offerings are capitalized subsequent to the establishment of technological feasibility, which is demonstrated by the completion of a detail program design or working model. Software development costs are included in Intangible assets, net in the Consolidated Balance Sheets. The Company amortizes capitalized costs on a straight-line basis over the estimated useful life of products, which is generally three years.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Equity Method Investments
Investments and ownership interests are accounted for under equity method accounting if the Company has the ability to exercise significant influence, but does not have a controlling financial interest. The Company records its interest in the net earnings of its equity method investees, along with adjustments for unrealized profits or losses on intra-entity transactions and amortization of basis differences, within Earnings from equity interests in the Consolidated Statements of Earnings. Profits or losses related to intra-entity sales with its equity method investees are eliminated until realized by the investor or investee. Basis differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to them. Equity method goodwill is not amortized or tested for impairment; instead the equity method investment is tested for impairment. The Company records its interest in the net earnings of its equity method investments based on the most recently available financial statements of the investees.
The carrying amount of the investment in equity interests is adjusted to reflect the Company's interest in net earnings, dividends received and other-than-temporary impairments. The Company reviews for impairment whenever factors indicate that the carrying amount of the investment might not be recoverable. In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statements of Earnings.
Equity Securities Investments
Equity securities investments with readily determinable fair values (other than those accounted for under the equity method or those that result in consolidation of the investee) are measured at fair value and any changes in fair value are recognized in Interest and other, net in the Consolidated Statements of Earnings. For equity investments without readily determinable fair values, the Company may elect to apply the measurement alternative or the fair value option. Under the measurement alternative investments are measured at cost, less impairment, and adjusted for qualifying observable price changes on a prospective basis. The Company reviews for impairment at each reporting period, assessing factors such as deterioration of earnings, adverse change in market/industry conditions, the ability to operate as a going concern, and other factors which indicate that the carrying amount of the investment might not be recoverable. In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statements of Earnings. The Company elects the fair value option when it believes that it best reflects the underlying economics of the investment. These investments may be valued using third-party pricing services at each reporting date with changes in fair value recorded as a component of Interest and other, net in the Consolidated Statements of Earnings.
Debt Securities Investments
Debt securities are generally considered available-for-sale and are reported at fair value with unrealized gains and losses, net of applicable taxes, recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets. Realized gains and losses for available-for-sale securities are calculated based on the specific identification method and included in Interest and other, net in the Consolidated Statements of Earnings. The Company monitors its investment portfolio for potential impairment on a quarterly basis. When the carrying amount of an investment in debt securities exceeds its fair value and the decline in value is determined to be due to credit-related factors, the Company recognizes the impairment using an allowance for credit loss in Interest and other, net, in the Consolidated Statements of Earnings, while the impairment that is not credit related is recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets.
Derivatives
The Company uses derivative financial instruments, primarily forwards, swaps, and, at times, options, to manage a variety of risks, including risks related to foreign currency and interest rate exposures. The Company does not use derivative financial instruments for speculative purposes.
The Company receives fair value to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. When prices in active markets are not available for an identical asset or liability, the Company generally uses industry standard valuation models to measure the fair value of derivative positions. Such measurements involve projecting future cash flows and discounting the future amounts to present value using market based observable inputs, including interest rate curves, Company and counterparty credit risk, foreign currency exchange rates, and forward and spot prices. In the absence of such data, the Company will use internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. The determination of fair value often involves significant judgments about assumptions such as determining an appropriate discount rate that factors in both risk and liquidity premiums, identifying the similarities and differences in market transactions, weighting those differences
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
accordingly and then making the appropriate adjustments to those market transactions to reflect the risks specific to the asset or liability being valued.
For a further discussion of fair value measurements and derivative instruments, refer to Note 12, “Fair Value,” and Note 13, “Financial Instruments,” respectively.
Contingencies
The Company is involved in various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. The Company records a liability for contingencies when it believes it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company does not record gain contingencies until realized. See Note 17, “Litigation, Contingencies, and Commitments,” for a full description of the Company's contingencies.
Warranties
The Company accrues the estimated cost of product warranties at the time of recognizing revenue. The Company's standard product warranty terms generally include post-sales support and repairs or replacement of a product at no additional charge for a specified period of time. The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers. The estimated warranty obligation is based on contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failure outside of the Company's baseline experience. Warranty terms generally range from one to seven years for parts and labor, depending upon the product. For certain networking products, the Company offers a limited lifetime warranty. Over the last three fiscal years, the annual warranty expense has averaged approximately 0.8% of annual net product revenue. Our warranty terms are evaluated periodically and may be subject to change. Refer to Note 7, “Balance Sheet Details,” for additional information.
Recently Enacted Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board (“FASB”) issued guidance to establish the accounting for a government grant received by a business entity. The amendment is effective for annual and interim periods beginning after December 15, 2028, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In September 2025, the FASB issued guidance to target improvements to the Accounting for Internal-Use Software, which simplifies the capitalization guidance by removing all references to software development project stages and clarifies the criteria to begin capitalizing cost. The amendment is effective for annual and interim periods beginning after December 15, 2027, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In July 2025, the FASB issued guidance to provide a practical expedient for measuring expected credit losses on current trade receivables and contract assets by assuming that current conditions remain unchanged over the life of the asset. The amendment is effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. The Company elected to early adopt the amendments in the fourth quarter of fiscal 2025, as permitted by the standard. The adoption of the amendments did not have a material impact on the Company's Consolidated Financial Statements.
In November 2024, the FASB issued guidance to provide disaggregated expense disclosures in the Consolidated Financial Statements. The Company is required to adopt the guidance for its annual period ending October 31, 2028 and all interim periods thereafter, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.
In December 2023, the FASB issued guidance to provide disaggregated income tax disclosures on the effective tax rate reconciliation and income taxes paid. The Company is required to adopt the guidance in fiscal 2026. The Company will adopt the guidance prospectively. Adoption of this new guidance will result in increased disclosures in the “Taxes on Earnings” note in the Company’s Consolidated Financial Statements but will not impact the consolidated financial results.
Note 2: Segment Information
Hewlett Packard Enterprise's operations are organized into five segments for financial reporting purposes: Server, Hybrid Cloud, Networking, Financial Services (“FS”), and Corporate Investments and Other. Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker (“CODM”), Antonio F. Neri, who is the President and Chief Executive Officer, uses to evaluate, view and run the Company's business operations, which
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
include, but are not limited to, customer base and homogeneity of products and technology. The five segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results. A summary of the types of products and services within each segment is as follows:
Server consists of general-purpose servers for multi-workload computing and workload-optimized servers to deliver the best performance and value for demanding applications, and integrated systems comprised of software and hardware designed to address High-Performance Computing and Supercomputing (including exascale applications), Artificial Intelligence (“AI”), Data Analytics, and Transaction Processing workloads for government and commercial customers globally. This portfolio of products includes the secure and versatile HPE ProLiant Rack and Tower servers; HPE Synergy, a composable infrastructure for traditional and cloud-native applications; HPE Scale Up Servers product lines for critical applications, including large enterprise software applications and data analytics platforms; HPE Edgeline servers; HPE Cray EX; HPE Cray XD (formerly known as HPE Apollo); and HPE NonStop. The Server segment’s offerings also include operational and support services sold with systems and as standalone services.
Hybrid Cloud offers a wide variety of cloud-native and hybrid solutions across storage, private cloud and the infrastructure SaaS space. Storage includes data storage and data management offerings with the HPE Alletra Storage portfolio; unstructured data solutions and analytics for AI; data protection and archiving; and storage networking. It also includes AIOps-driven intelligence with HPE InfoSight and HPE CloudPhysics. In private cloud, the HPE GreenLake offerings include new cloud-native offerings and capabilities for virtual machines, containers, and bare metal; a full suite of private cloud offerings that enable customers to self-manage or choose a fully managed experience; and a portfolio of world-class Private Cloud AI infrastructure delivered aaS. This segment also provides self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition, which includes an integrated VM Essentials virtualization software. Infrastructure software includes monitoring and observability for day two operations and beyond through the Company’s acquisition of OpsRamp and unified data access through HPE Ezmeral Data Fabric and analytics suite, which helps move and transform data for use in AI and other applications. The Hybrid Cloud segment also includes data lifecycle management and protection through its suite of offerings, including Zerto Disaster Recovery.
Networking develops and sells high-performance network and security products and services that empower customers of all sizes to build scalable, reliable, secure, agile, and efficient automated networks. Our platforms are purpose-built using AI to deliver secure and sustainable user experiences from the edge to the data center and cloud. Our solutions include hardware products such as Wi-Fi and private cellular access points; QFX, EX, and CX switches; MX and PTX routers; and gateways. Additionally, HPE provides software products, such as Mist and Aruba Central for cloud-based and on-premise management, network access control, software-defined wide area networking, network security, analytics and assurance, and private cellular core software. The Company also offers professional and support services and education and training programs, as well as aaS and flexible consumption models through the HPE GreenLake platform.
Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, utility programs, and asset management services for customers that facilitate unique technology deployment models and the acquisition of complete IT solutions, including hardware, software, and services from Hewlett Packard Enterprise and others. The FS segment also supports financial solutions for on-premise flexible consumption models, such as the HPE GreenLake cloud.
Corporate Investments and Other includes the Advisory and Professional Services (“A & PS”) business, which primarily offers consultative-led services, HPE and partner technology expertise and advice, implementation services as well as complex solution engagement capabilities; and Hewlett Packard Labs, which is responsible for research and development.
Segment Policy
Hewlett Packard Enterprise derives the results of its business segments directly from its internal management reporting system. The accounting policies that Hewlett Packard Enterprise uses to derive segment results are substantially the same as those the consolidated company uses. The CODM measures the performance of each segment based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of, and to allocate resources to each of the segments.
Segment revenue includes revenues from sales to external customers and intersegment revenues that reflect transactions between the segments on an arm's-length basis. Intersegment revenues primarily consist of sales of hardware and software that are sourced internally and, in the majority of the cases, are financed as operating leases by FS to the Company's customers. Hewlett Packard Enterprise's consolidated net revenue is derived and reported after the elimination of intersegment revenues from such arrangements.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Financing cost in the Consolidated Statements of Earnings reflects interest expense on borrowing and funding-related activity associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise for which a portion of the proceeds benefited FS.
Segment operating expenses primarily include employee related costs, third-party software costs, and lease expense. Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated operating costs include certain 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, acquisition, disposition and other charges. Total assets by segment are not presented as that information is not used to allocate resources or assess performance at the segment level and is not reviewed by the CODM.
Segment Realignments
Effective at the beginning of the first quarter of fiscal 2026, the Company implemented an organizational change by (i) merging the Server, Hybrid Cloud, and Financial Services business segments into a new segment named Cloud & AI and (ii) transferring the Telco and Instant On businesses to Corporate Investments and Other from Networking.
Segment Operating Results
| Server | Hybrid Cloud | Networking | Financial Services | Corporate Investments and Other | Total | ||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||
| Fiscal 2025 | |||||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 17,639 | $ | 5,544 | $ | 6,837 | $ | 3,507 | $ | 769 | $ | 34,296 | |||||||||||||||||||||||||||||
| Intersegment net revenue | 106 | 210 | 13 | (3) | 7 | 333 | |||||||||||||||||||||||||||||||||||
| Total segment net revenue | 17,745 | 5,754 | 6,850 | 3,504 | 776 | 34,629 | |||||||||||||||||||||||||||||||||||
| Segment cost of sales | 14,038 | 3,624 | 2,756 | 2,856 | 598 | 23,872 | |||||||||||||||||||||||||||||||||||
| Segment operating expenses | 2,364 | 1,795 | 2,498 | 287 | 210 | 7,154 | |||||||||||||||||||||||||||||||||||
| Segment earnings (loss) from operations | $ | 1,343 | $ | 335 | $ | 1,596 | $ | 361 | $ | (32) | $ | 3,603 | |||||||||||||||||||||||||||||
| Fiscal 2024**(1)** | |||||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 15,830 | $ | 5,273 | $ | 4,501 | $ | 3,509 | $ | 1,014 | $ | 30,127 | |||||||||||||||||||||||||||||
| Intersegment net revenue | 274 | 214 | 31 | 3 | — | 522 | |||||||||||||||||||||||||||||||||||
| Total segment net revenue | 16,104 | 5,487 | 4,532 | 3,512 | 1,014 | 30,649 | |||||||||||||||||||||||||||||||||||
| Segment cost of sales | 12,060 | 3,302 | 1,706 | 2,923 | 795 | 20,786 | |||||||||||||||||||||||||||||||||||
| Segment operating expenses | 2,240 | 1,926 | 1,711 | 273 | 244 | 6,394 | |||||||||||||||||||||||||||||||||||
| Segment earnings (loss) from operations | $ | 1,804 | $ | 259 | $ | 1,115 | $ | 316 | $ | (25) | $ | 3,469 | |||||||||||||||||||||||||||||
| Fiscal 2023**(1)** | |||||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 13,831 | $ | 5,491 | $ | 5,362 | $ | 3,466 | $ | 985 | $ | 29,135 | |||||||||||||||||||||||||||||
| Intersegment net revenue | 435 | 97 | 17 | 14 | — | 563 | |||||||||||||||||||||||||||||||||||
| Total segment net revenue | 14,266 | 5,588 | 5,379 | 3,480 | 985 | 29,698 | |||||||||||||||||||||||||||||||||||
| Segment cost of sales | 10,071 | 3,314 | 2,228 | 2,919 | 808 | 19,340 | |||||||||||||||||||||||||||||||||||
| Segment operating expenses | 2,380 | 2,027 | 1,808 | 280 | 254 | 6,749 | |||||||||||||||||||||||||||||||||||
| Segment earnings (loss) from operations | $ | 1,815 | $ | 247 | $ | 1,343 | $ | 281 | $ | (77) | $ | 3,609 |
(1) Effective at the beginning of the first quarter of fiscal 2025, in order to align its segment financial reporting more closely with its current business structure, HPE implemented an organizational change with the transfer of certain managed services, previously reported within the Server segment, to the Hybrid Cloud segment. These prior year amounts have been recast to reflect the change.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The reconciliation of segment operating results to Consolidated Statement of Earnings results was as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Net Revenue: | |||||||||||||||||
| Total segments | $ | 34,629 | $ | 30,649 | $ | 29,698 | |||||||||||
| Elimination of intersegment net revenue | (333) | (522) | (563) | ||||||||||||||
| Total consolidated net revenue | $ | 34,296 | $ | 30,127 | $ | 29,135 | |||||||||||
| (Loss) Earnings Before Taxes: | |||||||||||||||||
| Total segment earnings from operations | $ | 3,603 | $ | 3,469 | $ | 3,609 | |||||||||||
| Unallocated corporate costs and eliminations | (250) | (301) | (464) | ||||||||||||||
| Stock-based compensation expense | (643) | (430) | (428) | ||||||||||||||
| Amortization of intangible assets | (511) | (267) | (288) | ||||||||||||||
| Impairment charges | (1,621) | — | — | ||||||||||||||
| Transformation costs | (2) | (93) | (283) | ||||||||||||||
| Gain on sale of a business | 248 | — | — | ||||||||||||||
| H3C divestiture related severance costs | (97) | — | — | ||||||||||||||
| Cost reduction program | (275) | — | — | ||||||||||||||
| Acquisition, disposition and other charges(1) | (641) | (188) | (57) | ||||||||||||||
| Interest and other, net(2) | (175) | (117) | (104) | ||||||||||||||
| Gain on sale of equity interest | — | 733 | — | ||||||||||||||
| Earnings from equity interests | 79 | 147 | 245 | ||||||||||||||
| Total (loss) earnings before provision for taxes | $ | (285) | $ | 2,953 | $ | 2,230 |
(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 acquisition of Juniper Networks, which was recorded in cost of sales.
(2) Fiscal 2025 includes $135 million loss on investments, net, non-service net periodic credit $100 million and a $52 million litigation settlement received in the third quarter.
Major Customers
The Company had one distributor which represented approximately 10% of the Company's total net revenue in fiscal 2025, primarily within the Server and Networking segments. The Company had two distributors which represented approximately 14% and 11% of the Company's total net revenue in fiscal 2024, primarily within the Networking and Server segments. The Company had one customer, which is a distributor, that represented 11% of the Company's total net revenue in fiscal 2023, primarily within the Networking and Server segments.
Geographic Information
Net revenue by country is based upon the sales location that predominately represents the customer location. For each of the fiscal years of 2025, 2024 and 2023, other than the U.S., no country represented more than 10% of the Company's net revenue.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Net revenue by geographic region was as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Americas | |||||||||||||||||
| U.S. | $ | 13,402 | $ | 10,890 | $ | 10,369 | |||||||||||
| Americas excluding U.S. | 2,446 | 2,345 | 2,208 | ||||||||||||||
| Total Americas | 15,848 | 13,235 | 12,577 | ||||||||||||||
| Europe, Middle East and Africa | 11,510 | 10,189 | 10,151 | ||||||||||||||
| Asia Pacific and Japan | 6,938 | 6,703 | 6,407 | ||||||||||||||
| Total consolidated net revenue | $ | 34,296 | $ | 30,127 | $ | 29,135 |
Property, plant and equipment, net by country in which the Company's operates was as follows:
| As of October 31 | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| U.S. | $ | 2,982 | $ | 2,616 | |||||||
| Other countries | 3,020 | 3,048 | |||||||||
| Total property, plant and equipment, net | $ | 6,002 | $ | 5,664 |
Note 3: Transformation Programs
Transformation programs are comprised of the Cost Optimization and Prioritization Plan and the HPE Next Plan. The primary elements of both plans were completed by the end of fiscal 2024.
For each of fiscal 2025, 2024, and 2023, the transformation charges relating to both plans were $2 million, $96 million, and $286 million, respectively. These costs primarily related to labor restructuring, non-labor restructuring, IT investments, design and execution charges, and real estate initiatives.
Restructuring activities related to the Company's employees and infrastructure under the Cost Optimization and Prioritization Plan and HPE Next Plan are presented in the table below:
| Cost Optimization and Prioritization Plan | HPE Next Plan | ||||||||||||||||||||||
| Employee Severance | Infrastructure and other | Infrastructure and other | |||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Balance at beginning of year | $ | 67 | $ | 94 | $ | 23 | |||||||||||||||||
| Charges | — | (10) | (3) | ||||||||||||||||||||
| Cash payments | (32) | (21) | (5) | ||||||||||||||||||||
| Non-cash items | 2 | (2) | (1) | ||||||||||||||||||||
| Balance at end of year | $ | 37 | $ | 61 | $ | 14 | |||||||||||||||||
| Total costs incurred to date as of October 31, 2025 | $ | 823 | $ | 553 | $ | 268 | |||||||||||||||||
| Total expected costs to be incurred as of October 31, 2025 | $ | 823 | $ | 553 | $ | 268 |
The current restructuring liability related to the transformation programs, reported in Other accrued liabilities in the Consolidated Balance Sheets as of October 31, 2025 and 2024, was $42 million and $78 million, respectively. The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Consolidated Balance Sheets as of October 31, 2025 and 2024 was $70 million and $106 million, respectively.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 4: Retirement and Post-Retirement Benefit Plans
Defined Benefit Plans
The Company sponsors defined benefit pension plans worldwide, the most significant of which are the United Kingdom (“UK”) and Germany plans. The pension plan in the UK is closed to new entrants, and the plan was frozen on October 31, 2024. This plan provides benefits based on final pay and years of service and generally requires contributions from members. The German pension program that is open to new hires consists of cash balance plans that provide employer credits as a percentage of pay, certain employee pay deferrals and employer matching contributions. There also are previously closed German pension programs that include cash balance and final average pay plans. These previously closed pension programs comprise the majority of the pension obligations in Germany. As part of the Juniper Networks acquisition, HPE added mostly unfunded defined benefit plans contributing to a small decrease to HPE’s asset position.
Post-Retirement Benefit Plans
The Company sponsors retiree health and welfare benefit plans, the most significant of which is in the U.S. Generally, employees hired before August 2008 are eligible for employer credits under the Hewlett Packard Enterprise Retirement Medical Savings Account Plan (“RMSA”) upon attaining age 45. Employer credits to the RMSA available after September 2008 are provided in the form of matching credits on employee contributions made to a voluntary employee beneficiary association. Upon retirement, employees may use these employer credits for the reimbursement of certain eligible medical expenses.
Defined Contribution Plans
The Company offers various defined contribution plans for U.S. and non-U.S. employees. The Company’s defined contribution expense was approximately $228 million in fiscal 2025, and $206 million in fiscal 2024 and 2023. U.S. employees are automatically enrolled in the Hewlett Packard Enterprise Company 401(k) Plan (“HPE 401(k) Plan”), when they meet eligibility requirements, unless they decline participation. The HPE 401(k) Plan’s quarterly employer matching contributions are 100% of an employee’s contributions, up to a maximum of 4% of eligible compensation. Juniper Networks employees began participating in the HPE 401(k) plan in August 2025.
Pension Benefit Expense
The Company's net pension and post-retirement benefit costs that were directly attributable to the eligible employees, retirees and other former employees of Hewlett Packard Enterprise and recognized in the Consolidated Statements of Earnings for fiscal 2025, 2024 and 2023 are presented in the table below.
| For the fiscal years ended October 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Defined Benefit Plans | Post-Retirement Benefit Plans | ||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||
| Service cost | $ | 52 | $ | 49 | $ | 53 | $ | 1 | $ | 1 | $ | 1 | |||||||||||||||||||||||
| Interest cost(1) | 370 | 408 | 386 | 9 | 9 | 8 | |||||||||||||||||||||||||||||
| Expected return on plan assets(1) | (610) | (550) | (539) | (4) | (4) | (2) | |||||||||||||||||||||||||||||
| Amortization and Deferrals(1): | |||||||||||||||||||||||||||||||||||
| Actuarial loss (gain) | 131 | 148 | 160 | (2) | (4) | (6) | |||||||||||||||||||||||||||||
| Prior service benefit | (4) | (8) | (10) | — | — | — | |||||||||||||||||||||||||||||
| Net periodic benefit cost (credit) | (61) | 47 | 50 | 4 | 2 | 1 | |||||||||||||||||||||||||||||
| Settlement loss and special termination benefits(1) | 10 | 4 | 6 | — | — | — | |||||||||||||||||||||||||||||
| Total net benefit (credit) cost | $ | (51) | $ | 51 | $ | 56 | $ | 4 | $ | 2 | $ | 1 | |||||||||||||||||||||||
(1)These non-service components were included in Interest and other, net in the Consolidated Statements of Earnings.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The weighted-average assumptions used to calculate the net benefit cost (credit) in the table above for fiscal 2025, 2024 and 2023 were as follows:
| For the fiscal years ended October 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Defined Benefit Plans | Post-Retirement Benefit Plans | ||||||||||||||||||||||||||||||||||
| Discount rate used to determine benefit obligation | 3.8 | % | 4.4 | % | 3.9 | % | 5.6 | % | 6.5 | % | 6.0 | % | |||||||||||||||||||||||
| Discount rate used to determine service cost | 4.1 | % | 4.7 | % | 4.2 | % | 5.2 | % | 6.1 | % | 5.7 | % | |||||||||||||||||||||||
| Discount rate used to determine interest cost | 3.7 | % | 4.4 | % | 3.9 | % | 5.5 | % | 6.4 | % | 5.9 | % | |||||||||||||||||||||||
| Expected increase in compensation levels | 2.6 | % | 2.9 | % | 3.0 | % | — | — | — | ||||||||||||||||||||||||||
| Expected long-term return on plan assets | 5.5 | % | 5.5 | % | 5.1 | % | 4.8 | % | 5.3 | % | 4.3 | % | |||||||||||||||||||||||
| Interest crediting rate(1) | 2.5 | % | 2.4 | % | 2.4 | % | 4.8 | % | 5.3 | % | 4.3 | % |
(1)The average assumed interest credited for HPE's cash balance plans and post-retirement plans, as applicable.
To estimate the service and interest cost components of net periodic benefit cost for defined benefit plans that use the yield curve approach, which represent substantially all of the Company's defined benefit plans, the Company has elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Funded Status
The funded status of the plans was as follows:
| As of October 31, | |||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Defined Benefit Plans | Post-Retirement Benefit Plans | ||||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Change in fair value of plan assets: | |||||||||||||||||||||||
| Fair value—beginning of year | $ | 11,007 | $ | 9,879 | $ | 76 | $ | 68 | |||||||||||||||
| Acquisitions and divestitures | 26 | — | — | — | |||||||||||||||||||
| Reimbursement of benefit payments(1) | (102) | (90) | — | — | |||||||||||||||||||
| Actual return on plan assets | 605 | 1,207 | 5 | 5 | |||||||||||||||||||
| Employer contributions | 196 | 172 | 5 | 4 | |||||||||||||||||||
| Participant contributions | 27 | 26 | 6 | 6 | |||||||||||||||||||
| Benefits paid | (524) | (509) | (9) | (7) | |||||||||||||||||||
| Settlement | (64) | (18) | — | — | |||||||||||||||||||
| Currency impact | 559 | 340 | — | — | |||||||||||||||||||
| Fair value—end of year | $ | 11,730 | $ | 11,007 | $ | 83 | $ | 76 | |||||||||||||||
| Change in benefit obligation: | |||||||||||||||||||||||
| Projected benefit obligation—beginning of year | $ | 10,256 | $ | 9,362 | $ | 162 | $ | 148 | |||||||||||||||
| Addition/deletion of plans/acquisitions/divestitures(2) | 66 | — | — | — | |||||||||||||||||||
| Service cost | 52 | 49 | 1 | 1 | |||||||||||||||||||
| Interest cost | 370 | 408 | 9 | 9 | |||||||||||||||||||
| Participant contributions | 27 | 26 | 6 | 6 | |||||||||||||||||||
| Actuarial (gain) loss | (171) | 613 | (3) | 7 | |||||||||||||||||||
| Benefits paid | (524) | (509) | (9) | (7) | |||||||||||||||||||
| Plan amendments | 2 | 4 | — | — | |||||||||||||||||||
| Settlement | (64) | (18) | — | — | |||||||||||||||||||
| Special termination benefits | — | 2 | — | — | |||||||||||||||||||
| Currency impact | 491 | 319 | 1 | (2) | |||||||||||||||||||
| Projected benefit obligation—end of year(3) | $ | 10,505 | $ | 10,256 | $ | 167 | $ | 162 | |||||||||||||||
| Funded status at end of year | $ | 1,225 | $ | 751 | $ | (84) | $ | (86) | |||||||||||||||
| Accumulated benefit obligation | $ | 10,352 | $ | 10,130 | $ | — | $ | — |
(1)For benefit payments reimbursed to HPE from the German Contractual Trust Arrangements.
(2)Includes the addition/deletion of plans resulting from acquisitions and divestitures.
(3)HPE divested $13 million in projected benefit obligation and $7 million in assets due to the Communications Technology Group (“CTG”) divestiture that occurred on December 1, 2024. HPE added $68 million in projected benefit obligation and $39 million in assets due to the Merger that closed on July 2, 2025.
For the year ended October 31, 2025, the benefit obligation increased from $10.3 billion to $10.5 billion due to the effects of higher interest cost and currency impacts outweighing effects of a lower obligation due to higher discount rates. The increase was partially offset by benefits paid which reduced benefit obligations. Pension assets increased from $11.0 billion to $11.7 billion due to asset performance and currency impacts. The increase was partially offset by benefits paid from plan assets.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The weighted-average assumptions used to calculate the projected benefit obligations were as follows:
| As of October 31, | |||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Defined Benefit Plans | Post-Retirement Benefit Plans | ||||||||||||||||||||||
| Discount rate | 4.0 | % | 3.8 | % | 5.6 | % | 5.6 | % | |||||||||||||||
| Expected increase in compensation levels | 2.7 | % | 2.6 | % | — | — | |||||||||||||||||
| Interest crediting rate | 2.7 | % | 2.5 | % | 4.6 | % | 4.8 | % |
The net amounts recognized for defined benefit and post-retirement benefit plans in the Company's Consolidated Balance Sheets were as follows:
| As of October 31, | |||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Defined Benefit Plans | Post-Retirement Benefit Plans | ||||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Non-current assets | $ | 2,074 | $ | 1,555 | $ | — | $ | — | |||||||||||||||
| Current liabilities | (58) | (52) | (7) | (6) | |||||||||||||||||||
| Non-current liabilities | (791) | (752) | (77) | (80) | |||||||||||||||||||
| Funded status at end of year | $ | 1,225 | $ | 751 | $ | (84) | $ | (86) |
The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in accumulated other comprehensive loss for the defined benefit plans, activity for the post-retirement benefit plans were immaterial:
| As of October 31, 2025 | |||||||||||
| Defined Benefit Plans | |||||||||||
| In millions | |||||||||||
| Net actuarial loss | $ | 2,162 | |||||||||
| Prior service benefit | 20 | ||||||||||
| Total recognized in accumulated other comprehensive loss | $ | 2,182 |
Defined benefit plans with projected benefit obligations exceeding the fair value of plan assets were as follows:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Aggregate fair value of plan assets | $ | 2,114 | $ | 2,274 | |||||||
| Aggregate projected benefit obligation | $ | 2,964 | $ | 3,076 |
Defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Aggregate fair value of plan assets | $ | 190 | $ | 506 | |||||||
| Aggregate accumulated benefit obligation | $ | 934 | $ | 1,212 |
Fair Value of Plan Assets
The Company pays the U.S. defined benefit plan obligations when they come due since these plans are unfunded. The table below sets forth the fair value of non-U.S. defined benefit plan assets by asset category within the fair value hierarchy as of October 31, 2025 and 2024.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
| As of October 31, 2025 | As of October 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||
| Asset Category: | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity Securities | |||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 320 | $ | 485 | $ | — | $ | 805 | $ | 654 | $ | 60 | $ | — | $ | 714 | |||||||||||||||||||||||||||||||
| Non-U.S. | 131 | 229 | — | 360 | 125 | 190 | — | 315 | |||||||||||||||||||||||||||||||||||||||
| Debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Corporate | — | 1,759 | — | 1,759 | — | 1,526 | — | 1,526 | |||||||||||||||||||||||||||||||||||||||
| Government(1) | — | 4,637 | — | 4,637 | — | 4,768 | — | 4,768 | |||||||||||||||||||||||||||||||||||||||
| Other(2) | — | 765 | 699 | 1,464 | — | 465 | 745 | 1,210 | |||||||||||||||||||||||||||||||||||||||
| Alternative investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Private Equity(3) | — | 6 | 296 | 302 | — | 6 | 276 | 282 | |||||||||||||||||||||||||||||||||||||||
| Hybrids(4) | — | 379 | 162 | 541 | — | 365 | 197 | 562 | |||||||||||||||||||||||||||||||||||||||
| Hybrids at NAV(5) | 71 | 307 | |||||||||||||||||||||||||||||||||||||||||||||
| Common Contractual Funds at NAV(6) | |||||||||||||||||||||||||||||||||||||||||||||||
| Equities at NAV | 1,217 | 1,053 | |||||||||||||||||||||||||||||||||||||||||||||
| Fixed Income at NAV | 558 | 508 | |||||||||||||||||||||||||||||||||||||||||||||
| Emerging Markets at NAV | 283 | 275 | |||||||||||||||||||||||||||||||||||||||||||||
| Alternative investments at NAV | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
| Real Estate Funds(7) | 3 | 299 | 326 | 628 | 3 | 303 | 264 | 570 | |||||||||||||||||||||||||||||||||||||||
| Insurance Group Annuity Contracts | — | 126 | 21 | 147 | — | 93 | 21 | 114 | |||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | 182 | 134 | — | 316 | 157 | 194 | — | 351 | |||||||||||||||||||||||||||||||||||||||
| Other(8) | 17 | 157 | — | 174 | 9 | 154 | — | 163 | |||||||||||||||||||||||||||||||||||||||
| Obligation to return cash received from repurchase agreements(1) | — | (1,533) | — | (1,533) | — | (1,712) | — | (1,712) | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 653 | $ | 7,443 | $ | 1,504 | $ | 11,730 | $ | 948 | $ | 6,412 | $ | 1,503 | $ | 11,007 |
(1)Repurchase agreements, primarily in the UK, represent the plans’ short-term borrowing to hedge against interest rate and inflation risks. Investments in approximately $2.0 billion of government bonds collateralize this short-term borrowing at October 31, 2025 and 2024. The plans have an obligation to return the cash after the term of the agreements. Due to the short-term nature of the agreements, the outstanding balance of the obligation approximates fair value.
(2)Includes funds that invest primarily in asset-backed securities, mortgage-backed securities, collateralized loan obligations, and/or private debt investments. Primary valuation techniques for level 3 investments include discounted cash flows and broker quotes and/or third-party pricing services. Significant unobservable inputs include yields which are determined by considering the market yield of comparable public debt instruments adjusted for estimated losses to reflect where the expected recovery rate would be less than 100%, discount rates, and internal rate of return (IRR). The yields ranged from 6% to 29%, with the weighted average around 10%. In the prior year, the yields ranged from 6% to 21%, with the weighted average around 10%. The discount rates ranged from 3% to 4%, with the weighted average around 4%. In the prior year, the discount rates ranged from 3% to 5%, with the weighted average around 4%. The IRR ranged from 3% to 16%, with the main weighted average around 7%. In the prior year, the IRR ranged from 1% to 38%, with the main weighted average around 9%. Generally, an increase in yield and discounted rates may result in a decrease in the fair value of certain investments.
(3)Includes funds, primarily in the UK, held in non-marketable, limited partnership interests which invest in a broad range of infrastructure and infrastructure-related assets. Primary valuation techniques for level 3 investments include the market, income or cost approach. Significant unobservable inputs include discount rate and EV/EBITDA multiples. Discount rates ranged from 8% to 13%, with the weighted average around 10%. The EV/EBITDA multiples ranged from 6.3x to 35.7x, with the weighted average ranging from 11.8x to 34x. Generally, an increase in discount rates may result in a decrease in the fair value of certain investments. The EV/EBITDA ratio generally indicates the number of times investors are willing to pay for a company's EBITDA valuation.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(4)Includes funds, primarily in the UK, that invest in both private and public equities, as well as emerging markets across all sectors. The funds also hold fixed income and derivative instruments to hedge interest rate and inflation risk. In addition, the funds include units in transferable securities, collective investment schemes, money market funds, asset-backed income, cash, and deposits. Primary valuation techniques for level 3 investments include discounted cash flows and book value or net asset value. Significant unobservable inputs include discount rates. The discount rates ranged from 5% to 35%, with the weighted average around 14%. In the prior year, the discount rates ranged from 3% to 38%, with the weighted average around 17%. Generally, an increase in discount rates may result in a decrease in the fair value of certain investments.
(5)Includes a pooled fund in the UK, that seeks a rate of return with direct or indirect linkage to UK inflation by investing in vehicles including bonds, long lease property, income strips, asset-backed securities, and index linked assets. The fund has been terminated following a full redemption request by the Plan, and now holds residual investments in UK ground rents and cash, pending sale by the investment manager, following which the fund will be wound up. There are no future commitments on this investment.
(6)Common Contractual Funds are investment arrangements in which institutional investors pool their assets. Units may be acquired in four different sub-funds focused on equities, fixed income, alternative investments, and emerging markets. Each sub-fund is invested in accordance with the fund's investment objective and units are issued in relation to each sub-fund. While the sub-funds are not publicly traded, the custodian strikes a net asset value either once or twice a month, depending on the sub-fund. There are no redemption restrictions or future commitments on these investments.
(7)Includes funds, primarily in Germany, that invest in a diversified portfolio of European real estate assets exposed to logistics real estate properties, food retailing properties, residential and commercial properties, and properties under development. Primary valuation techniques for level 3 investments include the income capitalization approach, cost approach, and discounted cash flows. Significant unobservable inputs include rental yield and IRR. The rental yield rates ranged from 5% to 7%, with the weighted average around 5%. In the prior year, the rental yield rates ranged from 4% to 7%, with the weighted average around 5%. The IRR ranged from (2)% to 4%, with the main weighted average around 0%. In the prior year, the IRR ranged from 0% to 4%, with the main weighted average around 1%. The discount rates ranged from 5% to 9%, with the weighted average around 5%. Generally, an increase in rental yield rates may result in a decrease in the fair value of certain investments. A higher IRR generally signifies a greater fair value as it implies a greater potential rate of return over the life of an investment. An increase in discount rates may result in a decrease in the fair value of certain investments.
(8)Includes life insurance investment policies, unsettled transactions, and derivative instruments. As of October 31, 2025 and 2024, the derivative instruments include synthetic equity swaps held by the UK plans with equity exposure of $342 million and $396 million, respectively.
As of October 31, 2025 post-retirement benefit plan assets of $83 million were invested in publicly traded registered investment entities of which $66 million are classified within Level 1 and $17 million within Level 2 of the fair value hierarchy. As of October 31, 2024 post-retirement benefit plan assets of $76 million were invested in publicly traded registered investment entities of which $61 million are classified within Level 1 and $15 million within Level 2 of the fair value hierarchy.
Changes in fair value measurements of Level 3 investments for the non-U.S. defined benefit plans were as follows:
| For the fiscal year ended October 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Alternative Investments | |||||||||||||||||||||||||||||||||||||||||
| Debt-Other | Private Equity | Hybrids | Real Estate Funds | Insurance Group Annuities | Total | ||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of year | $ | 745 | $ | 276 | $ | 197 | $ | 264 | $ | 21 | $ | 1,503 | |||||||||||||||||||||||||||||
| Actual return on plan assets: | |||||||||||||||||||||||||||||||||||||||||
| Relating to assets held at the reporting date | 14 | 18 | 26 | 18 | — | 76 | |||||||||||||||||||||||||||||||||||
| Relating to assets sold during the period | (12) | 3 | — | — | — | (9) | |||||||||||||||||||||||||||||||||||
| Purchases, sales, and settlements | (48) | (1) | (61) | 44 | — | (66) | |||||||||||||||||||||||||||||||||||
| Balance at end of year | $ | 699 | $ | 296 | $ | 162 | $ | 326 | $ | 21 | $ | 1,504 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
| For the fiscal year ended October 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Alternative Investments | |||||||||||||||||||||||||||||||||||||||||
| Debt-Other | Private Equity | Hybrids | Real Estate Funds | Insurance Group Annuities | Total | ||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of year | $ | 799 | $ | 41 | $ | 177 | $ | 237 | $ | 20 | $ | 1,274 | |||||||||||||||||||||||||||||
| Actual return on plan assets: | |||||||||||||||||||||||||||||||||||||||||
| Relating to assets held at the reporting date | 27 | (3) | 6 | (14) | 1 | 17 | |||||||||||||||||||||||||||||||||||
| Relating to assets sold during the period | — | 4 | — | (1) | — | 3 | |||||||||||||||||||||||||||||||||||
| Purchases, sales, and settlements | (81) | 234 | 14 | 42 | — | 209 | |||||||||||||||||||||||||||||||||||
| Balance at end of year | $ | 745 | $ | 276 | $ | 197 | $ | 264 | $ | 21 | $ | 1,503 |
The following is a description of the valuation methodologies used to measure plan assets at fair value.
Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded. For corporate, government backed debt securities, and some other investments, fair value is based on observable inputs of comparable market transactions. The valuation of certain real estate funds, insurance group annuity contracts and alternative investments, such as limited partnerships and joint ventures, may require significant management judgment and involves a level of uncertainty. The valuation is generally based on fair value as reported by the asset manager and adjusted for cash flows, if necessary. In making such an assessment, a variety of factors are reviewed by management, including, but are not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager. The use of different techniques or assumptions to estimate fair value could result in a different fair value measurement at the reporting date. Cash and cash equivalents includes money market funds, which are valued based on cost, which approximates fair value. Other than those assets that have quoted prices from an active market, investments are generally classified in Level 2 or Level 3 of the fair value hierarchy based on the lowest level input that is significant to the fair value measure in its entirety. Investments measured using net asset value as a practical expedient are not categorized within the fair value hierarchy.
Plan Asset Allocations
The weighted-average target and actual asset allocations across the benefit plans at the respective measurement dates for the non-U.S. defined benefit plans were as follows:
| Defined Benefit Plans | |||||||||||||||||
| Plan Assets | |||||||||||||||||
| 2025 Target Allocation | 2025 | 2024 | |||||||||||||||
| Public equity securities | 22.8 | % | 21.4 | % | |||||||||||||
| Private/hybrid equity securities | 7.8 | % | 10.5 | % | |||||||||||||
| Real estate and other(1) | 6.8 | % | 6.7 | % | |||||||||||||
| Equity-related investments(1) | 42.3 | % | 37.4 | % | 38.6 | % | |||||||||||
| Debt securities | 56.2 | % | 59.9 | % | 58.2 | % | |||||||||||
| Cash and cash equivalents | 1.5 | % | 2.7 | % | 3.2 | % | |||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % |
(1) Included in Real estate and other investments are synthetic equity swaps with equity exposure of $342 million, which is held in the UK plans as of October 31, 2025.
For the Company's post-retirement benefit plans, approximately 80% of the plan assets are invested in cash and cash equivalents and approximately 20% in multi-asset credit investments which consists primarily of investment grade credit, emerging market debt and high yield bonds.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Investment Policy
The Company's investment strategy is to seek a competitive rate of return relative to an appropriate level of risk depending on the funded status of each plan and the timing of expected benefit payments. The majority of the plans’ investment managers employ active investment management strategies with the goal of outperforming the broad markets in which they invest. Risk management practices include diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets. A number of the plans’ investment managers are authorized to utilize derivatives for investment or liability exposures, and the Company may utilize derivatives to effect asset allocation changes or to hedge certain investment or liability exposures.
Asset allocation decisions are typically made by an independent board of trustees for the specific plan. Investment objectives are designed to generate returns that will enable the plan to meet its future obligations. In some countries, local regulations may restrict asset allocations, typically leading to a higher percentage of investment in fixed income securities than would otherwise be deployed. The Company reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees or investment committees for the specific plan.
Basis for Expected Long-Term Rate of Return on Plan Assets
The expected long-term rate of return on plan assets reflects the expected returns for each major asset class in which the plan invests and the weight of each asset class in the target mix. Expected asset returns reflect the current yield on government bonds, risk premiums for each asset class and expected real returns, which considers each country’s specific inflation outlook. Because the Company’s investment policy is to employ primarily active investment managers who seek to outperform the broader market, the expected returns are adjusted to reflect the expected additional returns, net of fees.
Employer Contributions and Funding Policy
During fiscal 2025, the Company contributed approximately $196 million to its non-U.S. pension plans and paid $5 million to cover benefit claims under the Company’s post-retirement benefit plans.
During fiscal 2026, the Company expects to contribute approximately $220 million to its non-U.S. pension plans. In addition, the Company expects to pay approximately $7 million to cover benefit claims for its post-retirement benefit plans. The Company's policy is to fund its pension plans so that it makes at least the minimum contribution required by various authorities including local government and taxing authorities.
Estimated Future Benefits Payments
As of October 31, 2025, estimated future benefits payments for the Company's retirement plans were as follows:
| Fiscal year | Defined Benefit Plans | Post-Retirement Benefit Plans | |||||||||
| In millions | |||||||||||
| 2026 | $ | 653 | $ | 11 | |||||||
| 2027 | 603 | 12 | |||||||||
| 2028 | 625 | 12 | |||||||||
| 2029 | 642 | 13 | |||||||||
| 2030 | 645 | 14 | |||||||||
| Next five fiscal years to October 31, 2035 | $ | 3,320 | $ | 75 |
Note 5: Stock-Based Compensation
On April 14, 2021 (the “Approval Date”), shareholders of the Company approved the Hewlett Packard Enterprise Company 2021 Stock Incentive Plan (the “2021 Plan”) that replaced the Company’s 2015 Stock Incentive Plan (the “2015 Plan”). The 2021 Plan provides for the grant of various types of awards including restricted stock awards, stock options and performance-based awards. These awards generally vest over 3 years from the grant date. The maximum number of shares as of the Approval Date that may be delivered to the participants under the 2021 Plan shall not exceed 7 million shares, plus 35.8 million shares that were available for grant under the 2015 Plan and any awards granted under the 2015 Plan prior to the Approval Date that were cash-settled, forfeited, terminated, or lapsed after the Approval Date. On April 5, 2023, April 10, 2024
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
and April 2, 2025, shareholders of the Company approved amendments to the 2021 Plan thereby increasing the overall number of shares available for issuance by 18 million shares, 22 million shares, and 22 million shares, respectively. As of October 31, 2025, the Company had remaining authorization of 49.7 million shares under the 2021 Plan.
Stock-Based Compensation Expense
Stock-based compensation expense and the resulting tax benefits were as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Stock-based compensation expense | $ | 643 | $ | 430 | $ | 428 | |||||||||||
| Income tax benefit | (151) | (96) | (92) | ||||||||||||||
| Stock-based compensation expense, net of tax | $ | 492 | $ | 334 | $ | 336 |
Stock-based compensation expense as presented in the table above is recorded within the following cost and expense lines in the Consolidated Statements of Earnings.
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Cost of sales | $ | 49 | $ | 49 | $ | 47 | |||||||||||
| Research and development | 208 | 158 | 161 | ||||||||||||||
| Selling, general and administrative | 348 | 223 | 220 | ||||||||||||||
| Acquisition, disposition and other charges | 38 | — | — | ||||||||||||||
| Stock-based compensation expense | $ | 643 | $ | 430 | $ | 428 |
Employee Stock Purchase Plan
Effective November 1, 2015, the Company adopted the Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan (“ESPP”). The total number of shares of Company's common stock authorized under the ESPP was 80 million. The ESPP allows eligible employees to contribute up to 10% of their eligible compensation to purchase Hewlett Packard Enterprise's common stock. The ESPP provides for a discount not to exceed 15% and an offering period up to 24 months. The Company currently offers 6-month offering periods during which employees have the ability to purchase shares at 95% of the closing market price on the purchase date. No stock-based compensation expense was recorded in connection with those purchases, as the criteria of a non-compensatory plan were met.
Restricted Stock Units
Restricted stock units have forfeitable dividend equivalent rights equal to the dividend paid on common stock. Restricted stock units do not have the voting rights of common stock, and the shares underlying restricted stock units are not considered issued and outstanding upon grant. The fair value of the restricted stock units is the closing price of the Company's common stock on the grant date of the award. The Company expenses the fair value of restricted stock units ratably over the period during which the restrictions lapse.
The following table summarizes restricted stock unit activity for the year ended October 31, 2025:
| Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||
| In thousands | |||||||||||
| Outstanding at beginning of year | 55,613 | $ | 16 | ||||||||
| Granted and replacement awards for acquisitions | 66,385 | 21 | |||||||||
| Vested | (41,471) | 18 | |||||||||
| Forfeited/canceled | (5,117) | 19 | |||||||||
| Outstanding at end of year | 75,410 | $ | 19 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The total grant date fair value of restricted stock awards vested for Company employees in fiscal 2025, 2024, and 2023 was $716 million, $348 million and $319 million, respectively. As of October 31, 2025, there was $770 million of unrecognized pre-tax stock-based compensation expense related to unvested restricted stock units, which the Company expects to recognize over the remaining weighted-average vesting period of 1.4 years.
Performance Restricted Units
The Company issues performance-adjusted restricted stock units (“PARSU”) that vest only on the satisfaction of service, performance and market conditions. The Company estimates the fair value of PARSUs subject to performance-contingent vesting conditions using the Monte Carlo simulation model. The expenses associated with these performance restricted units were not material for any of the periods presented.
Note 6: Taxes on Earnings
Benefit (provision) for Taxes
The domestic and foreign components of Net (loss) earnings from operations before Benefit (provision) for taxes were as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| U.S. | $ | (3,561) | $ | 765 | $ | (1,105) | |||||||||||
| Non-U.S. | 3,276 | 2,188 | 3,335 | ||||||||||||||
| $ | (285) | $ | 2,953 | $ | 2,230 |
The Benefit (provision) for taxes on (Loss) earnings from operations were as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| U.S. federal taxes: | |||||||||||||||||
| Current | $ | 154 | $ | (8) | $ | — | |||||||||||
| Deferred | 345 | 120 | 88 | ||||||||||||||
| Non-U.S. taxes: | |||||||||||||||||
| Current | (349) | (415) | (256) | ||||||||||||||
| Deferred | 66 | (44) | (23) | ||||||||||||||
| State taxes: | |||||||||||||||||
| Current | (28) | (15) | (16) | ||||||||||||||
| Deferred | 154 | (12) | 2 | ||||||||||||||
| $ | 342 | $ | (374) | $ | (205) |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The differences between the U.S. federal statutory income tax rate and the Company's effective tax rate were as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025**(1)** | 2024 | 2023 | |||||||||||||||
| U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State income taxes, net of federal tax benefit | 24.4 | % | 0.4 | % | 0.9 | % | |||||||||||
| Lower rates in other jurisdictions, net | 66.5 | % | (1.3) | % | (4.4) | % | |||||||||||
| Valuation allowance | (14.7) | % | (1.3) | % | (2.8) | % | |||||||||||
| U.S. permanent differences | (23.5) | % | (4.0) | % | (1.5) | % | |||||||||||
| U.S. R&D credit | 22.7 | % | (1.8) | % | (2.1) | % | |||||||||||
| Uncertain tax positions | 23.6 | % | (0.3) | % | (2.0) | % | |||||||||||
| Goodwill impairment | (115.7) | % | — | % | — | % | |||||||||||
| Tax impact of integration transactions | 114.6 | % | — | % | — | % | |||||||||||
| Other, net | 1.1 | % | — | % | 0.1 | % | |||||||||||
| 120.0 | % | 12.7 | % | 9.2 | % |
(1) Positive percentages represent tax benefits and negative percentages represent tax expense as the Company recorded income tax benefit on a pretax loss.
The jurisdictions with favorable tax rates that had the most significant impact on the Company's effective tax rate in the periods presented include Puerto Rico and Singapore. In the Company’s fiscal 2025 effective tax rate reconciliation, the absolute value of earnings before taxes was smaller than in prior periods, which exaggerated the impact of individual reconciling items. The effective tax rate for fiscal 2025 also included a $330 million tax provision from the non-deductible goodwill impairment.
In fiscal 2025, the Company 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.
In fiscal 2024, the Company recorded $43 million of net income tax charges related to various items discrete to the year. These amounts primarily included $104 million of income tax charges resulting from the gain on the partial disposition of H3C Technologies Co., Limited (“H3C”), which included $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.
In fiscal 2023, the Company recorded $131 million of net income tax benefits related to various items discrete to the year. These amounts primarily included $104 million of income tax benefits related to transformation costs, and acquisition, disposition and other charges and $19 million of net excess tax benefits related to stock-based compensation.
As a result of certain employment actions and capital investments the Company has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates through 2039. The gross foreign income tax benefits attributable to these actions and investments were $531 million ($0.40 diluted net EPS) in fiscal 2025, $356 million ($0.27 diluted net EPS) in fiscal 2024, and $857 million ($0.65 diluted net EPS) in fiscal 2023. Refer to Note 16, “Net (Loss) Earnings Per Share,” for details on shares used to compute diluted net EPS.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Uncertain Tax Positions
A reconciliation of unrecognized tax benefits is as follows:
| As of October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of year | $ | 724 | $ | 672 | $ | 674 | |||||||||||
| Increases: | |||||||||||||||||
| For current year's tax positions | 38 | 60 | 67 | ||||||||||||||
| For prior years' tax positions | 26 | 116 | 20 | ||||||||||||||
| For tax positions from the Merger | 111 | — | — | ||||||||||||||
| Decreases: | |||||||||||||||||
| For prior years' tax positions | (20) | (113) | (2) | ||||||||||||||
| Statute of limitations expiration | (50) | (4) | (4) | ||||||||||||||
| Settlements with taxing authorities | (355) | (7) | (83) | ||||||||||||||
| Balance at end of year | $ | 474 | $ | 724 | $ | 672 |
Up to $309 million, $344 million and $354 million of the Company's unrecognized tax benefits at October 31, 2025, 2024 and 2023, respectively, would affect its effective tax rate if realized in their respective periods. During the second quarter of fiscal 2025, the Company effectively settled with the U.S. Internal Revenue Service ("IRS") regarding its audit of the Company’s fiscal 2017 through 2019 U.S. federal income tax returns, resulting in a reduction in the Company's unrecognized tax benefits of approximately $340 million; however, the effective settlement did not result in a material impact to the Company’s Consolidated Statement of Earnings and 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 the Company’s effective tax rate. Additionally, the Company released $47 million of unrecognized tax benefits upon expiration of the applicable statute of limitations related to tax positions acquired from the Merger.
The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in Benefit (provision) for taxes in the Consolidated Statements of Earnings. The Company recognized $16 million of interest income, $2 million of interest expense and $25 million of interest income in fiscal 2025, 2024, and 2023, respectively. As of October 31, 2025 and 2024, the Company had accrued $42 million and $58 million, respectively, for interest and penalties in the Consolidated Balance Sheets.
The Company is subject to income tax in the U.S. and approximately 75 other countries and is subject to routine corporate income tax audits in many of these jurisdictions.
The Company engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. The Company is no longer subject to U.S. federal tax audits for years prior to 2020. The IRS is conducting audits of the Company's fiscal 2020 through 2022 U.S. federal income tax returns. Juniper Networks is no longer subject to U.S. federal tax audits for years prior to 2022 and is not currently under examination by the IRS for other tax years. The Company does not expect complete resolution of any IRS audit cycle within the next 12 months. With respect to major state and foreign tax jurisdictions, the Company is no longer subject to tax authority examinations for years prior to 2005. It is reasonably possible that certain foreign tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions and other matters. The Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $6 million within the next 12 months.
The Company believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the Company's tax provision. The Company adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the Benefit (provision) for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The Company has not provided for U.S. federal and state income and foreign withholding taxes on $9.5 billion of undistributed earnings and basis differences from non-U.S. operations as of October 31, 2025 because the Company intends to reinvest such earnings indefinitely outside of the U.S. Determination of the amount of unrecognized deferred tax liability related to these earnings and basis differences is not practicable. The Company will remit non-indefinitely reinvested earnings of its non-U.S. subsidiaries for which deferred U.S. state income and foreign withholding taxes have been provided where excess cash has accumulated and the Company determines that it is advantageous for business operations, tax or cash management reasons.
Deferred Income Taxes
Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.
The significant components of deferred tax assets and deferred tax liabilities were as follows:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Deferred tax assets: | |||||||||||
| Loss and credit carryforwards | $ | 7,225 | $ | 5,692 | |||||||
| Inventory valuation | 185 | 78 | |||||||||
| Intercompany prepayments | — | 192 | |||||||||
| Warranty | 39 | 45 | |||||||||
| Employee and retiree benefits | 73 | 162 | |||||||||
| Restructuring | 13 | 27 | |||||||||
| Deferred revenue | 1,115 | 799 | |||||||||
| Intangible assets | — | 251 | |||||||||
| Capitalized R&D | 390 | 81 | |||||||||
| Lease liabilities | 273 | 253 | |||||||||
| Other | 245 | 262 | |||||||||
| Total deferred tax assets | 9,558 | 7,842 | |||||||||
| Valuation allowance | (6,202) | (5,204) | |||||||||
| Total deferred tax assets net of valuation allowance | 3,356 | 2,638 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Unremitted earnings of foreign subsidiaries | (253) | (229) | |||||||||
| ROU assets | (259) | (236) | |||||||||
| Intangibles | (235) | — | |||||||||
| Fixed assets | (130) | (150) | |||||||||
| Total deferred tax liabilities | (877) | (615) | |||||||||
| Net deferred tax assets and liabilities | $ | 2,479 | $ | 2,023 |
Deferred tax assets and liabilities included in the Consolidated Balance Sheets are as follows:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Deferred tax assets | $ | 2,952 | $ | 2,396 | |||||||
| Deferred tax liabilities | (473) | (373) | |||||||||
| Deferred tax assets net of deferred tax liabilities | $ | 2,479 | $ | 2,023 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Net deferred tax assets increased by $456 million as a result of discrete tax benefits from the release of valuation allowances of $678 million related to certain U.S. foreign tax credits and certain state and non-U.S. attributes, partially offset by discrete tax charges of $117 million related to changes in tax law and a decrease of $107 million as a result of acquired net deferred tax liabilities due to the Merger.
As of October 31, 2025, the Company had $265 million, $2.9 billion and $20.5 billion of federal, state and foreign net operating loss carryforwards, respectively. Amounts included in state and foreign net operating loss carryforwards will begin to expire in 2026; federal net operating losses can carry forward indefinitely. The Company has provided a valuation allowance of $115 million and $3.6 billion for deferred tax assets related to state and foreign net operating losses carryforwards, respectively. As of October 31, 2025, the Company also had $153 million, $115 million, and $6.0 billion of federal, state, and foreign capital loss carryforwards, respectively. Amounts included in federal and state capital loss carryforwards will begin to expire in 2028; foreign capital losses can carry forward indefinitely. The Company has provided a valuation allowance of $28 million, $9 million, and $1.2 billion for deferred tax assets related to federal, state and foreign capital loss carryforwards, respectively.
As of October 31, 2025, the Company had recorded deferred tax assets for various tax credit carryforwards as follows:
| Carryforward | Valuation Allowance | Initial Year of Expiration | |||||||||||||||
| In millions | |||||||||||||||||
| U.S. foreign tax credits | $ | 805 | $ | (701) | 2027 | ||||||||||||
| U.S. research and development and other credits | 273 | — | 2029 | ||||||||||||||
| Tax credits in state and foreign jurisdictions | 544 | (487) | 2028 | ||||||||||||||
| Balance at end of year | $ | 1,622 | $ | (1,188) |
Total valuation allowances increased by $998 million in fiscal 2025, primarily as a result of certain non-U.S. capital loss generation as a result of intercompany transactions, attributes acquired due to the Merger, and changes in U.S. foreign tax credits due to tax return filings, partially offset by the $678 million release of valuation allowances related to certain U.S. foreign tax credits and certain state and non-U.S. attributes.
Tax Matters Agreement and Other Income Tax Matters
In connection with the completed separations and mergers of the former Enterprise Services business with DXC Technology Company (“DXC”) (the “Everett Transaction” or “Everett”) and the Software Segment with Micro Focus International plc (“Micro Focus”) (the “Seattle Transaction” or “Seattle”), the Company entered into a DXC Tax Matters Agreement with DXC and a Micro Focus Tax Matters Agreement with Micro Focus, respectively. See Note 18, “Guarantees and Indemnifications,” for a description of the DXC Tax Matters Agreement and Micro Focus Tax Matters Agreement.
Note 7: Balance Sheet Details
Cash, Cash Equivalents and Restricted Cash
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Cash and cash equivalents | $ | 5,773 | $ | 14,846 | |||||||
| Restricted cash | 86 | 259 | |||||||||
| Total | $ | 5,859 | $ | 15,105 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Accounts Receivable, Net
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Accounts receivable | $ | 4,916 | $ | 3,236 | |||||||
| Unbilled receivable | 396 | 324 | |||||||||
| Allowances | (22) | (10) | |||||||||
| Total | $ | 5,290 | $ | 3,550 |
The allowance for doubtful accounts related to accounts receivable and changes therein were as follows:
| As of October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of year | $ | 10 | $ | 37 | $ | 25 | |||||||||||
| Provision for credit losses | 33 | 41 | 29 | ||||||||||||||
| Adjustments to existing allowances, including write offs | (21) | (68) | (17) | ||||||||||||||
| Balance at end of year | $ | 22 | $ | 10 | $ | 37 |
The Company has third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers. The Company recorded an obligation of $59 million, $62 million and $80 million in Notes payable and short-term borrowings in its Consolidated Balance Sheets as of October 31, 2025, 2024 and 2023, respectively, related to the trade receivables sold and collected from the third party for which the revenue recognition was deferred. For arrangements involving an element of recourse, the fair value of the recourse obligation is measured using market data from similar transactions and reported as a current liability in Other accrued liabilities in the Consolidated Balance Sheets.
The activity related to Hewlett Packard Enterprise's revolving short-term financing arrangements was as follows:
| As of October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of period(1) | $ | — | $ | 83 | $ | 163 | |||||||||||
| Trade receivables sold | 3,724 | 3,098 | 4,097 | ||||||||||||||
| Cash receipts | (3,489) | (3,190) | (4,185) | ||||||||||||||
| Foreign currency and other | 10 | 9 | 8 | ||||||||||||||
| Balance at end of period(1) | $ | 245 | $ | — | $ | 83 |
(1)Beginning and ending balances represent amounts for trade receivables sold but not yet collected.
Inventory
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Purchased parts and fabricated assemblies | $ | 4,139 | $ | 5,441 | |||||||
| Finished goods | 2,213 | 2,369 | |||||||||
| Total1 | $ | 6,352 | $ | 7,810 |
(1)Inventory balances are net of reserves of $0.7 billion and $0.5 billion as of October 31, 2025 and October 31, 2024, respectively.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Property, Plant and Equipment, net
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Land | $ | 309 | $ | 66 | |||||||
| Internal use software | 2,259 | 1,941 | |||||||||
| Buildings and leasehold improvements | 2,075 | 1,696 | |||||||||
| Machinery and equipment, including equipment held for lease | 7,987 | 8,451 | |||||||||
| Gross property, plant and equipment | 12,630 | 12,154 | |||||||||
| Accumulated depreciation | (6,628) | (6,490) | |||||||||
| Property, plant and equipment, net | $ | 6,002 | $ | 5,664 |
Depreciation expense was $2.2 billion in fiscal 2025 and $2.3 billion in fiscal 2024 and 2023, respectively.
Long-Term Financing Receivables and Other Assets
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Financing receivables, net | $ | 5,716 | $ | 5,583 | |||||||
| Deferred tax assets | 2,952 | 2,396 | |||||||||
| Prepaid pension | 2,074 | 1,555 | |||||||||
| ROU assets | 1,535 | 1,408 | |||||||||
| Other | 1,540 | 1,674 | |||||||||
| Total | $ | 13,817 | $ | 12,616 |
Supplier Financing Arrangements
The Company enters into supplier financing arrangements with external financial institutions. Under these arrangements, suppliers can choose to settle outstanding payment obligations at a discount. The Company holds no economic interest in suppliers' participation, nor does it provide guarantees or pledge assets under these arrangements. Invoices are settled with the financial institutions based on the original supplier payment terms. These arrangements do not alter the Company's rights and obligations towards suppliers, including scheduled payment terms. Liabilities associated with the funded participation in these arrangements, are presented within Accounts payable on the Consolidated Balance Sheets, amounted to $488 million, and $466 million as of October 31, 2025 and October 31, 2024, respectively.
The rollforward of outstanding obligations confirmed as valid under its supplier finance program was as follows:
| As of | |||||||||||||||||
| October 31, 2025 | |||||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of period | $ | 466 | |||||||||||||||
| Invoices confirmed during the year | 1,895 | ||||||||||||||||
| Confirmed invoices paid during the year | (1,873) | ||||||||||||||||
| Balance at end of period | $ | 488 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Severance Charges
The Company incurs costs related to employee severance and records a liability for these costs when it is probable that employees will be entitled to termination benefits and the amounts can be reasonably estimated. As of October 31, 2025, $204 million and $34 million was recorded in Other accrued liabilities and Other Non-current liabilities, respectively.
The following table presents the activity related to the Company’s severance liability for the period indicated:
| As of | |||||
| October 31, 2025 | |||||
| In millions | |||||
| Balance at beginning of period | $ | 49 | |||
| Severance charges | 418 | ||||
| Cash paid and other | (229) | ||||
| Balance at end of period | $ | 238 |
Government Assistance
The Company receives government assistance in the form of grants and incentives which vary in size, duration, and conditions from various domestic and international governing bodies and related entities which are primarily structured as cash grants and non-income tax incentives. The Company recognizes the impact of the government assistance on the Consolidated Statements of Income upon reaching reasonable assurance that the Company will comply with the conditions of the assistance and that the grant will be received. The Company classifies the impact of government assistance on the Consolidated Statements of Income based on the underlying nature and purpose of the assistance.
During fiscal 2025, government assistance received primarily consisted of credits resulting from investment and actions in research and development areas, HPE recorded a receivable of $149 million in Other current assets and recognized a reduction in Cost of products of $196 million and $29 million in fiscal 2025 and 2024, respectively. Government assistance was not material for fiscal 2023.
Other Accrued Liabilities
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Sales and marketing programs | $ | 1,039 | $ | 1,032 | |||||||
| Value-added and property taxes | 1,065 | 922 | |||||||||
| Customer deposits | 616 | 289 | |||||||||
| Operating lease liabilities | 316 | 261 | |||||||||
| Severance and accrued restructuring | 234 | 61 | |||||||||
| Warranty | 138 | 150 | |||||||||
| Contract manufacturer liabilities | 23 | 505 | |||||||||
| Collateral payable | 16 | 90 | |||||||||
| Other | 1,308 | 1,281 | |||||||||
| Total | $ | 4,755 | $ | 4,591 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Other Non-Current Liabilities
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Deferred revenue | $ | 4,980 | $ | 3,578 | |||||||
| Operating lease liabilities | 1,396 | 1,309 | |||||||||
| Pension, post-retirement, and post-employment | 930 | 859 | |||||||||
| Deferred tax liabilities | 473 | 373 | |||||||||
| Taxes on earnings | 183 | 163 | |||||||||
| Other | 791 | 623 | |||||||||
| Total | $ | 8,753 | $ | 6,905 |
Warranties
The Company's aggregate product warranty liabilities and changes therein were as follows:
| As of October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of year | $ | 301 | $ | 318 | $ | 360 | |||||||||||
| Charges | 206 | 173 | 184 | ||||||||||||||
| Adjustments related to pre-existing warranties | (55) | (5) | (18) | ||||||||||||||
| Settlements made | (168) | (185) | (208) | ||||||||||||||
| Balance at end of year(1) | $ | 284 | $ | 301 | $ | 318 |
(1)The Company included the current portion in Other accrued liabilities, and amounts due after one year in Other non-current liabilities in the accompanying Consolidated Balance Sheets.
Contract Liabilities and Remaining Performance Obligations
Contract liabilities consist of deferred revenue and customer deposits. A summary of contract liabilities were as follows:
| As of October 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Location | In millions | |||||||||||||
| Customer deposits | Other accrued liabilities | $ | 616 | $ | 289 | |||||||||
| Customer deposits - non-current | Other non-current liabilities | 72 | 7 | |||||||||||
| Total customer deposits | $ | 688 | $ | 296 | ||||||||||
| Deferred revenue | Deferred revenue | $ | 5,358 | $ | 3,904 | |||||||||
| Deferred revenue - non-current | Other non-current liabilities | 4,980 | 3,578 | |||||||||||
| Total deferred revenue | $ | 10,338 | $ | 7,482 |
In fiscal 2025, approximately $3.7 billion of revenue was recognized relating to contract liabilities recorded as of October 31, 2024.
Revenue allocated to remaining performance obligations represents contract work that has not yet been performed and does not include contracts where the customer is not committed. Remaining performance obligations estimates are subject to change and are affected by several factors, including contract terminations, changes in the scope of contracts, adjustments for revenue that has not materialized and adjustments for currency. As of October 31, 2025, the aggregate amount of deferred revenue, was $10.3 billion, approximately $2.5 billion was attributable to the Merger. The Company expects to recognize approximately 50% of this balance over fiscal 2026, 23% over fiscal 2027, 14% over fiscal 2028, 7% over fiscal 2029, and 4%
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
over fiscal 2030 and thereafter. The Company receives payments in advance of completion of its contractual obligations, these payments are considered customer deposits. As customer acceptance milestones are met, the Company will recognize revenue and reduce the amount of contract liabilities. As of October 31, 2025, the aggregate amount of customer deposits was $688 million. The Company expects to recognize $616 million over fiscal 2025 and the remaining balance thereafter.
Costs to obtain a Contract
As of October 31, 2025, the current and non-current portions of the capitalized costs to obtain a contract were $109 million and $128 million, respectively. As of October 31, 2024, the current and non-current portions of the capitalized costs to obtain a contract were $88 million and $136 million, respectively. The current and non-current portions of the capitalized costs to obtain a contract were included in Other current assets, and Long-term financing receivables and other assets, respectively, in the Consolidated Balance Sheets. In fiscal 2025, 2024, and 2023 the Company amortized $125 million, $106 million, and $94 million, respectively, of the capitalized costs to obtain a contract which are included in Selling, general and administrative expense in the Consolidated Statements of Earnings.
Note 8: Accounting for Leases as a Lessee
Components of lease cost included in the Consolidated Statement of Earnings were as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Operating lease cost | $ | 350 | $ | 259 | $ | 200 | |||||||||||
| Finance lease cost | 3 | 3 | 4 | ||||||||||||||
| Sublease rental income | (40) | (26) | (23) | ||||||||||||||
| Total lease cost | $ | 313 | $ | 236 | $ | 181 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The ROU assets and lease liabilities for operating and finance leases included in the Consolidated Balance Sheets were as follows:
| As of October 31, | |||||||||||||||||
| Balance Sheet Classification | 2025 | 2024 | |||||||||||||||
| In millions | |||||||||||||||||
| Operating Leases | |||||||||||||||||
| ROU Assets | Long-term financing receivables and other assets | $ | 1,535 | $ | 1,408 | ||||||||||||
| Lease Liabilities: | |||||||||||||||||
| Operating lease liabilities – current | Other accrued liabilities | 316 | 261 | ||||||||||||||
| Operating lease liabilities – non-current | Other non-current liabilities | 1,396 | 1,309 | ||||||||||||||
| Total operating lease liabilities | $ | 1,712 | $ | 1,570 | |||||||||||||
| Finance Leases | |||||||||||||||||
| Finance lease ROU Assets: | Property, plant and equipment, net | ||||||||||||||||
| Gross finance lease ROU assets | $ | 26 | $ | 26 | |||||||||||||
| Less: Accumulated depreciation | (18) | (16) | |||||||||||||||
| Net finance lease ROU assets | $ | 8 | $ | 10 | |||||||||||||
| Lease Liabilities: | |||||||||||||||||
| Finance lease liabilities – current | Notes payable and short-term borrowings | $ | 6 | $ | 6 | ||||||||||||
| Finance lease liabilities – non-current | Long-term debt | 25 | 32 | ||||||||||||||
| Total finance lease liabilities | $ | 31 | $ | 38 | |||||||||||||
| Total ROU assets | $ | 1,543 | $ | 1,418 | |||||||||||||
| Total lease liabilities | $ | 1,743 | $ | 1,608 | |||||||||||||
The weighted-average remaining lease term and the weighted-average discount rate for the operating and finance leases were as follows:
| As of October 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||
| Weighted-average remaining lease term (in years) | 6.6 | 4.5 | 6.7 | 5.5 | |||||||||||||||||||
| Weighted-average discount rate | 4.5 | % | 3.5 | % | 4.4 | % | 3.5 | % |
Supplemental cash flow information related to leases was as follows:
| For the fiscal years ended October 31, | |||||||||||||||||||||||
| Cash Flow Statement Activity | 2025 | 2024 | 2023 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Cash outflows from operating leases | Net cash used in operating activities | $ | 352 | $ | 274 | $ | 219 | ||||||||||||||||
| ROU assets obtained in exchange for new operating lease liabilities | Non-cash activities | $ | 109 | $ | 627 | $ | 251 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The following tables shows the future payments on the Company's operating and finance leases:
| As of October 31, 2025 | |||||||||||
| Operating Leases | Finance Leases | ||||||||||
| Fiscal year | In millions | ||||||||||
| 2026 | $ | 383 | $ | 7 | |||||||
| 2027 | 355 | 7 | |||||||||
| 2028 | 312 | 8 | |||||||||
| 2029 | 252 | 8 | |||||||||
| 2030 | 196 | 4 | |||||||||
| Thereafter | 492 | — | |||||||||
| Total future lease payments | $ | 1,990 | $ | 34 | |||||||
| Less: imputed interest | (278) | (3) | |||||||||
| Total lease liabilities | $ | 1,712 | $ | 31 |
Note 9: Accounting for Leases as a Lessor
Financing Receivables
Financing receivables represent sales-type and direct-financing leases of the Company and third-party products. These receivables typically have terms ranging from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The allowance for credit losses represents future expected credit losses over the life of the receivables based on past experience, current information and forward-looking economic considerations. The components of financing receivables were as follows:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Minimum lease payments receivable | $ | 10,310 | $ | 10,266 | |||||||
| Unguaranteed residual value | 694 | 599 | |||||||||
| Unearned income | (1,264) | (1,218) | |||||||||
| Financing receivables, gross | 9,740 | 9,647 | |||||||||
| Allowance for credit losses | (198) | (194) | |||||||||
| Financing receivables, net | 9,542 | 9,453 | |||||||||
| Less: current portion | (3,826) | (3,870) | |||||||||
| Amounts due after one year, net | $ | 5,716 | $ | 5,583 |
As of October 31, 2025, scheduled maturities of the Company's minimum lease payments receivable were as follows:
| As of October 31, 2025 | |||||
| Fiscal year | In millions | ||||
| 2026 | $ | 4,424 | |||
| 2027 | 2,827 | ||||
| 2028 | 1,779 | ||||
| 2029 | 879 | ||||
| 2030 | 307 | ||||
| Thereafter | 94 | ||||
| Total undiscounted cash flows | $ | 10,310 | |||
| Present value of lease payments (recognized as finance receivables) | $ | 9,046 | |||
| Difference between undiscounted cash flows and discounted cash flows | $ | 1,264 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Sale of Financing Receivables
The Company enters into arrangements to transfer the contractual payments due under certain financing receivables to third-party financial institutions. For the fiscal years ended October 31, 2025 and 2024, the Company sold $196 million and $93 million, respectively, of financing receivables.
Credit Quality Indicators
Due to the homogeneous nature of its leasing transactions, the Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company evaluates the credit quality of an obligor at lease inception and monitors that credit quality over the term of a transaction. The Company assigns risk ratings to each lease based on the creditworthiness of the obligor and other variables that augment or mitigate the inherent credit risk of a particular transaction and periodically updates the risk ratings when there is a change in the underlying credit quality. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits.
The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2025, presented on amortized cost basis by year of origination was as follows:
| As of October 31, 2025 | |||||||||||||||||
| Risk Rating | |||||||||||||||||
| Low | Moderate | High | |||||||||||||||
| Fiscal Year | In millions | ||||||||||||||||
| 2025 | $ | 2,245 | $ | 1,016 | $ | 17 | |||||||||||
| 2024 | 2,160 | 942 | 36 | ||||||||||||||
| 2023 | 1,189 | 645 | 47 | ||||||||||||||
| 2022 | 579 | 347 | 26 | ||||||||||||||
| 2021 and prior | 213 | 206 | 72 | ||||||||||||||
| Total | $ | 6,386 | $ | 3,156 | $ | 198 |
The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2024, presented on amortized cost basis by year of origination was as follows:
| As of October 31, 2024 | |||||||||||||||||
| Risk Rating | |||||||||||||||||
| Low | Moderate | High | |||||||||||||||
| Fiscal Year | In millions | ||||||||||||||||
| 2024 | $ | 2,630 | $ | 1,120 | $ | 19 | |||||||||||
| 2023 | 1,804 | 948 | 54 | ||||||||||||||
| 2022 | 1,128 | 665 | 46 | ||||||||||||||
| 2021 | 440 | 317 | 52 | ||||||||||||||
| 2020 and prior | 158 | 193 | 73 | ||||||||||||||
| Total | $ | 6,160 | $ | 3,243 | $ | 244 |
Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment. The credit quality indicators do not reflect any mitigation actions taken to transfer credit risk to third parties.
Allowance for Credit Losses
The allowance for credit losses for financing receivables as of October 31, 2025, 2024, and 2023, and the respective changes for the twelve months then ended were as follows:
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
| As of October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of period | $ | 194 | $ | 243 | $ | 325 | |||||||||||
| Provision for credit losses | 77 | 50 | 58 | ||||||||||||||
| Adjustment to the existing allowance | (1) | (4) | — | ||||||||||||||
| Write-offs | (72) | (95) | (140) | ||||||||||||||
| Balance at end of period | $ | 198 | $ | 194 | $ | 243 |
Non-Accrual and Past-Due Financing Receivables
The following table summarizes the aging and non-accrual status of gross financing receivables:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Billed:(1) | |||||||||||
| Current 1-30 days | $ | 349 | $ | 334 | |||||||
| Past due 31-60 days | 26 | 29 | |||||||||
| Past due 61-90 days | 13 | 12 | |||||||||
| Past due > 90 days | 70 | 79 | |||||||||
| Unbilled sales-type and direct-financing lease receivables | 9,282 | 9,193 | |||||||||
| Total gross financing receivables | $ | 9,740 | $ | 9,647 | |||||||
| Gross financing receivables on non-accrual status(2) | $ | 168 | $ | 214 | |||||||
| Gross financing receivables 90 days past due and still accruing interest(2) | $ | 114 | $ | 82 |
(1)Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables.
(2)Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.
Operating Leases
Operating lease assets included in Property, plant and equipment, net in the Consolidated Balance Sheets were as follows:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Equipment leased to customers | $ | 6,123 | $ | 6,669 | |||||||
| Accumulated depreciation | (2,964) | (3,037) | |||||||||
| Total | $ | 3,159 | $ | 3,632 |
As of October 31, 2025, minimum future rentals on non-cancelable operating leases related to leased equipment were as follows:
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
| As of October 31, 2025 | |||||
| Fiscal year | In millions | ||||
| 2026 | $ | 1,410 | |||
| 2027 | 814 | ||||
| 2028 | 325 | ||||
| 2029 | 56 | ||||
| 2030 | 4 | ||||
| Thereafter | — | ||||
| Total | $ | 2,609 |
If a lease is classified as an operating lease, the Company records lease revenue on a straight-line basis over the lease term. At commencement of an operating lease, initial direct costs are deferred and are expensed over the lease term on the same basis as the lease revenue is recorded.
The following table presents amounts included in the Consolidated Statements of Earnings related to lessor activity:
| For the fiscal years ended October 31, | |||||||||||||||||||||||
| Location | 2025 | 2024 | 2023 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Interest income from sales-type leases and direct financing leases | Financing income | $ | 767 | $ | 668 | $ | 547 | ||||||||||||||||
| Lease income from operating leases | Services | 2,156 | 2,344 | 2,407 | |||||||||||||||||||
| Total lease income | $ | 2,923 | $ | 3,012 | $ | 2,954 |
Variable Interest Entities
The Company has issued asset-backed debt securities under a fixed-term securitization program to private investors. The asset-backed debt securities are collateralized by the U.S. fixed-term financing receivables and leased equipment in the offering, which is held by a Special Purpose Entity (“SPE”). The SPE meets the definition of a Variable Interest Entity (“VIE”) and is consolidated, along with the associated debt, into the Consolidated Financial Statements as the Company is the primary beneficiary of the VIE. The SPE is a bankruptcy-remote legal entity with separate assets and liabilities. The purpose of the SPE is to facilitate the funding of customer receivables and leased equipment in the capital markets.
The Company's risk of loss related to securitized receivables and leased equipment is limited to the amount by which the Company's right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities.
The following table presents the assets and liabilities held by the consolidated VIE as of October 31, 2025 and 2024, which are included in the Consolidated Balance Sheets. The assets in the table below include those that can be used to settle the obligations of the VIE. Additionally, general creditors do not have recourse to the assets of the VIE.
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Assets held by VIE: | In millions | ||||||||||
| Other current assets | $ | 73 | $ | 189 | |||||||
| Financing receivables | |||||||||||
| Short-term | 885 | 872 | |||||||||
| Long-term | 1,283 | 1,079 | |||||||||
| Property, plant and equipment, net | 775 | 1,033 | |||||||||
| Liabilities held by VIE: | |||||||||||
| Notes payable and short-term borrowings, net of unamortized debt issuance costs | 1,159 | 1,433 | |||||||||
| Long-term debt, net of unamortized debt issuance costs | 1,287 | 965 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the year ended October 31, 2025, financing receivables and leased equipment transferred via securitization through the SPE were $1.3 billion and $0.4 billion, respectively. For the fiscal year ended October 31, 2024, financing receivables and leased equipment transferred via securitization through the SPE were $1.2 billion and $0.6 billion, respectively.
Note 10: Acquisitions and Dispositions
Acquisitions and Disposition in fiscal 2025
Acquisition of Juniper Networks
On July 2, 2025, the Company completed the Merger. Under the terms of 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, which was paid through cash on hand, including proceeds and term loan drawdowns from the financings in fiscal 2024, and commercial paper issuances.
Juniper Networks is a leader in AI-native networks, and is included in the results of the Networking segment. The Company acquired Juniper Networks to advance HPE’s portfolio mix shift toward higher-growth solutions and strengthen its networking business.
Purchase Consideration
The following table summarizes the purchase consideration for the Merger:
| In millions | |||||
| Cash paid for outstanding Juniper Networks common stock | $ | 13,386 | |||
| Consideration for replacement of Juniper Networks equity awards | 239 | ||||
| Total purchase consideration | $ | 13,625 |
In connection with the Merger, each of the outstanding and unvested equity awards of Juniper Networks, which was comprised of restricted stock units, performance stock awards and stock options previously issued to Juniper Networks employees, was converted into HPE equity awards utilizing an exchange ratio of approximately 2.1. The exchange ratio was calculated as purchase consideration per share divided by HPE’s 10-day average stock price prior to July 2, 2025. The acquisition date fair value of the replacement equity awards has been determined using the Hull-White I Lattice model for options, and for restricted stock units by adjusting HPE’s Merger date close price for expected dividends as applicable. The fair value of the replacement awards was $927 million, of which $239 million is included in the Merger consideration.
For fiscal 2025, HPE recorded stock-based compensation expense of $192 million related to these assumed awards.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
A summary of the allocation of the total purchase price for the Merger is presented as follows:
| In millions | |||||||||||||||||
| Cash and cash equivalents | $ | 1,098 | |||||||||||||||
| Inventory | 989 | ||||||||||||||||
| Other current assets | 1,803 | ||||||||||||||||
| Goodwill | 7,272 | ||||||||||||||||
| Intangible assets | 6,219 | ||||||||||||||||
| Other non-current assets | 1,690 | ||||||||||||||||
| Total assets acquired | 19,071 | ||||||||||||||||
| Other accrued liabilities(1) | 2,627 | ||||||||||||||||
| Long-term debt | 1,232 | ||||||||||||||||
| Other non-current liabilities | 1,587 | ||||||||||||||||
| Total liabilities assumed | 5,446 | ||||||||||||||||
| Total purchase consideration | $ | 13,625 |
(1)Includes the current portion of long-term debt.
This acquisition has been accounted for as a business combination under FASB Topic Accounting Standards Codification 805 using the acquisition method. Tangible and identifiable intangible assets acquired, and liabilities assumed were recorded at the respective estimated fair values. The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acceleration of the Company’s portfolio mix shift to higher-margin, higher-growth areas. Goodwill also reflects the expectation that the Merger will position the Company for long-term profitable growth. Goodwill created as a result of the Merger is not deductible for tax purposes.
HPE estimated the fair value of acquired inventory, specifically finished goods, by determining the estimated selling price when completed, less an estimate of costs to be incurred to complete and sell the inventory, and an estimate of a reasonable profit allowance for those manufacturing and selling efforts. The fair value of inventory is recognized in the Company’s results of operations as the inventory is sold. Some of the more significant estimates and assumptions inherent in the estimate of the fair value of inventory include stage of completion, costs to complete, costs to dispose and selling price.
HPE estimated the fair value of acquired property, plant and equipment using a combination of the cost and market approaches. The market approach estimates fair value by analyzing recent actual market transactions for similar assets or liabilities. The cost approach estimates fair value based on the expected cost to replace or reproduce the asset or liability and relies on assumptions regarding the occurrence and extent of any physical, functional and/or economic obsolescence. Some of the more significant estimates and assumptions inherent in these approaches are the values of asset replacement costs, comparable assets and estimated remaining economic lives of the assets.
The purchase price allocation was updated during the fourth quarter of fiscal 2025 for certain measurement period adjustments based on revised estimates of fair value. Purchase price allocation adjustments during the measurement period primarily related to $71 million decrease in inventory, $51 million decrease in property, plant and equipment, $41 million decrease in deferred tax assets, $19 million increase in intangible assets, $86 million decrease in other assets and liabilities resulting in $230 million increase in goodwill. As of October 31, 2025, the purchase price allocation was substantially complete, except for legal and tax contingencies, which may be revised during the measurement period of up to one year from the acquisition date.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Purchased Intangible Assets
The weighted-average useful life for intangible assets acquired was 7 years. The following table presents preliminary details of the purchased intangible assets acquired:
| Weighted-Average Useful Life (in Years) | In millions | ||||||||||
| Customer contracts, customer lists and distribution agreements | 10 | $ | 2,420 | ||||||||
| Developed and core technology and patents | 4 | 2,507 | |||||||||
| Trade name and trademarks | 10 | 464 | |||||||||
| Total identified finite-lived intangible assets(1) | 5,391 | ||||||||||
| IPR&D | N/A | 828 | |||||||||
| Total intangible assets | $ | 6,219 |
(1)Amortization expense for fiscal 2025, was $362 million.
The fair values of (i) Developed and core technology and patents, (ii) Trade name and trademarks, and (iii) IPR&D were determined using the relief from royalty method under the income approach. The fair value of Customer contracts, customer lists and distribution agreements was determined using the multi-period excess earnings method under the income approach.
Significant estimates and assumptions were used to determine the fair value of the acquired intangible assets. The relief from royalty method utilizes estimates such as projected future revenues, selected royalty rates, useful lives, and discount rates. The multi-period excess earnings method relies on estimates including projected future revenues, customer attrition rates, profit margins, contributory asset charges, useful lives, and discount rates.
The following table presents the details of IPR&D by category as of the date of the Merger:
| IPR&D | % of Completion | Estimated Costs to Complete | Expected Release Date (Fiscal Year) | ||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||
| Campus & Branch | $ | 28 | 50 | % | $ | 13 | 2026 | ||||||||||||||||
| Data Center | 107 | 29 | % | 35 | 2026 | ||||||||||||||||||
| SASE & Security | 4 | 75 | % | 1 | 2026 | ||||||||||||||||||
| WAN | $ | 689 | 72 | % | $ | 51 | 2027 |
Long-term Debt
The following table presents long-term debt assumed at closing:
| Maturity Date | Par Value | Fair Value | |||||||||||||||
| In millions | |||||||||||||||||
| 1.200% fixed-rate notes | December 2025 | $ | 400 | $ | 394 | ||||||||||||
| 3.750% fixed-rate notes | August 2029 | 500 | 486 | ||||||||||||||
| 2.000% fixed-rate notes | December 2030 | 400 | 348 | ||||||||||||||
| 5.950% fixed-rate notes | March 2041 | $ | 400 | $ | 398 |
Results of Operations and Pro forma Financial Information
The following table presents revenues and net earnings for Juniper Networks since the acquisition date, July 2, 2025 through October 31, 2025:
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
| In millions | |||||
| Total revenue | $ | 2,096 | |||
| Earnings from operations(1) | $ | 419 |
(1) This amount does not include certain corporate costs which are managed at the corporate level.
The unaudited pro forma results of operations for HPE as if the Merger had occurred on November 1, 2023 are presented in the table below:
| For the fiscal years ended October 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Total revenue | $ | 38,085 | $ | 35,201 | |||||||||||||||||||
| Net earnings | $ | 108 | $ | 1,196 |
These pro forma results were based on estimates and assumptions, which the Company believes are reasonable. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition and the cost of financing the acquisition had taken place at the beginning of fiscal 2024. The unaudited pro forma information includes adjustments to amortization for intangible assets acquired, stock-based compensation expense, interest expense for acquisition financing, and depreciation for property and equipment acquired.
Acquisition costs related to the Merger were primarily included within Acquisition, disposition and other charges in the Consolidated Statements of Earnings. For fiscal 2025 and 2024, acquisition costs were $346 million and $130 million, respectively.
Disposition of CTG
On May 23, 2024, HPE announced plans to divest the CTG business to HCLTech. CTG is included in the Communications and Media Solutions business, which is 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. As of October 31, 2024, assets and liabilities to be sold have been presented in the Consolidated Balance Sheets as assets and liabilities held for sale. On December 1, 2024, the Company completed the disposition of CTG. The Company 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.
Acquisitions in fiscal 2024
On August 30, 2024, the Company completed the acquisition of Morpheus Data, a pioneer in software for hybrid cloud management and platform operations. Morpheus Data’s results of operations were included within the Hybrid Cloud segment. The acquisition date fair value consideration of $147 million primarily consisted of cash paid for outstanding common stock. The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of 4 years. The purchase price allocations for the Morpheus Data acquisition, described below, reflect various fair value estimates and analysis, including work performed by third-party valuation specialists, of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and non-income based taxes, and residual goodwill.
The following table presents the aggregate fair value of the assets acquired and liabilities assumed for the acquisition completed during fiscal 2024:
| In millions | |||||
| Goodwill | $ | 98 | |||
| Amortizable intangible assets | 68 | ||||
| Net liabilities assumed | (19) | ||||
| Total fair value consideration | $ | 147 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Acquisitions in fiscal 2023
During fiscal 2023, the Company completed five acquisitions. The purchase price allocations for the acquisitions described below reflect various fair values and analysis, including work performed by third-party valuation specialists, of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and non-income based taxes, and residual goodwill, which were subject to change within the measurement period.
The pro forma results of operations, revenue and net income subsequent to the acquisition dates have not been presented as they were not material to the Company's consolidated results of operations, either individually or in the aggregate. Goodwill, which represents the excess of the purchase price over the net tangible and intangible assets acquired, was not deductible for tax purposes.
The following table presents the aggregate fair value of the assets acquired and liabilities assumed for the acquisitions completed during fiscal 2023:
| In millions | |||||
| Goodwill | $ | 585 | |||
| Amortizable intangible assets | 209 | ||||
| Net tangible assets assumed | 46 | ||||
| Total fair value consideration | $ | 840 |
On May 2, 2023, the Company completed the acquisition of OpsRamp, an IT operations management company that monitors, observes, automates, and manages IT infrastructure, cloud resources, workloads, and applications for hybrid and multi-cloud environments, including the leading hyperscalers. OpsRamp’s results of operations were included within the Hybrid Cloud segment. The acquisition date fair value consideration of $307 million primarily consisted of cash paid for outstanding common stock. In connection with this acquisition, the Company recorded approximately $217 million of goodwill, and $84 million of intangible assets. The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of 5 years.
On March 15, 2023, the Company completed the acquisition of Axis Security, a cloud security provider, enabling the Company to expand its edge-to-cloud security capabilities by offering a unified Secure Access Services Edge solution to meet the increasing demand for integrated networking and security solutions delivered aaS. Axis Security's results of operations were included within the Networking segment. The acquisition date fair value consideration of $412 million primarily consisted of cash paid for outstanding common stock. In connection with this acquisition, the Company recorded approximately $311 million of goodwill, and $71 million of intangible assets. The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of 5 years.
Note 11: Goodwill and Intangible Assets
Goodwill
Goodwill and related changes in the carrying amount by reportable segment were as follows:
| Server | Hybrid Cloud | Networking | Financial Services | Corporate Investments & Other | Total | |||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2024 | $ | 10,194 | $ | 4,839 | $ | 2,909 | $ | 144 | $ | — | $ | 18,086 | ||||||||||||||||||||||||||||||||
| Goodwill from acquisitions | — | — | 7,272 | — | — | 7,272 | ||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill | — | (1,578) | — | — | — | (1,578) | ||||||||||||||||||||||||||||||||||||||
| Changes due to foreign currency | — | — | (10) | — | — | (10) | ||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2025(1) | $ | 10,194 | $ | 3,261 | $ | 10,171 | $ | 144 | $ | — | $ | 23,770 | ||||||||||||||||||||||||||||||||
(1)Goodwill is net of accumulated impairment losses of $3.3 billion. Accumulated impairment increased by approximately $1.5 billion from October 31, 2024 due to $1.6 billion of Hybrid Cloud reporting unit impairments, partially offset by a decrease due to the disposition of CTG (the Communications and Media Solutions reporting unit).
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
2025 Interim and Annual Goodwill Impairment Reviews
During fiscal 2025, the Company 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, the Company 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, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows which HPE considers to be a level 3 unobservable input in the fair value hierarchy.
Prior to the quantitative goodwill impairment test, the Company 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, the Company 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, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows which HPE considers to be a level 3 unobservable input in the fair value hierarchy.
Prior to the quantitative goodwill impairment test, the Company 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, the Company recorded a goodwill impairment charge of $0.2 billion in the fourth quarter of fiscal 2025.
Subsequent to the impairment of the Hybrid Cloud reporting unit, the indicated fair values of the reporting units exceeded their respective carrying amounts by a range of 0% to 240%.
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 net assets 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.
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,
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
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 the Company has significant or sustained decline in its stock price, it is possible its estimates about the 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.
2024 Interim and Annual Goodwill Impairment Reviews
As of October 31, 2024, the Company’s reporting units with goodwill were consistent with the reportable segments identified in Note 2, “Segment Information,” to the Consolidated Financial Statements in Item 8 of Part II, with the exception of Server, which contained two reporting units: Compute and High Performance Compute & AI, and Corporate Investments and Other which contained two reporting units: Advisory and Professional Services, and legacy Communications and Media Solutions.
During fiscal 2024, the Company performed the following goodwill impairment tests, none of which resulted in goodwill impairment:
-
Impairment test performed as of November 1, 2023 based on organizational changes impacting the composition of reporting units as of that date;
-
Annual goodwill impairment test, which was performed as of the first day of the fourth quarter of fiscal 2024. The excess of fair value over carrying amount for the reporting units ranged from approximately 8% to 198% of the respective carrying amounts and;
-
Interim goodwill impairment test as of September 30, 2024 for Compute and Hybrid Cloud reporting units.
2023 Annual Goodwill Impairment Review
The Company’s fiscal 2023 annual impairment test did not result in any impairment charges.
Intangible Assets
| As of October 31, 2025 | As of October 31, 2024 | ||||||||||||||||||||||||||||||||||
| Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||
| Customer contracts, customer lists and distribution agreements | $ | 2,634 | $ | (215) | $ | 2,419 | $ | 219 | $ | (70) | $ | 149 | |||||||||||||||||||||||
| Developed and core technology and patents | 3,253 | (780) | 2,473 | 747 | (443) | 304 | |||||||||||||||||||||||||||||
| Trade name and trademarks | 464 | (21) | 443 | 6 | (5) | 1 | |||||||||||||||||||||||||||||
| Capitalized software development costs | 232 | (27) | 205 | 56 | — | 56 | |||||||||||||||||||||||||||||
| IPR&D | 828 | — | 828 | — | — | — | |||||||||||||||||||||||||||||
| Total intangible assets | $ | 7,411 | $ | (1,043) | $ | 6,368 | $ | 1,028 | $ | (518) | $ | 510 |
For fiscal 2025, the increase in gross intangible assets was primarily due to $6.2 billion of acquired intangible assets related to the Merger and $0.2 billion related to capitalized software development costs.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
As of October 31, 2025, the weighted-average remaining useful lives of the Company's finite-lived intangible assets were as follows:
| Weighted-Average Remaining Useful Lives | |||||
| In years | |||||
| Customer contracts, customer lists and distribution agreements | 9 | ||||
| Developed and core technology and patents | 3 | ||||
| Trade name and trademarks | 10 | ||||
| Capitalized software development costs | 3 |
As of October 31, 2025, estimated future amortization expense related to finite-lived intangible assets was as follows:
| Fiscal year | In millions | ||||
| 2026 | $ | 1,220 | |||
| 2027 | 1,093 | ||||
| 2028 | 963 | ||||
| 2029 | 632 | ||||
| 2030 | 279 | ||||
| Thereafter | 1,282 | ||||
| Total(1) | $ | 5,469 |
(1)This table does not include $899 million of software development costs and IPR&D that are not amortizable as they are in-process.
Note 12: Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.
Fair Value Hierarchy
The Company uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.
Level 3—Unobservable inputs for assets or liabilities.
The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs. For the fiscal years ended October 31, 2025 and 2024, there were no transfers between levels within the fair value hierarchy.
The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis:
| As of October 31, 2025 | As of October 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measured Using | Fair Value Measured Using | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Equivalents: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | $ | — | $ | 997 | $ | — | $ | 997 | $ | — | $ | 601 | $ | — | $ | 601 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | 2,741 | — | — | 2,741 | 12,639 | — | — | 12,639 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents | 2,741 | 997 | — | 3,738 | 12,639 | 601 | — | 13,240 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale Debt Investments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign bonds | — | 111 | — | 111 | — | 102 | 1 | 103 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other debt securities(1) | — | — | 46 | 46 | — | — | 14 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale debt investments | — | 111 | 46 | 157 | — | 102 | 15 | 117 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | — | 59 | — | 59 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities in public companies | 6 | — | — | 6 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities | — | — | — | — | — | — | 88 | 88 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total equity investments | 6 | 59 | — | 65 | — | — | 88 | 88 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | — | 193 | — | 193 | — | 299 | — | 299 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other derivatives | — | 2 | — | 2 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 2,747 | 1,362 | 46 | 4,155 | 12,639 | 1,002 | 103 | 13,744 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts | — | 51 | — | 51 | — | 58 | — | 58 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | — | 238 | — | 238 | — | 103 | — | 103 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other derivatives | — | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | — | $ | 289 | $ | — | $ | 289 | $ | — | $ | 163 | $ | — | $ | 163 |
(1)Available-for-sale debt securities with carrying values that approximate fair value.
Valuation Techniques
Cash Equivalents and Investments: The Company holds time deposits, money market funds, debt securities primarily consisting of corporate and foreign government notes and bonds. The Company values cash equivalents using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt and equity investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data. Equity and other securities include investments in marketable and non-marketable securities. In evaluating non-marketable securities for impairment or observable price changes, the Company uses valuation techniques using the best information available, and may include quoted market prices, market comparables and discounted cash flow projections.
Derivative Instruments: The Company uses forward contracts, interest rate and total return swaps to hedge certain foreign currency and interest rate exposures. The Company uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, the Company and counterparties' credit risk, foreign currency exchange rates, and forward and spot prices for currencies and interest rates. See Note 13, “Financial Instruments,” for a further discussion of the Company's use of derivative instruments.
Other Fair Value Disclosures
Short-Term and Long-Term Debt: The Company estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk. The portion of the Company's debt that is hedged is reflected in the Consolidated Balance Sheets as an amount equal to the debt's carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. As of October 31, 2025, the estimated fair value of the Company's short-term and long-term debt was $22.5 billion and the carrying value was $22.4 billion. As of October 31, 2024, the estimated fair value of the Company's short-term and long-term debt was $18.3 billion and the carrying value was $18.2 billion. If measured at fair value in the Consolidated Balance Sheets, short-term and long-term debt would be classified in Level 2 of the fair value hierarchy.
Other Financial Instruments: For the balance of the Company's financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in other accrued liabilities, the carrying amounts approximate fair value due to their short-term nature. If measured at fair value in the Consolidated Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy.
Non-Recurring Fair Value Measurements
Equity Investments without Readily Determinable Fair Value: Equity investments are recorded at cost and measured at fair value, when they are deemed to be impaired or when there is an adjustment from observable price changes. For fiscal 2025, the Company recorded a realized net loss of $105 million on the sale of these investments. For fiscal 2024, the Company recorded net unrealized gain of $34 million. For fiscal 2023, the Company recorded net unrealized loss of $45 million, which included impairments of $50 million. These amounts are reflected in Interest and other, net in the Consolidated Statements of Earnings. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy. These adjustments are based on observable price changes for certain equity investments without readily determinable fair value. For investments still held as of October 31, 2025, there was no cumulative upward adjustments for observable price changes while the cumulative downward adjustments for observable price changes and impairments was immaterial. Refer to Note 13 “Financial Instruments,” for further information about equity investments.
Non-Financial Assets: The Company's non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at cost. The Company records ROU assets based on the lease liability, adjusted for lease prepayments, lease incentives received and the lessee's initial direct costs. Fair value adjustments are made to these non-financial assets in the period an impairment charge is recognized.
In fiscal 2025, the Company recorded $1.6 billion of impairment charges for the goodwill associated with the Hybrid Cloud reporting unit and the impairment of certain fixed assets. For impairment testing purposes, the fair values of both the reporting unit and the fixed assets were estimated using company‑specific unobservable inputs and would generally be classified within Level 3 of the fair value hierarchy. For more information on the goodwill impairment, see Note 11 “Goodwill and Intangible Assets.”
In fiscal 2023, the Company recorded a net ROU asset impairment charge of $18 million in Transformation costs in the Consolidated Statements of Earnings as the carrying value of certain ROU assets exceeded its fair value. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy.
Note 13: Financial Instruments
Cash Equivalents and Available-for-Sale Debt Investments
Cash equivalents and available-for-sale debt investments were as follows:
| As of October 31, 2025 | As of October 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost | Gross Unrealized Gains/(Losses) | Fair Value | Cost | Gross Unrealized Gains/(Losses) | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Equivalents | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | $ | 997 | $ | — | $ | 997 | $ | 601 | $ | — | $ | 601 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | 2,741 | — | 2,741 | 12,639 | — | 12,639 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents | 3,738 | — | 3,738 | 13,240 | — | 13,240 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale Investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign bonds | 107 | 4 | 111 | 101 | 2 | 103 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other debt securities | 44 | 2 | 46 | 8 | 6 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total debt securities | 151 | 6 | 157 | 109 | 8 | 117 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities in public companies | 6 | — | 6 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | 59 | — | 59 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total equity securities | 65 | — | 65 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale investments | 216 | 6 | 222 | 109 | 8 | 117 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents and available-for-sale investments | $ | 3,954 | $ | 6 | $ | 3,960 | $ | 13,349 | $ | 8 | $ | 13,357 |
All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of October 31, 2025 and 2024, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. Interest income related to cash, cash equivalents and debt securities was approximately $406 million, $197 million and $127 million in fiscal 2025, 2024 and 2023, respectively. Time deposits were primarily issued by institutions outside the U.S. as of October 31, 2025 and 2024. The estimated fair value of the available-for-sale debt investments may not be representative of values that will be realized in the future.
Contractual maturities of investments in available-for-sale debt securities were as follows:
| As of October 31, 2025 | |||||||||||
| Amortized Cost | Fair Value | ||||||||||
| In millions | |||||||||||
| Due in one to five years | $ | 37 | $ | 37 | |||||||
| Due in more than five years | 114 | 120 | |||||||||
| $ | 151 | $ | 157 |
Equity Investments
Non-marketable equity investments in privately held companies are included in Long-term financing receivables and other assets in the Consolidated Balance Sheets. These non-marketable equity investments are carried either at fair value or under measurement alternative. Measurement alternative equity investments are recorded at cost and measured at fair value when they are deemed to be impaired or when there is an adjustment from observable price changes.
In fiscal 2025, the Company sold its entire portfolio of non-marketable equity investments valued at $54 million under the fair value option. The carrying amount of those non-marketable equity investments accounted for under the fair value option was $88 million as of October 31, 2024. For fiscal 2025, the Company recorded a net realized loss of $14 million on the sale of these investments. For fiscal 2024 and 2023, the Company recorded a net unrealized loss of $47 million and net unrealized gain
of $9 million, respectively on these investments. These amounts are reflected in Interest and other, net in the Consolidated Statements of Earnings.
The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $61 million and $200 million as of October 31, 2025 and 2024, respectively. For fiscal 2025, the Company recorded a net realized loss of $105 million on the sale of these investments. For fiscal 2024, the Company recorded net unrealized gain of $34 million. For fiscal 2023, the Company recorded net unrealized loss of $45 million, which included impairments of $50 million. These amounts are reflected in Interest and other, net in the Consolidated Statements of Earnings.
Derivative Instruments
The Company is a global company exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of its business. As part of its risk management strategy, the Company uses derivative instruments, primarily forward contracts, interest rate swaps and total return swaps to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. The Company's objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting the fair value of assets and liabilities. The Company does not have any leveraged derivatives and does not use derivative contracts for speculative purposes. The Company may designate its derivative contracts as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation (“net investment hedges”). Additionally, for derivatives not designated as hedging instruments, the Company categorizes those economic hedges as other derivatives. Derivative instruments are recognized at fair value in the Consolidated Balance Sheets. The change in fair value of the derivative instruments is recognized in the Consolidated Statements of Earnings or Consolidated Statements of Comprehensive Income depending upon the type of hedge as further discussed below. The Company classifies cash flows from its derivative programs with the activities that correspond to the underlying hedged items in the Consolidated Statements of Cash Flows.
As a result of its use of derivative instruments, the Company is exposed to the risk that its counterparties will fail to meet their contractual obligations. To mitigate counterparty credit risk, the Company has a policy of only entering into derivative contracts with carefully selected major financial institutions based on their credit ratings and other factors, and the Company maintains dollar risk limits that correspond to each financial institution's credit rating and other factors. The Company's established policies and procedures for mitigating credit risk include reviewing and establishing limits for credit exposure and periodically reassessing the creditworthiness of its counterparties. Master netting agreements also mitigate credit exposure to counterparties by permitting the Company to net amounts due from the Company to a counterparty against amounts due to the Company from the same counterparty under certain conditions.
To further mitigate credit exposure to counterparties, the Company has collateral security agreements, which allows the Company to hold collateral from, or require the Company to post collateral to counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of the Company and its counterparties. If the Company's credit rating falls below a specified credit rating, the counterparty has the right to request full collateralization of the derivatives' net liability position. Conversely, if the counterparty's credit rating falls below a specified credit rating, the Company has the right to request full collateralization of the derivatives' net liability position. Collateral is generally posted within two business days. The fair value of the Company's derivatives with credit contingent features in a net liability position was $116 million and $23 million at October 31, 2025 and 2024, respectively, most of which were fully collateralized within two business days.
Under the Company's derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting the Company that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect the Company's financial position or cash flows as of October 31, 2025 and 2024.
Fair Value Hedges
The Company issues long-term debt in U.S. dollars based on market conditions at the time of financing. The Company may enter into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar London Interbank Offered Rate (“LIBOR”)-based floating interest rate which was replaced with Secured Overnight Financing Rate (“SOFR”) starting in July of fiscal 2023. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts. Alternatively, the Company may choose not to swap fixed for floating interest payments or may terminate a previously executed swap if it believes a larger proportion of fixed-rate debt would be beneficial. When investing in fixed-rate instruments, the Company may enter into interest rate swaps that convert the fixed interest payments into variable interest payments and may designate these swaps as fair value hedges.
For derivative instruments that are designated and qualify as fair value hedges, the Company recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Statements of Earnings in the period of change.
Cash Flow Hedges
The Company uses forward contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. The Company's foreign currency cash flow hedges mature generally within twelve months; however, forward contracts associated with sales-type and direct-financing leases and intercompany loans extend for the duration of the lease or loan term, which can extend up to five years.
For derivative instruments that are designated and qualify as cash flow hedges, and as long as they remain highly effective, the Company records the changes in fair value of the derivative instrument in Accumulated other comprehensive loss as a separate component of equity in the Consolidated Balance Sheets and subsequently reclassifies these amounts into earnings in the same financial statement line item when the hedged transaction is recognized.
In fiscal 2024, in connection with the Merger and related debt issuances, the Company entered into interest rate locks for an aggregate notional amount of $2.6 billion. These contracts were settled in fiscal 2024 and the Company recognized a loss of $42 million in Accumulated other comprehensive loss.
Net Investment Hedges
The Company uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. The Company records the changes in the fair value of the hedged items in cumulative translation adjustment as a separate component of equity in the Consolidated Balance Sheets.
Other Derivatives
Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. The Company also uses total return swaps, based on equity or fixed income indices, to hedge its executive deferred compensation plan liability.
For derivative instruments not designated as hedging instruments, the Company recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Statements of Earnings in the period of change.
Hedge Effectiveness
For interest rate swaps designated as fair value hedges, the Company measures hedge effectiveness by offsetting the change in fair value of the hedged items with the change in fair value of the derivative. For forward contracts designated as cash flow or net investment hedges, the Company measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates.
Fair Value of Derivative Instruments in the Consolidated Balance Sheets
The gross notional and fair value of derivative instruments in the Consolidated Balance Sheets were as follows:
| As of October 31, 2025 | As of October 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Gross Notional | Other Current Assets | Long-Term Financing Receivables and Other Assets | Other Accrued Liabilities | Long-Term Other Liabilities | Outstanding Gross Notional | Other Current Assets | Long-Term Financing Receivables and Other Assets | Other Accrued Liabilities | Long-Term Other Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts | $ | 600 | $ | — | $ | — | $ | — | $ | 51 | $ | 2,500 | $ | — | $ | — | $ | 58 | $ | — | |||||||||||||||||||||||||||||||||||||||
| Cash Flow Hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | 7,062 | 81 | 29 | 95 | 67 | 7,809 | 107 | 59 | 31 | 25 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net Investment Hedges: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | 2,126 | 20 | 24 | 30 | 20 | 1,986 | 38 | 44 | 12 | 13 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments | 9,788 | 101 | 53 | 125 | 138 | 12,295 | 145 | 103 | 101 | 38 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | 7,167 | 37 | 2 | 22 | 4 | 5,528 | 46 | 5 | 18 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other derivatives | 153 | 2 | — | — | — | 147 | — | — | 2 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total derivatives not designated as hedging instruments | 7,320 | 39 | 2 | 22 | 4 | 5,675 | 46 | 5 | 20 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total derivatives | $ | 17,108 | $ | 140 | $ | 55 | $ | 147 | $ | 142 | $ | 17,970 | $ | 191 | $ | 108 | $ | 121 | $ | 42 |
Offsetting of Derivative Instruments
The Company recognizes all derivative instruments on a gross basis in the Consolidated Balance Sheets. The Company's derivative instruments are subject to master netting arrangements and collateral security arrangements. The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under collateral security agreements. The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
| As of October 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| In the Consolidated Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| (i) | (ii) | (iii) = (i)–(ii) | (iv) | (v) | (vi) = (iii)–(iv)–(v) | |||||||||||||||||||||||||||||||||
| Gross Amounts Not Offset | ||||||||||||||||||||||||||||||||||||||
| Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Derivatives | Financial Collateral | Net Amount | |||||||||||||||||||||||||||||||||
| In millions | ||||||||||||||||||||||||||||||||||||||
| Derivative assets | $ | 195 | $ | — | $ | 195 | $ | 121 | $ | 16 | (1) | $ | 58 | |||||||||||||||||||||||||
| Derivative liabilities | $ | 289 | $ | — | $ | 289 | $ | 121 | $ | 136 | (2) | $ | 32 |
| As of October 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| In the Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||||||||
| (i) | (ii) | (iii) = (i)–(ii) | (iv) | (v) | (vi) = (iii)–(iv)–(v) | ||||||||||||||||||||||||||||||||||||
| Gross Amounts Not Offset | |||||||||||||||||||||||||||||||||||||||||
| Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Derivatives | Financial Collateral | Net Amount | ||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||
| Derivative assets | $ | 299 | $ | — | $ | 299 | $ | 138 | $ | 90 | (1) | $ | 71 | ||||||||||||||||||||||||||||
| Derivative liabilities | $ | 163 | $ | — | $ | 163 | $ | 138 | $ | 27 | (2) | N/A |
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.
(2)Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. As of October 31, 2025, of the $136 million of collateral posted, $120 million was in cash and $16 million was through the re-use of counterparty collateral. As of October 31, 2024, $27 million of collateral posted was entirely through the re-use of counterparty collateral.
The amounts recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges were as follows:
| Carrying Amount of the Hedged Liabilities | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities | ||||||||||||||||||||||
| As of October 31, | As of October 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| In millions | In millions | ||||||||||||||||||||||
| Notes payable and short-term borrowings | $ | — | $ | (2,440) | $ | — | $ | 58 | |||||||||||||||
| Long-term debt | $ | (754) | $ | — | $ | (4) | $ | — |
The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income (“OCI”) were as follows:
| Gains (Losses) Recognized in OCI on Derivatives | |||||||||||||||||
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Derivatives in Cash Flow Hedging Relationship | |||||||||||||||||
| Foreign exchange contracts | $ | (168) | $ | (73) | $ | (177) | |||||||||||
| Interest rate locks | — | (42) | — | ||||||||||||||
| Derivatives in Net Investment Hedging Relationship | |||||||||||||||||
| Foreign exchange contracts | (42) | 25 | (76) | ||||||||||||||
| Total | $ | (210) | $ | (90) | $ | (253) |
As of October 31, 2025, the Company expects to reclassify an estimated net accumulated other comprehensive gain of approximately $2 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges.
Effect of Derivative Instruments on the Consolidated Statements of Earnings
The following table represents the pre-tax effect of derivative instruments on total amounts of income and expense line items presented in the Consolidated Statements of Earnings in which the effects of fair value hedges, cash flow hedges and derivatives not designated as hedging instruments are recorded:
| Gains (Losses) Recognized in Income | |||||||||||||||||||||||||||||||||||||||||||||||
| For the fiscal years ended October 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||
| Net Revenue | Interest and Other, net | Net Revenue | Interest and Other, net | Net Revenue | Interest and Other, net | ||||||||||||||||||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||||||||||||||||||||
| Total net revenue and interest and other, net | $ | 34,296 | $ | (175) | $ | 30,127 | $ | (117) | $ | 29,135 | $ | (104) | |||||||||||||||||||||||||||||||||||
| Gains (Losses) on Derivatives in Fair Value Hedging Relationships: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest Rate Contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Hedged items | — | (62) | — | (93) | — | (27) | |||||||||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | — | 62 | — | 93 | — | 27 | |||||||||||||||||||||||||||||||||||||||||
| Gains (Losses) on Derivatives in Cash Flow Hedging Relationships: | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Exchange Contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Amount of (losses) gains reclassified from accumulated other comprehensive income into income | (33) | (120) | 59 | (75) | 28 | (144) | |||||||||||||||||||||||||||||||||||||||||
| Interest Rate Locks | |||||||||||||||||||||||||||||||||||||||||||||||
| Amount of losses reclassified from accumulated other comprehensive income into income | — | (3) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Gains (Losses) on Derivatives not Designated as Hedging Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | — | (61) | — | 38 | — | (97) | |||||||||||||||||||||||||||||||||||||||||
| Other derivatives | — | 3 | — | — | — | (8) | |||||||||||||||||||||||||||||||||||||||||
| Total (losses) gains | $ | (33) | $ | (181) | $ | 59 | $ | (37) | $ | 28 | $ | (249) |
Note 14: Borrowings
Notes Payable and Short-Term Borrowings
Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows:
| As of October 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Amount Outstanding | Weighted-Average Interest Rate | Amount Outstanding | Weighted-Average Interest Rate | ||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||
| Current portion of long-term debt(1) | $ | 3,796 | 4.4 | % | $ | 3,969 | 7.6 | % | |||||||||||||||
| Commercial paper | 681 | 2.3 | % | 649 | 3.7 | % | |||||||||||||||||
| Notes payable to banks, lines of credit and other | 132 | 3.1 | % | 124 | 5.0 | % | |||||||||||||||||
| Total notes payable and short-term borrowings | $ | 4,609 | $ | 4,742 |
(1)As of October 31, 2025 and 2024, the Current portion of long-term debt, net of discount and issuance costs, included $1.2 billion and $1.4 billion, respectively, both associated with the asset-backed debt securities issued by the Company.
Long-Term Debt
| As of October 31, | |||||||||||||||||||||||||||||
| Issuance Date | Maturity Date | 2025 | 2024 | ||||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||
| Unsecured Senior Notes | |||||||||||||||||||||||||||||
| 4.40% notes issued at discount to par at a price of 99.905% | September 2025 | October 2030 | $ | 850 | $ | — | |||||||||||||||||||||||
| 4.15% notes issued at discount to par at a price of 99.964% | September 2025 | September 2028 | 850 | — | |||||||||||||||||||||||||
| 4.05% notes issued at discount to par at a price of 99.949% | September 2025 | September 2027 | 900 | — | |||||||||||||||||||||||||
| Floating rate notes issued at par | September 2025 | September 2028 | 300 | — | |||||||||||||||||||||||||
| 4.45% notes issued at discount to par at a price of 99.996% | September 2024 | September 2026 | 1,250 | 1,250 | |||||||||||||||||||||||||
| 4.40% notes issued at discount to par at a price of 99.953% | September 2024 | September 2027 | 1,250 | 1,250 | |||||||||||||||||||||||||
| 4.55% notes issued at discount to par at a price of 99.894% | September 2024 | October 2029 | 1,750 | 1,750 | |||||||||||||||||||||||||
| 4.85% notes issued at discount to par at a price of 99.908% | September 2024 | October 2031 | 1,250 | 1,250 | |||||||||||||||||||||||||
| 5.00% notes issued at discount to par at a price of 99.078% | September 2024 | October 2034 | 2,000 | 2,000 | |||||||||||||||||||||||||
| 5.60% notes issued at discount to par at a price of 98.086% | September 2024 | October 2054 | 1,500 | 1,500 | |||||||||||||||||||||||||
| 5.25% notes issued at discount to par at a price of 99.887% | June 2023 | July 2028 | 550 | 550 | |||||||||||||||||||||||||
| 1.75% notes issued at discount to par at a price of 99.820% | July 2020 | April 2026 | 750 | 750 | |||||||||||||||||||||||||
| 4.90% notes issued at discount to par at a price of 99.725% | October 2015 | October 2025 | — | 2,500 | |||||||||||||||||||||||||
| 6.20% notes issued at discount to par at a price of 99.942% | October 2015 | October 2035 | 750 | 750 | |||||||||||||||||||||||||
| 6.35% notes issued at discount to par at a price of 99.932% | October 2015 | October 2045 | 1,500 | 1,500 | |||||||||||||||||||||||||
| 1.20% Juniper Global Notes assumed | December 2025 | 400 | — | ||||||||||||||||||||||||||
| 3.75% Juniper Global Notes assumed | August 2029 | 500 | — | ||||||||||||||||||||||||||
| 2.00% Juniper Global Notes assumed | September 2030 | 400 | — | ||||||||||||||||||||||||||
| 5.95% Juniper Global Notes assumed | March 2041 | 400 | — | ||||||||||||||||||||||||||
| Asset-Backed Debt Securities | |||||||||||||||||||||||||||||
| $660 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 4.31% | October 2025 | Stated final maturity date of May 2033 | 660 | — | |||||||||||||||||||||||||
| $900 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 4.67% | July 2025 | Stated final maturity date of March 2033 | 812 | — | |||||||||||||||||||||||||
| $818 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 5.59% | June 2024 | Stated final maturity date of April 2032 | 441 | 700 | |||||||||||||||||||||||||
| $796 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 5.48% | January 2024 | Stated final maturity date of November 2031 | 326 | 583 | |||||||||||||||||||||||||
| $612 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 6.40% | September 2023 | Stated final maturity date of July 2031 | 172 | 373 | |||||||||||||||||||||||||
| $643 issued in five tranches at a weighted average price of 99.99% and a weighted average interest rate of 5.59% | March-April 2023 | Stated final maturity date of April 2028 | 40 | 257 | |||||||||||||||||||||||||
| $651 issued in five tranches at a weighted average price of 99.99% and a weighted average interest rate of 5.55% | October 2022 | Stated final maturity date of August 2029 | 1 | 191 | |||||||||||||||||||||||||
| $747 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 3.68% | May 2022 | Stated final maturity date of March 2030 | — | 148 | |||||||||||||||||||||||||
| $1,000 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 1.51% | January 2022 | Stated final maturity date of November 2029 | — | 124 | |||||||||||||||||||||||||
| $753 issued in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 0.58% | June 2021 | Stated final maturity date of March 2029 | — | 26 | |||||||||||||||||||||||||
| Others | |||||||||||||||||||||||||||||
| Term Loan at Term Benchmark Rate | July 2025 | June 2028 | 2,000 | — | |||||||||||||||||||||||||
| Other, including finance lease obligations, at 1.6%-6.3%, due in calendar years 2025-2030(1) | 146 | 208 | |||||||||||||||||||||||||||
| Total | 21,748 | 17,660 | |||||||||||||||||||||||||||
| Unamortized premium/discount, issuance costs and other | (196) | (187) | |||||||||||||||||||||||||||
| Less: current portion | (3,796) | (3,969) | |||||||||||||||||||||||||||
| Total long-term debt | $ | 17,756 | $ | 13,504 |
(1)Other, including finance lease obligations included $4 million and $14 million as of October 31, 2025 and 2024, respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries that are collateralized by receivables and underlying assets associated with the related finance and operating leases. For both the periods presented, the carrying amount of the assets approximated the carrying amount of the borrowings.
Interest is payable semi-annually on fixed rate Unsecured Senior Notes, quarterly on floating rate Unsecured Senior Notes and monthly on Asset-Backed Debt Securities and Term Loan.
Interest expense on borrowings recognized in the Consolidated Statements of Earnings was as follows:
| For the fiscal years ended October 31, | |||||||||||||||||||||||
| Location | 2025 | 2024 | 2023 | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Financing interest | Financing cost | $ | 500 | $ | 495 | $ | 383 | ||||||||||||||||
| Interest expense | Interest and other, net | 598 | 282 | 326 | |||||||||||||||||||
| Total interest expense | $ | 1,098 | $ | 777 | $ | 709 |
As disclosed in Note 13, “Financial Instruments,” the Company used interest rate swaps to mitigate the exposure of its 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 its variable-rate debt. Interest rates on long-term debt in the table above have not been adjusted to reflect the impact of any interest rate swaps.
Commercial Paper
Hewlett Packard Enterprise maintains two commercial paper programs, “the Parent Programs”, and a wholly-owned subsidiary maintains a third program. The Parent Program in the U.S. provides for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $4.75 billion. The Parent Program outside the U.S. provides for the issuance of commercial paper denominated in U.S. dollars, euros or British pounds up to a maximum aggregate principal amount of $3.0 billion or the equivalent in those alternative currencies. The combined aggregate principal amount of commercial paper outstanding under those two programs at any one time cannot exceed the $4.75 billion as authorized by Hewlett Packard Enterprise's Board of Directors. In addition, the Hewlett Packard Enterprise subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $1.0 billion. As of October 31, 2025 and 2024, no borrowings were outstanding under the Parent Programs. As of October 31, 2025 and 2024, $681 million and $649 million, respectively, were outstanding under the subsidiary’s program.
Revolving Credit Facility
In September 2024, the Company terminated its 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 in connection with the closing of such acquisition. With the completion of the acquisition and the associated refinancing, the full $5.25 billion commitment under the new facility is now available to the Company. As of October 31, 2025 and 2024, no borrowings were outstanding under this credit facility.
Uncommitted Credit Facility
The Company maintains an uncommitted short-term advance facility with Societe Generale that was entered into in September 2023 with a principal amount of $500 million for a period of 5 years. As of October 31, 2025 and 2024, no borrowings were outstanding under this credit facility.
Juniper Networks Acquisition Financing
In September 2024, the Company entered into term loan agreements with JPMorgan Chase Bank, N.A, Citibank, N.A., and Mizuho Bank, Ltd. for approximately $12.0 billion of senior unsecured delayed draw term loan facilities, comprised of an approximately $9.0 billion 364-day tranche and a $3.0 billion three-year tranche, subject to customary conditions. The Company has since further reduced the commitments under the 364-day term loan to $1.0 billion.
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 aforementioned 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. Under both loans, interest was initially calculated using the Alternate Base Rate until July 8, 2025 with payment due in September 2025. Thereafter, the rate
transitioned to the Term Benchmark Rate (defined as Adjusted Term SOFR plus the Applicable Rate), payable monthly in accordance with the terms of both credit agreements.
The 364-day loan, which was originally scheduled for full repayment on July 1, 2026, was fully repaid in September 2025.
The three-year loan was subject to quarterly amortization at 1.25%, with the remaining balance due at maturity on June 30, 2028. In October 2025, the Company repaid $1.0 billion against the $3.0 billion previously borrowed under this agreement. On November 21, 2025, the Company amended the three-year delayed-draw term loan agreement that was entered into in September 2024. Under such amendment, the $1.0 billion of prepayment made in October 2025, along with any subsequent prepayments, will be applied toward the remaining scheduled amortization payments due on the loan, either as directed by the Company or, if no direction is provided, in order of maturity. As a result of the amendment, subsequent to October 31, 2025, the $1.0 billion of prepayment has been applied to a portion of the outstanding borrowed amount and all scheduled amortization payments until the maturity of the borrowings, as provided for in the term loan agreement (including the annual amortization payments of $150 million in each of fiscal 2026 and fiscal 2027, which are included in the fiscal 2026 and fiscal 2027 amounts shown in the below table). The remaining total amount of outstanding borrowings is $2.0 billion, which matures in fiscal 2028.
Future Maturities of Borrowings
As of October 31, 2025, aggregate future maturities of the Company's borrowings at face value:
| Fiscal Year | In millions | ||||
| 2026 | $ | 3,804 | |||
| 2027 | 3,136 | ||||
| 2028 | 3,778 | ||||
| 2029 | 2,376 | ||||
| 2030 | 404 | ||||
| Thereafter | 8,250 | ||||
| Total | $ | 21,748 |
Note 15: Stockholders' Equity
The components of accumulated other comprehensive loss, net of taxes as of October 31, 2025 and changes during fiscal 2025 were as follows:
| Net unrealized gains (losses) on available-for-sale securities | Net unrealized (losses) gains on cash flow hedges | Unrealized components of defined benefit plans | Cumulative translation adjustment | Accumulated other comprehensive loss | |||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 8 | $ | (16) | $ | (2,342) | $ | (627) | $ | (2,977) | |||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | (3) | (168) | 177 | (44) | (38) | ||||||||||||||||||||||||
| Reclassifications of losses into earnings | 1 | 156 | 134 | — | 291 | ||||||||||||||||||||||||
| Tax benefit (provision) | — | 2 | (27) | 1 | (24) | ||||||||||||||||||||||||
| Balance at end of period | $ | 6 | $ | (26) | $ | (2,058) | $ | (670) | $ | (2,748) |
The components of accumulated other comprehensive loss, net of taxes as of October 31, 2024 and changes during fiscal 2024 were as follows:
| Net unrealized gains on available-for-sale securities | Net unrealized gains (losses) on cash flow hedges | Unrealized components of defined benefit plans | Cumulative translation adjustment | Accumulated other comprehensive loss | |||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | — | $ | 61 | $ | (2,507) | $ | (638) | $ | (3,084) | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 8 | (115) | 34 | (23) | (96) | ||||||||||||||||||||||||
| Reclassifications of losses into earnings | — | 16 | 138 | 32 | 186 | ||||||||||||||||||||||||
| Tax benefit (provision) | — | 22 | (7) | 2 | 17 | ||||||||||||||||||||||||
| Balance at end of period | $ | 8 | $ | (16) | $ | (2,342) | $ | (627) | $ | (2,977) |
The components of accumulated other comprehensive loss, net of taxes as of October 31, 2023 and changes during fiscal 2023 were as follows:
| Net unrealized gains (losses) on available-for-sale securities | Net unrealized gains (losses) on cash flow hedges | Unrealized components of defined benefit plans | Cumulative translation adjustment | Accumulated other comprehensive loss | |||||||||||||||||||||||||
| In millions | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | (1) | $ | 109 | $ | (2,596) | $ | (610) | $ | (3,098) | |||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | 1 | (177) | (99) | (32) | (307) | ||||||||||||||||||||||||
| Reclassifications of (gains) losses into earnings | — | 116 | 147 | — | 263 | ||||||||||||||||||||||||
| Tax (provision) benefit | — | 13 | 41 | 4 | 58 | ||||||||||||||||||||||||
| Balance at end of period | $ | — | $ | 61 | $ | (2,507) | $ | (638) | $ | (3,084) |
7.625% Series C Mandatory Convertible Preferred Stock
In September 2024, the Company issued 30 million shares of 7.625% Series C Mandatory Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”), for an aggregate purchase price of $1.5 billion, less issuance costs of $38 million. As of October 31, 2025, 30 million shares of the Preferred Stock were outstanding.
Unless converted earlier in accordance with its terms, each share of Preferred Stock will automatically convert on the mandatory conversion date, which is expected to be September 1, 2027, into between 2.5352 shares and 3.1056 shares of common stock, in each case, subject to customary anti-dilution adjustments described in the certificate of designations related to the Preferred Stock (the “Certificate of Designations”). The number of shares of common stock issuable upon conversion will be determined based on the average volume weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately prior to September 1, 2027.
Holders of shares of Preferred Stock have the option to convert all or any portion of their shares of Preferred Stock at any time. The conversion rate applicable to any early conversion may, in certain circumstances, be increased to compensate holders of the Preferred Stock for unpaid accumulated dividends as described in the Certificate of Designations.
If a Fundamental Change, as defined in the Certificate of Designations, occurs on or prior to September 1, 2027, then holders of the Preferred Stock will be entitled to convert all or any portion of their Preferred Stock at the Fundamental Change Conversion Rate, into between 2.2950 shares and 3.1056 shares of common stock, in all cases, subject to customary anti-dilution adjustments described in the Certificate of Designations, for a specified period of time and to also receive an amount to compensate them for unpaid accumulated dividends and any remaining future scheduled dividend payments. The Preferred Stock is not subject to redemption at the Company’s option.
Dividends
The stockholders of HPE common stock are entitled to receive dividends when and as declared by the Board of Directors. The Company’s ability to pay dividends will depend on many factors, such as its financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in its debt, industry practice, legal requirements, regulatory constraints, and other factors that the Board of Directors deems relevant. Furthermore, so long as any share of its Preferred
Stock remains outstanding, no dividend on shares of common stock (or any other class of stock junior to the Preferred Stock) shall be declared or paid unless all accumulated and unpaid dividends for all preceding dividend periods for the Preferred Stock have been declared and paid in full in cash, shares of the Company’s common stock or a combination thereof, or a sufficient sum of cash or number of shares of its common stock has been set apart for the payment of such dividends, on all outstanding shares of the Preferred Stock. Dividends declared were $0.52 per common share in fiscal 2025 and 2024. Dividends declared on the Preferred Stock were $3.81 and $0.83 per share in fiscal 2025 and 2024, respectively.
On December 4, 2025, the Company declared a regular cash dividend of $0.1425 per share on the Company's common stock, payable on January 16, 2026, to the stockholders of record as of the close of business on December 19, 2025.
Dividends on the Preferred Stock will be payable on a cumulative basis when, as and if declared by the Board of Directors, or an authorized committee thereof, at an annual rate of 7.625% on the liquidation of preference of $50.00 per share. The Company may pay declared dividends in cash or, subject to certain limitations, in shares of its common stock or in any combination of cash and shares of its common stock on March 1, June 1, September 1 and December 1 of each year, commencing on December 1, 2024, and ending on, and including, September 1, 2027. The Company has declared a cash dividend of $0.953125 per share of its 7.625% Series C Mandatory Convertible Preferred Stock, which was paid on December 1, 2025, to holders of record as of the close of business on November 15, 2025.
Share Repurchase Program
On October 13, 2015, the Board of Directors approved a share repurchase program with a $3.0 billion authorization, which was refreshed with additional share repurchase authorizations of $3.0 billion, $5.0 billion, $2.5 billion and $3.0 billion on May 24, 2016, October 16, 2017, February 21, 2018 and October 15, 2025, respectively. This program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions.
In fiscal 2025, the Company repurchased and settled a total of 9.8 million shares under its share repurchase program through open market repurchases, which included 0.1 million shares that were unsettled open market repurchases as of October 31, 2024. As of October 31, 2025, the Company did not have any unsettled open market repurchases. Shares repurchased during the fiscal 2025 were recorded as a $200 million reduction to stockholders' equity. As of October 31, 2025, the Company had a remaining authorization of approximately $3.6 billion for future share repurchases.
In fiscal 2024, the Company repurchased and settled a total of 7.8 million shares under its share repurchase program through open market repurchases, which included 0.2 million shares that were unsettled open market repurchases as of October 31, 2023. Additionally, the Company had unsettled open market repurchases of 0.1 million shares as of October 31, 2024. Shares repurchased during the fiscal 2024 were recorded as a $0.2 billion reduction to stockholders' equity.
Note 16: Net (Loss) Earnings Per Share
The Company calculates basic net (loss) earnings per share (“EPS”) using net (loss) earnings and the weighted-average number of shares outstanding during the reporting period.
The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions, except per share amounts | |||||||||||||||||
| Numerator: | |||||||||||||||||
| Net (loss) earnings attributable to common stockholders - Basic | $ | (59) | $ | 2,554 | $ | 2,025 | |||||||||||
| Plus: 7.625% Series C mandatory convertible preferred stock dividends | — | 25 | — | ||||||||||||||
| Net (loss) earnings - Diluted | $ | (59) | $ | 2,579 | $ | 2,025 | |||||||||||
| Denominator: | |||||||||||||||||
| Weighted-average shares used to compute basic net EPS | 1,324 | 1,309 | 1,299 | ||||||||||||||
| Dilutive effect of employee stock plans(1) | — | 18 | 17 | ||||||||||||||
| Dilutive effect of 7.625% Series C mandatory convertible preferred stock(1) | — | 10 | — | ||||||||||||||
| Weighted-average shares used to compute diluted net EPS | 1,324 | 1,337 | 1,316 | ||||||||||||||
| Net EPS: | |||||||||||||||||
| Basic | $ | (0.04) | $ | 1.95 | $ | 1.56 | |||||||||||
| Diluted | $ | (0.04) | $ | 1.93 | $ | 1.54 | |||||||||||
| Anti-dilutive Share Count(1)(2): | |||||||||||||||||
| Employee stock plans | 62 | — | — | ||||||||||||||
| 7.625% Series C mandatory convertible preferred stock | 76 | — | — | ||||||||||||||
| Total anti-dilutive weighted-average stock | 138 | — | — |
(1)The impact of dilutive effect of employee stock plans is calculated under the treasury stock method, and the impact of dilutive effect of the Preferred Stock is calculated under the if-converted method. The effect of employee stock plans and Preferred Stock is excluded when calculating diluted net loss per share as it would be anti-dilutive.
(2)The Company excludes shares potentially issuable under employee stock plans and Preferred Stock that could dilute basic net EPS in the future from the calculation of diluted net earnings per share, as their effect, if included, would have been anti-dilutive for the periods presented.
Note 17: Litigation, Contingencies, and Commitments
Hewlett Packard Enterprise is involved in various lawsuits, claims, investigations and proceedings including those consisting of intellectual property, commercial, securities, employment, employee benefits, and environmental matters, which arise in the ordinary course of business. In addition, as part of the Separation and Distribution Agreement (the “Separation and Distribution Agreement”) entered into in connection with Hewlett Packard Enterprise’s spin-off from HP Inc. (formerly known as “Hewlett-Packard Company”) (the “Separation”), Hewlett Packard Enterprise and HP Inc. agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreement included provisions that allocate liability and financial responsibility for pending litigation involving the parties, as well as provide for cross-indemnification of the parties against liabilities to one party arising out of liabilities allocated to the other party. The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. arising prior to the Separation. Hewlett Packard Enterprise records a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. Hewlett Packard Enterprise reviews these matters at least quarterly and adjusts these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other updated information and events pertaining to a particular matter. Litigation is inherently unpredictable. However, Hewlett Packard Enterprise believes it has valid defenses with respect to legal matters pending against us. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of October 31, 2025, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.
Litigation, Proceedings, and Investigations
DOJ Action on the Proposed Acquisition of Juniper Networks*.* As previously disclosed, on January 9, 2024, the Company entered into the Merger Agreement with Juniper Networks and Jasmine Acquisition Sub, Inc., providing for the acquisition of Juniper Networks by HPE. On January 30, 2025, the Antitrust Division of the United States Department of Justice (“DOJ”) filed a complaint in the United States District Court for the Northern District of California, seeking to enjoin the closing of the Merger, alleging that the Merger is likely to substantially lessen competition in violation of Section 7 of the Clayton Act. On February 10, 2025, HPE and Juniper Networks filed answers to the DOJ’s complaint, disputing these claims. On June 27, 2025, HPE, Juniper, and the DOJ filed an Asset Preservation and Hold Separate Stipulation and Order (“Stipulation”) and Proposed Final Judgment with the Court. Pursuant to the Stipulation, HPE has agreed to divest its global InstantOn campus and branch business. HPE also has agreed to grant up to two licenses to the Mist AIOps source code, with the licensees determined through an auction process. In exchange, the DOJ agreed to dismiss its action to enjoin the Merger, subject to the Court’s approval of the Proposed Final Judgment under the Antitrust Procedures and Penalties Act (the “Tunney Act”). On June 30, 2025, the Court signed the Stipulation, allowing the Merger to proceed to closing. On October 14, 2025, the Attorneys General of twelve states and the District of Columbia (the “Attorneys General”) filed a motion to intervene in the Court’s Tunney Act process. Following a November 18, 2025 hearing, the Court issued an order granting the Attorneys General’s motion to intervene and set a status conference for December 16, 2025 to determine next steps, including the scope of the Attorneys General’s intervention rights under the Tunney Act. On November 18, 2025, the Attorneys General filed a motion to hold separate, seeking to enjoin further integration and consolidation of HPE and Juniper during the pendency of the Tunney Act proceedings. The hearing on the Attorneys General’s motion to hold separate is set for January 8, 2026.
India Directorate of Revenue Intelligence Proceedings*.* On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the “DRI”) issued notices to Hewlett-Packard India Sales Private Ltd (“HP India”), a subsidiary of HP Inc., seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties. On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related notices affirming duties and penalties against HP India and the named individuals for approximately $386 million (plus interest). On April 20, 2012, the Commissioner issued an order on the spare parts-related notice affirming duties and penalties against HP India and certain of the named individuals for approximately $17 million. HP India filed appeals of the Commissioner’s orders before the Customs Tribunal. The Customs Department filed cross-appeals before the Customs Tribunal. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner's orders. The Customs Tribunal rejected HP India's request to return the matter to the Commissioner on procedural grounds. After multiple delays and postponements over the last decade, the Customs Tribunal began hearing the parties’ cross-appeals on April 21, 2025. The hearing on the cross-appeals were completed in June 2025. HPE expects a ruling from the Customs Tribunal by early 2026. Either party may appeal the ruling to the India Supreme Court.
ECT Proceedings*.* In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos (“ECT”), notified a former subsidiary of HP Inc. in Brazil (“HP Brazil”) that it had initiated administrative proceedings to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies allegedly coordinated their bids and fixed results for three ECT contracts in 2007 and 2008. In late July 2011, ECT notified HP Brazil it had decided to apply the penalties against HP Brazil and suspend HP Brazil's right to bid and contract with ECT for five years, based upon the evidence before it. In August 2011, HP Brazil appealed ECT's decision. In April 2013, ECT rejected HP Brazil's appeal, and the administrative proceedings were closed with the penalties against HP Brazil remaining in place. In parallel, in September 2011, HP Brazil filed a civil action against ECT seeking to have ECT’s decision revoked. HP Brazil also requested an injunction suspending the application of the penalties until a final ruling on the merits of the case, which was denied. HP Brazil appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from five to two years. HP Brazil appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT's sanctions until a final ruling on the merits of the case. In September 2025, the Court of Appeals ruled in favor of HPE’s Civil Appeal, annulling the previously-stayed sanctions that, if enforced, would have barred HPE Brazil from participating in public tenders for five years. HPE has filed a motion to recover legal costs incurred during the appeal. ECT has filed a motion requesting the Court to clarify the merits.
Autonomy-Related Legal Proceedings*.* In 2015, four Hewlett Packard Enterprise subsidiaries (Autonomy Corporation Limited, Hewlett Packard Vision BV, Autonomy Systems Limited, and Autonomy, Inc., hereinafter the “Claimants”) initiated civil proceedings in the U.K. High Court of Justice against two members of Autonomy’s former management, Michael Lynch and Sushovan Hussain, for breach of their fiduciary duties in causing Autonomy group companies to engage in improper
transactions and accounting practices before and in connection with the 2011 acquisition of Autonomy. Trial concluded in January 2020. In May 2022, the court issued its liability judgment, finding that the Claimants had succeeded on substantially all claims against Messrs. Lynch and Hussain, and dismissing a counterclaim filed by Mr. Lynch. In February 2024, the court held a two-week trial on damages. The Claimants sought recovery for $4 billion in losses. In May 2025, Claimants reached an agreement with Mr. Hussain to resolve claims against him. On July 22, 2025, the court issued its ruling on the quantum of damages, finding that the Lynch estate owed £740 million. The court held a hearing during the week of November 17, 2025 addressing a number of matters including costs (including attorneys’ fees), pre-judgment interest, issues relating to the currency in which the judgment should be paid, and the Lynch Estate’s right to appeal discrete issues in the Court’s May 2022 liability judgment and its July 2025 quantum judgment. In total, Claimants are seeking a total of $1.786 billion from Lynch’s Estate. Pursuant to the terms of the 2015 Separation and Distribution Agreement, HP and Hewlett Packard Enterprise will share equally in any recovery.
Shared Litigation with HP Inc., DXC Technology Company and Micro Focus International plc
As part of the Separation and Distribution Agreements between Hewlett Packard Enterprise and HP Inc., Hewlett Packard Enterprise and DXC, and Hewlett Packard Enterprise and Seattle SpinCo, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of DXC from Hewlett Packard Enterprise and the separation of Seattle SpinCo from Hewlett Packard Enterprise), in each case arising prior to the applicable separation.
Environmental
The Company's operations and products are or may in the future become subject to various federal, state, local, and foreign laws and regulations concerning the environment, including laws addressing the discharge of pollutants into the air and water; supply chain due diligence; and sustainability, environment, and emissions-related reporting; environmental claims and statements; the management, movement, and disposal of hazardous substances and wastes; the clean-up of contaminated sites; product safety and compliance; the energy consumption of products, services, and operations; and the operational or financial responsibility for recycling, treatment, and disposal of those products. This includes legislation that makes producers of electrical goods, including servers and networking equipment, responsible for repairability requirements or financially responsible for specified collection, recycling, treatment, and disposal of past and future covered products (sometimes referred to as “product take-back legislation”). The Company could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws, including those related to addressing climate change, sustainability, and other environmental related issues, or if its products become non-compliant with such environmental laws. The Company's potential exposure includes impacts on revenue, fines and civil or criminal sanctions, third-party environmental or property damage or personal injury claims or actions, and clean-up costs. The amount and timing of costs to comply with environmental laws are difficult to predict.
In particular, the Company may become a party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), known as “Superfund,” or other federal, state or foreign laws and regulations addressing the clean-up of contaminated sites, and may become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs. The Company is also contractually obligated to make financial contributions to address actions related to certain environmental liabilities, both ongoing and arising in the future, pursuant to its Separation and Distribution Agreement with HP Inc.
Unconditional Purchase Obligations
As of October 31, 2025, the Company had unconditional purchase obligations of approximately $3.3 billion. These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction, as well as settlements that the Company has reached with third parties, requiring it to pay determined amounts over a specified period of time. These 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. The Company expects the commitments to total $1,956 million, $414 million, $379 million, $347 million, $111 million, and $87 million for fiscal years 2026, 2027, 2028, 2029, 2030, and thereafter, respectively.
Note 18: Guarantees and Indemnifications
Guarantees
In the ordinary course of business, the Company may issue performance guarantees to certain of its clients, customers and other parties pursuant to which the Company has guaranteed the performance obligations of third parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In general, the Company would be obligated to perform over the term of the guarantee in the event a specified triggering event occurs as defined by the guarantee. The Company believes the likelihood of having to perform under a material guarantee is remote.
The Company has entered into service contracts with certain of its clients that are supported by financing arrangements. If a service contract is terminated as a result of the Company's non-performance under the contract or failure to comply with the terms of the financing arrangement, the Company could, under certain circumstances, be required to acquire certain assets related to the service contract. The Company believes the likelihood of having to acquire a material amount of assets under these arrangements is remote.
The maximum potential future payments under performance guarantees and financing arrangements was $336 million as of October 31, 2025.
Indemnifications
In the ordinary course of business, the Company enters into contractual arrangements under which the Company may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of the Company or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. The Company also provides indemnifications to certain vendors and customers against claims of intellectual property infringement made by third parties arising from the use by such vendors and customers of the Company's software products and support services and certain other matters. Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.
General Cross-indemnifications
In connection with the Separation, Everett and Seattle Transactions, the Company entered into a Separation and Distribution Agreement with HP Inc., DXC and Micro Focus respectively, whereby the Company agreed to indemnify HP Inc., DXC and Micro Focus, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to the Company as part of the Separation, Everett and Seattle Transactions. Similarly, HP Inc., DXC and Micro Focus agreed to indemnify the Company, each of its subsidiaries and each of their respective directors, officers and employees from and against all claims and liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to HP Inc., DXC and Micro Focus as part of the Separation, Everett and Seattle Transactions.
Tax Matters Agreement with DXC/Micro Focus and Other Income Tax Matters
In connection with the Everett Transaction and the Seattle Transaction, the Company entered into a Tax Matters Agreement with DXC and Micro Focus respectively (the “DXC Tax Matters Agreement” and the “Micro Focus Tax Matters Agreement”). The DXC Tax Matters Agreement and the Micro Focus Tax Matters Agreement govern the rights and obligations of the Company and DXC/Micro Focus for certain pre-divestiture tax liabilities and tax receivables. The DXC Tax Matters Agreement and the Micro Focus Tax Matters Agreement generally provide that the Company will be responsible for pre-divestiture tax liabilities and will be entitled to pre-divestiture tax receivables that arise from adjustments made by tax authorities to the Company's and DXC's, or Micro Focus', as applicable, U.S. and certain non-U.S. tax returns. In certain jurisdictions, the Company and DXC/Micro Focus have joint and several liability for past tax liabilities and accordingly, the Company could be legally liable under applicable tax law for such liabilities and required to make additional tax payments.
As of October 31, 2025 and 2024, the Company's receivable and payable balances related to indemnified litigation matters and other contingencies, and income tax-related indemnification covered by these agreements were as follows:
| As of October 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Litigation Matters and Other Contingencies | |||||||||||
| Receivable | $ | 29 | $ | 37 | |||||||
| Payable | 33 | 47 | |||||||||
| Income Tax-Related Indemnification(1) | |||||||||||
| Net indemnification receivable - long-term | $ | 33 | $ | 35 | |||||||
(1)The actual amount that the Company may receive or pay could vary depending upon the outcome of certain unresolved tax matters, which may not be resolved for several years.
Note 19: Equity Interests
The Company includes investments which are accounted for using the equity method, under Investments in equity interests on the Company's Consolidated Balance Sheets.
Pursuant to the Shareholders' Agreement among the Company’s relevant subsidiaries, Unisplendour International Technology Limited (“UNIS”), and H3C dated as of May 1, 2016, as amended from time to time, and most recently on October 28, 2022, the Company delivered a notice to UNIS on December 30, 2022, to exercise its right to put to UNIS, for cash consideration, all of the H3C shares held by the Company, which represent 49% of the total issued share capital of H3C. On May 26, 2023, the Company’s relevant subsidiaries entered into a Put Share Purchase Agreement with UNIS, whereby UNIS has agreed to purchase all of the H3C shares held by the Company, through its subsidiaries. On May 24, 2024, the Company’s relevant subsidiaries entered into (i) an Amended and Restated Put Share Purchase Agreement with UNIS, whereby its relevant subsidiaries shall sell to UNIS 30% of the total issued share capital of H3C for pre-tax cash consideration of approximately $2.1 billion by August 31, 2024 (the “Sale Transaction”), and (ii) an Agreement on Subsequent Arrangements with UNIS, whereby upon closing of the Sale Transaction, the Company’s relevant subsidiary shall have a put option to sell to UNIS and UNIS shall have a call option to purchase from the Company’s relevant subsidiary 19% of the total issued share capital of H3C for pre-tax cash consideration of approximately $1.4 billion between the 16th month and until the 36th month after the Sale Transaction. The transactions referenced in clauses (i) and (ii) above, taken together, revise the arrangements governing the aforementioned sale of all of the H3C shares held by the Company, through its subsidiaries and are subject to certain grace periods and regulatory approvals. On September 4, 2024, pursuant to the Amended and Restated Put Share Purchase Agreement with UNIS (as described above), the Company received $2.1 billion of pre-tax consideration ($2.0 billion post-tax), in connection with the sale to UNIS of 30% of the total issued share capital of H3C resulting in a gain of $733 million. As of October 31, 2025, the Company's Investments in equity interests was $955 million and primarily related to a 19% equity interest in H3C. As of October 31, 2024, the Company's Investments in equity interests was $929 million and primarily related to a 19% equity interest in H3C.
Pending Divestiture of H3C 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.
As of October 31, 2025, there was no difference between the cost of the investment and the underlying equity in the net assets of the investment. As of October 31, 2025 and 2024, the Company determined that no impairment of its equity method investments existed.
Earnings from equity interests
The Company recorded earnings from equity interests of $79 million, $147 million and $245 million in fiscal 2025, 2024 and 2023, respectively, in the Consolidated Statements of Earnings, the components of which are as follows:
| For the fiscal years ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Earnings from equity interests, net of taxes | $ | 79 | $ | 154 | $ | 242 | |||||||||||
| Basis difference amortization | — | (3) | (9) | ||||||||||||||
| Adjustment of profit on intra-entity sales | — | (4) | 12 | ||||||||||||||
| Earnings from equity interests | $ | 79 | $ | 147 | $ | 245 |
For fiscal 2025 and 2024, the Company received a cash dividend of $29 million and $43 million, respectively, from H3C. These amounts were accounted for as a return on investment and reflected as a reduction in the carrying balance of the Company's Investments in equity interests in its Consolidated Balance Sheets.
The Company also has commercial arrangements with H3C to buy and sell HPE branded servers, storage and networking products and services. For fiscal 2025, 2024 and 2023, HPE recorded approximately $175 million, $256 million and $383 million of sales to H3C and $65 million, $72 million and $125 million of purchases from H3C, respectively. Payables due to H3C as of October 31, 2025 and 2024 were approximately $6 million and $7 million, respectively. Receivables due from H3C as of October 31, 2025 and 2024 were approximately $5 million and $7 million, respectively.
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