Hewlett Packard Enterprise HPE · USD

Segment InformationHewlett 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 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.

Stock-Based CompensationOn 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 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 ExpenseStock-based compensation expense and the resulting tax benefits were as follows: For the fiscal years ended October 31,202520242023In millionsStock-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 31,202520242023In millionsCost of sales$49 $49 $47 Research and development208 158 161 Selling, general and administrative348 223 220 Acquisition, disposition and other charges38 — — Stock-based compensation expense $643 $430 $428 Employee Stock Purchase PlanEffective 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.

Accounting for Leases as a LesseeComponents of lease cost included in the Consolidated Statement of Earnings were as follows:For the fiscal years ended October 31,202520242023In millionsOperating lease cost$350 $259 $200 Finance lease cost3 3 4 Sublease rental income(40)(26)(23)Total lease cost$313 $236 $181 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 Classification20252024In millionsOperating LeasesROU AssetsLong-term financing receivables and other assets$1,535 $1,408 Lease Liabilities:Operating lease liabilities – currentOther accrued liabilities316 261 Operating lease liabilities – non-currentOther non-current liabilities1,396 1,309 Total operating lease liabilities$1,712 $1,570 Finance LeasesFinance lease ROU Assets:Property, plant and equipment, netGross finance lease ROU assets$26 $26 Less: Accumulated depreciation(18)(16)Net finance lease ROU assets$8 $10 Lease Liabilities:Finance lease liabilities – currentNotes payable and short-term borrowings$6 $6 Finance lease liabilities – non-currentLong-term debt25 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 31,20252024Operating LeasesFinance LeasesOperating LeasesFinance LeasesWeighted-average remaining lease term (in years)6.64.56.75.5Weighted-average discount rate4.5 %3.5 %4.4 %3.

Acquisitions and DispositionsAcquisitions and Disposition in fiscal 2025Acquisition of Juniper NetworksOn 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 ConsiderationThe following table summarizes the purchase consideration for the Merger: In millionsCash paid for outstanding Juniper Networks common stock$13,386 Consideration for replacement of Juniper Networks equity awards239 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.A summary of the allocation of the total purchase price for the Merger is presented as follows:In millionsCash and cash equivalents$1,098 Inventory989 Other current assets1,803 Goodwill7,272 Intangible assets6,219 Other non-current assets1,690 Total assets acquired19,071 Other accrued liabilities(1)2,627 Long-term debt1,232 Other non-current liabilities1,587 Total liabilities assumed5,446 Total purchase consideration$13,625 (1)Includes the current portion of long-term debt.

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).

Our Cybersecurity and Digital Risk Management (“CDRM”) organization, under the leadership of a Global Chief Information Security Officer (“Global CISO”), operates a cybersecurity program that is designed to help us identify, assess, manage, and mitigate risks relating to cybersecurity threats and incidents. We design our cybersecurity standards, policies, processes and controls to operate in an integrated manner, leveraging applicable industry standards and security frameworks, including the NIST Cybersecurity Framework, as guidance in supporting our ability to perform such functions. CDRM manages our cybersecurity program, including by fostering collaboration with partners across business units and global functions to identify and assess material cybersecurity threats, evaluate their severity, and establish actions to mitigate and manage such risks. Business units and global functions are responsible for addressing risks and implementing our policies and standards within the respective business unit or function. Compliance with our policies and standards is assessed by our internal audit organization, through periodic cybersecurity audits. The results of these audits, together with our learnings from internal and external threats, drive periodic reassessment of and structured updates to our cybersecurity framework, as deemed necessary or appropriate. As part of our cybersecurity program, we also evaluate data collected from our attack surface management tools using a framework that quantifies the likelihood and severity of risks to produce a prioritized set of vulnerabilities for remediation. We also require mandatory cybersecurity training for employees and periodically conduct Company-wide phishing simulations. To aide in assessing material risks from cybersecurity threats, our enterprise risk management (“ERM”) program incorporates cybersecurity risks as part of its process to assess overall risk of the Company. The ERM organization supports management by facilitating a semi-annual risk assessment, which documents the priority and status of these risks and aligns them with our strategic mitigation efforts. ERM is structured using a framework based on guidance from the Committee of Sponsoring Organizations of the Treadway Commission on Enterprise Risk Management Integrating Strategy with Performance.

BorrowingsNotes Payable and Short-Term BorrowingsNotes payable and short-term borrowings, including the current portion of long-term debt, were as follows: As of October 31, 20252024 AmountOutstandingWeighted-AverageInterest RateAmountOutstandingWeighted-AverageInterest Rate Dollars in millionsCurrent portion of long-term debt(1)$3,796 4.4 %$3,969 7.6 %Commercial paper681 2.3 %649 3.7 %Notes payable to banks, lines of credit and other132 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 DateMaturity Date20252024 In millionsUnsecured Senior Notes 4.40% notes issued at discount to par at a price of 99.905%September 2025October 2030$850 $— 4.15% notes issued at discount to par at a price of 99.964%September 2025September 2028850 — 4.05% notes issued at discount to par at a price of 99.949%September 2025September 2027900 — Floating rate notes issued at parSeptember 2025September 2028300 — 4.45% notes issued at discount to par at a price of 99.996%September 2024September 20261,250 1,250 4.40% notes issued at discount to par at a price of 99.953%September 2024September 20271,250 1,250 4.55% notes issued at discount to par at a price of 99.894%September 2024October 20291,750 1,750 4.85% notes issued at discount to par at a price of 99.908%September 2024October 20311,250 1,250 5.00% notes issued at discount to par at a price of 99.078% September 2024October 20342,000 2,000 5.60% notes issued at discount to par at a price of 98.086% September 2024October 20541,500 1,500 5.25% notes issued at discount to par at a price of 99.887% June 2023July 2028550 550 1.75% notes issued at discount to par at a price of 99.820% July 2020April 2026750 750 4.90% notes issued at discount to par at a price of 99.725%October 2015October 2025— 2,500 6.20% notes issued at discount to par at a price of 99.942% October 2015October 2035750 750 6.35% notes issued at discount to par at a price of 99.932% October 2015October 20451,500 1,500 1.20% Juniper Global Notes assumedDecember 2025400 — 3.75% Juniper Global Notes assumedAugust 2029500 — 2.00% Juniper Global Notes assumedSeptember 2030400 — 5.

Fair ValueFair 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 HierarchyThe 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.