Q3 FY2026
Filed Sep 2, 2026HPE reports fiscal 2026 third quarter results: record revenue of $12.2 billion, up 34% year-over-year, and raises fiscal 2026 and fiscal 2027 outlook.
Record revenue, sharply higher GAAP and non-GAAP profitability, broad Networking and Cloud & AI growth, positive free cash flow, and raised fiscal 2026 and fiscal 2027 outlooks.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenueGAAP | $12,213 million | 14.4% | 33.7% |
| Gross profitGAAP | $4,899 million | – | – |
| Gross profit marginGAAP | 40.1% | up 360 basis points | up 1,090 basis points |
| Gross profitnon-GAAP | $4,928 million | – | – |
| Gross profit marginnon-GAAP | 40.4% | up 350 basis points | up 1,050 basis points |
| Earnings from operationsGAAP | $1,393 million | – | up 464% |
| Operating profit marginGAAP | 11.4% | up 440 basis points | up 870 basis points |
| Earnings from operationsnon-GAAP | $1,979 million | – | up 155% |
| Operating profit marginnon-GAAP | 16.2% | up 290 basis points | up 770 basis points |
| Net earnings attributable to HPEGAAP | $1,540 million | – | – |
| Net earnings attributable to common stockholdersGAAP | $1,511 million | – | – |
| Diluted net EPSGAAP | $1.06 | – | up $0.85 |
| Basic net EPSGAAP | $1.13 | – | – |
| Non-GAAP net earnings attributable to HPEnon-GAAP | $1,610 million | – | – |
| Non-GAAP net earnings attributable to common stockholdersnon-GAAP | $1,581 million | – | – |
| Diluted net EPSnon-GAAP | $1.11 | – | up $0.67 |
| Basic net EPSnon-GAAP | $1.18 | – | – |
| Net cash provided by operating activitiesGAAP | $1,641 million | – | an increase of $0.3 billion |
| Free cash flownon-GAAP | $958 million | – | an increase of $0.2 billion |
| Nine-month net revenueGAAP | $32,192 million | – | 30.8% |
| Nine-month earnings from operationsGAAP | $2,610 million | – | – |
| Nine-month non-GAAP earnings from operationsnon-GAAP | $4,584 million | – | – |
| Nine-month net cash provided by operating activitiesGAAP | $4,229 million | – | – |
| Nine-month free cash flownon-GAAP | $2,581 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| NetworkingNetworking operating profit margin was 22.0%, compared to 22.1% from the prior-year period and 21.6% in the prior quarter. | $2,893 million | 7.5% | 74.9% |
| Campus & BranchReported within Networking. | $1,442 million | 9.1% | 31.0% |
| Data Center NetworkingReported within Networking. | $382 million | 19.4% | 112.2% |
| SecurityReported within Networking. | $281 million | 2.9% | 75.6% |
| RoutingReported within Networking. | $788 million | 1.7% | 270.0% |
| Cloud & AICloud & AI operating profit margin was 17.0%, compared to 7.0% from the prior-year period and 12.4% in the prior quarter. | $9,042 million | 17.3% | 25.4% |
| ServerReported within Cloud & AI. | $6,766 million | 24.1% | 35.3% |
| StorageReported within Cloud & AI. | $1,291 million | 9.9% | 10.2% |
| Financial ServicesReported within Cloud & AI. | $883 million | (2.3%) | (0.3%) |
| OtherReported within Cloud & AI. | $102 million | (41.4%) | (34.2%) |
| Corporate Investments and OtherOperating profit margin was (24.1%), compared to (7.0%) from the prior-year period and (3.2%) in the prior quarter. | $278 million | (1.1%) | 3.0% |
Fiscal 2026 fourth quarter outlook outlook
- Revenue$13.9 billion to $14.8 billion
- NoteGAAP diluted net EPS: $1.12 to $1.22.
- NoteNon-GAAP diluted net EPS: $1.20 to $1.30.
- NoteFiscal 2026 fourth quarter non-GAAP diluted net EPS estimate excludes net after-tax adjustments of approximately $0.08 per diluted share.
- NoteFiscal 2026 full-year revenue growth: 34% to 37%.
- NoteFiscal 2026 Networking revenue growth: 73% to 74%.
- NoteFiscal 2026 GAAP operating profit growth: 1,070% to 1,105%.
- NoteFiscal 2026 non-GAAP operating profit growth: 100% to 105%.
- NoteFiscal 2026 GAAP diluted net EPS: $2.93 to $3.03.
- NoteFiscal 2026 non-GAAP diluted net EPS: $3.75 to $3.85.
- NoteFiscal 2026 free cash flow: at least $3.75 billion.
- NoteFiscal 2027 revenue growth: 13% to 17%.
- NoteFiscal 2027 non-GAAP diluted net EPS growth: 16% to 20%.
- NoteFiscal 2027 non-GAAP operating margin rate: 14% to 15%.
- NoteFiscal 2027 free cash flow: at least $5.0 billion.
Capital returns
- $324 million in the form of dividends and share repurchases in the third quarter.
- Regular cash dividend of $0.1425 per share, payable on or about October 16, 2026, to stockholders of record as of the close of business on September 17, 2026.
- Cash dividends declared per share of 0.1425 for the three months ended July 31, 2026.
- Repurchases of common stock of $(447) million for the nine months ended July 31, 2026.
- Cash dividends paid to common stockholders of $(568) million for the nine months ended July 31, 2026.
- Cash dividends paid to preferred stockholders of $(87) million for the nine months ended July 31, 2026.
What drove it
- Record revenue of $12.2 billion, up 34% from the prior-year period.
- Networking revenue increased 74.9%, led by Routing growth of 270.0%, Data Center Networking growth of 112.2%, Security growth of 75.6%, and Campus & Branch growth of 31.0%.
- Cloud & AI revenue increased 25.4%, including Server growth of 35.3% and Storage growth of 10.2%.
- GAAP gross profit margin expanded to 40.1% from 29.2%, and GAAP operating profit margin expanded to 11.4% from 2.7%.
- HPE reported a gain on sale of equity interest of $444 million.
- HPE stated that orders and order backlog were at record levels.
Concerns
- Financial Services revenue was down 0.3% from the prior-year period and down 2.3% sequentially.
- Cloud & AI Other revenue was down 34.2% from the prior-year period and down 41.4% sequentially.
- Corporate Investments and Other operating profit margin was (24.1%), compared to (7.0%) from the prior-year period.
- The quarter included a $444 million gain on sale of equity interest in GAAP results.
- Inventory was $11,823 million as of July 31, 2026, compared with $6,352 million as of October 31, 2025.
- The fiscal 2026 non-GAAP diluted net EPS estimate excludes net after-tax adjustments of approximately $0.82 per diluted share.
What to watch
- Execution against fiscal 2026 fourth-quarter revenue outlook of $13.9 billion to $14.8 billion.
- Networking revenue growth against the fiscal 2026 outlook of 73% to 74%.
- Cloud & AI segment margin performance following expansion to 17.0% in the third quarter.
- Progress toward fiscal 2026 free cash flow of at least $3.75 billion and fiscal 2027 free cash flow of at least $5.0 billion.
- Capital returns in the fourth quarter, when HPE plans to return at least 75% of free cash flow to shareholders.
- The company’s fiscal 2027 revenue growth framework of 13% to 17% and non-GAAP operating margin framework of 14% to 15%.
Balance sheet and cash flow
- Cash and cash equivalents: $6,216 million as of July 31, 2026, compared with $5,773 million as of October 31, 2025.
- Notes payable and short-term borrowings: $2,901 million as of July 31, 2026, compared with $4,609 million as of October 31, 2025.
- Long-term debt: $17,343 million as of July 31, 2026, compared with $17,756 million as of October 31, 2025.
- Inventory: $11,823 million as of July 31, 2026, compared with $6,352 million as of October 31, 2025.
- Accounts receivable, net of allowances: $6,185 million as of July 31, 2026, compared with $5,290 million as of October 31, 2025.
- Nine-month investment in property, plant and equipment and software assets: $(1,897) million.
- Nine-month payment of debt: $(4,686) million.
- Cash, cash equivalents and restricted cash at end of period: $6,278 million for the nine months ended July 31, 2026.
Analysis
HPE reported record third-quarter fiscal 2026 revenue of $12.2 billion, up 34% from the prior-year period. The financial statements reported net revenue of $12,213 million, versus $9,136 million in the prior-year period and $10,678 million in the prior quarter. Growth was broad across the operating portfolio, with Networking revenue up 74.9% and Cloud & AI revenue up 25.4%. Management characterized orders and order backlog as record levels and described customer demand as surging across the portfolio.
Networking was the fastest-growing major segment, generating $2,893 million of revenue. Routing revenue rose 270.0%, Data Center Networking increased 112.2%, Security increased 75.6%, and Campus & Branch increased 31.0%. Networking operating profit margin was 22.0%, nearly level with 22.1% in the prior-year period. Cloud & AI generated $9,042 million of revenue, led by Server revenue of $6,766 million, up 35.3%. Its operating profit margin improved to 17.0% from 7.0% in the prior-year period and 12.4% in the prior quarter. Financial Services revenue declined 0.3%, while Cloud & AI Other revenue declined 34.2%.
Profitability expanded sharply. GAAP gross profit margin reached 40.1%, up 1,090 basis points from the prior-year period and up 360 basis points sequentially. GAAP operating profit was $1,393 million and GAAP operating profit margin was 11.4%, compared with $247 million and 2.7% in the prior-year period. Non-GAAP operating profit was $1,979 million and non-GAAP operating profit margin was 16.2%. GAAP diluted net EPS was $1.06 and non-GAAP diluted net EPS was $1.11, both above the respective outlook ranges stated in the release. GAAP results included a $444 million gain on sale of equity interest.
Cash generation was positive, with third-quarter net cash provided by operating activities of $1,641 million and free cash flow of $958 million. For the nine months ended July 31, 2026, net cash provided by operating activities was $4,229 million and free cash flow was $2,581 million. HPE returned $324 million to common shareholders through dividends and share repurchases in the third quarter. The company also declared a regular cash dividend of $0.1425 per share and stated that it plans to return at least 75% of free cash flow to shareholders in the fourth quarter. Inventory was $11,823 million as of July 31, 2026, compared with $6,352 million as of October 31, 2025.
The outlook was raised across fiscal 2026 and fiscal 2027 measures. For the fiscal 2026 fourth quarter, HPE expects revenue of $13.9 billion to $14.8 billion, GAAP diluted net EPS of $1.12 to $1.22, and non-GAAP diluted net EPS of $1.20 to $1.30. Full-year fiscal 2026 guidance calls for revenue growth of 34% to 37%, Networking growth of 73% to 74%, GAAP operating profit growth of 1,070% to 1,105%, non-GAAP operating profit growth of 100% to 105%, and free cash flow of at least $3.75 billion. The fiscal 2027 framework calls for revenue growth of 13% to 17%, non-GAAP diluted net EPS growth of 16% to 20%, non-GAAP operating margin of 14% to 15%, and free cash flow of at least $5.0 billion.
Management, verbatim
HPE’s strategy is proving itself again this quarter. Our results demonstrate the durability of our profitable growth momentum. We delivered record revenue, orders, and profitability, fueled by surging customer demand across our portfolio.
Antonio Neri, president and CEO of HPE
AI is becoming a multi-year growth driver for HPE, and our differentiated portfolio positions us to capture that opportunity at scale.
Antonio Neri, president and CEO of HPE
With our Q3 results and our order backlog at a record level, we are raising our financial outlook and plan to return at least 75% of free cash flow to shareholders in Q4.
Marie Myers, executive vice president and CFO of HPE
Not in the filing
stated, not guessed- Previous outlook section was not provided, so comparison of reported results with prior guidance is unavailable.
- Fiscal 2026 fourth-quarter gross margin guidance was not provided.
- Fiscal 2026 fourth-quarter operating expense guidance was not provided.
- Fiscal 2026 fourth-quarter tax-rate guidance was not provided.
- Fiscal 2026 fourth-quarter free cash flow guidance was not provided.
- Third-quarter share repurchases and dividends were provided only as a combined $324 million capital-return figure.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.