Q2 2026 Hewlett Packard Enterprise Co Earnings Call

June 1, 2026

Speaker #1: All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on the touch-tone phone.

Speaker #1: To withdraw your question, please press star and then 2. Please note this event is being recorded. I would now like to turn the conference over to Paul Glazer, Head of Investor Relations.

Speaker #1: Please go ahead, sir.

Speaker #2: Good afternoon. I'm Paul Glazer, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2026 second quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer, and Marie Myers, HPE's Chief Financial Officer.

Speaker #2: Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes.

Speaker #1: Good day, and welcome to the fiscal 2026 second quarter Hewlett Packard Enterprise earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker #2: We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations webpage. Elements of the financial information referenced on this call are forward-looking and are based on our best view of our business and the external factors affecting us as we see them today.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your touch-tone phone.

Speaker #1: To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Paul Glaser, Head of Investor Relations.

Speaker #2: HPE assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE's quarterly report on Form 10Q for the fiscal quarter ended April 30th, 2026.

Speaker #1: Please go ahead, sir.

Speaker #2: Good afternoon. I am Paul Glaser, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2026 second quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer, and Marie Myers, HPE's Chief Financial Officer.

Speaker #2: Figures used in verbal remarks are rounded for ease of discussion. For more detailed information, please see the earnings materials as well as disclaimers relating to forward-looking statements that involve risks, uncertainties, and assumptions.

Speaker #2: Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes.

Speaker #2: Please refer to HPE's filings with SEC for more detailed discussion of these risks. For financial information that we are showing on a non-GAAP basis, we have provided reconciliations to the comparable GAAP information on our website.

Speaker #2: Please refer to the tables and slide presentation accompanying today's earnings release on our website for details. Throughout this conference call, all revenue growth rates, unless noted otherwise, are presented on a year-over-year basis.

Speaker #2: Unless otherwise noted, all financial metrics and growth rates discussed today are non-GAAP and EPS refers to non-GAAP diluted net earnings per share. Certain financial information featured in the presentation today has been normalized to include Juniper Networks results as of the beginning of HPE's fiscal 2025.

Speaker #2: Figures used in verbal remarks are rounded for ease of discussion. For more detailed information, please see the earnings materials, as well as disclaimers relating to forward-looking statements that involve risks, uncertainties, and assumptions.

Speaker #2: Antonio and Marie will reference our earnings presentation in their prepared comments. With that, let me turn it over to Antonio.

Speaker #2: Please refer to HPE's filings with the SEC for a more detailed discussion of these risks. For financial information that we are showing on a non-GAAP basis, we have provided reconciliations to the comparable GAAP information on our website.

Speaker #1: Thank you, Paul. Good afternoon, everyone. HPE delivered an exceptional quarter with record-breaking results, disciplined execution, and clear proof that our strategy is working. We met excellent progress in our Juniper integration and in our catalyst initiative with both running ahead of schedule.

Speaker #1: Revenue in the quarter reached 10.7 billion dollars, up 40%. Non-GAAP earnings per share of 79 cents increased 108%, significantly above the high end of our outlook.

Speaker #2: Unless otherwise noted, all financial metrics and growth rates discussed today are non-GAAP, and EPS refers to non-GAAP diluted net earnings per share. Certain financial information featured in the presentation today has been normalized to include Juniper Networks’ results as of the beginning of HPE’s fiscal 2025.

Speaker #1: We generated 915 million dollars in free cash flow and improvement of 1.8 billion dollars driven by strong cash from operations and improved cash conversion cycle performance.

Speaker #2: Antonio and Marie will reference our earnings presentation in their prepared comments. With that, let me turn it over to Antonio.

Speaker #1: Demand was even stronger than revenue growth. Orders more than doubled, significantly outpacing revenue, resulting in a record company backlog. Customer investments in agentic AI and AI inferencing accelerated.

Speaker #1: Thank you, Paul. Good afternoon, everyone. HPE delivered an exceptional quarter with record-breaking results, disciplined execution, and clear proof that our strategy is working. We made excellent progress in our Juniper integration and in our Catalyst initiative, with both running ahead of schedule.

Speaker #1: We also saw broad-based demand strength across the portfolio driven by ongoing investment in compute infrastructure modernization, unstructured storage data growth, and private cloud adoption for AI.

Speaker #1: Revenue in the quarter reached $10.7 billion, up 40%. Non-GAAP earnings per share of $0.79 increased 108%, significantly above the high end of our outlook.

Speaker #1: Last year, at a security analyst meeting in New York, we laid out our strategy and fiscal 2028 financial commitments. Based on our strong first half 2026 results, our record backlog and our visibility into the second half demand we now expect to deliver, $3.40 in non-GAAP earnings per share at the midpoint and at least 3.5 billion dollars in free cash flow in fiscal 2026.

Speaker #1: We generated $915 million in free cash flow, an improvement of $1.8 billion, driven by strong cash from operations and improved cash conversion cycle performance.

Speaker #1: That is two years ahead of our committed long-term plan. Marie will provide more detail on our third quarter and full-year fiscal 2026 outlook as well as our fiscal 2027 framework, which is grounded on durable customer demand and the profitability of both business segments.

Speaker #1: We also saw broad-based demand strength across the portfolio, driven by ongoing investment in compute infrastructure modernization, unstructured storage data growth, and private cloud adoption for AI.

Speaker #1: Now, let me turn to our business segment highlights. Starting with networking. I am particularly pleased with the progress we are making on the Juniper integration.

Speaker #1: Last year, other security analysts met in New York. We laid out our strategy and fiscal 2028 financial commitments. Based on our strong first-half 2026 results, our record backlog, and our visibility into the second half demand, we now expect to deliver $3.40 in non-GAAP earnings per share at the midpoint and at least $3.5 billion in free cash flow in fiscal 2026.

Speaker #1: We are ahead of our integration milestones and synergies commitments. And the unified portfolio and sales force are already strengthening our market position and growth momentum.

Speaker #1: Our combined networking portfolio and vision for self-driving networks is resonating with customers and that enthusiasm together with strong go-to-market execution is reflected in our results.

Speaker #1: That is two years ahead of our committed long-term plan. Marie will provide more detail on our third-quarter and full-year fiscal 2026 outlook, as well as our fiscal 2027 framework, which is grounded on durable customer demand and the profitability of both business segments.

Speaker #1: Networking delivered revenue of $2.7 billion dollars, up double digits on a normalized basis with orders growing significantly faster than revenue. We saw increased demand in campus and branch, networks for AI, and security.

Speaker #1: Now, let me turn to our business segment highlights, starting with Networking. I am particularly pleased with the progress we are making on the Juniper integration.

Speaker #1: I am pleased with the strong demand we saw from enterprise customers for our networking portfolio. Campus and branch orders reached a new record high, growing in the upper 20% range on a normalized basis.

Speaker #1: We are ahead of our integration milestones and synergies commitments, and the unified portfolio and sales force are already strengthening our market position and growth momentum.

Speaker #1: We want multi-million dollar deals across multiple verticals, including retail, automotive, government, and technology. Wi-Fi 7 access points sales increased more than seven times, reflecting a clear shift toward network modernization.

Speaker #1: Our combined networking portfolio and vision for self-driving networks is resonating with customers, and that enthusiasm, together with strong go-to-market execution, is reflected in our results.

Speaker #1: HPE, for the 20th time in a row, was named a leader in the Gartner Magic Quadrant for enterprise wire and wireless LAN infrastructure. We believe this independent industry analyst validation reinforces how far ahead we are in enterprise networking beyond even incumbents.

Speaker #1: Networking delivered revenue of $2.7 billion, up double digits on a normalized basis, with orders growing significantly faster than revenue. We saw increased demand in campus and branch, networks for AI, and security.

Speaker #1: Customers trust us with their most critical networking infrastructure decisions, as they expand their digital initiatives and AI investments. One customer taking advantage of the power of our combined campus and branch networking portfolio is Lowe's.

Speaker #1: We won multi-million dollar deals across multiple verticals, including retail, automotive, government, and technology. Wi-Fi 7 access points sales increased more than seven times, reflecting a clear shift toward network modernization.

Speaker #1: With over 1,750 stores across North America, Lowe's chose HPE to deliver the network foundation for a major technology transformation to support its digital on-ramp and AI-enabled operations.

Speaker #1: The solution is built on our HPE Mist AI platform for wire and wireless networking infrastructure, alongside our HPE Edge Connect SD-WAN solution. Last month, we reached a milestone with the launch of new autonomous agents powered by agentic AI for optimizing networking performance.

Speaker #1: The self-driving network is no longer a concept. It is a reality. The UK Ministry of Justice is an early adopter example. It was able to reduce the number of incidents seen by its network operations center by approximately 75% after deploying a suite of solutions that included our new HPE self-driving network capabilities.

Speaker #1: In enterprise data center switching orders increased nearly 20% on a normalized basis. Our data center switching pipeline remains strong. Cross-portfolio product integration and sales across server, storage, and networking are driving deeper customer engagement and larger deals.

Speaker #1: The solution is built on our HPE Mist AI platform for wired and wireless networking infrastructure, alongside our HPE EdgeConnect SD-WAN solution. Last month, we reached a milestone with the launch of new autonomous agents powered by agentic AI for optimizing networking performance.

Speaker #1: Security orders grew in the mid-teens on a normalized basis. We continue to make the network a first line of defense that responds to threats in real time.

Speaker #1: The self-driving network is no longer a concept; it is a reality. The UK Ministry of Justice is an early adopter example. It was able to reduce the number of incidents seen by its network operations center by approximately 75% after deploying a suite of solutions that included our new HPE self-driving network capabilities.

Speaker #1: This quarter, we launched the HPE Juniper SRX 400 series bringing carrier-grade firewall protection to the branch for large distributed environments. We see significant runway as more customers consolidate networking and security with a single vendor forcing convergence all the way to the silicon layer of the stack where HPE will have further differentiation.

Speaker #1: In enterprise data center switching, orders increased nearly 20% on a normalized basis. Our data center switching pipeline remains strong. Cross-portfolio product integration and sales across server, storage, and networking are driving deeper customer engagement and larger deals.

Speaker #1: In our service provider customer segment, revenue increased double digits. On a normalized basis, we're routing orders growing significantly faster than revenue. Routing orders increased nearly 30% on a normalized basis driven by data center interconnect deployments in large cloud service providers.

Speaker #1: Security orders grew in the mid-teens on a normalized basis. We continue to make the network a first line of defense that responds to threats in real time.

Speaker #1: Customers are choosing HPE because we help them scale in every dimension. Scale up by increasing the performance and density of individual platforms for the most demanding AI workloads.

Speaker #1: This quarter, we launched the HPE Juniper SRX 400 series, bringing carrier-grade firewall protection to the branch for large, distributed environments. We see significant runway as more customers consolidate networking and security with a single vendor, driving convergence all the way to the silicon layer of the stack, where HPE will have further differentiation.

Speaker #1: Scale out by expanding the networking fabric to connect thousands of GPUs and accelerators within a single data center. And scale across by extending high-bandwidth interconnectivity between data centers across campuses and into the wide area network, so AI services can run wherever they are needed.

Speaker #1: In our service provider customer segment, revenue increased by double digits. On a normalized basis, our routing orders are growing significantly faster than revenue. Routing orders increased nearly 30% on a normalized basis, driven by data center interconnect deployments in large cloud service providers.

Speaker #1: HPE is developing a scale-up Ethernet switch and software designed specifically for the AMD Helios AI rack scale architecture which we expect will be introduced in the fall.

Speaker #1: In scale out, we lead with our AI-driven QFX switching fabric. HPE is the first OEM to productize a Tomahawk 6-based 100% liquid-cooled switch with industry-leading performance and power-efficient for AI infrastructure.

Speaker #1: In addition, our leading fabric management and AI ops capabilities reduce congestion, latency, as well as operational complexity. We expect a roadmap to extend this leadership through co-package optics, resulting in lower overall power consumption.

Speaker #1: Scale out by expanding the networking fabric to connect thousands of GPUs and accelerators within a single data center. And scale across by extending high-bandwidth interconnectivity between data centers, across campuses, and into the wide area network, so AI services can run wherever they are needed.

Speaker #1: In scale across, the Juniper PTX series delivers 800 gigabits density with exceptional power efficiency, leveraging our distinct express silicon and simplified AI-native automation. Because of our leading innovation and market momentum in networks for AI, we are raising our cumulative fiscal 2026 networks for AI order target to at least $2 billion.

Speaker #1: HPE is developing a scale-up Ethernet switch and software designed specifically for the AMD Helios AI rack-scale architecture, which we expect will be introduced in the fall.

Speaker #1: In scale-out, we lead with our AI-driven QFX switching fabric. HPE is the first OEM to productize a Tomahawk 6-based, 100% liquid-cooled switch with industry-leading performance and power efficiency for AI infrastructure.

Speaker #1: We are laser-focused on building the best networking business in the industry. Our priorities are clear. Extend AI-driven automation across the portfolio, help customers scale modern AI infrastructure with secure, high-performance networking, and lead in the convergence of networking and security.

Speaker #1: In addition, our leading fabric management and AIOps capabilities reduce congestion, latency, as well as operational complexity. We expect a roadmap to extend this leadership through co-packaged optics, resulting in lower overall power consumption.

Speaker #1: We have the team, the capabilities, and the momentum to convert the opportunity in this segment into durable shareholder value. In our cloud and AI business segment, we executed with strong discipline across all business lines.

Speaker #1: At scale, across the Juniper PTX series, we deliver 800-gigabit density with exceptional power efficiency, leveraging our distinct Express silicon and simplified AI-native automation. Because of our leading innovation and market momentum in networks for AI, we are raising our cumulative fiscal 2026 networks for AI order target to at least $2 billion.

Speaker #1: Revenue was 7.7 billion dollars, up 23%, driven by exceptional traditional servers orders and very strong demand in AI systems. Alletra and P Storage Private Cloud and GreenLake software and services.

Speaker #1: Traditional server orders, increased triple digits. As customers continue to modernize their compute infrastructure and invest in AI inferencing. We are working very closely with our silicon and memory partners to continue to secure supply, which we factor into our new fiscal 2026 guide.

Speaker #1: We are laser-focused on building the best networking business in the industry. Our priorities are clear: extend AI-driven automation across the portfolio, help customers scale modern AI infrastructure with secure, high-performance networking, and lead in the convergence of networking and security.

Speaker #1: We're also engaging customers and channel partners on lead times and configuration options to help them plan effectively. We saw strong demand in AI training throughout the quarter.

Speaker #1: We have the team, the capabilities, and the momentum to convert the opportunity in this segment into durable shareholder value. In our Cloud and AI business segment, we executed with strong discipline across all business lines.

Speaker #1: We booked 1.8 billion dollars in new AI systems orders, bringing cumulative AI systems bookings to 16.4 billion dollars. We entered Q3 with 5.9 billion dollars in backlog, primarily composed of enterprise and sovereign orders.

Speaker #1: Revenue was $7.7 billion, up 23%, driven by exceptional traditional server orders and very strong demand in AI systems, Alletra NP storage, private cloud, and GreenLake software and services.

Speaker #1: We are seeing a broad pattern across industries. Enterprise is one that flexibility of choosing multiple AI models with the governance and control of on-premises.

Speaker #1: Traditional server orders increased triple digits. As customers continue to modernize their compute infrastructure and invest in AI inferencing, we are working very closely with our silicon and memory partners to continue to secure supply, which we factor into our new fiscal 2026 guide.

Speaker #1: We will continue to manage AI systems opportunities with a focus on profitable growth and prudent working capital management. Storage had an outstanding quarter, Alletra and P Storage orders increased triple digits.

Speaker #1: We're also engaging customers and channel partners on lead times and configuration options to help them plan effectively. We saw strong demand in AI training throughout the quarter.

Speaker #1: The sixth consecutive quarter of strong growth. Several weeks ago, we expanded the platform with new file storage and agentic AI ops capabilities. This extends Alletra MP into the growing unstructured data market.

Speaker #1: We booked $1.8 billion in new AI systems orders, bringing cumulative AI systems bookings to $16.4 billion. We entered Q3 with $5.9 billion in backlog, primarily composed of enterprise and sovereign orders.

Speaker #1: Our HPE Morpheus Enterprise and HPE VM Essential Software offerings continue to build momentum. Revenue grew sequentially for the fourth consecutive quarter. VM Essentials customer count increased 43% in the first half, with another rise in net new logos.

Speaker #1: We are seeing a broad pattern across industries. Enterprise is one where the flexibility of choosing multiple AI models, along with the governance and control of on-premises, is important.

Speaker #1: Private Cloud AI orders increased again this quarter with a growing base of new customer wins. We recently launched our second generation PC AI offering, designed for enterprise AI inferencing and cloud-gapped sovereign environments, which position us for continued growth.

Speaker #1: We will continue to manage AI systems opportunities with a focus on profitable growth and prudent working capital management. Storage had an outstanding quarter; Alletra NP storage orders increased triple digits.

Speaker #1: More broadly, we are embedding agentic AI capabilities across our storage and data protection portfolio, to help customers automate AI data pipelines and operations. We continue to add new cloud and AI agentic services to our GreenLake Cloud Platform, acquiring new customers and increasing the net retention rates for our GreenLake services business, which remains near 110%.

Speaker #1: Our HPE Morpheus Enterprise and HPE VM Essential software offerings continue to build momentum. Revenue grew sequentially for the fourth consecutive quarter. VM Essential's customer count increased 43% in the first half, with a notable rise in net new logos.

Speaker #1: We exited Q2 with approximately 50,000 customers operating their IT in our GreenLake Cloud, managing more than 6.7 million systems, up from 5.3 million a year ago.

Speaker #1: Private cloud AI orders increased again this quarter, with a growing base of new customer wins. We recently launched our second-generation PC AI offering, designed for enterprise AI inferencing and cloud-gap sovereign environments, which positions us for continued growth.

Speaker #1: One win that brings the power of the full HPE portfolio together is the Dallas Cowboys, the most valuable sports franchise in the world. They came to HPE with a clear objective: modernize their infrastructure, simplify operations, and build the right secure foundation for AI.

Speaker #1: More broadly, we are embedding agentic AI capabilities across our storage and data protection portfolio to help customers automate AI data pipelines and operations. We continue to add new cloud and AI agentic services to our GreenLake cloud platform, acquiring new customers and increasing the net retention rates for our GreenLake services business, which remains near 110%.

Speaker #1: We delivered a comprehensive solution anchored on our HPE GreenLake Private Cloud offering, spanning ProLiant servers, Alletra and P Storage, and HPE Morpheus Enterprise. The Cowboys are also adopting HPE VM Essentials as their preferred virtualization layer.

Speaker #1: This is a strong example of the value customers can unlock when they choose HPE as an end-to-end technology partner. Lastly, HPE Financial Services delivered another outstanding quarter with record return on equity.

Speaker #1: We exited Q2 with approximately 50,000 customers operating their IT in our GreenLake cloud, managing more than 6.7 million systems, up from 5.3 million a year ago.

Speaker #1: Financial Services deepens customer relationships, supports our GreenLake Cloud adoption, and remains a meaningful competitive advantage as customers ramp their investment in AI. Before I close, I want to highlight two important upcoming events.

Speaker #1: In two weeks, we are hosting HPE Discover in Las Vegas. We will share updates on our networking cloud and AI strategies, including major product announcements, along with a live Q&A for investors and analysts.

Speaker #1: We delivered a comprehensive solution anchored on our HPE GreenLake Private Cloud offering, spanning ProLiant servers, Alletra NP storage, and HPE Morpheus Enterprise. The Cowboys are also adopting HPE VM Essentials as their preferred virtualization layer.

Speaker #1: I hope to see you there. Then later this fall, we will host a dedicated networking investor day. In closing, HPE delivered an exceptional quarter.

Speaker #1: Our results demonstrate that our strategy continues to pay off. We now expect to significantly exceed our original fiscal 2028 non-GAAP earnings per share target and generate at least 3.5 billion dollars in free cash flow in fiscal 2026.

Speaker #1: Financial Services deepens customer relationships, supports our GreenLake cloud adoption, and remains a meaningful competitive advantage as customers ramp their investments in AI. Before I close, I want to highlight two important upcoming events.

Speaker #1: Two years ahead of plan. The market trends driving our performance remain strong, and well-aligned to our strategy. We expect demand strength to continue into fiscal 2027 and beyond, which will accelerate durable shareholder value, as we continue to scale profitably.

Speaker #1: In two weeks, we are hosting HPE Discover in Las Vegas. We will share updates on our networking, cloud, and AI strategies, including major product announcements, along with a live Q&A for investors and analysts.

Speaker #1: We are executing with strong discipline, creating meaningful value from the Juniper acquisition, and strengthening our position at the intersection of networking, cloud, and AI.

Speaker #1: I hope to see you there. Then, later this fall, we will host a dedicated networking Investor Day. In closing, HPE delivered an exceptional quarter.

Speaker #1: With a combined strength of HPE and Juniper, we have the portfolio, the talent, and the go-to-market scale to lead in the market. I want to thank our team members for their focus, and strong execution.

Speaker #1: With that, let me turn it to Marie to take you through the financial results and our 2026 and 2027 outlook. Marie? Thank you, Antonio, and good afternoon, everyone.

Speaker #1: Two years ahead of plan. The market trends driving our performance remain strong and well-aligned to our strategy. We expect demand strength to continue into fiscal 2027 and beyond, which will accelerate durable shareholder value as we continue to scale profitably.

Speaker #1: I'm pleased with our outstanding second quarter results. We exceeded our commitments delivering record revenue and EPS, driven by disciplined execution and a strong demand environment.

Speaker #1: Our large backlog, favorable industry tailwinds, and improved demand visibility support a higher growth outlook. In addition, we are achieving catalyst cost savings and Juniper synergies ahead of schedule.

Speaker #1: We are executing with strong discipline, creating meaningful value from the Juniper acquisition, and strengthening our position at the intersection of networking, cloud, and AI.

Speaker #1: As a result, we are increasing our fiscal 2026 EPS outlook by over 40%. I will address the drivers behind the strong EPS and free cash flow outlook shortly, but first, let's take a look at our Q2 performance.

Speaker #1: With the combined strength of HPE and Juniper, we have the portfolio, the talent, and the go-to-market scale to lead in the market. I want to thank our team members for their focus and strong execution.

Speaker #1: With that, let me turn it to Marie to take you through the financial results and our 2026 and 2027 outlook. Marie? Thank you, Antonio, and good afternoon, everyone.

Speaker #1: Revenue of $10.7 billion was above the high end of our guidance range, led by traditional server as customers accelerated investments in agentic AI and AI inferencing.

Speaker #1: And by networking, where we saw broad-based growth across the portfolio. Sequentially, revenue grew 15%, reflecting higher average selling prices within our server business, driven by ongoing DRAM and NAND inflationary costs, and supply constraints.

Speaker #1: I'm pleased with our outstanding second-quarter results. We exceeded our commitments, delivering record revenue and EPS, driven by disciplined execution and a strong demand environment.

Speaker #1: Our large backlog, favorable industry tailwinds, and improved demand visibility support a higher growth outlook. In addition, we are achieving Catalyst cost savings and Juniper synergies ahead of schedule.

Speaker #1: We continue to work with our partners to secure long-term agreements while executing the pricing actions we discussed last quarter. Gross margin improved to 36.9%, driven by NYX as we shape demand to higher margin products.

Speaker #1: Catalyst savings and Juniper-related synergies also contributed to improvement on a year-over-year basis. Operating profit was 1.4 billion, above our expectations, representing a 13.3% operating margin.

Speaker #1: Revenue of $10.7 billion was above the high end of our guidance range, led by traditional servers as customers accelerated investments in agentic AI and AI inferencing.

Speaker #1: As the company scaled and we continue to capture accelerated catalyst cost savings and Juniper synergies, we expect operating profit growth to continue to outpace our top line.

Speaker #1: And by networking, we saw broad-based growth across the portfolio. Sequentially, revenue grew 15%, reflecting higher average selling prices within our server business, driven by ongoing DRAM and NAND inflationary costs and supply constraints.

Speaker #1: EPS was 79 cents, well above the high end of our guidance. GAAP EPS was 44 cents. We delivered Q2 free cash flow of $915 million fueled by strong operating profit.

Speaker #1: Now let's turn to our segment results. Networking delivered another solid quarter. Revenue of $2.7 billion was up 10% on a normalized basis as growth accelerated.

Speaker #1: Our backlog continues to grow given elevated demand and supply than 40% sequential growth we saw in our purchase commitments. We continue to see strong demand for our networks for AI portfolio, and now expect cumulative orders to reach at least $2 billion by fiscal year-end 2026.

Speaker #1: Catalyst savings and Juniper-related synergies also contributed to improvement on a year-over-year basis. Operating profit was $1.4 billion, above our expectations, representing a 13.3% operating margin.

Speaker #1: As the company scales and we continue to capture accelerated Catalyst cost savings and Juniper synergies, we expect operating profit growth to continue to outpace our top line.

Speaker #1: Within our product categories, campus and branch normalized revenue growth accelerated to 10%, anchored by large deals across multiple industries. Security growth inflected positively to 18%, benefiting from improved backlog conversion and solid in-quarter demand.

Speaker #1: EPS was $0.79, well above the high end of our guidance. GAAP EPS was $0.44. We delivered Q2 free cash flow of $915 million, fueled by strong operating profit.

Speaker #1: Data center networking and routing grew 6% and 9%, respectively, reflecting robust networks for AI demand. We are optimistic about the demand momentum we are seeing based on our growing pipeline.

Speaker #1: Now let's turn to our segment results. Networking delivered another solid quarter. Revenue of $2.7 billion was up 10% on a normalized basis, as growth accelerated.

Speaker #1: Across customer verticals, service provider revenue grew 13%, and enterprise grew 9% on a normalized basis. Our AI-native self-driving network solution is clearly resonating as customers prioritize AI use cases and simplify their network operations.

Speaker #1: Our backlog continues to grow, given elevated demand and supply constraints, and this is reflected in the greater than 40% sequential growth we saw in our purchase commitments.

Speaker #1: We continue to see strong demand for our Networks for AI portfolio, and now expect cumulative orders to reach at least $2 billion by fiscal year-end 2026.

Speaker #1: Network operating margin of 21.6% was in line with guidance, reflecting improved operating leverage as Juniper synergies continue to ramp. The sequential decline in margin reflected two factors: first, Q1 benefited from certain one-time items, and second, Q2 absorbed higher variable compensation expense.

Speaker #1: Within our product categories, Campus and Branch, normalized revenue growth accelerated to 10%, anchored by large deals across multiple industries. Security growth inflected positively to 18%, benefiting from improved backlog conversion and solid in-quarter demand.

Speaker #1: We remain focused on disciplined execution, operational efficiencies, and synergy realization to improve profitability and expand margins in the second half and beyond. Moving to cloud and AI, we delivered revenue of $7.7 billion, up 23%, as strong order activity and pass-through of higher costs of new orders and traditional server and storage drove the upside, partially offset by supply constraints and timing of AI server shipments.

Speaker #1: Across customer verticals, service provider revenue grew 13%, and enterprise grew 9% on a normalized basis. Our AI-native, self-driving network solution is clearly resonating as customers prioritize AI use cases and simplify their network operations.

Speaker #1: Financial services continues to perform well. Scale benefits drove operating profit of nearly $1 billion up 48% sequentially and triple digits year over year, pushing operating margin to 12.4%, up 220 basis points sequentially.

Speaker #1: Network operating margin of 21.6% was in line with guidance, reflecting improved operating leverage as Juniper synergies continue to ramp. The sequential decline in margin reflected two factors: first, Q1 benefited from certain one-time items; and second, Q2 absorbed higher variable compensation expense.

Speaker #1: Server revenue increased 33% as ASP grows in traditional server more than offset supply-constrained unit volumes. Demand remained broad-based, as orders more than doubled year over year and increased strong double digits sequentially.

Speaker #1: We see accelerating demand in high memory configured servers, targeted and agentic AI workloads, supporting our expectation of sustainable growth. AI systems orders of $1.8 billion were more balanced and broad-based this quarter.

Speaker #1: Demand is expanding beyond AI server factories into broader AI workloads like orchestration, data movement, and agentic AI, service provider orders exceeded the combined total of its prior four quarters, underscoring the inherently lumpy nature of our large-scale AI deals.

Speaker #1: Financial Services continues to perform well. Scale benefits drove operating profit of nearly $1 billion, up 48% sequentially and triple digits year over year, pushing operating margin to 12.4%, up 220 basis points sequentially.

Speaker #1: Our backlog increased nearly 20% sequentially to a new high, and our pipeline remains multiples of our backlog. We continue to expect AI revenue to improve in the back half of the year now peaking in Q4.

Speaker #1: Server revenue increased 33% as ASP growth in traditional servers more than offset supply-constrained unit volumes. Demand remained broad-based, as orders more than doubled year over year and increased strong double digits sequentially.

Speaker #1: Storage revenue grew 2%, driven by strong orders, the ongoing NYX shift towards higher value-owned IP, and disciplined pricing execution. Electra NP customer migration momentum accelerated sequentially, driving triple digit year-over-year growth in both orders and revenue.

Speaker #1: We see accelerating demand in high-memory configured servers, targeted and agentic AI workloads, supporting our expectation of sustainable growth. AI systems orders of $1.8 billion were more balanced and broad-based this quarter.

Speaker #1: Continued demand strength th in private cloud and our expanding backlog are driving improved revenue visibility. Lastly, financial services revenue was up 6% and generated an all-time high in return on equity exceeding 30%.

Speaker #1: Demand is expanding beyond AI server factories into broader AI workloads like orchestration, data movement, and agentic AI. Service provider orders exceeded the combined total of the prior four quarters, underscoring the inherently lumpy nature of our large-scale AI deals.

Speaker #1: Turning to our catalyst initiatives and Juniper synergies, I'm pleased that we are running ahead of plan as we work on a range of programs to reduce cost of sales and OPEX across our business.

Speaker #1: As a result of these programs, a quarter end, we reported an employee base of just over 65,000, the lowest level at which we have operated as a combined company and reflecting an over 9% decline since both programs began.

Speaker #1: Storage revenue grew 2%, driven by strong orders, the ongoing mix shift towards higher-value owned IP, and disciplined pricing execution. Electra MP customer migration momentum accelerated sequentially, driving triple-digit year-over-year growth in both orders and revenue.

Speaker #1: Within Juniper synergies, we continue to focus on the four pillars we laid out at SAM. Phase one of the integration, which we completed in January, focused on reducing overlap in corporate functions and optimizing sales and service organizations.

Speaker #1: As our MIST and Aruba portfolios converge, we expect to optimize our R&D spend. In addition, we plan to continue to leverage overall HPE scale to improve commodity prices and consolidate our vendor footprint to drive savings through supply chain integration.

Speaker #1: Continued demand strength in private cloud and our expanding backlog are driving improved revenue visibility. Lastly, financial services revenue was up 6% and generated an all-time high return on equity, exceeding 30%.

Speaker #1: Finally, regarding customer support, we intend to leverage scale and digital capabilities inherited from Juniper to further improve efficiency and the customer experience. We expect to exceed our annual target of $200 million by the end of fiscal year 2026.

Speaker #1: As a result of these programs, at quarter-end we reported an employee base of just over 65,000—the lowest level at which we have operated as a combined company—and reflecting an over 9% decline since both programs began.

Speaker #1: I'm pleased with our progress on catalyst, and we are ahead of plan. Workforce transformation continues to drive the majority of our savings and Gen AI-enabled process simplification now represents nearly 20% of our fiscal 2026 initiative savings.

Speaker #1: We are leaning into Gen AI to increase productivity and reduce costs across the organization including customer support, HR, and marketing. Our teams are driving greater automation, redefining work management, and reducing costs.

Speaker #1: As our Missed and Aruba portfolios converge, we expect to optimize our R&D spend. In addition, we plan to continue to leverage overall HPE scale to improve commodity prices and consolidate our vendor footprint to drive savings through supply chain integration.

Speaker #1: We are also rationalizing our global lab footprint by more than two-thirds and reducing our contract base and supply chain customer service by over 90% through targeted consolidation.

Speaker #1: Taken together, we are building a leaner, more efficient organization, and delivering meaningful benefit to our operating margin. Turning to free cash flow, we delivered operating cash flow of $1.4 billion.

Speaker #1: I'm pleased with our progress on Catalyst, and we are ahead of plan. Workforce transformation continues to drive the majority of our savings, and GenAI-enabled process simplification now represents nearly 20% of our fiscal 2026 initiative savings.

Speaker #1: Free cash flow totaled $915 million in Q2, bringing our first half fiscal 2026 total to $1.6 billion. About 75% above our prior comparable period high reported in fiscal 2021.

Speaker #1: We are leaning into Gen AI to increase productivity and reduce costs across the organization, including customer support, HR, and marketing. Our teams are driving greater automation, redefining work management, and reducing costs.

Speaker #1: Our cash conversion cycle improved by two days from Q1, driven primarily by an increase in days payable due to higher purchases to support future shipments.

Speaker #1: This was offset by an increase in days of inventory due to higher inventory and anticipation of second half AI service shipments. Days receivable increased by five days from the prior quarter due to strong revenue performance towards the end of the quarter.

Speaker #1: We are also rationalizing our global lab footprint by more than two thirds and reducing our contractor base and supply chain customer service by over 90% through targeted consolidation.

Speaker #1: Inventory ended the quarter at $9 billion, up year over year and sequentially, supporting second half AI installations and targeted commodity purchases. We remain committed to our capital allocation strategy.

Speaker #1: Taken together, we are building a leaner, more efficient organization and delivering meaningful benefit to our operating margin. Turning to free cash flow, we delivered operating cash flow of $1.4 billion.

Speaker #1: During Q2, we returned $343 million to shareholders, including $189 million in common dividends and $154 million via share repurchases. We refinanced $2 billion of debt, received gross proceeds of approximately $1.4 billion after closing our previously announced H3C transactions last month, and used cash on hand to retire our term loan.

Speaker #1: Free cash flow totaled $915 million in Q2, bringing our first-half fiscal 2026 total to $1.6 billion—about 75% above our prior comparable period high, reported in fiscal 2021.

Speaker #1: Our cash conversion cycle improved by two days from Q1, driven primarily by an increase in days payable due to higher purchases to support future shipments.

Speaker #1: We expect the net impact will reduce annual net interest expense by approximately 75 million. Importantly, we improved our proforma net leverage ratio to 2.3 times a quarter end, down from 2.6 last quarter.

Speaker #1: This was offset by an increase in days of inventory, due to higher inventory and anticipation of second-half AI service shipments. Days receivable increased by five days from the prior quarter, due to strong revenue performance towards the end of the quarter.

Speaker #1: Inventory ended the quarter at $9 billion, up year over year and sequentially, supporting second-half AI installations and targeted commodity purchases. We remain committed to our capital allocation strategy.

Speaker #1: Turning to guidance, we are taking up our outlook on the back of Q2 results and greater visibility into the second half demand environment. Starting with Q3, we expect total revenue will be between $11.5 and $12.1 billion, driven by strong demand.

Speaker #1: During Q2, we returned $343 million to shareholders, including $189 million in common dividends and $154 million via share repurchases. We refinanced $2 billion of debt, received gross proceeds of approximately $1.4 billion after closing our previously announced H3C transaction last month, and used cash on hand to retire our term loan.

Speaker #1: For networking, we expect revenue to grow 73% to 78% year over year and on a reported basis, or approaching 10% on a normalized basis.

Speaker #1: We expect revenue performance in synergy realization to help offset the impact of inflationary component costs driving an operating margin rate in line with our full year guidance.

Speaker #1: In cloud and AI, we expect revenue to grow in the high teens, reflecting demand durability, elevated pricing, and improved AI systems revenue. We expect operating margins to be in the low to mid teens.

Speaker #1: We expect the net impact will reduce annual net interest expense by approximately $75 million. Importantly, we improved our pro forma net leverage ratio to 2.3 times at quarter-end, down from 2.6 last quarter.

Speaker #1: On a consolidated basis, we expect Q3 total operating expense to increase sequentially, supporting seasonal marketing expense and networking R&D investments. We expect our operating margin rate to be up on a sequential basis, driven by improved operating leverage.

Speaker #1: Turning to guidance, we are raising our outlook on the back of Q2 results and greater visibility into the second-half demand environment. Starting with Q3, we expect total revenue will be between $11.5 and $12.1 billion, driven by strong demand.

Speaker #1: Consequently, we expect EPS between 88% and 93 cents, and gap EPS between 84% and 89 cents. For fiscal year 2026, we are raising our EPS outlook range to $3.35 to $3.45.

Speaker #1: For Networking, we expect revenue to grow 73% to 78% year-over-year on a reported basis, or approaching 10% on a normalized basis.

Speaker #1: We expect revenue performance in synergy realization to help offset the impact of inflationary component costs, driving an operating margin rate in line with our full-year guidance.

Speaker #1: We are also raising our gap EPS range to $2.42 to $2.52. We are making the following updates to our outlook. We are raising our full year consolidated revenue growth to 29% to 33% on a reported basis, or high teens on a normalized basis.

Speaker #1: We are also raising our full year consolidated operating profit growth outlook to 80% to 85% on a reported basis. For cloud and AI, we expect server demand and pricing to remain durable, driving sustainable revenue growth.

Speaker #1: Consequently, we are raising our full year cloud and AI revenue growth to the low 20% range, from our prior mid to high single digit range, driven by higher ASPs in our traditional server business and improved AI systems revenue.

Speaker #1: Consequently, we expect EPS between $0.88 and $0.93, and GAAP EPS between $0.84 and $0.89. For fiscal year 2026, we are raising our EPS outlook range to $3.35 to $3.45. We are also raising our GAAP EPS range to $2.42 to $2.52.

Speaker #1: We are also raising our operating margin rate outlook to low to mid teens. We are raising our full year networking revenue growth to 72% to 75% on a reported basis, or approaching 10% on a normalized basis, reflecting accelerated business performance as our integration efforts take hold.

Speaker #1: We are making the following updates to our outlook. We are raising our full-year consolidated revenue growth to 29% to 33% on a reported basis, or to the high teens on a normalized basis.

Speaker #1: We are lowering our OIA outlook to a range of 420% to 460 million, reflecting lower net interest expense expectations. Lastly, we are increasing our free cash flow outlook to at least 3.5 billion dollars, up from our prior outlook of at least 2 billion.

Speaker #1: We are also raising our full-year consolidated operating profit growth outlook to 80% to 85% on a reported basis. For cloud and AI, we expect server demand and pricing to remain durable, driving sustainable revenue growth.

Speaker #1: We are confident in our new fiscal 2026 outlook as we see continued order momentum in the business, thus far in Q3. Based on the durability of demand, we are seeing in our results, we are providing an initial framework for fiscal 2027.

Speaker #1: Consequently, we are raising our full-year cloud and AI revenue growth to the low 20% range, from our prior mid- to high-single-digit range, driven by higher ASPs in our traditional server business and improved AI systems revenue.

Speaker #1: We see sustained secular tailwinds driving consolidated revenue growth of 8% to 12%, with a similar range for both of our networking and cloud and AI segments.

Speaker #1: We are also raising our operating margin rate outlook to the low to mid-teens. We are raising our full-year networking revenue growth to 72% to 75% on a reported basis, or approaching 10% on a normalized basis, reflecting accelerated business performance as our integration efforts take hold.

Speaker #1: Our outlook assumes that acceleration in AI systems revenue growth. We see improved operating margins of 12% to 16% for the company and expect to see a year-over-year reduction in operating expense.

Speaker #1: We are lowering our OINE outlook to a range of $420 million to $460 million, reflecting lower net interest expense expectations. Lastly, we are increasing our free cash flow outlook to at least $3.5 billion, up from our prior outlook of at least $2 billion.

Speaker #1: We forecast networking margin in the mid to high 20% range, driven by scale mix and synergies, with cloud and AI operating margin in the range of 10% to 15%, depending on the mix of AI business and the pace of catalyst savings.

Speaker #1: We expect revenue growth and operating leverage to deliver EPS growth of 12% to 16% and free cash flow of at least 4.5 billion. Our outlook is expected to enable faster debt paydown.

Speaker #1: We are confident in our new fiscal 2026 outlook as we see continued order momentum in the business thus far in Q3. Based on the durability of demand we are seeing in our results, we are providing an initial framework for fiscal 2027.

Speaker #1: As a result, we are now expect to reach our two-times net leverage goal by the end of fiscal year 2026. One year ahead of schedule.

Speaker #1: We see sustained secular tailwinds driving consolidated revenue growth of 8% to 12%, with a similar range for both our Networking and Cloud and AI segments.

Speaker #1: Once we reach our leverage target, we expect to return at least 75% of free cash flow to our shareholders via dividends and share repurchases.

Speaker #1: Our outlook assumes an acceleration in AI systems revenue growth. We see improved operating margins of 12% to 16% for the company and expect to see a year-over-year reduction in operating expenses.

Speaker #1: To close, Q2 was an outstanding quarter for HPE. We scaled the business, expanded margins, and generated significant free cash flow. We raised our outlook and are building a stronger, more profitable HPE.

Speaker #1: We forecast networking margin in the mid- to high-20% range, driven by scale, mix, and synergies, with cloud and AI operating margin in the range of 10% to 15%, depending on the mix of AI business and the pace of catalyst savings.

Speaker #1: I'm confident in our ability to create long-term value for our shareholders. With that, I'll turn the call back to the operator to begin the Q&A.

Speaker #1: We expect revenue growth and operating leverage to deliver EPS growth of 12% to 16% and free cash flow of at least $4.5 billion. Our outlook is expected to enable faster debt paydown.

Speaker #1: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchstone phone.

Speaker #1: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star, and then 2.

Speaker #1: As a result, we now expect to reach our two-times net leverage goal by the end of fiscal year 2026—one year ahead of schedule.

Speaker #1: Once we reach our leverage target, we expect to return at least 75% of free cash flow to our shareholders via dividends and share repurchases.

Speaker #1: In the interest of time, please limit yourself to one question. We will now pause momentarily to assemble the roster. The first question will come from Asiya Merchant with Citi.

Speaker #1: Please go ahead.

Speaker #2: Great. Thank you for taking my question and outstanding results and guidance. Maria and Antonio, I guess folks are kind of talking about enterprise budgets just given the price inflation that you guys are seeing through and being passed through.

Speaker #1: I am confident in our ability to create long-term value for our shareholders. With that, I'll turn the call back to the operator to begin the Q&A.

Speaker #2: Where do you see enterprise budgets still sustaining themselves? And obviously, your guide here now into fiscal year 2027, thank you very much for that as well.

Speaker #1: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then 1, on your touch-tone phone.

Speaker #2: Many people are concerned that there is some kind of demand cliff that you could see even past the more near-term outlooks and growth forecasts that you're seeing.

Speaker #2: What gives you this confidence to now provide fiscal year 2027 guide? If you could help us understand, I see it's between networking as well as cloud and AI.

Speaker #1: In the interest of time, please limit yourself to one question. We will now pause momentarily to assemble the roster. The first question will come from Asia Merchant with Citi.

Speaker #2: What gives you the confidence that you're seeing in being able to provide an early outlook into 2027? That would be great. Thank you.

Speaker #1: Please go ahead.

Speaker #3: Well, thank you, Aisha, for the question. I think it's multiple factors. Factor number one, and probably the most important one, is the durability of the demand based on what my conversations are with customers and the large, large pipeline, which remains multiple, so the current backlog.

Speaker #2: Great. Thank you for taking my question—and outstanding results and guidance. Maria and Antonio, I guess folks are talking about enterprise budgets, just given the price inflation that you are seeing and that's being passed through.

Speaker #2: Where do you see enterprise budgets still sustaining themselves? And, obviously, your guide here now into fiscal year 2027—thank you very much for that as well.

Speaker #3: And when you look at that demand and the pipeline, it's driven by the use cases we see with deployment of AI or the build-outs of new data centers for AI, obviously.

Speaker #2: Many people are concerned that there is some kind of demand cliff that you could see, even past the more near-term outlooks and growth forecasts that you're seeing.

Speaker #3: And then the modernization taking place in enterprise. And so it's a combination of multiple things. That ultimately give us the confidence to not only provide the new guide for 2026, but an early view of 2027.

Speaker #2: What gives you this confidence to now provide fiscal year 2027 guidance? If you could help us understand, I see it's between networking as well as cloud and AI.

Speaker #3: So when you think about our results in the first half and the backlog we have, and the supply that we have on hand and what is coming, that solidifies the 2026.

Speaker #2: What gives you the confidence that you're seeing in being able to provide an early outlook into 2027? That would be great. Thank you.

Speaker #3: And then in 2027, the momentum we have in networking is outstanding across all customer segments and as well product segments. We talked about some of the demand that we see today in campus and branch, upper 20%, and cloud networking, which is in the 30%, and so forth.

Speaker #1: Well, thank you, Aisha, for the question. I think it's multiple factors. Factor number one, and probably the most important one, is the durability of the demand based on what my conversations are with customers and the large, large pipeline, which remains multiples of the current backlog.

Speaker #3: And customers, when you think about budgets, obviously, there are challenges because of the price increases we have seen driven by the cost of commodity, but I can tell you we have not seen any pull-in.

Speaker #1: And when you look at that demand and the pipeline, it's driven by the new use cases we see with the deployment of AI or the build-outs of new data centers for AI, obviously.

Speaker #1: And then the modernization taking place in enterprise. So it's a combination of multiple things that ultimately give us the confidence to not only provide the new guide for 2026, but also an early view of 2027.

Speaker #3: We don't see a cliff. And in many ways, I think customers are prioritizing getting access to technology now faster than ever before because nobody wants to be left behind when it comes down to deploying AI.

Speaker #1: So, when you think about our results in the first half, the backlog we have, the supply we have on hand, and what is coming, that solidifies 2026.

Speaker #3: I'll give an example. In our own company, we have 1,200 use cases in AI. Marie, which is next to me here, is one of the early adopters and I would say aggressive adopter, but we have more than 250 use cases, mostly agentic AI, which has been already deployed.

Speaker #1: And then in 2027, the momentum we have in networking is outstanding, across all customer segments as well as product segments. We talked about some of the demand that we see today in campus and branch—upper 20%—and cloud networking, which is in the 30%, and so forth.

Speaker #3: And now we see this across the entire spectrum. I was last week in Chicago. I met with a number of customers and partners, and they see this.

Speaker #3: And when you go through that motion, then AI inference is growing. And so we expect that AI inference is going to be an accelerator of our demand as we go forward.

Speaker #1: And customers, when you think about budgets, obviously there are challenges because of the price increases we have seen driven by the cost of commodity, but I can tell you, we have not seen any pull-in.

Speaker #3: And therefore, points to be durable in our demand, in our ability to convert that.

Speaker #1: We don't see a cliff. In many ways, I think customers are prioritizing getting access to technology now, faster than ever before, because nobody wants to be left behind when it comes to deploying AI.

Speaker #1: Thank you, Asiya. Next question, please.

Speaker #4: The next question will come from Wamsi Mohan with Bank of America. Please go ahead.

Speaker #5: Yes, thank you, really impressive. Several results here and guide. Antonio, can you give us maybe some rough mix of the opportunity that you see?

Speaker #1: I'll give an example. In our own company, we have 1,200 use cases in AI. Marie, who is next to me here, is one of the early adopters—and I would say an aggressive adopter—but we have more than 250 use cases, mostly agentic AI, which have already been deployed.

Speaker #5: You mentioned scale-up, scale-out, scale-across, especially as you look into fiscal 2027. How do you see that evolve? And if I could, Marie, the growth in free cash flow is well in excess of EPS for 2027, hoping you might be able to share some color on the drivers of that.

Speaker #1: And now we see this across the entire spectrum. Last week, I was in Chicago. I met with a number of customers and partners, and they see this as well.

Speaker #5: Thank you so much.

Speaker #3: Well, thank you, Wamsi. I think it's fairly balanced across the four product segments, Wamsi. I mean, let's start with campus and branch, which has been and is the lion's share of our networking mix.

Speaker #1: And when you go through that motion, then AI inference is growing. So we expect that AI inference is going to be an accelerator of our demand as we go forward.

Speaker #1: And there are four points to be durable in our demand, in our ability to convert that.

Speaker #3: I think the self-driving network vision and now the execution of it is absolutely resonating with customers. We announced that roadmap last December at the HP Discover in Barcelona.

Speaker #3: Thank you, Aisha. Next question, please.

Speaker #1: The next question will come from Wamsee Mohan with Bank of America. Please go ahead.

Speaker #4: Yes, thank you. Really impressive—several results here and guidance. Antonio, can you give us maybe some rough mix of the opportunity that you see?

Speaker #3: You will see new announcements here in two weeks. Our ability to support Aruba switches with Nest and cross-pollinating the two platforms. But ultimately, that AI-driven experience is resonating and I mentioned one of the customers as an example taking advantage of that.

Speaker #4: You mentioned scale-up, scale-out, and scale-across, especially as you look into fiscal 2027. How do you see that evolving? And if I could, Marie, the growth in free cash flow is well in excess of EPS for 2027. Hoping you might be able to share some color on the drivers of that.

Speaker #3: When I think about data center networking, we grew 20% in enterprise. That obviously is driving synergies with the rest of the portfolio because now we have a full conversation with customers across server, storage, and networking.

Speaker #4: Thank you so much.

Speaker #5: Well, thank you, Wamsee. I think it's fairly balanced across the four product segments, Wamsee. I mean, let's start with campus and branch, which has been and is the lion's share of our networking mix.

Speaker #3: Now we are introducing in the fall the new switch with HelioStack reference architecture. That's the first time to market. Thomas has six, 1.6 terabits.

Speaker #5: I think the self-driving network vision, and now the execution of it, is absolutely resonating with customers. We announced that roadmap last December at HPE Discover in Barcelona.

Speaker #3: That will be a tailwind as 2027 starts adopting that footprint in large service providers. And then obviously, scale-across. The PTX platform is, I will say, the reference when it comes down for data center interconnect.

Speaker #5: You will see new announcements here in two weeks. Our ability to support Aruba switches with Myths and cross-pollinating the two platforms. But ultimately, that AI-driven experience is resonating, and I mentioned one of the customers as an example taking advantage of that.

Speaker #3: And that PTX 10,000 and 12,000 is resonating to drive data center interconnect. So it's fairly balanced, I will say. And we are early, early in the process.

Speaker #3: Obviously, you have to win the reference architecture and the kind of the discussion with the customers at that level. But then it's going to be synergies across the rest of the portfolio with compute.

Speaker #5: When I think about data center networking, we grew 20% in enterprise. That obviously is driving synergies with the rest of the portfolio, because now we have a full conversation with customers across server, storage, and networking.

Speaker #3: So I feel very good about the momentum and kudos to the team who has executed flawlessly. And when you think about an integration of this scale, done it so fast because if you put it in perspective, we integrated R&D teams.

Speaker #5: Now, we are introducing in the fall the new switch with the HelioStack reference architecture. That's the first time to market. Thomas has six 1.6-terabit switches.

Speaker #3: We announced the roadmap. We didn't miss a bit on networking innovation. We integrated the Salesforce in January. And we're ahead of the integration milestones and synergy.

Speaker #5: That will be a tailwind as 2027 starts adopting that footprint in large service providers. And then, obviously, scale across. The PTX platform is, I will say, the reference when it comes down to data center interconnect.

Speaker #3: So I think this is a reference for how to do large acquisitions in the market. So Marie, you want to talk about.

Speaker #5: And that PTX 10,000 and 12,000 is resonating to drive data center interconnect. So it's fairly balanced, I will say. And we are early, early in the process.

Speaker #1: Yeah, yeah, no, absolutely. So Wamsi, I'll answer your question on the strong free cash flow guide for 2027. And it's pretty simple. It's really just based around the expectations that we have of the operating profit growth.

Speaker #1: And obviously, that supports higher profitability. And that's translating, frankly, into cash flow. And just one other thing just to bear in mind, our 2026 baseline actually has the charges associated with the Juniper Synergies, which obviously you're not going to see that level of magnitude repeated in 2027.

Speaker #5: Obviously, you have to win the reference architecture and the discussion with the customers at that level. But then, it's going to be synergies across the rest of the portfolio with compute.

Speaker #5: So I feel very good about the momentum, and kudos to the team who has executed flawlessly. And when you think about an integration of this scale, done so fast—because if you put it in perspective, we integrated R&D teams.

Speaker #1: So that's also one of the benefits that's playing as well into the free cash flow guide. Just to close, as I said in my prepared remarks, that'll get us to 2x leverage by the end of 2026.

Speaker #1: And I think I mentioned that we will pull in our share repo now into early 2027 as well. So I just want to sort of close with that comment.

Speaker #5: We announced the roadmap. We didn't miss a beat on networking innovation. We integrated Salesforce in January. And we're ahead of the integration milestones and synergies.

Speaker #4: Very good. Let's please limit questions to one per analyst. Next question, please.

Speaker #5: So, I think this is a reference for how to do large acquisitions in the market. So, Marie, you want to talk about that?

Speaker #2: The next question will come from Amit Daryanani with Evercore. Please go ahead.

Speaker #6: Yeah, yeah, no, absolutely. So, Wamsee, I'll answer your question on the strong free cash flow guide for 2027. And it's pretty simple—it's really just based around the expectations that we have of the operating profit growth.

Speaker #6: I can't ask a multi-part question. I apologize. Called us out on that, I guess, now. So maybe I'll stick to one. And Antonio, this may sound like a bit of a silly question, but given these numbers are so strong, especially when I look at the fiscal 2027 guide, can you just talk about what's the bigger gating factor to growth as you go forward?

Speaker #6: And obviously, that supports higher profitability, and that's translating, frankly, into cash flow. And just one other thing to bear in mind: our 2026 baseline actually has the charges associated with the Juniper synergies, which, obviously, you're not going to see that level of magnitude repeated in 2027.

Speaker #6: Is it customer demand or is it more component availability? And I'm really trying to understand whether the outlook reflects the level of demand you're actually seeing today or is there actually additional demand that could be served if component supply and availability becomes a bit more easier?

Speaker #6: So that's also one of the benefits that's playing as well into the free cash flow guide. Just to close, as I said in my prepared remarks, that'll get us to 2x leverage by the end of 2026.

Speaker #6: And I think I mentioned that we will pull in our share repo now into early 2027 as well. So I just want to sort of close with that comment.

Speaker #6: Just love to understand just on the component side what's going on. Thank you.

Speaker #3: Well, thank you, Amit. I think demand to me equals bookings or orders. And so we expect that demand to be strong and durable, well into 2027.

Speaker #3: Very good. Please limit questions to one per analyst. Next question, please.

Speaker #3: I think we have an amazing portfolio, perfectly aligned to the inflection point that we see today across networking, cloud, and AI. And so we are uniquely positioned when it comes to demand and bookings.

Speaker #1: The next question will come from Amit Daryanani with Evercore. Please go ahead.

Speaker #7: I can't ask a multi-part question. I apologize—called us out on that, I guess, now. So maybe I'll stick to one. Antonio, this may sound like a bit of a silly question, but given these numbers are so strong—especially when I look at the fiscal 2027 guide—can you just talk about what's the bigger gating factor to growth as you go forward?

Speaker #3: And as I said in my prepared remarks, the pipeline remains multiples of the current backlog, which is record-breaking at the company level. When it comes down to potential upside on the revenue and the ability to convert that, it really comes down to availability of supply.

Speaker #7: Is it customer demand, or is it more component availability? I'm really trying to understand whether the outlook reflects the level of demand you're actually seeing today, or is there additional demand that could be served if component supply and availability becomes a bit easier?

Speaker #3: And what we factor both in 2026 and 2027, first is the allocation that we already got in our supply for 2026. I will say our teams have got much more proficient, by the way, using AI to really do a better supply matching with the demand that we have versus the supply that we have in terms of what type of mix you want to drive based on the capacity you've got allocated.

Speaker #7: I just love to understand, just on the component side, what's going on. Thank you.

Speaker #5: Well, thank you, Amit. I think demand, to me, equals bookings or orders. And so, we expect that demand to be strong and durable well into 2027.

Speaker #5: I think we have an amazing portfolio, perfectly aligned to the inflection point that we see today across networking, cloud, and AI. And so, we are uniquely positioned when it comes to demand and bookings.

Speaker #3: So that's why with Marie, we provide that new revenue guidance. There is no incremental supply in 2026 at this point in time, unless somebody cancels something and then we are able to get that.

Speaker #5: And as I said in my prepared remarks, the pipeline remains multiple times the current backlog, which is record-breaking at the company level. When it comes down to potential upside on the revenue and the ability to convert that, it really comes down to availability of supply.

Speaker #3: And in 2027, as you know, we have long-term agreements where we lock capacity. And we divide that capacity every quarter based on the mix of orders and backlog and what we see in the pipeline.

Speaker #5: And what we factor in both 2026 and 2027—first is the allocation that we already got in our supply for 2026. I will say our teams have got much more proficient, by the way, using AI to really do a better job of supply matching with the demand that we have versus the supply that we have, in terms of what type of mix you want to drive based on the capacity you've got allocated.

Speaker #3: And so all of that, Amit, has been factored in our guide. So if supply improves in 2027, with the momentum and demand we have, we may have an upside.

Speaker #3: But I will tell you, I don't expect the supply availability to change in 2027 that much. Neither the cost will continue to be elevated until this new factories will provide the yields to compensate for the incredible demand that we see across the portfolio.

Speaker #1: Thank you, Amit. Next question, please.

Speaker #5: So that's why, with Marie, we provide that new revenue guidance. There is no incremental supply in 2026 at this point in time, unless somebody cancels something and then we are able to get that.

Speaker #2: The next question will come from Katherine Murphy with Goldman Sachs. Please go ahead.

Speaker #5: Thank you for the question. Can you talk more about the improved AI systems outlook that you talked to? And if there's anything you can share on the demand outlook across customer types and if expectations for AI systems' profitability are improved relative to 90 days ago?

Speaker #5: And in 2027, as you know, we have long-term agreements where we lock capacity. We divide that capacity every quarter based on the mix of orders and backlog, and what we see in the pipeline.

Speaker #5: Thank you.

Speaker #3: Thank you, Katherine. I will start and Romary, if you want to add something. Look, we have been very deliberate in our strategy to focus on the markets related to the AI, where HPE can drive value and can drive the portfolio that we have.

Speaker #5: And so, all of that, Amit, has been factored into our guide. So, if supply improves in 2027, with the momentum and demand we have, we may have an upside.

Speaker #5: But I will tell you, I don't expect the supply availability to change in 2027 that much, neither the cost will continue to be elevated until this new factories will provide the yields to compensate for the incredible demand that we see across the portfolio.

Speaker #3: Not just pursuing just revenue for the sake of revenue. And those are markets have been three. One is enterprise. And you can see the momentum in enterprise.

Speaker #3: And in particular, whether AI factory for enterprise, which is private cloud AI, by the way, deep, deep integration with NVIDIA. And you're going to see more of that in a couple of weeks, which includes a lot related to software.

Speaker #3: Thank you, Amit. Next question, please.

Speaker #1: The next question will come from Katherine Murphy with Goldman Sachs. Please go ahead.

Speaker #8: Thank you for the question. Can you talk more about the improved AI systems outlook that you talked to? And if there's anything you can share on the demand outlook across customer types, and if expectations for AI systems profitability are improved relative to 90 days ago?

Speaker #3: It's not just taking the GPUs and distributors in a server. And by the way, that now includes storage, which is the first platform to be fully certified by an NVIDIA when it comes down to the file kind of structural data.

Speaker #8: Thank you.

Speaker #5: Yeah, thank you, Katherine. I will start, and Romary, if you want to add something. Look, we have been very deliberate in our strategy to focus on the markets related to AI, where HPE can drive value and leverage the portfolio that we have.

Speaker #3: Second part, obviously, is Sovereign. Those are long cycles. But when you think about Sovereign, I don't think about just large 1 gigawatt factory. I think about deployments that act as a Sovereign and ultimately are governed under the Sovereign law or air-gapped to meet the Sovereign requirements.

Speaker #5: Not just pursuing revenue for the sake of revenue. And those are markets, there have been three. One is enterprise. And you can see the momentum in enterprise.

Speaker #3: And then they are large pursuits in the large scale that may take longer to achieve. But what we see right now, Katherine, is a huge growth in inferencing.

Speaker #5: And in particular, whether AI Factory for Enterprise—which is private cloud AI, by the way—with deep, deep integration with NVIDIA. And you're going to see more of that in a couple of weeks, which includes a lot related to software.

Speaker #3: Inferencing clearly is accelerating. And that's a combination of both GPUs and CPUs. And this is why we see the momentum also on the traditional server because a lot of these inferency deployments will be done on CPUs.

Speaker #5: It's not just taking the GPUs and distributing them in a server. And by the way, that now includes storage, which is the first platform to be fully certified by NVIDIA when it comes down to the file kind of structured data.

Speaker #3: And it will be done in locations that where the customer feels confident in terms of governance, data privacy, and so forth. And that's why I think we all need to realize there is a new market there is not the traditional market that we know or have been used to.

Speaker #5: The second part, obviously, is Sovereign. And those are long cycles. But when we think about Sovereign, I don't think about just a large, 1-gigawatt factory.

Speaker #3: But this gives us the confidence that we have the right portfolio at the right time to capture this market. And I believe by the end of the decade, much of the demand will be in the inferencing space.

Speaker #5: I think about deployments that act as a sovereign and ultimately are governed under sovereign law, or are air-gapped to meet sovereign requirements. And then there are large pursuits, on a large scale, that may take longer to achieve.

Speaker #3: And that's why a combination with networking and compute and storage and memory, by the way, will give us the ability to be more competitive and honestly harvest more of the value of the gross margin as we go forward.

Speaker #5: But what we see right now, Katherine, is a huge growth in inferencing. Inferencing clearly is accelerating, and that's a combination of both GPUs and CPUs.

Speaker #4: And maybe I'll just add a comment, Katherine, on the margin. So we typically don't break out AI systems margins. But as Antonio alluded to, we do see enterprise and Sovereign typically being a more profitable sort of part of the mix compared to, say, your classic service provider or model builder.

Speaker #5: And this is why we see the momentum also on the traditional server, because a lot of these inferencing deployments will be done on CPUs, and it will be done in locations where customers feel confident in terms of governance, data privacy, and so forth.

Speaker #4: So that's just some context to how to think about margins.

Speaker #3: And last, what we'll say, on the service provider, we play selectively in our market. And we have been prioritizing prudent working capital management. And this is one of the reasons together with the cash commercial cycle, which obviously is slower on the AI system side compared to the traditional business side.

Speaker #5: And that's why I think we all need to realize there is a new market there. It's not the traditional market that we know or have been used to.

Speaker #5: But this gives us the confidence that we have the right portfolio at the right time to capture this market. And I believe that, by the end of the decade, much of the demand will be in the inferencing space.

Speaker #3: And the fact that we have now sold 100% of this 3C stake, that we can pay down that debt faster to return to the two times leverage commitment that we gave a year earlier.

Speaker #5: And that's why a combination of networking, compute, storage, and memory, by the way, will give us the ability to be more competitive and honestly harvest more of the value of the gross margin as we go forward.

Speaker #3: And that will allow us to make the right investment and return approximately 75% of capital in 2027.

Speaker #8: And maybe I'll just add a comment, Katherine, on the margin. So, we typically don't break out AI systems margins. But as Antonio alluded to, we do see enterprise and sovereign typically being a more profitable sort of part of the mix compared to, say, your classic service provider or model builder.

Speaker #1: Thank you, Katherine. Next question, please.

Speaker #2: The next question will come from Samik Chatterjee with JPMorgan. Please go ahead.

Speaker #6: Hi. Thanks for taking my question. And congrats on the strong results in Outlook. Your Antonio, if I can just on the growth outlook that you have this year and trying to compare that to next year, this year you're expecting cloud and AI to accelerate relative to networking, but when we get to your guidance for next year, you're expecting similar growth rates or the growth rates to converge.

Speaker #8: So that's just some context to how to think about margins.

Speaker #5: And last, what we'll say on the service provider: we play selectively in our market, and we have been prioritizing prudent working capital management. This is one of the reasons, together with the cash commercial cycle—which obviously is slower on the AI system side compared to the traditional business side—and the fact that we have now sold 100% of this 3C stake.

Speaker #6: I'm just wondering, is that more function you think about the individual drivers being slightly different in terms of timing with your customers? Or is there more of a supply component in there as the growth rates converge next year if you can sort of help me out in terms of what changes in the drivers?

Speaker #5: That way, we can pay down that debt faster to return to the 2x leverage commitment that we gave a year earlier. And that will allow us to make the right investments and return approximately 75% of capital in 2027.

Speaker #6: Thank you.

Speaker #3: Yeah. I think in the cloud and AI outlook, there is the usual lumpiness, I will say, of the AI system conversion. And so that's one aspect.

Speaker #3: Thank you, Katherine. Next question, please.

Speaker #1: The next question will come from Sumit Chatterjee with JPMorgan. Please go ahead.

Speaker #3: But then across both segments, there is the timing of supply availability. Look, if you think about networking for a moment, right? And you think about on an average, we grew 10% this past quarter.

Speaker #6: Hi, thanks for taking my question, and congrats on the strong results and outlook, Antonio. If I can, just on the growth outlook that you have this year—trying to compare that to next year. This year, you're expecting Cloud and AI to accelerate relative to Networking, but when we get to your guidance for next year, you're expecting similar growth rates, or the growth rates to converge.

Speaker #3: But we grew 2X or 3X the orders, the bookings in some of the product segments. That tells you we are growing much faster in the revenue.

Speaker #3: And then on the cloud AI, obviously, we have a very large backlog in servers. And then we have the lumpiness of the AI systems.

Speaker #6: I'm just wondering, is that more a function of you thinking about the individual drivers being slightly different in terms of timing with your customers? Or is there more of a supply component in there as the growth rates converge next year?

Speaker #3: And then also, we have constraints on the non-side of the equation for storage. So it's a combination of many things. There is no one specific number.

Speaker #6: If you can sort of help me out in terms of what changes in the drivers, thank you.

Speaker #5: Yeah, I think in the Cloud and AI outlook, there is the usual lumpiness, I will say, of the AI system conversion. And so that's one aspect.

Speaker #3: But as memory becomes available, then we should see an acceleration of conversion. But again, don't expect that to happen in early on in that cycle in 2027.

Speaker #3: If anything, maybe at the end of 2027. But once again, we factor all of that in our 8% to to 12% guide for 2027.

Speaker #5: But then, across both segments, there is the timing of supply availability. Look, if you think about networking for a moment, right? And you think about, on average, we grew 10% this past quarter.

Speaker #1: Thank you, Samik. Next question, please.

Speaker #2: The next question will come from David Vaught with UBS. Please go ahead.

Speaker #5: But we grew.

Speaker #1: Great. Thanks, guys, for all the details. Really appreciate it. Maybe Antonio, can we touch on networking for a second? So obviously, strong results there, really strong orders.

Speaker #1: But just trying to get a sense for how we think kind of double-digit normalized growth for this year. And effectively, double-digit growth at the midpoint for next year.

Speaker #1: Is there a reason why we're not seeing an acceleration? And then along those lines, what's driving the margin uplift next year in fiscal 2027 in the networking business, particularly given the supply chain constraints and cost inflation that you've mentioned earlier?

Speaker #1: Thanks.

Speaker #3: Yeah. Thanks, David. Look, it's all about supply chain. Supply chain is the name of the game. In networking, some of these products have DDR4.

Speaker #3: Some have DDR5. Some have other components that are constrained. But the wafer capacity we continue to work with our suppliers, by the way. We believe now we are the largest OEM partner of Broadcom in the networking space.

Speaker #3: And also combined with the rest of the business. So it's all about the supply availability in that moment in time to convert these orders.

Speaker #3: And I think that's the opportunity I will say. I think on one hand, it's a challenge. But on the other hand, it's an opportunity.

Speaker #3: It's something that unlocks there. Then it will be faster conversion of these amazing momentum we have in networking into revenue. So that's what it is.

Speaker #3: And Marie, you want to talk about the.

Speaker #4: Yeah. On the margins themselves, David, good afternoon. What you're seeing in 2027 is actually the full-year benefit of the Juniper Synergies program, which you recall we started when we closed the deal.

Speaker #4: So all of that, we expect is going to flow on a full-year basis from 2026 into 2027. And frankly, that's what's driving the margins.

Speaker #4: And I might add, it actually also helps us on cost of sales as well. So as we sort of buffer some of the impact that we've discussed here today on commodity costs, we're seeing some of those benefits help us out on gross margins as well.

Speaker #3: That's right.

Speaker #1: Thank you, David. Great. Our next question, please.

Speaker #2: The next question will come from Eric Woodring with Morgan Stanley. Please go ahead.

Speaker #5: Hey, guys. Thank you for taking my questions. And echo the congrats on the quarter and the Outlook. Antonio, when you take a step back, can you just help us better understand exactly what has happened over the last 90 days in cloud and AI?

Antonio Neri: of this amazing momentum we have in networking intro revenue. That's what it is. Marie, you want to talk about.

Speaker #5: And what I really mean by that is your significant price hikes were already well-known last quarter. So that's not a surprise. But now you're looking, obviously, at low 20% year-over-year cloud and AI revenue growth versus 90 days you thought it would be mid to high single digits.

Marie Myers: Yeah. On the op margins themselves, David, good afternoon. What you're seeing in FY27 is actually the full year benefit of the Juniper synergies program, which you recall we started when we closed the deal. All of that we expect is going to flow on a full year basis from FY26 into FY27, frankly, that's what's driving the margins. I might add it actually also helps us on cost of sales as well. As we sort of buffer some of the impact that we've discussed here today on commodity costs, we're seeing some of those benefits help us out on gross margins as well.

Speaker #5: So exactly what changed so abruptly in the last 90 days? And can you help us understand what customer base cohort did this inflection come from?

Speaker #5: Thanks so much.

Speaker #3: Yeah. Thanks, Eric. Well, I will say the quarter's demand acceleration. And I think that demand acceleration was manifested on a number of categories in the cloud AI business.

Antonio Neri: That's right.

So that's what it is and Marie want to talk about the on the margins themselves. David good afternoon. What you're seeing in 27 is actually the full year benefit of the Juniper synergies program which you recall we started you know, when we closed the deal. So all of that, we expect is going to flow on a full year basis from 26 to 27 and and frankly that's what's driving the margins and I might add it. It it actually also helps us on cost of sales as well. So as we sort of buffer, some of the impacts that we've discussed here today, on commodity costs, we're seeing some of those benefits help us out on on Gross, margins as well.

Eric: Thank you, David. Can we have our next question, please?

That's right.

Thank you, David.

Speaker #3: Obviously, the traditional server. I talked before about the concern to get access to products. And don't wait for things to improve. I think that was very clear.

Operator: The next question will come from Erik Woodring with Morgan Stanley. Please go ahead.

Great, our next question, please.

Erik Woodring: Hey, guys. Thank you for taking my questions. Echo the congrats on the quarter and the outlook. Antonio, when you take a step back, can you just help us better understand exactly what has happened over the last 90 days in cloud and AI? What I really mean by that is, your significant price hikes were already well known last quarter, so that's not a surprise. Now you're looking obviously at low 20% year-over-year cloud and AI revenue growth versus 90 days you thought it would be mid to high single digits. Exactly what changed so abruptly in the last 90 days, and can you help us understand what customer base cohort did this inflection come from? Thanks so much.

Erik Woodring: Hey, guys. Thank you for taking my questions. Echo the congrats on the quarter and the outlook. Antonio, when you take a step back, can you just help us better understand exactly what has happened over the last 90 days in cloud and AI? What I really mean by that is, your significant price hikes were already well known last quarter, so that's not a surprise. Now you're looking obviously at low 20% year-over-year cloud and AI revenue growth versus 90 days you thought it would be mid to high single digits. Exactly what changed so abruptly in the last 90 days and can you help us understand what customer base cohort did this inflection come from? Thanks so much.

The next question will come from Eric Woodring with Morgan Stanley. Please go ahead.

Speaker #3: Second is the agentic AI. Definitely, definitely, there has been a key driver of demand acceleration. I think on the storage side, obviously, we have our own benefit because we are forcing a transition to our Alletra MP because also we are end-of-life in legacy products.

Speaker #3: And then we introduced new data platforms with object which we expect to accelerate now with the introduction of file. I think there is a combination of virtualization modernization because customers with the new commercial terms, they're very concerned about cost.

Antonio Neri: Yeah, thanks, Eric. Well, I will say at the core is demand acceleration, and I think that demand acceleration was manifested on a number of categories in the cloud AI business. Obviously, the traditional server, I talked before about the concern to get access to products, and don't wait for things to improve. I think that was very clear. Second is the agentic AI. Definitely, that has been a key driver of demand acceleration. I think on the storage side, obviously, we have our own benefits because we are forcing a transition to our Alletra MP because also we are end of life in legacy products. Then we introduce new data platforms with object, which we expect to accelerate now with introduction of file. I think there is a combination of virtualization modernization because customers with the new commercial terms, they're very concerned about cost.

Antonio Neri: Yeah, thanks, Eric. Well, I will say at the core is demand acceleration and I think that demand acceleration was manifested on a number of categories in the cloud AI business. Obviously, the traditional server, I talked before about the concern to get access to products and don't wait for things to improve. I think that was very clear. Second is the agentic AI. Definitely, that has been a key driver of demand acceleration. I think on the storage side, obviously, we have our own benefits because we are forcing a transition to our Alletra MP because also we are, you know, end of life in, the you know, legacy products. Then we introduce new data platforms with object, which we expect to accelerate now with introduction of file. I think there is a combination of virtualization modernization because customers with the new commercial terms, they're very concerned about cost.

Hey guys, thank you for, uh, for taking my questions, and uh, echo the congrats on the quarter and the outlook. Um, Antonio, when you take a step back, can you just help us better understand exactly what has happened over the last 90 days in cloud and AI? And what I really mean by that is, you know, your significant price hikes were already well known last quarter, so that's not a surprise. But now you're looking, obviously, at low 20% year-over-year cloud and AI revenue growth, versus 90 days ago you thought it would be mid to high single digits. So exactly what changed so abruptly in the last 90 days, and can you help us understand what customer base or cohort did this inflection come from? Thanks so much.

Speaker #3: When you modernize, your software virtualization state by definition, you're modernizing the infrastructure that sits underneath. That's a combination of our Morpheus, Dragon, the private cloud business edition, for virtualization.

Speaker #3: And as we grow private cloud AI, call it AI factor for enterprise, that infrastructure and software is pretty much the same. The only real change is the GPUs in the server and the Alletra X10,000 in the storage.

Speaker #3: But then GreenLake also is a driver of additional adoption of technology because once you're on the platform, as I said earlier, we have a net retention rate of near 110%.

Speaker #3: And obviously, as budget gets constrained, we expect, obviously, the consumption model to grow over the next few quarters because you move to more on OPEX model.

Yeah, thanks Eric. Well I I will say at the core is the mandanda celebration and I think, you know that the mandanda celebration was manifested on a number of categories in the cloud AI business. Obviously, the traditional server I talked before about the concern to get access to products uh and don't wait for things to improve. I think that was very clear. Um, second is the agentic AI definitely. Definitely, there has been a key driver of demand acceleration. I think on the storage side obviously we have our own benefits because we are forcing a transition to our a later MP because also we are, you know, end of life in, you know, Legacy products. Um, and then we introduce new data platforms with objects, um, which with respect to accelerate now with introduction of file.

Speaker #3: So it's a combination of many things. But the pipeline and the customer engagement are super strong. And then obviously, the networking provides a core foundation to drive cross synergies, as we go forward.

Antonio Neri: When you modernize your software virtualization estate, by definition, you're modernizing the infrastructure that sits underneath. That's a combination of our Morpheus driving the private cloud business edition for virtualization. As we grow private cloud AI, call it AI factory for enterprise, that infrastructure and software is pretty much the same. The only really changes is the GPUs in the server and the Alletra X1000 in the storage. GreenLake also is a driver of additional adoption of technology because once you're on the platform, as I said earlier, we have a net retention rate of near 110%. Obviously, as budget gets constrained, we expect obviously the consumption model to grow over the next few quarters because you move to more an OpEx model. It's a combination of many things. The pipeline and the customer engagement are super strong.

Antonio Neri: When you modernize your software virtualization estate, by definition, you're modernizing the infrastructure that sits underneath. That's a combination of our Morpheus driving the private cloud business edition for virtualization. As we grow private cloud AI, call it AI factory for enterprise, that infrastructure and software is pretty much the same. The only really changes is the GPUs in the server and the Alletra X10000 in the storage. GreenLake also is a driver of additional adoption of technology because once you're on the platform, as I said earlier, we have a net retention rate of near 110%. Obviously, as budget gets constrained, we expect obviously the consumption model to grow over the next few quarters because you move to more an OpEx model. It's a combination of many things, but the pipeline and the customer engagement are super strong. Obviously, the networking provides a core foundation to drive cross synergies as we go forward

Speaker #1: Very good. Thank you, Eric. Next question, please.

Speaker #2: The next question will come from Matthew Niknam with Truist. Please go ahead.

Speaker #6: Hey, guys. I will echo the congrats everyone has relayed as well. Phenomenal results. Antonio, you mentioned cross-portfolio sales. And I'm wondering, how prevalent these are right now?

I think there is a combination of, um, virtualization and modernization, because customers with the new commercial terms are still very concerned about cost. When you modernize your software, virtualization stays by definition in a modernized infrastructure that sits underneath. That's a combination of our Morpheus, Dragon, the Private Cloud Business Edition for virtualization. And as we grow Private Cloud AI, I call it AI factor for enterprise, that infrastructure and software is pretty much the same. The only real change is—

Speaker #6: And is it in the context of more security and networking among enterprise customers? Or are you seeing more cross-portfolio purchasing across server, storage, and networking products to really bring some of these Juniper revenue synergies to fruition?

Speaker #6: Thanks.

Speaker #3: Well, thank you. I think it's a ladder. And I will say it's early even because as I said in my opening remarks, our enterprise data center switching orders grew 20%.

Antonio Neri: Obviously, the networking provides a core foundation to drive cross synergies as we go forward.

Speaker #3: And that's very early. Very early in the process. We see now larger deals and larger engagement because we have the scale of our sales force.

Is is the gpus in the server and the elettra x 10000 in the storage. But then Green Lake also is a driver of uh additional adoption of Technology. Because once you're on the platform, as I said earlier, we have a net retention rate of near 110% and obviously, as budget case constraint. You know, we expect obviously the consumption model to grow over the the next few quarters because you move to more an Opex model. So it's a combination of many things um but the pipeline and the customer engagement are super strong and then obviously the networking provides a core Foundation to drive across synergies as we go forward.

Eric: Very good. Thank you, Eric. Next question, please.

Very good. Thank you, Eric.

Speaker #3: We are the networking sales force can get access to customers that in the past, they were not able to get to. And then there is the product integration.

Operator: The next question will come from Matthew Niknam with Truist. Please go ahead.

Next question, please.

Matthew Niknam: Hey, guys. I will echo the congrats. Everyone has relayed as well. Phenomenal results. Antonio, you mentioned cross-portfolio sales, and I'm wondering how prevalent these are right now. Is it in the context of more security and networking among enterprise customers, or are you seeing more cross-portfolio purchasing across server, storage, and networking product sets to really bring some of these Juniper revenue synergies to fruition? Thanks.

The next question will come from Matthew, nicknamed “Truest.” Please, go ahead.

Speaker #3: To give a sense of the product integration, we are integrating what is called the Abstra lifecycle management or intent-based provisioning for data center switching with Morpheus.

Speaker #3: What that allows us to do is to provide a full hybrid control plane for server storage and networking. And also integrating the software-defined networking into the VM essential stack.

Speaker #3: That also will drive the data center switching inside the private cloud reference architecture. Eventually, when we move into the Ethernet-based storage, as the speeds continue to grow, that's going to be of course a Juniper switch at the 1.6 terabytes.

Antonio Neri: Well, thank you. I think it's the latter, and I will say it's early even. Because as I said in my opening remarks, our enterprise data center switching orders grew 20%. That's very early in the process. We see now larger deals and larger engagement because we have the scale of our sales force where the networking sales force can get access to customers that in the past they were not able to get to. Then there is a product integration. To give a sense of the product integration, we are integrating what is called the Apstra lifecycle management or intent-based provisioning for data center switching with Morpheus. What that allows to do is to provide a full hybrid control plane for server storage and networking, and also integrating the software-defined networking into the VM Essentials stack.

Hey guys, I will Echo. The congrats uh everyone is relayed as well phenomenal results. Um, Antonio you mentioned cross, portfolio sales, and I'm wondering how prevalent these are right now and is it in the context of more security and networking among Enterprise customers, or are you seeing more cross portfolio, purchasing across server storage and networking products? Thanks to really bring some of these Juniper Revenue synergies to fruition. Thanks.

Well, thank you. I think it is the latter, and I will say it is early. Even because, as I said in my opening remarks, our Enterprise Data Center switching orders grew 20%.

And that's very early.

Speaker #3: So I will say we are early. Now, networking and security, that's a more insulated with a networking because obviously, if you think about the edge, deploying a SASE or a secure service edge, that will drive convergence between network and security.

Burial in the process. We see now larger deals and larger engagement because we have the scale of our sales force, where the networking sales force can get access to customers that in the past they were unable to get to.

Speaker #3: But there, we are not thinking about driving security convergence just to the software level. We are taking a bold approach, which is to drive it at the silicon level.

Speaker #3: And you're going to see more of that as we go forward with Rami and team.

Speaker #1: Thank you, Matt. Next question, please.

Speaker #2: The next question will come from Aaron Rakers with Wells Fargo. Please go ahead.

Antonio Neri: That also will drive the data center switching inside the private cloud reference architecture. Eventually, when we move into the ethernet-based storage, as the speeds continue to grow, that's going to be, of course, a Juniper switch at the 1.6 TB. I will say we're early. Networking and security, that's a more insulated with the networking, because obviously if you think about the edge, deploying a SASE or a secure service edge, that will drive convergence between network and security. There we are not thinking about driving security convergence just at the software level. We are taking a bold approach, which is to drive it at the silicon level. You're going to see more of that as we go forward with Rami and team.

Antonio Neri: That also will drive the data center switching inside the private cloud reference architecture. Eventually, when we move into the ethernet-based storage, as the speeds continue to grow, that's going to be, of course, a Juniper switch at the 1.6T. I will say we're early. Networking and security, that's a more insulated with the networking, because obviously if you think about the edge, deploying a SASE or a secure service edge, that will drive convergence between network and security. There we are not thinking about driving security convergence just at the software level. We are taking a bold approach, which is to drive it at the silicon level. You're going to see more of that as we go forward with Rami and team.

We are integrating what is what is called the Oprah life cycle management or intent based provisioning for data center. Switching with morphus what that allows us to do is to provide a full hybrid control plane for Server storage and networking, and also integrating the software defined networking into the VM essential stack.

Speaker #5: Yeah. Thanks for taking a question also. Congrats on the results. Very impressive. I guess my question, some of it's been a little bit asked, but I want to go back to the traditional server business.

That also will drag the data center switching inside the private cloud, you know, reference architecture.

Speaker #5: 40-plus percent year-on-year growth, very impressive. But I'm curious if you could unpack how much we're seeing in terms of the ability to price through some of the inflationary component costs relative to underlying unit demand.

Speaker #5: And I guess when we look forward, does the guidance reflect a continued expectation of price increases to mitigate any margin impacts? Any kind of color of what you've done on the pricing strategy would be helpful.

Eventually, you know, when we move into the um ethernet base storage as the speeds continue to grow, that's going to be, of course a juniper switch at the 1.6. Terabytes. So I would say we're early now networking and security that that's a more uh insulated with a networking. Uh, because obviously if you think about the edge you know, deploying a sassy or a secure service edge.

Speaker #5: Thank you.

Speaker #3: Yeah. Thank you. Look, units are up. And we expect units to increase as we go forward because as prices normalize, obviously, the European units will rebalance.

That will drive convergence between network and security, but we are not thinking about driving security convergence just to the software level. We are taking a bold approach, which is to drive it at the silicon level, and you're going to see more of that as we go forward with Ramey and team.

Eric: Thank you, Matt. Next question, please.

Speaker #3: But units were up slightly this quarter. The second part of this is that the pricing, we have been very disciplined, right? And obviously, we have seen significant dislocation on the cost.

Operator: The next question will come from Aaron Rakers with Wells Fargo. Please go ahead.

Thank you. Matt, next question please.

The next question will come from Aaron Rakers with Wells Fargo. Please go ahead.

Aaron Rakers: Yeah, thanks for taking a question. Also, congrats on the results. Very impressive. I guess my question, some of it's been a little bit asked, but I want to go back to the traditional server business. 40%-plus year-on-year growth, very impressive. I'm curious if you could unpack how much we're seeing in terms of the ability to price through some of the inflationary component costs relative to underlying unit demand. I guess when we look forward, does the guidance reflect a continued expectation of price increases to mitigate any margin impact? Any kind of color of what you've done on the pricing strategy would be helpful. Thank you.

Aaron Rakers: Yeah, thanks for taking a question. Also, congrats on the results. Very impressive. I guess my question, some of it's been a little bit asked, but I want to go back to the traditional server business. You know, 40%-plus year-on-year growth, very impressive. I'm curious if you could unpack how much we're seeing in terms of the ability to price through some of the inflationary component costs relative to underlying unit demand. I guess when we look forward, does the guidance reflect a continued expectation of price increases to mitigate any margin impact? Any kind of color of what you've done on the pricing strategy would be helpful. Thank you.

Speaker #3: We expect that to moderate in the second half. And eventually, normalize. But I will say, Aaron, that cost environment and pricing environment will continue to be very elevated in 2027.

Speaker #3: But the units will rebalance. And as we said earlier, right, we expect that demand to continue to be very strong as we look into 2027.

Speaker #3: Especially the content is going to change because of the agentic AI deployment.

Speaker #4: And maybe just add a couple of comments just on the margin durability. We do also see the impact of our catalyst program helping us out both on gross and operating margins.

Yeah, thanks for uh taking a question. Also, congrats on the results. Very impressive. I I guess my question some of it's been a little bit asked but I want to go to back to the traditional server business. You know, 40 plus percent year-on-year growth uh, very impressive but I'm curious if you could unpack. You know, how much we're seeing in terms of the ability to price through some of the inflationary component costs relative to underlying units demand. And you know I I guess when we look forward um you know does the guidance reflect a continued you know expectation of price increases to mitigate any margin impact that any kind of color of what you've done on the pricing strategy would be helpful. Thank you.

Antonio Neri: Yeah, thank you, Aaron. Look, units are up, and we expect units to increase as we go forward because as prices normalize, obviously the AUP and units will rebalance. Units were up slightly this Q. The second part of this is that the pricing, we have been very disciplined, right? Obviously, we have seen significant dislocation on the cost. We expect that to moderate in H2 and eventually normalize. I will say, Aaron, that cost environment and pricing environment will continue to be very elevated in 2027. The units will rebalance and as we said earlier, we expect the demand to continue to be very strong as we look into 2027. Especially the content is going to change because of agentic AI deployment.

Speaker #4: And I think I commented in my prepared remarks we were slightly ahead. So that's giving us confidence around the durability of those margins. And we do expect that the to see some improvement in unit volumes in the back half of the year as well.

Yeah, thank you. Uh, look, units are up, and we expect units to increase as we go forward. Because as prices normalize, obviously, the ASP and units will rebalance. But units were up slightly this quarter.

Speaker #1: Question, Aaron. Next question, please.

Speaker #2: The next question will come from Tim Long with Barclays. Please go ahead.

Speaker #5: Thank you. I was hoping to touch on storage for a minute here. Maybe just if you could just talk a little bit about kind of the seeing the outside growth in server, but not in storage.

The second part of this is that, you know, the pricing — we have been very disciplined, right? And obviously, we have seen significant dislocation on the cost.

Uh, we expect that to moderate.

Speaker #5: What you would think about kind of pull through there. And I would assume you're I know there's a lot of ASP increase in servers because of DRAM.

Speaker #5: But I think also some in storage because of NAND. So maybe could you touch on that dynamic around the storage business? Thank you.

Marie Myers: Maybe I'll just add a couple of comments just on the margin durability. We do also see the impact of our Catalyst Program helping us out both on gross and operating margins, and I think I commented in my prepared remarks we're slightly ahead. That's giving us confidence around the durability of those margins, and we do expect to see some improvement in unit volumes in H2 as well.

Marie Myers: Maybe I'll just add a couple of comments just on the margin durability. We do also see the impact of our Catalyst Program helping us out both on gross and operating margins and I think I commented in my prepared remarks we're slightly ahead. That's giving us confidence around the durability of those margins and we do expect to see some improvement in unit volumes in that half of the year as well.

Speaker #3: Yeah. Sure. Look, a letter MP block customer migration accelerated. We talk about driving triple digits year over year growth only a letter MP, which is a go-forward platform.

Uh, in the second half um, and eventually normalize. But I will say are on that that cost environment and pricing environment will continue to be very elevated in 2027. But the units will rebalance and um, you know, as we said earlier, right, we expect that demand to continue to be very strong as we look into 20127, especially the content is going to change because of the agentic AI deployment and maybe just add a couple of comments just on the margin durability. Uh, we do also see the impact of our Catalyst program helping us out both on growth and operating margins and I think our commented in my prepared, remarks were slightly ahead. So that's giving us confidence around the durability of those margins. And we do expect that the, you know, to see some improvement in unit volumes in the back half of the year as well.

Eric: Question, Aaron. Next question, please.

Speaker #3: In both orders and revenue. Marie talked about that. Obviously, that takes time to see in the total number. But because we have other stuff in the storage, but overall, the storage was up 2%.

Question Aaron.

Operator: The next question will come from Tim Long with Barclays. Please go ahead.

Next question, please.

Tim Long: Thank you. Was hoping to touch on storage for a minute here. Maybe if you could just talk a little bit about kind of seeing the outsized growth in server but not in storage, what you would think about kind of pull-through there. I know there's a lot of ASP increase in servers because of DRAM, but I would think also some in storage because of demand. Maybe could you touch on that dynamic around the storage business? Thank you.

Tim Long: Thank you. Was hoping to touch on storage for a minute here. Maybe if you could just talk a little bit about kind of seeing the outsized growth in server but not in storage, what you would think about kind of pull-through there. I know there's a lot of ASP increase in servers because of DRAM, but I would think also some in storage because of demand. Maybe you could just touch on, you know, that dynamic around the storage business? Thank you.

The next question will come from Tim Long with Barclays. Please go ahead.

Speaker #3: But the letter MP, which is the platform that has both block, file, with object, is growing triple digits both revenue and orders. And remember that that revenue is also somewhat impacted by the fact that we are deferring a portion of the revenue over a longer period of time.

Speaker #3: Why that's the case? Because our software is a SaaS-based solution. On that CapEx, which is the hardware. But the takeaway our go-forward platform is growing triple digits both orders and revenue.

Thank you. Um, we was hoping to touch on storage, uh, for a minute here. Um, maybe just if you could just talk a little bit about kind of the, you know, seeing the outside growth in server but not in storage. Um, what you would think about kind of pull through there, uh, and I would assume you're, you know, I know there's a lot of ASP increase in in service because the DM but I think also some in storage because of man. So maybe you could just touch on, you know, that that Dynamic uh around.

Antonio Neri: Yeah, sure. Look, the HPE Alletra Storage MP block customer migration accelerated. We talk about driving triple digits year-over-year growth on the HPE Alletra Storage MP, which is a go-forward platform, in both orders and revenue. Marie talked about that. Obviously, that takes time to see in the total number, but because we have other stuff in the storage. Overall, the storage was up 2%. The HPE Alletra Storage MP, which is the platform that has both block, file, with object, is growing triple digits both revenue and orders. Remember that that revenue is also somewhat impacted by the fact that we are deferring a portion of the revenue over a longer period of time. Why that's the case, because our software is a SaaS-based solution on that CapEx, which is the hardware. The takeaway, our go-forward platform is growing triple digits, both orders and revenue.

Antonio Neri: Yeah, sure. Look, the Alletra MP block customer migration accelerated. We talk about driving triple digits year-over-year growth on the HPE Alletra Storage MP, which is a go-forward platform, in both orders and revenue. Marie talked about that. Obviously, that takes time to see in the total number, but because we have other stuff in the storage. Overall, the storage was up 2%. The HPE Alletra Storage MP, which is the platform that has both block, file, with object, is growing triple digits both revenue and orders. Remember that that revenue is also somewhat impacted by the fact that we are deferring a portion of the revenue over a longer period of time. Why that's the case, because our software is a SaaS-based solution on that CapEx, which is the hardware. The takeaway, our go-forward platform is growing triple digits, both orders and revenue and over time, that's going to fuel the growth in the total storage as it become the biggest part of the portfolio.

Out of the storage business. Thank you.

Speaker #3: And over time, that's going to fuel the growth in the total storage as it becomes the biggest part of the portfolio.

Yeah, sure. Look, the, um, elite, uh, block customer migration accelerated. We talk about driving triple-digit year-over-year growth.

Speaker #1: Okay. Thank you. Tim, operator, this will be the last question, please.

Speaker #2: Okay. The final question will come from Simon Leopold with Raymond James. Please go ahead.

Speaker #6: Hi guys. I think most of the questions have been asked. I guess we've heard some contradictory commentary from some of your peers regarding pull-through orders.

Speaker #6: Just curious, what's giving you the confidence that the strength this quarter doesn't reflect any of that? And what's giving you confidence in the society ability going forward?

Speaker #3: Yeah. I mean, we have no evidence. In our orders or backlog of any pulls in. And honestly, unlike COVID, where people maybe were also doing double booking, we don't see that at all.

Antonio Neri: Over time, that's going to fuel the growth in the total storage as it become the biggest part of the portfolio.

Speaker #3: And we have no cancellations. So that's the answer related to that question. And because of the pipeline that we have, we feel confident about the durability of that demand.

Why is that the case? Because our software is a SaaS-based solution, uh, on that CapEx, which is the hardware. But the takeaway is our go-forward platform is growing at triple digits, both in orders and revenue. And over time, that's going to fuel growth in total storage. It will become the biggest, the biggest part of the portfolio.

Eric: Okay. Thank you, Tim. Operator, this will be the last question, please.

Okay, thank you.

Speaker #3: Which will drive this sustained momentum. And that's why Marie and I went on. And we provided the guidance for '26 as we did. And the financial framework for '27.

Operator: Okay. The final question will come from Simon Leopold with Raymond James. Please go ahead.

Kim, operator, this will be the last question, please.

Okay, the final question will come from Simon Leopold with Raymond James. Please go ahead.

Simon Leopold: Hi, guys. I think most of the questions have been asked. I guess, we've heard some contradictory commentary from some of your peers regarding pull-through orders. Just curious, what's giving you the confidence that the strength this quarter doesn't reflect any of that, and what's giving you confidence in the sustainability going forward?

Speaker #3: That's what we see. Well, good. I know there's more questions, but I know the team will follow up with you. I just want to wrap by saying we deliver an exceptional quarter.

Speaker #3: We record-breaking results that those are results were driven by the strong demand. That we see in the market. Strong, disciplined execution. And honestly, our strategy.

Speaker #3: Because our strategy is more encompassing when it comes down to networking, cloud, and AI. The junior pre-acquisition, in my mind, has been a home run.

Antonio Neri: Yeah, Simon. We have no evidence in our orders or backlog of any pulls in. Honestly, unlike COVID, where people maybe were also doing double booking, we don't see that at all. We have no cancellations. That's the answer related to that question. Because of the pipeline that we have, we feel confident about the durability of that demand, which will drive this sustained momentum. That's why Marie and I went on, and we provided the guidance for FY26 as we did, and the financial framework for FY27. That's what we see. Well, good. I know there's more questions, but I know the team will follow up with you. I just want to wrap by saying we delivered an exceptional quarter with record-breaking results.

Hi, guys. I think most of the questions have been asked, I guess. Um, you know, we we've heard some contradictory commentary from some of your peers, you know, regarding pull through orders. Um, you know, just curious, what's giving you the confidence that that, um, you know, that the strength is quarter. Um, you know, doesn't reflect any of that. And you know, you know what's, you know, giving you confidence uh you know, in the you know, this is an ability to be going forward.

Speaker #3: And it's proven to be a big source of shareholder value creation. And therefore, we believe the strategy is working. I think our portfolio is the strongest it has ever been.

Yes. So I want I mean, we have no evidence um, in our orders or backlog of any pulls in and honestly, unlike Co where people, maybe we are also doing double booking. We don't see that at all and we have no cancellations.

Speaker #3: And you're going to see more of that here in two weeks. Because I will encourage you to log in either the keynote or to be in person there.

Speaker #3: We're going to have seven acres of technology on display. Just to put it in perspective. And you're going to see the synergies across the portfolio as we were talking about it.

So that's the the the answer related to that question. Um, and because of the pipeline that we have, we feel confident about the durability of that demand which will drive this uh, this state momentum. And that's why Maria and I went on and we provided the guidance for 26 as we did and the financial framework for 27.

Speaker #3: And the most important part is that we are building durable momentum for the future. This results is not a one-time thing. It's the combination of the quality of earnings that we are driving across the portfolio and my view is that we just unlocking the value that was always here in the company.

That's what we see.

Antonio Neri: Those results were driven by the strong demand that we see in the market, strong, disciplined execution, and honestly, our strategy, because our strategy is more encompassing when it comes down to networking, cloud, and AI. The Juniper acquisition, in my mind, has been a home run and is proving to be a big source of shareholder value creation, and therefore, we believe the strategy is working. I think our portfolio is the strongest it has ever been, and you're going to see more of that here in two weeks. I will encourage you to log in, either the keynote or to be in person there. We're going to have seven acres of technology on display, just to put it in perspective, and you're going to see the synergies across the portfolio as we were talking about it.

Speaker #3: And I think there is more to be done. But I'm very proud of what the team has delivered this quarter and the guide that we provided as we think about '26 and '27.

Speaker #3: So thank you again for your time. Hope to see you soon or at the HP Discover.

Well good. I know there's more questions but I know the team will follow up with you. I just want to wrap by saying uh, we deliver an exceptional quarter with record breaking results. That is all those are results were driven by the strong demand that we see in the market. Strong discipline execution and only 3 are strategies because our strategy is more encompassing when it comes down to networking cloud and AI the, Juniper acquisition, in my mind has been a home run and it's proven to be a, a big source of uh, shareholder value creation.

Antonio Neri: The most important part is that we are building durable momentum for the future. These results is not a one-time thing. It's a combination of the quality of earnings that we are driving across the portfolio, and my view is that we're just unlocking the value that was always here in the company. I think there is more to be done, but I'm very proud of what the team has delivered this quarter and the guide that we provided as we think about 2026 and 2027. Thank you again for your time. Hope to see you soon or at HPE Discover.

And therefore, we believe the strategy is working. I think our portfolio is the strongest it has ever been, and you're going to see more of that here in two weeks. Because, you know, I will encourage you to log in to either the keynote, or to be there in person. We're going to have 7 acres of technology on display, just to put it in perspective, and you're going to see the synergies across the portfolio as we were talking about it. And the most important part is that we are building durable momentum for the future. These results are not a one-time thing. It's

The combination of the quality of earnings that we are driving across the portfolio, and um, my view is that we are just, you know, unlocking the value that was always here in the company. Um, and I think, you know, there is more to be done, but I'm very proud of what the team has delivered this quarter and the guidance that we provided as we think about 2026 and 2027. So, thank you again for your time, and hope to see you soon or at HP Discover.

Operator: This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Q2 2026 Hewlett Packard Enterprise Co Earnings Call

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