AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 50

See which workplaces made this year's list.

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Employees say:"Our culture is top notch, and our people make this a great place to work. I love that on my team we can bring new ideas to the table, have a seat at the table, and know with confidence that our ideas will be considered. I am fully trusted to get my work done and my leader is available any time I need her. I also love the frequency of the recognition within our team. It keeps our team motivated and inspired."

Best Large Workplaces in Technology

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 116,000 U.S. employees.

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Employees say:"HPE is a company that prioritizes employee retention in a way that I've found to be very rare, especially in tech. There is a real focus on ensuring that people who work here are happy and fulfilled in their roles. There are also opportunities for people to find other roles within HPE if they are unhappy in their current role, instead of looking for a job at another company. I think this improves not only our company culture, but also the quality of our products/services. There is an amazing amount of expertise that is able to build when people stick around for a long time. As a newer employee, I really value the knowledge that the long-time members of my team have."

25 Best Large Workplaces in Texas

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The top companies on our list have one thing in common: Staff largely trust leadership to see them as well-rounded people and reward them for a job well done.

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Employees say: "My upper-level management is exceptionally good, especially my immediate manager. The entire team is extremely supportive and invested in you learning and performing well. It is one of the healthiest work environments I have ever worked in. I would work here just for that reason alone."

Fortune 100 Best Companies to Work For

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

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Best Large Workplaces for Parents

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Employees say:"What is truly exemplary is the 6 months of parental leave for having a child, but what's even more special is the recipients include adoptive parents. In addition, the huge benefit for those struggling with fertility and/or adoption...HPE really cares about its teams families."

Hewlett Packard Enterprise

Employees say:"HPE does an excellent job with Employee Resource Groups to help build the culture. Executives support the initiatives and the ERG leaders host events that make everyone feel welcome. I share our activities on social media and my friends are amazed at all we do for our employees at HPE."

Industries included in the sector are computers, internet services, IT services, semiconductors, and software companies.

Fortune Sector Leaders: Technology

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 95,000 U.S. employees.

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Employees say:"The wellness Fridays, innovation days, and the team member appreciation day are taken seriously and are nice benefits. The innovation days help employees to expand their knowledge toolkits and attack new problems and find new ways of doing things."

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

Creating a more empathetic workplace looks like staying loyal to workers, emphasizing D&I initiatives, and paying well.

100 Best Companies 2024-Hewlett Packard Enterprise

In 2015, when HPE was created in the wake of Hewlett-Packard’s separation, it made ambitious DEI goals a key part of its agenda. In February, it earned the top spot in Just Capital’s annual ranking, which takes into account social factors such as paying a fair living wage, creating American jobs, providing benefits to ensure work-life balance, and minimizing pollution. HPE was also dubbed the 15th-best workplace for parents last year, owing in large part to its flexible remote-work policies as well as its paid gender-neutral parental leave, bereavement leave after a miscarriage, and reimbursement for fertility expenses. &nbsp;HPE’s remote-work model, which it rolled out during the pandemic, reimagined offices as cultural and collaboration hubs, with workspaces reflecting HPE’s hybrid vision—equipped with more meeting spaces and hybrid tech. Approximately 78% of team members say they are pleased with the model. And nearly 87% say they are happy with the connectivity tools that bring team members together. Among hybrid staff, 84% say their work environment enables them to perform their roles more effectively.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

Building a culture of trust and transparency is essential to help everyone thrive, especially in rocky economic times.

100 BEST COMPANIES 2023-HPE

IT firm Hewlett Packard emphasizes the importance of transparency between employees and management. 
<ul> 
 	<li>So far more than 3,500 employees have taken part in Mystery Coffee, a program where team members connect with others from around the globe for virtual one-on-one coffee breaks.</li> 
 	<li>Employee wellness is a top priority at HPE, and team members worldwide can leave work three hours early on designated Wellness Fridays to spend time focused on their personal well-being.</li> 
 	<li>Staff receive financial wellness help, too, with tools enabling them to assess their current money situation and receive insights on how to budget, manage debt, build savings, and protect their finances.</li> 
 	<li>“HPE encourages employees to speak up, innovate, collaborate, be empowered, own our development, et cetera,” noted one employee.</li> 
</ul>

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 100,000 U.S. employees.

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Employees say: 
 
"HPE encourages employees to speak up, innovate, collaborate, be empowered, own your development, etc. HPE is a place of unlimited opportunities to grow and contribute, and provides a sense of belonging of a family."

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Employees say: 
 
"Top executives care for employees, encourage and provide opportunities for work-life balance, and celebrate every ethnicity and culture. That creates a great all-inclusive culture, which is the best thing this company offers."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

When it comes to supporting employees, flexibility, diversity, and a few extra paid days off go a long way.

100 Best 2022-Hewlett Packard Enterprise

Hewlett Packard Enterprise—which split from Hewlett-Packard in 2015 and focuses on information technology—saw order growth up 20% during the first fiscal quarter of 2022 as many U.S. companies continued to bring employees back to the office. Yet internally HPE has doubled down on the mental and emotional support offered to employees and focused on rolling out benefits like the Work That Fits Your Life program. As part of the initiative, rolled out in 2019, employees get access to three hours of paid time off one Friday a month and six full Fridays off each summer.

A key trait that shines through for company after company on this year's list is all-around fairness.

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Employees say: 
 
“Through almost 25 years of working here I've been able to balance my work and life. HPE has allowed me to be there for my children, attend field trips, and volunteer in classrooms throughout the years. When my parents get sick, I am able to balance my work and tend to them. I honestly don't know what other company would allow me to do this. I am so grateful to HPE and always tell people how much I LOVE MY JOB AND COMPANY! My colleagues are not just my colleagues but my family! Now with being an Edge worker, it's only made my work life so much easier. Thank you HPE!!!” 
 
Read the Great Place to Work review .

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Boards 2022  Hewlett Packard Enterprise

In 2014, the old-guard Silicon Valley giant Hewlett-Packard split into two companies, HP Inc. and Hewlett Packard Enterprise. Since then, both have found strong footing in corporate governance: Both HPE and HP made this list. (HP is No. 9.) 
 
That fact signals a remarkable turnaround. A little over a decade ago, Hewlett-Packard’s board endured multiple controversies involving proxy fights, <a href="https://www.businessinsider.com/a-brief-history-of-hps-totally-dysfunctional-board-2011-9#a-couple-weeks-later-fiorina-was-fired-4">unusual CEO transitions</a>, and a scandal over surveillance of colleagues and journalists that led to the <a href="https://money.cnn.com/2011/01/20/technology/HP_board_of_directors/index.htm#:~:text=The%20long%20and%20winding%20Hurd,marketing%20contractor%20for%20the%20company.">departure of four directors</a> in 2011. 
 
With those issues far in the past, HPE’s board earned the No. 2 spot on this list thanks to strengths in board expertise, gender equality, and board independence, among other criteria. The company specializes in enterprise information tech; it has recently seen particularly robust growth from its Intelligent Edge division, a data analytics and business intelligence platform. 
 
HPE’s board is chaired by Patricia Russo, former CEO of Alcatel-Lucent, the communications company. Russo is also a director at Merck, General Motors, and the private equity firm KKR. 
 
HPE’s directors’ careers reflect a wide range of expertise. Daniel Ammann is a former president of General Motors, as well as its former CFO, and until recently was CEO of GM Cruise LLC, a subsidiary of GM that focuses on autonomous vehicles. Pamela Carter is a former executive at Cummins, a machinery design and manufacturing company, where she was a business unit leader and general counsel; she chairs HPE’s HR and compensation committee.  
 
George R. Kurtz started his career at PwC and later founded a tech company that was acquired by McAfee. Mary Agnes Wilderotter chairs the audit committee and is the former CEO of Frontier Communications. 
 
In the non-CEO realm, Raymond Ozzie is a former chief software architect at Microsoft and a fellow of the Computer History Museum; Gary M. Reiner is the former chief information officer at General Electric; and Raymond Lane is the former COO of Oracle and partner emeritus at the famed venture capital firm Kleiner Perkins.

Fortune Modern Board 25

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Employees say: 
 
“The ability to make employees feel like a significant part of the overall team. In a company this size it's hard for employees to feel as if they make a difference. At HPE they go the extra mile to make sure that you know your contributions are critical for the company's success.”

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

Hewlett Packard Enterprise was founded in 2015 after splitting from the Hewlett-Packard company. Specializing in business information technology, the company offers cloud and infrastructure services to provide data storage, security, and network connectivity to its customers.

Fortune Global 500

Caring leaders at the Best Workplaces in Technology have been preparing their companies to thrive as the business world emerges from the COVID downturn.

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Employees say: 
“I am appreciative of the open line of communication our CEO and executive committee have kept in place with the entire company, especially during the COVID-19 shelter-in-place.” 
Read the Great Place to Work review .

These companies empower employees to bring their whole selves to work, prioritize their well-being, and grow in their careers.

Best Workplaces Women 2020-Hewlett Packard Enterprise Company

Employees say: 
 
“Our company is committed to our wellness and has provided many employee resources for financial, physical, emotional wellness. For example, every month we can leave several hours early to take care of ourselves on what's called a Wellness Friday.”

25 Best Large Workplaces in the Bay Area

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-106-Hewlett Packard Enterprise

We surveyed tens of thousands of employees to create this list of millennials’ favorite workplaces.

Best Large Workplaces Millennials 2021-Hewlett-Packard-Enterprise

Employees say: 
 
“Management is very supportive about growing and expanding your knowledge. Whenever I have shown interest in working on areas outside of my expertise, management has always been supportive, which I really appreciate.”

100 Best Large Workplaces for Millennials

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-431-Hewlett-Packard-Enterprise

Hewlett Packard Enterprise is a provider of various technologies including servers, storage, and networking equipment. Like many hardware companies, HPE has experienced pandemic-related supply chain problems in 2020, causing the company in March to walk back predictions that revenues would increase this year.

The companies on this year's list make a conscious effort to be supportive, inclusive workplaces.

Employees say: 
 
“While my husband was deployed, I was raising three kids with no close family. HPE has supported me for doctor appointments, sick kids, and school events. It was empowering to know that I could be a career-driven mom. ”

100 Best Large Workplaces for Women

This year's Fortune 500 marks the 66th running of the list.

F500-2020-109-HP

Hewlett Packard Enterprise is a provider of various technologies including servers, storage, and networking.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

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Industry

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Founded

City

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Worldwide Employees

Total Worldwide [including U.S.] Revenue in the Latest Fiscal Year

Web Address

Date info provided (companies may opt to keep some data confidential)

Best Workplaces For Parents

Best Companies

Rank last year

Years on list

U.S. employees

U.S. job openings

Year founded

Benefits

Subsidized childcare

Compressed work weeks

Option to work remotely

Minimum requirement in-office attendance (days per week)

Mental health coverage

Free mental health sessions (per year)

Free backup childcare time off (days)

Maximum $ amount covered for fertility services

Fully paid maternal leave (days)

Fully paid paternal leave (days)

Fully paid adoptive leave (days)

Maternal leave in addition to regular time off (days)

Paid days off for volunteering

Earnings Per Share (last Fiscal Year)

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EPS % Change (from prior fiscal year)

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Total Return

Total Return to Investors (last year)

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Total Return to Investors (10 year, annualized)

Best Workplaces In Texas

Best Workplaces In Technology

Sector

Current All-Star Rank

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Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

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Financial Soundness

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Global Competitiveness

Strongest Dimension

State

Hewlett Packard Enterprise focuses on enterprise IT solutions for customers across the Americas, Europe, the Middle East, and the Asia-Pacific region. The company delivers products and services related to cloud computing, servers, storage, networking, artificial intelligence, and more. HPE has developed several of the fastest supercomputers in the world. With origins tracing back to 1939, the company was spun off from PC manufacturer HP in 2015 and has since expanded through several acquisitions.

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Hewlett Packard Enterprise (HPE): Company Profile, Stock Price, News, Rankings

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hewlett packard enterprise

Good day, and welcome to the fiscal 2026 Q1 Hewlett Packard Enterprise earnings conference call. 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 zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star and 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. Please go ahead, sir.

Good afternoon. I am Paul Glaser, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2026 Q1 earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer, and Marie Myers, HPE's Chief Financial Officer. 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. 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. 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 10-Q for the fiscal quarter ended January 31st, 2026. Figures used in verbal remarks are rounded for ease of discussion. More detailed information, please see our earnings materials as well as disclaimers relating to forward-looking statements that involve risks, uncertainties, and assumptions. Please refer to HPE's filings with the SEC for more detailed discussion of these risks. Financial information that we are showing on a non-GAAP basis, we have provided reconciliations to the comparable GAAP information on our website. 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. 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 year 2025. Antonio and Marie will reference our earnings presentation in their prepared comments. With that, let me turn it over to Antonio.

Thank you, Paul. Good afternoon, everyone. HPE started fiscal 2026 with a strong Q1, delivering revenue growth at the high end of our outlook range and record earnings per share, driven by a strong performance in networking and a disciplined execution in cloud and AI. Our Q1 results give us the confidence to raise our fiscal 2026 outlook, which Marie will cover later in the call. Q1 revenue was $9.3 billion, up 18%. We delivered record earnings per share of $0.65, well above the high end of our outlook, with strong Q1 free cash flow of $708 million. Orders significantly outpaced revenues fueled by strong customer demand. We saw strong product orders across networking, servers, and storage, driven by ongoing AI deployment, on-premises infrastructure modernization, and some customer pull-ins due to ongoing commodity shortages and price increases.

GreenLake remains a critical differentiator for our software and services portfolio, delivering strong order bookings, customer adoption, and ARR growth. Phase one of our Juniper integration is complete. We remain on track to achieve our fiscal 2026 synergy targets. As we move to our second phase, we are focused on building a new networking market leader by aggressively executing our strategic product and software roadmap while driving revenue synergies through our go-to-market scale. We are excited about what comes next for our customers and our shareholders. Before I provide our business segment highlights, I want to address how we are navigating the commodity shortages and inflationary cost environment impacting the industry. The IT market is facing a sharp acceleration in supply tightness and increase in component costs, most notably in DRAM and NAND. We expect elevated prices to persist well into 2027.

We are taking a series of distinct actions to address the current industry dynamics. First, we're focused on securing supply. We have expanded our long-term multi-year agreements with our key silicon and memory partners to secure the capacity needed to meet customer demand. Second, we are protecting our margins. We have adopted an agile pricing posture with price adjustments across the entire portfolio with shorter quote commitment cycles. We have amended our quoting terms with the right to reprice existing orders for commodity cost increases between quoting and shipment. Third, we are proactively communicating with customers and channel partners, providing lead time and cost visibility along with alternative configuration recommendations to shape demand.

DRAM and NAND now make up over half of the bill of materials cost of a traditional server, and the share will continue to rise as component costs increases. As a result, we expect higher average unit prices in both our server and storage products. Networking is more insulated with memory comprising a significantly smaller portion of the bill of materials. Given the supply dynamics, our fiscal 2026 strategy prioritizes higher margin product orders, which have an impact on our AI system to revenue growth rate for the year. Moving on to our Q1 results. As communicated at security analyst meeting last October, we have streamlined our financial reporting structure into two primary segments. Our networking segment combines Juniper Networks with our historical intelligent edge business, while the cloud and AI segment includes server, hybrid cloud, and financial services.

I am incredibly pleased with our Q1 networking segment performance and with the excellent progress we have made in integrated Juniper Networks. Our strategy is paying off. We deliver strong revenue growth at the high end of our guidance, with orders growing faster than revenue. The networking segment now represents nearly 30% of our HPE's total revenues and more than half of our total operating profits. Networking revenue increased 152% and 7% on a normalized basis, with orders up low double digits, driven by strength in wireless data center switching and routing products with strategic wins and demand strength across the world. In campus and branch, customers are adopting our self-driving AIOps networking strategy and solutions. Normalized orders increased by high single digits. The Wi-Fi 7 transition is ramping quickly.

We saw more than 10 times increase in Wi-Fi 7 access points sold with devices connected to both our Mist and Aruba Central Cloud platforms up 28%. In data center switching, orders increased mid-40% on a normalized basis, driven by strong momentum in AI data centers and ongoing data center modernization efforts. AI data center builders and operators at scale appreciate our speed of execution, high touch support, and innovative congestion management capabilities. Our demand for our routing products was very strong, with orders increasing mid-20% on a normalized basis. HPE now has the most competitive routing portfolio spanning data center interconnect, AI on-ramp, and edge use cases. Our recently introduced MX301 router series is off to a great start with strong demand across all customer verticals.

Driven by a strong order demand momentum in data center switching and routing products, we are now targeting $1.7 billion-$1.9 billion in cumulative networks for AI orders by the end of fiscal 2026. Our new combined networking R&D team continue to drive bold innovation. We showcased our leading networking capabilities last month at the Milano Cortina 2026 Winter Olympic Games, delivering the connectivity and security for athletes to access real-time performance data, for broadcasters to stream video, and for fans to connect with the Olympic application. I experienced the IT operations firsthand at the games where our HPE experts were there with the Milano Cortina Olympic Committee IT staff, working to ensure everything performed at world-class levels.

The Olympics serves as a powerful case study for other customers to see the value of our full stack AI-native networking solutions and the power of our new combined networking portfolio. In advance of Mobile World Congress, we announced our expanded vision for service providers as they modernize their infrastructure to take advantage of our AI with advancements across our networking servers and software portfolios. We introduced a powerful new line of routers, the new high-density compact modular PTX Series. These routers will enable service providers to modernize their core networking RAN infrastructure to address the rise in data traffic demands driven by AI data center interconnect and inferencing scaling. We also announced new server innovations to speed 5G and AI deployments, enhance security, and streamline automation from the edge through the core network.

These solutions enable telecom operators to manage twice the amount of network traffic on a single server with the latest network security innovations. I am pleased to announce that we have completed our networking sales integration in Q1 by merging our Juniper and Aruba sales teams into a single HPE networking sales organization. Our focus now is to scale the organization while continuing to improve our overall sales productivity. With the sales portion of the integration behind us, we are well-positioned and energized for the years ahead, enabled by a best-in-class networking portfolio. HPE now owns the entire networking technology stack with the talent and go-to-market scale to create a new networking industry leader.

We will continue to focus on our networking priorities, including driving increased adoption of our highly differentiated AIOps self-driving networks to capture, share, and profitability in campus and branch, tapping into the large networks for AI investments that are happening in our industry with our world-class data center switching and routing offerings, and claiming market leadership in key areas where the network and security are converging. Moving on to cloud and AI segment. Revenue declined 3% with operating margin dollars up 18%, driven by pricing and cost discipline. We expect average unit server and storage pricing to continue to increase as the year progresses. Q1 server orders grew low double digits, driven by higher demand for traditional servers as customers expand AI deployments, modernize infrastructure, and accelerate orders due to industry supply challenges. Traditional server strength was partially offset by the timing of HPC and AI systems orders.

We entered Q2 with a record AI systems backlog of $5 billion, primarily composed of enterprise and sovereign orders, our sales pipeline remains multiples of our backlog. We are seeing more enterprises adopting agentic AI into their company's business workflows. Siemens Energy, one of the world's leading global energy technology companies, has recently selected HPE to provide infrastructure services to help engineers design and service gas turbines, which include AI inferencing. In storage, we remain focused on executing our shift to our own IP portfolio strategy. Our Storage Alletra MP products had another strong quarter, with Q1 orders up 42%, marking our fifth consecutive quarter of double-digit year-over-year growth, driven by the installed base block transition and the accelerated option of our object-based platform. GreenLake continues to be a significant differentiator for HPE. In Q1, we approached 50,000 customers on our GreenLake cloud platform.

Our ARR is on track to reach our $3.5 billion target by the end of FY26, driven by strong subscription services across networking, storage, and cloud software and services. Our unique portfolio cloud management software, AIOps, and our platform-based services underpin our hybrid cloud offerings, driving significant customer interest in building a strong sales pipeline. Our VM Essentials virtualization revenue grew sequentially for the third consecutive quarter, with high double-digit new logos growth year-over-year, driven by the escalating cost of legacy virtualization software. Our private cloud AI orders increased for the fourth consecutive quarter, supported by a substantial number of new customer wins across both enterprise and service providers. Lastly, HPEFS delivered an exceptional quarter with record return on equity.

During these high commodity cost cycles, HPEFS is a strategic advantage, enabling customers to maximize the value of their current IT infrastructure and provide access to certified pre-owned technology. Finally, we continue to make excellent progress in our Catalyst modernization and cost programs. We see great returns in deploying AI across our enterprise and remain on track to deliver our committed fiscal 2026 savings targets. In closing, we had a great start of our fiscal year. We delivered a strong Q1 performance while achieving our Juniper integration and Catalyst synergies commitments.

While the industry is currently experiencing significant commodity supply and cost headwinds, we are raising our networking revenue, earnings per share, and free cash flow outlook for fiscal 2026, and we remain committed to our long-term fiscal 2028 targets, including at least $3 in earnings per share and more than $3.5 billion in free cash flow. We are well positioned to navigate today's market dynamics while aggressively pursuing our strategic priorities, including building a new networking industry leader. I will now turn it over to Marie to walk through our Q1 financial details and our new fiscal 2026 outlook.

Thank you, Antonio, and good afternoon, everyone. I'm pleased with our performance this quarter as we delivered on our commitments with strong profitability across the board. Q1 was a strong start to fiscal 2026, reinforcing our confidence in our strategy and demonstrating our ability to execute in a dynamic environment. We exceeded expectations on net earnings and free cash flow while continuing to invest with discipline for long-term value creation. This quarter was defined by three themes. First, strong operating discipline and favorable mix drove operating margins above our outlook in both networking and cloud and AI. Second, overall demand strengthened sequentially with orders exceeding revenue and backlog building, reflecting customer investment in data center modernization and anticipation of component cost increases. Third, Catalyst savings and Juniper-related cost synergies are tracking to plan, contributing to higher profitability.

Now, let me walk you through the details of our Q1 performance. Revenue was $9.3 billion, up 18%, driven primarily by the inclusion of Juniper Networks and down 4% sequentially, reflecting typical seasonality and lower AI systems revenue as expected. Gross margin improved sequentially to 36.6%, driven by continued pricing discipline and a favorable mix towards networking, which helped to offset higher commodity costs, particularly in memory. Operating margin was better than expected at 12.7%. Margin strength in both networking and cloud and AI reflected our conscious pivot to focus on higher margin, more profitable components of our business. Operating expenses also declined 5% sequentially, consistent with our outlook driven by strong cost discipline. For the quarter, EPS was a record $0.65, exceeding the high end of our guidance range. GAAP EPS was $0.31.

I'm particularly pleased with our strong free cash flow of $708 million, a notable outcome as Q1 typically represents a seasonal cash flow outflow. Free cash flow growth is a core pillar of our strategic framework for value creation, the results underscore the progress we've made on improving our working capital management and profitability. Let's turn to our segment results. Networking was again the standout performer and the primary driver of a higher growth and margin profile. Revenue of $2.7 billion was up 7% on a normalized basis in line with our expectations. Our expanded portfolio enabled HPE to capture strong demand in data center switching and routing. Order growth exceeded revenue. As Antonio mentioned, we now expect cumulative networks for AI orders to reach a range of $1.7 billion-$1.9 billion by fiscal year end 2026.

As we announced at our securities analyst meeting, under our new reporting structure that began in Q1, we are now reporting our network segment revenue under two different views: product and customer. Within our product categories, data center networking and routing delivered 31% and 10% normalized growth, respectively, reflecting strong networks for AI demand. Campus and branch grew 2%, fueled by accelerating adoption of Wi-Fi 7, while security declined 5%. On a customer vertical basis, enterprise revenue was up 2% on a normalized basis, and service provider revenue was up 20%. Strength in service provider customers reflects investments in high-performance data center fabrics, routing capacity, and interconnect to support both AI training and inference. Networking operating margin was 23.7%, slightly above our guidance, supported by scale, pricing discipline, and early Juniper synergies.

Our actions are helping to offset higher component costs while supporting our margin performance. We are improving our execution, capturing operational efficiencies, and driving cost synergies as we work through the next phase of our integration. We successfully completed sales day one in Q1, marking an important milestone in integrating our HPE and Juniper sales organizations. Moving to cloud and AI, which includes our server, storage, and financial services businesses. Q1 revenue totaled $6.3 billion, down 3%, consistent with our outlook. This performance primarily reflects timing of AI server revenue shipments, offset by growth in the traditional server business and stable performance in storage and financial services. As Antonio mentioned, in the face of higher commodity costs, we have taken decisive actions to protect margins.

We implemented DRAM-related price increases starting in November 2025, shortened quote commitment cycles, and are more tightly coordinated across our supply chain, pricing, and sales organizations. In addition, we are actively steering demand towards lower memory configurations where appropriate, particularly across enterprise deployments. With our strategy in place, we are dynamically passing through memory and component cost inflation while protecting our margins and preserving profitability. These actions, coupled with strong cost discipline, resulted in a better than expected operating margin of 10.2%, with operating profit up 4% sequentially and 18% year-over-year. Server revenue declined 3% in line with expectations as strong AUP growth in traditional server was more than offset by the timing of AI shipments. Despite the pricing actions we implemented, we saw continued strong demand, albeit inclusive of some pull-ins aimed at avoiding the impact of rising component costs.

AI systems orders of $1.2 billion were largely enterprise-driven. Consistent with our strategy to focus on higher profitability, the mix of enterprise and sovereign has increased as a percentage of our cumulative orders since Q1 '23. Our AI server pipeline remains multiples of our backlog. We continue to expect AI demand and revenue to remain uneven this year, primarily due to some larger sovereign orders characterized by extended lead times, with AI shipments expected to ramp in the back half of the year. Moving to storage, which includes our storage, private cloud, and GreenLake Software Solutions revenue was up 1%. We continue to migrate customers to Alletra MP, which grew orders and revenue strong double digits year-over-year. We also continue to see strength in our private cloud offerings. As a reminder, we are exiting our third-party non-IP business to drive greater profitability.

We have reclassified this revenue with prior periods adjusted accordingly. Lastly, financial service revenue growth was roughly flat and generated an all-time high in return on equity of 27%. In addition, we are seeing incremental demand for networking following the acquisition of Juniper. Going forward, we expect networking to be a growth engine for HPEFS as we capitalize on our broader portfolio. This quarter's results reflect strong progress across our Catalyst initiatives and Juniper synergies, with both tracking to plan. These initiatives increase productivity, capture efficiencies, and unlock operating leverage that drives sustained profitability. Our relentless execution in both drove strong profitability and keeps us on track to generate at least $3 in EPS and more than $3.5 billion in free cash flow by FY28. Our Catalyst initiative is delivering meaningful cost savings by automating critical operational capabilities.

Across our global operations, we are aggressively deploying AI at scale to improve speed, cost, and customer experience, driving measurable and accelerating results as we continue to expand deployment. For example, we are using generative AI to surface technical insights, targeting a 90% reduction in search time for engineers and enabling faster, higher-quality service resolution. In addition, we are leveraging AI-optimized recommendations to simplify configuration workflows and improve accuracy. We are targeting 30% faster quote cycles, enabling customers to move from design to order with less friction. We have also made solid progress against our Juniper synergy plan. We have driven key structural actions, including the achievement of our sales day one milestone.

Our networking sales team is now operating on a unified approach to engaging customers, supported by harmonized fiscal 2026 sales compensation plans that sharpen our go-to-market focus and execution to drive toward our growth outlook for the year. We're making good progress on integrating corporate-related functions to drive significant savings across our networking business, including optimizing our supply chain strategy, real estate footprint, and marketing expenses. Turning to free cash flow, we delivered strong operating cash flow of $1.2 billion and free cash flow of $708 million in Q1, reinforcing our disciplined approach to financial management. Generating robust free cash flow and successfully integrating Juniper remain top priorities as we execute our fiscal 2026 strategy. Q1 benefited from a typical seasonality, which drove a five-day improvement in our cash conversion cycle from last quarter.

This was driven by an increase in days payable due to higher purchases to secure supply for future shipments and a slight decrease in days receivable due to favorable billings linearity and strong Juniper collections, largely offset by an increase in days of inventory due to higher purchases. Inventory ended the quarter at $6.9 billion, down year-over-year, but up sequentially for assurance of supply purposes given industry-wide supply chain constraints, particularly in memory. We saw our purchase commitments increase sequentially. We continue to demonstrate our commitment to a balanced capital allocation strategy. During the quarter, we returned $190 million through dividend to common shareholders and an additional $158 million via share repurchases.

We improved our pro forma net leverage ratio from 3.1 times after closing the Juniper acquisition to 2.6, primarily due to a healthy cash position, a lower debt balance, and improved profitability. We continue to make good progress on our previously announced H3C transactions, which remain on track to conclude in the first half of calendar 2026. Before we get into the details of our guidance, let me briefly address the macro environment, which continues to be highly dynamic and uncertain. First, as Antonio noted, we are seeing unprecedented supply tightness at a rapidly rising component costs. We are taking decisive actions to mitigate these pressures and protect profitability. Second, following the Supreme Court's recent tariff decision, we continue to monitor developments closely with greater clarity on tariff outcomes needed to fully assess the potential business impact.

Hewlett Packard Enterprise (HPE) Q1 2026 Earnings Call Transcript

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