AI Takeaway
HPE delivered a dramatic Q2 FY2026 turnaround, with revenue surging 40.0% YoY to $10.7B and swinging from a net loss of $1.05B to net income of $624M, driven largely by the Juniper Networks acquisition.
Revenue
$10.68B
++40.00% YoY
EPS (Basic)
$0.45
++154.88% YoY
Operating Income
$747M
++167.36% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Revenue jumped 40.0% YoY from $7.6B to $10.7B in Q2 FY2026, a growth rate that significantly exceeds HPE's historical organic growth trajectory and is primarily attributable to the consolidation of Juniper Networks following its acquisition close.
Source: Source: 10-Q Income Statement
Operating income swung from a loss of $1.1B in Q2 FY2025 to a gain of $747M in Q2 FY2026 (+167.4% YoY), and net income recovered from a loss of $1.05B to a profit of $624M, reflecting the absence of large one-time charges that weighed on the prior-year period and improved operating leverage.
Source: Source: 10-Q Income Statement
R&D expense rose 70.7% YoY to $922M and SG&A increased 41.0% YoY to $1.83B, reflecting the addition of Juniper's cost base and integration-related expenses, which will be a key area to monitor for margin improvement as synergies are realized.
Source: Source: 10-Q Income Statement
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Upgrade to unlockLong-term debt surged 47.3% YoY to $18.2B while cash fell 54.6% to $5.3B, significantly increasing HPE's leverage profile. Servicing this debt in a higher-for-longer interest rate environment could constrain free cash flow and limit strategic flexibility for future investments.
Source: Source: 10-Q Balance Sheet
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Upgrade to unlockReported EPS of $0.79 versus the $0.54 analyst consensus — a +46.4% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $10.68B | $7.63B | +40.00% |
Operating Income | $747M | $-1.11B | +167.36% |
Net Income | $624M | $-1.05B | +159.43% |
EPS (Basic) | $0.45 | $-0.82 | +154.88% |
EPS (Diluted) | $0.44 | $-0.82 | +153.66% |
R&D Expense | $922M | $540M | +70.74% |
SG&A Expense | $1.83B | $1.3B | +40.99% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $79.51B | $67.85B | +17.18% |
Current Assets | $29.36B | $31.57B | -7.01% |
Current Liabilities | $26.98B | $24.54B | +9.93% |
Stockholders' Equity | $25.29B | $23.87B | +5.97% |
Cash & Equivalents | $5.29B | $11.67B | -54.64% |
Long-Term Debt | $18.24B | $12.38B | +47.33% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $2.59B | $-851M | +404.11% |
Investing Cash FlowYTD | $-993M | $-1.01B | +1.88% |
Financing Cash FlowYTD | $-2.09B | $-1.49B | -40.15% |
Share BuybacksYTD | $312M | $102M | +205.88% |
D&AYTD | $1.75B | $1.17B | +49.10% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 7.0% | -14.5% | +21.54% |
Net Margin | 5.8% | — | — |
ROE | 2.5% | — | — |
ROA | 0.8% | — | — |
Current Ratio | $1.088 | — | — |
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HPE reported Q2 FY2026 net income of $624M and diluted EPS of $0.44, a dramatic turnaround from a net loss of $1.05B and EPS of -$0.82 in Q2 FY2025. The filing data does not include analyst consensus estimates, so a formal beat/miss determination requires comparison to Wall Street expectations at the time of reporting.
The headline story is HPE's 40% revenue surge to $10.7B and swing from a $1.05B net loss to $624M net profit, largely driven by the Juniper Networks acquisition. However, the deal also pushed long-term debt up 47.3% to $18.2B and cash down 54.6% to $5.3B, making integration execution and debt reduction critical near-term priorities.
HPE's revenue grew 40.0% YoY from $7.6B to $10.7B in Q2 FY2026, a growth rate well above the company's historical organic pace and primarily attributable to the consolidation of Juniper Networks. R&D and SG&A expenses also rose sharply (70.7% and 41.0% respectively), reflecting the expanded combined cost structure.
Based on the financial data, the most prominent risks are the elevated debt burden ($18.2B long-term debt, up 47.3% YoY), integration execution risk from the Juniper acquisition, and tight liquidity with a current ratio of only 1.09x. Low ROE (2.47%) and ROA (0.78%) also suggest the enlarged asset base has yet to generate adequate returns.
HPE's financial health is mixed: the company has returned to profitability with $624M net income and strong YTD operating cash flow of $2.59B, but leverage has increased materially with $18.2B in long-term debt and cash falling to $5.3B. The current ratio of 1.09x and modest operating margin of 7.0% indicate the company needs to successfully execute on synergies to strengthen its balance sheet over time.