| Segment/Quarter                        | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Compute/Server ($ billion)**         | 3.7  **[0001645590-22-000067_ex-991x10312022x8kng.htm:1]**  | 3.5  **[0001645590-23-000029_ex-991x322023x8k.htm:1]**  | 2.8  **[0001645590-23-000054_ex-991x5302023x8k.htm:1]**  | 2.6  **[0001645590-23-000082_ex-991x8292023x8k.htm:1]**  | 2.6  **[0001645590-23-000105_ex-991x11282023x8k.htm:1]**  | 3.4  **[0001645590-24-000058_ex-991x2292024x8k.htm:1]**  | 3.9  **[0001645590-24-000090_ex-991x642024x8k.htm:0]**  | 4.3  **[0001645590-24-000114_ex-991x942024x8k.htm:0]**  |
| **Hybrid Cloud ($ billion)**           | N/A     | N/A     | N/A     | N/A     | N/A     | 1.2  **[0001645590-24-000058_ex-991x2292024x8k.htm:1]**  | 1.3  **[0001645590-24-000090_ex-991x642024x8k.htm:0]**  | 1.3  **[0001645590-24-000114_ex-991x942024x8k.htm:0]**  |
| **Intelligent Edge ($ billion)**       | 0.965  **[0001645590-22-000067_ex-991x10312022x8kng.htm:1]**  | 1.1  **[0001645590-23-000029_ex-991x322023x8k.htm:1]**  | 1.3  **[0001645590-23-000054_ex-991x5302023x8k.htm:1]**  | 1.4  **[0001645590-23-000082_ex-991x8292023x8k.htm:1]**  | 1.4  **[0001645590-23-000105_ex-991x11282023x8k.htm:1]**  | 1.2  **[0001645590-24-000058_ex-991x2292024x8k.htm:1]**  | 1.1  **[0001645590-24-000090_ex-991x642024x8k.htm:0]**  | 1.1  **[0001645590-24-000114_ex-991x942024x8k.htm:0]**  |
| **HPC & AI ($ billion)**               | 0.862  **[0001645590-22-000067_ex-991x10312022x8kng.htm:1]**  | 1.1  **[0001645590-23-000029_ex-991x322023x8k.htm:1]**  | 0.84  **[0001645590-23-000054_ex-991x5302023x8k.htm:1]**  | 0.836  **[0001645590-23-000082_ex-991x8292023x8k.htm:1]**  | 1.2  **[0001645590-23-000105_ex-991x11282023x8k.htm:1]**  | N/A     | N/A     | N/A     |
| **Storage ($ billion)**                | 1.3  **[0001645590-22-000067_ex-991x10312022x8kng.htm:1]**  | 1.2  **[0001645590-23-000029_ex-991x322023x8k.htm:1]**  | 1.0  **[0001645590-23-000054_ex-991x5302023x8k.htm:1]**  | 1.1  **[0001645590-23-000082_ex-991x8292023x8k.htm:1]**  | 1.1  **[0001645590-23-000105_ex-991x11282023x8k.htm:1]**  | N/A     | N/A     | N/A     |
| **Financial Services ($ billion)**     | 0.857  **[0001645590-22-000067_ex-991x10312022x8kng.htm:1]**  | 0.873  **[0001645590-23-000029_ex-991x322023x8k.htm:1]**  | 0.858  **[0001645590-23-000054_ex-991x5302023x8k.htm:1]**  | 0.873  **[0001645590-23-000082_ex-991x8292023x8k.htm:1]**  | 0.876  **[0001645590-23-000105_ex-991x11282023x8k.htm:1]**  | 0.873  **[0001645590-24-000058_ex-991x2292024x8k.htm:1]**  | 0.867  **[0001645590-24-000090_ex-991x642024x8k.htm:0]**  | 0.879  **[0001645590-24-000114_ex-991x942024x8k.htm:0]**  |
| **Corporate Investments & Other ($ billion)** | N/A     | 0.293  **[0001645590-23-000035_hpe-20230131.htm:45]**  | N/A     | N/A     | N/A     | 0.238  **[0001645590-24-000069_hpe-20240131.htm:49]**  | 0.252  **[0001645590-24-000098_hpe-20240430.htm:16]**  | 0.262  **[0001645590-24-000119_hpe-20240731.htm:55]**  |

3222fd7fd509b59e583171183398b8f7547c220992a8df3327efb55168e4b359

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from Debt [USD, Millions]

Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

1ef055483dc1bccd05d629e3594bfb1e25632c244eefe00db546147bbfda87a0

| Geographical Segment | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Americas** (USD million) | **3,410**  **[0001645590-24-000119_hpe-20240731.htm:16]**  | **3,144**  **[0001645590-24-000098_hpe-20240430.htm:16]**  | **2,801**  **[0001645590-24-000069_hpe-20240131.htm:16]**  | N/A | **2,972**  **[0001645590-23-000087_hpe-20230731.htm:17]**  | **2,915**  **[0001645590-23-000066_hpe-20230430.htm:16]**  | N/A | N/A |
| **- United States** (USD million) | **2,882**  **[0001645590-24-000119_hpe-20240731.htm:16]**  | **2,584**  **[0001645590-24-000098_hpe-20240430.htm:16]**  | **2,294**  **[0001645590-24-000069_hpe-20240131.htm:16]**  | N/A | **2,433**  **[0001645590-23-000087_hpe-20230731.htm:17]**  | **2,395**  **[0001645590-23-000066_hpe-20230430.htm:16]**  | N/A | N/A |
| **- Americas excluding U.S.** (USD million) | **528**  **[0001645590-24-000119_hpe-20240731.htm:16]**  | **560**  **[0001645590-24-000098_hpe-20240430.htm:16]**  | **507**  **[0001645590-24-000069_hpe-20240131.htm:16]**  | N/A | **539**  **[0001645590-23-000087_hpe-20230731.htm:17]**  | **520**  **[0001645590-23-000066_hpe-20230430.htm:16]**  | N/A | N/A |
| **EMEA** (USD million) | **2,555**  **[0001645590-24-000119_hpe-20240731.htm:16]**  | **2,454**  **[0001645590-24-000098_hpe-20240430.htm:16]**  | **2,434**  **[0001645590-24-000069_hpe-20240131.htm:16]**  | N/A | **2,434**  **[0001645590-23-000087_hpe-20230731.htm:17]**  | **2,491**  **[0001645590-23-000066_hpe-20230430.htm:16]**  | N/A | N/A |
| **APJ** (USD million) | **1,745**  **[0001645590-24-000119_hpe-20240731.htm:16]**  | **1,606**  **[0001645590-24-000098_hpe-20240430.htm:16]**  | **1,520**  **[0001645590-24-000069_hpe-20240131.htm:16]**  | N/A | **1,596**  **[0001645590-23-000087_hpe-20230731.htm:17]**  | **1,567**  **[0001645590-23-000066_hpe-20230430.htm:16]**  | N/A | N/A |
| **Total Revenue** (USD million) | **7,710**  **[0001645590-24-000119_hpe-20240731.htm:16]**  | **7,204**  **[0001645590-24-000098_hpe-20240430.htm:16]**  | **6,755**  **[0001645590-24-000069_hpe-20240131.htm:16]**  | N/A | **7,002**  **[0001645590-23-000087_hpe-20230731.htm:17]**  | **6,973**  **[0001645590-23-000066_hpe-20230430.htm:16]**  | N/A | N/A |

aac20d56ce4b450abb3d5901af9615286e709b76489433fc592651c19d670852

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Units]

EPS - Diluted [USD, Units]

a1fe32792ca9801b02c367e85252bf018c3107f295c776dacff1b5d99451d1d4

Hewlett Packard Enterprise (HPE) is a global technology leader that develops intelligent solutions enabling customers to seamlessly capture, analyze, and act upon data from edge to cloud **[0001645590-23-000117_hpe-20231031.htm:127]** **[0001645590-23-000117_hpe-20231031.htm:143]**. The company offers a range of products and services across various segments, including general-purpose and workload-optimized servers, high-performance computing systems, data storage solutions, networking products, and financial services **[0001645590-23-000117_hpe-20231031.htm:12]** **[0001645590-23-000117_hpe-20231031.htm:143]**. HPE's Compute and Intelligent Edge segments are among the top contributors to its consolidated net revenue **[0001645590-23-000117_hpe-20231031.htm:12]**.

1. **Compute** - Offers general-purpose servers and workload-optimized servers, which are significant revenue sources for HPE **[0001645590-23-000117_hpe-20231031.htm:12]** **[0001645590-23-000117_hpe-20231031.htm:143]**.
2. **Intelligent Edge** - Focuses on networking products and services, contributing significantly to HPE's revenue **[0001645590-23-000117_hpe-20231031.htm:12]** **[0001645590-23-000117_hpe-20231031.htm:143]**.
3. **High Performance Computing & Artificial Intelligence (HPC & AI)** - Provides integrated systems for high-performance computing and AI workloads, including products like HPE Cray EX and HPE NonStop **[0001645590-23-000117_hpe-20231031.htm:143]**.
4. **Storage** - Delivers data storage and management solutions **[0001645590-23-000117_hpe-20231031.htm:12]** **[0001645590-23-000117_hpe-20231031.htm:143]**.
5. **Financial Services** - Provides leasing and financing solutions to support HPE's product sales **[HPE_3400977_1]**.
6. **Corporate Investments and Other** - Encompasses various corporate investments and other business activities **[0001645590-23-000117_hpe-20231031.htm:127]** **[0001645590-23-000117_hpe-20231031.htm:143]**.

866f4f53f7704024ccd99ec46bb788d2ee3cbac1fa9caf7c472fe056bf6b045c

50c9cecabe9bf2cbf92a0c2cfbd57a1f80b2234cbddcdbfbf80ded84b4f3e044

1. You mentioned debooking a large $700 million AI systems order due to concerns with a specific customer; can you provide more details on what led to this decision and how it might affect future AI systems orders?  
2. Given that AI systems orders can be "lumpy" and net orders were approximately $500 million after the debooking, how confident are you in the sustainability of AI systems revenue growth, and what measures are you taking to manage the volatility in this segment?  
3. With the AI systems business contributing to lower gross margins due to competitive pressures, what strategies do you have to improve profitability in this area, and are there specific gross margin thresholds you aim to maintain when pursuing AI deals?  
4. As you transition to next-generation GPUs like Blackwell, what challenges do you foresee in maintaining your AI systems revenue momentum, and how might this transition impact your operating margins in the upcoming quarters?  
5. The Intelligent Edge business experienced a 20% year-over-year revenue decline and continued prolonged sales cycles; what specific actions are you taking to address these challenges, and when do you anticipate a return to growth in this segment?

d5b91238ee034eb0544f53ae9d4ea2b7553fd8a7df83d3653e40f90a6626d7de

Americas

- United States

- Americas excluding U.S.

Europe, Middle East and Africa

Asia Pacific and Japan

Other Countries

Total Revenue

6a27a1936bd8a19bf56b2632dbfdb4e873ee40af86dd0644f7e9a47f5fedf2ea

Annualized Revenue Run-rate (USD millions)

Year-over-year growth rate for Annualized Revenue Run-rate (percentage)

Financing volume (USD millions)

409ab31bd55c25fbfcc88281fb3011c19fa56ec3ef3cd1b657dd6a338dfcfb8d

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: Q1 2025
- **Guidance**:
  1. **Revenue Growth**: Mid-teens year-over-year.
  2. **Server Revenue**: Expected to be down quarter-over-quarter.
  3. **Traditional Compute**: Flat to modest growth sequentially.
  4. **AI Systems Contribution**: Expected to be lower.
  5. **Server Operating Margin**: 10% to 11%.
  6. **Hybrid Cloud**: Sequential decline with mid-single-digit operating margin.
  7. **Networking**: Flattish sequential growth with low 20% operating margin.
  8. **Gross Margin**: Expected to benefit from a favorable revenue mix.
  9. **Operating Expenses (OpEx)**: Modest sequential decrease.
  10. **Other Income & Expense (OI&E)**: Positive contribution with higher net interest income.
  11. **GAAP Diluted Net EPS**: $0.31 to $0.36.
  12. **Non-GAAP Diluted Net EPS**: $0.47 to $0.52.
  13. **Free Cash Flow**: Typically consumes cash.
  14. **Share Buybacks**: Similar pace to Q4  **[HPE_3411067_6]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024 and FY 2024
- **Guidance**:
  - **Full Year Guidance**:
    1. **Revenue Growth**: High end of 1% to 3% growth.
    2. **Operating Profit Growth**: Low end of 0% to 2%.
    3. **Non-GAAP Diluted Net EPS**: $1.92 to $1.97.
    4. **GAAP EPS**: $1.68 to $1.73.
    5. **Free Cash Flow**: $1.9 billion.
  - **Q4 2024 Guidance**:
    1. **Revenue**: $8.1 billion to $8.4 billion.
    2. **GAAP Diluted Net EPS**: $0.76 to $0.81.
    3. **Non-GAAP Diluted Net EPS**: $0.52 to $0.57.
  - **Segment-Specific Guidance**:
    1. **Server Segment**: Low end of 11% to 13% operating margin.
    2. **Hybrid Cloud**: Mid-single-digit operating margin.
    3. **Intelligent Edge**: Mid-20% operating margin  **[HPE_3400492_9]** **[HPE_3400492_8]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: Q3 2024 and FY 2024
- **Guidance**:
  1. **Non-GAAP Operating Profit Growth**: 0% to 2%.
  2. **GAAP Diluted Net EPS**: $1.61 to $1.71.
  3. **Non-GAAP Diluted Net EPS**: $1.85 to $1.95.
  4. **Fiscal Year '24 Non-GAAP Gross Margin**: Below 35%.
  5. **Fiscal Year '24 OpEx**: Down modestly.
  6. **Fiscal Year '24 Operating Margin**: Flattish year-over-year.
  7. **OI&E Headwind**: $150 million.
  8. **Free Cash Flow**: At least $1.9 billion.
  9. **Revenue Growth**: 1% to 3%.
  10. **Q3 Revenue**: $7.4 billion to $7.8 billion.
  11. **Q3 GAAP Diluted Net EPS**: $0.29 to $0.34.
  12. **Q3 Non-GAAP Diluted Net EPS**: $0.43 to $0.48  **[HPE_3391510_8]** **[HPE_3391510_7]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: Q2 2024 and FY 2024
- **Guidance**:
  1. **Revenue**: $6.6 billion to $7 billion.
  2. **GAAP Diluted Net EPS**: $0.20 to $0.25.
  3. **Non-GAAP Diluted Net EPS**: $0.36 to $0.41.
  4. **Free Cash Flow**: Negative in Q2.
  5. **Full Year Non-GAAP Gross Margin**: Slightly down from 35%.
  6. **Operating Margin**: Flattish year-over-year.
  7. **OI&E**: $200 million to $250 million headwind.
  8. **Free Cash Flow for Fiscal Year '24**: At least $1.9 billion.
  9. **Non-GAAP Operating Profit Growth**: 0% to 2%.
  10. **GAAP Diluted Net EPS for Fiscal Year '24**: $1.81 to $1.91.
  11. **Non-GAAP Diluted Net EPS for Fiscal Year '24**: $1.82 to $1.92.
  12. **Intelligent Edge Margin**: Mid-20% range.
  13. **ARR Growth**: 35% to 45%  **[HPE_3376183_8]** **[HPE_3376183_2]** **[HPE_3376183_7]** .

3382546be56142a1779dd65186e62c299c681deaa76833a8c04549d60a1b245f

| Name              | Position                                                                 | Start Date       | Short Bio                                                                                                                                                                                                 |
|-------------------|--------------------------------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Antonio Neri      | President and Chief Executive Officer                                    | February 2018    | Antonio Neri has been with HPE for over 25 years, having joined HP in 1996. He has held various leadership roles, including Executive Vice President and General Manager of HPE's Enterprise Group  **[0001645590-23-000117_hpe-20231031.htm:30]** **[0001645590-24-000020_hpe-20240209.htm:65]** **[0001645590-24-000044_hpe-20240220.htm:65]** **[0001645590-23-000022_a2023hpeproxy.htm:59]** .                                |
| John F. Schultz   | Executive Vice President, Chief Operating and Legal Officer              | July 2020        | John F. Schultz joined HP Co. in 2008 and has held several senior roles, including Executive Vice President, Chief Legal and Administrative Officer and Secretary  **[0001645590-23-000117_hpe-20231031.htm:31]** **[0001645590-22-000071_hpe-20221031.htm:31]** .                                                                       |
| Alan May          | Executive Vice President and Chief People Officer                        | June 2015        | Alan May leads a global HR function at HPE, focusing on business growth and transformation. He previously held senior HR roles at Boeing, Cerberus Capital Management, and PepsiCo  **[0001645590-23-000117_hpe-20231031.htm:31]** **[0001645590-22-000071_hpe-20221031.htm:31]** .                                                      |
| Gerri A. Gold     | Executive Vice President, President, and Chief Executive Officer, HPE Financial Services | February 2023    | Gerri A. Gold leads HPE Financial Services and has held various leadership roles at HP Co., Compaq Financial Services, and AT&T  **[0001645590-23-000117_hpe-20231031.htm:31]** .                                                                                                           |
| Fidelma Russo     | Executive Vice President, Chief Technology Officer, and General Manager of Hybrid Cloud | November 2023    | Fidelma Russo has held senior positions at VMware, Iron Mountain, Inc., and EMC Corp. before joining HPE  **[0001645590-23-000117_hpe-20231031.htm:31]** .                                                                                                                                    |
| Justin Hotard     | Executive Vice President and General Manager of HPC & AI                 | March 2022       | Justin Hotard has led corporate transformation efforts at HPE and held leadership positions at NCR Corporation, Symbol Technologies, and Motorola, Inc.  **[0001645590-23-000117_hpe-20231031.htm:32]** **[0001645590-22-000071_hpe-20221031.htm:32]** .                                                                                |
| Neil B. MacDonald | Executive Vice President and General Manager of Compute                  | March 2022       | Neil B. MacDonald has been with HP Co. since 1996 and has held various senior roles within the Compute business  **[0001645590-23-000117_hpe-20231031.htm:32]** **[0001645590-22-000071_hpe-20221031.htm:32]** .                                                                                                                         |
| Philip J. Mottram | Executive Vice President and General Manager of Intelligent Edge         | March 2022       | Philip J. Mottram was previously the President of the Intelligent Edge business and has held leadership positions at Zayo Group and Vodafone  **[0001645590-23-000117_hpe-20231031.htm:33]** **[0001645590-22-000071_hpe-20221031.htm:33]** .                                                                                            |
| Jeremy K. Cox     | Senior Vice President, Chief Financial Officer, Corporate Controller, Chief Tax Officer, and Principal Accounting Officer | August 2023    | Jeremy K. Cox joined HP Inc. in 2008 and has held various senior positions at HPE, including roles in Global Tax and Financial Planning  **[0001645590-23-000117_hpe-20231031.htm:33]** **[0001645590-22-000071_hpe-20221031.htm:33]** .                                                                                                 |
| Kirt P. Karros    | Senior Vice President, Treasurer and Investor Relations                  | May 2022         | Kirt P. Karros has led Treasury and Investor Relations at HPE and previously held a similar role at HP Co. He is also the Executive Chairman of H3C Technologies  **[0001645590-23-000117_hpe-20231031.htm:33]** **[0001645590-22-000071_hpe-20221031.htm:33]** .                                                                        |

42cab28bf6a2bffe870324d118c6ed3680e52523335b24a879ce77bacc9d2d8b

2df7d04fb5547d3cd2056dfcf8ebb0052994fd3e54d78b37bdc3d63ba2eb2d92

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | October 13, 2015  **[0001645590-24-000139_hpe-20241031.htm:88]** **[0001645590-24-000139_hpe-20241031.htm:205]** **[0001645590-24-000139_hpe-20241031.htm:110]**  |
| End Date/Duration        | No specific expiration date  **[0001645590-24-000139_hpe-20241031.htm:88]** **[0001645590-24-000139_hpe-20241031.htm:205]** **[0001645590-24-000139_hpe-20241031.htm:110]**  |
| Total Additional Amount  | **$3.0 billion**  **[0001645590-24-000139_hpe-20241031.htm:88]** **[0001645590-24-000139_hpe-20241031.htm:205]** **[0001645590-24-000139_hpe-20241031.htm:110]**  |
| Remaining Authorization  | **$0.8 billion** as of October 31, 2024  **[0001645590-24-000139_hpe-20241031.htm:88]** **[0001645590-24-000139_hpe-20241031.htm:205]** **[0001645590-24-000139_hpe-20241031.htm:110]**  |
| Details                  | Allows repurchases in the open market or in private transactions  **[0001645590-24-000139_hpe-20241031.htm:88]** **[0001645590-24-000139_hpe-20241031.htm:205]** **[0001645590-24-000139_hpe-20241031.htm:110]**  |

10e5984fc5aa4980788449bf382448831ef1db15b437ad761ac12adc068bd932

Server

Compute

- Intersegment

Hybrid Cloud

HPC & AI

Storage

Intelligent Edge

Financial Services

Corporate Investments and Other

Products

Services

Financing Income

0a667d2b16c409f00f757e52ca2323e74846fb6b30b02aa1ddce6c3bd65ce12b

**Quarterly guidance for Q1 2025:**
- **Revenue Growth**: Mid-teens year-over-year  **[HPE_3411067_6]**  (no prior guidance)  
- **Server Revenue**: Expected to be down quarter-over-quarter  **[HPE_3411067_6]**  (no prior guidance)  
- **Traditional Compute**: Flat to modest growth sequentially  **[HPE_3411067_6]**  (no prior guidance)  
- **AI Systems Contribution**: Expected to be lower  **[HPE_3411067_6]**  (no prior guidance)  
- **Server Operating Margin**: 10% to 11%  **[HPE_3411067_6]**  (lowered from 11% to 13%  **[HPE_3400492_9]** **[HPE_3400492_8]** )  
- **Hybrid Cloud**: Sequential decline with mid-single-digit operating margin  **[HPE_3411067_6]**  (no change from prior guidance  **[HPE_3400492_9]** **[HPE_3400492_8]** )  
- **Networking**: Flattish sequential growth with low 20% operating margin  **[HPE_3411067_6]**  (lowered from mid-20% operating margin  **[HPE_3400492_9]** **[HPE_3400492_8]** )  
- **Gross Margin**: Expected to benefit from a favorable revenue mix  **[HPE_3411067_6]**  (no prior guidance)  
- **Operating Expenses (OpEx)**: Modest sequential decrease  **[HPE_3411067_6]**  (no prior guidance)  
- **Other Income & Expense (OI&E)**: Positive contribution with higher net interest income  **[HPE_3411067_6]**  (no prior guidance)  
- **GAAP Diluted Net EPS**: $0.31 to $0.36  **[HPE_3411067_6]**  (lowered from $0.76 to $0.81  **[HPE_3400492_9]** **[HPE_3400492_8]** )  
- **Non-GAAP Diluted Net EPS**: $0.47 to $0.52  **[HPE_3411067_6]**  (lowered from $0.52 to $0.57  **[HPE_3400492_9]** **[HPE_3400492_8]** )  
- **Free Cash Flow**: Typically consumes cash  **[HPE_3411067_6]**  (no prior guidance)  
- **Share Buybacks**: Similar pace to Q4  **[HPE_3411067_6]**  (no prior guidance)

8509a29ded09300210d292b956ea4b38941d162241de8e4cec0869da4a15c6fe

| Name               | Start Date | End Date | Reason for Change |
|--------------------|------------|----------|-------------------|
| Ernst & Young LLP | 2014  **[0001645590-24-000139_hpe-20241031.htm:132]**  | Present  | Current auditor   |

70e75380db3fcfad9971ca40cf1880ed176e8aa0862251430a5a72246c408695

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

01f22cdf7830422447e2df7b37bcfb2d4150713efd6e82885834ca59375a46d9

- Total Revenue: $8,458 million (**+15% YoY**)  **[0001645590-24-000139_hpe-20241031.htm:103]** **[0001645590-23-000117_hpe-20231031.htm:146]**   
- Operating Income (EBIT): $693 million (**+37% YoY**)  **[0001645590-23-000117_hpe-20231031.htm:122]** **[0001645590-24-000139_hpe-20241031.htm:135]**   
- Net Income: $1,366 million (**+113% YoY**)  **[0001645590-23-000117_hpe-20231031.htm:122]** **[0001645590-24-000139_hpe-20241031.htm:135]**   
- EPS (Basic): $1.02 (**+108% YoY**)  **[0001645590-23-000117_hpe-20231031.htm:122]** **[0001645590-24-000139_hpe-20241031.htm:135]**   
- Intelligent Edge: $1,148 million (-14% YoY)  **[0001645590-24-000139_hpe-20241031.htm:103]** **[0001645590-23-000117_hpe-20231031.htm:146]**   
- Corporate Investments & Other: $262 million (-24% YoY)  **[0001645590-24-000139_hpe-20241031.htm:103]** **[0001645590-23-000117_hpe-20231031.htm:146]**   
- Americas: $3,880 million (+20% YoY)  **[0001645590-23-000117_hpe-20231031.htm:147]** **[0001645590-24-000139_hpe-20241031.htm:160]**   
- EMEA: $2,746 million (+8% YoY)  **[0001645590-23-000117_hpe-20231031.htm:147]** **[0001645590-24-000139_hpe-20241031.htm:160]**   
- Asia Pacific & Japan: $1,832 million (+17% YoY)  **[0001645590-23-000117_hpe-20231031.htm:147]** **[0001645590-24-000139_hpe-20241031.htm:160]**   

b791138c5b9fdeab04690a2b21973bee87d37ef96ae482a80e4981b1f5b1c30b

3165a33c7f11549cedd83b63b6d27b1d4cf5b160ebb66ab028e99865ac26c266

0dbb9864b9a4b0ed6146dcf66fc210e795fd9778b831cdd2480bed1ffde5db25

- HPE is experiencing strong momentum in the **services attached to their AI systems**, particularly in the **enterprise segment**, which is expected to grow and **contribute positively to gross margins** over time as deferred revenues are recognized.  **[HPE_3400492_14]**
- HPE is seeing **no signs of cannibalization** of **traditional servers** by AI-accelerated platforms, and continues to observe **good growth and order patterns** in traditional servers.  **[HPE_3400492_15]**
- HPE is **well positioned** across various AI market segments, including **service providers**, **sovereign AI**, and the **growing enterprise AI segment**, allowing them to capitalize on the AI opportunity without negatively impacting their traditional server business.  **[HPE_3400492_15]**

2f34f27f216fa405e09afe9bd0c208d9e421df6159a651eba1658490731ced7d

| Year | Amount Due (in millions) | Debt Type                              | Interest Rate (%) | % of Total Debt                     |
|----------|------------------------------|--------------------------------------------|------------------------|------------------------------------------|
| 2025     | $4,032 **[0001645590-24-000139_hpe-20241031.htm:202]**               | Short-term borrowings and finance leases   | Various  **[0001645590-24-000139_hpe-20241031.htm:116]**   **[0001645590-24-000139_hpe-20241031.htm:200]**    | 22.1% = (4,032 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**  |
| 2026     | $2,710 **[0001645590-24-000139_hpe-20241031.htm:202]**               | Senior Notes                               | 4.45%, 1.75% **[0001645590-24-000139_hpe-20241031.htm:200]**  | 14.9% = (2,710 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**  |
| 2027     | $1,545 **[0001645590-24-000139_hpe-20241031.htm:202]**               | Senior Notes                               | 4.40% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 8.5% = (1,545 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**   |
| 2028     | $612 **[0001645590-24-000139_hpe-20241031.htm:202]**                 | Senior Notes                               | 5.25% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 3.4% = (612 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**     |
| 2029     | $1,758 **[0001645590-24-000139_hpe-20241031.htm:202]**               | Senior Notes                               | 4.55% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 9.6% = (1,758 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**   |
| 2031     | $1,250 **[0001645590-24-000139_hpe-20241031.htm:200]**               | Senior Notes                               | 4.85% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 6.9% = (1,250 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**   |
| 2034     | $2,000 **[0001645590-24-000139_hpe-20241031.htm:200]**               | Senior Notes                               | 5.00% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 11.0% = (2,000 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**  |
| 2035     | $750 **[0001645590-24-000139_hpe-20241031.htm:200]**                 | Senior Notes                               | 6.20% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 4.1% = (750 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**     |
| 2045     | $1,500 **[0001645590-24-000139_hpe-20241031.htm:200]**               | Senior Notes                               | 6.35% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 8.2% = (1,500 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**   |
| 2054     | $1,500 **[0001645590-24-000139_hpe-20241031.htm:200]**               | Senior Notes                               | 5.60% **[0001645590-24-000139_hpe-20241031.htm:200]**         | 8.2% = (1,500 / 18,246) * 100 **[0001645590-24-000139_hpe-20241031.htm:137]**   |

634de81db3951b456261164454fb6ca06a885c2b57c0e23a5671570b0d11a067

- **Strong demand for AI systems is driving significant growth opportunities**: HPE's cumulative orders for AI systems reached **$4 billion**, with a backlog of **$3 billion**, nearly tripling year-over-year. This robust demand is expected to drive a **very strong second half**, predominantly driven by AI systems revenue.  **[HPE_3376183_10]** ,  **[HPE_3376183_14]** ,  **[HPE_3376183_9]**
- **Expansion of Annual Recurring Revenue (ARR) through HPE GreenLake platform**: A significant portion of AI system orders is going through **HPE GreenLake**, contributing to ARR growth. HPE GreenLake now serves **over 31,000 customers**, up approximately **8% quarter-over-quarter** (about 3,000 new customers), enhancing margin expansion over time.  **[HPE_3376183_9]**
- **Stabilization and sequential improvement expected in servers and storage segments**: HPE sees signs of stabilization with **sequential order improvement** in traditional servers and storage, shifting to higher-value **Gen11 servers**, which have higher pricing and configurations. This shift is expected to drive revenue growth and improve operational services attachment rates.  **[HPE_3376183_11]**

8adfc070d54c198a97042d62366edbb0d778525ce2122f9d8464f044885690f1

1. **AI Systems Revenue and Margin Outlook**  
   **Q:** How are AI systems revenue and margins progressing?  
   **A:** HPE shipped **$900 million** in AI revenue this quarter, **doubling sequentially**.  **[HPE_3391510_9]** **[HPE_3391510_14]**  Operating profit margin in the server segment was **11%**, matching guidance.  **[HPE_3391510_9]**  CFO Marie Myers is pleased with the results and maintains guidance for the second half.  **[HPE_3391510_9]** 

2. **AI Backlog and Future Pipeline**  
   **Q:** What is the outlook for AI backlog and pipeline?  
   **A:** The AI backlog was slightly down quarter-over-quarter due to higher revenue conversion, but the pipeline is **multiples** of the current backlog.  **[HPE_3391510_13]**  Antonio Neri notes potential to exceed guidance, but limiting factors include data center space, power, and cooling availability.  **[HPE_3391510_12]** **[HPE_3391510_13]** 

3. **Differentiation in Liquid Cooling Technology**  
   **Q:** How does HPE's liquid cooling technology differentiate it?  
   **A:** HPE's unique **100% direct liquid cooling** capability sets it apart, essential for upcoming high-power GPUs like NVIDIA's Blackwell.  **[HPE_3391510_10]**  With over **300 patents** in liquid cooling and the largest water-cooled manufacturing footprint, HPE can deliver AI systems at scale.  **[HPE_3391510_10]** 

4. **Competitive Positioning Against Dell and Super Micro**  
   **Q:** How does HPE's AI margin compare to competitors?  
   **A:** HPE's AI margins are holding up better than those of Dell or Super Micro.  **[HPE_3391510_9]**  This is attributed to disciplined pricing, cost management, and differentiation in delivering AI systems at scale with unique cooling and services capabilities.  **[HPE_3391510_9]** 

5. **GreenLake Revenue and ARR Growth from AI**  
   **Q:** How is AI contributing to GreenLake revenue and ARR growth?  
   **A:** AI was the **fastest-growing** element of Annualized Recurring Revenue (ARR) in Q2, followed by storage and networking.  **[HPE_3391510_15]**  HPE is seeing AI permeate the entire portfolio, enhancing GreenLake offerings.  **[HPE_3391510_15]** 

6. **Guidance and Revenue Performance**  
   **Q:** Why does guidance not fully reflect the revenue beat?  
   **A:** The guidance raise includes a **$0.03** increase related to the 19% stake in H3C but maintains the previous range, pointing to the higher end.  **[HPE_3391510_12]**  CFO Marie Myers cites confidence from strong top-line growth and cost discipline, while noting some onetime OI&E favorability.  **[HPE_3391510_12]** 

7. **GPU Diversification and Future Products**  
   **Q:** What is HPE's view on GPU diversification with AMD and Intel?  
   **A:** HPE currently aligns with NVIDIA, the market leader in generative AI, offering multiple systems optimized for NVIDIA GPUs.  **[HPE_3391510_17]**  While open to future accelerators from AMD and Intel, HPE emphasizes its current focus on NVIDIA partnerships.  **[HPE_3391510_17]** 

8. **Intelligent Edge Inventory Digestion**  
   **Q:** Where is HPE in Intelligent Edge inventory digestion?  
   **A:** Q2 was the **trough period** for Intelligent Edge, with channel inventory now in good shape.  **[HPE_3391510_11]**  HPE expects a modest sequential improvement in networking in the second half of the year.  **[HPE_3391510_11]** 

52c7b3c67380f9d42ed7a8d6fd804b29cc777141aa1de027dd0c38a26e354def

1. **AI Systems Revenue and Backlog**  
   **Q:** How is AI revenue impacting your ARR growth?  
   **A:** A significant portion of our **$4 billion** in cumulative AI orders is going through **HPE GreenLake**, contributing to ARR growth. We shipped around **$400 million** in AI revenue and ended the quarter with a **$3 billion** AI backlog, nearly tripling year-on-year.  **[HPE_3376183_14]** 

2. **GPU Supply and Lead Times**  
   **Q:** Have GPU lead times improved, and how does that affect backlog conversion?  
   **A:** GPU lead times have come down but are still elevated at **20-plus weeks**. We continue to need more supply against our **$3 billion** backlog. However, we're confident in converting GPU orders into revenue as we see improvements in supply and customer acceptances.  **[HPE_3376183_9]** **[HPE_3376183_13]** 

3. **Intelligent Edge and Networking Outlook**  
   **Q:** What's changed in Intelligent Edge, and is the Juniper deal affecting demand?  
   **A:** We saw an acceleration of demand softness in January, but we do not have a channel inventory problem. Customers are taking longer to install shipped products. We haven't lost any deals due to the Juniper acquisition announcement, and we expect a slight improvement in the back half with **Q2 being the trough**.  **[HPE_3376183_11]** **[HPE_3376183_12]** 

4. **Server and Storage Growth Expectations**  
   **Q:** Why do you expect sequential growth in servers and storage?  
   **A:** We see signs of stabilization with sequential order improvement. There's a mix shift to **Gen11** servers, which are higher-priced, and we'll pass on cost inflation. Units are stable or improving, driving Operational Services attach rates. In storage, AI is a pull-through demand, and **Alletra** is growing, contributing to ARR through disaggregated software subscriptions.  **[HPE_3376183_12]** 

5. **Profitability of AI Servers**  
   **Q:** How does accelerated compute affect server profitability?  
   **A:** Our Server segment delivered strong performance within the **11% to 13%** target range. Selling an XD system can be **20×** the value of a traditional server, and an EX system up to **35×**. This allows us to optimize margins through configurations and service attachments, driving better shareholder outcomes.  **[HPE_3376183_16]** 

6. **AI Inferencing Demand**  
   **Q:** How do enterprise AI inferencing deployments differ from training, and when will they impact revenue?  
   **A:** Enterprises focus on fine-tuning models with their data in secure environments, leading to inferencing at the edge. Use cases include retail and banking. Growth in this area will materialize in the second half and into **fiscal '25**, given lead times. The Juniper acquisition enhances our ability to deliver these solutions.  **[HPE_3376183_15]** 

7. **Shift to GPU Accelerated Computing**  
   **Q:** Will x86 applications shift to GPUs as Moore's Law ends?  
   **A:** We believe traditional CPU-based architectures and GPU-accelerated AI applications will coexist. Not all applications will move to GPUs; some inferencing solutions will continue to run efficiently on CPUs. The transition will take time, and the mix depends on how AI applications are constructed.  **[HPE_3376183_17]** 

242aeaa9800fc3af298294aa73dcfdbaba6dfb0648f30741abb4960184ac0934

- **Increasing share of lower-margin AI systems is pressuring overall server margins. AI systems now make up **30%** of total Server revenue, up from **10%** in Q3 FY'23, leading to operating margins at the low end of the target range of **11% to 13%**. This shift may impact profitability.**  **[HPE_3400492_6]**
- **Recognition of services revenue for AI systems is largely deferred, which may delay positive impact on margins. The services component is "pretty much all deferred" and recognized over the length of the contract, potentially slowing margin improvement.**  **[HPE_3400492_14]**
- **Intense competition in the AI and server markets requires daily disciplined execution, posing risks to margins and profitability. The need to "execute every day with discipline" highlights the challenging market dynamics.**  **[HPE_3400492_17]**

1e31856ff239e6ca970703b9fb9d1c87a26a067186869925243d01510090a1a9

- **Rapid Growth in AI Systems Revenue with Strong Margins:** HPE's AI systems revenue more than doubled sequentially to over **$900 million**, while maintaining strong operating margins of **11%** in the server segment, demonstrating the company's ability to drive profitable growth in the competitive AI market.  **[HPE_3391510_9]**
- **Unique Differentiation in Direct Liquid Cooling Technology and Manufacturing:** HPE holds over **300 patents** in direct liquid cooling and has one of the largest water-cooled manufacturing footprints globally, providing a competitive advantage in meeting the demands of future AI infrastructure requiring advanced cooling solutions, such as NVIDIA's upcoming Blackwell GPUs.  **[HPE_3391510_10]**
- **Accelerating Enterprise AI Demand and Robust Pipeline:** Enterprise AI orders now comprise more than **15%** of HPE's cumulative AI orders, with the enterprise customer base growing, indicating strong future growth prospects supported by a pipeline that is multiples of the current backlog.  **[HPE_3391510_10]** **[HPE_3391510_13]**

7cb5d37fd78562e2b04b9bb75fc0bef3419b30c961199bad05a4701fc1ef087b

- **HPE's Intelligent Edge revenues fell 19% year-over-year**, and the company anticipates only modest sequential improvements, indicating potential ongoing weakness in this segment.  **[HPE_3391510_6]** ,  **[HPE_3391510_11]**
- **Despite exceeding revenue expectations by $400 million, HPE only raised its full-year revenue guidance by 1%**, suggesting possible concerns about sustaining growth or underlying business uncertainties.  **[HPE_3391510_7]** ,  **[HPE_3391510_12]**
- **Competitive pressures and market headwinds in the AI systems market**, including a **tougher inflationary commodity market** and a **highly competitive market environment**, may pressure HPE's margins moving forward.  **[HPE_3391510_3]** ,  **[HPE_3391510_9]**

35a5d35f1342117fd6ad760b879e38070b597b6571170258cf4a9b31173af6b9

- **Declining gross margins:** HPE's gross margins decreased by **390 basis points year-over-year** and **90 basis points quarter-over-quarter** to **30.9%**, primarily due to a lower contribution from **Intelligent Edge** revenue and a higher mix of lower-margin **AI systems** revenue, raising concerns about profitability sustainability.  **[HPE_3411067_10]**
- **Risks in AI order pipeline:** The company had to **debook a large $700 million AI order** due to concerns with a specific customer, highlighting potential risks and unpredictability in the AI order pipeline that could negatively impact future revenues.  **[HPE_3411067_15]** ,  **[HPE_3411067_9]**
- **Dependence on pending Juniper acquisition:** HPE expects that **50% of operating profit going forward will come from Juniper**, indicating significant reliance on the success of the **pending acquisition**, which is still under **DOJ review**. Any delays or complications could adversely affect projected profitability improvements.  **[HPE_3411067_10]** ,  **[HPE_3411067_1]**

f877eea6357540086f1e85dc8a5fb34cb16f3ac58edb198dbbdcd66ba3f5fdce

- **Declining demand in the Intelligent Edge segment and softness in the networking market**: HPE experienced a significant revenue shortfall in the Intelligent Edge business due to weakened customer demand, particularly in Europe and Asia. This softness in the networking market is expected to persist throughout the year, impacting revenue growth.  **[HPE_3376183_11]**
- **Delayed revenue recognition from AI server orders due to GPU supply constraints and customer readiness**: The company is facing delays in converting AI server orders into revenue because of tight GPU availability and customers taking longer to prepare data center space, power, and cooling requirements. This affects HPE's ability to capitalize on strong AI demand in a timely manner.  **[HPE_3376183_10]** **[HPE_3376183_9]**
- **Elevated GPU lead times impacting order fulfillment and revenue conversion**: Despite some improvement, GPU lead times remain elevated at **over 20 weeks**, limiting HPE's capacity to fulfill orders and convert its $3 billion AI backlog into revenue. This extended lead time poses a risk to revenue growth in the highly competitive AI server market.  **[HPE_3376183_9]** **[HPE_3376183_13]**

54c06258b12f3e883a1bdb0d1688eaf4102df1f5dd7596c84532c16dddfa86e1

1. **$700 Million De-booked AI Order**  
   **Q:** Why did you debook the $700 million AI order?  
   **A:** We debooked a large **$700 million** order due to concerns with a specific customer. Maintaining strong controls and risk management is paramount, so we decided it was prudent to debook and focus on other areas of the business. This was not due to competition or double ordering.  **[HPE_3411067_9]** 

2. **Gross Margin Decline Causes**  
   **Q:** What's driving the gross margin decline, and can you offset it?  
   **A:** Gross margin decreased to **30.9%** due to a lower contribution from Intelligent Edge revenue—the lowest for the entire year—and a higher contribution from lower-margin AI systems in servers. Despite this, we grew gross profit dollars both year-over-year and quarter-over-quarter. We expect gross margin to improve modestly going forward, driven by an improved business mix, particularly with growth in Intelligent Edge. In the longer term, future acquisitions are expected to positively impact both gross and operating margins. Additionally, higher-margin opportunities in AI, especially in sovereign and enterprise sectors, will contribute to profitability.  **[HPE_3411067_10]** 

3. **AI Pipeline Growth and Composition**  
   **Q:** How is the AI pipeline shaping up amid backlog dips?  
   **A:** Our AI pipeline is a multiple of the current backlog of over **$3.5 billion**. While hyperscalers and Tier 2/3 providers remain significant drivers, we're pleased to see the enterprise AI pipeline growing steadily with hundreds of customers and varied deal sizes. After making our co-engineered solution with NVIDIA available in September, we've already collected orders and closed deals in enterprise AI.  **[HPE_3411067_7]** 

4. **AI Business Metrics and Profitability**  
   **Q:** How do you approach AI margins, and did the de-book affect competitiveness?  
   **A:** The de-booked order was not due to competition; we had concerns with a specific customer and deemed it prudent to debook due to risk considerations. Regarding AI margins, we have a disciplined framework for pricing and cost management to pursue profitable growth. We balance gross margin pressures with cost control and strategic buys. Over time, we expect improving profitability as the market shifts toward sovereign and enterprise sectors where we see services attach.  **[HPE_3411067_9]** 

5. **Blackwell Platform Shipments**  
   **Q:** When will you ship Blackwell platform configurations in volume?  
   **A:** We expect to ship Blackwell platform systems in volume in 2025, particularly in the first half. Service providers, hyperscalers, and model builders will lead with this latest technology during the transition. In the enterprise space, adoption will typically lag by one or two generations, focusing more on deployment simplicity and time to value rather than the newest GPUs.  **[HPE_3411067_12]** 

6. **Hybrid Cloud Strong Performance**  
   **Q:** Was there anything unusual in the Hybrid Cloud revenue jump?  
   **A:** We're pleased with Hybrid Cloud's strong performance, with revenue up almost **18% year-over-year** and **22% quarter-over-quarter**, driven by both Private Cloud and the rapid adoption of HPE Alletra MP Storage. Alletra MP is one of the fastest-growing products in our history, already on a **$1 billion annualized basis**. There were no unusually large deals; this growth reflects the culmination of sustained efforts and customer adoption of our solutions.  **[HPE_3411067_13]** 

7. **Intelligent Edge Growth and Outlook**  
   **Q:** Intelligent Edge revenue growth seems limited; what's the outlook?  
   **A:** We've seen the third consecutive quarter of order growth in Intelligent Edge, but revenue appears flattish because accelerated growth areas are subscription-based, such as SD-WAN with SSE and HPE GreenLake Aruba Central services. Customers are placing orders for future quarters related to Wi-Fi 7. While campus switching hasn't fully rebounded, data center networking with intelligent features has achieved double-digit growth. We're optimistic about networking being a significant growth area for HPE in '25 and '26.  **[HPE_3411067_14]** 

8. **Traditional Servers Defying Seasonality**  
   **Q:** Traditional servers are flattish to slightly up next quarter; why?  
   **A:** Yes, despite typical seasonality, we expect traditional servers to be flattish to slightly up due to ongoing momentum. We've experienced strong growth in traditional compute, particularly Gen11 systems, which comprise about **two-thirds** of the mix so far. These higher configurations are driving richer average unit prices and higher structural margins. We're also maintaining pricing discipline and successfully passing on commodity costs.  **[HPE_3411067_11]** 

9. **AI Services Revenue Growth**  
   **Q:** Are AI services a growing percentage of orders and revenue?  
   **A:** Yes, our AI services orders increased quarter-over-quarter. Customers seek services across day 0 (defining use cases and ROI), day 1 (design and implementation), and day 2 (operations). HPE is uniquely positioned to deliver across these phases. Partnerships with firms like Deloitte enhance our offerings, allowing us to provide business process-oriented solutions. We expect continued improvement in services, contributing positively to gross margins.  **[HPE_3411067_17]** 

10. **IT Spending Outlook for '25**  
    **Q:** Has anything changed in the IT spending outlook heading into '25?  
    **A:** The macro environment has improved compared to a year ago. Customers are focusing more on AI, hybrid models, and data-intensive workloads. Cybersecurity remains a priority. Spending varies by geography. There's a modernization cycle in servers, with attention on sustainability and efficiency. Networking needs to catch up to AI demands, presenting opportunities for us to drive the next wave of innovation.  **[HPE_3411067_16]** 

11. **Operational Expense Control**  
    **Q:** What's driving OpEx controls, and how low can you take OpEx?  
    **A:** We've been diligently managing discretionary costs throughout '24 and are now moving into enhancing productivity. We're utilizing generative AI internally, including in finance, to drive efficiency. In a company as large as HPE, there's significant opportunity for further cost reductions. We're balancing gross margin pressures with cost control, strategic buys, and maintaining pricing discipline, which all contribute to our ability to offset margin headwinds.  **[HPE_3411067_10]** 

e037db675d95807b99bd429affd645edda8e11c2e1e667b8b1f427a0603bea61

1. **Gross Margins and AI Impact**  
   **Q:** Will AI server mix continue to pressure gross margins?  
   **A:** Marie Myers noted that while the AI server mix impacted gross margins this quarter, they expect profitability to improve as enterprise AI gains momentum, which has a more favorable margin profile. Additionally, the upcoming closure of the Juniper acquisition by end of calendar '24 or early '25 is expected to significantly boost both gross and operating margins, with over **50%** of operating profit coming from networking.  **[HPE_3400492_11]** 

2. **Free Cash Flow Guidance**  
   **Q:** Why is free cash flow down, and what's the outlook?  
   **A:** Marie Myers explained that the year-over-year decrease in free cash flow was due to timing of working capital and normal seasonality. They expect benefits from working capital reversals in Q4 and stronger AI revenue conversion, keeping them on track for **$1.9 billion** in free cash flow for the full year.  **[HPE_3400492_12]** **[HPE_3400492_13]** 

3. **Server Margins Strength**  
   **Q:** What drove the strong server margins this quarter?  
   **A:** Marie Myers highlighted that they shipped about **$1.3 billion** of AI servers, constituting around **30%** of server revenue, with margins at **10.8%**. The shift to Gen11 servers with richer configurations, successful passing through of commodity costs, and OpEx discipline contributed to the margin strength.  **[HPE_3400492_10]** 

4. **AI Deal Lumpiness**  
   **Q:** Were there unusually large AI deals in Q3?  
   **A:** Antonio Neri stated there were no unusually large deals; instead, bookings were more spread across the service provider space. The enterprise segment constituted mid-teens percentage of the **$1.6 billion** in AI bookings, consistent with prior quarters but with larger dollar amounts. They don't expect significant large deals in Q4, anticipating a continuation of current trends.  **[HPE_3400492_13]** 

5. **Services Impact on Margins**  
   **Q:** How will AI services affect margins over time?  
   **A:** Antonio Neri expressed optimism that the growing services attach rate in AI systems will contribute positively to gross margins as revenue is recognized over time. The introduction of HPE Private Cloud AI, which has a substantial services component, is expected to enhance margins in the server segment.  **[HPE_3400492_14]** 

6. **Traditional Servers vs. AI Cannibalization**  
   **Q:** Is AI cannibalizing traditional server sales?  
   **A:** Antonio Neri affirmed they've seen no signs of cannibalization in the traditional server market. Customers are not shifting legacy workloads to AI-accelerated platforms due to cost considerations and workload suitability. Traditional servers continue to show good growth and order patterns.  **[HPE_3400492_15]** 

7. **AI Backlog and Enterprise Demand**  
   **Q:** What's the composition of the AI backlog and enterprise projects?  
   **A:** Antonio Neri explained that the AI pipeline is multiple times the current backlog, indicating sustained momentum. The backlog is composed of mid-teens percentage from enterprise space, focusing on use cases with clear ROI in sectors like finance, manufacturing, and marketing. They are targeting these customers with offerings like HPE Private Cloud AI.  **[HPE_3400492_16]** 

8. **HPE's AI Strategy and GreenLake**  
   **Q:** What's HPE's focus in Gen AI and future deployments?  
   **A:** Antonio Neri identified their sweet spot as building, deploying, and running large AI systems, leveraging their expertise and services. The HPE GreenLake platform is central to their AI strategy, providing optimized infrastructure and configurations. The upcoming closure of the Juniper acquisition will add networking capabilities, positioning HPE to offer full-stack AI solutions to enterprise customers.  **[HPE_3400492_17]** 

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Hewlett Packard Enterprise Co (HPE)

Financials