HPE reported record third-quarter fiscal 2026 revenue of $12.2 billion, increasing 34% year over year as demand strengthened across networking, AI, servers and storage.
GAAP operating margin reached 11.4%, up 870 basis points, while non-GAAP operating margin increased 770 basis points to 16.2%.
GAAP diluted EPS increased to $1.06 from $0.21, while non-GAAP diluted EPS increased to $1.11 from $0.44. Both results exceeded HPE’s prior outlook.
Networking revenue increased 74.9% to $2.9 billion. Within the segment, Data Center Networking increased 112.2%, Security rose 75.6% and Routing surged 270%.
Cloud & AI revenue increased 25.4% to $9 billion, including a 35.3% increase in Server revenue to $6.8 billion and a 10.2% increase in Storage revenue to $1.3 billion.
Cash flow from operations reached $1.6 billion and free cash flow totaled $1 billion. HPE returned $324 million to shareholders through dividends and share repurchases.
For the fourth quarter, HPE expects revenue of $13.9 billion to $14.8 billion and non-GAAP diluted EPS of $1.20 to $1.30.
HPE raised its fiscal 2026 revenue growth outlook to 34% to 37%, increased non-GAAP diluted EPS guidance to $3.75 to $3.85 and lifted free cash flow guidance to at least $3.75 billion.
The company also raised its fiscal 2027 framework, now targeting 13% to 17% revenue growth, 16% to 20% non-GAAP EPS growth and at least $5 billion of free cash flow.
KEY QUOTES:
“HPE’s strategy is proving itself again this quarter. Our results demonstrate the durability of our profitable growth momentum. We delivered record revenue, orders, and profitability, fueled by surging customer demand across our portfolio. AI is becoming a multi-year growth driver for HPE, and our differentiated portfolio positions us to capture that opportunity at scale.”
Antonio Neri, President and CEO of HPE
“Our outstanding revenue performance and expanded profitability in the third quarter reflect robust demand across our portfolio and consistent, disciplined execution. With our Q3 results and our order backlog at a record level, we are raising our financial outlook and plan to return at least 75% of free cash flow to shareholders in Q4.”
Marie Myers, Executive Vice President and CFO of HPE
