HPE Reports Fiscal 2020 Fourth Quarter

Fiscal 2021 first quarter outlook:

Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.02 to $0.06 and non-GAAP diluted net EPS to be in the range of $0.40 to $0.44. Fiscal 2021 first quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.38 per diluted share, primarily related to transformation costs, stock-based compensation and the amortization of intangible assets.

Fiscal 2021 outlook:

Hewlett Packard Enterprise raises GAAP diluted net earnings per share outlook to $0.38 to $0.56 from $0.34 to $0.54 and non-GAAP diluted net earnings per share outlook to $1.60 to $1.78 from $1.56 to $1.76. Fiscal 2021 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.22 per diluted share, primarily related to transformation costs, stock-based compensation and the amortization of intangible assets.

Reiterates free cash flow¹ guidance range of $0.9 to $1.1 billion.

¹Hewlett Packard Enterprise provides certain guidance on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results. Refer to the discussion of non-GAAP financial measures below for more information.

About Hewlett Packard Enterprise

Hewlett Packard Enterprise is the global edge-to-cloud platform-as-a-service company that helps organizations accelerate outcomes by unlocking value from all of their data, everywhere. Built on decades of reimagining the future and innovating to advance the way we live and work, HPE delivers unique, open and intelligent technology solutions, with a consistent experience across all clouds and edges, to help customers develop new business models, engage in new ways, and increase operational performance. For more information, visit: www.hpe.com.

Use of non-GAAP financial information

To supplement Hewlett Packard Enterprise’s condensed consolidated financial statement information presented on a generally accepted accounting principles (GAAP) basis, Hewlett Packard Enterprise provides revenue on a constant currency basis as well as non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating profit (non-GAAP earnings from operations), non-GAAP operating profit margin, non-GAAP income tax rate, non-GAAP net earnings, non-GAAP diluted net earnings per share, gross cash, free cash flow, net debt, net cash, operating company net debt and operating company net cash financial measures. Hewlett Packard Enterprise also provides forecasts of non-GAAP diluted net earnings per share and free cash flow. A reconciliation of adjustments to GAAP financial measures for this quarter and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which Hewlett Packard Enterprise’s management uses these non-GAAP measures to evaluate its business, the substance behind Hewlett Packard Enterprise’s decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which Hewlett Packard Enterprise’s management compensates for those limitations, and the substantive reasons why Hewlett Packard Enterprise’s management believes that these non-GAAP measures provide useful information to investors is included under “Use of non-GAAP financial measures” further below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for revenue, gross profit, gross profit margin, operating profit (earnings from operations), operating profit margin, net earnings, diluted net earnings per share, cash, cash equivalents and restricted cash, cash flow from operations, investments in property, plant and equipment, or total company debt prepared in accordance with GAAP.

Forward-looking statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise and its consolidated subsidiaries may differ materially from those expressed or implied by such forward-looking statements and assumptions. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “aim,” “will,” “should” and similar expressions are intended to identify such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to the scope and duration of the novel coronavirus pandemic (“COVID-19”) and its impact on our business, operations, liquidity and capital resources, employees, customers, partners, supply chain, financial results and the world economy; any projections of revenue, margins, expenses, effective tax rates, the impact of the U.S. Tax Cuts and Jobs Act of 2017, net earnings, net earnings per share, cash flows, backlog, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings, restructuring charges, or other transformation actions; any statements of the plans, strategies and objectives of management for future operations, as well as the execution of corporate transactions or contemplated acquisitions, transformation and restructuring plans and any resulting benefit, cost savings or restructuring charges, revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on Hewlett Packard Enterprise and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements or assumptions underlying any of the foregoing.

Risks, uncertainties and assumptions include the need to address the many challenges facing Hewlett Packard Enterprise’s businesses; the competitive pressures faced by Hewlett Packard Enterprise’s businesses; risks associated with executing Hewlett Packard Enterprise’s strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of Hewlett Packard Enterprise’s products and the delivery of Hewlett Packard Enterprise’s services effectively; the protection of Hewlett Packard Enterprise’s intellectual property assets, including intellectual property licensed from third parties and intellectual property shared with its former parent; risks associated with Hewlett Packard Enterprise’s international operations (including pandemics and public health problems, such as the COVID-19 pandemic); the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers, clients and partners, including any impact thereon resulting from events such as the COVID-19 pandemic; the hiring and retention of key employees; execution, integration and other risks associated with business combination and investment transactions; the execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the costs and anticipated benefits of implementing the transformation and restructuring plans; the effects of the U.S. Tax Cuts and Jobs Act and related guidance and regulations that may be implemented; the resolution of pending investigations, claims and disputes; and other risks that are described in Hewlett Packard Enterprise’s other filings with the Securities and Exchange Commission, including but not limited to the risks described in Hewlett Packard Enterprise’s Annual Report on Form 10-K for the fiscal year ended October 31, 2019, Hewlett Packard Enterprise’s Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 2020, April 30, 2020, and July 31, 2020, Current Reports on Form 8-K, and in other filings made by Hewlett Packard Enterprise from time to time with the Securities and Exchange Commission.

As in prior periods, the financial information set forth in this press release, including tax-related items, reflects estimates based on information available at this time. While Hewlett Packard Enterprise believes these estimates to be reasonable, these amounts could differ materially from reported amounts in the Hewlett Packard Enterprise Annual Report on Form 10-K for the fiscal year ended October 31, 2020. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts)

	Three months ended
	October 31, 2020			July 31, 2020			October 31, 2019
Net revenue	$	7,208		$	6,816		$	7,215
Costs and expenses:
Cost of sales	5,002			4,749			4,822
Research and development	484			455			438
Selling, general and administrative	1,166			1,131			1,229
Amortization of intangible assets	80			95			68
Transformation costs	304			357			151
Disaster charges ^(a)	2			2			—
Acquisition, disposition and other related charges	25			15			47
Total costs and expenses	7,063			6,804			6,755
Earnings from operations	145			12			460
Interest and other, net	(57		)	(71		)	(38		)
Tax indemnification adjustments	(15		)	(30		)	288
Non-service net periodic benefit credit	35			28			14
Earnings (loss) from equity interests	17			27			(1)
Earnings (loss) before taxes	125			(34		)	723
(Provision) benefit from taxes	32			43			(243		)
Net earnings	$	157		$	9		$	480
Net earnings per share:
Basic	$	0.12		$	0.01		$	0.37
Diluted ^(b)	$	0.12		$	0.01		$	0.36
Cash dividends declared per share	$	0.1200		$	—		$	0.1200
Weighted-average shares used to compute net earnings per share:
Basic	1,293			1,292			1,308
Diluted ^(b)	1,306			1,300			1,323

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts)

	Twelve months ended October 31,
	2020			2019
Net revenue	$	26,982		$	29,135
Costs and expenses:
Cost of sales	18,513			19,642
Research and development	1,874			1,842
Selling, general and administrative	4,624			4,907
Amortization of intangible assets	379			267
Impairment of goodwill ^(c)	865			—
Transformation costs	950			453
Disaster charges (recovery) ^(a)	26			(7		)
Acquisition, disposition and other related charges	80			757
Total costs and expenses	27,311			27,861
Earnings (loss) from operations	(329		)	1,274
Interest and other, net	(215		)	(177		)
Tax indemnification adjustments	(101		)	377
Non-service net periodic benefit credit	136			59
Earnings from equity interests	67			20
Earnings (loss) before taxes	(442		)	1,553
(Provision) benefit for taxes	120			(504		)
Net earnings (loss)	$	(322	)	$	1,049
Net earnings (loss) per share:
Basic	$	(0.25	)	$	0.78
Diluted ^(b)	$	(0.25	)	$	0.77
Cash dividends declared per share	$	0.3600		$	0.4575
Weighted-average shares used to compute net earnings (loss) per share:
Basic	1,294			1,353
Diluted ^(b)	1,294			1,366

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Unaudited) (In millions, except percentages and per share amounts)

	Three months ended October 31, 2020			Diluted net earnings per share			Three months ended July 31, 2020			Diluted net earnings per share			Three months ended October 31, 2019			Diluted net earnings per share
GAAP net earnings	$	157		$	0.12		$	9		$	0.01		$	480		$	0.36
Non-GAAP adjustments:
Amortization of initial direct costs	1			—			3			—			—			—
Amortization of intangible assets	80			0.06			95			0.07			68			0.05
Transformation costs	304			0.23			357			0.27			151			0.11
Disaster charges ^(a)	2			—			2			—			—			—
Acquisition, disposition and other related charges	25			0.02			15			0.01			54			0.04
Tax indemnification adjustments	15			0.02			30			0.03			(288		)	(0.22		)
Non-service net periodic benefit credit	(35		)	(0.03		)	(28		)	(0.02		)	(14		)	(0.01		)
Earnings from equity interests ^(d)	35			0.03			36			0.03			38			0.03
Adjustments for taxes	$	(98	)	(0.08		)	$	(100	)	(0.08		)	$	155		0.13
Non-GAAP net earnings	$	486		$	0.37		$	419		$	0.32		$	644		$	0.49

GAAP earnings from operations	$	145					$	12					$	460
Non-GAAP adjustments
Amortization of initial direct costs	1						3						—
Amortization of intangible assets	80						95						68
Transformation costs	304						357						151
Disaster charges ^(a)	2						2						—
Acquisition, disposition and other related charges	25						15						54
Non-GAAP earnings from operations	$	557					$	484					$	733

GAAP operating profit margin	2.0		%				0.2		%				6.4		%
Non-GAAP adjustments	5.7		%				6.9		%				3.8		%
Non-GAAP operating profit margin	7.7		%				7.1		%				10.2		%

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Unaudited) (In millions, except percentages and per share amounts)

	Three months ended October 31, 2020			Three months ended July 31, 2020			Three months ended October 31, 2019
GAAP net revenue	$	7,208		$	6,816		$	7,215
GAAP cost of sales	5,002			4,749			4,822
GAAP gross profit	$	2,206		$	2,067		$	2,393

Non-GAAP adjustments
Amortization of initial direct costs	$	1		$	3		$	—
Acquisition, disposition and other related charges ^(e)	—			—			7
Non-GAAP gross profit	$	2,207		$	2,070		$	2,400

GAAP gross profit margin	30.6		%	30.3		%	33.2		%
Non-GAAP adjustments	—		%	0.1		%	0.1		%
Non-GAAP gross profit margin	30.6		%	30.4		%	33.3		%

Net cash provided by operating activities	$	747		$	1,472		$	1,432
Investment in property, plant and equipment	(604		)	(620		)	(703		)
Proceeds from sale of property, plant and equipment	80			72			149
Free cash flow	$	223		$	924		$	878

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Unaudited) (In millions, except percentages and per share amounts)

	Twelve months ended October 31, 2020			Diluted net earnings per share			Twelve months ended October 31, 2019			Diluted net earnings per share
GAAP net earnings (loss)	$	(322	)	$	(0.25	)	$	1,049		$	0.77

Non-GAAP adjustments:
Amortization of initial direct costs	10			0.01			—			—
Amortization of intangible assets	379			0.29			267			0.20
Impairment of goodwill ^(c)	865			0.67			—			—
Transformation costs	950			0.74			453			0.33
Disaster charges (recovery) ^(a)	26			0.02			(7		)	(0.01		)
Acquisition, disposition and other related charges	107			0.08			764			0.56
Tax indemnification adjustments	101			0.08			(377		)	(0.28)
Non-service net periodic benefit credit	(136		)	(0.11		)	(59		)	(0.04		)
Earnings from equity interests ^(d)	145			0.11			152			0.11
Adjustments for taxes	$	(360	)	(0.29		)	$	174		0.13
Non-GAAP net earnings	$	1,765		$	1.35		$	2,416		$	1.77

GAAP (loss) earnings from operations	$	(329	)				$	1,274

Non-GAAP adjustments
Amortization of initial direct costs	10						—
Amortization of intangible assets	379						267
Impairment of goodwill ^(c)	865						—
Transformation costs	950						453
Disaster charges (recovery) ^(a)	26						(7		)
Acquisition, disposition and other related charges	107						764
Non-GAAP earnings from operations	$	2,008					$	2,751

GAAP operating profit margin	(1.2		%)				4.4		%
Non-GAAP adjustments	8.6		%				5.0		%
Non-GAAP operating profit margin	7.4		%				9.4		%

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Unaudited) (In millions, except percentages and per share amounts)

	Twelve months ended October 31, 2020			Twelve months ended October 31, 2019
GAAP net revenue	$	26,982		$	29,135
GAAP cost of sales	18,513			19,642
GAAP gross profit	$	8,469		$	9,493

Non-GAAP adjustments
Amortization of initial direct costs	$	10		$	—
Acquisition, disposition and other related charges ^(e)	27			7
Non-GAAP gross profit	$	8,506		$	9,500

GAAP gross profit margin	31.4		%	32.6		%
Non-GAAP adjustments	0.1		%	—		%
Non-GAAP gross profit margin	31.5		%	32.6		%

Net cash provided by operating activities	$	2,240		$	3,997
Investment in property, plant and equipment	(2,383		)	(2,856		)
Proceeds from sale of property, plant and equipment	703			597
Free cash flow	$	560		$	1,738

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions, except par value)

	As of
	October 31, 2020			October 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	4,233		$	3,753
Accounts receivable, net of allowance for doubtful accounts	3,386			2,957
Financing receivables, net of allowance for doubtful accounts	3,794			3,572
Inventory	2,674			2,387
Assets held for sale	77			46
Other current assets	2,392			2,428
Total current assets	16,556			15,143
Property, plant and equipment	5,625			6,054
Long-term financing receivables and other assets ^(f)	10,544			8,918
Investments in equity interests	2,170			2,254
Goodwill and intangible assets	19,120			19,434
Total assets	$	54,015		$	51,803
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and short-term borrowings	$	3,755		$	4,425
Accounts payable	5,383			5,595
Employee compensation and benefits	1,391			1,522
Taxes on earnings	148			186
Deferred revenue	3,430			3,234
Accrued restructuring	366			195
Other accrued liabilities ^(f)	4,265			4,002
Total current liabilities	18,738			19,159
Long-term debt	12,186			9,395
Other non-current liabilities ^(f)	6,995			6,100
Stockholders’ equity
HPE stockholders’ equity:
Preferred stock, $0.01 par value (300 shares authorized; none issued)	—			—
Common stock, $0.01 par value (9,600 shares authorized; 1,287 and 1,294 issued and outstanding at October 31, 2020 and October 31, 2019, respectively)	13			13
Additional paid-in capital	28,350			28,444
Accumulated deficit ^(g)	(8,375		)	(7,632		)
Accumulated other comprehensive loss ^(g)	(3,939		)	(3,727		)
Total HPE stockholders’ equity	16,049			17,098
Non-controlling interests	47			51
Total stockholders’ equity	16,096			17,149
Total liabilities and stockholders’ equity	$	54,015		$	51,803

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions)

	Three months ended October 31, 2020			Twelve months ended October 31, 2020
Cash flows from operating activities:
Net earnings (loss)	$	157		$	(322	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization	652			2,625
Impairment of goodwill	—			865
Stock-based compensation expense	59			274
Provision for doubtful accounts and inventory	100			308
Restructuring charges	216			769
Deferred taxes on earnings	(80		)	(294		)
Earnings from equity interests	(17		)	(67		)
Dividends received from equity investees	130			165
Other, net	48			163
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(530		)	(461		)
Financing receivables	(76		)	(487		)
Inventory	726			(527		)
Accounts payable	(656		)	(225		)
Taxes on earnings	(37		)	(122		)
Restructuring	(128		)	(478		)
Other assets and liabilities	183			54
Net cash provided by operating activities	747			2,240
Cash flows from investing activities:
Investment in property, plant and equipment	(604		)	(2,383		)
Proceeds from sale of property, plant and equipment	80			703
Purchases of available-for-sale securities and other investments	(23		)	(101		)
Maturities and sales of available-for-sale securities and other investments	19			48
Financial collateral posted	(71		)	(644		)
Financial collateral received	28			665
Payments made in connection with business acquisitions, net of cash acquired	(853		)	(866		)
Net cash used in investing activities	(1,424		)	(2,578		)
Cash flows from financing activities:
Short-term borrowings with original maturities less than 90 days, net	(45		)	(9		)
Proceeds from debt, net of issuance costs	262			7,007
Payment of debt	(3,700		)	(5,099		)
Net payments related to stock-based award activities	(2		)	(36		)
Repurchase of common stock	—			(355		)
Cash dividends paid to non-controlling interests, net of contributions	—			(7		)
Cash dividends paid	(154		)	(618		)
Net cash provided by (used in) financing activities	(3,639		)	883
Increase (decrease) in cash, cash equivalents and restricted cash	(4,316		)	545
Cash, cash equivalents and restricted cash at beginning of period	8,937			4,076
Cash, cash equivalents and restricted cash at end of period	$	4,621		$	4,621

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions)

	Three months ended
	October 31, 2020			July 31, 2020			October 31, 2019
Net revenue: ^(h)
Compute	$	3,175		$	3,389		$	3,349
HPC & MCS	975			649			777
Storage	1,217			1,128			1,256
A & PS	245			226			269
Intelligent Edge	786			684			742
Financial Services	849			811			878
Corporate Investments	126			119			134
Total segment net revenue	7,373			7,006			7,405
Elimination of intersegment net revenue	(165		)	(190		)	(190		)
Total Hewlett Packard Enterprise consolidated net revenue	$	7,208		$	6,816		$	7,215

Earnings before taxes: ^(h)
Compute	$	194		$	288		$	464
HPC & MCS	119			36			79
Storage	203			145			219
A & PS	(1		)	(4		)	1
Intelligent Edge	79			59			46
Financial Services	65			65			74
Corporate Investments	(18		)	(27		)	(26		)
Total segment earnings from operations	641			562			857

Unallocated corporate costs and eliminations	(73		)	(65		)	(107		)
Unallocated stock-based compensation expense	(11		)	(13		)	(17		)
Amortization of initial direct costs	(1		)	(3		)	—
Amortization of intangible assets	(80		)	(95		)	(68		)
Transformation costs	(304		)	(357		)	(151		)
Disaster charges ^(a)	(2		)	(2		)	—
Acquisition, disposition and other related charges	(25		)	(15		)	(54		)
Interest and other, net	(57		)	(71		)	(38		)
Tax indemnification adjustments	(15		)	(30		)	288
Non-service net periodic benefit credit	35			28			14
Earnings (loss) from equity interests	17			27			(1		)
Total Hewlett Packard Enterprise consolidated earnings (loss) before taxes	$	125		$	(34	)	$	723

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions)

	Twelve months ended October 31,
	2020			2019
Net revenue: ^(h)
Compute	$	12,215		$	13,642
HPC & MCS	3,036			2,910
Storage	4,681			5,185
A & PS	951			1,012
Intelligent Edge	2,855			2,913
Financial Services	3,352			3,581
Corporate Investments	490			507
Total segment net revenue	27,580			29,750
Elimination of intersegment net revenue	(598		)	(615		)
Total Hewlett Packard Enterprise consolidated net revenue	$	26,982		$	29,135

Earnings before taxes: ^(h)
Compute	$	893		$	1,550
HPC & MCS	237			320
Storage	719			924
A & PS	(5		)	(54		)
Intelligent Edge	281			159
Financial Services	278			305
Corporate Investments	(100		)	(108		)
Total segment earnings from operations	2,303			3,096

Unallocated corporate costs and eliminations	(238		)	(286		)
Unallocated stock-based compensation expense	(57		)	(59		)
Amortization of initial direct costs	(10		)	—
Amortization of intangible assets	(379		)	(267		)
Impairment of goodwill ^(c)	(865		)	—
Transformation costs	(950		)	(453		)
Disaster (charges) recoveries ^(a)	(26		)	7
Acquisition, disposition and other related charges	(107		)	(764		)
Interest and other, net	(215		)	(177		)
Tax indemnification adjustments	(101		)	377
Non-service net periodic benefit credit	136			59
Earnings from equity interests	67			20
Total Hewlett Packard Enterprise consolidated earnings (loss) before taxes	$	(442	)	$	1,553

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) (In millions, except percentages)

	Three months ended														Change (%)
	October 31, 2020			July 31 2020					October 31, 2019						Q/Q				Y/Y
Net revenue: ^(h)
Compute	$	3,175		$	3,389				$	3,349					(6			%)	(5	%)
HPC & MCS	975			649					777						50			%	25	%
Storage	1,217			1,128					1,256						8			%	(3	%)
A & PS	245			226					269						8			%	(9	%)
Intelligent Edge	786			684					742						15			%	6	%
Financial Services	849			811					878						5			%	(3	%)
Corporate Investments	126			119					134						6			%	(6	%)
Total segment net revenue	7,373			7,006					7,405						5			%	—	%
Elimination of intersegment net revenue and other	(165		)	(190				)	(190					)	(13			%)	(13	%)
Total Hewlett Packard Enterprise consolidated net revenue	$	7,208		$	6,816				$	7,215					6			%	—	%

						Twelve months ended October 31,
						2020						2019					Y/Y
Net revenue: ^(h)
Compute						$	12,215					$	13,642				(10				%)
HPC & MCS						3,036						2,910					4				%
Storage						4,681						5,185					(10				%)
A & PS						951						1,012					(6				%)
Intelligent Edge						2,855						2,913					(2				%)
Financial Services						3,352						3,581					(6				%)
Corporate Investments						490						507					(3				%)
Total segment net revenue						27,580						29,750					(7				%)
Elimination of intersegment net revenue and other						(598					)	(615				)	(3				%)
Total Hewlett Packard Enterprise consolidated net revenue						$	26,982					$	29,135				(7				%)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES SEGMENT OPERATING MARGIN SUMMARY DATA (Unaudited)

	Three months ended		Change in Operating Margin (pts)
	October 31, 2020		Q/Q	Y/Y
Segment operating margin: ^(h)
Compute	6.1	%	-2.4	-7.8
HPC & MCS	12.2	%	6.7	2.0
Storage	16.7	%	3.8	-0.7
A & PS	(0.4	%)	1.4	-0.8
Intelligent Edge	10.1	%	1.5	3.9
Financial Services	7.7	%	-0.3	-0.7
Corporate Investments	(14.3	%)	8.4	5.1
Total segment operating margin	8.7	%	0.7	-2.9

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS (LOSS) PER SHARE (Unaudited) (In millions, except per share amounts)

	Three months ended
	October 31, 2020		July 31, 2020		October 31, 2019
Numerator:
GAAP net earnings	$	157	$	9	$	480
Non-GAAP net earnings	$	486	$	419	$	644

Denominator:
Weighted-average shares used to compute basic net earnings per share	1,293		1,292		1,308
Dilutive effect of employee stock plans ^(b)	13		8		15
Weighted-average shares used to compute diluted net earnings per share	1,306		1,300		1,323

GAAP net earnings per share
Basic	$	0.12	$	0.01	$	0.37
Diluted ^(b)	$	0.12	$	0.01	$	0.36

Non-GAAP net earnings per share
Basic	$	0.38	$	0.32	$	0.49
Diluted ^(b)	$	0.37	$	0.32	$	0.49

	Twelve months ended October 31,
	2020			2019
Numerator:
GAAP net earnings (loss)	$	(322	)	$	1,049
Non-GAAP net earnings	$	1,765		$	2,416

Denominator:
Weighted-average shares used to compute basic net earnings (loss) per share and diluted net loss per share	1,294			1,353
Dilutive effect of employee stock plans ^(b)	11			13
Weighted-average shares used to compute diluted net earnings per share	1,305			1,366

GAAP net earnings (loss) per share
Basic	$	(0.25	)	$	0.78
Diluted ^(b)	$	(0.25	)	$	0.77

Non-GAAP net earnings per share
Basic	$	1.36		$	1.79
Diluted ^(b)	$	1.35		$	1.77

(a)	Disaster charges (recovery) for fiscal 2020 include direct costs resulting from COVID-19. For fiscal 2019, represents insurance recoveries in relation to damage to our facilities in Houston, Texas due to Hurricane Harvey in fiscal 2017.
(b)	Diluted net earnings per share reflects any dilutive effect of restricted stock awards, stock options and performance-based awards, but the effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive.
(c)	The Company recorded $865 million of partial goodwill impairment charge in the second quarter of fiscal 2020 as it was determined that the fair value of the HPC & MCS reporting unit was below the carrying value of its net assets.
(d)	Represents the amortization of basis difference adjustments related to the H3C divestiture.
(e)	For the periods presented, amounts represent Acquisition, disposition and other related charges related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray, Inc., which was included in Cost of sales.
(f)	The Company adopted the new accounting standard for leases in the first quarter of fiscal 2020 which requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset for the lease term. The Company elected the modified retrospective transition method whereby prior comparative periods are not restated. Adoption of the new lease standard resulted in the recognition of $1.0 billion of ROU assets and $1.1 billion of lease liabilities on the Company’s Condensed Consolidated Balance Sheet at November 1, 2019.
(g)	The Company adopted an accounting standard update in the first quarter of fiscal 2020 that allowed it to reclassify $43 million of stranded tax effects resulting from U.S. tax reform from accumulated other comprehensive loss into accumulated deficit.
(h)	Effective at the beginning of the first quarter of fiscal 2020, Hewlett Packard Enterprise Company ("HPE") implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. As a result of these organizational changes, HPE replaced the Hybrid IT reportable segment (and the Compute, Storage and HPE Pointnext business units within it) with four new financial reporting segments: Compute, High Performance Compute & Mission-Critical Systems ("HPC & MCS"), Storage, and Advisory and Professional Services ("A & PS").
	In addition, the Intelligent Edge segment now includes the Data Center Networking ("DC Networking") operational services business that was previously a part of the Hybrid IT Segment. The DC Networking business, other than operational services, had been transferred to the Intelligent Edge segment in a prior realignment.
	The Company reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the transfer of net revenue and operating profit for each of the businesses as described above. These changes had no impact on Hewlett Packard Enterprise’s previously reported consolidated net revenue, net earnings or net earnings per share ("EPS").

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