How HPE (Hewlett Packard Enterprise Company) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a technology hardware and services company like Hewlett Packard Enterprise makes money is essential for investors and anyone interested in the business of enterprise IT solutions. In this post, we break down Hewlett Packard Enterprise's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Hewlett Packard Enterprise Overview

Hewlett Packard Enterprise operates as a multinational provider of enterprise IT solutions, including servers, storage, networking, and hybrid cloud services. Revenue comes primarily from sales of hardware, software, and related services to enterprise customers worldwide. Financial data aggregates core business segments under "Other" reporting, reflecting integrated operations across hybrid cloud, financial services, and corporate functions.

Revenue Breakdown

• Total Revenue (Q4 2025): $9.762B (+15.4% YoY)
  • Other: $9.762B (100% of total)
  • Growth is powered by strong demand in enterprise IT infrastructure, including servers and edge-to-cloud solutions.

Gross Profit and Margins

• Gross Profit: Not specified in available data (gross margin: not specified)
  • Cost of Revenue: Not specified (+YoY: not specified)
  • Hewlett Packard Enterprise maintains margins through its scalable hardware and services model, though specific gross figures are unavailable here.
• Most costs come from cost of revenue (hardware production and supply chain) and operating expenses.

Operating Income and Expenses

• Operating Income: Not specified (+YoY: not specified, margin: not specified)
• Operating Expenses: $2.523B (+31.9% YoY)
  • R&D: $881M (+67.2% YoY, 9.0% of revenue) — focused on innovation in AI, edge computing, and hybrid cloud platforms
  • SG&A: $1.642B (+35.6% YoY, 16.8% of revenue) — covers sales, marketing, and administrative functions supporting global enterprise sales
  • Hewlett Packard Enterprise continues to prioritize innovation while expanding operations amid rapid revenue growth.

Net Income

• Pre-Tax Income: Not specified (+YoY: not specified, margin: not specified)
• Income Tax: Not specified (effective tax rate: not specified)
• Net Income: $146M (-89.1% YoY, 1.5% net margin)
• Hewlett Packard Enterprise converts a moderate portion of sales into profit due to high operating expenses offsetting revenue gains.

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What Drives Hewlett Packard Enterprise's Money Machine?

• Enterprise IT Hardware and Services: 100% of revenue from core "Other" category encompassing servers, storage, and networking
• R&D Investment: $881M (9.0% of revenue), fueling advancements in hybrid cloud and AI infrastructure
• Operating Scale: Revenue up 15.4% YoY supports growth despite 31.9% rise in expenses
• Future growth areas: Expansion in edge computing and AI-driven solutions, though net income declined sharply YoY

Visualizing Hewlett Packard Enterprise's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.[1][4]

• Most revenue flows into gross profit, with operating expenses (especially SG&A at 16.8%) taking the largest chunk.
• Even after significant investments, 1.5% of revenue drops to the bottom line.

Key Takeaways

• Hewlett Packard Enterprise's money comes overwhelmingly from enterprise IT hardware and services
• Moderate net margins illustrate the power of Hewlett Packard Enterprise's scalable IT infrastructure model
• Heavy investment in R&D, balanced by efficiency in operating costs amid revenue growth
• Ongoing growth is driven by demand for hybrid cloud and AI solutions

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FAQ About Hewlett Packard Enterprise's Income Statement

1. What is the main source of Hewlett Packard Enterprise's revenue in 2025?

Hewlett Packard Enterprise generates over 100% of its revenue from its core "Other" category, which includes enterprise hardware, storage, networking, and related services.

2. How profitable is Hewlett Packard Enterprise in Q4 2025?

Hewlett Packard Enterprise reported net income of $146M in Q4 2025, with a net margin of approximately 1.5%, reflecting moderate profitability driven by revenue growth offset by sharply rising operating expenses.

3. What are the largest expense categories for Hewlett Packard Enterprise?

The biggest expenses on Hewlett Packard Enterprise's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $881M in Q4 2025, as Hewlett Packard Enterprise prioritizes innovation in hybrid cloud and AI infrastructure.

4. Why does Other operate at a constrained margin?

Other, despite generating $9.762B in revenue, contributed to a net income of only $146M in Q4 2025. This is because Hewlett Packard Enterprise aggressively invests in R&D (up 67.2% YoY) and SG&A (up 35.6% YoY), believing these will drive long-term growth—even if margins are pressured today.

5. How does Hewlett Packard Enterprise's effective tax rate compare to previous years?

Hewlett Packard Enterprise's effective tax rate in Q4 2025 was not specified, consistent with available data. This rate is influenced by standard corporate tax structures and international operations.