Segment Information

Hewlett Packard Enterprise's operations are organized into four segments for financial reporting purposes: Hybrid IT, Intelligent Edge, Financial Services ("FS"), and Corporate Investments. Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker ("CODM"), who is the Chief Executive Officer ("CEO"), uses to evaluate, view and run its business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.

A summary description of each segment follows.

Hybrid IT provides a broad portfolio of services-led and software-enabled infrastructure and solutions including secure, software-defined servers, storage and HPE Pointnext services, thereby combining HPE's hardware, software and services capabilities to make Hybrid IT simple for its customers. Described below are the business unit capabilities within Hybrid IT.


•	Hybrid IT Product includes Compute and Storage.

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Compute. To address the full array of the customers' computing needs, HPE's compute portfolio offers both Industry Standard Servers ("ISS"), which are general purpose servers for multi-workload computing, as well as Mission-Critical Servers ("MCS"), which are servers optimized for particular workloads. HPE's general purpose servers include HPE ProLiant, secure and versatile rack and tower servers; HPE BladeSystem, a modular infrastructure that converges server, storage and networking; and HPE Synergy, a composable infrastructure for traditional and cloud-native applications. The Company's workload optimized server portfolio includes HPE Apollo for high performance computing and artificial intelligence, HPE Cloudline for cloud data centers, HPE Edgeline for computing at the network edge, HPE Integrity for mission-critical applications, and HPE SimpliVity, a hyperconverged infrastructure for virtualized workloads.

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Storage. With storage offerings that are AI-driven and built for cloud environments, HPE provides the right workload optimized destinations for data. Powered by HPE InfoSight advanced analytics and machine learning and HPE Cloud Volumes data mobility, HPE delivers intelligent storage for hybrid cloud environments so that customers can unlock data's full potential and derive business insights. Key solutions include HPE 3PAR Storage and HPE Nimble Storage all-flash arrays for mission critical workloads and general purpose workloads, respectively, and big data solutions running on HPE Apollo Servers. Storage also provides comprehensive data protection with HPE StoreOnce and HPE Recovery Manager Central, solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE MSA and HPE XP.

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HPE Pointnext creates preferred IT experiences that power the digital business. The HPE Pointnext team and the Company's extensive partner network provide value across the IT life cycle delivering advice, transformation projects, professional services, support services and operational services for Hybrid IT. HPE Pointnext is also a provider of on-premises flexible consumption models, such as HPE GreenLake, that enable IT agility, simplify operations and align cost to business value. HPE Pointnext offerings include Operational Services, and Advisory and Professional Services.

The Intelligent Edge business is comprised of enterprise networking and security solutions for businesses of any size, offering secure connectivity for campus and branch environments, operating under the Aruba brand. The primary business drivers for Intelligent Edge solutions are mobility and the Internet of Things ("IoT").


•	HPE Aruba Product includes wired and wireless local area network hardware products such as Wi-Fi access points, switches, routers, sensors, and software products that include network management, network access control, analytics and assurance, and location services software.


•	HPE Aruba Services offers professional and support services for the Intelligent Edge portfolio of products.

Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, and utility programs and asset management services, for customers that facilitate unique technology deployment models and the acquisition of complete IT solutions, including hardware, software and services from Hewlett Packard Enterprise and others. In order to provide flexible services and capabilities that support the entire IT life cycle, FS partners with customers globally to help build investment strategies that enhance their business agility and support their business transformation. FS offers a wide selection of investment solution capabilities for large enterprise customers and channel partners, along with an array of financial options to SMBs and educational and governmental entities.

Corporate Investments includes Hewlett Packard Labs, Communications and Media Solutions ("CMS"), and certain business incubation projects.

Segment Policy

There have been no significant changes to the Company's segment accounting policies disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2018, except as described in the 'Segment Realignment' section below.

Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include certain corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, amortization of intangible assets, restructuring charges, transformation costs, disaster charges, acquisition, disposition and other related charges, and separation costs.

Segment Realignment

Effective at the beginning of the first quarter of fiscal 2019, the Company implemented organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes primarily include: (i) the transfer of the data center networking ("DC Networking") business, which was previously reported within the Hybrid IT Product business unit in the Hybrid IT segment, to the HPE Aruba Product and HPE Aruba Services business units within the Intelligent Edge segment; (ii) the transfer of the edge compute business, which was previously reported within the HPE Aruba Product business unit in the Intelligent Edge segment, to the Hybrid IT Product business unit within the Hybrid IT segment; and (iii) the transfer of the CMS business, which was previously reported within the HPE Pointnext business unit in the Hybrid IT segment, to the Corporate Investments segment.

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, earnings from operations, net earnings or net earnings per share ("EPS").

Segment Operating Results



	Hybrid IT		Intelligent Edge		Financial Services		Corporate Investments			Total
	In millions
Three months ended April 30, 2019
Net revenue	$	5,469	$	662	$	894	$	125		$	7,150
Intersegment net revenue and other	167		4		2		—			173
Total segment net revenue	$	5,636	$	666	$	896	$	125		$	7,323
Segment earnings (loss) from operations	$	645	$	20	$	77	$	(29	)	$	713
Three months ended April 30, 2018
Net revenue	$	5,721	$	699	$	914	$	134		$	7,468
Intersegment net revenue and other	172		7		2		—			181
Total segment net revenue	$	5,893	$	706	$	916	$	134		$	7,649
Segment earnings (loss) from operations	$	591	$	56	$	72	$	(28	)	$	691
Six months ended April 30, 2019
Net revenue	$	11,301	$	1,349	$	1,810	$	243		$	14,703
Intersegment net revenue and other	305		3		5		—			313
Total segment net revenue	$	11,606	$	1,352	$	1,815	$	243		$	15,016
Segment earnings (loss) from operations	$	1,320	$	29	$	154	$	(57	)	$	1,446
Six months ended April 30, 2018
Net revenue	$	11,721	$	1,351	$	1,800	$	270		$	15,142
Intersegment net revenue and other	330		11		4		—			345
Total segment net revenue	$	12,051	$	1,362	$	1,804	$	270		$	15,487
Segment earnings (loss) from operations	$	1,163	$	90	$	143	$	(54	)	$	1,342

The reconciliation of segment operating results to Hewlett Packard Enterprise condensed consolidated results was as follows:



	Three Months Ended April 30,						Six Months Ended April 30,
	2019			2018			2019			2018
	In millions
Net Revenue:
Total segments	$	7,323		$	7,649		$	15,016		$	15,487
Eliminations of intersegment net revenue and other	(173		)	(181		)	(313		)	(345		)
Total Hewlett Packard Enterprise condensed consolidated net revenue	$	7,150		$	7,468		$	14,703		$	15,142
Earnings before taxes:
Total segment earnings from operations	$	713		$	691		$	1,446		$	1,342
Unallocated corporate costs and eliminations	(64		)	(61		)	(114		)	(120		)
Unallocated stock-based compensation expense	(15		)	(20		)	(29		)	(50		)
Amortization of intangible assets	(69		)	(72		)	(141		)	(150		)
Restructuring charges	—			(10		)	—			(15		)
Transformation costs	(54		)	(120		)	(132		)	(365		)
Disaster charges	7			—			7			—
Acquisition, disposition and other related charges	(84		)	(16		)	(147		)	(46		)
Separation costs	—			(26		)	—			(2		)
Interest and other, net	(18		)	(78		)	(69		)	(99		)
Tax indemnification adjustments	4			(425		)	223			(1,344		)
Non-service net periodic benefit credit	17			31			33			64
Earnings (loss) from equity interests	3			(10		)	18			12
Total Hewlett Packard Enterprise condensed consolidated earnings (loss) from continuing operations before taxes	$	440		$	(116	)	$	1,095		$	(773	)

Net revenue by segment and business unit was as follows:



	Three Months Ended April 30,						Six Months Ended April 30,
	2019			2018			2019			2018
	In millions
Hybrid IT
Hybrid IT Product
Compute	$	3,093		$	3,263		$	6,495		$	6,781
Storage	942			912			1,917			1,860
Total Hybrid IT Product	4,035			4,175			8,412			8,641
HPE Pointnext	1,601			1,718			3,194			3,410
Total Hybrid IT	5,636			5,893			11,606			12,051
Intelligent Edge
HPE Aruba Product	577			629			1,174			1,211
HPE Aruba Services	89			77			178			151
Total Intelligent Edge	666			706			1,352			1,362
Financial Services	896			916			1,815			1,804
Corporate Investments	125			134			243			270
Total segment net revenue	7,323			7,649			15,016			15,487
Eliminations of intersegment net revenue and other	(173		)	(181		)	(313		)	(345		)
Total Hewlett Packard Enterprise condensed consolidated net revenue⁽¹⁾	$	7,150		$	7,468		$	14,703		$	15,142


(1)	Revenue from leasing arrangements within Financial Services and Eliminations of intersegment net revenue and other are not subject to the new revenue standard.

The Company’s net revenue by geographic regions was as follows:



	Three Months Ended April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
	In millions
Americas	$	2,667	$	2,898	$	5,672	$	5,900
Europe, Middle East and Africa	2,727		2,787		5,637		5,624
Asia Pacific and Japan	1,756		1,783		3,394		3,618
Total Hewlett Packard Enterprise condensed consolidated net revenue⁽¹⁾	$	7,150	$	7,468	$	14,703	$	15,142


(1)	Revenue from leasing arrangements within Financial Services and Eliminations of intersegment net revenue and other are not subject to the new revenue standard.