Hewlett Packard Enterprise Company

Item 1A. Risk Factors. 

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal period ended October 31, 2024, and Part II, Item IA, Risk Factors in our Quarterly Report on Form 10-Q for the fiscal period ended January 31, 2025, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock, including certain risks, which have been modified as follows:

Failure to complete the Merger with Juniper Networks may adversely aWe depend on third-party suppliers, and our financial results could suffect our business andr if we fail to manage our stockupplier relationships price.

In January 2024, we entered into a definitive agreement operly.

Our operations depend on our ability to acquire Juniper Networknticipate our needs for components, products, Inc.and services, a leader in AI-native networks (the Merger). Consummations well as our suppliers abilities to deliver sufficient quantities of the Merger is subject to the satisfaction quality components, products, and services at reasonable prices and in time for waiver of certain condus to meet critions, including but not limited to (i)cal schedules for the adoptiondelivery of the Agreement and Plan of Merger (our own products and services. Given the Merger Agreement), by and among Juniper Networks, HPEwide variety of solutions that we offer, the large and Jasmine Acquisidiverse distribution Sub, Inc., a Delaware corporation of our suppliers and contract manufacturers, and a wholly owned subsidiary of HPE (Merger Sub), by Junipthe long lead times required to manufacture, assemble, and deliver Networks stockholders (which was completed on April 2, 2024); (ii)certain solutions, problems have, from time to time in the abpast, arisence of any, and could in the future arise, injun production, order or law preventplanning, prohibiting orand inventory making illegalnagement theat consummation of the Merger; (iii) the expirauld harm our business. In addition or termination of the waiti, our ongoing period (or extension thereof) under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and efforts to geographically diversify and optimize the receiptefficiency of all other required approvals, consents or clearances under specified f our supply chain could cause supply disruptions and be moreign antitrust laws expensive, time-consuming, and foreign investment laws withoutresource-intensive than expected, and such imposition of a Burdensome Condition (as defineacts may be more pronounced in the Merger Agreement);light of increased tariffs between the U.S. and (iv) in the case ofits trading partners. In the obligationsis environment of HPE and Merger Sub to effect the Merger, the absheightened trade restrictions, we have experience of ad, and material adverse effect with respect to Juniper Networks that is continuing as of the closing. There can be no assurance that these y continue to experience, cost increases from certain of our suppliers. which in turn resulted in price increases for other clossome of our offering conditions will be satisfis and/or subsequently limited in a timely manner or at all. Any delay in completing the Mergerdemand or, if we were unable to pass on all or some of such could cause us not tost increases to our customers, realize some orduced our margins, all of the anticipated benefits when expected, if at all. On January 30 2025, the Antitrust Division of which may impact us again from time to time in the United States Departmentfuture. Furthermore, certain of Justice (the DOJ) filed a complaintour suppliers have at times decided, and may in the United States District Court for the Northern District of California, seekingfuture decide, to discontinue conducting business with us or fail to enjoinperform under the closing of the Merger, alleging that ir contracts with us. Othe Merger is likely to substantially lessen competition in violation of Section 7 of r supplier problems that we have faced, and could again face in the Clayton Act. On February 10 2025, HPE and Juniper Networks filed answers to the DOJs complaint, disputing these claims. Trialfuture, include component shortages, excess supply, and contractual, relational, and labor risks, each of which is scheduldescribed to begin on July 9, 2025. While we intend to vigorously defendbelow.

Component shortages. We have in the litigation, an unfavorable ruling could ultimately prevent the closing ofpast experienced, and may experience again in the Merger, thereby adversely impacting our ability to achieve the intended benefifuture, delays and shortages of certain components of the Merger, which could, in turn, have an adverse impact on our business, financial condas a result of strong demand, supplier transition, and results of operatis, raw material or capacity cons.

If the Merger is not completed, our stock price coultraints, and other problems experienced be impacted to the extent ity suppliers in certain geographies and markets, reflects an assumption that we will complete the Merger, sulting in insufficient supply to meet total market demand additionally, we may suffer other consequ. In the past, we have experiences that could adversely affect our business, resultsd shortages or delays, which led to higher prices of operations, certain components

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and stock price, including incurring significant acquisition costsexposure to quality issues and delivery delays, which may occur again in that we woulde future. We may not be unable to recover, negative

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secure enough compublicity, and a negative impressiononents at reasonable prices, of us in the investment communacceptable quality. Addition, or at ally, the DOJ couo build request conditions, terms, obligations, or restrictions or seek to require divestitures, or place restricproducts or provide services in a timely manner in the quantities needed or according to our specifications on the conduct of. Accordingly, our business afternd financial performance consummationuld suffer from a loss of the Mergerime-sensitive sales, any of which, if agreed to bdditional freight costs incurred, or the inability theo parties, could advss on price increases to our customersely affect the expected benefits of the Merger, our business, results. If we cannot adequately address supply issues, we may have to reengineer some product or service of operationferings, or stock price Fwhich could result in furthermore, under certain specified circumstances, including the terminatio costs and delays.

Excess supply. In of the Merger Agreemrder to secure component by either us for our products or Juniper Networks because certain required regulatory clearservices, at times we have made advances are not obtained payments to suppliers or the enterms of the Merger Aed into long term agreement are materially breached by us, we would be required to pay Juniper Networks a termination fee of $815 mills, non-cancellable commitments, or other inventory management arrangements with vendors. In addition.

In order to be successful, we must at, we have also, at times, purchased components stract, retain, train, motivate, develop, and transition key qualified employeetegically in advance of demand to take advantage of favorable pricing, to address concerns about the availability of future components, and failureor to do so could seriously harm us.

In prepare to fulfill large order to be successful, we must attract, retain, train, motivate,s. If we fail to anticipate customer develop, mand transition qualified executives and other key employees, includingproperly, continue to take such actions, or thoese in managerial, technical, development, sales, marketing, and IT posidynamics are exacerbated due to order delays or cancellations. In order to attract and, a temporary oversupply can retasult in executives and other key employees in a competitive marketplacecess or obsolete components (which has happened at times in the past), we must provide a competitive compensation package, including cashhich has at times adversely impacted our business and financial performance and equity-based compensation. These are particularly important considercould do so again in the future.

Contractual terms. As a result of binding our growth strategy to capture the market opportunities presented by networking, hybrid cloud, and AI. Certain equity-blong-term price or purchase commitments with vendors, we may be obligated to purchased inc componentive awards for certain executives contain conditions relating to our stock price performances or services at prices that are higher than those available in the current market and our long-term financial performance that make the future value of those awards uncertainbe limited in our ability to respond to changing market conditions. If the anticipated value of such equity-based incwe commit to purchasing componentive awards does not materialize, if our equity-based compensation os or services for prices in excess of therwise ceases to be viewed as then-current market price, we may be at a valuable benefit, if our totaldisadvantage to compensation package is not viewed as beingtitors who have access to competitive, or if we do not obtaonents or services at lower prices, our gross margin the stockholder approval needed to continue grancould suffer, and we could incur charges relating equity-based i to inventory obsolescence.

Contive awards in thngent workers. We amounts we believe are necessary, our ability to attract, retainlso rely on third-party suppliers for the provision of contingent workers, and motivate highly qualified execuour failure to manage our use of such workers effectives and key employeesly could be weakened.

Oadversely affect our failure to successfully hireresults of operations. We have been executives and key employees orposed to various legal claims relating to the losstatus of any executives and key employees contingent workers in the past and could have aface significant impamilar claims in the future. We may be subject on our operations and our ability to execute our strategy. Further, chato shortages, oversupply or fixed contractual terms relating to continges in ournt workers. Our ability to management team may be disruptive to the size and cost of our business, and any failure to successfully transcontingent workforce may be subject to addition and assimilate key new hires or promotal constraints imposed employees could adversely affect by local laws.

Single-sour business and results of operations. As ce suppliers. We obtain certain competition for highly skilled employees in our industry has grown increasingly intense, we onents from single-source suppliers due to technology, availability, price, quality, scale, or customization needs. Certain of such suppliers have, in the past experiencdecided, and may in the future experience, higher than anticipatdecide, to discontinue manufacturing components used levels of employee attritionin our products, which has resulted may cause us to discontinue certain products, increasedur additional costs to hire new employees with the desired skills and may do so again in the future. In addition, significaredesign our products so as not to incorporate such discontinued components, or incur time and expense to find replacement or prolonged turnover or revised hiringsuppliers. Replacing a single-source supplier has at times delayed, and could delay, production of some prioritieoducts as replacement suppliers may negativeinitially impact our operations be unable to meet demand our abilityr be subject to successfully maintain our processes and procedureother output limitations. For some components, such as customized components, including due to alternative sources eithe loss of hr may not existorical, technical, and other expertise. These risks or may be unable to produce the quantities of those components necessary to attrasatisfy our producting and retaining the necessary highly qualified talon requirements. In addition, we sometimes purchase components from single-source suppliers under short-term agreement may be exacerbated by labor constraints, such as immigration policies which may impair ths that contain favorable pricing and other terms but that may be unilaterally modified or terminated by the supplier with limited notice ability to recruit technical and professional talnd with little or no penalty. The performance of such single-source suppliers under those agreement, s (and inflat the renewal or extensionary pressures, which impa of those agreements upon similar terms) may affect employee wagesthe quality, quantity, and benefiprice of our components. Further, integrThe loss of a single-source supplier, the deterioration of employees and buour relationship with a sinesses as a result of ougle-source supplier, or acquisiny unilateral modifications, including the Merger, may present challenges, which to the contractual terms under which we are supplied components by a single-source supplier could negativeadversely affect our ability to retainbusiness and recruit personnel who are essentfinancial to our future success.

performance.

If we fail to manage the distribution of our products and services properly, our business and financial performance could suffer. 

We use a variety of distribution methods to sell our products and services around the world, including both direct and indirect sales to end-users. Successfully managing the interaction of our direct and indirect channel efforts to reach various potential customer segments for our products and services is a complex process. Moreover, since each distribution method has distinct risks and gross margins, our failure to implement the most advantageous balance in the delivery model for our products and services could adversely affect our revenue and gross margins and therefore our profitability.

Our financial results could be materially adversely affected due to distribution channel conflicts or if the financial conditions of our channel partners were to weaken. Our results of operations may be adversely affected by any conflicts that

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might arise between our various distribution channels or the loss or deterioration of any alliance or distribution arrangement. Moreover, some of our wholesale distributors may have insufficient financial resources and may not be able to withstand changes in business conditions, including economic weakness, industry consolidation, tariffs, and/or market trends. Considerable trade receivables that are not covered by collateral or credit insurance are outstanding with our distribution channel partners. Revenue from indirect sales could suffer, and we could experience disruptions in distribution, if our distributors financial conditions, abilities to borrow funds in the credit markets, or operations weaken.

Our inventory management is complex, as we continue to sell a significant mix of products through distributors. We must manage both owned and channel inventory effectively, particularly with respect to sales to distributors, which involves forecasting demand and pricing challenges. Distributors have in the past adjusted orders during periods of product shortages, and may do so in the future, in addition to cancelling orders if their inventory is too high or delaying orders in anticipation of new products. Distributors also may adjust their orders in response to the supply of our products and the products of our competitors and seasonal fluctuations in end-user demand. As a result of these considerations, we have experienced, and may in

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the future again experience, abnormally high inventory levels. If we have excess or obsolete inventory, we mhich we have experienced from time to time, we may have to reduce our prices and/or write down inventory, either of which may adversely impact our gross margin and our results of operations. These dynamics are accentuated for larger orders, including some orders for our AI systems, and particularly so if they are delayed or cancelled. Moreover, our use of indirect distribution channels may limit our willingness or ability to adjust prices quickly and otherwise to respond to pricing changes or tariffs.

FailurDue to meet responsible and sustainable the international nature of our business expectations or st, political or economic changes and the laws andards or achieve our Living Progres regulatory regimes applying to international transactions objectiver other factors could adversely affectharm our business,future resulvenue, costs of operations, and expenses, and financial condition, or stock price.

There has been an increased focus from regulator.

Our business and financial performance depend significantly on worldwide economic conditions and stakeholders on sustainabilitythe demand for technology hardware, software, and services in, and corporate responsibilintinued access to, the markets in which we compete. Economic weakness and uncertainty matters. Given our commitand the volatile inflationary and geopolitical environment to susthave constrainable and responsible business, we activeed spending on enterprise infrastructure. This has in the past adversely manageaffected these issues through our established and publicly announced Living Proge demand for our products, services, and solutions, which has impacted our financial condition and ress Stults of operategy, ions, all of which we may refine or even expand further experience again in the future. This strategyese have, at times in the past, reflects our current plans and aspirations, is based on available datasulted in increased expenses due to higher allowances for doubtful accounts and potential goodwill and estimates, and is not a guarantee that we will be able to achieve such plansasset impairment charges (among other financial impacts), and made it more difficult for us to manage inventory and make accurate forecasts of revenue, gross margin, cash flows, and expenses, and aspirations. Moreover, acmay have such effects again in the future. Such factors, including how long such conditions or statements that wemay persist, among others, may take based on expectations, assumptnegatively impact the evenness or volume of demand for our products and services, potentially resulting in impacts similar to those mentions, ored above, though third-party information that we e precise extent of such impacts cannot be accurrentately believe to be reasonable may subsequently be determinedpredicted.

Economic weakness, tariffs, and geopolitical uncertainty have, at times caused, and could, in the future cause our financial performance to be erroneous or be subjvary materially from our expect to misinterpretation. Initiativations. Any financial turmoil affecting the financial markets, or any significant financial services to address sustainability and corporate respinstitution failures could negatively impact our treasury operationsibility issu, as the financial condition of such parties may be costdeteriorate rapidly and maywithout not have the desired effect. Evolving stakeholderice in times of market volatility and disruption. Interest and other expenses have varied, and could continue to vary, materially from expectations and our efforts and ability to manage these issuesdepending on changes in interest rates, borrowing costs, currency exchange rates, costs of hedging activities, and the fair value of derivative instruments. It is difficult to present numerous operational, regulatory, reputational, financial, legal, and odict the impact of such events on us, our third-party partners, our customers, or economic markets more broadly, which have been and will continue to be highly dependent upon ther risks, any of which may be outside actions of governments and businesses in response to macroeconomic events, and the effectiveness of our control or couldthose actions. Such actions have adverseimpacted, and may further impacts on o our business, incluability, desire, or the timing of seeking funding on our stock price. Further, there is uncertainty arounfor various investment opportunities. Economic downturns also may lead the accounto restructuring standardactions and climassociate-related disclosures associated with emerging lawsd expenses. Further, reduced government spending may limit demand for our products, services, and reporting requiresolutions from organizations that receive funding from the governments a, around the relatedworld, and could negatively affect macroeconomic costs to comply with nditions in the countries which we operate, which could furthe emerging regular reduce demand for our products, services, and solutions.

Our failure or business and financial perceived failure to achieve our Living Progress objectives, maintain responsibleformance have, at times, been adversely affected by changes in U.S. trade policy, U.S. export controls and sanctions, U.S. regulations concerning imports, tariffs, and sustainable business practicresultant retaliatory countermeasures from other countries, or comply with emergingas well as international laws and regulations that meet evolvrelating regulatory or stakeholder expectations could harm our reputation, adverselyto global trade. As a result, our business has, from time to time, been impact our ability to attract and retained by forced price increases of materials, which in turn resulted in price increases to customers, and talent, subsequently limited demand expose usfor our offerings (if we were unable to pass on such increased scrutiny fromcosts), and/or reduced margins, all of which we may experience in the investment community and enforcefuture, especially in light of the current international tariff environment. Current U.S. government authortrade policy includes the imposities. Our reputon of tariffs on certain foreign goods, including information also may be harmed by the perceptions that our stakeholdnd communication technology products. These measures have materially increased costs for certain goods imported into the United States. Additionally, certain U.S. trading partners have about our action or inadopted, and others may in the future adopt, their own reciprocal trade restriction on certain sustainability- and cors and tariffs in response to U.S. actions, making it more difficult or costly for us to exporate responsibility-related issues, or because they may disagree with our strategy and initiatives, either t our products to those countries and more costly for our customers to consume our products and services in those countries. While we are evaluating supply chain diversification and resilience strategies to mitigate the adverse impacts of whisuch may cause us to feasures, the actions weve taken or may take in the future

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mace scrutiny, legal and/or regulatory proceedings, or other market access restricy not be effective or able to be effectuated in a timely manner, or at all. The political situation remains volatile and has changed rapidly at times. As such, changes in U.S. and internations from certain parties relateal trade policy and any countermeasures, to any existing trade agreements, and to our action or in the scope and timing of any such action on such issues. Damage tos and the ultimate impact of these measures are difficult to predict and may adversely affect our reputoperations and loss of brand equity may reduce demand for ourfinancial condition. Similarly, changes in regulations relating to certain exports, including economic sanctions, have led to export delays and prevented us, and could in the future prevent us, from exporting products and services and thusto certain locations or customers entirely, which have an adverse effect on our in some instances impacted, and could in the future impact, our financial performance, as well as . In addition, changes in require additional resments relating to making foreign direct investments could increase ources to rebuild our reputation.

We operate in an intensely cost of doing business in certain jurisdictions, prevent us from shipping products to particular countries or markets, affect our ability to obtain favorable terms for components, increase our operating costs, or lead to penalties or restrictions. While we have policies and procedures designed to facilitate competitive industry, andliance with global trade laws and regimes around the world, such measures may not guarantee competitive pressures could harm ourliance.

Sales outside the United States constituted approximately 64% of our net revenue in fiscal 2024. As such, our future business and financial performance.

Our abili could suffer due to a variety to implement solutions for our customers, anticipate andof international factors in addition to those otherwise already disclosed, including:

ongoing uncertainties as a respond to rapid andult of instability or changes in geopolitical continuditions, including changes in technology (s trade protection measures such as import tariffs or import or export restrictions, the revocation or material modification of trade agreements, military or political conflicts, such as cloud-, AI-,those caused by the ongoing conflicts between Russia and security-related offerings, Ukraine or in the Middle East (the potential escalation or geographic expansion of which are cocould heighten other risks identinually evolvingfied in this report), and develop new service offeror the relationship between China and the U.S. (which could, among other things or incorporate technological improve, impact trade dynamics and the enforceability of certain contracts or the timing and form of certain payments into our offerings);

inflationary pressures, which have in that meet current and prospective customers needs, ae past increased, and may in the future increase costs for materials, supplies, and services, including those of third parties well as evolvith whom we do business;

adverse or uncertain macroeconomic conditions, including industry sta changing interest rate environment andards, is critic fears of a potential to our competitiveness global economic downturn or recession, which have at times in the past slowed customer demand sucfor our products and servicess. We encounter aggressive, and may do so again in the future;

network security, privacy, geopolitical, and data sovereignty competition from numerouncerns, which could make foreign customers reluctant to purchase products and variservices from U.S.-based competitors in all areas of technology companies;

longer collection cycles and financial instability among customers, which could impact our business,ability to collect on accounts receivable and our competitors have targeted and are expectedconsequently recognize revenue;

local labor conditions and regulations, including local labor issues faced by specific suppliers and OEMs, or changes to immigration and labor law policies which may adversely impact our access to continuetechnical and professional targetlent;

managing our key market segments. We compete primarily on the basis ofgeographically dispersed workforce, which has necessitated, and may in the future require, incurring costs to promote seamless workforce connectivity and to comply with changing laws, regulations, and workers rights councils across multiple jurisdictions;

differing technology, innovation, performance, price, quality, reliability, br standards or customer requirements, which have required us to incur additional development and, reputa production, distribution, range of product costs to modify or adapt our offerings, and may do so again in the future;

local content and manufacturing requirements and services, trade protection mease of use of our products, accounures such as import tariffs or import or export relastrictionships, custom, which have impacted, and could further training, service and support, securityimpact, our ability to sell into those markets;

difficulties associated with repatriating earnings in restricted countries, and the availability ofchanges in tax laws, which introduces uncertainty to our IT infrastructureresults offerings. If our products, services, sup operations and financial performance; and

fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transport,tation and cost shipping infrastructure do not enable us to compete successfully based onat important geographic points of exit and entry for our products and shipments, which have from time to time adversely impacted, and any of those criteriawhich could in the future adversely impact, our results of operations and business prospects could bability to meet customer demand.

Certain of the factors described above harmed.

We have a large portfolio ofve, in the past, disrupted the operations of, and adversely impacted our products and servicescomponent manufacturing and must alkey suppliers, customers, or vendors located our financial, personnel, and otside of the United States, and could do so again in ther resources across all of ou future. For example, we rely on suppliers in Asia for products assembly and services while competing with companies that have smallmanufacture, the operations of whom are subject to local labor laws and other portfoliorequirements. Any loss of or limitations or specialize in one or more ofn their output or their inability to operate could have an adverse effect on our ability to timely deliver our product ors and service lines. As a ress, which would in turn negatively impact our financial performance.

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Fult, we may invest less in certrther, the ongoing conflict between Russia and Ukrain areas of our businesse and the trade sanctions imposed by the U.S., than our competitors doe European Union (the EU), and outher competitors may untries in response have greater negatively impacted business and financial, technical, and marke performance in that region. HPE is conting resources available to them compared to the resources allocated to ouruing to execute on the exit of our remaining business in Russia and Belarus as planned; however, we cannot provide any assurance that such exit will be efficient or uninterrupted, which may negatively impact our operational expenses..

We implement policies, productscedures, and services thattraining designed to facilitate compete against theirs. If we do liance with anti-corruption laws around the world, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. However, such measures may not sufficiently invest in new technologies, guarantee compliance, and our employees and third parties with whom we work may take actions in violation of successfully adapt to industry h policies or such anti-corruption laws. Furthermore, in many foreign countries, particularly in those with developments and changing demand, and evolve and expand ouring economies, people may engage in business at sufficient spepractices prohibited and scale to keep pace with the demandby anti-corruption laws or our policies and procedures. Violations of the markets wesuch laws may result in serve, we may be unable to develop and maintain a competitive advantage and execute on our growth strategy, which wvere criminal or civil sanctions and penalties, and we may be subject to those and other liabilities that could ahave an adversely a effect on our business, results of operations, and financial condition. Industry consolid

The revenue and profitability of our operation may also affect competition by creating ls have historically varied, which makes our future financial results less predictable.

Our revenue, gross marger, more homogeneous,in, and profit vary among our diverse products and potentially strongservices, customer competitors in thegroups, and geographic markets in which we operate. Additionally, our competitors may affect and therefore, will likely be different in future periods than our business by entering into exclusive arrangements with our existing or potential customerhistorical results. Our revenue depends on the overall demand for our products and services, which is difficult to accurately predict, varies from time to time, may be uneven across or suppliers.

Companur portfolio of offerings and our geographies with whom we have vertical relationships, and is subject to industry-wide or broader macroeconomic market dynamics, all of which have in certain areas the past adversely impacted, and may be or become again in the future adversely impact, our competitors in obusiness and financial condition. Additionally, ther areas. In addi varying sizes of customer contracts or orders, variation, companis in customer acceptances with whom we have vertical reof delivered orders, the timing thereof, and cancellationships also may acquire or form relationships with our  and/or de-bookings of such orders (due to various reasons, including but not limited to failure to satisfy terms and competitoliance matters, which could reduce hetheir business with us. If we arr initiated by us or the customer) can be unable to effectively manage these complicaeven across our portfolio and have at times impacted relationships with vertical partners, and in the future could impact, our businespipeline, bookings and results of operations could be adverseour ability to recognize revenue, if at all (particularly affected.

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Wewith respect to face aggressive price competition and may continue to do so. As a consequencecontracts and orders involving our AI offerings). Further, larger orders, including some orders for our AI systems, may involve larger amounts of inflation and highcredit or longer supply chain and manufacturing costs, we havepayment terms than typical for our business, increasing our risk when customers do not pay in the past increased the prices of many ofa timely fashion, or at all, particularly where payment terms with major suppliers differ from the terms with our products and serviccustomers. Such variables to maintain orhave in the past negatively improveacted our revenue and gross marginfinancial performance, and may do so again in the future. In addiDelays or reductions in discretion, competitoary IT spending by our customers or potential customers whohave had, and in the future could have a gremater presence in some of the lower-cost markets inial adverse effect on demand for our products and services, which we compete, could result in a significant decline in revenue. For who can obtain better pricing, more favorableexample, we have seen demand soften unevenly across our portfolio and geographies, which may contractual terminue, as certain customers and conditions, or more favorable allocations of products and components during periodssectors have been taking longer than anticipated to digest prior large orders. In addition, revenue declines in some of limited supplyour businesses may be able to offer lowaffect revenue in our other pricbusinesses thanas we are able to offer. Inmay lose cross-selling opportunities. Overall gross margins an effort to better compete with our competitors, we have offerd profitability in any given period are dependent partially on the product, service, customer, and geographic mix reflected heavierin than normal discounts on the sale of certain products t period's net revenue.

Furthermore, the relationship between China and the U.S., and services, which have negatively impacted our financial results. Our future cash flows,any subsequent action that may be taken by either country, may significantly vary the results ofur operations, and financial conditperformance from that region may . There could be adversely affected by these and other industry-widitional uncertainty surrounding heightened trade prestricing pressures and our actions or the enforceability of contract obligations in response, as well as thereto timing and form of payments from China.

Because our business model is based on providiCompetition, lawsuits, investigations, increases in component and manufacturing innovativcosts that we and high-quality products and servicere unable to pass on to our customers, we may spend a proporcomponent supply disruptionately greats, and other amount ofrisks affecting our revenues on RD than some ofbusinesses may have a significant impact on our competitors. If we cannotoverall gross margin and proportionately decrease ofitability. Variations in our fixed cost structure (apart from RD expenses) on a timely basis in response to competitive price pressures, ourand gross margins across business units and product portfolios, have from time to time led to, and may lead to significant operating profitab volatility could be adverseon a quarterly affectedor annual basis in the future. In addition, if our pricing and other facets of our offerings are not sufficiently competitive, or ifnewer geographic market opportunities may be relatively less profitable due to our investments associated with entering there iose markets an adverse reaction to ourd local pricing product decisions,essures, and we may lose market share in certain areas, which could adversely affect our finan have difficulty establishing and maintaining the operating infrastructure necessary to support the high growth rate associal performance and business prospects.

Even if we are able to maintaited with some of those markets. Market trends, industry shifts, competitive pressures, commoditization orf products, increase market share for a particd component or shipping costs, trade restrictions, regular product, its financial performance could decline because the protory impacts, and other factors have from time to time resulted in, and may in the future result in, reduct is in aions in revenue or pressure on gross maturing industry orrgins of certain segments in a given period, which market segy lead to adjustment or contains technology that is becoms to our operations. Moreover, our efforts to address the challenges facing obsolete. Financial performur business could increase the level of variability in our finance could decline due to increased competition from oial results because the rate at which we are able to realize ther types of products benefits from that perose efform similar functions as our offts may vary from period to perings.od.

Our uneven sales cycle and supply chain disruptions make planning and inventory management difficult and future financial results less predictable. 

In some of our businesses, our quarterly sales have periodically reflected a pattern in which a disproportionate percentage of each quarter's total sales occurs towards the end of the quarter. This uneven sales pattern makes predicting revenue, earnings, cash flow from operations, and working capital for each financial period difficult, increases the risk of

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unanticipated variations in our quarterly results and financial condition, and places pressure on our inventory management and logistics systems. If predicted demand is substantially greater than orders, there may be excess inventory and greater risk of inventory write downs. Alternativ, which we have experienced from time to time. Larger orders, including some orders for our AI systems, may be particularly susceptible to this risk and may also require greater commitments of working capital, such as for purchases of key components, which could adversely impact our cash flow and results of operations. Alternatively, if orders substantially exceed predicted demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be canceled. As a result of such variations in predicted demand, we have experienced these impacts from time to time and may do so again in the future. Depending on when they occur in a quarter, developments such as a systems failure, component pricing movements, component shortages, or global logistics disruptions, have in the past adversely impacted, and could in the future adversely impact, our inventory levels and results of operations in a manner that is disproportionate to the number of days in the quarter affected. We experience some seasonal trends in the sale of our products that also have produced, and may in the future produce, variations in our quarterly results and financial condition. Many of the factors that create and affect seasonal trends are beyond our control. 

Separately, periodic supply chain shortages and constraints have, in some instances, resulted in, and may result in, increases to the costs of production of our hardware products that we have, at times, not been able to, and may, in the future, not be able to pass on to our customers. We have, in some instances, responded to such constraints by committing to higher inventory purchases and balances relative to our historical positions in order to secure manufacturing capacity, components to fulfill orders, or both. While these measures have been taken to shorten lead times to deliver products to customers, they may also result in excess or obsolete components in the future if the demand for our products is less than we anticipate or orders are cancelled, which could adversely affect our business and financial performance.

We make estimates and assumptions in connection with the preparation of our Contracts solidated Financial Statements and any changes to those estimates and assumptions could adversely affect our results of operations.

In connection with federal, state, the preparation of our Consolidated Financial Statements, we use certain estimates and assumptions based on historical experience and other factors. Our most critical accounting estimates are described in the section entitled Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended October 31, 2024. In addition, as discussed in Note 1, Overview and Summary of Significant Accounting PoliciesUse of Estimates to our Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, and to our Consolidated Financial Statements in Item 8 of Part II of our Form 10-K for the fiscal year ended October 31, 2024 and Note 15, Litigation, Contingencies, and Commitments to our Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, we make certain estimates, including decisions related to provincial, and local governmsions for legal proceedings and other contingencies. While we believe that these estimates and assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could adversely affect our results of operations.

We periodically evaluate goodwill and intangible assets to determine whether all or a portion of their carrying values may be impaired, in which case an impairments are sub charge may be necessary. The value of goodwill may be materially and adversely affected if businesses that we acquire perform in a manner that is inconsistent with our assumptions at the time of acquisition. In addition, from time to time we divest businesses, and any such divestiture could result in significant asset impairment and disposition charges, including those related to goodwill and intangible assets. In the latest completed fiscal quarter, we recognized an impairment charge of $1.4 billion for goodwill related to the Hybrid Cloud reporting unit, which we believe was predominantly due to the discount rate used in the analysis. Any future evaluations resulting in an impairment of goodwill or intangible assets could materially and adversely affect our results of operations and financial condition in the period in which the impairment is recognized.

Contracts with federal, state, provincial, and local governments are subject to a number of challenges and risks that may adversely impact our business. .

Our contracts with federal, state, provincial, and local governmental customers are subject to various government procurement laws and regulations, required contract provisions, and other requirements relating to contract formation, administration, and performance, as well as local content, manufacturing, information security and security requirements. Any violation of government contracting laws and regulations or contract terms could result in the imposition of various civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments and fines, treble damages, and suspension from future government contracting. Additionally, changes in underlying regulatory requirements that vary across the geographies in which we operate could increase compliance costs and risks. Such failures could also cause reputational damage to our business. In addition, in the US.S., we will continue to be subject to qui tam litigation brought by private individuals on behalf of the government relating to our government contracts. If we are suspended or disbarred from government work or if our ability to compete for new government contracts is adversely affected, our financial performance could suffer.

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Government contracts impose additional challenges and risks to our sales efforts. GoPolitical factors, such as election outcomes, changes in leadership in one or more branches of government demand and pay, and the resulting potential changes in government policies have affected the number and terms of government contracts entered into, the authorizations for programs that we bid on, spending priorities, or how compliance with relevant rules or laws is assessed, and may do so again in the future. Government demand for our products and services may behas been impacted by public sector staffing and available resources, budgetarand government payments may in the future be impacted or delayed for the same reasons (including recent actions taken to reduce the size of the U.S. federal workforce), budgetary cycles and funding authorizations, including in connection with an extended government shutdown, with funding reductions, or delays adversely affecting public sector demand for our products and services. SWhile our contracts with government entities are often planned and executed as multi-year projects, government entities usually reserve the right to change the scope of or terminate these projects for any or some of the aforementioned reasons. As such, such developments could result in material payment delays, payment reductions, or contract terminations by our governmental customers, which may impact our results of operations and financial condition. These may also adversely impact the results of operations and financial condition of government contractors with whom we conduct business. This may cause those government contractors to become unable to meet their obligations under contracts with us. 

We may not achieve some or all of

Further, the expected benefits of our cost reduccurrent U.S. administration programs and actions, some or all of which may be disruphas issued executive to our business.

We have announced a cost reductio orders and taken actions to curtail certain program to reduce structurs that violate federal operating costs and continue advancing the Company's ongoing commitment to profitable growth. We may not be able to obtain the cost savings and benefitsanti-discrimination laws, including requiring U.S. federal contracts to certify that are initially anticipthey do not operated in connection with any such programs. Addi violationally, as a result of this program and th of these orders or becoming subject to adverse actions contemplated thereby, we may experience a loss ofuld expose us to penalties and sanctions or jeopardize our ability to continuity, loss of accumulated knowledge and/or inefficiency during transitional e to do work for the U.S. federal government, which may adversely affect our future results of operiodations. Implementing and overseeing such acAn allegation of a violations can could require a significant amount of managementsult in reputational harm and other employees' time and focus, which may divert attentsubject us to increased litigation from operarisk. Additionally, conflicting alaws and growing our business. If we fail to achieve some or all of the expected benefits of this program,regulations between federal, state and local governments may make it could have a material adverse effect on our competitive position,increasingly difficult for us to do business, financial condition, results of operations and cash flows.  in every government jurisdiction.