• Revenue: $7.6 billion, up 7% year over year.

• Non-GAAP Diluted Net Earnings Per Share: $0.38, above guidance.

• Operating Margin: 8%, down 150 basis points year over year.

• Free Cash Flow: Negative $847 million.

• Server Revenue: $4.1 billion, up 7% year over year.

• Intelligent Edge Revenue: $1.2 billion, up 8% year over year.

• Hybrid Cloud Revenue: $1.5 billion, up 15% year over year.

• Financial Services Revenue: $856 million, up 1% year over year.

• Annualized Revenue Run Rate (ARR): $2.2 billion, up 47% year over year.

• Gross Margin: 29.4%, down 370 basis points year over year.

• GAAP Diluted Net Loss Per Share: $0.82, due to a non-cash goodwill impairment charge.

• AI Systems Revenue: Over $1 billion, up from $900 million last quarter.

• Customer Count for GreenLake: Approximately 42,000.

• Warning! GuruFocus has detected 5 Warning Sign with HPE.

Release Date: June 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hewlett Packard Enterprise Co (NYSE:HPE) delivered Q2 revenue of $7.6 billion, up 7% year over year, exceeding the high end of guidance.

• The company saw year-over-year revenue growth in every product segment, with strong performance in AI systems, Intelligent Edge, and Hybrid Cloud.

• HPE's GreenLake Cloud subscription services showed significant growth, contributing to a 47% increase in annualized revenue run rate.

• The company implemented effective measures to address previous operational challenges in the Server segment, leading to improved margin performance.

• HPE's commitment to innovation is evident with new product launches, including advanced private cloud solutions and AI partnerships with NVIDIA.

Negative Points

• HPE faced a complex macroeconomic and geopolitical landscape, impacting demand and creating uncertainty.

• Non-GAAP gross margin was down 370 basis points year over year, affected by an unfavorable mix within the Server segment.

• Free cash flow was negative $847 million, although slightly better than expected.

• The company recorded a non-cash goodwill impairment charge of approximately $1.4 billion related to its Hybrid Cloud business.

• HPE's Financial Services segment saw a 20% year-over-year decrease in financing volumes.

Q & A Highlights

Q: What steps are needed for Server margins to improve from 5% to 10% by year-end, and what are the priorities if the Juniper transaction doesn't close? A: Antonio Neri, CEO, explained that HPE has addressed execution challenges with targeted actions, such as new pricing analytics and inventory management, which are expected to help achieve a 10% operating margin by Q4. Regarding the Juniper transaction, HPE is exploring other options, including capital return and portfolio actions, if the deal doesn't close.