HPE Delivers record revenue with sequential profitability growth
HPE (NYSE: HPE) today announced financial results for the third quarter ended July 31, 2025.
“HPE delivered record-breaking revenue and improved profitability this quarter as we marked a major milestone by closing our acquisition of Juniper Networks,” said Antonio Neri, president and CEO of HPE. “Customer demand stretched broadly across our portfolio and was particularly strong in our Server and Networking segments. As we enter a new chapter at HPE, we are focused on capturing the tremendous market opportunity through execution that delivers strong, consistent shareholder value.”
“In Q3, we delivered on our commitments, generating record revenue, as well as improved sequential operating profit with major contributions from our three largest segments,” said Marie Myers, executive vice president and CFO of HPE. “Acquiring Juniper Networks has already added to our results, with more profit accretion expected as we work to quickly capture planned synergies and drive new market opportunities.”
Third Quarter Fiscal 2025 Financial Results
Revenue: $9.1 billion, up 19% from the prior-year period in actual dollars and 18% in constant currency
Annualized revenue run-rate (“ARR”): $3.1 billion, up 77% from the prior-year period in actual dollars and 75% in constant currency
Gross margins:
GAAP of 29.2%, down 240 basis points from the prior-year period and up 80 basis points sequentially
Non-GAAP of 29.9%, down 190 basis points from the prior-year period and up 50 basis points sequentially
Diluted net earnings per share (“EPS”):
GAAP of $0.21, down $0.17 from the prior-year period
Non-GAAP of $0.44, down $0.06 from the prior-year period and within our outlook range of $0.40 - $0.45
Cash flow from operations: $1,305 million, an increase of $151 million from the prior-year period
Free cash flow (“FCF”): $790 million, an increase of $121 million from the prior-year period
Capital returns to common shareholders: $171 million in the form of dividends
Third Quarter Fiscal 2025 Segment Results
Server revenue was $4.9 billion, up 16% from the prior-year period in actual dollars and in constant currency, with 6.4% operating profit margin, compared to 10.8% from the prior-year period.
Networking revenue was $1.7 billion, up 54% from the prior-year period in actual dollars and in constant currency, with 20.8% operating profit margin, compared to 22.4% from the prior-year period. The Networking segment was renamed from Intelligent Edge to more precisely reflect the business and the market of this segment.
Hybrid Cloud revenue was $1.5 billion, up 12% from the prior-year period in actual dollars and 11% in constant currency, with 5.9% operating profit margin, compared to 5.2% from the prior-year period.
Financial Services revenue was $886 million, up 1% from the prior-year period in actual dollars and down 1% in constant currency, with 9.9% operating profit margin, compared to 9.0% from the prior-year period. Net portfolio assets of $13.2 billion, up 0.7% from the prior-year period and 17.9% in constant currency. The business delivered return on equity of 17.7%, up 0.3 points from the prior-year period.
HPE estimates revenue to be in the range of $9.7 billion and $10.1 billion. HPE estimates GAAP diluted net EPS to be in the range of $0.50 to $0.54 and non-GAAP diluted net EPS to be in the range of $0.56 to $0.60. Fiscal 2025 fourth quarter non-GAAP diluted net EPS estimate excludes net after-tax adjustments of approximately $0.06 per diluted share, primarily related to acquisition, disposition and other charges, stock-based compensation expense, and cost reduction program, partially offset by tax adjustments.
