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HPE Q3 revenues grew 19% to $9.1B, with strength in servers, networking and hybrid cloud.
AI servers and GreenLake adoption drove top-line momentum, aiding segment performance.
HPE raised FY25 revenue growth outlook to 14-16%, above prior guidance of 7-9%.
Hewlett Packard Enterprise’s (HPE - Free Report) shares rose 2% during yesterday’s extended trading session after it reported better-than-expected results for third-quarter fiscal 2025. The company’s non-GAAP earnings of 44 cents per share beat the Zacks Consensus Estimate by 2.3% but declined 12% year over year.
HPE’s revenues increased 19% year over year to $9.1 billion and surpassed the Zacks Consensus Estimate by 4.1%. The top line grew on the back of Server, Hybrid Cloud and Financial services segments, driven by increased sales in artificial intelligence and GreenLake.
HPE’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 4.4%.
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
Hewlett Packard Enterprise’s Server segment sales increased 16% (up 16% at cc) year over year and rose 21% sequentially to $4.94 billion, mainly due to strong demand for its AI servers as well as growth in server systems. The division reported an operating profit margin of 6.4%, which decreased 440 basis points (bps) from the year-ago quarter but increased 50 bps from the previous quarter.
Revenues in the Networking division (previously known as Intelligent Edge) increased 54% (up 54% at cc) year over year and rose 48% sequentially to $1.73 billion during the quarter. The division’s operating profit margin of 20.8% contracted 160 bps from the year-ago quarter and 280 bps sequentially.
The Hybrid Cloud division’s sales increased 12% (up 11% at cc) year over year and rose 1% sequentially to $1.48 billion. The company stated that its Hybrid Cloud revenues grew on the back of Private Cloud and Alletra Storage MP. The division reported an operating profit margin of 5.9%, which increased 70 bps from the year-ago quarter and expanded 50 bps sequentially. The year-over-year increase in operating profit margin was mainly due to controlled operating expenses.
The Financial Service segment’s revenues of $886 million increased 1% (down 1% in cc) year over year and remained flat sequentially. The segment’s operating margin of 9.9% expanded 90 bps year over year but contracted 50 bps sequentially. Net portfolio assets of $13.2 billion increased 0.7% year over year (down 1% in cc). Corporate Investments & Other revenues were $194 million, down 26% year over year and remained flat sequentially.
Operating Results of HPE
The non-GAAP gross profit was $2.73 billion, up 11.5% year over year and 21.7% sequentially. The non-GAAP gross margin contracted 190 bps on a year-over-year basis and expanded 50 bps on a quarter-over-quarter basis to 29.9%.
Hewlett Packard Enterprise’s non-GAAP operating profit increased 0.8% year over year and 26.8% sequentially to $777 million. The non-GAAP operating margin contracted 150 bps year over year but expanded 50 bps sequentially to 8.5%.
HPE’s Balance Sheet and Cash Flow
Hewlett Packard Enterprise ended the fiscal third quarter with $457 million in cash and cash equivalents compared with $11.67 billion at the end of the previous quarter.
In the fiscal third quarter, HPE generated cash worth $1.3 billion from operational activities and free cash flow of $790 million. In the first three quarters of fiscal 2025, it generated cash worth $454 million from operational activities and had a negative free cash flow of $934 million.
HPE returned $171 million to its shareholders in the third quarter of fiscal 2025 through dividends and share repurchases. In the first three quarters of fiscal 2025, it returned $615 million to shareholders through share buybacks and dividend payments.
Guidance for FY25 and Q4
Hewlett Packard Enterprise initiated guidance for the fiscal fourth quarter and updated guidance for fiscal 2025. For the fourth quarter of fiscal 2025, the company forecasts to generate revenues in the range of $9.7-$10.1 billion. The company estimates GAAP and non-GAAP net earnings per share in the range of 50-54 cents and 56-60 cents, respectively. The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues and non-GAAP earnings is pegged at $10.13 billion and 60 cents per share, respectively.
For fiscal 2025, HPE forecasts to generate year-over-year revenue growth of 14-16%, up from prior guidance of 7-9%, in constant currency. The company estimates GAAP net earnings per share of 42-46 cents, up from 30-42 cents. HPE estimates non-GAAP net earnings per share of $1.88-$1.92, up from $1.78-$1.90. The Zacks Consensus Estimate for fiscal 2025 revenues and non-GAAP earnings is pegged at $34.39 billion and $1.89 per share, respectively.
Amphenol’s shares have gained 59.5% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings is pegged at $3.02 per share, up 4 cents over the past 30 days, indicating an increase of 59.8% from the year-ago quarter’s reported figure.
F5’s shares have surged 22.9% year to date. The Zacks Consensus Estimate for F5’s full-year fiscal 2025 earnings is pegged at $15.38 per share, up 0.8% over the past 30 days, indicating a gain of 15% from the year-ago quarter’s reported figure.
CrowdStrike’s shares have gained 20.4% year to date. The Zacks Consensus Estimate for CrowdStrike’s full-year 2026 earnings per share is pegged $3.67 per share, up 4.9% over the past seven days, indicating a decline of 6.6% from the year-ago quarter’s reported figure.
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HPE Q3 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Up 2%
Key Takeaways
Hewlett Packard Enterprise’s (HPE - Free Report) shares rose 2% during yesterday’s extended trading session after it reported better-than-expected results for third-quarter fiscal 2025. The company’s non-GAAP earnings of 44 cents per share beat the Zacks Consensus Estimate by 2.3% but declined 12% year over year.
HPE’s revenues increased 19% year over year to $9.1 billion and surpassed the Zacks Consensus Estimate by 4.1%. The top line grew on the back of Server, Hybrid Cloud and Financial services segments, driven by increased sales in artificial intelligence and GreenLake.
HPE’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 4.4%.
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
Hewlett Packard Enterprise Company price-consensus-eps-surprise-chart | Hewlett Packard Enterprise Company Quote
HPE's Segment-Wise Performance
Hewlett Packard Enterprise’s Server segment sales increased 16% (up 16% at cc) year over year and rose 21% sequentially to $4.94 billion, mainly due to strong demand for its AI servers as well as growth in server systems. The division reported an operating profit margin of 6.4%, which decreased 440 basis points (bps) from the year-ago quarter but increased 50 bps from the previous quarter.
Revenues in the Networking division (previously known as Intelligent Edge) increased 54% (up 54% at cc) year over year and rose 48% sequentially to $1.73 billion during the quarter. The division’s operating profit margin of 20.8% contracted 160 bps from the year-ago quarter and 280 bps sequentially.
The Hybrid Cloud division’s sales increased 12% (up 11% at cc) year over year and rose 1% sequentially to $1.48 billion. The company stated that its Hybrid Cloud revenues grew on the back of Private Cloud and Alletra Storage MP. The division reported an operating profit margin of 5.9%, which increased 70 bps from the year-ago quarter and expanded 50 bps sequentially. The year-over-year increase in operating profit margin was mainly due to controlled operating expenses.
The Financial Service segment’s revenues of $886 million increased 1% (down 1% in cc) year over year and remained flat sequentially. The segment’s operating margin of 9.9% expanded 90 bps year over year but contracted 50 bps sequentially. Net portfolio assets of $13.2 billion increased 0.7% year over year (down 1% in cc). Corporate Investments & Other revenues were $194 million, down 26% year over year and remained flat sequentially.
Operating Results of HPE
The non-GAAP gross profit was $2.73 billion, up 11.5% year over year and 21.7% sequentially. The non-GAAP gross margin contracted 190 bps on a year-over-year basis and expanded 50 bps on a quarter-over-quarter basis to 29.9%.
Hewlett Packard Enterprise’s non-GAAP operating profit increased 0.8% year over year and 26.8% sequentially to $777 million. The non-GAAP operating margin contracted 150 bps year over year but expanded 50 bps sequentially to 8.5%.
HPE’s Balance Sheet and Cash Flow
Hewlett Packard Enterprise ended the fiscal third quarter with $457 million in cash and cash equivalents compared with $11.67 billion at the end of the previous quarter.
In the fiscal third quarter, HPE generated cash worth $1.3 billion from operational activities and free cash flow of $790 million. In the first three quarters of fiscal 2025, it generated cash worth $454 million from operational activities and had a negative free cash flow of $934 million.
HPE returned $171 million to its shareholders in the third quarter of fiscal 2025 through dividends and share repurchases. In the first three quarters of fiscal 2025, it returned $615 million to shareholders through share buybacks and dividend payments.
Guidance for FY25 and Q4
Hewlett Packard Enterprise initiated guidance for the fiscal fourth quarter and updated guidance for fiscal 2025. For the fourth quarter of fiscal 2025, the company forecasts to generate revenues in the range of $9.7-$10.1 billion. The company estimates GAAP and non-GAAP net earnings per share in the range of 50-54 cents and 56-60 cents, respectively. The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues and non-GAAP earnings is pegged at $10.13 billion and 60 cents per share, respectively.
For fiscal 2025, HPE forecasts to generate year-over-year revenue growth of 14-16%, up from prior guidance of 7-9%, in constant currency. The company estimates GAAP net earnings per share of 42-46 cents, up from 30-42 cents. HPE estimates non-GAAP net earnings per share of $1.88-$1.92, up from $1.78-$1.90. The Zacks Consensus Estimate for fiscal 2025 revenues and non-GAAP earnings is pegged at $34.39 billion and $1.89 per share, respectively.
HPE’s Zacks Rank and Other Stocks to Consider
Currently, HPE carries a Zacks Rank #2 (Buy).
Amphenol (APH - Free Report) , F5 (FFIV - Free Report) and CrowdStrike (CRWD - Free Report) are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Amphenol, F5 and CrowdStrike sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphenol’s shares have gained 59.5% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings is pegged at $3.02 per share, up 4 cents over the past 30 days, indicating an increase of 59.8% from the year-ago quarter’s reported figure.
F5’s shares have surged 22.9% year to date. The Zacks Consensus Estimate for F5’s full-year fiscal 2025 earnings is pegged at $15.38 per share, up 0.8% over the past 30 days, indicating a gain of 15% from the year-ago quarter’s reported figure.
CrowdStrike’s shares have gained 20.4% year to date. The Zacks Consensus Estimate for CrowdStrike’s full-year 2026 earnings per share is pegged $3.67 per share, up 4.9% over the past seven days, indicating a decline of 6.6% from the year-ago quarter’s reported figure.