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HPE posts Q4 earnings beat with revenues up 14.4% year over year.
Networking revenues jump 150% while Server and Hybrid Cloud decline.
HPE guides FY26 for 17-22% revenue growth and up to $2.45 non-GAAP EPS
Hewlett Packard Enterprise (HPE - Free Report) stock declined more than 8% in the pre-market hours despite reporting better-than-expected results for fourth-quarter fiscal 2025. The company’s non-GAAP earnings of 62 cents per share beat the Zacks Consensus Estimate by 5.1% and increased 6.3% year over year.
HPE’s revenues increased 14.4% year over year to $9.68 billion while missing the Zacks Consensus Estimate by 2.63%. The top line grew on the back of the networking business.
HPE’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 4.3%.
HPE’s Segment-Wise Performance
Hewlett Packard Enterprise’s Server segment generated $4.5 billion in revenues in the fourth quarter of fiscal 2025, down 5% year over year and constant currency, due to a pushout in AI server shipments and lower-than-expected U.S. federal spending. The division reported an operating profit margin of 9.8%, which decreased 180 basis points (bps) from the year-ago quarter.
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
Revenues in the Networking division were $2.8 billion, up 150% year over year, driven largely by the addition of Juniper Networks. However, the segment delivered an operating profit margin of 23%, down 140 basis points from the year-ago quarter.
The Hybrid Cloud division reported $1.4 billion in revenues, down 12% year over year (down 13% in constant currency). This decline in revenues came due to HPE’s strategic choice to reduce exposure to low-margin non-IP-related businesses while focusing on higher-margin HPE-developed solutions. The segment posted an operating profit margin of 5% compared with 7.8% in the year-ago period.
The Financial Services segment recorded $889 million in revenues, flat year over year (down 2% in constant currency), with an operating margin of 11.5%, up 230 basis points from the prior-year quarter.
HPE’s Operating Results
HPE’s non-GAAP gross profit for fourth-quarter fiscal 2025 was $3.52 billion compared with $2.61 billion a year ago, while the non-GAAP gross margin expanded to 36.4%, up 550 bps year over year.
The company’s non-GAAP operating profit was $1.18 billion compared with $938 million in the year-ago quarter. The non-GAAP operating margin improved to 12.2%, up 110 bps from the year-ago quarter.
HPE’s Balance Sheet and Cash Flow
Hewlett Packard Enterprise ended the fiscal fourth quarter with $5.77 billion in cash and cash equivalents compared with $4.57 billion at the end of the previous quarter.
In the fourth quarter, HPE generated $2.5 billion in cash from operating activities and produced $1.9 billion in free cash flow, both increasing meaningfully from the prior-year period.
HPE returned $271 million to shareholders in the fourth quarter of fiscal 2025 through dividends and share repurchases, and $886 million over the full fiscal 2025 period.
Guidance for FY26 and Q1
Hewlett Packard Enterprise issued guidance for the first quarter of fiscal 2026 and initiated its full-year fiscal 2026 outlook. For the first quarter of fiscal 2026, HPE expects revenues in the range of $9-$9.4 billion. The Zacks Consensus Estimate is pegged at 54 cents per share, indicating year-over-year growth of 10.2%.
It expects GAAP diluted earnings per share in the range of 9 cents to 13 cents, and non-GAAP diluted EPS of 57 cents to 61 cents. The Zacks Consensus Estimate is pegged at $9.89 billion, indicating year-over-year growth of 24.89%.
For full-year fiscal 2026, HPE forecasts revenue growth of 17-22% as reported (5–10% pro forma). The company projects GAAP diluted EPS of 62 to 82 cents and non-GAAP diluted earnings per share of $2.25-$2.45. The Zacks Consensus Estimate is pegged at $2.31 per share, indicating year-over-year growth of 21.5%. HPE also anticipates generating free cash flow of $1.7-$2.0 billion for the fiscal year.
The Zacks Consensus Estimate for Advanced Energy Industries’ 2025 earnings has been revised upward by 10 cents to $6.23 per share over the past 30 days and suggests a year-over-year increase of 67.9%. Advanced Energy Industries shares have jumped 85.8% year to date.
The Zacks Consensus Estimate for Amphenol’s 2025 earnings has moved upward by 7 cents to $3.29 per share in the past 30 days, calling for a year-over-year surge of 74.1%. Amphenol shares have soared 100.9% year to date.
The Zacks Consensus Estimate for Logitech International’s fiscal 2026 earnings has been revised upward by 2.4% to $5.61 per share in the past 30 days, suggesting a year-over-year increase of 15.9%. Logitech International shares have surged 44.6% year to date.
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HPE Q4 Earnings Surpass Expectations, Revenues Rise Y/Y
Key Takeaways
Hewlett Packard Enterprise (HPE - Free Report) stock declined more than 8% in the pre-market hours despite reporting better-than-expected results for fourth-quarter fiscal 2025. The company’s non-GAAP earnings of 62 cents per share beat the Zacks Consensus Estimate by 5.1% and increased 6.3% year over year.
HPE’s revenues increased 14.4% year over year to $9.68 billion while missing the Zacks Consensus Estimate by 2.63%. The top line grew on the back of the networking business.
HPE’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 4.3%.
HPE’s Segment-Wise Performance
Hewlett Packard Enterprise’s Server segment generated $4.5 billion in revenues in the fourth quarter of fiscal 2025, down 5% year over year and constant currency, due to a pushout in AI server shipments and lower-than-expected U.S. federal spending. The division reported an operating profit margin of 9.8%, which decreased 180 basis points (bps) from the year-ago quarter.
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
Hewlett Packard Enterprise Company price-consensus-eps-surprise-chart | Hewlett Packard Enterprise Company Quote
Revenues in the Networking division were $2.8 billion, up 150% year over year, driven largely by the addition of Juniper Networks. However, the segment delivered an operating profit margin of 23%, down 140 basis points from the year-ago quarter.
The Hybrid Cloud division reported $1.4 billion in revenues, down 12% year over year (down 13% in constant currency). This decline in revenues came due to HPE’s strategic choice to reduce exposure to low-margin non-IP-related businesses while focusing on higher-margin HPE-developed solutions. The segment posted an operating profit margin of 5% compared with 7.8% in the year-ago period.
The Financial Services segment recorded $889 million in revenues, flat year over year (down 2% in constant currency), with an operating margin of 11.5%, up 230 basis points from the prior-year quarter.
HPE’s Operating Results
HPE’s non-GAAP gross profit for fourth-quarter fiscal 2025 was $3.52 billion compared with $2.61 billion a year ago, while the non-GAAP gross margin expanded to 36.4%, up 550 bps year over year.
The company’s non-GAAP operating profit was $1.18 billion compared with $938 million in the year-ago quarter. The non-GAAP operating margin improved to 12.2%, up 110 bps from the year-ago quarter.
HPE’s Balance Sheet and Cash Flow
Hewlett Packard Enterprise ended the fiscal fourth quarter with $5.77 billion in cash and cash equivalents compared with $4.57 billion at the end of the previous quarter.
In the fourth quarter, HPE generated $2.5 billion in cash from operating activities and produced $1.9 billion in free cash flow, both increasing meaningfully from the prior-year period.
HPE returned $271 million to shareholders in the fourth quarter of fiscal 2025 through dividends and share repurchases, and $886 million over the full fiscal 2025 period.
Guidance for FY26 and Q1
Hewlett Packard Enterprise issued guidance for the first quarter of fiscal 2026 and initiated its full-year fiscal 2026 outlook. For the first quarter of fiscal 2026, HPE expects revenues in the range of $9-$9.4 billion. The Zacks Consensus Estimate is pegged at 54 cents per share, indicating year-over-year growth of 10.2%.
It expects GAAP diluted earnings per share in the range of 9 cents to 13 cents, and non-GAAP diluted EPS of 57 cents to 61 cents. The Zacks Consensus Estimate is pegged at $9.89 billion, indicating year-over-year growth of 24.89%.
For full-year fiscal 2026, HPE forecasts revenue growth of 17-22% as reported (5–10% pro forma). The company projects GAAP diluted EPS of 62 to 82 cents and non-GAAP diluted earnings per share of $2.25-$2.45. The Zacks Consensus Estimate is pegged at $2.31 per share, indicating year-over-year growth of 21.5%. HPE also anticipates generating free cash flow of $1.7-$2.0 billion for the fiscal year.
HPE’s Zacks Rank and Stocks to Consider
Currently, Hewlett Packard Enterprise carries a Zacks Rank #5 (Strong Sell).
Advanced Energy Industries (AEIS - Free Report) , Amphenol (APH - Free Report) and Logitech International (LOGI - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Advanced Energy Industries, Amphenol and Logitech International sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Advanced Energy Industries’ 2025 earnings has been revised upward by 10 cents to $6.23 per share over the past 30 days and suggests a year-over-year increase of 67.9%. Advanced Energy Industries shares have jumped 85.8% year to date.
The Zacks Consensus Estimate for Amphenol’s 2025 earnings has moved upward by 7 cents to $3.29 per share in the past 30 days, calling for a year-over-year surge of 74.1%. Amphenol shares have soared 100.9% year to date.
The Zacks Consensus Estimate for Logitech International’s fiscal 2026 earnings has been revised upward by 2.4% to $5.61 per share in the past 30 days, suggesting a year-over-year increase of 15.9%. Logitech International shares have surged 44.6% year to date.