Hewlett Packard Enterprise Beats Q2 Revenue Expectations with 18.5% YoY Growth, Raises Guidance

Hewlett Packard Enterprise (HPE) exceeded Wall Street expectations in Q2 CY2025, with revenue up 18.5% YoY to $9.14 billion and non-GAAP profit of $0.44 per share, a 5.4% beat. The company's annual recurring revenue grew 78.3% YoY to $3.07 billion. Management raised full-year adjusted EPS guidance to $1.90 and attributed the strong performance to AI demand, the Juniper Networks acquisition, and improved supply chain execution.

Hewlett Packard Enterprise (HPE) has delivered a robust performance in Q2 2025, exceeding Wall Street expectations with significant revenue growth and strategic acquisitions. The company reported revenue of $9.14 billion, up 18.5% year-over-year (YoY) [1]. This impressive result was accompanied by a non-GAAP profit of $0.44 per share, a 5.4% beat over expectations. Additionally, annual recurring revenue (ARR) grew by 78.3% YoY to $3.07 billion [1].

The strong performance can be attributed to several key factors. Firstly, the demand for AI-driven solutions has surged, driving significant growth in HPE's core segments. The company's AI systems revenue exceeded $1 billion during the quarter, supported by a $3.2 billion backlog [1]. This momentum is further amplified by the integration of Juniper Networks' Mist AI platform, which has boosted networking revenue by 54% year-over-year in Q3 2025 [2].

The acquisition of Juniper Networks for $14 billion in July 2025 has proven transformative. By embedding Mist AI’s self-driving network capabilities into its offerings, HPE is addressing the growing need for automated, AI-driven infrastructure—a critical differentiator in an era where enterprises prioritize agility and scalability [2]. The acquisition also positions HPE to capitalize on the AI-native networking market, which is projected to grow at a CAGR of 27.73% through 2030 [2].

Improved supply chain execution has also contributed to HPE's strong performance. The company has demonstrated operational discipline, with significant cost optimization initiatives and software-led revenue models driving margin improvements [1]. Notably, the operating margins in the Hybrid Cloud segment improved significantly, rising from 1.0% to 5.4% year-over-year [1].

HPE's strategic momentum is further reinforced by recent product launches and partnerships. The HPE Alletra MPX 10,000 SDK solution, integrated with NVIDIA’s AI data platform, positions the company to meet surging demand for enterprise AI solutions [1]. Additionally, the Alletra MP platform’s sustained triple-digit growth underscores HPE’s ability to innovate in storage and hybrid cloud services [1].

Management has raised full-year adjusted EPS guidance to $1.90, reflecting confidence in the company's hybrid cloud and AI infrastructure roadmap. The company now anticipates non-GAAP EPS of $1.78–$1.90, up from prior expectations, and projects Q3 revenue between $8.2–$8.5 billion [1].

In conclusion, HPE's Q2 performance underscores its role as a pivotal player in the AI and hybrid cloud markets. With a 13% year-over-year growth in Hybrid Cloud revenue, a $3.2 billion AI backlog, and a margin-improvement trajectory, the company is not only adapting to industry shifts but actively shaping them. For investors seeking exposure to the next phase of enterprise tech, HPE’s combination of financial resilience, innovation, and market alignment makes it a high-conviction long-term play.

References:
[1] Hewlett Packard Enterprise delivers solid FY 2025 second quarter results [https://www.hpe.com/us/en/newsroom/press-release/2025/06/hewlett-packard-enterprise-delivers-solid-fy-2025-second-quarter-results.html]
[2] HPE Q2 FY 2025 Revenue Highlights Server and Cloud Gains [https://futurumgroup.com/insights/hpe-q2-fy-2025-revenue-tops-estimates-on-server-and-cloud-gains/]