Hewlett Packard Enterprise Q3 Results Beat Estimates, Q4 Outlook Falls Short

Hewlett Packard Enterprise (HPE) reported Q3 results that surpassed estimates, despite its first earnings report since acquiring Juniper Networks. Shares fell 1% in early trading. Q4 outlook was below expectations.

Hewlett Packard Enterprise (HPE) reported its Q3 financial results for the period ended July 31, 2025, with revenue and operating profit improvements, driven by strong performance in its Server and Networking segments. The company's acquisition of Juniper Networks, closed on July 2, 2025, contributed to the results, with more profit accretion expected as synergies are realized.

Revenue for the quarter was $9.1 billion, up 19% from the prior-year period in actual dollars and 18% in constant currency [1]. The annualized revenue run-rate (ARR) increased by 77% in actual dollars and 75% in constant currency, reflecting the growth in cloud services and software consumption revenue [1].

Operating profit margins were 29.2% on a GAAP basis and 29.9% non-GAAP, indicating a decline from the prior-year period but an improvement sequentially [1]. Net earnings per share (EPS) were $0.21 on a GAAP basis and $0.44 non-GAAP, down from the prior-year period but within the company's outlook range [1].

The Server segment reported revenue of $4.9 billion, up 16% from the prior-year period, with an operating profit margin of 6.4% [1]. The Networking segment, previously known as Intelligent Edge, saw revenue of $1.7 billion, up 54% from the prior-year period, with an operating profit margin of 20.8% [1]. The Hybrid Cloud segment and Financial Services also contributed to revenue growth, with increases of 12% and 1%, respectively [1].

Despite the strong results, HPE's shares fell 1% in early trading, potentially due to the Q4 outlook being below expectations. The company estimates Q4 revenue to be in the range of $9.7 billion to $10.1 billion, with GAAP diluted net EPS of $0.50 to $0.54 and non-GAAP diluted net EPS of $0.56 to $0.60 [1].

HPE expects fiscal 2025 revenue growth of 14% to 16% in constant currency, with non-GAAP operating profit growth of 4% to 7% [1]. The company also estimates free cash flow of approximately $700 million for the year [1].

References:
[1] https://www.businesswire.com/news/home/20250903478868/en/Hewlett-Packard-Enterprise-Reports-Fiscal-2025-Third-Quarter-Results