Hewlett Packard 2025 Q2 Earnings Misses Targets as Net Income Falls 434%

Hewlett Packard Enterprise (HPE) reported its fiscal 2025 Q2 earnings on June 4th, 2025. The company's quarterly financial performance fell short of analyst expectations. While revenue saw a year-over-year increase, the net income suffered a significant decline. HPE adjusted its guidance, raising the lower end of its non-GAAP diluted net earnings per share range, indicating slight optimism despite the earnings miss. The revised figures suggest a cautious outlook for the remainder of fiscal 2025.

Revenue

Hewlett Packard's revenue reached $7.63 billion in the second quarter of 2025, marking a 5.9% increase compared to $7.20 billion in the same period of 2024. The Server segment was a major contributor, generating $4.06 billion in revenue. The Hybrid Cloud segment followed with $1.45 billion, and Intelligent Edge contributed $1.16 billion. Financial Services added $856 million, while Corporate Investments and other segments provided $194 million. However, intersegment net revenue elimination accounted for a $96 million deduction.

Earnings/Net Income

Hewlett Packard experienced a downturn, posting a loss of $0.82 per share in 2025 Q2, a considerable negative shift from a profit of $0.24 per share in 2024 Q2. The company reported a net loss of $1.05 billion, a stark contrast to the $314 million net income achieved the previous year. The EPS indicates challenging financial conditions for the company.

Post Earnings Price Action Review

The investment strategy of purchasing HPE stock following a positive revenue report and holding for 30 days resulted in a 39.65% return, which underperformed the benchmark by 39.23%. The strategy's Sharpe ratio was notably low at 0.19, suggesting poor risk-adjusted returns. With a maximum drawdown of -48.75% and volatility at 36.60%, the approach involved substantial risk, making it unattractive for risk-averse investors. Despite initial revenue optimism, the associated risk factors and market volatility proved significant, highlighting the challenge of predicting stock performance solely based on revenue beats.

CEO Commentary

Antonio Fabio Neri, CEO, emphasized the solid revenue results, noting a 7% year-over-year increase. He discussed the disciplined execution to overcome operational challenges in the Server segment and pointed out a stronger pipeline. Neri highlighted the demand for AI systems, with $1.1 billion in net new orders, and praised the robust performance of Hybrid Cloud and Intelligent Edge segments. He expressed optimism about growth, stating HPE's focus on increasing profitability and enhancing shareholder value.

Guidance

HPE revised its revenue outlook for fiscal year 2025, forecasting a 7% to 9% year-over-year growth and increasing the lower end of its non-GAAP diluted EPS range by $0.08. The company anticipates fiscal third-quarter revenue between $8.2 billion and $8.5 billion, with a focus on improving margins, particularly aiming for a Server operating margin around 10% by Q4.

Additional News

In recent developments, Hewlett Packard Enterprise remained active in its strategic initiatives. Elliott Investment has increased its stake in HPE, investing over $1.5 billion, which could influence future operational strategies and governance. The company also declared a regular cash dividend of $0.13 per share, payable on July 17, 2025, to stockholders of record as of June 18, 2025, demonstrating its commitment to delivering shareholder returns amidst challenging financial results. Additionally, HPE is set to complete its acquisition of Juniper Networks, Inc., a move anticipated to enhance its technological capabilities and market presence.