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- **Record Q4 Profitability**: 12.2% operating margin, $1.9B free cash flow, and $0.62 EPS beat. Networking margin 23%, AI orders $1.9B.
- **Juniper Synergy Acceleration**: FY26 networking revenue $11B+ (low 20% margin), Juniper collections driving FCF upside.
- **AI Growth Engine**: FY25 AI orders $6.8B, 60%+ from sovereign/enterprise. FY26 AI server pipeline multiples of backlog.
- **Commodity Mitigation**: Price increases offset DRAM/NAND costs. Server margin disciplined despite 2026 component inflation.
- **Balance Sheet Strength**: H3C sale ($1.4B) to reduce leverage to 2x. FY26 FCF $1.7-2.0B, OI&E $650M.

**【CEO Summary Section】**
- **Record Q4 Performance**: Revenue of $9.7 billion (+14% YoY), non-GAAP operating margin of 12.2%, and free cash flow of $1.9 billion. Networking and AI growth drove profitability.
- **Juniper Integration Success**: Pro forma networking orders up double digits YoY, with Juniper contributing $2.8 billion in Q4 revenue. Operating margin for combined networking reached 23%.
- **AI Server Momentum**: $6.8 billion in AI orders FY25, with sovereign and enterprise bookings >60% of cumulative orders. Q4 AI orders $1.9 billion, pipeline multiples of backlog.
- **Strategic Initiatives**: $1.4 billion sale of H3C stake to reduce leverage to ~2x by FY27. FY26 guidance: revenue +17-22%, EPS $2.25-2.45, free cash flow $1.7-2.0 billion.

**【CFO Financial Commentary】**
- **FY25 Results**: Revenue $34.3 billion (+14% YoY), non-GAAP EPS $1.94, free cash flow $986 million. Networking revenue +51% YoY, driven by Juniper acquisition.
- **Q4 Financials**: Gross margin 36% (record), operating expenses +11% YoY (Juniper-related). Free cash flow $1.9 billion, up 98% YoY.
- **FY26 Outlook**: Networking revenue +65-70% YoY, cloud/AI +mid-single to low-double digits. OI&E $650 million, tax rate 14%, share count 1.44 billion.
- **Commodity Management**: Passing through DRAM/NAND cost increases (>50% Q4 DRAM prices) via pricing actions. Server margin disciplined despite 2026 cost headwinds.

**【Q&A Highlights】**
- **Commodity Pricing**: Implemented November price increases for servers. Expect NAND price hikes in 2026. 2/3 of server AUP structural, limiting unit growth but supporting revenue.
- **Networking Synergies**: Juniper operating margin at 8-year high Q4. Unified sales force (Jan 2026) to drive >$11 billion networking revenue FY26 (low 20% margin).
- **AI Server Seasonality**: Q1 AI revenue down sequentially due to sovereign delays, 2H26 conversion of $1.5 billion+ backlog. Private Cloud AI orders +100% QoQ.
- **ARR Growth**: $3.2 billion ARR (+62% YoY), 80% software/services. Juniper Mist/Apstra integration accelerates AIOps adoption.
- **Liquidity**: H3C sale proceeds to deleverage. Q1 free cash flow $1.9 billion, FY26 FCF $1.7-2.0 billion (includes $700M Juniper/Catalyst costs).

Hewlett Packard Enterprise Company (HPE) Q4 2025 Earnings Call Transcript

Revenue

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HPE

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