Q3 2025 Hewlett Packard Enterprise Co Earnings Call Transcript
Key Points
- Hewlett Packard Enterprise Co (HPE) achieved record-breaking revenue of $9.1 billion, up 18% year over year, driven by strong momentum in AI, networking, and hybrid cloud.
- The acquisition of Juniper Networks was completed, which is expected to accelerate growth across HPE's strategic business pillars and contribute to cost synergies of at least $600 million over the next three years.
- HPE's AI portfolio saw significant demand, with AI orders nearly doubling sequentially and a record AI backlog of $3.7 billion.
- The networking segment, including Juniper, accounted for nearly 50% of HPE's non-GAAP consolidated operating profit, with revenue increasing 54% year over year.
- HPE's hybrid cloud segment posted its fourth consecutive quarter of year-over-year top-line growth and operating margin expansion, with revenue up 11% year over year.
- Non-GAAP gross margin was down 190 basis points year over year, impacted by unfavorable mix within server, networking, and hybrid cloud.
- The server segment's operating margin was 6.4%, affected by a higher AI mix and inventory adjustments, although improvements are expected in the next quarter.
- Networking operating margin decreased to 20.8%, down 160 basis points year over year, due to variable compensation and product-related costs.
- Free cash flow guidance for fiscal year 2025 was revised to approximately $700 million, reflecting costs associated with the Juniper acquisition.
- HPE's Financial Services revenue declined by 1% year over year, with operating margin also declining 50 basis points quarter over quarter.
Good afternoon, and welcome to the fiscal 2025 third quarter Hewlett Packard Enterprise earnings conference call. (Operator Instructions) Please note that today's event is being recorded.
I would now like to turn the conference over to Paul Glaser, Head of Investor Relations. Please go ahead, sir.
Good afternoon. I am Paul Glaser, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2025 third quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer; and Marie Myers, HPE's Chief Financial Officer.
Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE investor relations web page.
Elements of the financial information referenced on this call are forward-looking and are based on
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