10-QPeriod: Q3 FY2025

Hewlett Packard Enterprise Co Quarterly Report for Q3 Ended Jul 31, 2025

Filed September 4, 2025For Securities:HPEHPE-PC

Summary

Hewlett Packard Enterprise Company (HPE) reported its third-quarter fiscal year 2025 results, demonstrating significant revenue growth driven by the recent acquisition of Juniper Networks and continued expansion in its Server and Hybrid Cloud segments. While consolidated net revenue saw a robust increase of 18.5% year-over-year, the company experienced a year-over-year decrease in net earnings attributable to HPE, largely influenced by the costs associated with the Juniper Networks merger and a substantial goodwill impairment charge in the Hybrid Cloud segment. Despite these headwinds, HPE highlights strong growth in its Annualized Revenue Run-rate (ARR), which surged by 77% year-over-year, underscoring the company's strategic shift towards a consumption-based, as-a-service model. The Networking segment, boosted by the Juniper acquisition, was a key revenue driver. Investors should note the increased leverage on the balance sheet due to debt financing for the acquisition, alongside ongoing efforts to optimize costs and manage macroeconomic uncertainties. The company's outlook remains focused on integrating Juniper Networks, driving its GreenLake offerings, and navigating the dynamic global economic landscape.

Financial Highlights

47 data points
Beta

Revenue

$9.14B

Net Income

$305.00M

3.3% Net Margin

EPS (Diluted)

$0.21

Total Assets

$77.34B

Cash & Equivalents

$4.57B

Free Cash Flow

$1.30B

Financial Statements
Beta
Revenue$9.14B
R&D Expenses$622.00M
SG&A Expenses$1.50B
Operating Expenses$8.89B
Operating Income$247.00M
Net Income$305.00M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)1.32B
Shares Outstanding (Diluted)1.42B

Key Highlights

  • 1HPE reported a significant 18.5% year-over-year increase in total net revenue, reaching $9.1 billion for the third quarter of fiscal year 2025, primarily driven by the Juniper Networks acquisition and strong performance in the Server and Hybrid Cloud segments.
  • 2Net earnings attributable to HPE decreased by 40.4% to $305 million, and net earnings attributable to common stockholders fell by 46.1% to $276 million, impacted by merger-related costs and a goodwill impairment charge.
  • 3The company's Annualized Revenue Run-rate (ARR) demonstrated substantial growth, increasing by 77% year-over-year to $3.1 billion, signaling momentum in its as-a-service strategy.
  • 4A significant goodwill impairment charge of $1.4 billion was recorded in the second quarter of fiscal year 2025 related to the Hybrid Cloud reporting unit, reflecting increased macroeconomic uncertainty.
  • 5The acquisition of Juniper Networks, completed on July 2, 2025, for approximately $13.4 billion, is a major strategic move bolstering the Networking segment and is expected to drive future growth.
  • 6Gross profit margin declined by 2.4 percentage points to 29.2% compared to the prior year, primarily due to increased cost of sales in the Server, Networking, and Hybrid Cloud segments.
  • 7Operating profit margin decreased to 2.7% from 7.1% in the prior year, largely due to merger-related expenses and the goodwill impairment charge.

Frequently Asked Questions

The primary driver of the revenue increase was the recent acquisition of Juniper Networks, which significantly boosted the Networking segment. Additionally, the Server and Hybrid Cloud segments contributed to the growth through higher average unit prices and increased unit volume, respectively.

The acquisition of Juniper Networks, completed in July 2025, added approximately $13.4 billion to HPE's balance sheet and is a key contributor to the 54.3% revenue increase in the Networking segment for the quarter. However, the integration has also brought associated costs, impacting overall profitability. The company's Annual Revenue Run-rate (ARR) saw a substantial 77% year-over-year increase, partly reflecting the inclusion of Juniper's recurring revenue streams.

HPE recorded a goodwill impairment charge of $1.4 billion related to its Hybrid Cloud reporting unit. This was primarily driven by increased macroeconomic uncertainty, heightened global trade tensions, and geopolitical instability, which led to an increase in the discount rate used in their discounted cash flow analysis, causing the reporting unit's fair value to fall below its carrying value.

HPE is implementing a cost reduction program aimed at reducing structural operating costs. The company incurred $148 million in charges related to this program for the nine months ended July 31, 2025. Additionally, the company is managing its expenses by focusing on cost containment measures and optimizing its supply chain and pricing strategies to mitigate the impact of rising input costs and competitive pricing pressures.