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HPE(HPE) - 2025 Q1 - Quarterly Results
HPEHPE(HPE)2025-03-06 21:08

Revenue Performance - Revenue for Q1 Fiscal 2025 was 7.9billion,representinga167.9 billion, representing a 16% increase year-over-year in actual dollars and a 17% increase in constant currency [3]. - Annualized revenue run-rate (ARR) reached 2.1 billion, up 45% from the prior-year period in actual dollars and 46% in constant currency [3]. - Net revenue for the three months ended January 31, 2025, was 7,854million,adecreaseof7.17,854 million, a decrease of 7.1% from 8,458 million in the previous quarter and an increase of 16.2% from 6,755millioninthesamequarterlastyear[19].−TotalconsolidatednetrevenueforthethreemonthsendedJanuary31,2025,was6,755 million in the same quarter last year [19]. - Total consolidated net revenue for the three months ended January 31, 2025, was 7,854 million, a decrease of 7% quarter-over-quarter and an increase of 16% year-over-year [31]. - The Server segment reported net revenue of 4,290million,down84,290 million, down 8% from the previous quarter but up 29% year-over-year [31]. - Intelligent Edge revenue was 1.1 billion, down 5% year-over-year in actual dollars, with an operating profit margin of 27.4% [7]. - Hybrid Cloud revenue was 1.4billion,up101.4 billion, up 10% year-over-year in actual dollars, with an operating profit margin of 7.0% [7]. Earnings and Profitability - GAAP diluted net EPS was 0.44, up 52% from the prior-year period, exceeding the guidance range of 0.31to0.31 to 0.36 [7]. - Non-GAAP diluted net EPS was 0.49,up20.49, up 2% from the prior-year period, within the guidance range of 0.47 to 0.52[7].−Earningsfromoperationsforthesameperiodwere0.52 [7]. - Earnings from operations for the same period were 433 million, down 37.5% from 693millioninthepreviousquarteranddown17.5693 million in the previous quarter and down 17.5% from 525 million year-over-year [19]. - Net earnings attributable to common stockholders were 598million,adecreaseof55.5598 million, a decrease of 55.5% from 1,341 million in the previous quarter and an increase of 54.3% from 387millionyear−over−year[19].−GAAPgrossprofitmarginforthethreemonthsendedJanuary31,2025,was29.2387 million year-over-year [19]. - GAAP gross profit margin for the three months ended January 31, 2025, was 29.2%, down from 30.8% in the previous quarter and down from 36.4% year-over-year [21]. - Non-GAAP net earnings attributable to HPE for the three months ended January 31, 2025, were 684 million, compared to 795millioninthepreviousquarterand795 million in the previous quarter and 638 million in the same quarter last year [23]. - The total segment operating profit margin decreased to 10.6% for the three months ended January 31, 2025, down from 11.9% in the previous quarter and 12.3% year-over-year [33]. Cash Flow and Expenses - Free cash flow for the three months ended January 31, 2025, was (877)million,asignificantdecreasefrom(877) million, a significant decrease from 1,500 million in the previous quarter and (482)millionyear−over−year[23].−Researchanddevelopmentexpensesforthequarterwere(482) million year-over-year [23]. - Research and development expenses for the quarter were 475 million, down from 527millioninthepreviousquarteranddownfrom527 million in the previous quarter and down from 582 million year-over-year [19]. - The total costs and expenses for the three months ended January 31, 2025, were 7,421million,adecreaseof4.47,421 million, a decrease of 4.4% from 7,765 million in the previous quarter and an increase of 19.1% from 6,230millionyear−over−year[19].−Thecompanyreportedanetcashusedinoperatingactivitiesof6,230 million year-over-year [19]. - The company reported a net cash used in operating activities of 390 million for the three months ended January 31, 2025, compared to a net cash provided of 64millionforthesameperiodlastyear[27].FutureProjectionsandGuidance−HPEestimatesQ2Fiscal2025revenuetobeintherangeof64 million for the same period last year [27]. Future Projections and Guidance - HPE estimates Q2 Fiscal 2025 revenue to be in the range of 7.2 billion to 7.6billion,withGAAPdilutednetEPSestimatedbetween7.6 billion, with GAAP diluted net EPS estimated between 0.08 and 0.14[6].−HPEexpectsfutureannualizedcostsavingsofapproximately0.14 [6]. - HPE expects future annualized cost savings of approximately 120 million following the divestiture of 30% of H3C's total issued share capital, which generated 2.1billioninpre−taxproceeds[43].−HPEannouncedacostreductionprogramexpectedtodelivergrosssavingsofapproximately2.1 billion in pre-tax proceeds [43]. - HPE announced a cost reduction program expected to deliver gross savings of approximately 350 million by fiscal year 2027 [9]. Legal and Organizational Changes - The proposed merger with Juniper Networks is facing legal challenges, with a trial set to commence on July 9, 2025 [8]. - HPE implemented an organizational change effective at the beginning of fiscal 2025, transferring certain managed services to align with its current business structure [37]. Financial Reporting and Non-GAAP Measures - The company provides non-GAAP financial measures to enhance transparency and allow investors to evaluate its operating performance without the impact of foreign exchange rates [41]. - HPE's management believes that excluding certain costs from non-GAAP measures provides a clearer view of ongoing operating results [42]. - HPE excludes gains and losses on non-marketable equity investments to reflect normal business operations, impacting the evaluation of current operating performance [46]. - For fiscal 2025, HPE projects a non-GAAP income tax rate of 15%, consistent with the rate used in fiscal 2024 [46]. - HPE's Free Cash Flow (FCF) is defined as cash flow from operations minus net capital expenditures, adjusted for exchange rate fluctuations [46]. - The projected non-GAAP income tax rate may change due to the evolving global tax environment and changes in the Company's geographic earnings mix [46]. - HPE's management and investors utilize FCF to assess cash available for investments, stock repurchases, and liquidity evaluation [46].