HPE(US:HPE)2025-03-06 21:08Revenue Performance - Revenue for Q1 Fiscal 2025 was $7.9 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 $7,854 million, a decrease of 7.1% from $8,458 million in the previous quarter and an increase of 16.2% from $6,755 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 $4,290 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 $1.4 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 $0.31 to $0.36 [7]. - Non-GAAP diluted net EPS was $0.49, up 2% from the prior-year period, within the guidance range of $0.47 to $0.52 [7]. - Earnings from operations for the same period were $433 million, down 37.5% from $693 million in the previous quarter and down 17.5% from $525 million year-over-year [19]. - Net earnings attributable to common stockholders were $598 million, a decrease of 55.5% from $1,341 million in the previous quarter and an increase of 54.3% from $387 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 $795 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, a significant decrease from $1,500 million in the previous quarter and $(482) million year-over-year [23]. - Research and development expenses for the quarter were $475 million, down from $527 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 $7,421 million, a decrease of 4.4% from $7,765 million in the previous quarter and an increase of 19.1% from $6,230 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 $64 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 $7.6 billion, with GAAP diluted net EPS estimated between $0.08 and $0.14 [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 $2.1 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].