HPE(US:HPE)2025-10-15 20:47Financial Performance - HPE reported record revenue of $9.1 billion for Q3 FY2025, a 19% increase from the prior-year period[3] - Annualized revenue run-rate (ARR) reached $3.1 billion, up 77% year-over-year[3] - Net revenue for the three months ended July 31, 2025, was $9,136 million, a 19.7% increase from $7,710 million in the same period last year[20] - For the nine months ended July 31, 2025, net revenue was $24,617 million, up 13.5% from $21,669 million in the same period last year[22] - Total consolidated net revenue for the three months ended July 31, 2025, was $9,136 million, representing a 20% increase from $7,627 million in the previous quarter and a 19% increase from $7,710 million year-over-year[34] - For the nine months ended July 31, 2025, total consolidated net revenue reached $24,617 million, a 14% increase compared to $21,669 million for the same period last year[36] Earnings and Profitability - GAAP diluted net earnings per share (EPS) was $0.21, down $0.17 from the prior-year period, while non-GAAP EPS was $0.44, down $0.06[3] - Net earnings attributable to common stockholders for the three months ended July 31, 2025, were $276 million, compared to a loss of $1,079 million in the previous quarter[20] - For the three months ended July 31, 2025, GAAP net earnings attributable to HPE were $305 million, resulting in a diluted EPS of $0.21, compared to a net loss of $1,050 million and an EPS of $(0.82) for the same period in 2024[26] - Non-GAAP net earnings attributable to HPE for the three months ended July 31, 2025, were $631 million, with a diluted EPS of $0.44, compared to $545 million and an EPS of $0.38 for the same period in 2024[26] - For the nine months ended July 31, 2025, GAAP net loss attributable to HPE was $(118) million, resulting in a diluted EPS of $(0.16), compared to net earnings of $1,213 million and an EPS of $0.92 for the same period in 2024[28] - Non-GAAP net earnings attributable to HPE for the nine months ended July 31, 2025, were $1,860 million, with a diluted EPS of $1.32, consistent with $1,860 million and an EPS of $1.40 for the same period in 2024[28] Cash Flow and Dividends - Cash flow from operations increased to $1,305 million, up $151 million from the prior-year period[8] - Free cash flow (FCF) was $790 million, an increase of $121 million year-over-year[8] - Cash provided by operating activities for the three months ended July 31, 2025, was $1,305 million, compared to $(461) million for the previous quarter[28] - Free cash flow for the three months ended July 31, 2025, was $790 million, a significant improvement from $(847) million in the previous quarter[28] - Cash dividends declared per share remained consistent at $0.13 for the three months ended July 31, 2025[20] Segment Performance - Server revenue was $4.9 billion, up 16% from the prior-year period, with a 6.4% operating profit margin[8] - Networking revenue was $1.7 billion, up 54% year-over-year, with a 20.8% operating profit margin[8] - The Server segment reported net revenue of $4,940 million for the three months ended July 31, 2025, up 22% quarter-over-quarter and 16% year-over-year[38] - The Networking segment achieved a net revenue of $1,730 million for the three months ended July 31, 2025, reflecting a 49% increase from the previous quarter and a 54% increase year-over-year[38] - The total segment earnings from operations for the nine months ended July 31, 2025, were $2,351 million, slightly down from $2,448 million in the same period last year[36] Acquisitions and Organizational Changes - HPE completed the acquisition of Juniper Networks on July 2, 2025, which is expected to enhance profitability and market opportunities[9] - The company incurred acquisition charges primarily related to the acquisition of Juniper Networks, impacting financial results for the three and nine months ended July 31, 2025[49] - The company has implemented an organizational change to align its segment financial reporting with its current business structure, affecting the Hybrid Cloud reportable segment[43] Impairments and Settlements - The company incurred an impairment of goodwill of $1,361 million during the nine months ended July 31, 2025[22] - The company reported a $52 million litigation settlement included in the three and nine months ended July 31, 2025[43] - HPE received $52 million from a settlement related to ongoing litigation, which is excluded from non-GAAP measures for performance evaluation[52] Financial Metrics and Guidance - HPE estimates Q4 FY2025 revenue between $9.7 billion and $10.1 billion, with GAAP diluted net EPS projected between $0.50 and $0.54[6] - The company expects FY2025 revenue growth of 14% to 16% in constant currency[7] - HPE's projected non-GAAP income tax rate for fiscal 2025 is 15%, consistent with the previous fiscal year[51] Non-GAAP Measures - Hewlett Packard Enterprise provides non-GAAP financial measures to enhance transparency and allow investors to evaluate the company's performance without the impact of foreign exchange rates[44] - The company believes that excluding certain items from non-GAAP financial measures provides a clearer view of its consolidated financial performance[48] - HPE excludes stock-based compensation and amortization of intangible assets from non-GAAP measures to provide a clearer view of operating performance[49] - HPE's free cash flow (FCF) is defined as cash flow from operations less net capital expenditures, adjusted for exchange rate fluctuations[51] - HPE's management believes that excluding certain charges facilitates a more meaningful evaluation of current operating performance[51] - The company stopped reporting H3C earnings in non-GAAP results due to the planned divestiture, which aids in evaluating current operating performance[52]