Hewlett Packard Enterprise reported fiscal 2025 fourth‑quarter revenue of $9.7 billion, falling short of the $9.9 billion consensus estimate by roughly $0.2 billion, while diluted earnings per share rose to $0.62, beating the $0.59 estimate by $0.03.
Server revenue declined 5% year‑over‑year to $4.5 billion as demand for lower‑margin, AI‑heavy systems waned. In contrast, networking revenue surged 150% to $2.8 billion, driven by the integration of Juniper Networks and a sharp uptick in high‑margin networking contracts. Hybrid‑cloud revenue fell 12% to $1.4 billion, reflecting a slowdown in demand for hybrid‑cloud solutions amid broader market softness.
Gross margin expanded 270 basis points on a GAAP basis and 550 basis points on a non‑GAAP basis, while non‑GAAP operating margin reached a record 12.2%. The margin lift is largely attributable to the mix shift toward higher‑margin networking and disciplined cost control initiatives that offset the revenue decline in servers and hybrid‑cloud.
Management guided fiscal 2026 revenue growth of 17%–22% and non‑GAAP operating profit growth of 32%–40%. For the first quarter of fiscal 2026, HPE projected revenue of $9.0 billion to $9.4 billion and diluted EPS of $0.57 to $0.61, both below analyst consensus, reflecting caution around AI server shipments and ongoing cost‑control efforts.
CEO Antonio Neri highlighted the company’s transformation into a networking‑centric organization, noting the Juniper acquisition, accelerated AI and cloud initiatives, and a focus on high‑margin software and services. CFO Marie Myers emphasized disciplined spending, portfolio simplification, and the realization of Juniper integration synergies that have already boosted operating profit margins.
After the earnings release, HPE’s shares fell 8%–10% in after‑hours trading. The decline was driven primarily by the softer Q1 2026 revenue guidance and the revenue miss, which prompted investors to reassess the company’s AI positioning and the pace of its transition to a networking‑centric model.
The results underscore a strategic pivot: while servers and hybrid‑cloud segments face headwinds, the robust growth and margin expansion in networking, coupled with cost discipline, position HPE to capture long‑term value in AI infrastructure and high‑margin services, though near‑term revenue growth remains cautious.
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