Hewlett Packard beats quarterly revenue estimates on robust server demand

Third Quarter Fiscal 2025 Financial Results

Hewlett Packard Enterprise (HPE) has announced record-breaking results for the third fiscal quarter of 2025, propelled by strong demand for servers and AI-powered infrastructure. Total revenue reached $9.14 billion, marking a 19% increase year-over-year and beating analyst projections of $8.58 billion[2].

Key Growth Drivers

• Server Revenue: Grew by 16% to $4.9 billion, supported by surging demand for AI servers and enterprise clients[5].
• Networking Revenue: Jumped 54%, reflecting strong traction from the acquisition of Juniper Networks, which began contributing to results in July[2].
• AI Segment: HPE recorded $1.6 billion in AI server revenue for the quarter[4].
• Other segments including Hybrid Cloud and Financial Services also contributed to robust, broad-based growth[2].

Profitability and Margins

• Adjusted gross margin stood at 29.9%, rising 50 basis points sequentially but down 190 basis points year-over-year as integration expenses for Juniper Networks weighed on results[2][4].
• GAAP gross margin decreased to 29.2%, down 240 basis points from the previous year[2].
• EPS reported at 44 cents, ahead of analyst estimates of 41 cents[4].

Strategic Milestones and Market Outlook

• The acquisition of Juniper Networks closed on July 2, 2025, marking a transformative shift toward integrated, full-stack offerings for data centers[3][4].
• HPE’s guidance forecasts fiscal 2025 revenue to grow by 14–16% in constant currency, with non-GAAP EPS expected between $1.88 and $1.92[2][3].
• The company has largely addressed earlier operational setbacks and expects further profit accretion by capturing planned cost synergies with Juniper[3][4].
• Enterprise and sovereign client sales are showing greater stability and profitability versus more volatile model builder and hyperscaler markets[4].

Leadership Commentary

Antonio Neri, CEO of HPE, stated, “Customer demand stretched broadly across our portfolio and was particularly strong in our Server and Networking segments. As we enter a new chapter at HPE, we are focused on capturing the tremendous market opportunity through execution that delivers strong, consistent shareholder value."[3]

Marie Myers, CFO, added, "Acquiring Juniper Networks has already added to our results, with more profit accretion expected as we work to quickly capture planned synergies and drive new market opportunities."[3]

Conclusion

HPE’s third-quarter results highlight the impact of strong AI-driven infrastructure demand and a strategic expansion through acquisition, balancing record revenue growth with ongoing margin pressures and integration costs[2][3][4][5].

Marie Myers, CFO, added, "Acquiring Juniper Networks has already added to our results, with more profit accretion expected as we work to quickly capture planned synergies and drive new market opportunities."[3]

Marie Myers, CFO, added, "Acquiring Juniper Networks has already added to our results, with more profit accretion expected as we work to quickly capture planned synergies and drive new market opportunities."[3]