Hewlett Packard Enterprise’s second-quarter results received a notably positive response from the market, as robust demand across AI, networking, and cloud offerings was a central theme. Management attributed the strong revenue performance to the successful integration of Juniper Networks, accelerating order growth in AI systems, and improved execution in server and hybrid cloud segments. CEO Antonio Neri emphasized that customer appetite for AI solutions nearly doubled sequentially, especially in sovereign and enterprise segments. Neri added, “We exited the quarter with record AI backlog at $3.7 billion.”
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Hewlett Packard Enterprise (HPE) Q2 CY2025 Highlights:
- Revenue: $9.14 billion vs analyst estimates of $8.58 billion (18.5% year-on-year growth, 6.5% beat)
- Adjusted EPS: $0.44 vs analyst estimates of $0.42 (5.4% beat)
- Adjusted EBITDA: $1.46 billion vs analyst estimates of $1.32 billion (16% margin, 10.9% beat)
- Revenue Guidance for Q3 CY2025 is $9.9 billion at the midpoint, above analyst estimates of $9.51 billion
- Management raised its full-year Adjusted EPS guidance to $1.90 at the midpoint, a 3.3% increase
- Operating Margin: 2.7%, down from 7.1% in the same quarter last year
- Annual Recurring Revenue: $3.05 billion vs analyst estimates of $2.38 billion (77.2% year-on-year growth, 28.3% beat)
- Market Capitalization: $31.51 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Hewlett Packard Enterprise’s Q2 Earnings Call
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Aaron Rakers (Wells Fargo) pressed management on the profitability of the AI server business versus traditional servers. CEO Antonio Neri explained traditional margins have recovered, but AI mix creates some short-term dilution, which management expects to normalize as volume shifts.
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Wamsi Mohan (Bank of America) asked about Juniper integration progress and the balance of AI opportunity between networking and servers. Neri emphasized early integration milestones and highlighted networking as increasingly critical to HPE’s AI strategy.
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Samik Chatterjee (JPMorgan) questioned the lower networking segment margins post-Juniper. CFO Marie Myers explained that the mix with Juniper temporarily lowers margins, but synergy capture and cost discipline are expected to drive recovery over time.
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Amit Daryanani (Evercore) inquired about future networking growth rates and campus product integration. Neri stated both Aruba and Mist platforms will be maintained, with thoughtful integration at the AI-operations layer to serve diverse customer needs.
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Eric Woodring (Morgan Stanley) sought insight into customer priorities and market health for servers and hybrid cloud. Neri reported robust demand and cited edge server refresh cycles and the transition to new virtualization software as key growth drivers.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) the pace of Juniper Networks integration and realization of targeted cost synergies, (2) the conversion of HPE’s record AI backlog into revenue as new customer segments ramp, and (3) margin stabilization in networking and server segments as product mix and integration costs evolve. Execution on free cash flow and leverage reduction will also be important markers of progress.
Hewlett Packard Enterprise currently trades at $24.06, up from $22.85 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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