Hewlett Packard Enterprise (HPE) is a global technology leader focused on delivering intelligent solutions in areas such as hybrid cloud, IoT, and artificial intelligence. For the first quarter of fiscal 2025, HPE reported a revenue increase of 17% year-over-year, totaling $7.9 billion. This marks the fourth consecutive quarter of year-over-year revenue growth, driven by a robust performance in the Server segment, which saw a revenue increase of 30% year-over-year to reach $4.3 billion.

HPE’s non-GAAP diluted net earnings per share came in at $0.49, which aligns with guidance and reflects a 2% increase from the same period last year. The company’s gross margins were reported at 29.4%, down 680 basis points year-over-year and down 150 basis points sequentially. Non-GAAP operating margin for the quarter was 9.9%, down 160 basis points from the previous year.

The annual recurring revenue (ARR) reached $2.1 billion, a 46% increase year-over-year. The Intelligent Edge segment generated revenue of $1.1 billion, a 4% year-over-year decrease, but showed a quarter-over-quarter growth of 2%. Hybrid Cloud revenue was $1.4 billion, a year-over-year growth of 11%, although it experienced a 12% decline sequentially.

Operating cash flow for the quarter was negative $390 million, aligning with typical seasonality for HPE. Free cash flow was reported at negative $877 million, a decline of $395 million compared to the previous year. Inventory at the end of the quarter totaled $8.6 billion, an increase of $767 million quarter-over-quarter.

HPE’s guidance for fiscal 2025 reflects expected revenue growth of 7% to 11% in constant currency. The company anticipates GAAP diluted net earnings per share within the range of $1.15 to $1.35 and non-GAAP diluted net earnings per share between $1.70 and $1.90. For the second quarter, HPE expects revenue to be between $7.2 billion and $7.6 billion, with diluted net earnings per share estimates between $0.08 and $0.14 for GAAP and $0.28 to $0.34 for non-GAAP metrics.

HPE has initiated a cost reduction program expected to achieve approximately $350 million in gross savings by fiscal 2027, coinciding with workforce reductions amounting to about 2,500 positions. This action is primarily aimed at aligning the company’s operational structure and optimizing profitability amid ongoing market challenges, including competitive pricing pressures and tariffs impacting business operations.

The company is facing challenges in its Server segment, where operating profit margins dropped to 8.1%, significantly below the expected 10% to 11%. This underperformance is attributed to higher discounting in the traditional server market and unexpected pressures from the transition to new AI-related products and inventory management. Despite these challenges, the company projects that Server margins will approach normal levels by the end of fiscal 2025, as corrective measures take effect.

In light of recent regulatory developments, HPE is also working towards closing its proposed acquisition of Juniper Networks, which it expects to finalize before the end of fiscal 2025. The acquisition is projected to generate gross annual run rate synergies of at least $450 million within three years post-closure. The trial date for the legal proceedings concerning this acquisition has been set for July 9, 2025.