Hewlett Packard Enterprise (NYSE: HPE) is a global technology company that focuses on providing intelligent solutions to help customers manage their data and transition to cloud-based operations. The company operates in several areas, including networking, hybrid cloud, and artificial intelligence (AI), serving various industries and market segments.

In its fiscal 2025 second quarter, HPE reported total revenue of $7.6 billion, marking a 7% increase year-over-year and exceeding the high end of its previous guidance. The company achieved revenue growth across all product segments, with server revenue increasing by 7% year-over-year, albeit down 5% from the previous quarter. HPE’s intelligent edge revenue also showed an increase of 8% compared to the prior year.

The company’s non-GAAP diluted net earnings per share (EPS) stood at $0.38, outperforming its guidance range of $0.28 to $0.34. However, this was a decline of approximately 10% from the previous year’s $0.42. Meanwhile, HPE reported a GAAP diluted net loss per share of $0.82, primarily influenced by a non-cash goodwill impairment charge of $1.03 per share related to its hybrid cloud business.

HPE’s cash flow from operations was negative at $461 million for the quarter. Free cash flow totaled a negative $847 million, slightly better than anticipated due to the conversion of some AI backlog into revenue. Operating margins also faced challenges, with non-GAAP gross margin at 29.4%, down 370 basis points from the prior year, and non-GAAP operating margin at 8%, reflecting a decline due to lower gross margins and increased expenses.

Looking ahead, HPE tightened its full-year revenue growth outlook to between 7% and 9%. The company raised its lower-end guidance for non-GAAP diluted net EPS by $0.08, now projected between $1.78 and $1.90 for fiscal 2025. Guidance for the third quarter indicates expected revenue between $8.2 billion and $8.5 billion, with non-GAAP diluted EPS in the range of $0.40 to $0.45.

By segment performance, server revenue reached $4.1 billion with a profit margin of 5.9%, down from 11.0% year-over-year. Intelligent Edge recorded $1.2 billion in revenue and an operating margin of 23.6%, while Hybrid Cloud revenue was $1.5 billion with a profit margin of 5.4%, up significantly from 1.0% in the prior year. Financial Services generated revenue of $856 million, reflecting a slight decline year-over-year but an increased margin of 10.4%.

HPE’s annualized revenue run-rate was reported at $2.2 billion, indicating a 47% increase from the previous year, spurred by robust demand in AI and subscription services like HPE GreenLake. The company noted a backlog of $3.2 billion in AI systems at quarter-end, with significant order growth in its hybrid cloud and intelligent edge segments.

Overall, HPE continues to navigate challenges in profitability while focusing on strategic growth in its key areas, demonstrating a commitment to maintaining its position as a technology leader in the evolving IT landscape.