Hewlett Packard Enterprise revenue jumps 40%
The enterprise technology provider raised its full-year earnings guidance to $3.35-$3.45 a share.
Hewlett Packard Enterprise (HPE) reported a record quarter as revenue surged 40% year-over-year, marking its fastest growth in over a decade. The results reflected a sharp rebound in demand for its high-margin networking and cloud infrastructure, prompting the company to lift its full-year outlook across all key metrics.
The enterprise technology provider posted second-quarter revenue of $10.7 billion, accelerating from 18% growth in the prior quarter. GAAP diluted earnings rose to $0.44 a share, up $1.26 from the year-earlier period, while non-GAAP earnings climbed 108% to $0.79 a share. Free cash flow reached $0.9 billion, more than doubling from $0.1 billion a year ago.
The gains were driven by the company’s Cloud & AI segment, where revenue grew 22.9% to $7.7 billion after declining 2.7% in the prior quarter. Server revenue rebounded 32.7% to $5.5 billion, reversing a 2.7% drop in the January quarter, while operating profit margins in the segment expanded to 12.4% from 10.2%. Networking revenue, meanwhile, nearly tripled to $2.7 billion, though growth decelerated slightly from 151.5% in the prior quarter, and operating margins compressed to 21.6%.
Gross margins continued to expand, with GAAP gross margin reaching 36.5%, up 810 basis points year-over-year. Non-GAAP gross margin held steady at 36.9%, an increase of 750 basis points. The company attributed the improvement to a richer mix of high-margin products and disciplined cost management.
Hewlett Packard Enterprise raised its full-year revenue growth guidance to 29-33%, up from 17-22%, and lifted its non-GAAP earnings outlook to $3.35-$3.45 a share from $2.30-$2.50. Free cash flow guidance was increased to at least $3.5 billion, exceeding the company’s original 2028 target. The company also introduced a 2027 growth framework, projecting revenue growth of 8-12% and free cash flow of at least $4.5 billion.
The quarter included the completion of the divestiture of HPE’s remaining 19% stake in H3C, which generated $1.357 billion in cash proceeds. The transaction brought total pretax consideration to $3.5 billion since the exit was announced.