Hewlett Packard Enterprise (2HP.DE) delivered a solid year-over-year top-line expansion in QQ1 2025, with revenue of $7.81 billion, up 16.0% versus the prior year period, but a sequential decline of approximately 7.7% from Q4 2024. Gross profit of $2.213 billion produced a gross margin around 28.3%, reflecting ongoing mix shifts toward higher-value services and infrastructure offerings and a modest margin contraction versus the prior year quarter. Operating income reached $0.47 billion (operating margin ~6.0%), while net income was $0.627 billion with a net margin near 8.0% and diluted EPS of $0.44. The results show a resilient profitability profile on an annual basis but exhibit near-term cash-flow headwinds due to working capital dynamics.
From a cash-flow perspective, operating cash flow was negative $0.39 billion and free cash flow stood at negative $0.918 billion, driven by a large working capital swing (-$1.711 billion) in the quarter and moderate capital expenditure of $0.528 billion. The company ends QQ1 2025 with a robust liquidity position: cash and cash equivalents of about $13.85 billion against total debt of ~$17.88 billion, yielding a net debt of ~$4.45 billion and a leverage profile that remains manageable (debt to equity ~0.71, debt to capitalization ~0.415). Shareholder-friendly activity includes dividends paid of $0.196 billion and modest share repurchases of $0.052 billion.
Strategically, HPE continues to diversify across core hardware, software-enabled services, and edge/AI-oriented solutions, underscoring potential upside from data-center refresh cycles, hybrid IT demand, and Aruba networking initiatives. The near-term hurdle is translating revenue growth and margin stability into sustained free cash flow generation, a function of working capital normalization and discipline on capital deployment. Investors should monitor the pace of free cash flow recovery, portfolio execution, and the progress of high-growth adjacencies such as AI-ready infrastructure, HPC, and intelligent edge offerings.