Executive Summary
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.
Key Performance Indicators
QoQ: -14.95% | YoY:-6.31%
QoQ: -21.27% | YoY:-16.67%
QoQ: -54.10% | YoY:62.02%
QoQ: -55.88% | YoY:50.00%
Key Insights
Revenue: $7.81B, YoY +16.03%, QoQ -7.66% | Gross Profit: $2.213B, YoY -6.31%, QoQ -14.95% | Operating Income: $0.47B, YoY -16.67%, QoQ -21.27% | Net Income: $0.627B, YoY +62.02%, QoQ -54.10% | EPS Diluted: $0.44, YoY +50.00%, QoQ -55.88%
Liquidity/Leverage: Cash & equivalents $13.85B; Total debt $17.88B; Net debt ~$4.45B; Current ratio 1.33; Quick ratio 0.98; Debt to equity 0.71; Debt to capitalization 0.415.
Cash Flow: Operating cash flow -$0.39B; Capex $0.528B; Free cash flow -$0.918B. ...
Financial Highlights
Revenue: $7.81B, YoY +16.03%, QoQ -7.66% | Gross Profit: $2.213B, YoY -6.31%, QoQ -14.95% | Operating Income: $0.47B, YoY -16.67%, QoQ -21.27% | Net Income: $0.627B, YoY +62.02%, QoQ -54.10% | EPS Diluted: $0.44, YoY +50.00%, QoQ -55.88%
Liquidity/Leverage: Cash & equivalents $13.85B; Total debt $17.88B; Net debt ~$4.45B; Current ratio 1.33; Quick ratio 0.98; Debt to equity 0.71; Debt to capitalization 0.415.
Cash Flow: Operating cash flow -$0.39B; Capex $0.528B; Free cash flow -$0.918B.
Working Capital Dynamics: DSO 82.8 days; DIO 138.9 days; DPO 174.0 days; CCC 221.6 days; Cash conversion cycle 47.6 days.
Capital Allocation: Dividends paid $0.196B; Share repurchases $0.052B.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
7.81B |
16.03% |
-7.66% |
| Gross Profit |
2.21B |
-6.31% |
-14.95% |
| Operating Income |
470.00M |
-16.67% |
-21.27% |
| Net Income |
627.00M |
62.02% |
-54.10% |
| EPS |
0.45 |
50.00% |
-55.88% |
Key Financial Ratios
operatingProfitMargin
5.51%
operatingCashFlowPerShare
$-0.3
freeCashFlowPerShare
$-0.7
dividendPayoutRatio
31.3%
Management Commentary
Transcript not provided in the dataset. Consequently, management commentary cannot be quoted verbatim. Typically, highlights would cover strategy execution (portfolio optimization, AI/data center adjacencies), operating discipline (cost controls, supply chain resilience), market conditions (enterprise IT spend, AI demand), and capital allocation (dividends, buybacks, M&A).
Transcript not available in the provided data.
— N/A
Transcript not available in the provided data.
— N/A
Forward Guidance
No explicit forward guidance is presented in the QQ1 2025 release in the provided data. Given the ongoing data-center refresh cycle, AI-related demand, and portfolio diversification into Aruba and edge offerings, a constructive but cautious outlook is plausible. Key factors to monitor for achievability include: (1) stabilization or acceleration in enterprise IT spending, (2) normalization of working capital to support positive free cash flow, (3) success in monetizing software-as-a-service and consumption-based models, and (4) continued progress in the integration and scale of high-growth adjacencies (HPC, AI-enabled infrastructure, and intelligent edge). Investors should watch for updated management targets on FCF growth, operating leverage, and portfolio mix in subsequent quarters.