Latest news with #AntonioNeri
Yahoo
a day ago
- Business
- Yahoo
HPE Q1 Earnings Call: Revenue Misses Expectations, Adjusted EPS Beats, AI and Hybrid Cloud Growth Highlighted
Enterprise technology company Hewlett Packard Enterprise (NYSE:HPE) fell short of the market's revenue expectations in Q1 CY2025, but sales rose 5.9% year on year to $7.63 billion. Its non-GAAP EPS of $0.38 per share was 16.3% above analysts' consensus estimates. Is now the time to buy HPE? Find out in our full research report (it's free). Revenue: $7.63 billion (5.9% year-on-year growth) Adjusted EPS: $0.38 vs analyst estimates of $0.33 (16.3% beat) Adjusted Operating Income: $613 million vs analyst estimates of $549.5 million (8% margin, 11.6% beat) Revenue Guidance for Q2 CY2025 is $8.35 billion at the midpoint, above analyst estimates of $8.18 billion Management raised its full-year Adjusted EPS guidance to $1.84 at the midpoint, a 2.2% increase Operating Margin: -14.5%, down from 5.9% in the same quarter last year Annual Recurring Revenue: $2.25 billion at quarter end, up 47.2% year on year Market Capitalization: $23.24 billion Hewlett Packard Enterprise's first quarter results reflected a mix of headwinds and operational improvements across its core segments, as management targeted execution issues in its server business and capitalized on expanding demand for AI-driven infrastructure. CEO Antonio Neri highlighted that the company 'addressed the operational challenges we experienced in our service segment last quarter,' referencing the implementation of new pricing analytics and increased discount scrutiny. Growth was led by higher AI system revenue, improved performance in the Intelligent Edge segment, and robust adoption of the hybrid cloud platforms, particularly the HPE Alletra MP storage transition and GreenLake cloud services. CFO Marie Myers noted that the company also made significant progress with its cost reduction program, which included workforce reductions and organizational streamlining. Looking ahead, management's guidance is anchored by anticipated improvements in server profitability, ongoing strength in AI and hybrid cloud demand, and incremental benefits from structural cost actions. Neri stated, 'We continue to capitalize on the mega trends reshaping the IT industry across networking, AI, and hybrid cloud,' and expects further margin recovery in the server segment as corrective actions take hold. The company anticipates a less pronounced impact from tariffs, continued scaling of its annual recurring revenue, and additional product launches in AI and networking. Myers emphasized a focus on balancing investments in innovation with disciplined cost management, cautioning that macroeconomic and trade policy uncertainties remain potential headwinds for the remainder of the year. Management attributed the quarter's performance to stronger AI systems revenue, momentum in hybrid cloud and Intelligent Edge, and operational changes aimed at improving server margins. Server margin remediation: Management implemented new pricing analytics, tighter discount controls, and inventory management to address previous execution issues in the server segment. These steps are expected to result in server operating margins recovering to approximately 10% by year-end. AI systems and backlog growth: The company highlighted over $1 billion in recognized AI systems revenue, an increase from the prior quarter, and a $3.2 billion AI systems backlog. Growth was attributed to enterprise and sovereign customer demand for AI infrastructure, with management noting a 'multiples of our backlog' in the pipeline. Hybrid cloud and storage momentum: The HPE Alletra MP storage platform experienced high double-digit growth, with orders for Alletra MP growing over 75% year over year for four consecutive quarters. The transition to a subscription model is currently a revenue headwind but is expected to support long-term profitability. Intelligent Edge recovery: Intelligent Edge returned to revenue growth after five quarters, benefiting from improved demand in networking and the introduction of new Wi-Fi 7 solutions. Channel inventory levels remained healthy, and data center and campus switching orders saw double-digit growth. Cost reduction and organizational changes: The company executed a cost reduction program, including a 5% workforce reduction and the launch of the 'Catalyst' initiative to streamline operations and leverage AI for internal efficiency. Myers described these efforts as 'accelerating our reporting cycles by approximately 50% and reducing processing costs by an estimated 25%.' Management expects ongoing AI and hybrid cloud momentum, server profitability improvements, and disciplined cost actions to drive results, though macroeconomic and trade policy uncertainties remain significant factors. AI and hybrid cloud demand: Management projects continued high demand for AI systems and hybrid cloud solutions, especially as enterprise and sovereign clients expand deployments. The company's integration with NVIDIA's new GPUs and AI software partnerships are expected to further expand market opportunities. Server margin recovery: The server segment's profitability is expected to improve as pricing and discounting controls, inventory management, and cost actions take full effect. Management reaffirmed the target for server operating margins to approach 10% by year-end, supported by the rollout of new server generations and improved backlog conversion. Operational efficiency and cost control: The 'Catalyst' initiative, including workforce reductions and AI-driven process improvements, is expected to deliver incremental cost savings and improved agility. Management cautioned that ongoing trade policy changes and macroeconomic volatility could affect both demand and margins. In coming quarters, the StockStory team will monitor (1) the pace of server margin recovery and execution on cost reductions, (2) sustained growth in AI systems and hybrid cloud platforms as new product launches roll out, and (3) the closing and integration of the Juniper Networks acquisition. Other important indicators include annual recurring revenue expansion and signs of stabilization in the networking and Intelligent Edge segments. Hewlett Packard Enterprise currently trades at a forward P/E ratio of 9.1×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time of India
a day ago
- Business
- Time of India
Hewlett Packard beats Q2 revenue estimates on AI demand; records $1.36 billion charge
Hewlett Packard Enterprise beat Wall Street revenue estimates for the second quarter on Tuesday, driven by demand for its artificial-intelligence servers and hybrid cloud segment. Shares of the server-maker, which also recorded an impairment charge of $1.36 billion in the reported quarter, were up 3.2% in extended trading. HPE has benefited from a surge in spending on advanced data center architecture, designed to support the complex processing needs of generative AI. The boom in GenAI has bumped up demand for HPE's AI-optimized servers, which are powered by Nvidia processors and can run complex applications. "In a very dynamic macro environment, we executed our strategy with discipline," CEO Antonio Neri said. HPE was focusing on achieving efficiencies and streamlining operations across its businesses, said CFO Marie Myers. For the quarter ended April 30, HPE posted revenue of $7.63 billion, ahead of analysts' average estimate of $7.45 billion, according to data compiled by LSEG. Adjusted profit per share came in at 38 cents, beating an estimate of 32 cents per share. It forecast third-quarter revenue between $8.2 billion and $8.5 billion, compared to an estimate of $8.17 billion.
Yahoo
a day ago
- Business
- Yahoo
HPE gains enterprise traction with private cloud, AI-powered servers
This story was originally published on CIO Dive. To receive daily news and insights, subscribe to our free daily CIO Dive newsletter. Hewlett Packard Enterprise received a two-pronged boost from its AI server and private cloud segments during the second quarter of its 2025 fiscal year, executives said during a Tuesday earnings call. The hardware vendor saw revenue grow 6% year over year to $7.6 billion during the three-month period ending April 30. One-third of the hardware vendor's AI orders were driven by enterprise demand for GPU-powered servers and private cloud systems, according HPE President and CEO Antonio Neri. The company signed $1.1 billion of net new AI systems orders and exited the quarter with a $3.2 billion backlog, Neri said. Enterprise AI server and networking deployments gained momentum in both on-premises and colocation data centers, according to Neri. 'What we see is customers modernizing their data center, especially because they are focused on data sovereignty and compliance,' he said. Organizations are standing up infrastructure for retrieval-augmented generation, fine tuning and inferencing, he added. As enterprises weigh their AI procurement options, the market has split between providers that are pushing customers to public cloud and vendors steering them in the direction of on-premises alternatives. SAP, Salesforce and Workday are among the enterprise software giants driving businesses to cloud-based agentic AI. Data cloud company Snowflake gave its platform an agent-oriented overhaul earlier this week. On the other side of the divide, on-premises private cloud is enjoying a concurrent resurgence. HPE rolled out upgraded versions of its Morpheus virtualization software and private cloud bundle last month and announced the HPE Private Cloud AI integration with Nvidia's enterprise AI platform. Dell, which last week reported more than $12 billion in AI server orders during the three-month period ending May 2, introduced a private cloud suite in May, too. 'We experienced exceptionally strong demand for AI-optimized servers,' Dell Vice Chairman and COO Jeff Clarke said during a Q1 2026 earnings call, noting the company shipped $1.8 billion of the units, leaving a backlog of $14.4 billion. HPE remains entrenched in the enterprise data center side of the hybrid cloud equation, as it digs out from execution challenges that triggered a 5% workforce reduction announced during a March earnings call and other remediation efforts. 'Since our last update, we have closely monitored the changes implemented to improve profitability,' Neri said Tuesday. 'This includes the rollout of new pricing analytics, increased discount scrutiny and inventory management.' The company expects to eliminate 2,500 positions by the end of the year and ended the recent quarter with a headcount under 59,000, its lowest since splitting from Hewlett-Packard in 2015, according to EVP and CFO Marie Myers. AI is integral to HPE's optimization efforts. The company will use agentic tools to improve efficiency internally, Myers said. 'Within finance, HPE and Deloitte co-developed Zuora AI CFO insights agents built on Nvidia's advanced AI stack and deployed on our own HPE private cloud AI platform,' said Myers. 'We're turning data into actionable intelligence, accelerating our reporting cycles by approximately 50% and reducing processing costs by an estimated 25%.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
HPE earnings: CEO Antonio Neri talks results & Juniper deal
Hewlett Packard Enterprise (HPE) reported fiscal second quarter results that topped Wall Street estimates on both the top and bottom lines. In the video above, HPE CEO Antonio Neri discusses the company's quarter, layoffs, and the Department of Justice's bid to block its acquisition of Juniper (JNPR). To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. All right, we're keeping a close eye on shares of HPE after better-than-expected earnings. Let's bring in HPE CEO Antonio Neri. Um look, we were here, I was in the seat, I think you were in that seat three months ago talking about challenges in the server business. Has this business, did it bottom in the most recent quarter? It did. It did. But look, Brian, we had a very solid quarter. In fact, we delivered above our commitments for the quarter, including the server business which we provided a guide that ultimately our results came at the very high end of that guide, both on revenue, operating profit, and operating margins. But what I'm really pleased is the fact that we took swift, targeted, and aggressive actions to address the three challenges we discussed last quarter in the server business. But this was our fifth consecutive quarter of year-over-year revenue growth across the company and every product business: in Intelligent Edge, in Networking, hybrid cloud, particularly true storage and GreenLake and private cloud, and then server growth revenues. And then, we also expanded profitability in hybrid cloud, HP Financial Services, and Intelligent Edge. And we are on track to deliver the server operating margins back to 10% by the exit of Q4. So, all in all, strong performance. And because of the momentum we saw in Q2, the line of sight we have for the second half, the bigger pipeline we exited Q2, we are raising our bottom range of that EPS guidance, the non-GAAP EPS guidance by eight cents. The margins, the operating margins in the server business, down year over year, down sequentially, or quarter over quarter, in the trenches here, what are your teams seeing? What has been making it so challenging in that server market? Well, first of all, like I said, we delivered better than expected. Although we guided down quarter over quarter, and like I said, it will take two to three quarters to get back to that 10%. But it's a combination of things, right? One is what we discussed last quarter with some inventory issues that we had that we had to take care of it, aggressive discounting. But ultimately, it comes down to the mix of the business with AI. And that's why we take a very disciplined approach across the AI ecosystem, if you will. And what I'm really pleased in AI is that this quarter, one-third of our orders came from enterprise, which tend to come with higher margin because there is more software and services attached to that enterprise market. Then you have to pay attention also to working capital. Working capital is very important because in some of these deals, you are deploying a significant amount of capital and there is a time between the capital deployment and the revenue profit recognition. So that's why, it is a technology transition, there is a business transition, and then there's a working capital transition. But I'm pleased with the progress we made in Q2. Definitely was the lowest and although better than we anticipated, and we have our way path back to where we need to be. When I talked to Enrique Lores, who you know, of course, Antonio, he is the CEO of HP. They reported earnings, disappointing quarter from them, sounded cautious on the outlook. Maybe enterprise consumers or businesses are holding back demand or orders because of everything going on in the economy. Heard the same vibe from your competitor over at Dell in the server market. Have you started to see concern from your customers, those business customers, about placing orders given everything that's going on in the world? Well, look, because of a unique portfolio, and we have a very comprehensive portfolio between Networking, and we are excited to see the transaction with Juniper come to a close very soon, and then, you know, the hybrid cloud with GreenLake. Look, GreenLake grew 47% year-over-year driven by the stickiness of that experience through storage and private cloud and all the ancillary services, and then our server business, which is a very large business. We have actually ability to mitigate ups and downs, but I will tell you that the demand during the quarter was steady. Although it was uneven in through the weeks because of the tariff churn that we went through. But month three was very solid month, and like I stated, our pipeline was higher in Q2 than it was in Q1. And so from my vantage point, customers continue to invest in IT. They all realize without IT, you can't compete in any industry you are in. And so that's why I'm more optimistic than just thinking PCs or printers or anything else. We play in the right markets, and we are capturing some of these inflection points we see. Last time I talked to Antonio, you announced a workforce reduction, 5%, 350 million potential cost savings, but on that earnings call last night, I heard a more, maybe more aggressive HPE than I thought. Are you going to go deeper or beyond 350 million in cost savings? Look, our goal is to accelerate growth while we drive structural cost savings, right? We are not only reducing costs but rethinking how we become more agile in the way we operate. So we are on track to achieve our overall 350 million cost savings by the 2026 fiscal year. We made significant progress and we expect that will contribute to the future results. Obviously, actions impact our employees, our team members, and we don't take those lightly. But the reality is that we are focused on anything that will drive operational efficiencies across the company. So aspect of that may be portfolio rationalization, but in the end, it's about process simplification and automation. And look, I think we spoke before, the fact that we have more than 250 use cases where we are doing POCs or already deploying AI. In fact, more than 40 are already in production. And we see the benefits of that across finance, global operations, marketing, as well as services. So that's why we believe there is an opportunity to accelerate that improvement, not just by reducing the workforce, but really becoming nimbler and better at everything we do. You mentioned Juniper, Antonio. That trial begins, I believe, in July, and I've been following this with you every step of the way ever since you announced this transaction. You remain confident you can get this deal done this year. Are there concessions you're willing to make to the administration to get this done? And if so, what are they? Well, look, the trial will start on July 9th, and we believe it's going to last only one to two weeks. That was the direction of the judge. So that's why we are now closer and closer to that timeline. And then the judge may take, you know, two to six weeks to issue the opinion, but that's the court process. And nothing has changed in our confidence to get the deal done. As we said many, many times, we believe the DOJ, this is flawed, the narrow the market in ways that really is not right. And secondly, it's not the reality, by the way. You know, in the United States, when you think about the Wi-Fi, the wireless market, there is at least eight competitors that they all play in every segment of the market. And then, you know, through the documents we have access, we believe we have the right to win this case. But you know, we obviously talk to the DOJ on an ongoing basis, but if they come forward with something that makes sense in terms of a proposal for settlement, that does not change the thesis of the deal and the return to our shareholders, we will consider it. But right now, we haven't seen that. Coming out of this quarter, Antonio, and this, I was surprised by this number, we're just crunching the math, almost 12 billion dollars in cash on your balance sheet. That's about 50% of your market cap. If this Juniper deal does not go through, what's your next course of action to drive shareholder value? Well, look, Brian, the reason why we have that balance sheet is because we are ready to pay for the Juniper deal. And as you recall, I stated that the Juniper deal is not only the fastest way to generate shareholder value, but we are committed to deliver at least 450 million dollars of synergies, which pays for more than the deal itself. So this is a no-brainer from a financial architecture perspective. From a technology perspective, this is totally complementary to our Aruba Networking and the rest of the HPE portfolio, which will allow us to provide a modern, secure AI networking set of product and services. And outside the United States, it's to compete with other vendors, including Huawei, which obviously, they have a larger share because they are not allowed to play in the United States. So from an investor perspective, it's a great deal. From a customer standpoint, it's a great set of technology and talent that we can integrate. But look, we looked at multiple alternatives with our board, it's our fiduciary duty, how we accelerate value, and we landed on this one. But if this doesn't happen, which would be incredibly disappointing, then obviously, we're going to discuss what is coming next, and there is a number of scenarios, including capital return and the like. But we are not prepared to discuss those at this point in time because our focus is closing this transaction and going through the trial. Since we last spoke, Antonio, Elliott Management, of course, a feared activist investor, has reportedly taken a 1.5 billion dollar stake in HPE. Have you been able to meet with them yet to hear what they had in mind or suggesting for your company? Well, Brian, HPE and our board maintain an ongoing dialogue with shareholders, and that has to do with a range of issues, and we always value their constructive input. We don't comment on specific communications that we have had with our shareholders. But as you can imagine, our board is very engaged. But I don't speculate on anything at this point in time. Is an activist helpful or hurtful to what you're trying to do in terms of transform HPE? Look, we welcome all the ideas, you know? And if there are really ideas that we haven't considered in the past, of course, we welcome them. And that's why we always approach every conversation from a constructive standpoint. Look, we have very smart investors, and Elliott, of course, is one of the smartest out there. So we approach this in a constructive way. And so if they have ideas that will accelerate the strategy and the value we are focused on, of course, we'll consider. All right, we'll leave it there for now. HPE CEO Antonio Neri, always good to see you. We'll talk to you soon. Thank you, Brian.
Yahoo
2 days ago
- Business
- Yahoo
HPE earnings: CEO Antonio Neri talks results & Juniper deal
Hewlett Packard Enterprise (HPE) reported fiscal second quarter results that topped Wall Street estimates on both the top and bottom lines. In the video above, HPE CEO Antonio Neri discusses the company's quarter, layoffs, and the Department of Justice's bid to block its acquisition of Juniper (JNPR). To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
