Total Revenue

+16% (from $6,755 million in Q1 FY2024 to $7,854 million in Q1 FY2025)

Driven by strong Server segment performance with higher average unit prices (AUPs) and robust geographic revenue growth—Americas up 21%, EMEA up 10%, and Asia Pacific & Japan up 17%—which built on improvements from Q1 FY2024. " " " "

Products Revenue

+26% (from $3,956 million to $4,970 million)

Higher demand and pricing in the Server segment boosted products revenue, overcoming previous period challenges such as competitive pricing pressure and weaker product mix in Q1 FY2024. " "

Services Revenue

+2% (from $2,643 million to $2,698 million)

Stable growth in as-a-Service and attached support services contributed to a modest increase, reflecting a gradual recovery compared to Q1 FY2024 where service demand remained largely steady. " "

Financing Income

+19% (from $156 million to $186 million)

Improved financing income resulted from higher finance leases in a higher interest rate environment and favorable currency fluctuations—a trend that continued from FY2024 into Q1 FY2025. " "

Americas Revenue

+21% (from $2,801 million to $3,392 million)

Robust U.S. demand and higher AUPs, especially in the Server segment, spurred a strong increase relative to the lower base in Q1 FY2024, leading to a 21% rise in revenues from the Americas. " "

EMEA Revenue

+10% (from $2,434 million to $2,680 million)

Moderate regional recovery and improved customer demand in Europe, the Middle East, and Africa helped drive a 10% increase, building on the modest performance seen in Q1 FY2024. " "

Asia Pacific & Japan Revenue

+17% (from $1,520 million to $1,782 million)

Increased unit volume and improved pricing in the region contributed to a 17% revenue rise, overcoming previous period challenges and reflecting improved market conditions in Q1 FY2025 relative to Q1 FY2024. " "

Net Earnings Attributable to HPE

+62% (from $387 million to $627 million)

A significant jump driven by a $244 million gain on the sale of a business combined with net revenue growth and efficient cost management contributed to a 62% surge in net earnings compared to Q1 FY2024. " "

EPS (Basic and Diluted)

+50% (Basic EPS from $0.30 to $0.45; similar for Diluted EPS)

EPS growth was largely due to the improved net earnings from business sale gains and revenue enhancements, despite margin pressures from higher operating costs, resulting in a 50% increase compared to Q1 FY2024. " "

Operating Earnings

-17% (from $525 million to $433 million)

Operating earnings declined by 17% as rising cost pressures, competitive pricing challenges, and a higher cost structure eroded margins—even as revenue increased—highlighting issues that persisted from Q1 FY2024. " "

Cash and Cash Equivalents

-9.6% (from $14,846 million to $13,431 million)

Lower cash balances were due to increased outflows from operating, investing, and financing activities—including higher working capital needs and significant financing cash outflows—contrasting with the stronger cash position at the end of Q1 FY2024. " "

Total Stockholders’ Equity

+1.6% (from $24,880 million to $25,282 million)

Modest equity growth resulted from strong net earnings and other comprehensive income, which partially offset reductions due to share repurchases and dividend outflows, continuing the trend of gradual improvement seen at the close of Q1 FY2024. " "

GAAP Diluted EPS (Quarterly)

Q2 2025

$0.31 to $0.36 "

$0.08 to $0.14 "

lowered

Non-GAAP Diluted EPS (Quarterly)

Q2 2025

$0.47 to $0.52 "

$0.28 to $0.34 "

lowered

Servers Operating Margin

Q2 2025

10% to 11% "

mid-single digits "

lowered

Hybrid Cloud Operating Margin

Q2 2025

mid-single-digit range "

mid-single digits "

no change

Networking Operating Margin

Q2 2025

low 20% range "

mid-20% range "

raised

AI Systems Growth and Order Pipeline

Q3 2024 and Q2 2024 calls emphasized robust growth—with sequentially increasing revenues (e.g., $1.3B in Q3 2024) and a strong, “multiples of backlog” order pipeline. " " "

Q1 2025 highlighted $1.6B in new AI system orders, a robust $3.1B backlog, and accelerated enterprise adoption (including agentic AI models). " " "

Continued strong momentum despite minor sequential headwinds.

Enterprise AI Demand and Expanded Pipeline

Earlier calls noted enterprise orders nearly tripling YOY and a doubling of the pipeline sequentially, driven by generative AI experiments and increased sovereign engagements. " " "

Q1 2025 reported a 40% YOY increase in enterprise AI orders and broad interest from sovereign customers validating diverse use cases via Private Cloud AI. "

Persistent expansion with enhanced diversification across customer segments.

Traditional Server Business Performance and Margin Dynamics

Q3 2024 and Q2 2024 highlighted healthy revenue growth driven by Gen11 products and steady server margins (10.8% in Q3 and 11% in Q2), reflecting disciplined cost management and strong order performance. " " "

Q1 2025 disclosed significant pricing challenges, aggressive discounting, and inventory valuation issues that drove the server operating margin down to 8.1%, falling short of guidance. " "

A shift from stable performance to margin deterioration due to pricing and inventory constraints.

Margin Management, Cost Efficiency, and Profitability Improvement

Earlier periods reported stable or improving margins with disciplined cost controls and modest operating expense reductions (non‐GAAP margins improving and costs trimmed). " " "

Q1 2025 revealed sharper margin compression—with non‐GAAP gross margin at 29.4% and acknowledged the need for a robust $350M cost efficiency program alongside corrective pricing actions. " "

Increasing emphasis on aggressive cost management to counteract margin compression.

Deferred Revenue Recognition for AI Services

Q3 2024 mentioned that much of the services revenue for AI systems is deferred through maintenance contracts, contributing to gradual margin improvements. "

Q1 2025 did not feature any specific discussion on deferred revenue recognition for AI services.

Topic no longer emphasized in the current period.

Pricing Challenges and Impact from AI GPU Transitions

Q2 2024 discussed pricing discipline with improvements such as better lead times for NVIDIA H100 GPUs, while Q3 2024 focused on maintaining pricing discipline amid competitive pressures. " "

Q1 2025 explicitly highlighted unanticipated pricing challenges, aggressive discounting in traditional compute, and heightened impacts from transitioning to new GPU generations, including management of legacy inventory. " " "

Heightened concern with increased emphasis on pricing pressures and GPU transition impacts.

Competitive Market Dynamics and Execution Discipline

Q3 2024 and Q2 2024 called out competitive market pressures but stressed disciplined execution, stable margins, and strong cost control. " "

Q1 2025 acknowledged aggressive market competition with execution missteps—prompting corrective actions like a revised discount framework and tighter deal mix scrutiny. " "

Growing focus on corrective discipline to counter intensified competitive pressures.

Direct Liquid Cooling Technology and Manufacturing Innovation

Q3 2024 and Q2 2024 emphasized HPE’s strong expertise in direct liquid cooling, noting large-scale deployments (e.g., DOE supercomputers) and a vast patent portfolio. " " "

Q1 2025 introduced the shipment of its first 100% fanless direct liquid cooling solution—a significant new milestone highlighting advanced manufacturing capabilities. "

Continued strategic focus with a new milestone in product innovation.

Emerging AI Market Segments

Q2 2024 and Q3 2024 outlined early-stage engagements with sovereign AI projects (e.g., Bristol University, Leibniz Centre) and highlighted opportunities among service providers and model builders. " "

Q1 2025 further emphasized emerging segments with substantial orders from service providers (70% of new orders) and robust sovereign interest in deploying AI systems and supercomputing solutions. " "

Growing emphasis and market expansion in diversified emerging AI segments.

Declining Emphasis on Intelligent Edge Revenues

Q3 2024 and Q2 2024 reported declining Intelligent Edge revenues (down 23% YOY in Q3 and 19% YOY in Q2) amid tough annual comparisons and soft demand. " "

Q1 2025 did not indicate any decline; instead, the focus was on positive performance and sequential revenue growth in other segments. " "

Topic is no longer discussed, suggesting a potential strategic shift away from Intelligent Edge focus.

Free Cash Flow Decline and Financial Flexibility Concerns

Q2 2024 showed strong free cash flow generation (e.g., $610M) and confidence in the full-year target, while Q3 2024 noted a seasonal downturn with expectations of recovery. " "

Q1 2025 revealed significant financial stress with negative free cash flow of $877M driven by working capital challenges and AI inventory buildup, raising concerns about financial flexibility. " "

Significant deterioration with emerging cash flow issues and heightened financial flexibility concerns.