Hewlett Packard Enterprise saw server revenue surge in a mixed first quarter, but the company cut its outlook for the second quarter and fiscal year.
HPE reported first quarter earnings of 44 cents a share on revenue of $7.9 billion, up 16% from a year ago. Non-GAAP earnings were 49 cents a share, which was within HPE's previous guidance but a penny short of estimates.
Server revenue for HPE was $4.3 billion, up 29% from a year ago. Intelligent edge revenue was $1.1 billion, down 5%. Hybrid cloud revenue was $1.4 billion, up 10% from a year ago.
CEO Antonio Neri said the company's new products were "met with customer enthusiasm," but noted "we could have executed better in some areas."
HPE CFO Marie Myers said the company is cutting costs.
As for the outlook, HPE projected second quarter revenue between $7.2 billion and $7.6 billion with non-GAAP earnings of 28 cents a share to 34 cents a share. Wall Street was expecting second quarter non-GAAP earnings 50 cents a share on revenue of $7.93 billion.
For fiscal 2025, HPE projected revenue growth of 7% to 11% with non-GAAP earnings of $1.70 a share to $1.90 a share relative to Wall Street estimates of $2.13 a share.
By the numbers:
- HPE said it had $1.6 billion in new AI systems orders and AI systems backlog was up 29% sequentially to $3.1 billion.
- Operating profit margin in the service business was 8.1% due to "aggressive competitive discounting, executing challenges in inventory costs and transition."
- HPE GreenLake cloud ended the quarter with 41,000 customers.
HPE said it still is planning to close the Juniper Networks purchase and noted that its lawsuit vs. the US Department of Justice is scheduled for July 9.
