HPE FY25 Deep Dive: Juniper Drives Revenue, Impairments Cause Net Loss

For investors and technology professionals tracking the enterprise infrastructure market, the latest financial results from Hewlett Packard Enterprise (HPE) present a narrative of aggressive expansion coupled with significant accounting adjustments. HPE, a company spun off from the original Hewlett-Packard to focus on servers, storage, and networking, is currently navigating a major strategic shift toward AI-native networking.

We are going to unpack the income statement from their latest 10-K filing for the fiscal year ended October 31, 2025. The headline numbers present a dichotomy: while revenue surged, the company swung from a multi-billion dollar profit in 2024 to a net loss in 2025.

To visualize how HPE's top-line revenue filters down through costs and expenses to the bottom line, refer to the flow diagram below:

Note: In the diagram above, the "Corporate Investments and Other" category includes revenue from non-core businesses, specifically the Communications Technology Group (CTG), which HPE divested in December 2024.

Revenue Surge Powered by Networking and AI

HPE reported total net revenue of $34.3 billion, marking a robust 13.8% increase from the $30.1 billion reported in the prior fiscal year. This growth was not evenly distributed across the company but was driven by specific strategic bets.

The most dramatic movement occurred in the Networking segment. Revenue here jumped 51.1% year-over-year to $6.85 billion. This surge is largely attributable to the acquisition of Juniper Networks, a major deal that closed in July 2025. By integrating Juniper, a leader in AI-native networking, HPE is positioning itself to capture higher margins than those typically found in legacy hardware.

Simultaneously, the Server segment—HPE's largest revenue engine—grew 10.2% to $17.7 billion. This growth reflects the intense industry-wide demand for compute infrastructure capable of handling Artificial Intelligence workloads.

Unpacking the Net Loss: Impairments and Integration

Despite the double-digit revenue growth, HPE reported a Net Loss of $59 million attributable to common stockholders, a sharp reversal from the $2.55 billion net earnings recorded in fiscal 2024.

The primary driver of this loss was a massive increase in operating expenses, specifically regarding asset impairments.

1. Impairment Charges ($1.62 billion): The income statement includes a substantial line item for impairment charges. The vast majority of this—$1.58 billion—was specifically a Goodwill impairment related to the Hybrid Cloud reporting unit.

   • Financial Concept: Goodwill is an accounting metric representing the premium a company pays for an acquisition over the fair value of the acquired company's identifiable net assets. These net assets include both tangible items (like factories) and identifiable intangible assets (like patents or customer lists). When a reporting unit underperforms expectations, companies must write down this value. Essentially, HPE acknowledged that the past premiums paid for its Hybrid Cloud assets are no longer justified by their current fair value.
2. Acquisition & Disposition Charges ($458 million): Mergers of the scale of Juniper Networks incur significant one-time costs. These charges, which cover transaction and integration expenses, more than doubled compared to 2024.

Margin Compression

While revenue grew, the cost of generating that revenue grew faster. The Gross Profit Margin declined from 32.8% in 2024 to 30.3% in 2025. Management attributes this largely to a shift in product mix toward AI servers, which currently command lower margins due to high component costs, as well as the amortization of intangible assets associated with recent acquisitions.

Combined with the impairment charges and increased interest expenses related to debt raised for the Juniper deal, HPE’s operations resulted in a GAAP operating loss of $(437) million.

Conclusion

Fiscal 2025 represents a transformative period for Hewlett Packard Enterprise. The company is effectively trading short-term GAAP profitability for long-term strategic positioning. By swallowing the pill of heavy impairment charges and integration costs now, HPE aims to pivot its portfolio toward the high-growth areas of AI networking and hybrid cloud.

The challenge for HPE moving forward will be the successful integration of Juniper Networks. In a competitive landscape dominated by giants like Cisco and Dell Technologies, HPE must demonstrate that its new, larger networking footprint can deliver the synergies and margin expansion promised to investors.