HPE Q3 2025: Juniper Acquisition Fuels Revenue Surge but Squeezes Profits

Hewlett Packard Enterprise (HPE) is a major player in the world of enterprise technology, providing servers, storage, networking, and cloud services to businesses globally. To understand its current health and strategic direction, there's no better place to look than its quarterly financial filings. We're diving into HPE's latest Form 10-Q, filed for the third quarter of fiscal year 2025, to break down how the company is performing.

The headline numbers for the three months ending July 31, 2025, show a company in major transition. Revenue surged an impressive 18.5% year-over-year to $9.1 billion. However, this top-line growth didn't translate to the bottom line, as net earnings attributable to common stockholders fell by 46% to $276 million. Let's unpack the key drivers behind these figures.

A Visual Breakdown of HPE's Income

To see how HPE's revenue is generated and where the money goes, the following flow diagram visualizes the company's income statement for the quarter.

The Juniper Networks Effect

The single biggest story of the quarter is HPE's massive acquisition of networking giant Juniper Networks, which closed on July 2, 2025. This $13.6 billion deal is a game-changer for HPE, and its impact is immediately visible.

• Networking Supercharged: The Networking segment's revenue skyrocketed by 54.3% to $1.7 billion. The filing explicitly states this was "primarily due to the Merger." In just one month, the newly acquired Juniper business contributed $480 million in revenue. This move positions HPE as a more formidable competitor to industry leaders like Cisco.
• Acquisition Costs: Such a large acquisition comes with significant costs. Amortization of intangible assets more than doubled to $126 million for the quarter. Additionally, "Acquisition, disposition and other charges" jumped to $181 million from $42 million in the prior year. These expenses were a major factor in the quarter's reduced profitability.

Segment Performance and a Look at the Bigger Picture

Beyond networking, other segments showed varied results:

• Server: This remains HPE's largest segment, with revenue growing a healthy 16.1% to $4.9 billion. This was driven by higher average unit prices, likely reflecting strong demand for high-performance servers needed for AI workloads. However, the segment's operating margin fell from 10.8% to 6.4%, suggesting higher costs or a shift in product mix.
• Hybrid Cloud: Revenue grew 12.0% to $1.5 billion, with operating margin showing a modest improvement. This segment, which includes HPE's storage and software platforms, is key to its cloud strategy.

It's also crucial to look at the nine-month picture to understand a significant event that didn't affect Q3 directly but looms large over the fiscal year. For the nine months ended July 31, 2025, HPE reported a net loss of $205 million. This was almost entirely due to a $1.36 billion goodwill impairment charge taken earlier in the year within the Hybrid Cloud segment. A goodwill impairment is a non-cash charge that occurs when the market value of an acquired asset drops below its recorded value on the balance sheet, often reflecting changing market conditions or performance expectations.

A Transformative Period

HPE's third-quarter results paint a clear picture of a company undergoing a bold transformation. The acquisition of Juniper Networks has instantly boosted its scale and competitive standing in the high-margin networking market. While this strategic move has brought immediate revenue growth, it has also come with substantial short-term costs that have squeezed profits.

The challenge ahead for HPE is to successfully integrate Juniper, manage its increased debt load, and turn its expanded revenue base into sustained profit growth. Investors will be watching closely to see if the company can realize the long-term benefits of this transformative acquisition while also improving margins in its core Server and Hybrid Cloud businesses.