Hewlett Packard Enterprise (NYSE:HPE) reported third-quarter financial results that showcased a significant acceleration in top-line growth, fueled by robust demand for its "as-a-service" offerings and high-performance computing.
The Texas-based technology firm posted revenue of $9.1 billion for the period ended July 31, 2025, representing a 19% increase from the prior-year period.
A standout metric in the report was the company’s Annualized Revenue Run-rate (ARR), which reached $3.1 billion.
This reflects a 77% increase in actual dollars compared to the same quarter last year, signaling a rapid shift in the company’s business model toward recurring, subscription-based revenue.
Despite the strong revenue performance, the company faced some pressure on its bottom line.
GAAP gross margins for the quarter stood at 29.2%, a decrease of 240 basis points year-over-year.
On a non-GAAP basis, gross margins were 29.9%, down 190 basis points from the prior-year period.
However, management noted that margins improved sequentially by 50 to 80 basis points, suggesting that the company is successfully navigating supply chain and product mix challenges.
Diluted net earnings per share (EPS) on a GAAP basis was $0.21, down from $0.38 in the previous year.
Non-GAAP EPS came in at $0.44, which fell within the company’s previously issued outlook range of $0.40 to $0.45.
The year-over-year decline in earnings reflects the ongoing investments in research and development and the costs associated with scaling its cloud infrastructure.
Meanwhile, HPE’s cash generation remained a bright spot in the quarterly report.
Cash flow from operations rose to $1.3 billion, an increase of $151 million compared to the prior-year period.
Free cash flow reached $790 million, representing a $121 million increase year-over-year.