This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 50

See which workplaces made this year's list.

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Employees say:"Our culture is top notch, and our people make this a great place to work. I love that on my team we can bring new ideas to the table, have a seat at the table, and know with confidence that our ideas will be considered. I am fully trusted to get my work done and my leader is available any time I need her. I also love the frequency of the recognition within our team. It keeps our team motivated and inspired."

Best Large Workplaces in Technology

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 116,000 U.S. employees.

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Employees say:"HPE is a company that prioritizes employee retention in a way that I've found to be very rare, especially in tech. There is a real focus on ensuring that people who work here are happy and fulfilled in their roles. There are also opportunities for people to find other roles within HPE if they are unhappy in their current role, instead of looking for a job at another company. I think this improves not only our company culture, but also the quality of our products/services. There is an amazing amount of expertise that is able to build when people stick around for a long time. As a newer employee, I really value the knowledge that the long-time members of my team have."

25 Best Large Workplaces in Texas

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The top companies on our list have one thing in common: Staff largely trust leadership to see them as well-rounded people and reward them for a job well done.

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Employees say: "My upper-level management is exceptionally good, especially my immediate manager. The entire team is extremely supportive and invested in you learning and performing well. It is one of the healthiest work environments I have ever worked in. I would work here just for that reason alone."

Fortune 100 Best Companies to Work For

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

World's Most Admired Companies

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Employees say:"What is truly exemplary is the 6 months of parental leave for having a child, but what's even more special is the recipients include adoptive parents. In addition, the huge benefit for those struggling with fertility and/or adoption...HPE really cares about its teams families."

Best Large Workplaces for Parents

Hewlett Packard Enterprise

Employees say:"HPE does an excellent job with Employee Resource Groups to help build the culture. Executives support the initiatives and the ERG leaders host events that make everyone feel welcome. I share our activities on social media and my friends are amazed at all we do for our employees at HPE."

Industries included in the sector are computers, internet services, IT services, semiconductors, and software companies.

Fortune Sector Leaders: Technology

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 95,000 U.S. employees.

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Employees say:"The wellness Fridays, innovation days, and the team member appreciation day are taken seriously and are nice benefits. The innovation days help employees to expand their knowledge toolkits and attack new problems and find new ways of doing things."

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

Creating a more empathetic workplace looks like staying loyal to workers, emphasizing D&I initiatives, and paying well.

100 Best Companies 2024-Hewlett Packard Enterprise

In 2015, when HPE was created in the wake of Hewlett-Packard’s separation, it made ambitious DEI goals a key part of its agenda. In February, it earned the top spot in Just Capital’s annual ranking, which takes into account social factors such as paying a fair living wage, creating American jobs, providing benefits to ensure work-life balance, and minimizing pollution. HPE was also dubbed the 15th-best workplace for parents last year, owing in large part to its flexible remote-work policies as well as its paid gender-neutral parental leave, bereavement leave after a miscarriage, and reimbursement for fertility expenses. &nbsp;HPE’s remote-work model, which it rolled out during the pandemic, reimagined offices as cultural and collaboration hubs, with workspaces reflecting HPE’s hybrid vision—equipped with more meeting spaces and hybrid tech. Approximately 78% of team members say they are pleased with the model. And nearly 87% say they are happy with the connectivity tools that bring team members together. Among hybrid staff, 84% say their work environment enables them to perform their roles more effectively.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

Building a culture of trust and transparency is essential to help everyone thrive, especially in rocky economic times.

100 BEST COMPANIES 2023-HPE

IT firm Hewlett Packard emphasizes the importance of transparency between employees and management. 
<ul> 
 	<li>So far more than 3,500 employees have taken part in Mystery Coffee, a program where team members connect with others from around the globe for virtual one-on-one coffee breaks.</li> 
 	<li>Employee wellness is a top priority at HPE, and team members worldwide can leave work three hours early on designated Wellness Fridays to spend time focused on their personal well-being.</li> 
 	<li>Staff receive financial wellness help, too, with tools enabling them to assess their current money situation and receive insights on how to budget, manage debt, build savings, and protect their finances.</li> 
 	<li>“HPE encourages employees to speak up, innovate, collaborate, be empowered, own our development, et cetera,” noted one employee.</li> 
</ul>

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 100,000 U.S. employees.

GPTW Texas 2023-Hewlett Packard Enterprise

Employees say: 
 
"HPE encourages employees to speak up, innovate, collaborate, be empowered, own your development, etc. HPE is a place of unlimited opportunities to grow and contribute, and provides a sense of belonging of a family."

GPTW 2023 Best Workplaces Tech LargeHewlett Packard Enterprise Company_1

Employees say: 
 
"Top executives care for employees, encourage and provide opportunities for work-life balance, and celebrate every ethnicity and culture. That creates a great all-inclusive culture, which is the best thing this company offers."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

When it comes to supporting employees, flexibility, diversity, and a few extra paid days off go a long way.

100 Best 2022-Hewlett Packard Enterprise

Hewlett Packard Enterprise—which split from Hewlett-Packard in 2015 and focuses on information technology—saw order growth up 20% during the first fiscal quarter of 2022 as many U.S. companies continued to bring employees back to the office. Yet internally HPE has doubled down on the mental and emotional support offered to employees and focused on rolling out benefits like the Work That Fits Your Life program. As part of the initiative, rolled out in 2019, employees get access to three hours of paid time off one Friday a month and six full Fridays off each summer.

A key trait that shines through for company after company on this year's list is all-around fairness.

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Employees say: 
 
“Through almost 25 years of working here I've been able to balance my work and life. HPE has allowed me to be there for my children, attend field trips, and volunteer in classrooms throughout the years. When my parents get sick, I am able to balance my work and tend to them. I honestly don't know what other company would allow me to do this. I am so grateful to HPE and always tell people how much I LOVE MY JOB AND COMPANY! My colleagues are not just my colleagues but my family! Now with being an Edge worker, it's only made my work life so much easier. Thank you HPE!!!” 
 
Read the Great Place to Work review .

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Boards 2022  Hewlett Packard Enterprise

In 2014, the old-guard Silicon Valley giant Hewlett-Packard split into two companies, HP Inc. and Hewlett Packard Enterprise. Since then, both have found strong footing in corporate governance: Both HPE and HP made this list. (HP is No. 9.) 
 
That fact signals a remarkable turnaround. A little over a decade ago, Hewlett-Packard’s board endured multiple controversies involving proxy fights, <a href="https://www.businessinsider.com/a-brief-history-of-hps-totally-dysfunctional-board-2011-9#a-couple-weeks-later-fiorina-was-fired-4">unusual CEO transitions</a>, and a scandal over surveillance of colleagues and journalists that led to the <a href="https://money.cnn.com/2011/01/20/technology/HP_board_of_directors/index.htm#:~:text=The%20long%20and%20winding%20Hurd,marketing%20contractor%20for%20the%20company.">departure of four directors</a> in 2011. 
 
With those issues far in the past, HPE’s board earned the No. 2 spot on this list thanks to strengths in board expertise, gender equality, and board independence, among other criteria. The company specializes in enterprise information tech; it has recently seen particularly robust growth from its Intelligent Edge division, a data analytics and business intelligence platform. 
 
HPE’s board is chaired by Patricia Russo, former CEO of Alcatel-Lucent, the communications company. Russo is also a director at Merck, General Motors, and the private equity firm KKR. 
 
HPE’s directors’ careers reflect a wide range of expertise. Daniel Ammann is a former president of General Motors, as well as its former CFO, and until recently was CEO of GM Cruise LLC, a subsidiary of GM that focuses on autonomous vehicles. Pamela Carter is a former executive at Cummins, a machinery design and manufacturing company, where she was a business unit leader and general counsel; she chairs HPE’s HR and compensation committee.  
 
George R. Kurtz started his career at PwC and later founded a tech company that was acquired by McAfee. Mary Agnes Wilderotter chairs the audit committee and is the former CEO of Frontier Communications. 
 
In the non-CEO realm, Raymond Ozzie is a former chief software architect at Microsoft and a fellow of the Computer History Museum; Gary M. Reiner is the former chief information officer at General Electric; and Raymond Lane is the former COO of Oracle and partner emeritus at the famed venture capital firm Kleiner Perkins.

Fortune Modern Board 25

GPTW Information Technology Large 2022-Hewlett Packard Enterprise Company

Employees say: 
 
“The ability to make employees feel like a significant part of the overall team. In a company this size it's hard for employees to feel as if they make a difference. At HPE they go the extra mile to make sure that you know your contributions are critical for the company's success.”

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

Hewlett Packard Enterprise was founded in 2015 after splitting from the Hewlett-Packard company. Specializing in business information technology, the company offers cloud and infrastructure services to provide data storage, security, and network connectivity to its customers.

Fortune Global 500

Caring leaders at the Best Workplaces in Technology have been preparing their companies to thrive as the business world emerges from the COVID downturn.

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Employees say: 
“I am appreciative of the open line of communication our CEO and executive committee have kept in place with the entire company, especially during the COVID-19 shelter-in-place.” 
Read the Great Place to Work review .

These companies empower employees to bring their whole selves to work, prioritize their well-being, and grow in their careers.

Best Workplaces Women 2020-Hewlett Packard Enterprise Company

Employees say: 
 
“Our company is committed to our wellness and has provided many employee resources for financial, physical, emotional wellness. For example, every month we can leave several hours early to take care of ourselves on what's called a Wellness Friday.”

25 Best Large Workplaces in the Bay Area

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-106-Hewlett Packard Enterprise

We surveyed tens of thousands of employees to create this list of millennials’ favorite workplaces.

Best Large Workplaces Millennials 2021-Hewlett-Packard-Enterprise

Employees say: 
 
“Management is very supportive about growing and expanding your knowledge. Whenever I have shown interest in working on areas outside of my expertise, management has always been supportive, which I really appreciate.”

100 Best Large Workplaces for Millennials

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-431-Hewlett-Packard-Enterprise

Hewlett Packard Enterprise is a provider of various technologies including servers, storage, and networking equipment. Like many hardware companies, HPE has experienced pandemic-related supply chain problems in 2020, causing the company in March to walk back predictions that revenues would increase this year.

The companies on this year's list make a conscious effort to be supportive, inclusive workplaces.

Employees say: 
 
“While my husband was deployed, I was raising three kids with no close family. HPE has supported me for doctor appointments, sick kids, and school events. It was empowering to know that I could be a career-driven mom. ”

100 Best Large Workplaces for Women

This year's Fortune 500 marks the 66th running of the list.

F500-2020-109-HP

Hewlett Packard Enterprise is a provider of various technologies including servers, storage, and networking.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

Key Financials (last Fiscal Year)

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Total Stockholder Equity ($M)

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Company Info

Industry

Industry Vertical

Founded

City

Sites

Worldwide Employees

Total Worldwide [including U.S.] Revenue in the Latest Fiscal Year

Web Address

Date info provided (companies may opt to keep some data confidential)

Best Workplaces For Parents

Sector

Current All-Star Rank

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Industry Rank

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Overall Score

Innovation

People Management

Use of Corporate Assets

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Benefits

Subsidized childcare

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Option to work remotely

Minimum requirement in-office attendance (days per week)

Mental health coverage

Free mental health sessions (per year)

Free backup childcare time off (days)

Maximum $ amount covered for fertility services

Fully paid maternal leave (days)

Fully paid paternal leave (days)

Fully paid adoptive leave (days)

Maternal leave in addition to regular time off (days)

Paid days off for volunteering

Earnings Per Share (last Fiscal Year)

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Best Workplaces In Texas

Best Workplaces In Technology

Hewlett Packard Enterprise focuses on enterprise IT solutions for customers across the Americas, Europe, the Middle East, and the Asia-Pacific region. The company delivers products and services related to cloud computing, servers, storage, networking, artificial intelligence, and more. HPE has developed several of the fastest supercomputers in the world. With origins tracing back to 1939, the company was spun off from PC manufacturer HP in 2015 and has since expanded through several acquisitions.

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Hewlett Packard Enterprise (HPE): Company Profile, Stock Price, News, Rankings

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hewlett packard enterprise

Good afternoon, and welcome to the First Quarter Fiscal twenty twenty five Hewlett Packard Enterprise Earnings Conference Call. At this time, all participants will be in a listen only mode. We will be facilitating a question and answer session towards the end of the conference. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Paul Glazer, Head of Investor Relations.

Good afternoon. I am Paul Glaser, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal twenty twenty five first quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer and Marie Myers, HPE's Chief Financial Officer. Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes.

We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations webpage. Elements of the financial information referenced on this call are forward looking and are based on our best view of the world and our business as we see them today. HPE assumes no obligation and does not intend to update any such forward looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE's quarterly report on Form 10 Q for the fiscal quarter ended 01/31/2025. For more detailed information, please see the disclaimers on the earnings materials relating to forward looking statements that involve risks, uncertainties, and assumptions.

Please refer to HPE's filings with the SEC for a discussion of these risks. For financial information we have expressed on a non GAAP basis, we have provided reconciliations to the comparable GAAP information on our website. Please refer to the tables and slide presentation accompanying today's earnings release on our website for details. Throughout this conference call, all revenue growth rates, unless noted otherwise, are presented on a year over year basis and adjusted to exclude the impact of currency. Finally, Antonio and Marie will reference our earnings presentation in their prepared comments.

With that, let me turn it over to Antonio.

Thank you, Paul. Good afternoon, everyone. Before I share my comments on our Q1 performance, I would like to start by addressing the recent decision of the Department adjusted to file a lawsuit seeking to block our proposed acquisition of Juniper Networks. The DOJ's analysis of the market is fundamentally flawed. We strongly believe this transaction will positively change the dynamics in the networking market by enhancing competition.

HPE and Juniper remain fully committed to the transaction, which we expect will deliver at least $450,000,000 in gross annual run rate synergies to shareholders within three years of the deal closing. The court has set a trial date of July 9. We believe we have a compelling case and expect to be able to close the transaction before the end of fiscal twenty twenty five. As you know, the U. S.

Administration enacted tariffs on imports from Mexico and Canada, with increased tariffs on imports from China beginning March 4. In anticipation of this decision, we have been evaluating numerous scenarios and mitigation strategies since December to assess the potential net impact. We intend to leverage our global supply chain to mitigate aspects of the expected impact with pricing adjustments also expected. Pending further announcement from the U. S.

Administration, our outlook for the balance of the year reflects our best estimate of the net impact from this tariff policy. Marie will provide more details shortly. Turning to our Q1 performance, we delivered against our commitments for the quarter including achieving strong double digit year over year revenue growth. However, we could have executed better. While our Q1 operating profit outlook anticipated increased pressure on our server operating margins, three factors impacted our profitability more than expected.

Near the end of the quarter, we saw that our traditional server pricing did not adequately account for the evaluation of our inventory, which resulted in incremental server margin pressure. Higher discounts due to aggressive pricing competition in the market compounded this issue. And finally, our server margins were further pressured by the higher than normal AI inventory caused by the rapid transition of demand to next generation GPUs and related components. We have already implemented aggressive actions to address these issues and are already seeing the positive effects of doing so. However, we do expect to see continued pressure over the next one to two quarters before we realize the full benefit of these measures including expected higher AI revenue conversion.

Looking ahead, we see additional opportunities to take incremental corporate cost actions to further strengthen our financial profile. We plan to reduce our employee base 5% over the next twelve to eighteen months through the reduction of approximately 2,500 positions and expected attrition. Doing so will better align our cost structure to our business mix and long term strategy. These are not easy decisions to make as they directly affect the life of our team members. We will treat all those transitions with the highest level of care and compassion.

I will touch on a few highlights from the quarter and Marie will go through each segment in greater financial detail. At the company level, we delivered revenue and diluted net earnings per share consistent with our outlook. Q1 revenue growth of 17%, a near record was in line with our mid teens growth expectations. This was the fourth consecutive quarter of improved year over year top line growth driven by our server business, which grew revenue 30% year over year and hybrid cloud, which was up 11% year over year. Non GAAP operating profit dollars in the quarter were flat year over year.

That resulted in non GAAP diluted net earnings per share of $0.49 consistent with our Q1 outlook range. We are pleased by the performance of Intelligent Edge, which recorded 2% quarter over quarter revenue growth, the third consecutive quarter of sequential revenue growth for the segment. With the market continuing its positive path to recovery, we delivered double digit year over year orders growth across all key geographies and key products, including campus switching. During the quarter, HP Aruba networking attracted new large enterprise logos, underscoring the confidence our customers in our strategy, product portfolio and roadmap. Hybrid cloud grew 11% year over year, although down sequentially following an exceptional Q4.

The growth shows our storage and GreenLake cloud product strategies are working. Demand for our Alletra storage MP was up triple digits year over year and now represents greater than 50% of our IP block product orders. GreenLake remains a key differentiator, enabling HP to capture new enterprise hybrid cloud and AI workloads and data. We finished Q1 with more than 41,000 enterprises using HP GreenLake Cloud. And AIR surpassed $2,000,000,000 for the first time, up 46% year over year.

In AI, we continue to see strong demand from model builders and service providers. We booked $1,600,000,000 in new AI system orders in the quarter, bringing our cumulative AI system orders to $8,300,000,000 The Blackwall GPU generation of products represented approximately 70% of our new order intake in Q1. We exited the quarter with $3,100,000,000 in AI systems backlog, up 29% quarter over quarter and our pipeline remains multiples of our backlog. On the revenue front, we delivered $900,000,000 in AI systems revenue in Q1. As we have said before, the AI systems business tends to be lumpy as large deals take time to convert.

We expect significantly higher AI revenue conversion in the second half of twenty twenty five, driven by the transition to Blackboard GPUs. We're proud to have achieved a new milestone three weeks ago, when we announced the shipment of our first NVIDIA GB200 systems. In the enterprise AI market, we saw an accelerated adoption of a variety of AI models including agentic AI approaches in specific market verticals and workflows. In Q1, our enterprise AI orders increased 40% year over year, driven by higher conversion from the proof of concept phase. An example is KDDI, who in partnership with HPE designed and implemented a platform which will be used both internally and externally to develop, train and tune Japanese generative AI models for domain specific use cases.

Our enterprise AI pipeline continues to grow with customers continue to validate their use cases on our private cloud AI solution powered by GreenLake Cloud. We see broad and increased interest from Sovereign customers globally. Sovereign customers are deploying both AI systems for the development of sovereign generative AI large language models and supercomputing systems for simulation and modeling using AI. Recently, the Leibniz Supercomputer Center at the Bavarian Academy of Sciences Humanities selected HP to build their new supercomputer called Blue Lion. It features HP innovations including our industry first one hundred percent fanless direct liquid cooling infrastructure with our slingshot networking fabric.

Lastly, HP and Accenture are collaborating on a new agentic AI solution for procurement powered by Accenture AI Refinery with our private cloud AI offering. This new solution will be deployed across HPE's category and sourcing strategies, spend management, strategic relationship analysis and contract obligation management. Shifting to the innovation front, I am proud of our new and differentiated products and services we continue to bring to market to fuel the success of our customers and growth of our business. For example, in Intelligent Edge, we announced new vertical solutions for retailers to accelerate security first AI driven networks. These solutions provide Intelligent Edge processing for IoT data in real time, improving security, operational efficiencies, and customer experiences for retailers.

In hybrid cloud, last November, we introduced a new KVM based HPE VM essential software offerings. Hybrid cloud orchestration and on premises infrastructure virtualizations are tremendous growth opportunities for HPE. Our new VM essentials enables customers to deploy a more cost effective virtualization solution than VMware with full hybrid cloud orchestration. Since its launch, we have had hundreds of customers in trials demonstrating strong market interest and excitement. We are in the process of integrating our VM Essentials into our private cloud offerings.

We also continue to offer it as a standalone software on HPE and multi vendor infrastructure. In storage, we are very pleased with our triple digits year over year orders growth in our Alletra MP portfolio. This validates our strategy to provide customers a disaggregated data infrastructure with subscription based hybrid cloud native services. Alletra MP now offers block and fast objects, supporting a variety of data workloads, including AI. This reduces customers' need for multiple infrastructure purchases and management.

And finally, in our server business, two weeks ago we launched a new ProLiant Gen12 server platform with our next generation of high low quantum resistant security enclave and direct liquid cooling support. This latest generation offers the most sustainable and secure cost per computing core performance. One Gen 12 server can replace up to 26 Gen nine servers and up to 14 Gen 10 servers. This reduces power consumption by at least 65%. In closing, in Q1, we saw continuous strong demand across the portfolio driven by our new impressive innovations and customers' continued enthusiasm for our offerings.

However, we could have executed better, particularly in our server segment. HP has a proven execution track record and we are committed to doing what is needed. We have already taken steps to improve our execution performance and we expect our efforts will contribute to improvements in the back half of fiscal year twenty twenty five. We have made great strides at HPE in accelerating our strategy and aligning our product portfolio to market inflection points and customer needs. We will continue to make bold moves to enhance our portfolio and attract new customers in ways that accelerate value for our shareholders.

Now let me turn the call over to Marie, who will provide more details on the quarter. Marie?

Thank you, Antonio, and good afternoon, everyone. During the first quarter of fiscal twenty twenty five, we saw increased demand for service, storage and networking products. Our revenue grew 17% compared to last year, marking the fourth straight quarter of accelerated revenue growth. We met our outlook, achieving double digit growth in server and hybrid cloud. Intelligent Edge also performed better than we expected and is set to grow further in this quarter.

We reported non GAAP diluted net earnings per share of 49¢, aligning with our outlook showing strong profitability and hybrid cloud and intelligent edge. However, we faced some challenges in the service segment, which we are addressing. Here's a closer look at the details of the quarter. Our first quarter revenue was $7,900,000,000 up 17% year over year, but down 7% quarter over quarter, reflecting typical seasonality and lower AI systems revenue. Our annual recurring revenue was $2,100,000,000 up 46% year over year driven by AI and Intelligent Edge.

Non GAAP gross margin was 29.4%, down six eighty basis points year over year and 150 basis points quarter over quarter. On a year over year basis, gross margin was impacted by a higher mix of server revenue and lower contribution from Intelligent Edge. And we faced challenges in server that pressured margin both year over year and sequentially. Non GAAP operating margin was 9.9%, down 160 basis points year over year and 120 basis points sequentially, primarily due to headwinds in gross margin. Operating margin partially benefited from a 9% decrease in non GAAP operating expenses, reflecting lower variable compensation and continued cost discipline.

In my first year as CFO, we implemented cost saving measures by targeting discretionary spending, reducing non GAAP operating expenses from 24% in fiscal twenty twenty three to 22% of revenue in fiscal twenty twenty four. In q one, these actions lowered operating expenses to a record low of 19% of revenue. This year, we aim to target more structural cost savings. Free cash flow was negative $877,000,000 in line with normal seasonal patterns. GAAP diluted net earnings per share was 44¢ above guidance of 31¢ to 36¢ due to a gain recognized on the sale of a Communications Technology Group or CTG and lower than expected Juniper related costs.

Non GAAP diluted net earnings per share of 49¢ was within our guided range of 47¢ to 52¢. Non GAAP diluted net earnings per share excludes $57,000,000 in net costs primarily related to stock based compensation expense, h three c divestiture related severance costs, acquisition, disposition, and other charges, and amortization of intangible assets primarily offset by the gain recognized on the sale of CTG. Now let's break down the segment results. Server revenue was 4,300,000,000 up 30% year over year. Revenue fell sequentially primarily due to the timing of AI systems deals.

In traditional compute, our Gen 11 value proposition resonated with customers, contributing to year over year AUP growth. Gen 11 accounts for the majority of our traditional compute sales, and we expect to begin shipping the new Gen 12 portfolio later this year. In AI systems, we signed $1,600,000,000 in net orders and added enterprise and sovereign customers, although most demand is still from model builders. We recognized roughly $900,000,000 of revenue, up from about $400,000,000 last year, but down sequentially as expected due to chip availability and customer readiness. We expect these factors will continue to affect our AI systems business.

Server operating margin was well below expectations at 8.1%. While our guidance of 10 to 11% assumed impact from the GPU transition and competitive pricing, market pressures were greater than expected and execution issues further impacted operating margin. We have made improvements and taken additional steps to reduce costs, expecting server operating margin to be around 10% by Q4. Let me provide further details. In traditional compute, we face challenges in pricing strategies and discounting.

We now have a more rigorous discount framework with increased deal mix scrutiny. These changes will take time to impact our P and L as we work through our backlog. In addition, we expect pricing adjustments may negatively impact top line growth in the near term. In AI, our margins were affected by the transition to new GPUs and managing older GPU inventory. We believe this is an industry wide challenge that will improve as supply and demand align.

We have implemented actions to reduce inventory. Now on to Intelligent Edge, which exceeded our expectations and is ready for growth in Q2. Revenue was $1,100,000,000 up 2% quarter over quarter, ahead of guidance of flattish growth. Revenue was down 4% year over year as we move past post pandemic related backlog. We saw double digit year over year growth in Sassy and data center switching, with notable order growth for wireless LAN and campus switching.

Hewlett Packard Enterprise (HPE) Q1 2025 Earnings Call Transcript

Company Participants