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.

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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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Company Info

Industry

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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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Innovation

People Management

Use of Corporate Assets

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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

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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

legacy

hewlett packard enterprise

Good afternoon, and welcome to the Fiscal twenty twenty five Second Quarter 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 Glaser, 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 second 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 businesses 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 04/30/2025. 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. Antonio and Marie will refer to our earnings presentation in their prepared comments.

Finally, I would like to announce that we will hold our Security Analyst Meeting on 10/15/2025. We will provide more details as the date gets closer. With that, let me turn it over to Antonio.

Thank you, Paul. Good afternoon, everyone. In Q2, HPE delivered solid results. We executed well and delivered both revenue and non GAAP diluted net earnings per share above the high end of guidance. Through focused and disciplined execution, we have addressed the operational challenges we experienced in our Service segment last quarter.

We expect these actions will contribute to margin improvement through fiscal year end. In the second quarter, we saw a very dynamic macro and trade policy environment. The IT industry continues to navigate significant uncertainty brought on by tariffs, the AI diffusion policy withdrawal and broad macroeconomic concerns. While this led to uneven demand during the quarter, we did not benefit from significant order pull ins. We ended Q2 with our stronger pipeline compared to Q1, reinforcing that our strategy is the right one.

Q2 revenue was $7,600,000,000 up 7% year over year and just above the high end of our previously provided guidance. We saw year over year revenue growth in every product segment. The results were led by higher AI system revenue conversion in server, solid performance in Intelligent Edge, and stronger than expected performance in our hybrid cloud segment, which was driven by our HPE Alletra MP storage transition and the continued adoption of HPE GreenLake cloud subscription services. Q2 operating profit grew year over year in hybrid cloud, Intelligent Edge and HPE Financial Services. As we said in our Q1 earnings, we expect that server operating profit to decline quarter over quarter, although our server revenue and operating margin were near the high end of our Q2 guide.

We remain laser focused on execution in our server segment. Since our last update, we have closely monitored the changes implemented to improve profitability. These include the rollout of new pricing analytics, increased discount scrutiny and inventory management. As we said in our last call, it will take a couple of quarters to realize the full benefit of these measures and we expect our service segment operating margin will recover to approximately 10% exiting Q4. We delivered non GAAP diluted net earnings per share of $0.38 above the high end of our previously provided guidance.

We benefited from lower than anticipated tariff impact and more favorable OI and E. Net of these items, non GAAP EPS was still at the high end of our outlook, driven by solid revenue performance and cost management. As we move into the second half, we have improved line of sight to timing of our AI revenue conversion. As such, we are tightening our revenue outlook to be up 7% to 9% year over year. In addition, we are raising the low end of our non GAAP diluted net earnings per share range by $08 We continue to capitalize on the megatrends reshaping the IT industry across networking, AI and hybrid cloud.

In networking, the market continues to recover. Year over year, our business achieved its third consecutive quarter of orders growth and return to revenue growth. In AI, we signed $1,100,000,000 of net new orders with enterprise accounting for one third. We converted more than $1,000,000,000 into revenue, up from $900,000,000 last quarter. And we exited with $3,200,000,000 of backlog in AI systems.

Our pipeline remains multiples of our backlog. In our hybrid cloud segment, we saw another solid quarter of storage revenue performance with our Alectra portfolio growing high double digits year over year. The transition to a subscription business model is a revenue headwind in the near term, or more accretive to profitability long term. Orders for Alletra MP have grown more than 75% year over year for four consecutive quarters, contributed to our growing deferred software revenue balance. This demonstrates the value of our disaggregated architecture with multi protocol support and the flexibility of our offering.

Finally, GreenLake continues to deliver strong results. We are growing customer count, which now totals approximately 42,000, generating over $2,200,000,000 of annualized revenue run rate. This is up 47% year over year and above our 35% to 45% CAGR commitment. Software and services continue to be more than 70% of our AIR, demonstrating a portfolio shift to higher growth and higher margin areas of the stack. Marie will provide more details on Q2 and our fiscal year outlook.

But first, I would like to highlight several recent product launches that further reinforce our strategy. Last month, we launched the industry's most advanced private cloud portfolio. Morpheus and our HPE virtualization software have been integrated into our HPE private cloud portfolio. Through this integration, we can lower customers' virtualization costs by up to 90% on our core basis and unify management of their entire multi cloud and multi vendor IT estate. Customer interest in VM Essentials has been very strong.

Notably, Danfoss is planning to replace 75% of its virtual estate with VM Essentials within HPE GreenLake for private cloud enterprise. In networking, we introduced new capabilities with HPE Aruba Networking Central to expand universal Zero Trust network access solutions to help enterprises bolster cybersecurity. HPE Aruba Networking Central is now also available to deploy as an on premises option. This is particularly helpful for customers prioritizing data sovereignty. Aruba Network in Central now manages over 5,000,000 devices and is contributing to strong AIR subscription growth within Intelligent Edge.

We are maintaining our rapid pace of AI innovation in our deep and long standing partnership with NVIDIA. One of the cluster build outs we are working on right now with NVIDIA is a large deployment of NVIDIA Grace Blackwell MVL-seventy two systems. We are nearing completion and appreciate the continued partnership that pairs our capabilities. Most recently, at GTC, Taipei and Computex, we announced several enhanced storage and server platforms targeting all customer segments. In 2025, we integrated NVIDIA's latest GPUs into our server portfolio, which delivered record breaking performance for generative AI inferencing.

We announced advancements in storage to unify enterprise data management to create context rich AI ready object data with built in intelligence. And we launched the HPE Alletra Storage MPX 10,000 SDK solution for the NVIDIA AI data platform, bringing enterprise data into an intelligent orchestrated pipeline within the NVIDIA AI ecosystem. All these new innovations are aligned to our strategy to continue to move up stack to areas of higher growth with higher margins. We continue to help enterprises accelerate their business transformation across networking, hybrid cloud and AI. And we will unveil even more exciting breakthrough innovations at the HPE Discover later this month.

Finally, I want to reinforce our commitment to closing the Juniper Networks transaction. We expect the proposed transaction will deliver at least $450,000,000 in annual run rate synergies to our shareholders within thirty six months of closing the transaction. The deal will help both companies deliver a modern secure AI driven edge to cloud portfolio of networking products and services. We continue to expect to close the transaction before the end of fiscal year twenty twenty five. In closing, in Q2, we delivered solid results through focused and disciplined execution.

As we committed, we have addressed the server execution challenges. Our leadership team and I took accountability and swift action despite the challenges of a fluid macro environment. We remain focused on executing against our goals and becoming a more agile and nimbler company to continue to increase our profitability and enhance shareholder value. I remain excited about the profitable growth opportunities HP has ahead, including the anticipated closure of the Juniper Networks transaction. We have the right strategy and the right team to continue to accelerate value for our shareholders.

With that, let me turn it over to Marie. Marie?

Thank you, Antonio, and good afternoon. In Q2, we addressed the execution challenges we experienced in Q1, which enabled us to drive improved margin performance in our server business as we moved through the quarter. While we still have more work to do to return the segment's operating profit margin performance to a double digit rate, we are on the right trajectory to achieve that by Q4 of this year. In addition, our Intelligent Edge business returned to year over year top line growth after five quarters as the networking market recovery gained momentum. And we reported double digit year over year revenue growth in our hybrid cloud segment for the third consecutive quarter, with all product lines contributing to growth.

We also made significant progress against the cost reduction program we announced last quarter, which we expect will contribute to our results in future quarters. We reported non GAAP diluted net earnings per share of $0.38 ahead of our outlook, driven in part by a more moderate tariff impact and operational benefits. However, we continue to navigate a complex macroeconomic and geopolitical landscape, and remain prepared to take additional action in the back half of the year to deliver against our fiscal twenty twenty five outlook. Let's talk about the details of the quarter. Our second quarter revenue was $7,600,000,000 up 7% year over year, but down 3% quarter over quarter, reflecting strong top line performance in Intelligent Edge and Hybrid Cloud and a year over year increase in server revenue.

We did not see a significant benefit from tariff related demand pull forward based on quarterly business linearity and historical order patterns. Our annualized revenue run rate was $2,200,000,000 up 47% year over year, driven again by AI and Intelligent Edge. Our software and services ARR grew nearly 60% year over year and improved its mix of ARR by 700 basis points to 75%, primarily due to an increase in GreenLake Flex subscriptions and AI services. Non GAAP gross margin was 29.4, down three seventy basis points year over year and flat quarter over quarter. On a year over year basis, gross margin was impacted primarily by an unfavorable mix within server, including the dilutive backlog in traditional compute we carried into the quarter.

Non GAAP operating margin was 8%, down 150 basis points year over year, reflecting lower gross margins partially offset by cost management. The 190 basis point sequential decline was primarily due to increased variable compensation and higher marketing expenses. Non GAAP operating expense as a percentage of revenue increased sequentially from a record low in Q1 and declined two twenty basis points year over year reflecting better cost discipline as our business scales further. We'll continue managing discretionary costs and driving efficiencies while working to increase the incremental structural cost savings we drove this quarter. Free cash flow was negative $847,000,000 slightly better than expected due in part to the conversion of some AI backlog.

GAAP diluted net loss per share of $0.82 was below guidance of positive $08 to $0.14 primarily due to a non cash goodwill impairment charge recorded in the quarter. Non GAAP diluted net earnings per share of $0.38 was above our guided range of $0.28 to $0.34 EPS included $02 each related to tariffs and OI and E expense. Non GAAP diluted net earnings per share excludes $1,700,000,000 in net costs primarily driven by a non cash goodwill impairment charge of approximately $1,400,000,000 or $1.3 per share related to a hybrid cloud business. This charge is due primarily to the macroeconomic uncertainty that played out during the second quarter requiring an additional interim impairment test of our goodwill. These tests use a market based cost of capital assumption which increased significantly since our last test, leading to the material non cash impairment charge.

Our view on our hybrid cloud business has not changed. Other factors excluded from our non GAAP diluted net earnings per share include expenses related to our cost reduction program, stock based compensation expense, acquisition, disposition and other charges, amortization of intangible assets, and H3C divestiture related severance costs. Let's turn to our segment results. Server revenue was $4,100,000,000 up 7% year over year and a decline of 5% sequentially, consistent with the higher end of the guidance range we provided. The quarter over quarter revenue decline was impacted by lower traditional compute volumes due to the implementation of corrective pricing actions we took at the end of Q1, offset partially by higher than expected AI systems revenue.

We took decisive actions to address the execution issues that impacted our performance last quarter. Firstly, we implemented more rigorous reporting processes and analytics to more quickly identify and remediate operational issues. Secondly, we tightened down deal desk controls to require greater management scrutiny, including forward costing assumptions on orders. Lastly, we are managing inventory exposure associated with AI transactions and potential component transitions. We believe these steps will improve performance and profitability as we progress through the back half of fiscal twenty twenty five and into next year.

In traditional server, consistent with our expectations, revenue declined sequentially driven by volume declines offsetting AUP growth as the Gen11 server refresh continues to drive the majority of our core compute sales mix. We began shipping Gen12 servers during Q2 and remain confident in its adoption and growth trajectory. In AI Systems, we signed $1,100,000,000 in net new orders driven by strong growth in our enterprise and sovereign markets on both a year over year and sequential basis. We recognized more than $1,000,000,000 of revenue during the quarter up from $900,000,000 last year. AI systems revenue increased by greater than 10% sequentially versus our guidance of a modest decline due to improved customer readiness.

Server operating margin of 5.9% was consistent with expectations. Our margin performance improved over the course of the quarter as the remediation actions we implemented in late Q1 helped offset some of the backlog pricing headwinds we carried into the quarter. Tariff related headwinds were milder than expected and margins are expected to benefit further from remediation actions as we progress through the second half of the year. Our Intelligent Edge business performance aligned with expectations as revenue and operating profit returned to year over year growth in Q2 for the first time in five quarters. Revenue was $1,200,000,000 up 8% year over year in line with our outlook for positive revenue growth due to the ongoing network market recovery and the diminished effect of the prior year's backlog.

Revenue was up 2% quarter over quarter, reflecting improved demand. We saw orders grow high single digits year over year including double digit growth in both data center and campus switching. Wi Fi seven demand ramped meaningfully with orders up triple digits sequentially. Federal, state and local and education spending was mixed in the quarter as the U. S.

Government adjusted the new administration's priorities while enterprise spending continued its positive trend. Our orders remained strong and our channel inventory levels remained healthy as sell through increased sequentially despite some pockets of softness across our geographies. Operating margin was 23.6%, up 180 basis points year over year driven by revenue growth and cost discipline resulting in operating profit dollar growth of 16%. Operating margin was down three eighty basis points quarter over quarter, primarily due to increased variable compensation expense and slightly lower gross profit. Moving to Hybrid Cloud.

Revenue was $1,500,000,000 Once again, we saw broad based strength across all areas of the business contributing to strong revenue growth of 15% year over year. Sequentially, revenue increased 4% exceeding our expectations. In storage, our HPE Elektra MP platform continues to drive robust growth with revenue up triple digits year over year and new logos up almost 300 sequentially. In addition, it continues to constitute over half of our IP block orders. In private cloud, we are seeing a strong pipeline for our PCAI product doubling quarter over quarter, while VM Essentials has garnered at least 1,000 interested customers.

Hewlett Packard Enterprise (HPE) Q2 2025 Earnings Call Transcript

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