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

Best Workplaces_Texas_Large_2025-Hewlett Packard Enterprise_US1__67fd62d0bb07cc513ab900d5_3

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

See which workplaces made this year's list.

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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."

Best Large Workplaces in Technology

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.

GPTW-2024-Texas-Large-Hewlett-Packard-Enterprise

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.

GPTW Texas Large 2022-Hewlett Packard Enterprise Company

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.

Best-Workplaces-in-Technology-Large-Hewlett-Packard-Enterprise-Company

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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Best Workplaces In Technology

Best Workplaces For Parents

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Best Workplaces In Texas

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 Third Quarter Hewlett Packard Enterprise Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that today's event is being recorded. I would now like to turn the conference over to Paul Glaser, Head of Investor Relations. Please go ahead, sir.

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 third 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 07/31/2025. 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. Antonio Marie will reference our earnings presentation in their prepared comments.

Finally, I would like to clarify that in the discussion today, any mention of HPE Intelligent Edge will refer to HPE's prior business segment and networking will refer to the combination of Intelligent Edge and Juniper Networks. With that, let me turn it over to Antonio.

Thank you, Paul. Good afternoon, everyone. In Q3, we delivered solid results and completed a major milestone closing our acquisition of Juniper Networks. Together with Juniper, we will accelerate our momentum across our three strategic business pillars, networking, cloud and AI, building a stronger, leaner and more profitable HPE. In Q3, HPE achieved record breaking revenue with and without Juniper.

Revenue was $9,100,000,000 up 18% year over year, fueled by strong momentum across AI, networking and hybrid cloud. We grew revenues year over year across our three largest business segments. Demand was broad based across our products and services. We increased sequential operating profit dollars in server, hybrid cloud and both Intelligent Edge and the new combined networking segment. We also grew operating profit dollars in financial services on a year over year basis.

The new combined networking segment accounted for nearly 50% of HPE's non GAAP consolidated operating profit. We also improved sequential operating profit margins in server and hybrid cloud. Our improved profitability flow through to non GAAP diluted net earnings per share of $0.44 Free cash flow was $790,000,000 as we significantly lowered our inventory driven by higher AI backlog conversion to revenue and strong supply chain execution. We continue to transform our business through Catalyst, the structural cost saving program we announced last quarter, including enhancing operational efficiency, simplifying our portfolio, adopting AI and optimizing our workforce. In Q3 customers continue to demonstrate strong demand for our AI portfolio.

We nearly doubled our AI orders sequentially driven by sovereign opportunities up approximately 250%. Cumulative orders since Q1 twenty twenty three for sovereign and enterprise now account for more than 50% of total AI systems net orders. We exited the quarter with a record AI backlog at $3,700,000,000 Marie will provide more details on the quarter and our Q4 fiscal year twenty twenty five guide. But first, I would like to provide key Q3 highlights across our business segments. I am incredibly pleased that we closed the Juniper acquisition in July.

Integration is progressing well. I have been spending time with Rami and the new combined networking leadership team, which is world class. Going forward, we will refer to the combination of our HPE Intelligent Edge segment and Juniper as our new HPE networking segment. Our vision for this segment is clear, to build the best network in business, providing customers with a modern secure and AI driven networking portfolio. Rami and I will discuss our networking strategy in more detail at our upcoming Securities Analyst Meeting in October.

On the demand front, the networking market recovery continues. In enterprise, we continue to see robust demand in campus and branch, driven by the wire and wireless refresh, SASE and data center switching. Wi Fi seven demand is ramping with orders up triple digits sequentially. In cloud, we see strong demand for networking for AI, particularly in data center switching and Juniper PTX routing. Revenue of $1,700,000,000 increased 54% year over year, driven by strong performances in both Intelligent Edge and Juniper.

Intelligent Edge revenue increased 11% year over year and 8% quarter over quarter. We generated double digit year over year revenue growth in Campus and Branch, data center switching, Automated WAN and services. We also grew SASE and security revenue. These strong results contributed to sustained momentum in networking SaaS and support services. Operating profit for the networking segment was $360,000,000 up 43% year over year, benefiting from one month of Juniper results and operating profit dollars expansion in Intelligent Edge.

Networking innovation is accelerating across the entire networking portfolio. Just last week, we introduced a new Mist AgenTeq AI native innovations for campus and branch data center switching and automated one. These complement the new AgenTeq AI mesh technology from our HPE Aruba networking portfolio that we announced alongside GreenLake Intelligence at HPE Discover in June. Our innovation is being noticed by the market. HPE and Juniper Networks were both recognized again as leaders in the latest 2025 Gartner Magic Quadrant for enterprise wire and wireless LAN infrastructure.

Customers are already taking advantage of the power of our full HPE portfolio with inclusion of HPE Juniper networking solutions. For example, early this year HPE won a multimillion dollar deal with SPAr Austria Group, a leading retailer in Central Europe. SPAR is building out a digital business services platform underpinned by GreenLake. The full IT stack solution is designed and implemented by HPE Professional Services. It will be fully managed by HPE managed services and includes Aruba switches, Juniper firewalls, Aletra MP storage, plus HPE Cloud's op software including Zerto, OpsRamp and Morpheus.

The solution will enable a cloud native and AI driven platform experience. Finally, with respect to integration synergies, we are reiterating at least $600,000,000 in cost synergies over the next three years. In the server segment, market demand is robust across our portfolio. Revenue of $4,900,000,000 was an all time high, increased 16% year over year and 21% quarter over quarter driven by strong conversion of AI orders and solid demand for traditional servers. AI systems revenue of $1,600,000,000 was also an all time high as we completed delivery of a large GB200 system.

Server operating margin improved sequentially, benefiting from the changes we made in pricing and discounting early in the year, which returned traditional server product margins to historical levels. This was partially offset by higher AI mix including a large deal. As we enter Q4, we continue to expect total server operating margin to be around 10% for the quarter. AI systems orders increased nearly 100% quarter over quarter including Middle East sovereign wins and continued traction in enterprise. We have grown enterprise AI orders year over year every quarter since the beginning of fiscal twenty twenty four.

From an innovation perspective, we continue to keep pace with new accelerators technology and time to market customer demands. Last month, we launched HPE servers with the new NVIDIA RTX Pro 6,000 Blackwell and NVIDIA Blackwell ultra accelerated computing platforms. In traditional servers, customers are continuing to refresh edge infrastructure with more powerful, richly configured servers. As a result, revenue increased double digits year over year on mix shift to HPE Gen11 and Gen12 servers. During the quarter, we expanded the Gen12 compute portfolio to include the latest AMD fifth generation EPYC processors.

The new servers include support for HPE Compute Ops Management with AI driven Lifecycle Management. We expect the Gen 12 adoption to accelerate through 2026. In Q3, we also released our next generation HPE nonstop compute solutions for mission critical workloads with double the memory capacity and double the system interconnect bandwidth. Finally, hybrid cloud performance was solid. Revenue of $1,500,000,000 increased year over year for the fourth consecutive quarter.

In addition, operating profit margins were up 70 basis points and operating profit dollars increased 26% year over year. AIR increased 75% compared to Q3 twenty twenty four with inclusion of one month of Juniper results. On an organic basis, AIR increased 40% in line with our guidance of 35 to 45% CAGR. In storage, we saw robust growth in our IP product portfolio. HPE Alletra MP storage revenue increased triple digits year over year.

We have now shipped more than 5,000 Alletra MP arrays to date. We continue to successfully migrate our customer installed base while gaining new customer logos resulting in a one point share gain in the most recently released IDC market share report. In private cloud, we continue to ramp sales of our enterprise AI factory solutions. During Q3, we added twice the number of new private cloud AI customers compared to Q2 with particular interest in our developer configuration. Software is a core differentiator for our GreenLake cloud and for our private cloud portfolio, which is a key contributor to our AIR growth.

In June, we announced our new HPE hybrid cloud ops suite software bringing together Morpheus, VM Essentials, OpsRamp and Zerto to assist customers from hybrid cloud orchestration, virtualization and observability to continuous data protection. Our cloud software revenue in the quarter increased strong double digits year over year. At Discover Las Vegas, we unveiled GreenLake Intelligence, our framework for deploying AI agents across cloud and infrastructure to simplify customers' hybrid IT operations. We also expanded our agentic AI capabilities in OpsRamp, networking and storage. Innovations like these continue to attract new customers to our GreenLake cloud.

In Q3, we added approximately 2,000 new customers bringing our GreenLake cloud customer count to approximately 44,000. In closing, as we look ahead, I am excited for HPE's next chapter. The completion of our Juniper acquisition position us to win in networking as the market enters a new era of IT and business transformation where AI, cloud and networking converge. We launched a new brand for HPE to reflect this potential. The brand is modern, expresses what our technology and talent make possible and reinforces our relevance with our customers.

Our vision for the company is clear, to lead in the AI era through a modern secure cloud native and AI driven networking portfolio that accelerates our profitable growth. We are focused on executing with precision to capitalize on the growing opportunities in the market to deliver strong value to our customers and our shareholders. I look forward to providing more details about our strategy and our long term value creation framework at our Securities Analyst Meeting on October 15 at the New York Stock Exchange. I would like now to turn it over to Marie to provide more insights into our quarterly results and full fiscal year guide. Marie?

Thank you, Antonio, and good afternoon. I'm pleased with our performance this quarter while navigating an evolving market environment. Regarding our results, first, all segments of our business performed well. Our server business has moved past the pricing and discounting issues we reported earlier this year in compute. Hybrid cloud posted its fourth consecutive quarter of year over year top line growth and operating margin expansion, and revenue growth in our Intelligent Edge business is improving as the networking market recovery continues.

Second, I'm pleased that we completed our acquisition of Juniper, which will shift our revenue mix towards a higher growth, higher margin networking business. We continue to expect the acquisition to be accretive to our non GAAP results in year one, enhancing our profitability as we capture synergies and drive new market opportunities with our increased scale. And finally, we made solid progress on our cost reduction initiatives announced last quarter. I'm looking forward to sharing more about the next chapter of our company at our security analyst meeting next month. Let's talk about the details of the quarter.

Third quarter revenue of $9,100,000,000 which included Juniper was up 18% year over year and quarter over quarter and up 11% excluding Juniper revenue of $480,000,000. Excluding Juniper, total revenue of $8,700,000,000 exceeded the high end of our outlook range. Demand was strong this quarter, and we did not see material demand pull in. Our reported annualized recurring revenue run rate was $3,100,000,000 including $519,000,000 contributed by Juniper. Reported ARR was up 75% year over year or up 40% excluding Juniper.

Software and services ARR, including Juniper, doubled year over year as the mix of this higher margin revenue improved sequentially by six forty basis points to over 81%. Including Juniper, non GAAP gross margin was 29.9%, down 190 basis points year over year and up 50 basis points quarter over quarter. On a year over year basis, gross margin was impacted by an unfavorable mix within server, networking and hybrid cloud, which more than offset the beneficial margin contribution from one month of Juniper. Excluding Juniper, gross margin was 28.3%. Non GAAP operating expense, including Juniper as a percentage of revenue, flat sequentially and declined 40 basis points year over year, reflecting strong revenue performance and disciplined cost management, partially offset by variable compensation.

We will continue to manage costs rigorously as we target efficiencies through Catalyst, complemented by at least $600,000,000,000 in expected Juniper related cost synergies over the next three years with $200,000,000 expected to be realized next year. Excluding Juniper, non GAAP operating expense as a percentage of revenue was 20.2%, down 160 basis points year over year and down 120 basis points sequentially, driven by strong cost discipline as we grew revenue faster than expenses. Non GAAP operating margin, including Juniper, was 8.5%, down 150 basis points year over year, primarily due to lower gross margins partially offset by cost management. The 50 basis point sequential improvement was primarily due to the inclusion of Juniper's results. Excluding Juniper, operating margin was 8.1, down 190 basis points year over year, but up 10 basis points sequentially.

During the quarter, we generated free cash flow of $719,000,000 including approximately $200,000,000 of deal related costs and higher net interest expense, partially offset by improved inventory management. Non GAAP diluted net earnings per share of $0.44 was toward the high end of our guided range of $0.40 to $0.45 Our non GAAP diluted net EPS includes a $01 net impact attributable to consolidating one month of Juniper's results and the impact of net interest costs related to the acquisition. Q3 GAAP diluted net earnings per share was $0.21 below our guidance of $0.24 to $0.29 In terms of these results, non GAAP diluted net earnings per share excludes $326,000,000 in net costs primarily due to Juniper related acquisition costs, stock based compensation expense, amortization of intangible assets and acquisition disposition and other charges, partially offset by adjustments for taxes, gain from litigation settlement and other adjustments. Now let's turn to our segment results. Starting with networking.

As previously mentioned, we closed our acquisition of Juniper on July 2, so our Q3 earnings report includes only one month of Juniper's results. Our Q4 networking results will include our first full quarter of consolidated Juniper financials. We will provide more details regarding our near term and longer term strategy and outlook for our networking business at our Security Analyst Meeting next month. Networking revenue for the quarter was $1,700,000,000 up 54% year over year, up 48% sequentially and up 11% year over year excluding Juniper. Strong networking revenue growth was driven by the ongoing recovery in the networking market and consolidation of Juniper's results for the month of July.

While it's early days, we are pleased with our order growth and revenue performance we generated across the combined networking business. Reported orders grew strong double digits year over year, including double digit growth in both campus switching and the SMB markets. Excluding Juniper, Intelligent Edge orders grew a mid teens percent year over year. Demand in Q3 was strong as sellout increased sequentially and year over year. Networking operating margin was 20.8, down 160 basis points year over year.

This is inclusive of a 22.7% operating margin from HPE's former Intelligent Edge business and 15.8% operating margin from Juniper's networking business. Excluding Juniper, operating margin was down 90 basis points sequentially, primarily due to variable compensation and product related costs. Server revenue was $4,900,000,000 up 16% year over year and up 21% sequentially, above the high end of our guidance range. The quarter over quarter revenue increase was driven largely by a double digit increase in AI systems revenue due to a large AI deal we shipped in the quarter, augmented by higher AUP from a favorable mix shift in core compute. In traditional server, revenue increased sequentially driven by volume increases and AUP strings supported by the continued shift to Gen 11 servers, augmented by early yet improving sales of our Gen 12 servers.

In AI systems, we signed $2,100,000,000 in net new orders, driven by robust growth in sovereign net new orders, which increased by triple digits both year over year and sequentially, while enterprise net new orders were also up year over year. Together, enterprise and sovereign constitute greater than 50% of our cumulative AI orders since q one twenty three. We generated $1,600,000,000 of revenue during the quarter, up 25% year over year and up 57% sequentially, driven by the previously disclosed large AI system that we shipped in the quarter. We finished Q3 with our pipeline at multiples of our $3,700,000,000 ending backlog. Server operating margin of 6.4% was consistent with our outlook.

Margin performance improved sequentially benefiting from the changes we made in pricing and discounting earlier in the year, which returned traditional server product margins to historical levels. This was partially offset by higher AI mix, including a large deal and AI inventory. Moving to hybrid cloud. Revenue was $1,500,000,000 up 11% year over year, the fourth consecutive quarter of double digit growth. Sequentially, revenue increased 1% consistent with our outlook.

In storage, our HPE Eletra MP platform continues to drive robust growth, achieving triple digit year over year revenue growth for the third consecutive quarter, while high double digit margins expanded sequentially again. In Q3, new logos were up more than three fifty sequentially and grew over 70% year over year. In private cloud, revenue grew strong double digits year over year as we see continued growth in our pipeline for PCAI with a number of new enterprise customers doubled quarter over quarter. Also, our VM Essentials solutions closed over a 120 customers in q three and has generated a pipeline exceeding 1,000 interested customers since its launch last November. Hybrid cloud operating margin increased 50 basis points sequentially to 5.9% and increased 70 basis points year over year, the fourth consecutive quarter that our OP margin has expanded on a year over year basis.

Lastly, our financial services business generated revenue of $886,000,000 down 1% year over year and flat quarter over quarter. Financing volumes increased two percent year over year to $1,500,000,000 Our Q3 loss ratio was 0.7%, and return on equity improved sequentially and year over year to 17.7%. Operating margin of 9.9% increased 90 basis points year over year, primarily due to a higher mix of financing versus operating leases, but declined 50 basis points quarter over quarter driven by unfavorable operating expenses despite the higher revenue. Last quarter, we announced Catalyst, a series of initiatives designed to accelerate growth, increase efficiency and make it easier to do business with HPE. Our starting point was an approximate 5% workforce reduction from the exit of Q1 with gross savings of at least $350,000,000 by fiscal year twenty twenty seven.

Hewlett Packard Enterprise (HPE) Q3 2025 Earnings Call Transcript

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