Hewlett Packard Enterprise reported weak fourth-quarter revenue and server numbers, but beat earnings expectations and reaffirmed its fiscal year guidance on strong artificial intelligence
“I’m incredibly pleased with the results we posted in Q4 … despite the fact that we were on the lower end of the guide on revenues, because that was driven by the conversion of some unique deals in AI, a couple driven by the U.S. shutdown, and one in Europe, which was driven by the readiness in the data center,” CEO Antonio Neri told CNBC’s “Money Movers” on Friday.
The company reported earnings after the bell on Thursday, posting revenue of $9.68 billion, which was up 14% over the year prior but fell short of the $9.94 billion in revenue expected by analysts polled by LSEG.
The revenue miss and weakness in the company’s server segment initially sent the stock down as much as 9%. Shares rebounded on Friday, closing 1.88% higher.
HPE beat earnings expectations for Q4, with adjusted earnings of 62 cents per share coming in above the 58 cents per share expected by LSEG.
CFO Marie Myers said on the earnings call with analysts that the adjustments came from the “amortization of intangible assets, Juniper-related acquisition costs, stock-based compensation expense and cost reduction plan expense, partially offset by adjustments for taxes and other adjustments.”
The company reaffirmed the fiscal year 2026 revenue outlook range of 17% to 22%, but issued weak guidance for the first quarter.
The company said it expects fiscal 2026 first-quarter revenue in the range of $9 billion to $9.4 billion, which was short of the $9.87 billion expected by FactSet analysts.
Rising costs, seasonality and the timing of AI server deals were all factors in the guidance.
The revenue dip from Q4 is “in line with historic seasonality,” Myers told analysts. She also noted continued cost increases in DRAM, dynamic random access memory, and NAND memory, a flash memory typically used in memory cards.
She told analysts the majority of those costs are expected to be passed along.
AI system orders reached $1.9 billion in the fourth quarter, and Myers said the company expects AI demand to be “uneven,” with larger sovereign customers making orders with extended lead times that can defer shipments to future quarters.
Neri said on the analyst call that the company expects the biggest part of the AI revenue conversion to land in the back half of FY2026.
Revenue for HPE’s server segment during Q4 came in at $4.46 billion, down 5% from the $4.68 billion a year ago. The fourth-quarter number missed StreetAccount analyst expectations of $4.58 billion.
Myers addressed the shortfall on the earnings call, attributing it to the timing of AI service shipments and lower-than-expected government spending.
“Despite these headwinds, we were encouraged by robust server order growth across both traditional server and AI offerings, with demand significantly outpacing revenue in this period,” she said.
Server revenue declined 10% from the third quarter.
Networking revenue of $2.81 billion during Q4 was a bright spot, and saw a boost from the completed acquisition of Juniper Networks in July.
Neri told CNBC Friday that the acquisition makes HPE “a networking-centric company.”
HPE reported net income of $146 million during the fourth quarter, or 11 cents per share, which was much lower than the net income of $1.34 billion, or 99 cents per share, from a year ago.
HPE one-day stock chart.
