Antonio Neri, President and CEO of Hewlett Packard Enterprise.
Anjali Sundaram | CNBC
Hewlett Packard Enterprise reported fourth-quarter revenue that missed analyst expectations, initially sending shares down as much as 9%. The stock rebounded Friday and were largely flat.
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.
Revenue for HPE’s server segment 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.
CFO Marie Myers addressed the shortfall on the analyst call Thursday, attributing it to the timing of artificial intelligence 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.
HPE beat earnings expectations with adjusted earnings of 62 cents per share, coming in above the 58 cents per share expected by LSEG.
Myers said 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 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 said 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.
CEO Antonio Neri noted several factors causing delays and said some of the AI deals were government-related, with the government shutdown affecting timing. He said in one deal, the data center wasn’t ready.
Neri said the company expects the biggest part of the AI revenue conversion to land in the back half of FY2026.
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.
