Hewlett Packard Enterprise (HPE) has reported better-than-anticipated results for its fourth quarter of fiscal 2024 (Q4 FY24), exceeding Wall Street’s forecasts. The company’s revenue reached $8.5bn, a 15% year-on-year (YoY) increase, driven by robust demand for its servers, particularly those designed to support artificial intelligence (AI) applications.
The company’s shares saw a slight uptick of 1.5% following the announcement, continuing their upward trend for 2024, which has seen the stock rise by about 27%.
Server revenue soars amid strong AI demand
The performance surpassed analyst expectations, with revenue exceeding the consensus estimate of $8.26bn, as per data from LSEG. HPE’s server revenue, which is a major contributor to its success, saw a significant 32% increase, totalling $4.7bn. This growth has been largely attributed to the surge in demand for servers equipped with Nvidia processors, essential for enterprises investing in AI infrastructure.
While the server division thrived, HPE’s Intelligent Edge business, which supplies networking hardware such as switches and Wi-Fi access points, saw a decline in revenue. Sales in this segment dropped by 20%, totalling $1.1bn for the fourth quarter, a result of softer demand in this segment. However, HPE has shown signs of recovery in its broader portfolio, with its hybrid cloud segment achieving an 18% growth, bringing in $1.6bn.
Despite the weaker performance in some areas, HPE remains well-positioned in the market, particularly in the growing fields of AI and cloud computing. The company has heavily invested in this sector, launching new AI-optimised servers in October powered by Advanced Micro Devices (AMD) chips, further enhancing its portfolio for AI applications such as training large language models.
HPE has forecast a solid start to fiscal 2025, projecting revenue growth in the mid-teens percentage range for the first quarter. The company also anticipates non-GAAP diluted net earnings per share (EPS) to be between $0.47 and $0.52, reflecting continued strong performance across its core business areas.
For Q4 FY24, HPE’s net income surged to $1.34bn, marking a significant rise from the $642m, reported in the same period last year. A key element of HPE’s growth strategy is its planned acquisition of Juniper Networks, a move aimed at bolstering its position in the competitive networking industry. The deal, which has already received approval from regulatory authorities in several countries, including the EU, UK, India, and South Korea, is expected to close in early 2025. The acquisition is expected to strengthen HPE’s networking capabilities and market share.
The company also highlighted its strong cash flow performance in the fourth quarter, generating $2bn in operating cash flow. However, its free cash flow decreased, standing at $1.5bn, compared to the previous year.
Read more: UK CMA clears HPE’s $14bn acquisition of Juniper Networks
