Enterprise technology company Hewlett Packard Enterprise (NYSE: HPE) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 18.5% year on year to $9.14 billion. On top of that, next quarter’s revenue guidance ($9.9 billion at the midpoint) was surprisingly good and 4.1% above what analysts were expecting. Its non-GAAP profit of $0.44 per share was 5.4% above analysts’ consensus estimates.

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Company Overview

Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.

With $33.08 billion in revenue over the past 12 months, Hewlett Packard Enterprise is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s challenging to maintain high growth rates when you’ve already captured a large portion of the addressable market. For Hewlett Packard Enterprise to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, Hewlett Packard Enterprise’s sales grew at a mediocre 4.2% compounded annual growth rate over the last five years. This shows it couldn’t generate demand in any major way and is a tough starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Hewlett Packard Enterprise’s annualized revenue growth of 5.6% over the last two years is above its five-year trend, suggesting some bright spots.

This quarter, Hewlett Packard Enterprise reported year-on-year revenue growth of 18.5%, and its $9.14 billion of revenue exceeded Wall Street’s estimates by 6.5%. Company management is currently guiding for a 17% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 12.1% over the next 12 months, an improvement versus the last two years. This projection is particularly healthy for a company of its scale and suggests its newer products and services will spur better top-line performance.

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Operating Margin

Hewlett Packard Enterprise was profitable over the last five years but held back by its large cost base. Its average operating margin of 4% was weak for a business services business.

Analyzing the trend in its profitability, Hewlett Packard Enterprise’s operating margin decreased by 2.6 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Hewlett Packard Enterprise’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Hewlett Packard Enterprise generated an operating margin profit margin of 2.7%, down 4.4 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Hewlett Packard Enterprise’s unimpressive 5.2% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Hewlett Packard Enterprise’s two-year annual EPS declines of 7.5% were bad and lower than its 5.6% two-year revenue growth.

Diving into the nuances of Hewlett Packard Enterprise’s earnings can give us a better understanding of its performance. Hewlett Packard Enterprise’s operating margin has declined over the last two yearswhile its share count has grown 8%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q2, Hewlett Packard Enterprise reported adjusted EPS of $0.44, down from $0.50 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 5.4%. Over the next 12 months, Wall Street expects Hewlett Packard Enterprise’s full-year EPS of $1.89 to grow 19.7%.

Key Takeaways from Hewlett Packard Enterprise’s Q2 Results

We were impressed by how significantly Hewlett Packard Enterprise blew past analysts’ revenue expectations this quarter. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. On the other hand, its EPS guidance for next quarter slightly missed. Zooming out, we think this was a mixed print. The market seemed to be hoping for more, and the stock traded down 1.7% to $22.47 immediately after reporting.

So do we think Hewlett Packard Enterprise is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.