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Hewlett Packard Enterprise (HPE) is trading nicely higher after reporting its Q3 (Jul) results last night that featured record revenue and the first contribution from its newly closed Juniper Networks acquisition. The IT solutions company beat expectations on both EPS and revenue.

• Revenue rose 18% yr/yr to $9.1 bln, with broad based demand across AI, Networking, and Hybrid Cloud. Excluding Juniper, revenue was still a record, up 11% yr/yr, surpassing the high end of HPE's outlook. ARR increased 75% yr/yr (40% excluding Juniper).
• Networking revenue of $1.7 bln jumped 54% yr/yr, supported by Juniper's July contribution. The networking market continues to recover, while the company is seeing strong demand in campus and branch driven by wired and wireless refresh, SASE, and data center switching. Segment operating profit of $360 mln increased 43% yr/yr, with the new combined networking business (Intelligent Edge and Juniper Networks) accounting for nearly half of consolidated operating profit.
• Server revenue hit an all-time high $4.9 bln, up 16% yr/yr and 21% sequentially, boosted by a large AI system shipment. AI systems revenue of $1.6 bln was also a record, while net new AI system orders totaled $2.1 bln, leaving HPE with a record $3.7 bln AI backlog exiting the quarter.
• Hybrid Cloud revenue grew 11% yr/yr to $1.5 bln, marking a fourth straight quarter of double-digit growth, supported by triple-digit gains for Alletra MP storage.

Briefing.com Analyst Insight

This was a strong quarter for HPE. The company is firing on all cylinders, with Networking now its largest profit contributor, Servers benefiting from AI demand, and Hybrid Cloud extending its growth streak. A key takeaway is HPE's ability to both convert AI backlog into revenue and add new large-scale AI orders, resulting in a record backlog that underscores sustained demand. Also, the Juniper acquisition is already proving accretive, driving scale in networking and boosting profitability despite initial integration costs.