HPE raises networking revenue outlook, reports $1.2B order

Sunnyvale, California - Hewlett Packard Enterprise (HPE) has revised its expectations for the Networking business segment's revenue growth, projecting between low to mid-20s percent annual growth over the next three years. This upward adjustment was announced during the company's Networking Investor Day, where HPE outlined its growth prospects for the segment through fiscal year 2029.

HPE anticipates Data Center Networking revenue to expand at a moderate pace, with a compound annual growth rate (CAGR) of low to high 50s percent over the forecast period. Routing revenue is expected to grow at a lower but still significant range, with a CAGR of low to high 20s percent. Campus & Branch and Security revenue are projected to grow at a high single-digit CAGR through fiscal 2029.

The company also revealed an increased target for cost synergies stemming from its acquisition of Juniper Networks, aiming for $800 million in annual run-rate savings by the end of fiscal 2028. This is a notable increase from the previously stated target of at least $600 million. HPE aims to bolster its market position by gaining share in Data Center Networking, Routing, and Campus & Branch over the next three years.

In terms of financial performance, HPE expects its Networking segment operating margin to settle in the mid-to-high 20s percent range for fiscal 2027, with the same range expected to persist through fiscal 2029. The company's long-term projections for Networking segment revenue now reflect a high-teens CAGR from fiscal 2026 through fiscal 2029.

HPE recently secured a significant order in this domain, with Vultr committing to a $1.2 billion deal for the deployment of AMD Helios AI Rack systems. This marks HPE's inaugural order for this specific new system, which encompasses both HPE Networking hardware and software.