00:00You're up 21 percent. You have led to a record high on the stock. It is a record move for
00:04the
00:04stock and you've added 13 billion dollars in market cap. Just reflect for a moment on what
00:08people are calling a blowout quarter. Yeah, well, good morning, Caroline. It was an exceptional
00:14quarter, I just said, right? We achieve a record break results, a number of key metrics. We have
00:21tremendous demand across our portfolio. Our portfolio is at the intersection of networking,
00:26cloud and AI. And that demand is durable. And therefore, you know, thanks to the results
00:33of the first half, the tremendous record breaking backlog that we have, the pipeline, which remains
00:39multiples of that backlog, allows us to raise the 26 guide and provide 2027 guide six months
00:46ahead because of that durability. So we are very, very proud of this moment. Antonio, this
00:52is a story about demand, right? And outlook. And it's through HPE's lens, a revenue figure.
01:00But I think there's a lot of value if you could talk us through whether that outlook for 26 and
01:05then the 27 outlook, which you say is evidence of durability, is a volume story or it's a pricing
01:12story. In other words, no great volume of servers more than you'd normally do. You can
01:18just charge a lot more for them. Well, first of all, when we talk about the outlook, we are
01:26actually pulling by two years the 2028 outlook that we provided last October at the security
01:33analyst meeting intro 2026. And to give a sense, you saw that our earnings per share at the midpoint
01:40will be $3.40, which is a dollar higher than the previous guidance. And at the core of that
01:47is our networking story. And the improvements we have made across the entire portfolio, combination
01:54of course of volume in the key product segments, whether it's campus and branch, which is up
02:00almost 30% in orders. So the routing business, so the data center search of business orders,
02:09which is at close to 20%. And then on the server side of the equation, we are up triple digits
02:15in demand storage for the six consecutive quarter triple digits in our private cloud portfolio,
02:21which obviously has the AI factories for enterprise continuous growth. So it is a volume story with
02:28very disciplined pricing and execution. I mean, talking about discipline, the fact that operating
02:33profit you see going to 80 to 85% growth for the fiscal full year, and this in the context
02:39of memory prices just going through the roof, how are you able to navigate what could be a significant
02:45pricing pressure bottleneck still, there's a lot still to be a little bit anxious about Antonio,
02:49what could disrupt this? Well, we need to go underneath the portfolio and look at the mix,
02:55Caroline, because now with an $11 billion business in networking, clearly drives a different mix in a
03:02gross margin, which was record 36.9%. Let's not forget that we are ahead of plan in the Juniper and
03:11Catalyst initiatives, both milestones and synergies that fuels cost of sales improvements and OPEX
03:17improvements. And then you have, of course, you have the cost increases in DRAM and NAND, but
03:25fundamentally there is all about the demand. I have to tell you, and I commented this yesterday,
03:31customers need access to this technology. You guys have covered extremely well the AI momentum,
03:37both in the build out, but we were very pleased to see the acceleration in enterprise, which is driven
03:43by that option, and especially in AI inferencing. There are lots of things happening. On-prem is back,
03:50hybrid cloud, as we just discussed with perplexity, is becoming increasingly important. In your outlook,
03:56or even in the quarter gone, was this a story about one big customer that changed the trajectory for you?
04:03Or are you seeing new types of customer? It's not just a hyperscaler story anymore?
04:09No, we have been very selectively playing in the AI scale in terms of profitability, as well as working
04:20capital, because you need a lot of working capital. We have prioritized paying down the debt and making
04:25sure we drive the profitable growth through networking cloud and AI in enterprise and sovereign
04:31So this is not one customer. This is a number of many, many customers. I spoke yesterday about some of
04:38the
04:38customers that we are winning, that are bringing that infrastructure on-premise, because for compliance
04:45reasons, governance reasons, data privacy reasons, security reasons, they need to do it on-premise. And I give an
04:52example of my own use case. We, inside HP, we have 1200 AI use cases, of which 250 are in
05:01production. We actually use a
05:04combination of proprietary or closed models and open models. And we have very stringent governance. And we do it on
05:10-premise. And we see that
05:12trend happening across the enterprise more and more.
05:14I'm going to be very dry and very specific with you, Antonio. Is this an enterprise super cycle? Or is
05:22this something
05:22different, where agentic AI leads to a complete structural shift on how all kinds of companies change their spending
05:30habits? What do you see?
05:32It's the latter. And I think, you know, AI enterprise will accelerate. But the reality is that agentic AI is
05:43transforming the way we do business, is transforming business processes, workflows, and is making
05:49companies more agile and efficient. So that's what we see today. And I think we are early in the
05:56enterprise adoption. And I think, you know, customers now want to make sure they don't be, they are not
06:01left behind. We have a say inside the company, the future belongs to the fast. And so you got to
06:06move really
06:07fast. And we learn a lot through the COVID, right, through the on-ramp to digital. So it's the latter.
06:12And I'm enthusiastic about this because it really helped customers to be more competitive in the
06:18market, which ultimately is the thesis about AI, productivity.
06:23It's about productivity. And many worry. That means fewer jobs. That means change in labor. Have you seen
06:30any changes to the way in which you're hiring? Maybe you don't need as many employees? What do you think
06:34about the narrative? Well, definitely the type of roles you're hiring is different. But inside the
06:41company, we have a very aggressive talent development succession plan. In fact, this afternoon, I'm going
06:48to have a session with my entire team about that. But the skill sets of the future have to evolve.
06:55And,
06:55you know, I always remind our 65,000 employees to use this technology in their favor to become more
07:02productive. And I believe everyone, everyone, including yourselves as anchors, you got to be,
07:08you have to have a minor in AI. Have to use the technology is going to be a competitive advantage
07:12advantage in every role across the enterprise.
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