Good afternoon, and welcome to the Fiscal 2025 second quarter Hewlett Packard Enterprise earnings conference call. At this time, all participants will be in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. Should you need assistance during the call, please signal a conference specialist by pressing the star key followed by zero. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Paul Glaser, Head of Investor Relations. Please go ahead, sir. Good afternoon. I am Paul Glaser, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2025 second q uarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer, and Marie Myers, HPE's Chief Financial Officer. Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations webpage. Elements of the financial information referenced on this call are forward-looking and are based on our best view of the world and our businesses as we see them today. HPE assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE's quarterly report on Form 10-Q for the fiscal quarter ended April 30th, 2025. For more detailed information, please see the disclaimers on the earnings materials relating to forward-looking statements that involve risks, uncertainties, and assumptions. Please refer to HPE's filings with the SEC for a discussion of these risks. For financial information we have expressed on a non-GAAP basis, we have provided reconciliations to the comparable GAAP information on our website. Please refer to the tables and slide presentation accompanying today's earnings release on our website for details. Throughout this conference call, all revenue growth rates, unless noted otherwise, are presented on a year-over-year basis and adjusted to exclude the impact of currency. Antonio and Marie will refer to our earnings presentation in their prepared comments. Finally, I would like to announce that we will hold our Security Analyst Meeting on October 15th, 2025. We will provide more details as the date gets closer. With that, let me turn it over to Antonio. Thank you, Paul. Good afternoon, everyone. In Q2, HPE delivered solid results. We executed well and delivered both revenue and non-GAAP diluted net earnings per share above the high end of guidance. Through focused and disciplined execution, we have addressed the operational challenges we experienced in our service segment last quarter. We expect these actions will contribute to margin improvement through fiscal year end. In the second quarter, we saw a very dynamic macro and trade policy environment. The IT industry continues to navigate significant uncertainty brought on by tariffs, the AI diffusion policy withdrawal, and broad macroeconomic concerns. While this led to uneven demand during the quarter, we did not benefit from significant order pull-ins. We ended Q2 with our stronger pipeline compared to Q1, reinforcing that our strategy is the right one. Q2 revenue was $7.6 billion, up 7% year-over-year and just above the high end of our previously provided guidance. We saw year-over-year revenue growth in every product segment. The results were led by higher AI system revenue conversion in server, solid performance in Intelligent Edge, and stronger than expected performance in our hybrid cloud segment, which was driven by our HPE Alletra MP storage transition and the continued adoption of HPE GreenLake cloud subscription services. Q2 operating profit grew year-over-year in hybrid cloud, Intelligent Edge, and HPE Financial Services. As we said in our Q1 earnings, we expected server operating profit to decline quarter- over- quarter, although our server revenue and operating margin were near the high end of our Q2 guide. We remain laser-focused on execution in our server segment. Since our last update, we have closely monitored the changes implemented to improve profitability. These include the rollout of new pricing analytics, increased discount scrutiny, and inventory management. As we said in our last call, it will take a couple of quarters to realize the full benefit of these measures, and we expect our server segment operating margin will recover to approximately 10% exiting Q4. We delivered non-GAAP diluted net earnings per share of $0.38, above the high end of our previously provided guidance. We benefited from lower than anticipated tariff impact and more favorable OINE. Net of these items, non-GAAP EPS was still at the high end of our outlook, driven by solid revenue performance and cost management. As we move into the second half, we have improved line of sight to timing of our AI revenue conversion. As such, we are tightening our revenue outlook to be up 7%-9% year-over-year. In addition, we are raising the low end of our non-GAAP diluted net earnings per share range by $0.08. We continue to capitalize on the mega trends reshaping the IT industry across networking, AI, and hybrid cloud. In networking, the market continues to recover. Year-over-year, our business achieved its third consecutive quarter of orders growth and return to revenue growth. In AI, we signed $1.1 billion of net new orders, with enterprise accounting for one-third. We converted more than $1 billion into revenue, up from $900 million last quarter, and we exited with $3.2 billion of backlog in AI systems. Our pipeline remains multiples of our backlog. In our hybrid cloud segment, we saw another solid quarter of storage revenue performance, with our Alletra portfolio growing high double digits year-over-year. The transition to a subscription business model is a revenue headwind in the near term, but more accretive to profitability long-term. Orders for Alletra MP have grown more than 75% year-over-year for four consecutive quarters, contributing to our growing deferred software revenue balance. This demonstrates the value of our disaggregated architecture with multi-protocol support and the flexibility of our offering. Finally, GreenLake continues to deliver strong results. We are growing customer count, which now totals approximately 42,000, generating over $2.2 billion of annualized revenue run rate. This is up 47% year-over-year and above our 35%-45% CAGR commitment. Software and services continue to be more than 70% of our ARR, demonstrating a portfolio shift to higher growth and higher margin areas of the stack. Marie will provide more details on Q2 and our fiscal year outlook. First, I would like to highlight several recent product launches that further reinforce our strategy. Last month, we launched the industry's most advanced private cloud portfolio. Morpheus and our HPE virtualization software have been integrated into our HPE Private Cloud portfolio. Through this integration, we can lower customers' virtualization cost by up to 90% on a core basis and unify management of their entire multi-cloud and multi-vendor IT estate. Customer interest in VM Essentials has been very strong. Notably, Danfoss is planning to replace 75% of its virtual estate with VM Essentials within HPE GreenLake for Private Cloud Enterprise. In networking, we introduced new capabilities with HPE Aruba Networking Central to expand universal zero trust network access solutions to help enterprises bolster cybersecurity. HPE Aruba Networking Central is now also available to deploy as an on-premises option. This is particularly helpful for customers prioritizing data sovereignty. Aruba Networking Central now manages over 5 million devices and is contributing to strong ARR subscription growth within Intelligent Edge. We are maintaining a rapid pace of AI innovation in our deep and long-standing partnership with NVIDIA. One of the cluster buildouts we are working on right now with NVIDIA is a large deployment of NVIDIA Grace Blackwell MVL72 systems. We are nearing completion and appreciate the continued partnership that pairs our capabilities. Most recently, at GTC Taipei at Computex, we announced several enhanced storage and server platforms targeting all customer segments. In 2025, we integrated NVIDIA's latest GPUs into our server portfolio, which delivered record-breaking performance for generative AI inferencing. We announced advancements in storage to unify enterprise data management to create context-rich AI-ready object data with built-in intelligence. We launched the HPE Alletra MP X1000 SDK solution for the NVIDIA AI Data Platform, bringing enterprise data into an intelligent orchestrated pipeline within the NVIDIA AI ecosystem. All these new innovations are aligned to our strategy to continue to move upstack to areas of higher growth with higher margins. We continue to help enterprises accelerate their business transformation across networking, hybrid cloud, and AI, and we will unveil even more exciting breakthrough innovations at the HPE Discover later this month. Finally, I want to reinforce our commitment to closing the Juniper Networks transaction. We expect the proposed transaction will deliver at least $450 million in annual run rate synergies to our shareholders within 36 months of closing the transaction. The deal will have both companies deliver a modern, secure, AI-driven edge-to-cloud portfolio of networking products and services. We continue to expect to close the transaction before the end of fiscal year 2025. In closing, in Q2, we delivered solid results through focused and disciplined execution. As we committed, we have addressed the server execution challenges. Our leadership team and I took accountability and swift action despite the challenges of a fluid microenvironment. We remain focused on executing against our goals and becoming a more agile and nimble company to continue to increase our profitability and enhance shareholder value. I remain excited about the profitable growth opportunities HPE has ahead, including the anticipated closure of the Juniper Networks transaction. We have the right strategy and the right team to continue to accelerate value for our shareholders. With that, let me turn it over to Marie. Marie. Thank you, Antonio, and good afternoon. In Q2, we addressed the execution challenges we experienced in Q1, which enabled us to drive improved margin performance in our server business as we moved through the quarter. While we still have more work to do to return the segment's operating profit margin performance to a double-digit rate, we are on the right trajectory to achieve that by Q4 of this year. In addition, our Intelligent Edge business returned to year-over-year top-line growth after five quarters as the networking market recovery gained momentum. We reported double-digit year-over-year revenue growth in our hybrid cloud segment for the third consecutive quarter, with all product lines contributing to growth. We also made significant progress against the cost reduction program we announced last quarter, which we expect will contribute to our results in future quarters. We reported non-GAAP diluted net earnings per share of $0.38 ahead of our outlook, driven in part by a more moderate tariff impact and operational benefits. However, we continue to navigate a complex macroeconomic and geopolitical landscape and remain prepared to take additional action in the back half of the year to deliver against our fiscal 2025 outlook. Let's talk about the details of the quarter. Our second quarter revenue was $7.6 billion, up 7% year-over-year but down- 3% quarter- over- quarter, reflecting strong top-line performance in Intelligent Edge and hybrid cloud and a year-over-year increase in server revenue. We did not see a significant benefit from tariff-related demand pull forward based on quarterly business linearity and historical order patterns. Our annualized revenue run rate was $2.2 billion, up 47% year-over-year, driven again by AI and Intelligent Edge. Our software and services ARR grew nearly 60% year-over-year and improved its mix of ARR by 700 basis points to 75%, primarily due to an increase in GreenLake Flex subscriptions and AI services. Non-GAAP gross margin was 29.4%, down 370 basis points year-over-year and flat quarter -over- quarter. On a year-over-year basis, gross margin was impacted primarily by an unfavorable mix within server, including the dilutive backlog in traditional compute we carried into the quarter. Non-GAAP operating margin was 8%, down 150 basis points year-over-year, reflecting lower gross margins partially offset by cost management. The 190 basis point sequential decline was primarily due to increased variable compensation and higher marketing expenses. Non-GAAP operating expense as a percentage of revenue increased sequentially from a record low in Q1 and declined 220 basis points year-over-year, reflecting better cost discipline as our business scales further. We'll continue managing discretionary costs and driving efficiencies while working to increase the incremental structural cost savings we drove this quarter. Free cash flow was - $847 million, slightly better than expected due in part to the conversion of some AI backlog. GAAP diluted net loss per share of $0.82 was below guidance of + $0.08-$0.14, primarily due to a non-cash goodwill impairment charge recorded in the quarter. Non-GAAP diluted net earnings per share of $0.38 was above our guided range of $0.28-$0.34. EPS included $0.02 each related to tariffs and OINE expense. Non-GAAP diluted net earnings per share excludes $1.7 billion in net costs primarily driven by a non-cash goodwill impairment charge of approximately $1.4 billion, or $1.03 per share related to our hybrid cloud business. This charge is due primarily to the macroeconomic uncertainty that played out during the second quarter, requiring an additional interim impairment test of our goodwill. These tests use a market-based cost of capital assumption, which increased significantly since our last test, leading to the material non-cash impairment charge. Our view on our hybrid cloud business has not changed. Other factors excluded from our non-GAAP diluted net earnings per share include expenses related to our cost reduction program, stock-based compensation expense, acquisition, disposition, and other charges, amortization of intangible assets, and H3C divestiture-related severance costs. Now, let's turn to our segment results. Server revenue was $4.1 billion, up 7% year-over-year and a decline of 5% sequentially, consistent with the higher end of the guidance range we provided. The quarter-over-quarter revenue decline was impacted by lower traditional compute volumes due to the implementation of corrective pricing actions we took at the end of Q1, offset partially by higher than expected AI systems revenue. We took decisive actions to address the execution issues that impacted our performance last quarter. Firstly, we implemented more rigorous reporting processes and analytics to more quickly identify and remediate operational issues. Secondly, we tightened our deal desk controls to require greater management scrutiny, including forward costing assumptions on orders. Lastly, we are managing inventory exposure associated with AI transactions and potential component transitions. We believe these steps will improve performance and profitability as we progress through the back half of fiscal 2025 and into next year. In traditional server, consistent with our expectations, revenue declined sequentially driven by volume declines, offsetting AUP growth as the Gen-11 server refresh continues to drive the majority of our core compute sales mix. We began shipping Gen-12 servers during Q2 and remain confident in its adoption and growth trajectory. In AI systems, we signed $1.1 billion in net new orders driven by strong growth in our enterprise and sovereign markets on both a year-over-year and sequential basis. We recognize more than $1 billion of revenue during the quarter, up from $900 million last year. AI systems revenue increased by greater than 10% sequentially versus our guidance of a modest decline due to improved customer readiness. Server operating margin of 5.9% was consistent with expectations. Our margin performance improved over the course of the quarter as the remediation actions we implemented in late Q1 helped offset some of the backlog pricing headwinds we carried into the quarter. Tariff-related headwinds were milder than expected, and margins are expected to benefit further from remediation actions as we progress through the second half of the year. Our Intelligent Edge business performance aligned with expectations as revenue and operating profit returned to year-over-year growth in Q2 for the first time in five quarters. Revenue was $1.2 billion, up 8% year-over-year, in line with our outlook for positive revenue growth due to the ongoing network market recovery and the diminished effect of the prior year's backlog. Revenue was up 2% quarter over quarter, reflecting improved demand. We saw orders grow high single digits year-over-year, including double-digit growth in both data center and campus switching. Wi-Fi 7 demand ramped meaningfully, with orders up triple digits sequentially. Federal, state, and local education spending was mixed in the quarter as the U.S. government adjusted to the new administration's priorities, while enterprise spending continued its positive trend. Our orders remained strong, and our channel inventory levels remained healthy as sell-through increased sequentially despite some pockets of softness across our geographies. Operating margin was 23.6%, up 180 basis points year-over-year, driven by revenue growth and cost discipline, resulting in operating profit dollar growth of 16%. Operating margin was down 380 basis points quarter- over- quarter, primarily due to increased variable compensation expense and slightly lower gross profit. Moving to hybrid cloud, revenue was $1.5 billion. Once again, we saw broad-based strength across all areas of the business, contributing to strong revenue growth of 15% year-over-year. Sequentially, revenue increased 4%, exceeding our expectations. In storage, our HPE Alletra MP platform continues to drive robust growth, with revenue up triple digits year-over-year and new logos up almost 300 sequentially. In addition, it continues to constitute over half of our IP block orders. In private cloud, we are seeing a strong pipeline for our PC AI product, doubling quarter- over- quarter, while VM Essentials has garnered at least 1,000 interested customers. Hybrid cloud operating margin rose 440 basis points year-over-year to 5.4%, driven by strong cost management, but declined 160 basis points sequentially due to higher variable compensation. Lastly, financial services. Our financial services business generated revenue of $856 million, up 1% year-over-year and down 2% quarter- over- quarter. Financing volumes decreased 20% year-over-year to $1.3 billion. Our Q2 loss ratio was 0.6%, and return on equity totaled 17.5%. Operating margin of 10.4% increased 110 basis points year-over-year and 100 basis points quarter over quarter and was the highest in two years, primarily due to strong cost management. Moving to cash flow and capital allocation. We consumed $461 million of operating cash flow in the quarter, and free cash flow was an outflow of $847 million, slightly better than we guided, which benefited from better-than-expected non-GAAP net earnings and inventory reduction. Inventory totaled $8.1 billion at the end of the period, down $481 million sequentially. Reducing our inventory balance to more normalized levels remains a key priority, and we expect to reduce inventory levels further in Q3 as we deploy a large AI system order booked earlier this year. Q2 cash conversion cycle was positive 26 days, up 21 days from last quarter. This was driven by a decrease in days payable due to higher vendor payments and lower inventory purchases, and an increase in days receivable due to later shipment timing in the quarter, offset by a decrease in days of inventory due to higher shipments. We expect sequential improvements in free cash flow, partially driven by an improved cash conversion cycle over the back half of the year. We returned $171 million through dividends and $50 million via share repurchases to common shareholders, respectively. Our results this quarter reflect the importance of balancing investments in innovation and growth with disciplined cost management to improve our long-term profitability and to drive shareholder value. Last quarter, we announced a cost reduction program aimed at streamlining our workforce and reducing our cost structure. This was an important first step, but only part of broader actions we're undertaking. This program is largely centered around a 5% workforce reduction that we expect to complete largely by year-end. We are on track to achieve our savings goals expected for FY 2025. We ended the quarter with a headcount just under 59,000, the lowest we have seen as an independent company. We are reducing management layers and flattening our organization because flatter is faster, enabling swifter decision-making and improving agility across functions. Today, we are accelerating those cost efforts through Catalyst, a comprehensive series of initiatives designed to accelerate revenue growth while also driving structural cost savings. These initiatives fall into four key categories and include the prior workforce cost reduction program, which we announced last quarter, in addition to efforts around operational efficiency, optimizing our portfolio, and using AI across our business. These workforce optimization efforts are covered by the existing $350 million in charges we announced last quarter, and any resulting benefits are included in our FY 2025 guide. We will update you at our securities analyst meeting in October when we provide our fiscal 2026 outlook. As part of Catalyst, we want to make it easier to do business with us, simplifying our offerings, streamlining our sales processes, and aligning our team internally to be more responsive to customers' needs. In addition, we will be leveraging AI to improve efficiency across our business. As an example, thwe are adopting an agentic AI initiative as part of our campaign. Within finance, HPE and Deloitte co-developed Zora AI CFO Insights agents built on NVIDIA's advanced AI stack and deployed on our own HPE Private Cloud AI platform. This strategic move will transform our executive reporting. We're turning data into actionable intelligence, accelerating our reporting cycles by approximately 50%, and reducing processing costs by an estimated 25%. Our ambition is clear: a leaner, faster, and more competitive organization. Nothing is off-limits. We are focused on rethinking the business, not just reducing our costs, but transforming the way we operate. We'll keep you regularly updated on our progress. Before addressing our outlook, given the evolving and uncertain state of global trade policy, I want to provide a brief update to our tariff outlook. Our initial full-year guidance of a 7% impact to earnings reflected our best estimate based on tariffs in place on March 4th, net of our mitigation efforts. As mentioned, we absorbed $0.02 in the second quarter. Looking out to the second half of the year, we are reducing our tariff impact by one penny to 2 cents as the 90-day pause currently in effect for most tariffs expires on July 9. For fiscal 2025, we are tightening our guidance due to improved visibility into the second half of the year. We now expect constant currency revenue growth of 7%-9%. We estimate currency impacts of about 20 basis points, improved from our prior view as FX becomes less of a headwind due to a weaker outlook for the US dollar. By segment, we expect to continue Intelligent Edge to grow mid-single digits, Hybrid Cloud to grow high single digits, and that server will grow low double digits. We are maintaining our outlook for non-GAAP gross margin to be below 30% for the full year, with Q4 exiting the year above that. In Q3, we expect operating expense to increase sequentially due to the higher marketing expenses associated with our annual discovery event, but is expected to step back down in Q4 to a level more consistent with Q2. We expect full-year non-GAAP operating margin above 9% at the midpoint as we see sequential improvements in the second half of fiscal 2025, exiting the year approaching normal ranges. By segment, we continue to expect Hybrid Cloud operating margin in the mid to high single- digits, Intelligent Edge to remain in the mid 20% range, and server to improve sequentially, exiting the year with an operating margin around 10%. We now expect OINE will constitute a net benefit of approximately $15 million. We are narrowing our fiscal year 2025 non-GAAP diluted net earnings per share outlook to $1.78-$1.90. 3 cents of this is related to a lower-than-expected net tariff expense, $0.001 and is related to operational improvements. We are guiding GAAP diluted net earnings per share between $0.30 and $0.42, inclusive of the goodwill impairment charge previously mentioned, versus our previous GAAP guidance range of approximately $1.15-$1.35. Our outlook for free cash flow of approximately $1 billion remains intact. For Q3, we expect revenue will be between $8.2-$8.5 billion. For Intelligent Edge, we expect revenue will continue to improve sequentially as the networking market recovery progresses, with operating margin remaining in the mid 20% range. For Hybrid Cloud, we expect revenue to increase slightly sequentially, with operating margin in the mid single digits, improved sequentially and year-over-year. For server, we forecast a sequential increase at mid-teens rate, reflecting a strong double-digit increase in AI systems revenue due to our large AI deal we expect to ship in Q3. Server operating margin is expected to improve sequentially, falling in the mid to high single digits range due to the corrective actions we took, offsetting a higher mix of AI systems revenue. We expect GAAP diluted net earnings per share to be between $0.24 and $0.29, and non-GAAP diluted net earnings per share to be between $0.40 and $0.45. We expect the second half of fiscal 2025 will be seasonally stronger than the first half, with free cash flow rebounding sequentially in Q3, primarily due to the continued reduction in inventories and increased net income. With that, I'll open the floor for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. In the interest of time, we request that you please ask only one question. We will now pause momentarily to assemble our... Your first question today will come from Amit Daryanani with Evercore. Please go ahead. Yep. Good afternoon. Thanks for taking my question. I guess maybe just to talk about April quarter numbers came in better than expected, especially on the server side where you had a few issues last quarter, I think both on the x86 and the AI side. If you could just talk about what's needed at this point for server margins to go from 5%-10%+ by year-end, it would be helpful just to understand and get an update on what issues have been resolved versus what still needs to be tackled as you go forward to get to that 10% number. Then, Antonio, maybe somewhat related to all this, since we last spoke, there have been public articles around an activist engagement. I'd love to understand sort of how do you think about it and maybe talk about your priorities or options in the event Juniper doesn't close because I think you've talked a fair bit about what the model can look like with Juniper in there. Thank you. Thanks, Amit, and good afternoon. As I said in my remarks, Marie, we addressed the execution challenges we had in Q1. If you recall, we spoke about three issues. It was the cost in our pricing, it was the discounting, and it was the inventory, which obviously was elevated, and that drove incremental expenses. We felt that we have addressed those issues with very targeted actions that will continue to deliver results as we go through the back half of the year. Examples of these actions are on the pricing side, new analytics, so that gives us a better insight of what comes next in our pipeline and how to price and discount those. Obviously, very, very stringent discounting empowerment throughout the organization. On the inventory side, quarter over quarter, we reduced inventory by $500 million. We believe that the remaining actions will be addressed through the back half as we convert more revenue. In Q3, we're going to convert a very large deployment that we expect to be completed here soon. We are confident that those actions will help us return to that 10% exit on operating margins in Q4. That is also substantiated by the incremental actions we are taking on cost. We are confident about that. That is why we have raised the bottom end of our guide, and we believe we have line of sight to that. In terms of your second question, look, we do not comment on specific communication that we have with our shareholders. Our board and I engage a number of shareholders, and we have an ongoing dialogue on a range of issues and opportunities. We value the constructive input from all of them. We believe today the fastest path to increase in accelerated shareholder value is the Juniper transaction. We also have seen and explored a number of other options if the Juniper deal does not happen, and that includes capital return and other portfolio actions. We are not going to discuss those until we see the outcome of the Juniper transaction. We are, look, we are within five weeks of the trial, and we hope to get that result and start the integration of the asset. Very good. Thank you, Amit. Next question, please. Your next question will come from Tim Long with Barclays. Please go ahead. Thank you. Antonio, I was hoping you could elaborate a little bit. You talked about, I think, the pipeline exiting Q2 being a little stronger than exiting Q1. You also mentioned a multiplier on the AI backlog, so I'm assuming that's part of the answer. But can you just kind of run through the businesses and give us a little bit of color on that pipeline, whether it's product-driven or geographic? What is driving that upside in pipeline compared to last quarter? Thank you. Yeah, thanks, Tim. Look, we saw a strengthening of the pipeline across the portfolio. Let's start with AI. Obviously, you saw that we recorded one-third of our orders in AI being now enterprise-driven. That's a very strong momentum there. It's driven by our servers, both Reliant and Cray with GPUs and private cloud AI. In sovereign, we continue to see a very strong engagement. We have a number of opportunities in the making, and we hope to close some of those here in the short- term. In the traditional service provider, right, and model builders, obviously, those are large deployments. As I said, we are closing now a deployment, which will be one of the largest GP-200 deployments so far in the world. We participate there where it makes sense because, obviously, there is a margin aspect and a working capital aspect. There also, we have multiples of our current backlog, which is now $3.2 billion. We went up $100 million quarter- over- quarter. That is on AI, and we continue to see very strong momentum. In the hybrid cloud, I am very, very pleased with the momentum we have in storage with our Alletra MP portfolio. Booking more than 75% order growth for four consecutive quarters is pretty stunning. As you know, a portion of that order gets deferred once we convert to revenue because there is a SaaS piece connected to the CapEx. In the short term, it's a revenue headwind. In the long term, it's a profit accretion. The demand for Alletra is very strong because we introduced a very unique disaggregated architecture with multi-protocol support. We also introduced integrated offerings with NVIDIA. At the same time, each of these aspects, whether it's the server or the storage, gets integrated in our private cloud portfolio. In addition, the virtualization part of the private cloud is very, very strong. Marie stated that there are now 1,000 customers logged in our pipeline, and now they're going through POCs. One customer, Danfoss, has already committed to transition 75% to their estate. That's a predefined number. We see tremendous opportunities ahead. GreenLake. Look, GreenLake continued to do extremely well with 47% in subscription services growth. That is through both storage growth and intelligent edge growth and the private cloud growth. In networking, the market, I believe, has recovered, right? Three consecutive quarters of order demand. We see that in Wi-Fi 7 transition, in the upgrade cycle of switching in campus and branch. Now we start seeing growth in data center switching because we have a unique position there. Once we close the Juniper deal, we expect that growth to continue to accelerate. We saw strong, solid momentum across the three areas of the portfolio, balance across geography. Actually, I will say Europe was very solid. Now, Europe, obviously, now you have the Euro strengthening, right, which is helpful from a revenue perspective. At the same time, we need to see what happens after the summer, which normally tends to be a reset in many ways. So far, so good. I'm very encouraged. Here in three weeks, we're going to make a series of new announcements, which I believe will strengthen that pipeline. Ve ry good. Thank you. Operator, next question, please. Your next question today will come from Meta Marshall with Morgan Stanley. Please go ahead. Great. Thanks. Just wanted to get a sense of kind of where you're seeing the most AI server traction kind of right now. Maybe just on the second piece, just about improving kind of the margin profile of the storage business, realize kind of Alletra doing quite well, but just kind of what you see as the path towards kind of improving the margin profile there with your own IP products. Thanks. Yeah, Mita. On the server side, look, it's a combination depending on the customer segment. When you think about these large service providers or model builders, they tend to consume a large amount of compute. It's very compute-driven, meaning accelerating computing. That comes with networking and other things that you have to surround around the infrastructure, which obviously direct liquid cooling, which we have been talking about since last October, is now a necessity. We believe HPE is uniquely positioned both from an IP perspective and manufacturing capability at scale perspective. It takes an enormous amount of work, and we have learned a lot in these deployments in the last few months. As you go to sovereign, it's a mix of compute and storage and as well supercomputing. Let's not forget supercomputing continues to be a very important element. Clearly, there are 15-20 countries. They're all trying to deploy AI factories for sovereign reasons and the like. There, again, very compute-centric, but there are other types of infrastructure you can attach to it. An enterprise is all above, right? What we see in enterprise is time to value, is not time to market. Time to value meaning I don't need to spend a lot of time gluing together infrastructure. I need to deploy infrastructure at the speed I can deliver value to the enterprise. This is where storage and compute are very tightly coupled with networking that really brings all of that together. The software piece of that is the most essential component. That's why GreenLake resonates because once you are in GreenLake, you already have access to all the software. That's the co-engineering work we have done with NVIDIA, bringing their software and HPE software in an environment where they can accelerate time to value. That's what we have seen. In terms of storage margin, Marie, you want to take that? Yeah. No, look, I'd say, Mita, we do expect to see the margins, as you know, we reflect that in our hybrid cloud segment. Through the course of the year, we do expect to see the margins actually turn up towards the end of the year to the high single digits. You'll see some of that favorability basically flow through by the end of Q4. Thanks, Mita. Next question, please. Your next question today will come fro m Simon Leopold with Raymond James. Please go ahead. Hi, guys. This is Victor Chewin for Simon Leopold. Has Blackwell demand helped to bridge the recovery in AI servers and contribute to the improved line of sight that you noted earlier? I guess, what steps have you taken to ensure that you have optimized inventory levels around AI servers going forward? Yeah. I mean, in Q1, I said that the demand, the orders we booked, shifted very rapidly to Blackwell. That clearly is now what we've seen. The way we drive this process now, remember, for some of the customers, not all of them, is prepayment. That means that unless they prepay us, we don't buy inventory. That's point number one. Point number two is that on the previous generation, that inventory has been decreased dramatically. There's still demand, but our exposure on the older inventory is significantly lower, and we are adequately reserved at this point in time. Okay. Thank you. Next question, please. Your next question will come from Samik Chatterjee with JPMorgan. Please go ahead. Hi. Thanks for taking my question. I guess maybe, Antonio, on the general purpose servers, if I can ask you, just relative to whenever competitors have talked about more specifically sort of calling out weaker trends in general purpose servers in the U.S. specifically, maybe if you can sort of highlight what trends you're seeing there in terms of customer orders, independent of the execution improvement that you're seeing in that business. Maybe just a follow-up there. I know you're reiterating the 10% margin target for the total server segment for Q4, but that's sort of the reiteration from the quarter ago. Tariffs are a lower headwind than what you anticipated 90 days ago. Did you automatically assume that the outlook was better than what you thought 90 days ago? Thank you. Yeah. I'm really sorry. I have a very hard time hearing you. Maybe I don't know if you can reconnect with a better line. I caught a little bit about North America, I think it was. Look, we in North America, we didn't see any slowdown at this point in time. I mean, it was steady as we normally have seen. We have a strong engagement with our partner network. I didn't see that at this point in time. In fact, I will argue that our monthly order demand was stronger than the previous two months. That's what I saw. The second part, honestly, I couldn't hear. Are you got it, Marie? I think Simon got to heard you just talk about the server operating margins. Let me just sort of walk you through how to think about those margins through the year. As we look sequentially, we do expect to see those margins improve. As we walk from Q2- Q3 and Q3- Q4, Q3 is going to be driven, as Antonio mentioned earlier, by the mix of server revenue, which is going to be skewed by that large AI order that we expect to ship in Q3. As you correctly said, as we move from Q3- Q4, we do expect Q4 to exit the year around 10%. That is consistent with what we have said before. I just want to clarify that for you as well, please. Great. Okay. Thank you, Samik. Operator, next question, please. Your next question today will come from Ananda Baruah with Loop Capital. Please go ahead. Oh, yes. Thanks, guys. Appreciate the question. Yeah. Just I guess, Antonio, as we get going through the Blackwell ramp, since we're at the front end and you're already starting to notice it in your business, is it reasonable to anticipate higher highs, increased highs in both systems revenue over time and in backlog as well as we go through the cycle? You saw this through the Hopper cycle, and it would make sense that you would see it through the Blackwell cycle. Just want to get your thoughts on that as well. Thanks. That's it for me. Thanks. Yeah. No, thank you, Anand. Look, this business is lumpy, right? You're going to have periods of very high orders if you close one or two very large deals with service providers. Obviously, after that is the revenue recognition because I can tell you from what I learned in this deployment, it takes several months to build it, ship it, install it, and make it productive. That said, though, as we go from the 200 to the 300, I think the mix is going to shift a little bit between the Grace Blackwell 300 with the Blackwell only 300. That has to do with performance, and it has to do with the use case between training and inferencing. I will say that as I think about these large deals that are in the pipeline, pretty much all of them are 200 with a lot shifting already to 300. That will take time to see it from orders to revenue because remember, the 300 is coming in the back half of 2025 or early 2026 at scale. Okay. Thank y ou, Ananda. Operator, next question, please. Your next question today will come from Michael Ng with Goldman Sachs. Please go ahead. Hi. Good afternoon. Thank you for the question. First, I wanted to ask about the comments around federal and state and local education spending. Any visibility into when that improves and when you get better line of sight into that? Second, just on the higher-than-expected AI systems revenue in the quarter, I think you mentioned some of the AI outperformance driven by improved customer readiness. Could you just provide a little bit more texture around that? Is that driven by a greater need to do these AI deployments? Is it component availability? Any thoughts there would be great. Thank you. Yeah. I mean, on the U.S. federal spend, right? Clearly, there was a period of time where the government had to enact their plans. Remember, not every vendor participates uniformly across the federal. We are unique in many ways because we provide systems at large scale, sometimes in classified environments, sometimes in non-classified environments. That has not slowed down in the context of what we see. However, there are areas of the government where there was a pause, whether it is reviewing current deals that the government needed an incremental approval to get it done. We expect that to solve itself as we go in the back half. We have a very solid pipeline related to the US federal business. Now, remember, we are also a large provider of supercomputing capacity. That is very important. We already see new opportunities in the pipeline as we go through the refresh of that. The second part of the question was I'm trying to think about the deal timing for some of these AI deals. Now, look, I mean, the timing of the deals and the deployment, right, we believe are aligned to the customer needs. When we think about these deployments, we see an acceleration of deployments because in enterprise, they either put it in a colo or they put it in their own data center. What we see customers doing is modernizing the data center, especially because they are focused on data sovereignty and compliance, free up the space, and bring the infrastructure that they need to do ragging or fine-tuning or inferencing. In service providers, look, there is a lot of buildouts, but they tend to be very straightforward unless you work a very, very large deployment. In terms of components availability, we have now seen a constraint in components availability to the current generation. As we go to the 300, it is a different story. I would just add that specifically in Q2, we saw that incremental AI revenue, it was really related to what Antonio said around customer readiness. Just thinking about it from a timing perspective, that is the way to think about that AI revenue in Q2. Thank you, Mike. Next question, please. Your next question will come from David Vogt with UBS. Please go ahead. Great. Thanks, guys, for taking my question. Maybe, Antonio, can I dig in on sort of the industry drivers and the demand backdrop? Because I thought I heard you say that demand seemed to be relatively solid even in the third month of April. I guess what I'm trying to understand is July, the quarter, the guide looks relatively strong. If I kind of take it in the context of the full year, we're looking for, I think, a relatively modest sequential growth in October. I recognize the backdrop is murky and the comp is tough on a year-over-year. Can you maybe just expand on why you're being a little bit more conservative than I thought you would be given the trends in October? Maybe just for Marie, on the workforce reduction plan, I would imagine that the vast majority of that is skewed towards the server business. If not, please correct me. I'm trying to think through what are the margin impacts on server as we exit this year when the plan is complete and you're exiting at a 10% rate? I mean, does that suggest that we can get back to the level of margins previously before this most recent downdraft because of some execution issues? I'm thinking more of fiscal 2024. Thank you. Why don't I take the second part of your question first on the server margins and the restructuring plan? First of all, just pleased to say we're on track in terms of our savings goals. What we said on the last call was that we had 20% of savings of the $350 million are in the year. At this point, overall, I think I said in my prepared remarks, we've actually seen really good progress against a headcount. Absolutely on track to achieve the goals we had. With respect to how to tie that to server margin, that plan is actually more than server. It is actually enterprise-wide. I just want to correct your question because it is not specifically aimed at server. It is aimed at just actually the entire company. We did announce Catalyst also as part of the statements I made as well earlier. As we think about server margins, we will let you know because we have got Sam coming up in October. We will give you further sort of color around how to think about those margins for 2026. That is it on the server piece. In terms of just the revenue linearity in the back half of the year, as I said in my prepared remarks, we do expect to ship a very large AI deal in Q3. As a result of that, we're going to see a more non-seasonal pattern in Q3. Then we'll continue to see revenue growth from a year-on-year basis into Q4. It is going to be moderated because of the fact we've got that large conversion of that large AI system deal in Q3. That is how you should be thinking about the revenue seasonality in the back half and respectively between Q3 and Q4. I will say for Q4, right, look, there is timing related to some of the deals. If you recall, in Q4 of 2024, we had an exceptional Q4 with significant year-over-year revenue growth. Despite that, we expect year-over-year revenue growth in Q4. To Marie's point, the seasonality between Q3 and Q4 is a little bit different because of this very large acceptance we are working right now as we speak. Okay. Thank you. Operator, this will be our last question, please. Your final question today will come from Aaron Rakers with Wells Fargo. Please go ahead. Yeah. Thanks for taking the question. I want to just kind of dig a little bit deeper into the AI server competitive landscape. Antonio, if I look at your closest competitor, I think their new order number was like $12 billion. You guys talked about $1 billion. I'm curious, should we kind of think about HPE as a little bit different in terms of how you're going to market, what segments you really want to focus on maybe relative to your peers? Has there been any kind of changes in the competitive landscape in terms of deals that you'll go after and maybe walk away from? I'm just curious how you would kind of compare fairly different numbers in terms of the order momentum we're seeing on these AI servers. Thank you. Sure. Look, we are focused in all segments of the market, but we participate with discipline where we see path to gross margin accretion and obviously working capital that eventually translates into free cash flow. What I saw there is probably a couple of large opportunities that we decided not to participate. If you look at their results, it's fair to say that they actually, on the profitability, we will see what they're going to do. My view is that in enterprise, we're all in, and we see that momentum. In sovereign, we're all in, and we see the momentum as you see more in the next few weeks. And then in service provider, we participate where we believe we can sustain that 10% operating margin and still sustain our revenue as we go forward. Antonio, any closing comments? Yeah. No. Look, I know we probably have more questions, but I know we have follow-up calls with each of you. Look, we delivered a solid Q2. I'm very pleased with the fifth consecutive quarter of year-over-year revenue growth. We see the actions we are taking in server already delivering the results that we want, and we're going to see that in the next two quarters. Networking continued to do very well. We are very pleased with the hybrid cloud. As always, there is more work to do. I believe we have line of sight to our new guide and commitments. It's all about driving the execution, which is sustained by an amazing portfolio with amazing innovation. I hope you will pay attention to what we have to say in three weeks at HPE Discover. You will be very impressed about the number of new innovations we're going to continue to bring to the market across networking, hybrid cloud, and AI. We hope next time we speak, we're going to have an answer on the Juniper Networks deal. Thank you again for your time today. fThe conference has now concluded. Thank you for attending today's presentation. You may now disconnect.