HPE Delivers Q2 Results & Raises FY19 EPS Outlook

May 23, 2019

SAN JOSE, Calif., May 23, 2019 – Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for its fiscal 2019 second quarter, ended April 30, 2019.

Q2 2019 Financial Highlights:
• Revenue: $7.2 billion
• Diluted Net Earnings Per Share:
• GAAP $0.30, down 44% from the prior-year period EPS from continuing operations due primarily to one-time, non-cash adjustments related to U.S. tax reform in the prior-year period and above the previously provided outlook of $0.19 to $0.23
• Non-GAAP $0.42, up 31% from the prior-year period EPS and above the
previously provided outlook of $0.34 to $0.38 per share
• Cash Flow from Operations: $987 million, up 300% from $247 million in the prioryear period
• Free Cash Flow: $402 million, up $671 million from the prior-year period

FY 2019 Outlook:
• Earnings Per Share: Raising GAAP diluted net earnings per share outlook to $0.98 to $1.08 and non-GAAP diluted net earnings per share outlook to $1.62 to $1.72
• Free Cash Flow: Reiterating free cash flow guidance of $1.4 to $1.6 billion

“In Q2 we demonstrated traction in critical areas for our customers that delivered strong margin improvement, EPS above our outlook and solid cash flow,” said Antonio Neri, President and CEO of HPE. “We continue to make important strategic moves that further enhance our competitive position and ability to better serve our customers in a hybrid world. I remain confident that our edge-to-core strategy backed by the important investments we’ve been making will generate positive shareholder returns in the near and longer term.”

Second Quarter Fiscal Year 2019

Financial Summary

Second quarter net revenue of $7.2 billion, down 4% from the prior-year period, and down 2% when adjusted for currency. Second quarter net revenue was up 1% from the prior-year period, excluding Tier 1 server sales, when adjusted for currency.

Second quarter GAAP diluted net earnings per share (“EPS”) from continuing operations was $0.30, down from GAAP diluted net EPS from continuing operations of $0.54 in the prior-year period primarily due to one-time, non-cash adjustments related to U.S. tax reform in the prior-year period. Second quarter non-GAAP diluted net EPS from continuing operations was $0.42, up from non-GAAP diluted net EPS from continuing operations of $0.32 in the prior-year period.

Second quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax adjustments of $160 million and $0.12 per diluted share, respectively, primarily related to the impact of acquisition, disposition and other related charges, amortization of intangible assets, transformation costs, an adjustment to earnings from equity interests and the impact of U.S. tax reform.

Second quarter cash flow from operations of $987 million and free cash flow of $402 million, was up $740 million and $671 million from the prior-year period, respectively.

Segment Results

• Intelligent Edge revenue was $666 million, down 6% year over year and down 5% when adjusted for currency, with 3.0% operating margin. HPE Aruba
Product revenue was down 8% year over year and down 7% when adjusted for currency and HPE Aruba Services revenue was up 16% year over year and up 18% when adjusted for currency.

• Hybrid IT continued to drive profitable growth with revenue of $5.6 billion, down 4% year over year and down 3% when adjusted for currency with 11.4%
operating margin that was up 140 bps year over year. Compute revenue was down 5% year over year and down 4% when adjusted for currency. Excluding the impact from the company’s intentional exit of certain Tier 1 customer segments, Compute revenue was up 4% when adjusted for currency and HPE’s higher-margin Value Compute portfolio grew approximately 8% when adjusted for currency, driven by strength in high-performance compute, hyperconverged and composable cloud. Storage revenue was up 3% year over year and up 5% when adjusted for currency, with particular strength in Nimble, XP and Entry Storage. HPE Pointnext revenue was down 7% year over year and down 3% when adjusted for currency. HPE Pointnext operational services orders, including Nimble services was up 1% when adjusted for currency.

• Financial Services revenue was $896 million, down 2% year over year and up 2% when adjusted for currency, net portfolio assets were down 2% year over year and up 1% when adjusted for currency, and financing volume was down 10% year over year and down 6% when adjusted for currency. The business delivered an operating margin of 8.6%.

Raised FY 2019 Outlook

For the fiscal 2019 third quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.29 to $0.33 and non-GAAP diluted net EPS to be in the range of $0.40 to $0.44. Fiscal 2019 third quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.11 per diluted share, primarily related to transformation costs and the amortization of intangible assets.

For fiscal 2019 full-year, Hewlett Packard Enterprise now estimates GAAP diluted net EPS to be in the range of $0.98 to $1.08 and the non-GAAP diluted
net EPS to be in the range of $1.62 to $1.72. Fiscal 2019 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.64 per diluted share,
primarily related to transformation costs, the amortization of intangible assets, and an adjustment to earnings from equity interests.

For fiscal 2019 full-year, Hewlett Packard Enterprise reiterates free cash flow guidance range of $1.4 to $1.6 billion, up over 35% from the prior year.

Link to full release – PDF.

About Hewlett Packard Enterprise

Hewlett Packard Enterprise is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. HPE enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.


Source: Hewlett Packard Enterprise

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