HPE Reports Fiscal 2017 Third Quarter Results

September 5, 2017

PALO ALTO, Calif., Sep. 5, 2017 — Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for its fiscal 2017 third quarter, ended July 31, 2017.

Third quarter net revenue of $8.2 billion was up 3% from the prior-year period and up 6% when adjusted for divestitures and currency.

Third quarter GAAP diluted net earnings per share (“EPS”) from continuing operations was $0.15, down from GAAP diluted net EPS from continuing operations of $1.43 in the prior-year period. Third quarter non-GAAP diluted net EPS from continuing operations was $0.31, down from non-GAAP diluted net EPS from continuing operations of $0.40 in the prior-year period. Third quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax costs of $269 million and $0.16 per diluted share, respectively, related to separation costs, restructuring charges, amortization of intangible assets, acquisition and other related charges, transformation costs, valuation allowances and divestiture taxes, tax indemnification adjustments, defined benefit plan settlement charges and remeasurement benefit and an adjustment to earnings from equity interests.

“The results of the third quarter are an encouraging sign of the progress we are making,” said Whitman. “With better execution we drove overall revenue growth, exceeded our EPS targets and improved our operating margins sequentially, all while completing the spin-merge of our Software business. There’s more work to do, but we are on the right track.”

Information about HPE’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.

Outlook

For the fiscal 2017 fourth quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.00 to $0.04 and non-GAAP diluted net EPS to be in the range of $0.26 to $0.30. Fiscal 2017 fourth quarter non-GAAP diluted net EPS from continuing operations estimates exclude after-tax costs of approximately $0.26 per diluted share, related primarily to separation costs, restructuring charges, the amortization of intangible assets, acquisition and other related charges and an adjustment to earnings from equity interests.

HPE is adjusting its fiscal 2017 full year outlook in connection with the close of the Software transaction. As previously disclosed, the Software transaction will impact HPE’s fiscal 2017 diluted net EPS by approximately $0.13, including Software-related stranded costs. For fiscal 2017, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of ($0.11) to ($0.07) and nonGAAP diluted net EPS to be in the range of $1.36 to $1.40. Fiscal 2017 nonGAAP diluted net EPS from continuing operations estimates exclude after-tax costs of approximately $1.47 per diluted share, related primarily to valuation allowances and divestiture taxes, separation costs, restructuring charges, transformation costs, amortization of intangible assets, acquisition and other related charges and an adjustment to earnings from equity interests.

Fiscal 2017 third quarter segment results

  • Enterprise Group revenue was $6.8 billion, up 3% year over year, up 3% when adjusted for currency, with a 9.3% operating margin. Servers revenue was down 1%, flat when adjusted for currency, Storage revenue was up 11%, up 11% when adjusted for currency, Networking revenue was up 16%, up 17% when adjusted for currency, and Technology Services revenue was up 1%, up 2% when adjusted for currency.
  • Software revenue was $718 million, down 3% year over year, down 2% when adjusted for divestitures and currency, with a 24.9% operating margin. License revenue was up 2%, up 5% when adjusted for divestitures and currency, Support revenue was down 2%, down 1% when adjusted for divestitures and currency, Professional Services revenue was down 23%, down 22% when adjusted for divestitures and currency, and Software-as-a-service (SaaS) revenue was up 7%, up 7% when adjusted for divestitures and currency.
  • Financial Services revenue was $897 million, up 10% year over year, net portfolio assets were up 2%, and financing volume was down 8%. The business delivered an operating margin of 7.8%.
    • Revenue from continuing operations adjusted for divestitures and currency excludes revenue resulting from businesses divestitures in fiscal 2017 and 2016 and also assumes no change in the foreign exchange rate from the prior-year period. A reconciliation of GAAP revenue to revenue adjusted for divestitures and currency is provided in the earnings presentation at investors.hpe.com.

About Hewlett Packard Enterprise

Hewlett Packard Enterprise (HPE) is an industry leading technology company that enables customers to go further, faster. With the industry’s most comprehensive portfolio, spanning the cloud to the data center to workplace applications, our technology and services help customers around the world make IT more efficient, more productive and more secure.


Source: HPE

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