HPE Reports Fiscal 2021 Second Quarter Results

HOUSTON, June 1, 2021 — Hewlett Packard Enterprise today announced financial results for the second quarter, ended April 30, 2021.

Q2 2021 Financial Highlights:

Revenue: $6.7 billion, up 11% from the prior-year period or 9% when adjusted for currency with better than normal sequential seasonality driven by strong demand
- Annualized revenue run-rate (ARR): $678 million, up 30% from the prior-year period
- Intelligent Edge revenue: $799 million, up 20% from the prior year period or 17% when adjusted for currency
- HPC & MCS revenue: $685 million, up 13% from the prior-year period or 11% when adjusted for currency
- Core businesses delivered revenue growth and strong profitability with Compute revenue of $3.0 billion, up 12% from the prior-year period or 10% when adjusted for currency and Storage revenue of $1.1 billion, up 5% from the prior-year period or 3% when adjusted for currency
Diluted net earnings per share (“EPS”):
- GAAP of $0.19, above the previously provided outlook of $0.02 to $0.08 per share
- Non-GAAP of $0.46, up 70% from the prior-year period and above the previously provided outlook of $0.38 to $0.44 per share
Cash flow from operations of $822 million, up $722 million from the prior-year period
Generated free cash flow of $368 million, up $770 million from the prior-year period

Dividend: declared a regular cash dividend of $0.12 per share, payable on July 7, 2021

Outlook:

Fiscal 2021 Third quarter: Estimates GAAP diluted net EPS to be in the range of $0.04 to $0.10 and non-GAAP diluted net EPS to be in the range of $0.38 to $0.44
Fiscal 2021: Raises GAAP diluted net EPS outlook to $0.60 to $0.72 and non-GAAP diluted net EPS outlook to $1.82 to $1.94
Fiscal 2021 free cash flow¹: Raises free cash flow guidance to $1.2 to $1.5 billion

“Our disciplined execution on our strategic priorities is positively impacting both top and bottom line performance,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “We are strengthening our core compute and storage businesses, doubling down in our growth Intelligent Edge and HPC businesses and accelerating our pivot to as-a-service, while also advancing our cloud-first innovation agenda to become the edge-to-cloud platform as-a-service choice for our customers and partners.”

“As businesses emerge from the pandemic and move beyond the immediate needs of COVID, digital transformation is at the forefront of their strategic initiatives,” said Neri. “Our focus has been to accelerate our strategy in order to help our customers transform their businesses, optimize their applications and data across an increasingly distributed world, and be future ready, today.”

“I am very pleased with our results that are marked by revenue growth, strong profitability and free cash flow,” said Tarek Robbiati, EVP and CFO of Hewlett Packard Enterprise. “The overall demand environment is improving, and we are seeing traction across our portfolio.”

“We are once again raising our full-year guidance to reflect the continued momentum in the demand environment and our strong operational performance to date,” continued Robbiati. “This marks the third increase in our outlook since our Securities Analyst Meeting last October.”

Second Quarter Fiscal Year 2021 Results

Net revenue of $6.7 billion, up 11% from the prior-year period or 9% when adjusted for currency, with better than normal sequential seasonality driven by strong demand.

Annualized revenue run-rate (ARR) of $678 million, up 30% from the prior-year period and total as-a-Service orders were up 41% from the prior-year period. HPE Aruba Central SaaS platform continued to grow, up triple-digits from the prior-year period. Based on strong customer demand and recent wins, we reiterate our 2020 Securities Analyst Meeting ARR guidance of 30-40% Compounded Annual Growth Rate from fiscal year 2020 to fiscal year 2023.

GAAP gross margins of 34.1%, up 220 basis points from the prior-year period and Non-GAAP gross margins of 34.3%, up 210 basis points from the prior-year period.

GAAP diluted net earnings per share (“EPS”) was $0.19, compared to ($0.64) in the prior-year period and above the previously provided outlook of $0.02 to $0.08 per share.

Non-GAAP diluted net EPS was $0.46, compared to $0.27 in the prior-year period and above the previously provided outlook of $0.38 to $0.44 per share. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $353 million or $0.27 per diluted share, respectively, primarily related to transformation costs, stock-based compensation expense and the amortization of intangible assets.

Cash flow from operations of approximately $822 million, up $722 million from the prior-year period.

Free cash flow of $368 million, up $770 million from the prior-year period.

Segment Results

Intelligent Edge revenue was $799 million, up 20% from the prior-year period or 17% when adjusted for currency, with 15.5% operating profit margin, compared to 12.3% from the prior-year period. Switching was up 17% from the prior-year period when adjusted for currency, WLAN was up 16% from the prior-year period when adjusted for currency, and Aruba SaaS offering was up triple-digits from the prior-year period and is now a meaningful contributor to HPE’s overall ARR.
High Performance Compute & Mission Critical Systems (HPC & MCS) revenue was $685 million, up 13% from the prior-year period or 11% when adjusted for currency, with 2.8% operating profit margin, compared to 7.6% from the prior-year period. We remain on track to achieve our full year and 3-year revenue growth CAGR target of 8% to 12%.
Compute revenue was $3.0 billion, up 12% from the prior-year period or up 10% when adjusted for currency, with 11.3% operating profit margin, compared to 5.8% from the prior-year period.
Storage revenue was $1.1 billion, up 5% from the prior-year period or up 3% when adjusted for currency, with 16.8% operating profit margin, compared to 15.7% from the prior-year period. Notable strength in software-defined solutions, including Nimble, up 17% from the prior-year period when adjusted for currency with strong momentum in dHCI growing triple-digits. All flash Arrays grew 20% from the prior-year period led by Primera, up triple-digits from the prior-year period.
Financial Services revenue was $839 million, up 1% from the prior-year period or down 3% when adjusted for currency, with 10.8% operating profit margin, compared to 9.2% from the prior-year period. Net portfolio assets were up 3% from the prior-year period or down 2% when adjusted for currency. The business delivered return on equity of 18.3%, up 2.5 points from the prior-year period.

Dividend

Board of Directors have declared a regular cash dividend of $0.12 per share on the company’s common stock. This dividend, the third in Hewlett Packard Enterprise’s fiscal year 2021, is payable on July 7, 2021, to stockholders of record as of the close of business on June 16, 2021.

Fiscal 2021 third quarter outlook:

Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.04 to $0.10 and non-GAAP diluted net EPS to be in the range of $0.38 to $0.44. Fiscal 2021 third quarter non-GAAP diluted net EPS estimates exclude after-tax adjustments of approximately $0.34 per diluted share, primarily related to transformation costs, stock-based compensation expense and the amortization of intangible assets.

Fiscal 2021 outlook:

Hewlett Packard Enterprise raises GAAP diluted net EPS outlook to $0.60 to $0.72 from $0.48 to $0.66 and non-GAAP diluted net EPS outlook to $1.82 to $1.94 from $1.70 to $1.88. Fiscal 2021 non-GAAP diluted net EPS estimates exclude after-tax adjustments of approximately $1.22 per diluted share, primarily related to transformation costs, stock-based compensation expense and the amortization of intangible assets.

Raises free cash flow¹ guidance range to $1.2 to $1.5 billion from $1.1 to $1.4 billion.

¹Hewlett Packard Enterprise provides certain guidance on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results. Refer to the discussion of non-GAAP financial measures below for more information.

Link to the full release.

About Hewlett Packard Enterprise

Hewlett Packard Enterprise (NYSE: HPE) is the global edge-to-cloud platform as-a-service company that helps organizations accelerate outcomes by unlocking value from all of their data, everywhere. Built on decades of reimagining the future and innovating to advance the way people live and work, HPE delivers unique, open and intelligent technology solutions, with a consistent experience across all clouds and edges, to help customers develop new business models, engage in new ways, and increase operational performance. For more information, visit: www.hpe.com.

Source: HPE