HOUSTON, May 31, 2023 — Hewlett Packard Enterprise has announced financial results for the second quarter ended April 30, 2023.
“Building on a great start to the fiscal year, HPE grew revenue, increased the contribution of recurring revenue through the HPE GreenLake edge-to-cloud platform, and delivered exceptional profitability to generate a strong second quarter performance,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “Our shift to a higher-margin portfolio mix led by the Intelligent Edge segment, and the strong demand for our AI offering, further strengthen the investment opportunity for our shareholders.”
“We are very pleased that the progress we are making against our strategy continues to deliver on both the top and bottom lines,” said Tarek Robbiati, executive vice president and CFO of Hewlett Packard Enterprise. “These results demonstrate that our strategy to pivot our portfolio to higher-growth, higher-margin areas is working – and that we are operating with discipline.”
Second Quarter Fiscal 2023 Segment Results
Intelligent Edge revenue was $1.3 billion, up 50% from the prior-year period in actual dollars and 56% in constant currency, with 26.9% operating profit margin, compared to 12.6% in the prior-year period. The business exceeded the Rule of 40 for a second consecutive quarter.
High Performance Computing & Artificial Intelligence (“HPC & AI”) revenue was $840 million, up 18% from the prior-year period in actual dollars and 22% in constant currency, with (0.2)% operating profit margin, compared to (5.6)% from the prior-year period.
Compute revenue was $2.8 billion, down 8% from the prior-year period in actual dollars and 3% in constant currency, with 15.2% operating profit margin, compared to 14.1% from the prior-year period.
Storage revenue was $1.0 billion, down 3% from the prior-year period in actual dollars and up 2% in constant currency, with 7.9% operating profit margin, compared to 11.8% from the prior-year period. HPE Alletra revenue grew triple digits from the prior-year period.
Financial Services revenue was $858 million, up 4% from the prior-year period in actual dollars and up 7% in constant currency, with 9.8% operating profit margin, compared to 12.6% from the prior-year period. Net portfolio assets of $13.3 billion, up 5% from the prior-year period in actual dollars and in constant currency. The business delivered return on equity of 16.5%, down 3.9 points from the prior-year period.
The HPE Board of Directors declared a regular cash dividend of $0.12 per share on the company’s common stock, payable on July 14, 2023, to stockholders of record as of the close of business on June 15, 2023.
Fiscal 2023 Third Quarter Outlook
HPE estimates revenue to be in the range of $6.7 billion to $7.2 billion. HPE estimates GAAP diluted net EPS to be in the range of $0.34 to $0.38 and non-GAAP diluted net EPS to be in the range of $0.44 to $0.48. Fiscal 2023 third quarter non-GAAP diluted net EPS estimates exclude after-tax adjustments of $0.10 per diluted share, primarily related to, stock-based compensation expense, transformation costs and amortization of intangible assets.
Fiscal 2023 Outlook
HPE estimates fiscal 2023 revenue growth to be in the range of 4%-6% in constant currency, and targets fiscal 2023 GAAP operating profit growth to be in the range of 180%-184% and non-GAAP operating profit growth to be in the range of 6%-7%. HPE raises GAAP diluted net EPS to be in the range of $1.42 and $1.50 and non-GAAP diluted net EPS to be in the range of $2.06 and $2.14. Fiscal 2023 non-GAAP diluted net EPS estimates exclude after-tax adjustments of $0.64 per diluted share, primarily related to stock-based compensation expense, amortization of intangible assets, and transformation costs.
Fiscal 2023 Free Cash Flow
Reiterates guidance of $1.9 billion to $2.1 billion.
Fiscal 2023 Capital Returns to Shareholders
Returning approximately 60% of free cash flow to shareholders in dividends and share repurchases.
Download the Q2 FY23 earnings infographic here.
H3C Technologies Co., Limited Update
HPE, through its relevant subsidiaries, has entered into a Put Share Purchase Agreement with Unisplendour International Technology Limited (“UNIS”) governing the sale of shares of H3C Technologies Co., Limited (“H3C”) held by HPE, through its relevant subsidiaries, which represent 49% of the total issued share capital of H3C. This follows HPE’s decision in December 2022 to exercise an option to put its holdings in H3C to UNIS. Under the Put Share Purchase Agreement, UNIS will purchase all of HPE’s shares in H3C for a total of U.S. $3.5 billion in cash. The disposition remains subject to obtaining required regulatory approvals and completion of certain conditions necessary for closing. The parties anticipate that the transaction will close in the next 6 months to 12 months, however this timeline could be extended pursuant to the terms of the Put Share Purchase Agreement.
In addition, HPE has negotiated the terms of a new go-forward Strategic Sales Agreement to be entered into with H3C that covers direct sales, service and reseller arrangements between the companies. HPE is firmly committed to serving customers and continuing to do business in China through both direct sales and our partner H3C.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise (NYSE: HPE) is the global edge-to-cloud 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 as a service. With offerings spanning Cloud Services, Compute, High Performance Computing & AI, Intelligent Edge, Software, and Storage, HPE provides a consistent experience across all clouds and edges, helping customers develop new business models, engage in new ways, and increase operational performance.