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  /  Latest News   /  Hewlett Packard Enterprise Reports Fiscal 2022 Second Quarter Results
Hewlett Packard

Hewlett Packard Enterprise Reports Fiscal 2022 Second Quarter Results

Persistent demand drives orders and sustained margins

Q2 2022 Financial Highlights:

• Orders: Strong customer demand drives order growth up 20% from the prior-year period, the fourth
a consecutive quarter of 20% or better order growth

• As-a-Service orders(1) increased 107% from the prior-year period, the 3rd consecutive quarter of doubling

• Revenue: $6.7 billion, up 0.2% and 1.5% adjusted for currency from the prior-year period and in line with the Q2 outlook

• Gross margins remain strong despite ongoing supply chain constraints and an inflationary environment

• GAAP of 32.4%, down 170 basis points from the prior-year period primarily due to $105 million of Russia-related charges

• Non-GAAP of 34.2%, down 10 basis points from the prior-year period

• Diluted net earnings per share (“EPS”):

• GAAP of $0.19, flat from the prior-year period primarily due to $126 million of Russia-related charges

• Non-GAAP of $0.44, down 4% from the prior-year period due to impact from Russia-related operations
and currency

• Cash flow from operations of $379 million and free cash flow of ($211) million, in line with normal seasonality

Capital Returns:

• Returned $214 million to shareholders in the form of dividends and share repurchases

• Declared a regular cash dividend of $0.12 per share, payable on July 8, 2022

Outlook:

• Reiterates fiscal 2022 revenue growth of 3%-4% adjusted for currency

• Third quarter fiscal 2022: Estimates GAAP diluted net EPS to be in the range of $0.22 to $0.32 and non

GAAP diluted net EPS to be in the range of $0.44 to $0.54

• Fiscal 2022: Updates GAAP diluted net EPS to be in the range of $1.17 to $1.31 and non-GAAP diluted

net EPS back to the original outlook of $1.96 to $2.10 provided at the HPE October 2021 Securities

Analyst Meeting reflecting unfavorable currency movements and Russia’s exit

• Fiscal 2022 free cash flow(3): Reiterates free cash flow guidance to be in the range of $1.8 to $2.0

billion

HOUSTON, Texas – June 1, 2022 – Hewlett Packard Enterprise (NYSE: HPE) today announced financial

results for the second quarter, which ended April 30, 2022. “Persistent demand led to another quarter of

significant order growth and higher revenue for HPE, underscoring the accelerating interest customers

have in our unique edge-to-cloud portfolio and our HPE GreenLake platform,” said Antonio Neri,

president, and CEO of Hewlett Packard Enterprise. “I am optimistic that demand will continue to be

strong, given our customers’ needs to accelerate their business resilience and competitiveness. We

remain focused on innovating for our customers and on executing with discipline so that we translate

that demand into profitable growth for HPE.”

“We are particularly pleased with the resiliency of our gross margins despite the inflationary environment

and ongoing supply chain disruptions,” said Tarek Robbiati, EVP and CFO of Hewlett Packard Enterprise.

“With record levels of high-quality backlog, we are well-positioned for growth in FY22 and beyond, and

confident in realizing the financial commitments we set at our Securities Analyst Meeting last October.”

Second Quarter Fiscal Year 2022 Results

Net revenue of $6.7 billion, up 0.2% and 1.5% adjusted for currency(2) from the prior-year period and in

line with outlook.

Annualized revenue run-rate (“ARR”) (4) of $829 million, up 25%(2) from the prior-year period, and total

as-a-Service orders(1) were up 107% from the prior-year period, marking the third consecutive quarter of

orders doubling. We remain confident in delivering our 2021 Securities Analyst Meeting ARR guidance of

35%-45% Compounded Annual Growth Rate from the fiscal year 2021 to the fiscal year 2024.

GAAP gross margin of 32.4%, down 170 basis points from the prior-year period, primarily due to $105

million of Russia-related charges, and non-GAAP gross margin of 34.2%, down 10 basis points from the

prior-year period, driven by disciplined execution and pricing actions.

GAAP diluted net EPS was $0.19, flat from the prior-year period and in line with our previously provided

outlook of $0.18 to $0.26 per share.

HPE announced in February that we stopped all shipments to and sales in Russia and Belarus. During

the second quarter of 2022, we recorded total charges of $126 million related to the Russia conflict’s

impact on our business. Based on further assessment of business risks and needs, we have determined

that it is no longer tenable to maintain operations in Russia and Belarus and are proceeding with an

orderly, managed exit of our remaining business in these countries. We expect to record additional

charges in the third quarter of fiscal 2022 related to our decision to exit Russia and Belarus, but do not

expect these charges to be material.

Non-GAAP diluted net EPS was $0.44, compared to $0.46 in the prior-year period and near the midpoint

of our outlook range of $0.41 to $0.49 per share. Second-quarter non-GAAP net earnings and non-GAAP

diluted net EPS excludes after-tax adjustments of $333 million and $0.25 per diluted share, respectively,

primarily for Russia-related disaster charges, stock-based compensation expenses, transformation costs,

and the amortization of intangible assets.

Cash flow from operations of $379 million, down $443 million from the prior-year period.

Free cash flow of ($211) million, down $579 million from the prior-year period reflecting normal

seasonality and strategic working capital actions due to strong customer demand.

Capital returns to shareholders of $214 million in the form of share repurchases and dividends. Segment Results

• Intelligent Edge revenue was $867 million, up 8% from the prior-year period in actual dollars and 9%

when adjusted for currency, with a 12.6% operating profit margin, compared to 15.7% in the prior-year

period. Aruba Services revenue was up double-digits from the prior-year period and Intelligent Edge as-a

Service ARR(4) was up 50%+ from the prior-year period.

• High-Performance Computing & Artificial Intelligence (“HPC & AI”) revenue was $710 million, up 4%

from the prior-year period in actual dollars and 5% when adjusted for currency, with (a 5.6%) operating

profit margin, compared to 2.6% from the prior-year period. The operating loss was driven by supply

constraints and delayed customer acceptances. We remain on track to exceed the expected 11% market

CAGR from FY21-24.

• Compute revenue was $3.0 billion, flat from the prior-year period in actual dollars and up 1% when

adjusted for currency, with a 13.9% operating profit margin, compared to 11.2% from the prior-year

period. Margin expansion was driven by strategic pricing actions more than offsetting input cost

increases.

• Storage revenue was $1.1 billion, down 3% from the prior-year period in actual dollars and 2% when

adjusted for currency, with a 12.6% operating profit margin, compared to 16.8% from the prior-year period

reflecting higher supply chain costs and unfavorable mix shifts.

• Financial Services revenue was $823 million, down 2% from the prior-year period in actual dollars and

flat when adjusted for currency, with a 12.6% operating profit margin, compared to 10.8% from the prior-

year period. Net portfolio assets of approximately $12.6 billion, down 4% from the prior-year period or up

1% when adjusted for currency. The business delivered a return on equity of 20.4%, up 2.1 points from

the prior-year period, well above pre-pandemic levels.

Dividend

Board of Directors has declared a regular cash dividend of $0.12 per share on the company’s common

stock, payable on July 8, 2022, to stockholders of record as of the close of business on June 13, 2022.

Fiscal 2022 third-quarter outlook:

Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.22 to $0.32 and

non-GAAP diluted net EPS to be in the range of $0.44 to $0.54. Fiscal 2022 third-quarter non-GAAP

diluted net EPS estimates exclude after-tax adjustments of approximately $0.22 per diluted share,

primarily related to, transformation costs, stock-based compensation expenses, and the amortization of

intangible assets.

Fiscal 2022 outlook:

Hewlett Packard Enterprise updates GAAP diluted net EPS outlook of $1.17 – $1.31 and full-year FY22

non-GAAP diluted net EPS outlook to the original outlook provided at our 2021 Securities Analyst

Meeting of $1.96 to $2.10. Fiscal 2022 non-GAAP diluted net EPS estimates exclude after-tax

adjustments of approximately $0.79 per diluted share, reflecting charges related to Russia and Belarus,

transformation costs, stock-based compensation expense, and the amortization of intangible assets.

Reiterates free cash flow(3) guidance of $1.8 to $2.0 billion.

1 As-a-Service (“AAS”) orders are an overlay across all business segments contributing to HPE’s

consumption-based services (both recurring and non-recurring) and includes hardware, as well as

GreenLake as-a-Service, Aruba SaaS, CMS SaaS, and other Software assets.

2 Adjusted to eliminate the effects of currency. A description of HPE’s use of non-GAAP financial

information is provided below under “Use of non-GAAP financial information”.

3 Hewlett 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.

4 Annualized Revenue Run-Rate (“ARR”) is a financial metric used to assess the growth of the

Consumption Services (“CS”) offerings. ARR represents the annualized revenue of all net HPE

GreenLake services revenue, related financial services revenue (which includes rental income from

operating leases and interest income for capital leases), software-as-a-Service, software

consumption revenue, and other as-a-Service offerings recognized during a quarter and multiplied by

four. We use ARR as a performance metric. ARR should be viewed independently of net revenue and is

not intended to be combined with it.

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. For more information, visit: www.hpe.com