Hewlett Packard Enterprise Reports Fiscal 2024 Second Quarter

Hewlett Packard Enterprise Reports Fiscal 2024 Second Quarter Results

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Unaudited)

	For the three months ended
	April 30, 2024			January 31, 2024			April 30, 2023
	In millions, except per share amounts
Net revenue	$	7,204		$	6,755		$	6,973
Costs and Expenses:
Cost of sales		4,828			4,298			4,461
Research and development		590			582			570
Selling, general and administrative		1,215			1,216			1,269
Amortization of intangible assets		67			71			71
Transformation costs		33			20			60
Disaster charges		—			—			3
Acquisition, disposition and other related charges		46			43			19
Total costs and expenses		6,779			6,230			6,453
Earnings from operations		425			525			520
Interest and other, net ⁽¹⁾		(22	)		(88	)		(47	)
Earnings from equity interests		42			46			49
Earnings before provision for taxes		445			483			522
Provision for taxes		(131	)		(96	)		(104	)
Net earnings	$	314		$	387		$	418
Net Earnings Per Share:
Basic	$	0.24		$	0.30		$	0.32
Diluted	$	0.24		$	0.29		$	0.32
Cash dividends declared per share	$	0.13		$	0.13		$	0.12
Weighted-average Shares Used to Compute Net Earnings Per Share:
Basic		1,311			1,301			1,304
Diluted		1,325			1,316			1,318

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Unaudited)

	For the six months ended
	April 30, 2024			April 30, 2023
	In millions, except per share amounts
Net revenue	$	13,959		$	14,782
Costs and Expenses:
Cost of sales		9,126			9,612
Research and development		1,172			1,193
Selling, general and administrative		2,431			2,526
Amortization of intangible assets		138			144
Transformation costs		53			162
Disaster charges		—			4
Acquisition, disposition and other related charges		89			30
Total costs and expenses		13,009			13,671
Earnings from operations		950			1,111
Interest and other, net		(110	)		(73	)
Earnings from equity interests		88			107
Earnings before provision for taxes		928			1,145
Provision for taxes		(227	)		(226	)
Net earnings	$	701		$	919
Net Earnings Per Share:
Basic	$	0.54		$	0.71
Diluted	$	0.53		$	0.70
Cash dividends declared per share	$	0.26		$	0.24
Weighted-average Shares Used to Compute Net Earnings Per Share:
Basic		1,306			1,301
Diluted		1,320			1,317

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP measures (Unaudited)

	For the three months ended
	April 30, 2024			January 31, 2024			April 30, 2023
	Dollars in millions
GAAP net revenue	$	7,204		$	6,755		$	6,973
GAAP cost of sales		4,828			4,298			4,461
GAAP gross profit		2,376			2,457			2,512
Non-GAAP Adjustments
Stock-based compensation expense		14			16			13
Disaster recovery		(7	)		(25	)		—
Non-GAAP gross profit	$	2,383		$	2,448		$	2,525

GAAP gross profit margin		33.0	%		36.4	%		36.0	%
Non-GAAP adjustments		0.1	%		(0.2	)%		0.2	%
Non-GAAP gross profit margin		33.1	%		36.2	%		36.2	%


	For the six months ended
	April 30, 2024			April 30, 2023
	Dollars in millions
GAAP net revenue	$	13,959		$	14,782
GAAP cost of sales		9,126			9,612
GAAP gross profit	$	4,833		$	5,170
Non-GAAP Adjustments
Stock-based compensation expense		30			29
Disaster recovery		(32	)		—
Non-GAAP gross profit	$	4,831		$	5,199

GAAP gross profit margin		34.6	%		35.0	%
Non-GAAP adjustments		—	%		0.2	%
Non-GAAP gross profit margin		34.6	%		35.2	%

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP measures (Unaudited)

	For the three months ended
	April 30, 2024			January 31, 2024			April 30, 2023
	Dollars in millions
GAAP earnings from operations	$	425		$	525		$	520
Non-GAAP Adjustments
Amortization of intangible assets		67			71			71
Transformation costs		33			20			60
Disaster (recovery) charges		(7	)		(25	)		3
Stock-based compensation expense		120			141			126
Acquisition, disposition and other related charges		46			43			19
Non-GAAP earnings from operations	$	684		$	775		$	799

GAAP operating profit margin		5.9	%		7.8	%		7.5	%
Non-GAAP adjustments		3.6	%		3.7	%		4.0	%
Non-GAAP operating profit margin		9.5	%		11.5	%		11.5	%


	For the six months ended
	April 30, 2024			April 30, 2023
	Dollars in millions
GAAP earnings from operations	$	950		$	1,111
Non-GAAP Adjustments
Amortization of intangible assets		138			144
Transformation costs		53			162
Disaster (recovery) charges		(32	)		4
Stock-based compensation expense		261			266
Acquisition, disposition and other related charges		89			30
Non-GAAP earnings from operations	$	1,459		$	1,717

GAAP operating profit margin		6.8	%		7.5	%
Non-GAAP adjustments		3.7	%		4.1	%
Non-GAAP operating profit margin		10.5	%		11.6	%

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP measures (Unaudited)

	For the three months ended
	April 30, 2024			Diluted net earnings per share			January 31, 2024			Diluted net earnings per share			April 30, 2023			Diluted net earnings per share
	Dollars in millions, except per share amounts
GAAP net earnings	$	314		$	0.24		$	387		$	0.29		$	418		$	0.32
Non-GAAP Adjustments:
Amortization of intangible assets		67			0.05			71			0.05			71			0.05
Transformation costs		33			0.03			20			0.02			60			0.05
Disaster (recovery) charges		(7	)		(0.01	)		(25	)		(0.02	)		3			—
Stock-based compensation expense		120			0.09			141			0.11			126			0.10
Acquisition, disposition and other related charges		46			0.04			43			0.03			19			0.01
Earnings from equity interests ⁽²⁾		(42	)		(0.03	)		(46	)		(0.03	)		2			—
Loss on equity investments, net		—			—			61			0.05			—			—
Adjustments for taxes		31			0.02			(16	)		(0.02	)		(7	)		(0.01	)
Other adjustments ⁽³⁾		(1	)		(0.01	)		2			—			(7	)		—
Non-GAAP net earnings	$	561		$	0.42		$	638		$	0.48		$	685		$	0.52


	For the six months ended
	April 30, 2024			Diluted net earnings per share			April 30, 2023			Diluted net earnings per share
	Dollars in millions, except per share amounts
GAAP net earnings	$	701		$	0.53		$	919		$	0.70
Non-GAAP Adjustments:
Amortization of intangible assets		138			0.10			144			0.11
Transformation costs		53			0.04			162			0.12
Disaster (recovery) charges		(32	)		(0.02	)		4			—
Stock-based compensation expense		261			0.20			266			0.21
Acquisition, disposition and other related charges		89			0.07			30			0.02
Earnings from equity interests ⁽²⁾		(88	)		(0.07	)		14			0.01
Loss on equity investments, net		61			0.05			—			—
Adjustments for taxes		15			0.01			(20	)		(0.02	)
Other adjustments ⁽³⁾		1			—			(6	)		—
Non-GAAP net earnings	$	1,199		$	0.91		$	1,513		$	1.15

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP measures (Unaudited)

	For the three months ended
	April 30, 2024			January 31, 2024			April 30, 2023
	In millions
Net cash provided by operating activities	$	1,093		$	64		$	889
Investment in property, plant and equipment		(560	)		(656	)		(688	)
Proceeds from sale of property, plant and equipment		122			96			86
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(45	)		14			1
Free cash flow	$	610		$	(482	)	$	288


	For the six months ended
	April 30, 2024			April 30, 2023
	In millions
Net cash provided by operating activities	$	1,157		$	60
Investment in property, plant and equipment		(1,216	)		(1,482	)
Proceeds from sale of property, plant and equipment		218			245
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(31	)		139
Free cash flow	$	128		$	(1,038	)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Condensed Consolidated Balance Sheets

	As of
	April 30, 2024			October 31, 2023
	(Unaudited)			(Audited)
	In millions, except par value
ASSETS
Current Assets:
Cash and cash equivalents	$	2,676		$	4,270
Accounts receivable, net of allowances		3,840			3,481
Financing receivables, net of allowances		3,646			3,543
Inventory		7,326			4,607
Other current assets		3,939			3,047
Total current assets		21,427			18,948
Property, plant and equipment, net		5,817			5,989
Long-term financing receivables and other assets		11,673			11,377
Investments in equity interests		2,291			2,197
Goodwill and intangible assets		18,503			18,642
Total assets	$	59,711		$	57,153
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable and short-term borrowings	$	3,767		$	4,868
Accounts payable		10,119			7,136
Employee compensation and benefits		1,084			1,724
Taxes on earnings		181			155
Deferred revenue		3,783			3,658
Accrued restructuring		97			180
Other accrued liabilities		4,719			4,161
Total current liabilities		23,750			21,882
Long-term debt		7,490			7,487
Other non-current liabilities		6,737			6,546

Stockholders’ Equity
Common stock, $0.01 par value (9,600 shares authorized; 1,298 and 1,283 shares issued and outstanding as of April 30, 2024 and October 31, 2023, respectively)		13			13
Additional paid-in capital		28,308			28,199
Accumulated deficit		(3,583	)		(3,946	)
Accumulated other comprehensive loss		(3,058	)		(3,084	)
Total HPE stockholders’ equity		21,680			21,182
Non-controlling interests		54			56
Total stockholders’ equity		21,734			21,238
Total liabilities and stockholders’ equity	$	59,711		$	57,153

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited)
	For the six months ended
	April 30, 2024			April 30, 2023
	In millions
Cash Flows from Operating Activities:
Net earnings	$	701		$	919
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and amortization		1,299			1,307
Stock-based compensation expense		261			266
Provision for inventory and credit losses		113			97
Restructuring charges		18			95
Deferred taxes on earnings		—			69
Earnings from equity interests		(88	)		(107	)
Other, net		128			(11	)
Changes in Operating Assets and Liabilities, Net of Acquisitions:
Accounts receivable		(376	)		370
Financing receivables		(327	)		(666	)
Inventory		(2,808	)		782
Accounts payable		3,026			(3,220	)
Taxes on earnings		95			(1	)
Restructuring		(121	)		(147	)
Other assets and liabilities		(764	)		307
Net cash provided by operating activities		1,157			60
Cash Flows from Investing Activities:
Investment in property, plant and equipment		(1,216	)		(1,482	)
Proceeds from sale of property, plant and equipment		218			245
Purchases of investments		(16	)		(5	)
Proceeds from maturities and sales of investments		5			4
Financial collateral posted		(499	)		(1,009	)
Financial collateral received		401			483
Payments made in connection with business acquisitions, net of cash acquired		—			(406	)
Net cash used in investing activities		(1,107	)		(2,170	)
Cash Flows from Financing Activities:
Short-term borrowings with original maturities less than 90 days, net		(45	)		344
Proceeds from debt, net of issuance costs		1,075			2,845
Payment of debt		(2,218	)		(2,428	)
Cash settlement for derivative hedging debt		—			(2	)
Net payments related to stock-based award activities		(94	)		(106	)
Repurchase of common stock		(48	)		(179	)
Cash dividends paid to non-controlling interests, net of contributions		(8	)		—
Cash dividends paid to shareholders		(338	)		(311	)
Net cash (used in) provided by financing activities		(1,676	)		163
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(31	)		139
Decrease in cash, cash equivalents and restricted cash		(1,657	)		(1,808	)
Cash, cash equivalents and restricted cash at beginning of period		4,581			4,763
Cash, cash equivalents and restricted cash at end of period	$	2,924		$	2,955

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Segment Information (Unaudited)

	For the three months ended
	April 30, 2024			January 31, 2024			April 30, 2023
	In millions
Net Revenue:
Server ⁽⁴⁾	$	3,867		$	3,352		$	3,287
Hybrid Cloud ⁽⁴⁾		1,256			1,248			1,371
Intelligent Edge ⁽⁴⁾		1,086			1,201			1,344
Financial Services		867			873			858
Corporate Investments and other ⁽⁴⁾		252			238			242
Total segment net revenue		7,328			6,912			7,102
Elimination of intersegment net revenue		(124	)		(157	)		(129	)
Total consolidated net revenue	$	7,204		$	6,755		$	6,973

Earnings Before Taxes ⁽⁴⁾ :
Server	$	426		$	383		$	473
Hybrid Cloud		10			47			26
Intelligent Edge		237			353			332
Financial Services		81			74			76
Corporate Investments and other		(9	)		(10	)		(19	)
Total segment earnings from operations		745			847			888

Unallocated corporate costs and eliminations		(61	)		(72	)		(89	)
Stock-based compensation expense		(120	)		(141	)		(126	)
Amortization of intangible assets		(67	)		(71	)		(71	)
Transformation costs		(33	)		(20	)		(60	)
Disaster recovery (charges)		7			25			(3	)
Acquisition, disposition and other related charges		(46	)		(43	)		(19	)
Interest and other, net ⁽¹⁾		(22	)		(88	)		(47	)
Earnings from equity interests		42			46			49
Total pretax earnings	$	445		$	483		$	522

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Segment Information (Unaudited)

	For the six months ended
	April 30, 2024			April 30, 2023
	In millions
Net Revenue:
Server ⁽⁴⁾	$	7,219		$	7,619
Hybrid Cloud ⁽⁴⁾		2,504			2,755
Intelligent Edge ⁽⁴⁾		2,287			2,513
Financial Services		1,740			1,731
Corporate Investments and other ⁽⁴⁾		490			476
Total segment net revenue		14,240			15,094
Elimination of intersegment net revenue		(281	)		(312	)
Total consolidated net revenue	$	13,959		$	14,782

Earnings Before Taxes ⁽⁴⁾ :
Server	$	809		$	1,151
Hybrid Cloud		57			106
Intelligent Edge		590			559
Financial Services		155			139
Corporate Investments and other		(19	)		(41	)
Total segment earnings from operations		1,592			1,914

Unallocated corporate costs and eliminations		(133	)		(197	)
Stock-based compensation expense		(261	)		(266	)
Amortization of intangible assets		(138	)		(144	)
Transformation costs		(53	)		(162	)
Disaster recovery (charges)		32			(4	)
Acquisition, disposition and other related charges		(89	)		(30	)
Interest and other, net ⁽¹⁾		(110	)		(73	)
Earnings from equity interests		88			107
Total consolidated earnings before taxes	$	928		$	1,145

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Segment Information (Unaudited)

	For the three months ended									Change (%)
	April 30, 2024			January 31, 2024			April 30, 2023			Q/Q		Y/Y
	Dollars in millions
Net Revenue:
Server ⁽⁴⁾	$	3,867		$	3,352		$	3,287		15	%	18	%
Hybrid Cloud ⁽⁴⁾		1,256			1,248			1,371		1		(8	)
Intelligent Edge ⁽⁴⁾		1,086			1,201			1,344		(10	)	(19	)
Financial Services		867			873			858		(1	)	1
Corporate Investments and other ⁽⁴⁾		252			238			242		6		4
Total segment net revenue		7,328			6,912			7,102		6		3
Elimination of intersegment net revenue		(124	)		(157	)		(129	)	(21	)	(4	)
Total consolidated net revenue	$	7,204		$	6,755		$	6,973		7	%	3	%


	For the six months ended
	April 30, 2024			April 30, 2023			Y/Y
	Dollars in millions
Net Revenue:
Server ⁽⁴⁾	$	7,219		$	7,619		(5	%)
Hybrid Cloud ⁽⁴⁾		2,504			2,755		(9	)
Intelligent Edge ⁽⁴⁾		2,287			2,513		(9	)
Financial Services		1,740			1,731		1
Corporate Investments and other ⁽⁴⁾		490			476		3
Total segment net revenue		14,240			15,094		(6	)
Elimination of intersegment net revenue		(281	)		(312	)	(10	)
Total consolidated net revenue	$	13,959		$	14,782		(6	%)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Segment Operating Margin Summary Data (Unaudited)

	For the three months ended						Change in operating profit margin (pts)
	April 30, 2024		January 31, 2024		April 30, 2023		Q/Q		Y/Y
Segment Operating Profit Margin ⁽⁴⁾ :
Server	11.0	%	11.4	%	14.4	%	(0.4	)	(3.4	)
Hybrid Cloud	0.8	%	3.8	%	1.9	%	(3.0	)	(1.1	)
Intelligent Edge	21.8	%	29.4	%	24.7	%	(7.6	)	(2.9	)
Financial Services	9.3	%	8.5	%	8.9	%	0.8		0.4
Corporate Investments and other	(3.6	%)	(4.2	%)	(7.9	%)	0.6		4.3
Total segment operating profit margin	10.2	%	12.3	%	12.5	%	(2.1	)	(2.3	)


	For the six months ended				Change in operating profit margin (pts)
	April 30, 2024		April 30, 2023		Y/Y
Segment Operating Profit Margin ⁽⁴⁾ :
Server	11.2	%	15.1	%	(3.9	)
Hybrid Cloud	2.3	%	3.8	%	(1.5	)
Intelligent Edge	25.8	%	22.2	%	3.6
Financial Services	8.9	%	8.0	%	0.9
Corporate Investments and other	(3.9	%)	(8.6	%)	4.7
Total segment operating profit margin	11.2	%	12.7	%	(1.5	)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Calculation of Diluted Net Earnings Per Share (Unaudited)

	For the three months ended
	April 30, 2024		January 31, 2024		April 30, 2023
	In millions, except per share amounts
Numerator:
GAAP net earnings	$	314	$	387	$	418
Non-GAAP net earnings	$	561	$	638	$	685

Denominator:
Weighted-average shares used to compute basic net earnings per share		1,311		1,301		1,304
Dilutive effect of employee stock plans		14		15		14
Weighted-average shares used to compute diluted net earnings per share		1,325		1,316		1,318

GAAP Net Earnings Per Share
Basic	$	0.24	$	0.30	$	0.32
Diluted	$	0.24	$	0.29	$	0.32

Non-GAAP Net Earnings Per Share
Basic	$	0.43	$	0.49	$	0.53
Diluted	$	0.42	$	0.48	$	0.52


	For the six months ended
	April 30, 2024		April 30, 2023
	In millions, except per share amounts
Numerator:
GAAP net earnings	$	701	$	919
Non-GAAP net earnings	$	1,199	$	1,513

Denominator:
Weighted-average shares used to compute basic net earnings per share		1,306		1,301
Dilutive effect of employee stock plans		14		16
Weighted-average shares used to compute diluted net earnings per share		1,320		1,317

GAAP Net Earnings Per Share
Basic	$	0.54	$	0.71
Diluted	$	0.53	$	0.70

Non-GAAP Net Earnings Per Share
Basic	$	0.92	$	1.16
Diluted	$	0.91	$	1.15

(1)		Interest and other, net includes tax indemnification and other adjustments, non-service net periodic benefit cost, and interest and other, net.

(2)		For the three and six months ended April 30, 2024, includes the equity in earnings from H3C equity method investment and all periods include the amortization of the basis difference in the Company’s investment.

(3)		Other adjustments includes non-service net periodic benefit cost and tax indemnification and other adjustments.

(4)		As previously disclosed, effective as of the beginning of the first quarter of fiscal 2024, in order to align the segment financial reporting more closely with its business structure, the Company established two new reportable segments, Hybrid Cloud and Server. Hybrid Cloud includes the historical Storage segment, HPE GreenLake Flex Solutions (which provides flexible as-a-service IT infrastructure through the HPE GreenLake edge-to-cloud platform and was previously reported under the Compute and the High Performance Computing & Artificial Intelligence ("HPC & AI") segments), Private Cloud, and Software (previously reported under the Corporate Investments and Other segment). The Server segment combines the previously separately reported Compute and HPC & AI segments, with adjustments for certain product lines that are now reported in Hybrid Cloud. Additionally, certain products and services previously reported in the financial results for the HPC & AI segment were moved to be reported in the Hybrid Cloud segment, and the Athonet business and certain components of the Communications and Media Solutions business, both previously reported in the financial results for Corporate Investments and Other, moved to be reported in the Intelligent Edge segment.

		As a result, the Company’s new organizational structure consists of the following segments: (i) Server; (ii) Hybrid Cloud; (iii) Intelligent Edge; (iv) Financial Services; and (v) Corporate Investments and Other. The Company began reporting under this re-aligned segment structure beginning with the results of the first quarter of fiscal 2024.

		The Company has reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the realignment of net revenue and operating profit for each of the segments as described above. These changes had no impact on Hewlett Packard Enterprise’s previously reported consolidated net revenue, net earnings, net earnings per share or total assets.

« Previous Page 1 | 2 | 3 | 4 | 5 Next Page »