Industry Summary Articles

Hewlett Packard Enterprise announced financial results for the fourth quarter and full-year, ended October 31, 2022.

“HPE had an impressive fourth quarter, generating an outstanding performance across our key performance metrics,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “We are producing strong financial results as we meet new customer needs with the edge-to-cloud portfolio that only we can deliver.”

“The strength of our culture and commitment of our team members this quarter and throughout the entire 2022 fiscal year enabled us to innovate and take bold actions to pivot our portfolio and bolster our financial position as we head into 2023,” Neri added.

“Our differentiated edge-to-cloud portfolio is driving sustained demand, which is translating to record or near-record results for HPE,” said Tarek Robbiati, EVP and CFO of Hewlett Packard Enterprise. “These results would not have been possible without the strategic actions we have taken. We are now entering a very different phase of the company, one where the combination of our rightsized cost structure and substantial order book is expected to deliver profitable growth that is increasingly recurring at higher margins as our as-a-service transformation continues to unfold.”

Fourth Quarter Fiscal 2022 Financial Results:

• Revenue: $7.9 billion, up 7% and up 12% adjusted for currency¹ from the prior-year period, above our sequential Q4 guidance and the second-highest quarterly revenue on record for the company on a continuing operations basis
• ARR²of $936 million, up 17% and up 25% adjusted for currency¹ from the prior-year period and total as-a-Service orders⁵ were up 33% from the prior-year period, and up 68% in fiscal year 2022. We reiterate our 2022 SAM ARR guidance of 35%-45% Compounded Annual Growth Rate from fiscal year 2022 to fiscal year 2025
• Gross marginsremain resilient despite ongoing supply chain constraints and an inflationary environment
  • GAAP of 32.9%, flat from the prior-year period and down 160 basis points sequentially
  • Non-GAAP of 33.1%, up 10 basis points from the prior-year period and down 160 basis points sequentially 
• Diluted net EPS:
  • GAAP of ($0.23), down 112% from the prior-year period and down 174% sequentially, due primarily to the goodwill impairment charge in the current period and the prior-year period gain on the Itanium litigation judgment
  • Non-GAAP of $0.57, up 10% from the prior-year period and up 19% sequentially. Fourth quarter non-GAAP diluted net EPS excludes after-tax adjustments of $0.80 per diluted share, primarily for goodwill impairment, transformation costs, stock-based compensation expense, and the amortization of intangible assets 
• Cash flow from operationsof $3.0 billion was flat from the prior-year period
• Free cash flow³of $2.0 billion,up $1.9 billion from the prior-year period
• Capital returns to shareholders: $282 million in the form of dividends and share repurchases 

Fourth Quarter Fiscal 2022 Segment Results 

• Intelligent Edge revenue was $965 million, up 18% from the prior-year period in actual dollars and 23% when adjusted for currency, with 13.3% operating profit margin, compared to 10.9% in the prior-year period. Aruba Services revenue was up high single-digits from the prior-year period when adjusted for currency and Intelligent Edge as-a-Service ARR²was up 70% from the prior-year period
• High Performance Computing & Artificial Intelligence (“HPC & AI”) revenue was $862 million, down 14% from the prior-year period in actual dollars and 11% when adjusted for currency, with 3.5% operating profit margin, compared to 14.2% from the prior-year period. HPC & AI market share is 37% and includes four of the global top-10 supercomputers and three of the top five
• Compute revenue was $3.7 billion, up 16% from the prior-year period in actual dollars and 22% when adjusted for currency, with 14.7% operating profit margin, compared to 9.4% from the prior-year period. Margin expansion was driven by product mix shift and strategic pricing actions, more than offsetting input cost increases
• Storage revenue was $1.3 billion, up 4% from the prior-year period in actual dollars and 6% when adjusted for currency, with 15.9% operating profit margin, compared to 13.8% from the prior-year period, and up 120 basis points sequentially, with richer mix of owned-IP revenue
• Financial Services revenue was $857 million, flat from the prior-year period in actual dollars and up 6% when adjusted for currency, with 11.1% operating profit margin, compared to 14.1% from the prior-year period. Net portfolio assets of approximately $12.5 billion, down 6% from the prior-year period, or up 1% when adjusted for currency. Return on equity was 18%, down 6 points from the prior-year period, and in-line with the target reiterated at 2022 SAM

Fiscal Year 2022 Full-Year Results 

• Revenue: $28.5 billion, up 3% and 5% adjusted for currency¹ from the prior-year period, and above our initial outlook provided at 2021 SAM
• Gross margins:
  • GAAP of 33.4%, down 30 basis points from the prior-year period
  • Non-GAAP of 33.9%, flat from the prior-year period 
• Diluted net EPS:
  • GAAP was $0.66, compared to $2.58 in the prior-year period, due primarily to the goodwill impairment charge in the current period and the prior-year period gain on the Itanium litigation judgment
  • Non-GAAP was $2.02, compared to $1.96 in the prior-year period. Fiscal 2022 non-GAAP diluted net EPS excludes after-tax adjustments of $1.36 per diluted share, primarily for goodwill impairment, transformation costs, stock-based compensation expense, and the amortization of intangible assets 
• Cash flow from operations: $4.6 billion, down $1.3 billion from the prior-year period due primarily to the $2.2 billion of cash after-tax impact from the Itanium litigation judgment in the prior-year period
• Free cash flow³: $1.8 billion, up $0.2 billion from the prior-year period
• Capital returns to shareholders: $1.1 billion in the form of dividends and share repurchases, representing over 60% of HPE’s free cash flow

Dividend
The HPE Board of Directors has declared a regular cash dividend of $0.12 per share on the company’s common stock, payable on January 13, 2023, to stockholders of record as of the close of business on December 14, 2022.

Fiscal 2023 first quarter outlook:
HPE estimates revenue to be in the range of $7.2 billion to $7.6 billion. HPE estimates GAAP diluted net EPS to be in the range of $0.32 to $0.40 and non-GAAP diluted net EPS to be in the range of $0.50 to $0.58. Fiscal 2023 first quarter non-GAAP diluted net EPS estimates exclude after-tax adjustments of $0.18 per diluted share, primarily related to stock-based compensation expense, transformation costs and amortization of intangible assets.

Fiscal 2023 outlook:
HPE estimates GAAP diluted net EPS of between $1.38 and $1.46 and non-GAAP diluted net EPS of between $1.96 and $2.04. Fiscal 2023 non-GAAP diluted net EPS estimates exclude after-tax adjustments of $0.58 per diluted share, primarily related to stock-based compensation expense, amortization of intangible assets and transformation costs.

Reiterates free cash flow^3,4 guidance of $1.9 to $2.1 billion

Capital returns to shareholders: Committed to returning at least $500 million in share buybacks in Fiscal 2023

Download the Q4 FY22 earnings infographic here.

To view the original press release, please click here.

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