Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q1 2023 Earnings Presentation
41 slides from Hewlett Packard Enterprise's earnings presentation, Mar 2, 2023
Slide 1: HPE Q1 FY23 Earnings Announcement
HPE Q1 FY23 Earnings Announcement , March 2, 2023
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements that involve risks, uncertainties, and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise and its consolidated subsidiaries ¢’Hewlet
Slide 3: Use of non-GAAP financial information
Use of non-GAAP financial information HPE’s management uses net revenue on a constant currency basis, including at the business segment level, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating profit, non-GAAP operating profit margin, non-GAAP research & development (“R&D”) and
Slide 4: HPE delivers record-setting Q1 performance in uneven market
HPE delivers record-setting Q1 performance in uneven market $7.8 billion Net revenue Increase of 18% y/y and flat q/q®; above high-end of Q1 outlook and the highest of any first quarter since completion of 2017 spin-off transactions HPE GreenLake Highlights * ARR rose 31% y/yY®, exceeding $1 billion
Slide 5: Q1 FY23 financial highlights
Q1 FY23 financial highlights — Net revenue of $7.8 billion is up 18%“ from the prior-year period, flat sequentially and above our outlook range of $7.2 to $7.6 billion — ARR® exceeded $1 billion, up 31% from the prior-year period — Non-GAAP Gross Margin of 34.2% was up 0.3 pts from the prior-year pe
Slide 6: ARR exceeds $1 billion
ARR exceeds $1 billion Annualized Revenue Run Rate as-a-Service Orders (trailing 12 months) $ in millions $4,000 $ in millions Software/Services = Infrastructure = Financial Services $1,200 $2,000 $1B $1,000 936 858 796 798 829 $800 67g 705 a a ee 649 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q422 Q
Slide 7: Q1 FY23 business segment performance
Q1 FY23 business segment performance Net Revenue Year-over-Year Operating Profit $ Operating Profit Year-over-Year Cin millions) Revenue Growth Cin millions) % revenue OP % revenue Intelligent Edge $1,127 31% $247 21.9% 4.5 pts HPC & Al $1,056 37% $1 0.1% 1.0 pts Storage $1,187 10% $142 12.0% (2.9)
Slide 8: Our differentiated strategy and consistent execution are lifting revenue growth and earnings per share
Our differentiated strategy and consistent execution are lifting revenue growth and earnings per share $ in billions $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 Qr20 Q2'20 Q3'20 Q4'20 Q1'21 — a Revenue —Non-GAAP diluted net EPS $7.2 S74 S28 $68 $68 47 $6.9 $6.0 $0.50 $0.52 Q2'21) Q3'21) Q4'21 Q2'22
Slide 9: Gross margins remain resilient on improving mix, pricing discipline and easing supply
Gross margins remain resilient on improving mix, pricing discipline and easing supply $in billions /™ non-GAAP Gross Profit? non-GAAP Gross Margin 34.7% $35 33.4% gy ny 33.7% 343% 347% 33.0% is 33.1% : 30.5% 30.7% $3.0 $25 --$23 g22 -$23.——«$23 $2.4 $2.1 : $2.0 $1.9 $15 $1.0 $05 $0.0 Q1'20 ©Q2'20 «Q
Slide 10: Strong revenues, gross margins and cost discipline result in sustainable profitability
Strong revenues, gross margins and cost discipline result in sustainable profitability for shareholders $in millions 1 non-GAAP Operating Profit® u non-GAAP Operating Margin? non-GAAP R&D+FSC % revenue VO $1,200 20.1% ; i 22% 18.6% 19.1% 18.4% 20% $1,000 18% 16% 800 9 $ $695 14% 12% $600 10% 10.0% 9
Slide 11: Non-GAAP H3C Equity Interest
$ in millions Non-GAAP H3C Equity Interest 300 250 200 150 100 50 Continued benefit of H3C dividend until completion of put exercise 257 265 89 oe 0) 76 70 70 52 50 38 Q1'21 Q2'21 Q3'21 Q4'21 FY21 Q1'22 Q2'22 Q3'22 Q4'22 FY22 Q1'23 1L A reconciliation of specific adjustments to GAAP results for the
Slide 12: Reiterating outlook for $1.9 to $2.1 billion in FY23 free cash flow
$ in billions $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 ($0.5) ($1.0) ($1.5) at — a Reiterating outlook for $1.9 to $2.1 billion in FY23 free cash flow ™ Cash flow from operations Free cash flow FY21 FCF $1.6B FY22 FCF $1.8B 39 FY23E $1.9 - $2.1B — > 2.0 aa 13 iy 08 08 oe O4 @5 04 06 o1 ma (0.1) (02)
Slide 13: Raising Q2 FY23 and full year outlook
Raising Q2 FY23 and full year outlook Q2 FY23 outlook Full year FY23 outlook Revenues $7.1 - $7.5 billion Revenue growth 5 — 7% tadj. for currency) GAAP diluted net EPS $0.27 - $0.35 Non-GAAP operating profit growth? 5 - 6% Non-GAAP diluted net EPS‘) $0.44 - $0.52 GAAP diluted net EPS $1.40 - $1.48
Slide 14: Supplemental slides
Supplemental slides
Slide 15: HPE's differentiated portfolio is capitalizing on mega trends in data, cloud and connectivity
HPE’s differentiated portfolio is capitalizing on mega trends in data, cloud and connectivity HPE Q1’23 net revenue HPE Q1’23 non-GAAP operating profit | Q1’23 Net revenue by region $7.8 billion $0.9 billion Segment net revenue mix) Segment operating profit and mix <2 $ in millions Intelligent Edge
Slide 16: Intelligent Edge
Intelligent Edge Q1 FY23 Revenue Operating profit Americas 45% $1,127 million $247 million Revenue m EMEA 37% A 25% yly, 417% q/q CCH 21.9% of revenue Asia Pacific ae A 31% y/y CCH * $ in bill Overview ae ee « Revenue of $1,127 million on growth of 31% y/y CC and 17% q/q caw mars CC®, second consecu
Slide 17: High Performance Computing & Artificial Intelligence
High Performance Computing & Artificial Intelligence Q1 FY23 Revenue Operating profit S 1 056 Americas 62% 9 million $1 million Revenue m EMEA 23% ABA% yly, 22% q/q Cc? 0.1% of revenue ® Asia Pacific 15% 437% yly CCP . $ in billions Overview aa =a « Revenue increased 37% y/y CC® with the acceptance
Slide 18: Storage
Storage Q1 FY23 Revenue Operating profit Americas 32% S 1, 187 million S 142 million Revenue ™@ EMEA 4h% Ad%yly, VO%q/q CCP 12.0% of revenue ™ Asia Pacific 24% 410% y/y CC ; $ in billions Overview $4 28% « Revenue up 10% y/y CC? and down 6% q/q CC? $12 24% ¢ Double-digit percentage growth y/y in own
Slide 19: Compute
Compute Q1 FY23 Revenue Operating profit Americas 41% S 3,4 5 6 million $609 million Revenue @ EMEA 36% M14%yly, V7%q/q CCH 17.6% of revenue ® Asia Pacific 23% 419% yly CCH * $ in bill Overview pho. 20% « Revenue up 19% y/y CC? and down 7% q/q CC? ¢ Units down low-single digits y/y. AUPs up >20% y/y
Slide 20: Financial Services
Financial Services Q1 FY23 Revenue Operating profit Americas 57% $873 million $82 million Revenue m EMEA 28% Mbzyly 4 2% g/g CC? 9.4% of revenue ™@ Asia Pacific 15% 48% y/ly CCH * $ in bill Overview mst 16 « Financing volume rose 21% y/y CC“ and revenue rose 8% y/y CCP wu, sos © Write-off % of asset
Slide 21: Key balance sheet metrics healthy
Key balance sheet metrics healthy Q1 FY23 Balance Sheet Operating Company Financing Company °° Net Cash $0.7B”” $13.2B $12.1B Cash Debt Net Portfolio Assets” Capital Structure NFS Gross Debt “ mFS Gross Cas! 1. Operating Company = Total HPE excluding Financial Services (FS) Financing Company = HPE F
Slide 22: GAAP to NON-GAAP bridges
GAAP to NON-GAAP bridges
Slide 23: Q1 FY23
Q1 FY23 GAAP to non-GAAP bridge” Acquisition, 2. Represents the amortization of basis difference adjustments related to H3C and the Company's portion of intangible asset impairment charges from H3C of $8 milion. In millions, ie " sescairi ‘Stock-based Non-service net ans i s ‘Tax indemnification Exc
Slide 24: FY22
FY22 GAAP to non-GAAP bridge” In millions, son Russia/Ukraine Disaster ‘Amortization Tax Structural Excess tax excepttaxrateand GAAP —[yansformation Confit disaster charges ‘compensatio of ics indemnification rate benefits from Non-GAAP per share amounts charges nexpense assets cost interest adjustm
Slide 25: Q4 FY22
Q4 FY22 GAAP to non-GAAP bridge” In millions, jon Russia/Ukraine A@uisition, | Stock-based Amortization | — Nonservice net Tax pera ttarateand GAAP Transformation CuStvcrai0e disposition, and fen of targcaibhe’ Impairment Amortization of tee cay Earn cmnifcation Stucturalrate benefitsfrom — Noncaap
Slide 26: Q3 FY22
Q3 FY22 GAAP to non-GAAP bridge” In millions, jon Russia/Ukraine ACAuisition, | stock-hased 7 2 pera ttarateand GAAP Transformation CuStvcrai0e disposition, and fan Amortization of ion Structuralrate benefitsfrom Non caap Eakin este ine cierto’ ovement interest Shomer" sdhment sodebored Revenue $6,9
Slide 27: Q2 FY22
Q2 FY22 GAAP to non-GAAP bridge” In millions, " Russia/Ukraine ‘ " ‘Stock-based baat Non-service net cae fs Excess tax benefits ttanrateand GAAP Transformation Cortivtusace, Disaster _—_—isposition, and ee? ‘Amortization of Tenemt Eamingsinequity Structuralrate cess tan bene Non- eens tea omer Ghrge
Slide 28: Q1 FY22
Q1 FY22 GAAP to non-GAAP bridge” In millions, ‘Transformation Disaster daecifiomand _StoCke-based Non-service net Taxindemnification —ceucturalrate Excess tax benefits Capkienn and GAAP [rapstormation ene oir en iret costs Petiodic benefit BS acjustment’” fomsteckbased Non-GAAP Revenue $6,961 $6,961
Slide 29: FY21
FY21 GAAP to non-GAAP bridge” In millions, a ‘Acquisition, Stock-based Amor P Earlydebt T2X Structural Taxon Brees ton except tax rate and GAAP Transformation Disaster dipernar” compensation of Hasatot redemption néomnitction rate separations. Penefitsfrom Non-GAAP per share amounts felated charges
Slide 30: Q4 FY21
Q4 FY21 GAAP to non-GAAP bridge” Inmillions, a Acquisition, stock-based _— rr Earlydebt TX ctructural © Taxon Excess tax except taxrateand GAAP. Tretrmation Dsser sepontar ard conperstion geist of Nogaser fedempon ‘narrarcgo" rate Siamese Sense” NowGAAP per share amounts charges oA Stell adjustments
Slide 31: Q3 FY21
Q3 FY21 GAAP to non-GAAP bridge” Excess tax In millions, except a Acquisition, | Stock-based ‘Tax indemnification fatvaiv a parce Gap Transformation Disaster disposition, and # , ae Structuratrate benefitsfrom Non.caap ENED casts chores terrae” Gomerston tne set interest ndrelated sihsment stodcbere
Slide 32: Q2 FY21
Q2 FY21 GAAP to non-GAAP bridge” In millions, a parent Stock-based , Non-service net ° Taxon Excess tax benefits except taxrate and CON eaten Teoma compensation ene Benefit Sarre eat Separation & — Suucturalrate —fromstock-based Non-GAAP Per share amounts eons expense divestitures ‘compensation Reve
Slide 33: Q1 FY21
Q1 FY21 GAAP to non-GAAP bridge” Inmillions, a pomittion, Stock-based ‘Tax indemnification pert po i Gaap Transformation Disaster disposition, and Sfocpased Mercer Structuralrate benefitsfrom Non gaap per share amounts ep charges ether elated expense adjustments atest ee Revenue $6,833 $6,833 Cost o
Slide 34: FY20
FY20 GAAP to non-GAAP bridge” Inmiillions, a Acquisition, Stock-based Amor Merde tier Taxon Structural Excess tax ‘except tax rate and GAAP afore eer Sepernce” compensation indempification Tax _, separation& rate benefits from Non-GAAP per share amounts related charges ‘XPense adjustments divestitur
Slide 35: Q4 FY20
Q4 FY20 GAAP to non-GAAP bridge” In millions, ‘Acquisition, Stock-based - _ A a = nee Transformation Disaster a . ‘Amortizationof _Amortizationof —_—Non-servicenet periodic Earningsin Tax indemnificationand Structural rate except tax rate and GAAP disposition, and other . face can 4 Non-GAAP shige c
Slide 36: Q3 FY20
Q3 FY20 GAAP to non-GAAP bridge” Excess tax In millions, a ‘Acquisition, | | Stock-based except taxrate and P coats” Charges otherresred” SOMBER rat aaes dusiment—sodehased”_NOM-GAAP per share amounts charges expense adjustments ‘compensation Revenue $6,816 $6,816 Cost of sales 4,749 (8) @ 4,738 Gro
Slide 37: Q2 FY20
Q2 FY20 GAAP to non-GAAP bridge” Inmiillions, a pomttion, erecta base ‘Amortization , except tax rate and GAAP Cte ne” Gorges ofherraated” expense fntongbeseets Tavestiures "adjustment Non-GAAP per share amounts acorn adjustments Revenue $6,009 $6,009 Cost of sales 4,095 2) O) ® 4,076 Gross profit 1
Slide 38: Q1 FY20
Q1 FY20 GAAP to non-GAAP bridge” In millions, 7 Acquisition, ‘Stock-based boat ‘Amortization —_Non-service Tax indemnification Excess tax benefits ‘Transformation 4. sti 7 Amortization of Ear ‘Structural rate exons tax raed GAAP costs erase other a intangible aseets Cie direct net per eq interest oe
Slide 39: Reconciliation of operating Cash Flow to Free Cash flow
Reconciliation of operating Cash Flow to Free Cash flow Q1'20 Q2'20 Q3'20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Net cash (used in) provided by operating activities $79) $100 $1,472 $747 $963 $822 $1,130 $2,956 $(76) $379 $1,254 $3,036 $(829) Litigation judgment, net of taxes pa
Slide 40: Reconciliation of GAAP Earnings from equity interests to Non-GAAP H3C equity earnings
Reconciliation of GAAP Earnings from equity interests to Non-GAAP H3C equity earnings Q7’21) = Q2’21) «Q3’21) «=Q4’21 YTD’21 Q1’22 Q2’22 Q3’22 Q4’22 YTD’22 Q1’23 GAAP Earnings from equity interests $26 $4 $79 $71 $180 $31 $33 $68 $83 $215 $58 Basis and other adjustments 34 34 23 18 109 17 17 8 3 45
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