Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q2 2024 Earnings Presentation
41 slides from Hewlett Packard Enterprise's earnings presentation, Jun 4, 2024
Slide 1: HPE Q2 FY24 Earnings Announcement
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties, and ‘assumptions. If the risks or uncertainties ever materialize or
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 as more than half of HPE's revenue is generated outside of the U.S., non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating profit, non-GAAP
Slide 4: AI systems revenue more than doubled sequentially
Al systems revenue more than doubled sequentially, beating Q2 revenue and non-GAAP EPS guidance Delivered solid Q2 performance Net revenue of $7.2 billion, up 4% y/y* and more than $200 million above guidance Converted $900+ million in Al systems revenue, more than doubling Al systems revenue q/q No
Slide 5: Leveraging competitive advantage in AI
Leveraging competitive advantage in Al Fastest supercomputers 4 of the top 10 on the Top 500 list Greenest supercomputers 7 of the top 10 on the Top 500 list Decades of experience in data center design and direct liquid cooling technologies CUBOX yecosystem of Al partners Argonne & NATIONAL LABORATO
Slide 6: Leading portfolio across the entire AI lifecycle
Leading portfolio across the entire Al lifecycle Al SOFTWARE SERVERS NVIDIA Al Enterprise HPE Machine Learning Development Environment Software HPE Machine Learning Data Management Software HPE Machine Learning Inference Software HPE Ezmeral Unified Analytics Software NETWORKING FABRICS STORAGE HPE
Slide 7: Decades of experience in direct liquid cooling
Decades of experience in direct liquid cooling with 300+ patents Liquid to Air Cooling 70% Direct Liquid Cooling 100% Direct Liquid Cooling Chilled water supply from the facility cools down the air-cooling system positioned close to the servers Combined direct liquid cooling and air cooling = = ~ Co
Slide 8: Attracted ~3,000 new HPE GreenLake customers in Q2
Attracted ~ 3,000 new HPE GreenLake customers in Q2 ARR? grew 39% y/ y’ DISA As-a-service total contract value? grew to S15B+ ™ Ss 1. For definition of ARR, please see slide 13. (7) Ee ircontem ren A cescrptonch HE ust nn GAAP fn provided onthe le ied “Use of non-GAAP financial information” 3. Total
Slide 9: Strengthened broad networking portfolio
Strengthened broad networking portfolio New generative Al capabilities to improve AlOps New security and Al observability.tools including firewall-as-a-service to fight Al cyber risks New Wi-Fi 7 access points that l capture edge data for Al inferencing d private 5G and Wi-Fi portfolio HPE Aruba Net
Slide 10: Q2 FY24 financial highlights
Q2 FY24 financial highlights — Net revenue of $7.2 billion is up 4%1 from the prior-year period, up 7%+ sequentially and above our outlook range of $6.6 to $7.0 billion — ARR? of $1.5 billion, up 39% from the prior-year period and up 7%! sequentially — Non-GAAP gross margin® of 33.1% was down 3.1 pt
Slide 11: Q2 FY24 business segment results
Q2 FY24 business segment results Net Revenue Year-over-Year Operating Profit $ Operating Profit iC ana Gin millions) Revenue Growth" (in ns) % Revenue sie OP % Revenue Server $3,867 18% $426 11.0% (3.4) pts Intelligent Edge $1,086 cky) $237 21.8% (2.9) pts Hybrid Cloud $1,256 (9%) $10 0.8% (1.1) pts
Slide 12: HPE more than doubled AI systems revenue sequentially
HPE more than doubled Al systems revenue sequentially Cumulative Al systems Quarterly Al systems Quarterly Al systems orders! since Q1’23 revenues ending backlog $ in billions ‘S.in billions $ in billions ™ Products ™ Services = Products m Services $6.0 $15 $6.0 $5.0 $4.6 $1.3 $5.0 x) a $1.0 $0.9 $
Slide 13: HPE GreenLake momentum continues with robust ARR growth
| _ HPE GreenLake momentum continues with robust 39%: y/y ARR? growth 4 Annualized Revenue Run-Rate2 | Software/Services = Infrastructure 1 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 1 In constant currency. A description of HPE's use of non-GAAP financial information is provided on the slide titled "
Slide 14: Expect to generate at least $1.9B of free cash flow in FY24
Expect to generate at least $1.9B of free cash flow! in FY24 Cash Flow Shareholder Return $in billions "Cash flow from operations ™Free cash flow * $ inmilions ® Dividend payment —™ Share repurchase $5.0 ‘ $1,200 $4.4 $4.0 $1,000 $800 $3.0 $600 $2.0 eRe) $48 iy $1.2 $14 ‘$10 eo $0.6 $200 FY23 YTD24
Slide 15: Full Year FY24 outlook
Full Year FY24 outlook 1-3% Cin constant currency) Revenue growth? GAAP operating profit growth 2-6% Non-GAAP operating profit 0-2% : growth? GAAP diluted net EPS $1.61 - $1.71 Non-GAAP diluted $1.85 - $1.95 At least $1.9 billion 3 \P financial information is provided on the slide ttled “Use of non-
Slide 16: Supplemental slides
Supplemental slides
Slide 17: Server
Server Q2 FY24 Revenue" Operating profit® Americas 45% $3,867 million $426 million Revenue M EMEA 32% 4 18% y/y, 16% q/q CC? + 18% y/y CC Overview sito - « Revenue up 18% y/y CC? and up 16% q/q CC? ¢ Operating margin of 11.0% is down 340 bps y/y and down 40 bps q/q $4.0 16% $3.0 12% $20 8% $10 4% $0
Slide 18: Intelligent Edge
Intelligent Edge Q2 FY24 Revenue! Operating profit® Americas 49% S 1,086 million $2 3 7 million Revenue m EMEA 35% 19% yly, ¥9% q/q CC 21.8% of revenue ® Asia Pacific 16% 19% y/y CC? * $ in bill Overview netee 7 ¢ Revenue down 19% y/y CC? and down 9% q/q CC? $14 28% ¢ Intelligent Edge ARR up 55% y/y
Slide 19: Hybrid Cloud
Hybrid Cloud Q2 FY24 Operating profit? $10 million 0.8% of revenue Revenue’ $1,256 million V8%y/y, 41% q/q C2 Vv 9% y/y CC? Overview « Revenue down 9% y/y CC?and up 1% q/q CC? ¢ Operating margin of 0.8%, down 110 bps y/y and down 300 bps q/q Revenue $ in billions ll Revenue $16 $14 $12 $1.0 $08 $0.6
Slide 20: Financial Services
Financial Services Q2 FY24 Revenue! Operating profit® Americas 53% $867 million ss 1 million Revenue m@ EMEA 31% 1x%yly, V 1% q/q CC? 9.3% of revenue ® Asia Pacific 16% 41% y/y CC? * $ in bill Overview 10 68 « Financing volume was flat y/y CC?and revenue was up 1% y/y CC? a 12% ¢ Write-off % of asse
Slide 21: Q2 FY24 balance sheet
Q2 FY24 balance sheet Operating Company*° Financing Company *° Net Cash $2.5B’ $13.28 $11.5B Debt Net Portfolio Assets > Capital Structure ™ FS Gross Debt* ™FS Cash ince sheet 4. Operating Company = Total HPE excluding Financial Services (FS); Financing Company = HPE Financial Services (FS) 2. Opera
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Slide 23: Q2 FY24 GAAP to non-GAAP bridge
Slide 24: 4, Other non-recurring
Net earnings Diluted net EPS 4, Other non-recurring 5. Other operating exp
Slide 25: Tax rate
Tax rate Net earnings Diluted net EPS 2. Other operating exp
Slide 26: Tax rate
Tax rate Net earnings Diluted net EPS 2. Other operating exp
Slide 27: Income tax
Income tax Tax rate Net earnings Diluted net EPS 2. Other operating exp
Slide 28: Income té
Income té Tax rate Net earnings Diluted net EPS 1. For the purposes 0
Slide 29: Income té
Income té Tax rate Net earnings Diluted net EPS 4. For the purpo 2. Represents the.
Slide 30: Income tai
Income tai Tax rate Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 31: Income ta
Income ta Tax rate Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 32: 1. For the purposes of
Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 33: 1. For the purposes of
Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 34: Income té
Income té Tax rate Net earnings Diluted net EPS 1 For the purposes 0 2, Other operating exp
Slide 35: Income t
Income t Tax rate Net earnings Diluted net EPS 2. Other operating
Slide 36: 2. Other operating
Net earnings Diluted net EPS 2. Other operating
Slide 37: Net earnings
Net earnings Diluted net EPS
Slide 38: Net earnings
Net earnings Diluted net EPS
Slide 39: Income t
Income t Tax rate Net earnings Diluted net EPS 2. Other operating
Slide 40: Reconciliation of Operating Cash Flow to Free Cash Flow
Slide 41: Reconciliation of Segment Operating Profit to GAAP & Non-GAAP Operating Profit
Hewlett Packard Enterprise Company — Q2 2024 Earnings Presentation on 6ix