Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q4 2023 Earnings Presentation
39 slides from Hewlett Packard Enterprise's earnings presentation, Nov 28, 2023
Slide 1: HPE Q4 FY23 Earnings Announcement
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 This 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-
Slide 4: HPE delivered record financial performance in FY23
HPE delivered record financial performance in FY23 FY23 Net Revenue FY23 Non-GAAP FY23 Non-GAAP FY23 Non-GAAP Diluted FY23 Free Cash Flow? Gross Margin’? Operating Margin? Net Earnings per share? $29.1 billion 35.3% 10.8% $2.15 $2.2 billion Up 5.5% y/y Up 140bps y/y Up 20bps y/y Up 6.4% y/y Up $0.4
Slide 5: Q4 FY23 Financial Highlights
Q4 FY23 Financial Highlights — Net revenue of $7.4 billion is down 6% from the prior-year period, up 5%“ sequentially and approximately the midpoint our outlook range of $7.2 to $7.5 billion — ARR® of $1.3 billion, up 37% from the prior-year period and up 2% sequentially — Non-GAAP gross margin™ of
Slide 6: Q4 FY23 Business Segments Results
Q4 FY23 Business Segments Results Net Revenue Year-over-Year Operating Profit $ Operating Profit Resrryemicat a a change in (in millions) Revenue Growth” Cin millions) % Revenue 34 OP % Revenue Intelligent Edge $1,358 40% $401 29.5% 16.2 pts HPC & Al $1,181 ~~ 38% S55 4.7% 1.2 pts Storage $1,111 (12
Slide 7: Growth in the Intelligent Edge segment driving HPE revenue and profit mix shift
20% 15% 10% 5% 0% ~ Growth in the Intelligent Edge segment driving HPE revenue and profit mix shift Intelligent Edge Revenue % of Total Segment Revenue Intelligent Edge Operating Profit % of Total Segment Operating Profit “2020 2021 2022 2023 1. Edge revenue and total segment revenue are not adjuste
Slide 8: HPE GreenLake Cloud TCV growth driving significant ARR expansion
HPE GreenLake Cloud TCV growth driving significant ARR expansion as-a-Service Total Contract Value (TCV) Annualized Revenue Run-Rate” $in billions $in millions © Software/Services Infrastructure ™ Financial Services i $15 $1,600 ~$13B +$1.3B 1.3B $1,400 $12 — $1,200 $9 : $1,000 1'22 Q2'22 Q3'22 Qh'2
Slide 9: HPE is capturing the AI demand explosion
HPE is capturing the Al demand explosion $ in billions $4.0 $3.5 $3.0 2 5 % $2.5 °o $2.0 APU percentage of Total ELS Server Orders in FY23 $1.0 $0.5 $- $0.1 Q1'23 $0.1 Q2'23 Cumulative Cray XD FY23 APU orders $1.7 Q3'23 $2.4 Q4'23 $ in billions $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $- Total FY23 A
Slide 10: HPE strategy continues to drive gross margin expansion
$ in billions $9.0 $8.0 $7.0 $6.0 $2.0 Non-GAAP Gross Margin’) HPE strategy continues to drive gross margin expansion lm HPE Revenue —non-GAAP Gross Margin Q3'20 Q4'20 Q1'21)0 Q2'21 Q3'21 421 Q1'22.-Q2'22 Q3'22 Q4'22 Q1'23 0: 31.7: FY21: 33.9% FY22: 33.9% Q2'23 FY23: 35.3% Q3'23 1. Areconciliation o
Slide 11: FY23 record breaking free cash flow
FY23 record breaking free cash flow Annual cash flow Free cash flow as a % of fre = Cash flow from operations ™Free cash flow % non-GAAP net earnings $7 100% 6 * 80% $5 $4.6 Shh $4 60% cS 0% $2 0 20% $o 0% Bow 2021 2022 2023 2020 2021 2022 2023 “Converted ~80% of non-GAAP net earnings” into free cas
Slide 12: Outlook
Outlook Full Year FY24 Outlook - $7.3 billion | Revenue growth? 2 - 4% cinconstant currency) $0.24 - $0.: Non-GAAP operating profit growth®® 3-5% luted net EPS $0.42 - $0.50 GAAP diluted net EPS $1.81 - $2.01 Non-GAAP diluted net EPSP $1.82 - $2.02 Free Cash Flow $1.9 - $2.1 billion Toa. A d share r
Slide 13: Supplemental slides
Supplemental slides
Slide 14: HPE's differentiated portfolio is capitalizing on mega trends in cloud, AI, data and connectivity
HPE’s differentiated portfolio is capitalizing on mega trends in cloud, Al, data and connectivity HPE Q4’23 net revenue HPE Q4’23 non-GAAP operating profit | Q4’23 Net revenue by region S7.4 billion $0.7 billion Segment net revenue mix Segment operating profit and mix2 <2 $ in millions Intelligent E
Slide 15: Intelligent Edge
| Intelligent Edge Revenue $ 1,358 nillion A 4l%yly, V 4% qlq CC A 40% y/y CC? Operating profit $401 million 29.5% of revenue Overview « Revenue up 40% y/y CC and down 4% q/q CC, ¢ Intelligent Edge ARR up 55% y/y ¢ Operating margin of 29.5%, up 1,620 bps y/y and down 20 bps q/q Q4 FY23 Revenue $ in
Slide 16: High Performance Computing & Artificial Intelligence
High Performance Computing & Artificial Intelligence Q4 FY23 Revenue? Operating profit 1 181 Americas 66% 9 million S 5 5 million Revenue m@ EMEA 18% A 37% yly, & 41% q/q CC 4.7% of revenue ™ Asia Pacific 16% 38% y/y CC * $ in billions Overview 16 168% « Revenue up 38% y/y CC and up 41% q/q CC? S14
Slide 17: Storage
Storage Q4 FY23 Revenue Operating profit S 1, 1 1 1 million $90 million Revenue V 13% y/y, 4 3% q/q CC? 8.1% of revenue V 12% y/y CC? $ in billions Overview sus « Revenue down 12% y/y CC and up 3% q/q CC $12 © Operating margin of 8.1%, down 730 bps y/y and down 260 bps q/q $10 Z $08 é $0.6 | $04 $02
Slide 18: Compute
Compute Q4 FY23 Revenue” $2,595 mition V 31% yly, Y1% q/q CC V 30% y/y CC Operating profit $2 ) 5 million 9.8% of revenue Overview « Revenue down 30% y/y CC and down 1% q/q CC? ¢ Units down ~35% y/y and AUPs down low-single digits on commodity costs and higher revenue mix from current period orders.
Slide 19: Financial Services
| Financial Services Q4 FY23 Revenue” $876 million 2%yly_ flat q/q CC flat y/y CC? Operating profit oy £:} million 8.9% of revenue Overview « Financing volume fell 21% y/y CC and revenue was flat y/y CC? ¢ Write-off % of assets roughly flat q/q at 0.5%, which is below FY19 pre- pandemic levels ¢ Ope
Slide 20: Key balance sheet metrics healthy
Key balance sheet metrics healthy Q4 FY23 Balance Sheet Operating Company Financing Company © Net Cash $2.8B° $13.18 $11.68 $3.7B $0.9B Cash Debt Net Portfolio Assets” Capital Structure =FSGross Debt mFS Cash 1. Operating Company = Total HPE excluding Financial Services (FS); Financing Company = HPE
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Slide 22: Tax rate
Tax rate Net earnings Diluted net EPS 2. Other operating exp
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Tax rate Net earnings Diluted net EPS 2. Other operating exp
Slide 24: Income tax
Income tax Tax rate Net earnings Diluted net EPS 2. Other operating exp
Slide 25: Income tax
Income té Tax rate Net earnings Diluted net EPS 1. For the purposes 0
Slide 26: Income tax
Income té Tax rate Net earnings Diluted net EPS 4. For the purpo 2. Represents the.
Slide 27: Income tax
Income tai Tax rate Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 28: Income tax
Income ta Tax rate Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 29: 1. For the purposes of
Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 30: 1. For the purposes of
Net earnings Diluted net EPS 1. For the purposes of 2. Other operating exper
Slide 31: Income tax
Income té Tax rate Net earnings Diluted net EPS 1 For the purposes 0 2, Other operating exp
Slide 32: Net earnings
Net earnings Diluted net EPS
Slide 33: Net (loss) earnings
Net (loss) earnings Diluted net EPS 1. For the purpo of Taxon the a 2, Other opera
Slide 34: Tax rate
Taxrate Net earnings Diluted net EPS
Slide 35: 1. For the purposes:
Net earnings Diluted net EPS 1. For the purposes: adjustments. 2. Other operating expenses
Slide 36: Net (loss) earnings
Net (loss) earnings Diluted net EPS
Slide 37: Net earnings
Net earnings Diluted net EPS
Slide 38: Reconciliation of Operating Cash Flow to Free Cash Flow
Slide 39: Reconciliation of Segment Operating Profit to GAAP & Non-GAAP Operating Profit
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