Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q2 2022 Earnings Presentation
37 slides from Hewlett Packard Enterprise's earnings presentation, Jun 1, 2022
Slide 1: HPE Q2 FY22 Earnings Announcement
——— _ os o is We Rage 4 fe WES PeN @ Gee, Sie HPE @2 FY22 EARNI S ANNOUNCEMENT June 1, 2022 vestors.hpe.com
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, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating profit, non-GAAP operating profit margin, non-GAAP income tax rate, non-GAAP net earnings, and non-GAAP diluted net earnings p
Slide 4: Persistent Customer Demand in Q2 with Sustained Margins
PERSISTENT CUSTOMER DEMAND IN Q2 WITH SUSTAINED MARGINS HPE’s differentiated edge-to-cloud portfolio shows continued traction with customers 20% $6.7 — HPE GreenLake Highlights * Total as-a-Service orders more than doubled y/y for the 3rd straight quarter Order Growth Net revenue * aaS ARR® rose 25%
Slide 5: HPE GreenLake Edge-to-Cloud Platform
HPE GREENLAKE EDGE-TO-CLOUD PLATFORM UNIFIED CLOUD SERVICES EXPERIENCE SECURITY ANALYTICS | Al | MACHINE LEARNING WORKLOAD ORCHESTRATION Bare Metal | VMs | Containers COMPLIANCE DATA MANAGEMENT SERVICES ADVISORY SERVICES MANAGED SERVICES OPEN | ELASTIC | PARTNER ENABLED FINANCIAL NETWORKING COMPUTE
Slide 6: Q2 FY22 Financial Highlights
Q2 FY22 FINANCIAL HIGHLIGHTS — Order growth of 20% from the prior-year period increased backlog to record levels — Net revenue of $6.7 billion, up 1.5% from the prior-year period - As-a-Service ARR® of $829 million, up 25% from the prior-year period — Non-GAAP Gross Margin of 34.2%, down 0.1 pts fro
Slide 7: As-a-Service Order Growth More Than Doubled for 3rd Consecutive Quarter
150% 125% 100% 75% 50% 25% AAS ORDER GROWTH MORE THAN DOUBLED FOR 3RD CONSECUTIVE QUARTER WITH RICHER SOFTWARE MIX as-a-Service Order Growth” 136% $ in millions 0% Q1'21 Q2'21) Q3'21. Q4'20— Q1'22, Q2'22 Annualized Revenue Run Rate © Software/Services © Infrastructure = Financial Services 1,000 69)
Slide 8: Q2 FY22 Business Segment Performance
Q2 FY22 BUSINESS SEGMENT PERFORMANCE Net Revenue Cin millions) Intelligent Edge $867 GROWTH HPC & Al $710 Compute $2,985 CORE Storage $1,098 AAS HPEFS $823 ENABLERS Corp. Inv. and Other $327 Hewlett Packard a 1 Adjusted to eliminate the effects of curreny.A description of HPE's use of nom GAAP finan
Slide 9: Revenue and EPS Levels Maintained Despite China Shutdowns and Russia Impact
Revenues Sbillions $8 $7 $6 $5 $4 So $2 Sil $o Q1'20 Q2'20 Q3'20 Q4'20 Q121 — REVENUE AND EPS LEVELS MAINTAINED DESPITE CHINA SHUTDOWNS AND RUSSIA IMPACT... Revenue —Non-GAAP diluted net EPS from operations” 72 $6.9 $6.8 ° $6.8 $6.0 $0.50 $0.52 Q3'21 Q4'21 Q1'22 1 A reconciliation of specific adjust
Slide 10: Strategic Pricing Actions Drive Resilient Gross Margins
ooeWHILE STRATEGIC PRICING ACTIONS CONTINUE TO DRIVE RESILIENT GROSS MARGINS... non-GAAP Gross Profit? non-GAAP Gross Margin o Sbillions $35 BBA gag 33.7% SES yey I 35% - 30.5% 30.7% —— $3.0 30% $2.5 $2.3 gna $23 $2.4 $2.4 $2.4 25% $2.1 : $2.0 Sie 20% $1.5 15% $1.0 10% $0.5 5% $0.0 0% Q1'20 Q2'20 Q3
Slide 11: Operating Margins Reflect Long-Term Growth Investments
$millions $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 «AND OPERATING MARGINS REFLECT LONG-TERM GROWTH INVESTMENTS. non-GAAP Operating Profit‘? +=—=non-GAAP Operating Margin® —=R&D+FSC % revenue — Q3'20 Q4'20 1. A reconciliation of specific adjustments to GAAP results for the
Slide 12: Our Unique China Setup with H3C
OUR UNIQUE CHINA SETUP WITH H3C CONTINUES TO GENERATE GROWING VALUE TO SHAREHOLDERS H3C equity interest rose 32% y/y in Q2’22 after 21% growth in FY21 Smillons 4 O¢ 89 B 80 5 2 Pa 70 = 60 3 52 50 Ww 1S) PR 40 #8 a xt S 2 20 (e} Zz ) Q121 Q2'21 Q3'21 Q4'21 Q122 Q2'22 7 1. A reconciliation of specific
Slide 13: Robust Demand, Normal Seasonality and Working Capital Actions to Drive H2 FCF
ROBUST DEMAND, NORMAL SEASONALITY AND WORKING CAPITAL ACTIONS TO DRIVE H2 FCF ona ™ Cash flow from operations‘? © Free cash flow YO $2.0 FY20 FCF $0.6B FY21 FCF $1.6B 15 $15 09 $1.0 07 04 o4 | $0.0 — — ©. Yo, 2) (0.2) ($0.5) (0.4) ($1.0) Q1'20 Q2'20 Q3'20 Q4'20 ‘ Q2'21 Q3'21 Q2'22 Reiterating FCF ou
Slide 14: Updating FY22 Outlook
UPDATING FY22 OUTLOOK Q3 FY22 outlook Full year FY22 outlook GAAP diluted net EPS $0.22 - $0.32 Revenue growth 3-4% (adj. for currency) Non-GAAP diluted net Epsuxe $0.44 - $0.54 GAAP diluted net EPS $1.17 - $1.31 Non-GAAP diluted net EPS? $1.96 - $2.10 Free Cash Flow $1.8 - $2.0 billion Targeting sh
Slide 15: Slide 15
Slide 16: HPE's Differentiated Portfolio Capitalizing on Mega Trends
HPE’S DIFFERENTIATED PORTFOLIO IS CAPITALIZING ON MEGA TRENDS IN DATA, CLOUD, AND CONNECTIVITY HPE Q2’22 net revenue $6.7 billion Segment net revenue mix Intelligent Edge 13% HPC & Al 10% Compute Lh% Financial Services 12% Corporate Investments 5% a Storage 16% HPE Q2’22 non-GAAP operating profit $0
Slide 17: Intelligent Edge
INTELLIGENT EDGE Q2 FY22 Revenue Operating profit @ Americas 42% $ 867 million S 109 million Revenue m EMEA 40% A 8% yly, VW 3% q/q CC? 12.6% of revenue ™ Asia Pacific 458 A V%yly CCH * Sbill Overview nen 20% ¢ Fifth consecutive quarter of 35%+ y/y order growth z 0.8 16% « Revenue growth of 9% y/y C
Slide 18: High Performance Computing & Artificial Intelligence
HIGH PERFORMANCE COMPUTING & ARTIFICIAL INTELLIGENCE Q2 FY22 Revenue Operating profit ™@ Americas 52% $710 million ($40) million Revenue . EMEe P= a A 4% yly, V 10% q/q CC (5.6)% of revenue Asia Pacific 19% 5% yly CC? * Overview arr b. ¢ Order growth of 15%+ y/y for a record of approx. $3 billion in
Slide 19: Compute
COMPUTE Q2 FY22 Revenue Operating profit @ Americas 35% $2,985 million $415 million Revenue ™@ EMEA 38% AOA yly, V1% q/q CCH 13.9% of revenue ™@ Asia Pacific 27% 41% y/ly CCH * Sbil Overview men a ¢ Order growth of 20%+ y/y for the fourth straight quarter driven aa primarily by richer configs follow
Slide 20: Storage
STORAGE Q2 FY22 Revenue Operating profit @ Americas 3a% S 1,098 million S 1 3 8 million Revenue m EMEA 45% WV 3%yly, V5%q/q CCP 12.6% of revenue ™@ Asia Pacific 21% V 2% yly CCP ° Sbillions Overview st 268 ¢ Backlog rose to another record level $12 26% ¢ Revenue down 2% y/y CCgiven supply constraint
Slide 21: Financial Services
FINANCIAL SERVICES Q2 FY22 Revenue Operating profit @ Americas 53% S 82 3 million S 104 million Revenue Mm EMEA 30% V2%yly V2%q/q Cc? 12.6% of revenue ™@ Asia Pacific 17% Flat y/y CC? * Sbill Overview me Be « Financing volume increased 2% y/y with revenue flat y/y CC? $08 16% ¢ Write-off % of assets
Slide 22: Key Balance Sheet Metrics Healthy
KEY BALANCE SHEET METRICS HEALTHY Q2 FY22 Balance Sheet Operating Company © Financing Company °° Net Cash $ 0.28” $12.6B $11.6B $2.2B $2.0B Cash Debt Net Portfolio Assets” Capital Structure FS Gross Debt “mFS Gross Cash Operating Company = Total HPE excluding Financial Services (FS); Financing Compa
Slide 23: GAAP to Non-GAAP Bridges
Slide 24: Q2 FY22 GAAP to Non-GAAP Bridge
Q2 FY22 GAAP TO NON-GAAP BRIDGE Inmillions, eae Stoclebased Amortization of Nonservice net Excess tax benefits ‘Transformation Russia/Ukraine Disaster disposition, and 3 ‘Amortizationof —Nomservicenet_ earnings in equity Structuralrate Non- cent tae cated GAAP costs Confctcharoes curses other rested
Slide 25: Q1 FY22 GAAP to Non-GAAP Bridge
Q1 FY22 GAAP TO NON-GAAP BRIDGE In millions, ‘Acquisition, ‘Stock-based Amortization of Non-service net ‘Tax indemnification Excess tax benefits Transformation Disaster oat, ry ‘Amortization of rien Earnings in ‘Structural rate cent tae cated EXD Costs charges NT eet intangholenaane iitaldirect cost
Slide 26: FY21 GAAP to Non-GAAP Bridge
FY21 GAAP TO NON-GAAP BRIDGE In millions, oe ‘Acquisition, — stock-based Amortization amortization Non-service Earn jtigation _ Eattv debt ficaee Structural Tax rhe except taxrate and aap Trersformation Disaster disposition, compensation °F PUIG! Creal pet period: inequity #93400 redempyion ‘Mdemnfi
Slide 27: Q4 FY21 GAAP to Non-GAAP Bridge
Q4 FY21 GAAP TO NON-GAAP BRIDGE Inmillions, ‘ ° ,. Acquisition, stock-based Amortizationof Amortization NomService Eamings Earlydebt oe TX Structural BO ees except taxrate and aap Trersformation Disaster deposition. and compensation purchased afinitia| "'PAOS ineauity UABAHION segempron emnifeation
Slide 28: Q3 FY21 GAAP to Non-GAAP Bridge
Q3 FY21 GAAP TO NON-GAAP BRIDGE Inmillions, except 7 ‘Acquisition, Stock-based Amortization of a Norrservice net ingsin 72* indemnification See Transformation Disaster Gi. cit < H Amortization of repairs Ea Structuralrate benefits fro uid per share aap ao craepaa) Cope eS purchased intangible initio
Slide 29: Q2 FY21 GAAP to Non-GAAP Bridge
Q2 FY21 GAAP TO NON-GAAP BRIDGE In millions, a ‘Acquisition, Stock-based Amortization of a. Non-service net nt Taxon Excess tax benefits Transformation Disaster gic osit 3 ‘Amortization of aS Earnings in 5 Structural rate cinceant cae Te AS ee et ahs Ta MN vin etiee | “heat aes tenon Revenue $6,700
Slide 30: Q1 FY21 GAAP to Non-GAAP Bridge
Q1 FY21 GAAP TO NON-GAAP BRIDGE Inmiillions, o k Acquisition, Stock-based Amortization of — Non-service net imgsin equity T2*indemnification Ces hone an aap Transformation Disaster inosine ation : ation of amortization of NOWSETVEENEY earnings in equity nfcation structuralrate benefits 0M Non. GAAP
Slide 31: FY20 GAAP to Non-GAAP Bridge
FY20 GAAP TO NON-GAAP BRIDGE In millions, ‘i ; Acquisition, stock-based Amortization amortization | Non-service Eamingsin <4. «1% Taxon Structural, Excess tax except tax rate and Gaap Transformarion Disaster depositor” compensation °F Purchased “of ntial MPAIICNT net periodic equity MACMnICaton Tax
Slide 32: Q4 FY20 GAAP to Non-GAAP Bridge
Q4 FY20 GAAP TO NON-GAAP BRIDGE In millions, nm m a ‘Stock-based ‘Amortization of _ A -_ teem i A state ‘Transformation Disaste Aca . disposition, - Amortization of Non-service net periodi Ear ‘Tax indemnificati id ‘Structural rate ecco ae ata Gaap Tonlom™eosts charges andotherrelotedchargescomPensa
Slide 33: Q3 FY20 GAAP to Non-GAAP Bridge
Q3 FY20 GAAP TO NON-GAAP BRIDGE Inmillions, o 5 __ Acquisition, stock-based Amortizationof Amortization _Non-service per fener Ss A taxrateaed GAAp Transformation Disaster _ disposition, and = Peed fri RS Earningsin indemnification, Structuralrate benefitsfrom Non. caap Patent fests charges atherrel
Slide 34: Q2 FY20 GAAP to Non-GAAP Bridge
Q2 FY20 GAAP TO NON-GAAP BRIDGE In millions, ‘i ; fen auisition, Stockebased = gmortizationof Amortization | Nor-service net op pe a ey) GAAP Transformation Disaster disposition, and compensatio ationot Amortization impairment of NOwservieret —earningsin indemmifcation Taxon separation Structurlrate
Slide 35: Q1 FY20 GAAP to Non-GAAP Bridge
Q1 FY20 GAAP TO NON-GAAP BRIDGE” Inmilions, . ‘Acquisition, Stockbased Amortizationof Amortization _Non-service ingsin _ T#Xindemnification Excess tax benefits except tax rate and GAap Transformation disposition, and other compensation purchased of niialdirect net periodic gui mrcrcer ‘andrelated Ta
Slide 36: Free Cash Flow Reconciliation
- - - - - - (2,172) - - $784 $(76) $379
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