Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q1 2024 Earnings Presentation
38 slides from Hewlett Packard Enterprise's earnings presentation, Feb 29, 2024
Slide 1: HPE Q1 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: Advancing our long-term strategy in a dynamic environment
Advancing our long-term strategy in a dynamic environment Mixed Q1 performance + Revenue declined Y/Y due to tougher compares, slowing campus networking demand, GPU supply availability, and timing of several large Al system acceptances aaS recurring revenue continued to ale rapidly, with near-record
Slide 5: HPE AI innovation accelerating customers' business outcomes
HPE Al innovation accelerating customers’ business outcomes HPE GreenLake Expanded NVIDIA collaboration with Announced expanded HPE GreenLake full- stack, pre-configured Al tuning and for File Storage solution rencing solution, including HPE designed for GenAl are and infrastructure
Slide 6: HPE is the edge-to-cloud company
HPE is the edge-to-cloud company Investment thesis Capturing the shift to cloud-native offerings and the explosion of Al through our differentiated portfolio Driving our portfolio mix to higher growth, higher margin, as-a-service revenue Executing with strong operating discipline which is delivering
Slide 7: Q1 FY24 financial highlights
Q1 FY24 financial highlights — Net revenue of $6.8 billion is down 14% from the prior-year period, down 8%1 sequentially and below our outlook range of $6.9 to $7.3 billion — ARR? of $1.4 billion, up 41% from the prior-year period and up 9%1 sequentially — Non-GAAP gross margin? of 36.2% was up 2.0
Slide 8: Q1 FY24 business segment results
Q1 FY24 business segment results Net Revenue Year-over-Year Operating Profit ieee Gin millions) Revenue Growth" % Revenue OP % Revenue Server $3,352 ~ (23%) $383 11.4% (4.3) pts Intelligent Edge $1,201 2% $353 29.4% 10.0 pts Hybrid Cloud $1,248 [aey4) S47 3.8% (2.0) pts HPEFS $873 (2%) $74 8.5% 1.3
Slide 9: HPE is capturing the AI server demand explosion
HPE is capturing the Al server demand explosion Cumulative APU' orders since Q1’23* $ in billions $5.0 ne $4.0 $4.0 a 9) 5 % - . “ $3.5 U percentage? of Total ee i Orders since Q1’23 ~ $1.0 $0.8 in i $- 6 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 1. Accelerated processing units APU") includes all GPU-based prod
Slide 10: HPE's strategy continues to drive gross margin expansion
HPE’s strategy continues to drive gross margin expansion Non-GAAP Gross Margin’ 36.2% 36.2% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 4. Areconailiation of specific adjustments to GAAP results for the current and prior periods i included in the non-GAAP slide section th
Slide 11: Robust 41% y/y ARR growth illustrates aaS momentum
Robust 41%: y/y ARR? growth illustrates aaS momentum Annualized Revenue Run-Rate~ $in millions $1,600 Software/Services = Infrastructure = Financial Services 1.4B $1,400 138 1.3B $1,200 1.18 $1,000 as 796 798 829 858 $800 we a oan eB] = $600 fel on eS $400 66% 9: 66% 65% $200. sox 50x. 8x «2% BX HK
Slide 12: Cash flow and shareholder return
$ in billions $5.0 $4.0 $3.0 ™ Cash flow from operations $4.4 $2.2 FY23 Expect to generate at least $1.9B of free cash flow‘ in FY24 Cash Flow ™ Free cash flow+ $0.1 $0.1 1 ($0.5) we ($0.5) $(0.8) YTD24 Q1'23 Q1'24 Free Cash Flow is on slide 37. Shareholder Return $ in millions ™ Dividend payment ™
Slide 13: Full Year FY24 outlook
Full Year FY24 outlook 0-2% Revenue growth? Cin constant currency) GAAP operating profit growth 7-11% Non-GAAP operating profit 0-2% growth?36 GAAP diluted net EPS $1.81 - $1.91 $1.82 - $1.92 At least $1.9 billion® 1. Adescription financial information is provided on the side titled “Use of non-GAAP
Slide 14: Supplemental slides
Supplemental slides
Slide 15: Server
Server Q1 FY24 Revenue" Operating profit® Americas 41% $3,3 52 million $383 million Revenue M EMEA 35% 23% yly, V7% a/q CC2 11.4% of revenue ™ Asia Pacific 24% V 23% yly C2 * Overview eae - * Revenue down 23% y/y CC? and down 7% q/q CC? $4.0 16% ¢ Operating margin of 11.4% is down 430 bps y/y and up
Slide 16: Intelligent Edge
Intelligent Edge Q1 FY24 Revenue! Operating profit® Americas 49% S 1,20 1 million S 3 ) 3 million Revenue m EMEA 36% + B%yly, V 15% q/q CC 29.4% of revenue ® Asia Pacific 15% + 2% yly CC? ° $n billions Overview tars a ¢ Revenue up 2% y/y CC? and down 15% q/q CC? $14 28% ¢ Intelligent Edge ARR up 77%
Slide 17: Hybrid Cloud
Hybrid Cloud Q1 FY24 Revenue" Operating profit? S 1,248 million S47 million Revenue V10% y/y, V 7% a/q CC2 3.8% of revenue V 10% y/y CC? 4 $ in billions Overview sus « Revenue down 10% y/y CC? and down 7% q/q CC? ae ¢ Operating margin of 3.8%, down 200 bps y/y and flat q/q Ge g si0 c $ so « | $0.6 $
Slide 18: Financial Services
Financial Services Q1 FY24 Revenue! Operating profit® Americas 53% $873 million S74 million Revenue m EMEA 54% flat y/y flat q/q CC? 8.5% of revenue ™ Asia Pacific 16% V2% yly CC * $ in bill Overview 10 68 « Financing volume fell 16% y/y CC? and revenue was down 2% y/y CC? a 12% ¢ Write-off % of ass
Slide 19: Q1 FY24 balance sheet
Q1 FY24 balance sheet Operating Company: Financing Company ** Net Cash $1.9B $13.28 $11.88 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. Operating c
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20
Slide 21: 4, Other non-recurring
Net earnings Diluted net EPS 4, Other non-recurring 5. Other operating exp
Slide 22: Tax rate
Tax rate Net earnings Diluted net EPS 2. Other operating exp
Slide 23: Tax rate
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: Income tax
Income t Tax rate Net earnings Diluted net EPS 2. Other operating
Slide 33: 2. Other operating
Net earnings Diluted net EPS 2. Other operating
Slide 34: Net earnings
Net earnings Diluted net EPS
Slide 35: Net earnings
Net earnings Diluted net EPS
Slide 36: Income tax
Income t Tax rate Net earnings Diluted net EPS 2. Other operating
Slide 37: Reconciliation of Operating Cash Flow to Free Cash Flow
Slide 38: Reconciliation of Segment Operating Profit to GAAP & Non-GAAP Operating Profit
Hewlett Packard Enterprise Company — Q1 2024 Earnings Presentation on 6ix