Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q3 2022 Earnings Presentation
37 slides from Hewlett Packard Enterprise's earnings presentation, Aug 30, 2022
Slide 1: Announcement August 30, 2022
——— _ os ee. gy ANNOUNCEMENT August 30, 2022
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 (‘Hewlett
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 research & development (“R&D”) and field-selling costs (“FSC”) as a percent
Slide 4: Q3 Revenue and Margins Grow with Enduring Demand
Q3 REVENUE AND MARGINS GROW WITH ENDURING DEMAND $7 .Obition 34.7% 10.5% $0.48 Net revenue Non-GAAP gross margin Non-GAAP operating margin Non-GAAP diluted net EPS Increase of 4% y/y, 5% q/q’, and Up 0.5 pts q/q through disciplined Up 1.2 pts q/q and up 0.7 pts y/y from Up 9% q/q, despite supply cha
Slide 5: Q3 FY22 Financial Highlights
Q3 FY22 FINANCIAL HIGHLIGHTS — Net revenue of $7.0 billion is up 4% from the prior-year period, up 5% sequentially, and above our outlook — Orders fell 9% from the prior-year period and are up 10% year-to-date — As-a-Service ARR® of $858 million, up 28% from the prior-year period — Non-GAAP Gross Ma
Slide 6: YTD aaS Order Growth of 86%
YTD AAS ORDER GROWTH OF 86% WITH IMPROVING SOFTWARE & SERVICES MIX YTD as-a-Service Order Growth Annualized Revenue Run Rate +86% y/y $in millions ™ Software/Services "Infrastructure = Financial Services YTD Q3 FY22 $1,000 858 $800 796 798 829 64g 678 705 =Q3 $600 Nee $400 Q1 $200 $o FY 2021 YTD FY
Slide 7: Q3 FY22 Business Segment Performance
Q3 FY22 BUSINESS SEGMENT PERFORMANCE Net Revenue Year-over-Year Operating Profit$ Operating Profit Year-over-Year Cin millions) RevenueGrowth» (in millions) % revenue OP % revenue Intelligent Edge $941 12% $155 16.5% 0.4 pts GROWTH HPC & Al $830 15% $28 3.4% (0.4) pts Compute $3,004 (1%) $400 13.3%
Slide 8: EPS Grows with Revenues Despite Supply and F/X Headwinds
$ in billions $8 $7 $6 $5 $0.50 $4 $3 $2 $1 $o Q1'20 Q2'20 Q3'20 Q4'20 Q121 Q2'21 EPS GROWS WITH REVENUES DESPITE SUPPLY AND F/X HEADWINDS... Revenue $7.2 $6.9 $68 $68 $67 $6.0 1 A reconciliation of specific adjustments to GAAP results for the current and prior ‘non-GAAP financial information is pro
Slide 9: Strategic Pricing Actions and Improving Mix Drive Resilient Gross Margins
eoeWHILE STRATEGIC PRICING ACTIONS AND IMPROVING MIX DRIVE RESILIENT GROSS MARGINS... non-GAAP Gross Profit? non-GAAP Gross Margin o $ in billions $3.5 33.4% ay 33.7% 34.3% 33.0% 33.9% 34.2% a 30.5% 30.7% $3.0 30% $2.5 $2.3 gna $23 $23 $2.4 $2.4 $23 25% $2.0 $1.9 at 20% $15 15% $1.0 10% $05 5% $0.0
Slide 10: Operating Margin Expansion Balanced with Long-Term Growth Investments
«WITH OPERATING MARGINS EXPANSION BALANCED WITH CONTINUED LONG-TERM GROWTH INVESTMENTS. $ in millions non-GAAP Operating Profit?» —non-GAAP Operating Margih? non-GAAP R&D+FSC % revenud” $1,200 22% $1100 ag 6% 20% $1,000 18% $900 16% 7809 5695 14% $700 12% $600 10.0% $500 oe $400 i $300 6% $200 4% $1
Slide 11: Our Unique Setup in China with H3C Continues to Expand Shareholder Value
OUR UNIQUE SETUP IN CHINA WITH H3C CONTINUES TO EXPAND SHAREHOLDER VALUE H3C equity interest rose 9% y/y in Q3’22 after 21% growth in FY21 $in millions 100 = ar) 76 5 2 Pa 70 = 60 3 52 50 Ww 1S) PR 40 #8 a xt & 2 20 [e} 4 0 Qu21 Q2'21 Q3'21 Q4'21 au'22 Q2'22 Q3'22 ’ 1. Areconclationof spec adjustmen
Slide 12: Robust Execution and Working Capital Actions Improve Cash Flow
ROBUST EXECUTION AND WORKING CAPITAL ACTIONS IMPROVE CASH FLOW FROM OPERATIONS (>) (1203) $ in billions $2.0 Free cash flow’ ™ Cash flow from operations FY20 FCF $0.6B FY21 FCF $1.6B 15 $15 aL35 0.6 (0.1) (0.2) ($0.5) (or) (0.6) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 nts i
Slide 13: FY22 Outlook
FY22 OUTLOOK Q4 FY22 outlook Full year FY22 outlook GAAP diluted net EPS $0.32 - $0.40 Revenue growth 3-4% (adj. for currency) Non-GAAP diluted net Eps $0.52 - $0.60 GAAP diluted net EPS $1.20 - $1.28 Non-GAAP diluted net EPS?“ $1.96 - $2.04 Free Cash Flow“ $1.7 - $1.9 billion On track to repurchase
Slide 14: Supplemental Slides
Slide 15: HPE's Differentiated Portfolio Capitalizing on Mega Trends
HPE’S DIFFERENTIATED PORTFOLIO IS CAPITALIZING ON MEGA TRENDS IN DATA, CLOUD, AND CONNECTIVITY HPE Q3’22 net revenue $7.0 billion Segment net revenue mix Intelligent Edge 13% HPC & Al 12% Compute 43% Financial Services 12% Corporate Investments 4% Storage 16% \ HPE Q3’22 non-GAAP operating profit $0
Slide 16: Intelligent Edge
INTELLIGENT EDGE Q3 FY22 Revenue S9AL ation + 8% yly, 410% q/q CCP 12% y/y CCH Operating profit $1555 ition 16.5% of revenue Overview ¢ Seventh consecutive quarter of 15%+ y/y order growth « Revenue growth of 12% y/y CCP and 10% q/q CC despite ongoing supply constraints - Intelligent Edge aaS orders
Slide 17: High Performance Computing & Artificial Intelligence
HIGH PERFORMANCE COMPUTING & ARTIFICIAL INTELLIGENCE Q3 FY22 Revenue Operating profit 8 0) Americas 53% 3 million $28 million Revenue Mm EMEA 26% A 12%yly, 418% q/q CCP 3.4% of revenue ™ Asia Pacific 21% 415% y/y CC S $ in billions Overview aa ee. ¢ Backlog remains approximately $3 billion of awarde
Slide 18: Compute
COMPUTE Q3 FY22 Revenue Operating profit Americas RLY $3,004 million $400 million Revenue m@ EMEA 38% V3%yly, 42% q/q CCP 13.3% of revenue ™® Asia Pacific 28% W1% y/y CCH . $ in billions Overview sho 158 ¢ Backlog increased sequentially to record levels 12% « Revenue down 1% y/y CC given ongoing sup
Slide 19: Storage
STORAGE Q3 FY22 Revenue Operating profit Americas RLY S 1, 1 5 2 million S 169 million Revenue m EMEA hhie V2%yly, 4 6%q/q CC 14.7% of revenue ™ Asia Pacific 22% 41% yly CCH ° $ in billions Overview ste 268 ¢ Backlog increased sequentially to another record level $12 26% « Revenue up 1% y/y CC and 6
Slide 20: Financial Services
FINANCIAL SERVICES Q3 FY22 Revenue Operating profit Americas 54% S 8 17 million $96 million Revenue m EMEA 29% V3%yly 41% q/q CCH 11.8% of revenue ® Asia Pacific 17% 41% yly CCH * $n bill Overview rey 20% « Financing volume rose 4% y/y CC with growth in GreenLake and revenue rose 1% y/y CC Si a A ¢
Slide 21: Key Balance Sheet Metrics Healthy
KEY BALANCE SHEET METRICS HEALTHY Q3 FY22 Balance Sheet Operating Company © Financing Company °° Net Cash $ 0.7B”” $12.6B $11.7B $2.9B $2.2B Cash Debt Net Portfolio Assets” Capital Structure FS Gross Debt “? mFS Gross Cash Operating Company = Total HPE excluding Financial Services (FS); Financing Co
Slide 22: GAAP to Non-GAAP Bridges
Slide 23: Q3 FY22 Bridge
Q3 FY22 GAAP TO NON-GAAP BRIDGE In millions, fon Russia/Ukraine AC@UiitiOn. | Stock-based oe a Non-service net cpeppey WO aus except taxrateand — Gaap —[ransformation Confit disaster GhPosivonan4 compensation Amormtation ot, Aatainect casts Petiodic benefit FA™INSSINCQUITY indemnification Stuart? be
Slide 24: Q2 FY22 Bridge
Q2 FY22 GAAP TO NON-GAAP BRIDGE In millions, ie Russia/Ukraine 5 ‘Stock-based 9 _— Non-service net eae i a Excess tax benefits ftaxrateand GAAP Transformation Pussia/srain® Disaster nd ed Amortizationof _Amorfizationof_—-Now-servicengt Earnings inequity Structuralrate fess fax Non- ocean fans costs
Slide 25: Q1 FY22 Bridge
Q1 FY22 GAAP TO NON-GAAP BRIDGE ‘Acquisition, In millions, Stock-based Non-service net ‘Tax indemnification Excess tax benefits Transformation Disaster _disposition, and ‘Amortization of Amortizationof Nowservicenet’ earnings in Structural rate t tax rate and GAAP : ae an iodic benefit Earaing d rel
Slide 26: FY21 Bridge
FY21 GAAP TO NON-GAAP BRIDGE” Inmiillions, on ‘Acauisition, Stock-based Amortization Amortization Nomservice Earnings irisation Earl debt 79% ig sin, Structural Ts eeree except tax rate and Gaap Transformation eee eee Compencation of intangible) of lial linet peo aan pabeia) redenption indempificati
Slide 27: Q4 FY21 Bridge
Q4 FY21 GAAP TO NON-GAAP BRIDGE In millions, oe Acquisition, | Stock-based a Amortization NOPSErVICE Earnings |. sign Earlydebt 7X. structural TaxOn Excess tax a faxreieenel GAAP Transformation Disaster disposition, and aston Amortizationof Ament oN" net periodic gy _Litigation Fjeraption indemnific
Slide 28: Q3 FY21 Bridge
Q3 FY21 GAAP TO NON-GAAP BRIDGE” In millions, except Acquisition, "| Stoclebased Nonservicenet ‘Tax indemnification pei ‘Transformation Disaster disposition, and Amortization of Amortization of Earnings in ‘Structural rate benefits from tax rate and per share GAAP compensation Amorti ane periodic be
Slide 29: Q2 FY21 Bridge
Q2 FY21 GAAP TO NON-GAAP BRIDGE In millions, oy fa Acquisition, | | stock-based aoe ; except tax rate and CO erat cera? compensation hr ets neta eorts Non-GAAP per share amounts os expense Revenue $6,700 $6,700 Cost of sales bh an Q 4,400 Gross profit 2,287 11 2 2,300 Total operating epaices 2,009 2
Slide 30: Q1 FY21 Bridge
Q1 FY21 GAAP TO NON-GAAP BRIDGE In millions, pecestioey Stock-based Non-service net ‘Tax indemnification eed Transformation Disaster disposition, and 7 “Amortization of Amortization of pies Earnings in equity ‘Structuralrate benefits from. except taxrate and GAAP costs charges other related Cee inta
Slide 31: FY20 Bridge
FY20 GAAP TO NON-GAAP BRIDGE In millions, Acquisition, stock-based Amortization Amortization Non-servi Earnings i Excess fax except taxrateand aap Transformation Disaster disposition, Compensation of mangible ofiniial TPSMEN nerperodie equity benefits from Non-GAAP per share amounts aes Malated char
Slide 32: Q4 FY20 Bridge
Q4 FY20 GAAP TO NON-GAAP BRIDGE In millions, Acquisition, ‘Stock-based Transformation Disaster "9 wy 9 Amortization of Amortization of Non-service net periodic Earnings in ‘Tax indemnification and Structural rate except tae cate and GAAP costs charges Gee Ge intangible assets initial direct costs be
Slide 33: Q3 FY20 Bridge
Q3 FY20 GAAP TO NON-GAAP BRIDGE In millions, Acquisition, | stock-based ‘Amortization Non-service es fears ‘Transformation Disaster disposition, and " ‘Amortization of ers addi Earnings in ‘indemnification ‘Structural rate benefits from t tax rate and GAAP tion mort of initial period se Tax reform 4
Slide 34: Q2 FY20 Bridge
Q2 FY20 GAAP TO NON-GAAP BRIDGE ‘Acquisition, Stock-based In millions, Amortization Nor-service net Transformation Disaster _ disposition, and tion Amortization of Impairment of Earnings ir ioe ification Te ation Structural rate Cephan hr GAAP costs Charges otherrelated” expense intangibleassets. of
Slide 35: Q1 FY20 Bridge
Q1 FY20 GAAP TO NON-GAAP BRIDGE In millions, s ‘Acquisition, ‘Stock-based -_ ‘Amortization —_ Norrservice er ‘Tax indemnification Excess tax benefits rastormatin Sea amatzaonat Sat wit ramen geeputonrarcard GAAP coat Sereaeges Mer Gmvereton intangibles cfiataldres pened, equtymtret Tuacemees, —TUTOT
Slide 36: - - - - - - (2,172) - - - $784 $(76) $379 $1,254
- - - - - - (2,172) - - - $784 $(76) $379 $1,254
Slide 37: Slide 37
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