Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q4 2024 Earnings Presentation
35 slides from Hewlett Packard Enterprise's earnings presentation, Dec 5, 2024
Slide 1: HPE Q4 FY24 Earnings
Hewlett Packard Enterprise HPE Q4 FY24 Earnings December 5'), 2024
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 o
Slide 4: Exceptional Q4 drives full-year revenue and EPS outperformance, with record free cash flow
Exceptional Q4 drives full-year revenue and EPS outperformance, with record free cash flow ancial Performance Q4 * Record quarterly revenue of $8.5 billion, up 15%1 year-over-year * Server revenue of $4.7 billion, our third consecutive quarter of double-digit year-over-year growth, including Al syst
Slide 5: HPE portfolio accelerates shareholder value
HPE portfolio accelerates shareholder value HPE GreenLake Cloud Aruba Central (NetOps | Morpheus (DevOps) | OpsRamp (IT Ops) | Al Ops | Security | Marketplace Data Protection Ops | Sustainability Insight Center | Consumption Analytics (FinOps) HPE Hybrid Cloud Portfolio HPE ProLiant Servers HPE Alle
Slide 6: HPE is positioned to lead the next wave of innovation driven by AI and Hybrid Cloud
HPE is positioned to lead the next wave of innovation driven by Al and Hybrid Cloud Industry-first 100% fanless direct-liquid cooling Al Architecture Hybrid Cloud HPE Alletra Storage MP X10000 High performance object store El Capitan - fastest and among most energy efficient supercomputers in the wo
Slide 7: FY financial highlights
FY 24 financial highlights * Net revenue of $30.1 billion is up 3.3% from the prior-year, above the high end of our outlook growth range of 1-3% * Non-GAAP gross margin? of 32.8% was down 2.5 pts from the prior-year * Non-GAAP operating profit? of $3.2 billion was up 0.7% from the prior-year * GAAP
Slide 8: Q4 FY24 financial highlights
Q4 FY24 financial highlights Net revenue of $8.5 billion is up 15%* from the prior-year period, up 9%1 sequentially and above the high end of our outlook range of $8.1 to $8.4 billion ARR? of $1.9 billion, up 48% from the prior-year period and up 12%! sequentially Non-GAAP gross margin? of 30.9% was
Slide 9: Q4 FY24 business segment results
Q4 FY24 business segment results Year-over-Year change in OP % Revenue Net Revenue Year-over-Year Operating Profit $ Operating Profit Gn millions) Revenue Growth? Gn millions) % Revenue Server $4,706 31% $545 11.6% 1.5 pts Intelligent Edge $1,124 (20%) $274 24.4% (2.7) pts Hybrid Cloud $1,582 18% $1
Slide 10: Continued HPE GreenLake Cloud customer adoption delivers strong 48% y/y growth in ARR
Continued HPE GreenLake Cloud customer adoption delivers strong 48%7 y/y growth in ARR? GreenLake Customers Annualized Revenue Run-Rate2 ‘Thousands $ in millions 45 $2,100 39K $1,800 $1,500 $1,200 - $900 - $600 - $300 - $o Q1'23) Q2'23. Q3'23) Q4'23. —Q1'24 = 2'24 «= Q3'24 A246 Q1'23) Q2'23) Q3'23.
Slide 11: Double-digit y/y growth in AI systems orders and revenue
Double-digit y/y growth in Al systems orders and revenue Cumulative Al systems Orders since Q1’23 Quarterly Al systems Revenues Quarterly Al systems ending backlog!” $ in billions ™Products m= Services $ in billions Products ™ Services $in billions $7.0 $1.6 $Ls $4.0 $3.4 $3.4 $3.4 $3.0 $3.1 $5.0 $1
Slide 12: Generated record free cash flow of $2.3 billion in FY24
Generated record free cash flow! of $2.3 billion in FY24 Cash Flow Common Shareholder Returns $ in billions HNCash flow from operations —®=Freecash flow —sinbillions —_$ in millions ™ Dividend payment ™ Share repurchase $1,200 $6.0 ars) <a $2.5 $5.0 $2.0 $4.0 —_ ee $800 $1.5 $3.0 se poe] oe $600 $1.
Slide 13: Q1 FY25 Outlook
Q1 FY25 Outlook Revenue growth year-over-year Mid-teens percent GAAP diluted net EPS $0.31 - $0.36 Non-GAAP diluted net EPS*? $0.47 - $0.52 2. 0125 non-GAAP diluted net EPS excludes net after-tax adjustments of $0.16 per diluted share primarily related to stock-based compensation, acquisition, dispo
Slide 14: Supplemental slides
a“ 7 i Supplemental slid é E 1 waar
Slide 15: Server - Q4 FY24
Server - Q4 FY24 Revenue’ Operating profit® Americas 46% $4,706 million $545 million Revenue __EMEA 31% A 32% yly, A 9% aq CP 11.6% of revenue @ Asia Pacific 23% 431% y/y CC? * Overview ly non « Revenue up 31% y/y CC? and up 9% q/q CC? $4.0 16% ¢ Operating margin of 11.6% is up 150 bps y/y and up 80
Slide 16: Intelligent Edge - Q4 FY24
Intelligent Edge - Q4 FY24 Revenue! Operating profit® 1,124 274 ae a 9 million Revenue EMEA 38% Y 20% y/y, flat q/q CC? 24.4% of revenue @ Asia Pacific 16% y 20% y/y CC? . $ in billions Overview wo - « Revenue down 20% y/y CC? and flat q/q CC? $14 28% « Intelligent Edge ARR“ up 61% y/y Ga 25% 8 A .
Slide 17: Hybrid Cloud - Q4 FY24
Hybrid Cloud - Q4 FY24 Revenue? Operating profit® 1 582 @ Americas 46% 9 million S 1 2 2 million Revenue _ EMEA 36% 418% yly, 421% q/q CC? 7.7% of revenue ™ Asia Pacific 18% 418% y/y CC? * $ in billions Overview an 108 « Revenue up 18% y/y CC2and up 21% q/q CC? 6 aes $14 14% ¢ Operating margin of 7.
Slide 18: Financial Services - Q4 FY24
Financial Services - Q4 FY24 Revenue’ Operating profit® @ Americas 53% $893 million $82 million Revenue EMEA 31% A2%yly, 41% q/q CC 9.2% of revenue ™@ Asia Pacific 16% N2% yly CC? * $ in bill Overview ons te « Financing volume was up 40% y/y CC? and revenue was = Aon up 2% y/y CC2 . ‘a 8% ¢ Write-of
Slide 19: Q4 FY24 balance sheet
Q4 FY24 balance sheet Operating Company?> Financing Company*> Net Cash $8.1B2 $13.6B Cash Debt Net Portfolio Assets > Capital Structure mFS Gross Debt* |= FS Cash Committed to investment grade rating and healthy balance sheet 1. Operating Company = Total HPE excluding Financial Services (FS); Financ
Slide 20: Appendix
Slide 21: Preferred stock conversion table
Preferred stock conversion table Dilution Impact (shares) HPE Stock Price Conversion Rate Greater than Threshold Appreciation Price ($19.72) Cee 76,058,000 Equal to or less than the Threshold Between 2.5352 and eae Appreciation Price ($19.72) but determined by dividing $50 by the . greater than or e
Slide 22: FY24 GAAP to non-GAAP bridge
FY24 GAAP to non-GAAP bridge? Losson Immilions, except taxrateand per share casp Tratsfomation Disster_epeifon and comometon ven este “tani investments wet Cp mea charges Revenue $ 30,127 $ 30,127 Cost of sales 20,249 43 49) ©) 20,234 Gross profit 9,878 43) 49 9 9,893 Total operating expenses 7,688
Slide 23: Q4 FY24 GAAP to non-GAAP bridge
Q4 FY24 GAAP to non-GAAP bridge? Inmillions, except tax rate and per share aap. Tansformation Disaster dlapostion and cae eareg Amortization of aygsgmave Adjustments for CD tom amounts costs recovery other related creation intangible assets ents equity interests? charges Revenue $ 8,458 $ 8,458 Cost
Slide 24: Q3 FY24 GAAP to non-GAAP bridge
Q3 FY24 GAAP to non-GAAP bridge? i _ Gain on Inmilins, Transformatio Disaster disposition and STOCKB*E4 —ieatinyreAMortizaton vestments, Earnings from Thrpt ott and per sae amounts cane Tomtermae Pee gee aed cnmeaon uychitas onic MEN ieee Non AAP charges Revenue $7,710 $7,710 Cost of sales 5,271 7 (
Slide 25: Q2 FY24 GAAP to non-GAAP bridge
Q2 FY24 GAAP to non-GAAP bridge? Stock-based In mill ‘Transformati i nn ; Amortization of Earnings f ity a eee carte can Tamfomeien ouanraavey emer compan Asien iat ey otter Non-GAAP Revenue $7,204 $7,204 Cost of sales 4,828 7 4) 4,821 Gross profit 2,376 qa” 14 2,383 Total operating expenses 1,951 G
Slide 26: Q1 FY24 GAAP to non-GAAP bridge
Q1 FY24 GAAP to non-GAAP bridge? Acquisition, Stock-based Inmillions, ‘Transformatic Disaster (rec > dicpositic . ‘Amortization of Loss; Earnings from an Gaap —Traniomeastz charges 8Postion andother compensation istangibleassets._ investments net! equity interests Other! Non-GAAP Revenue $6,755 $6,7
Slide 27: FY23 GAAP to non-GAAP bridge
FY23 GAAP to non-GAAP bridge? Revenue $29,135 $29,135 Cost of sales 18,896 13 an 18,862 Gross profit 10,239 a3) 47 10,273 Mets 8,150 (283) @ (0) 81) 288) 7,128 RED 2,349 161) 2,188 SG&A 5,160 220) 4,940 Others? 644 (283) w 9) - (288) - Operating profit 2,089 283 a2 69 428 288 3,145 Interest & other,
Slide 28: Q4 FY23 GAAP to non-GAAP bridge
Q4 FY23 GAAP to non-GAAP bridge? Revenue $7,351 $7,351 Cost of sales 4,792 10 cc) 4,793 Gross profit 2,559 (10) 9 2,558 Mets 2,052 (56) 4 as) 2) a) 1,848 R&D 578 [éx9) 545 SG&A 1,332 (29) 1,303 Others? 142 (56) 4 (18) - (72) A Operating profit 507 56 a4) 18 71 72 710 Interest & other, net (23) 1 40
Slide 29: Q3 FY23 GAAP to non-GAAP bridge
Q3 FY23 GAAP to non-GAAP bridge? In millions, ie i oo ition, Stock-based _ Non-servicenet carmingsin equity T®xindemnification Excess tax benefits ‘Transformation Disaster disposition, and " Amortization of Aedk Earnings in equity ‘Structural rate f tax rate and GAAP tion, Amor’ odie benefit . ‘and
Slide 30: Q2 FY23 GAAP to non-GAAP bridge
Inmillions, Q2 FY23 GAAP to non-GAAP bridge? ; np TSSrty poy Stockbased —pmortzationot NEPSETMEEO caringsinegury —THIndemaaion Srcartane HESSTneHS qxcepttaxrateandper cone hges“iherrtea<OMPENAONanghieaee Pes bent intrest imrclated Sjartment —oMstockebased Non Revenue $6,973 $6,973 Cost of sales 4h a
Slide 31: Q1 FY23 GAAP to non-GAAP bridge
Q1 FY23 GAAP to non-GAAP bridge? In millions, a 5 ‘Stock-based Non-service net ae . Tax indemnification Excess tax benefits A Gaap Transformation Disaster foam eer rcecey Earnings in equity Structuralrate F4cess fax rane except taxrateandper cone hges“iherrtea<OMPENAONanghieaee Pes bent interest aur
Slide 32: FY22 GAAP to non-GAAP bridge
FY22 GAAP to non-GAAP bridge? In millions, ae Tax ‘Structural Excess tax except taxrateand GAAP Transformation lspostion and “orpencato. ofa demnifiation rate DERE Non GAAP per share amounts charges expense assets djustments adjustment Corspensation Revenue $28,496 $28,496 Cost of sales 18,990 11) 6
Slide 33: Q4 FY22 GAAP to non-GAAP bridge
Q4 FY22 GAAP to non-GAAP bridge? In millions, fon Russia/Ukraine nd Stock-based Amortization j..45, ae except taxrateand — Gap —[fansformation Confit disaster ShPosition.3n4 compensation of intangible 7Pahment ceatmene benetyefca” Non-GAAP per share amounts charges charges expense assets compensatio
Slide 34: Reconciliation of Operating Cash Flow to Free Cash Flow
Reconciliation of Operating Cash Flow to Free Cash Flow? Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 F | ; orn ($829) Net cash (used in) provided by operating activities $889 $1,525 $2,843 $64 $1,093 $1,154 $2,030 Investment in property, plant and equipment and software assets CD) (688) (671) (6
Slide 35: Reconciliation of Segment Operating Profit to GAAP & Non-GAAP Operating Profit
Reconciliation of Segment Operating Profit to GAAP & Non-GAAP Operating Profit Q1'22 Q2’'22 Q3'22 Q4’22 Q1'23 Q2’23 Q3'23 Q4’23 Q1'24 Q2’'24 Q3'24 Q4'24 Intelligent Edge $153 $106 $156 $127 $227 $332 $402 $382 $353 $237 $251 $274 Server 465 398 470 625 678 473 319 360 383 426 464 545 Hybrid Cloud 10
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