Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Investor Day (October 2023)
84 slides from Hewlett Packard Enterprise's investor day presentation, October 2023
Slide 1: HPE Securities Analyst Meeting
HPE Securities Analyst Meeting 1
Slide 2: Jeff Kvaal, Investor Relations
Jeff Kvaal Vice President Investor Relations
Slide 3: Agenda
01 Company Vision and Strategy Antonio Neri Phil Mottram | Fidelma Russo | Justin Hotard Agenda 02 Financial Jeremy Cox Review 03 Q&A HPE Executive Team 3
Slide 4: Forward-looking statements
Forward-looking statements You’ll hear some These are based Our actual results More detail can forward-looking on risks and could differ be found in your statements in assumptions that materially and we written materials. today’s presentation. may not prove assume no correct. obligation to update. A
Slide 5: Antonio Neri
Antonio Neri President and Chief Executive Officer
Slide 6: Strategic pivot has delivered strong value for shareholders
Since FY21, our deliberate strategy to pivot to higher-growth, higher-margin markets has delivered strong value for our shareholders +13.4% +43.5% +310bps Capital Returns Revenue1,2 Non-GAAP Non-GAAP Since FY18, we have returned Gross Margins1,3 Diluted Net EPS1,3 nearly $11 billion +280bps +241% +1
Slide 7: Mix shift across edge-to-cloud portfolio positions us for growth
Mix shift across edge-to-cloud portfolio positions us for sustainable, profitable growth 7
Slide 8: Expanding market with new, profitable areas
Expanding market with new, profitable areas 1 Edge & Networking Hybrid Cloud AI 1.5x 1.7x 2.4x $94B $164B $146B Security P5G Infrastructure SW - Analytics AI 39% Edge - Data management Platform SW infrastructure $125B 9% - Observability - ModelOps $64B 16% - DataOps 21% DC 32% Edge Private Cloud inf
Slide 9: Sustaining our momentum at the edge
Sustaining our momentum at the edge 9
Slide 10: Phil Mottram
Phil Mottram Executive Vice President General Manager Intelligent Edge
Slide 11: Strong revenue and operating profit momentum
We have strong revenue and operating profit momentum $,B Net revenue1 $,B Operating profit1 32% 1.6 0.5 Operating Profit OP% 28% 1.4 0.4 24% 1.2 20% 1.0 0.3 16% 0.8 12% 0.2 0.6 8% 0.4 0.1 4% 0.2 0.0 0% Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2
Slide 12: We have the right strategy
We have the right strategy WLAN SWITCHING DCN SD-WAN SSE 5G 12
Slide 13: Expanding market with new, profitable areas
Expanding market with new, profitable areas 1 Edge & Networking Hybrid Cloud AI 1.5x 1.7x 2.4x $94B $164B $146B Security P5G Infrastructure SW - Analytics AI 39% Edge - Data management Platform SW infrastructure $125B 9% - Observability - ModelOps $64B 16% - DataOps 21% DC 32% Edge Private Cloud inf
Slide 14: Edge & Networking
Edge & Networking Note: HPE’s total addressable market (TAM) opportunity spans the impacts of the mega-trends we believe are shaping the IT industry, including at the edge, hybrid cloud, and artificial intelligence. All TAM data and projections are based on currently available data and HPE’s interna
Slide 15: Delivering security-first networking
We are delivering security-first networking Axis Security acquisition strengthens Aruba’s SASE solutions with integrated cloud security and SD-WAN in a single offering Secure Access Service Edge HPE Aruba Networking EdgeConnect SSE SASE SD-WAN 15
Slide 16: Capturing new opportunities with Private 5G and Wi-Fi
We are capturing new opportunities with Private 5G and Wi-Fi Defense Mining Healthcare Emergency services Manufacturing Education Sea ports Utilities Airports Hospitality 16
Slide 17: Driving growth in data centers and at the edge with AI
We are driving growth in data centers and at the edge with AI Networking solutions for the evolving data center that support digital transformation and simplify transition to hybrid cloud 17
Slide 18: Clear lead in Network-as-a-Service market
We have a clear lead in the growing Network-as-a-Service market NaaS supports AI-driven analytics and automation, drives sustainability, and scales to deliver value for customers from the mid-market to global enterprise 18
Slide 19: Customer centric innovation drives business momentum
Our customer centric innovation drives sustained business momentum AI-powered, cloud-native architecture designed to connect, protect, and automate the edge Unified Edge-to-cloud AI and infrastructure security automation 19
Slide 20: Unifying components of our hybrid cloud offering
Unifying all components of our hybrid cloud offering to become the #1 hybrid cloud player 20
Slide 21: HPE GreenLake
HPE GreenLake ~$12B $1.2B+ 1,100+ aaS Lifetime TCV ARR Partners 3.4M 2+ 97% Connected devices Exabytes Customer Data under management retention rate 21
Slide 22: Fidelma Russo
Fidelma Russo Executive Vice President Chief Technology Officer
Slide 23: Expanding market with new, profitable areas
Expanding market with new, profitable areas 1 Edge & Networking Hybrid Cloud AI 1.5x 1.7x 2.4x $94B $164B $146B Security P5G Infrastructure SW - Analytics AI 39% Edge - Data management Platform SW infrastructure $125B 9% - Observability - ModelOps $64B 16% - DataOps 21% DC 32% Edge Private Cloud inf
Slide 24: Hybrid Cloud
Hybrid Cloud Note: HPE’s total addressable market (TAM) opportunity spans the impacts of the mega-trends we believe are shaping the IT industry, including at the edge, hybrid cloud, and artificial intelligence. All TAM data and projections are based on currently available data and HPE’s internal ana
Slide 25: HPE Hybrid Cloud
HPE Hybrid Cloud Transform Modernize IT Simplify hybrid through data infrastructure cloud operations 25
Slide 26: HPE Hybrid Cloud: Transform through data
HPE Hybrid Cloud Transform through data Storage Modern scalable platform Cloud-native SW architecture AI Ops 26
Slide 27: HPE Hybrid Cloud: Modernize IT infrastructure
HPE Hybrid Cloud Modernize IT infrastructure Cloud Hybrid cloud orchestration HPE GreenLake Private Cloud Private Cloud Enterprise Private Cloud Business Edition Flexible Solutions AI-optimized infrastructure 27
Slide 28: HPE Hybrid Cloud: Simplify hybrid cloud operations
HPE Hybrid Cloud Simplify hybrid cloud operations SaaS Hybrid Cloud services HPE GreenLake Data lifecycle | Day 2 Ops | Unified data access & analytics for Backup & Recovery Native cloud integrations HPE Ezmeral 28
Slide 29: HPE GreenLake Platform
HPE Hybrid Cloud HPE GreenLake Platform Unified cloud Consumption Sustainability AI Ops experience analytics 29
Slide 30: Our value proposition is resonating
Our value proposition is resonating Business Multi-site video platform IT as service provider Needs for players and coaches to enable business innovation HPE High-performance storage Managed private cloud GreenLake Value Prop Off-site replication Global operational footprint 30
Slide 31: HPE GreenLake is winning in the market
HPE GreenLake is winning in the market 27K 35-45% ~70% Unique ARR Software & customer growth1,2 services in ARR2,3 logos 1. FY22-FY26 CAGR 2. Annualized Revenue Run-Rate (ARR) is a financial metric used to assess the growth of the Consumption Services offerings. ARR represents the annualized revenue
Slide 32: Capturing AI market growth with differentiated solutions
Capturing AI market growth opportunity with differentiated, margin-rich solutions 32
Slide 33: Justin Hotard
Justin Hotard Executive Vice President General Manager Figia,Performance Computing, Al & Labs Cc
Slide 34: Expanding market with new, profitable areas
Expanding market with new, profitable areas 1 Edge & Networking Hybrid Cloud AI 1.5x 1.7x 2.4x $94B $164B $146B Security P5G Infrastructure SW - Analytics AI 39% Edge - Data management Platform SW infrastructure $125B 9% - Observability - ModelOps $64B 16% - DataOps 21% DC 32% Edge Private Cloud inf
Slide 35: AI
AI Note: HPE’s total addressable market (TAM) opportunity spans the impacts of the mega-trends we believe are shaping the IT industry, including at the edge, hybrid cloud, and artificial intelligence. All TAM data and projections are based on currently available data and HPE’s internal analyses and
Slide 36: New AI workloads require a different architecture
New compute-intensive AI workloads require a fundamentally different architecture that HPE is uniquely positioned to provide Cloud-native AI-native Web services AI models Thousands of workloads/many nodes One workload/thousands of nodes Multi-cloud Hybrid-by-design Locked-in ecosystem Open to accele
Slide 37: Differentiated IP-rich AI offering drives higher margins
Our differentiated IP-rich AI offering drives higher margins High-performance Supercomputing Software networking infrastructure End-to-end platform HPE Slingshot enables Liquid cooling critical to to train and tune open ecosystem sustainability for AI data AI models including Ethernet center scaling
Slide 38: Customers turn to HPE to train large AI models
Customers turn to HPE to train their large AI models Note: Oak Ridge National Laboratory and the oak leaf symbol are registered trademarks of the U.S. Department of Energy. Use of this mark does not constitute or imply its endorsement, recommendation, or favoring by the United States Government or a
Slide 39: HPE positioned to capture AI growth opportunity
HPE well positioned to profitably capture AI growth opportunity 39
Slide 40: Compute's scale brings value across our portfolio
Compute’s scale brings value across our portfolio to customers and shareholders 40
Slide 41: Steady Compute market with growing AI inference opportunity
Capturing a steady Compute market with growing AI inference opportunity Compute 1 HPE differentiators 1.2x Intuitive cloud operating experience $63B Cloud-based | Simplified | Automated | Unified $54B AI Inference Workload-optimized solutions AI Inference 22% Enterprise apps | Cloud-native apps | Te
Slide 42: Complete compute portfolio for the AI lifecycle
Complete compute portfolio to address entire AI lifecycle Train Tune Inference HPE Cray HPE Cray HPE ProLiant HPE ProLiant HPE Edgeline EX series XD6500 series DL380a DL320 8000 Direct liquid cooled Direct liquid cooled Air cooled Air cooled Air cooled Air cooled NVIDIA GH200 NVIDIA H100 HGX NVIDIA
Slide 43: HPE Financial Services is a competitive advantage
HPE Financial Services is a competitive advantage 43
Slide 44: Expanding TAM through strategic acquisitions
Expanding TAM and enhancing innovation through strategic acquisitions 44
Slide 45: Advancing the way people live and work
Advancing the way people live and work Accelerating Investing Operating our net zero transition in people with integrity One of two global IT companies 91% Voluntary retention rate Set ambitious supply chain with net-zero goal of 2040 or sooner approved by responsibility goals for 2030 +2% pts above
Slide 46: HPE Securities Analyst Meeting
HPE Securities Analyst Meeting 46
Slide 47: Jeremy Cox
Jeremy Cox Senior Vice President and laterim Chief Financial Officer
Slide 48: FY23 guidance demonstrates continued momentum
FY23 guidance demonstrates continued momentum Current FY23 Outlook Revenue growth1 4 – 6% In constant currency Non-GAAP operating profit growth1,2 ~4% GAAP diluted net EPS $1.35 – $1.39 Non-GAAP diluted net EPS1,3 $2.11 – $2.15 Free cash flow1,4 $1.9B – $2.1B 1. A description of HPE’s use of non-GAA
Slide 49: Our strategy accelerates shareholder value
Our strategy accelerates shareholder value Balanced investments Portfolio shift Pivot to aaS and returns Improving growth and Accelerating HPE Capital allocation profit profile, driven GreenLake momentum framework balances by portfolio mix shift to drives faster ARR1 growth long-term revenue, FCF hi
Slide 50: Growth segments >50% of revenue by FY26
Our growth business segments will represent >50% of our revenue and >60% of our operating profit by FY26 % of Total segment revenue1 % of Total segment operating profit2 55% 70% 50% 60% 45% 50% 40% 40% 35% 30% 30% 20% 3 FY22 FY23E FY24E FY25E FY26E FY22 3 FY23E FY24E FY25E FY26E Growth businesses: I
Slide 51: HPE GreenLake ARR projected to more than double by FY26
HPE GreenLake ARR is projected to more than double from FY23 to FY26 and deliver higher gross margin through a richer business mix HPE GreenLake drives a richer mix of Improving mix of software and services also business across the portfolio supports higher margins within HPE GreenLake ARR1 ARR1 Mix
Slide 52: GreenLake improves software and services revenues and margins
HPE GreenLake improves software and services revenues, margins and customer retention For the customer: Example of HPE GreenLake software and ✓ Greater flexibility services revenue over the life of a deal1 ✓ Improved experience >3x and operational savings ✓ Expanded capacity as $354 usage grows >2x
Slide 53: New operating model aligns to market growth
New operating model aligns to our market growth opportunities Intelligent Hybrid HPC & AI Compute Corp Inv & Edge Cloud Other Storage Supercomputing Networking (Cray EX) HPE GreenLake A&PS SASE for Compute AI solutions (Silver Peak, Axis (Slingshot, AI SW, Compute products Legacy CTG Security) Priva
Slide 54: Intelligent Edge: share gains and expanded TAM
Intelligent Edge: Continued share gains in campus & branch and expanded TAM delivers sustainable profitable growth Market Opportunity1 Operating Priorities FY26 Segment Outlook • Continue to execute on an order book that is expected Low FY26 TAM to remain elevated entering FY24 double-digits • Exten
Slide 55: Hybrid Cloud: GreenLake and Storage accelerate recurring revenues
Hybrid Cloud: Our HPE GreenLake cloud and Storage offerings accelerate profitable recurring revenues with higher margins Market Opportunity1 Operating Priorities FY26 Segment Outlook (Storage Only) Storage • Drive portfolio mix shift to margin-rich, owned IP-offering • Expand portfolio into newer ad
Slide 56: HPC & AI: capturing AI growth profitably
HPC & AI: Our unique IP and investments will enable HPE to capture the AI market growth opportunity profitably Market Opportunity1 Operating Priorities FY26 Segment Outlook • Deliver to our operational commitments to achieve profitability targets with more efficient capital Double-digits FY26 TAM ma
Slide 57: Compute: unit growth and market-leading gross margins
Compute: Unit growth and market-leading gross margins delivers stable revenue and FCF contribution Market Opportunity1 Operating Priorities FY26 Segment Outlook • Accelerate migration to HPE ProLiant Gen 11 platforms • Lift attach of observability, automation, security, and FY26 TAM sustainability s
Slide 58: HPE Financial Services enables strategic pivot
HPE Financial Services: Enables HPE strategic pivot through asset lifecycle management and sustainability Operating priorities FY26 Segment Outlook • Create investment capacity for customers’ digital transformations Mid • Support HPE pivot to aaS with financing for HPE GreenLake single-digit Revenue
Slide 59: Three-year long-term plan maximizes shareholder value
Our three-year long-term plan maximizes shareholder value Revenue growth1 2 – 4% Revenue CAGR [FY23 – FY26] in constant currency EPS growth1 3 – 5% Non-GAAP diluted net EPS CAGR [FY23 – FY26] 7 – 9% adj. for H3C2 Capital returns to shareholders 65% – 75% of FCF1,3 Target 1. A description of HPE’s us
Slide 60: Increased free cash flow and better conversion
Increased free cash flow through non-GAAP net earnings1 growth and better conversion Better conversion from declining transformation costs, improving working capital, and rising non-GAAP net earnings Free cash flow1,2 as a % of non-GAAP net earnings1 100% 75% 50% 25% 0% FY20 FY21 FY22 FY23E FY24E FY
Slide 61: FY24 Outlook
FY24 Outlook Revenue growth 1 2 – 4% In constant currency 1, 2 Non-GAAP operating profit growth 3 – 5% GAAP diluted net EPS $1.83 – $2.03 1, 3 Non-GAAP diluted net EPS $1.82 – $2.02 1, 4 Free cash flow $1.9B – $2.1B 1. A description of HPE’s use of non-GAAP financial information is provided at the e
Slide 62: Normalized earnings growing while investing in growth areas
Normalized earnings growing ~4%1 while investing in higher-growth, higher gross margin portfolio areas $ per share Non-GAAP diluted net EPS2 outlook Increase Decrease Total 3 4 1. Represents estimated growth between the normalized non-GAAP diluted net EPS estimated for FY23 and FY24 2. A description
Slide 63: Capital allocation balances growth with shareholder returns
Capital allocation balances long-term revenue and free cash flow growth with consistent shareholder returns Capital Returns Investment in Reiterating commitment to dividends high ROIC growth areas Significant share repurchases 63
Slide 64: HPE Securities Analyst Meeting
HPE Securities Analyst Meeting 64
Slide 65: HPE is well positioned to deliver shareholder value
HPE is well positioned to deliver shareholder value 65
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Slide 67: HPE Securities Analyst Meeting
HPE Securities Analyst Meeting 67
Slide 68: Appendix
Appendix 68
Slide 69: Reconciliation map for offerings vs. reported segments
Appendix: Reconciliation map for offerings across Edge & Networking / Hybrid Cloud / AI vs. currently reported HPE segments Current Segmentation Intelligent HPC/AI Storage Compute Other Edge Private 5G and security (SASE, NAC) Edge & DC switching (DC Switch, Support) Networking Edge infrastructure (
Slide 70: TAM details under existing segmentation
TAM details under existing segmentation FY22 TAM FY26E TAM FY22 – FY26 TAM CAGR Intelligent Edge1 $54B $71B ~7% Storage2 $58B $66B ~3% HPC/AI3 $35B $78B ~22% Compute4 $54B $63B ~4% Source: IDC / Gartner / 650 Group / HPE estimates for WW market excl. T1. Sept 2023. 1. Addressable market for Intellig
Slide 71: Q3 FY23 GAAP to non-GAAP bridge
Q3 FY23 GAAP to non-GAAP bridge1 In millions, Acquisition, Stock-based Non-service net Tax indemnification Excess tax benefits Transformation Disaster disposition, and Amortization of Earnings in equity Structural rate except tax rate and per GAAP costs charges other related compensation intangible
Slide 72: Q2 FY23 GAAP to non-GAAP bridge
Q2 FY23 GAAP to non-GAAP bridge1 In millions, Acquisition, Stock-based Non-service net Tax indemnification Excess tax benefits Transformation Disaster disposition, and Amortization of Earnings in equity Structural rate except tax rate and per GAAP costs charges other related compensation intangible
Slide 73: Q1 FY23 GAAP to non-GAAP bridge
Q1 FY23 GAAP to non-GAAP bridge1 In millions, Acquisition, Stock-based Non-service net Tax indemnification Excess tax benefits Transformation Disaster disposition, and Amortization of Earnings in equity Structural rate except tax rate and per GAAP costs charges other related compensation intangible
Slide 74: FY22 GAAP to non-GAAP bridge
FY22 GAAP to non-GAAP bridge1 In millions, Acquisition, Excess tax Russia/Ukraine Disaster Stock-based Amortization Amortization Non-service net Earnings in Tax Structural Transformation disposition, and Impairment of benefits from except tax rate and GAAP costs Conflict disaster charges other relat
Slide 75: Q4 FY22 GAAP to non-GAAP bridge
Q4 FY22 GAAP to non-GAAP bridge1 In millions, Acquisition, Excess tax Russia/Ukraine Stock-based Amortization Non-service net Tax Transformation disposition, and Impairment Amortization of Earnings in Structural rate benefits from except tax rate and GAAP costs Conflict disaster other related compen
Slide 76: Q3 FY22 GAAP to non-GAAP bridge
Q3 FY22 GAAP to non-GAAP bridge1 In millions, Acquisition, Excess tax Russia/Ukraine Stock-based Non-service net Tax Transformation disposition, and Amortization of Amortization of Earnings in equity Structural rate benefits from except tax rate and GAAP costs Conflict disaster other related compens
Slide 77: Q2 FY22 GAAP to non-GAAP bridge
Q2 FY22 GAAP to non-GAAP bridge1 In millions, Acquisition, Russia/Ukraine Stock-based Non-service net Excess tax benefits Transformation Disaster disposition, and Amortization of Amortization of Earnings in equity Structural rate Non- except tax rate and GAAP Conflict disaster compensation periodic
Slide 78: Q1 FY22 GAAP to non-GAAP bridge
Q1 FY22 GAAP to non-GAAP bridge1 In millions, Acquisition, Stock-based Non-service net Tax indemnification Excess tax benefits Transformation Disaster disposition, and Amortization of Amortization of Earnings in Structural rate except tax rate and GAAP costs charges other related compensation intang
Slide 79: FY21 GAAP to non-GAAP bridge
FY21 GAAP to non-GAAP bridge1 In millions, Acquisition, Tax Excess tax Stock-based Amortization Amortization Non-service Earnings Early debt Structural Tax on Transformation Disaster disposition, Litigation indemnification benefits from except tax rate and GAAP costs charges and other compensation o
Slide 80: FY20 GAAP to non-GAAP bridge
FY20 GAAP to non-GAAP bridge1 In millions, Acquisition, Tax Excess tax Stock-based Amortization Amortization Non-service Earnings in Tax on Structural Transformation Disaster disposition, Impairment indemnification Tax benefits from except tax rate and GAAP costs charges and other compensation of in
Slide 81: Reconciliation of Operating Cash Flow to Free Cash Flow
Reconciliation of Operating Cash Flow to Free Cash Flow Q1'20 Q2'20 Q3'20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Net cash (used in) provided by operating activities $(79) $100 $1,472 $747 $963 $822 $1,130 $2,956 $(76) $379 $1,254 $3,036 $(829) $889 $1,525 Litigation
Slide 82: Reconciliation of Segment Operating Profit to GAAP & Non-GAAP
Reconciliation of Segment Operating Profit to GAAP & Non-GAAP Operating Profit Q1'20 Q2'20 Q3'20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Intelligent Edge $89 $85 $73 $99 $154 $126 $140 $89 $157 $109 $155 $128 $247 $351 $420 HPC & AI 62 45 46 129 43 18 28 142 (7) (40)
Slide 83: 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 84: 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
Hewlett Packard Enterprise — Investor Day (October 2023) on 6ix