Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q4 2022 Earnings Presentation
40 slides from Hewlett Packard Enterprise's earnings presentation, Nov 29, 2022
Slide 1: HPE Q4 FY22 Earnings Announcement
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 research & development (‘R&D”) and field-selling costs (“FSC”) as a percent
Slide 4: HPE delivers record results in Q4
HPE delivers record results in Q4 $2.0 billion Free cash flow 11.5% Non-GAAP operating margin $7.9 billion Net revenue $0.57 Non-GAAP diluted net EPS Q4 drove full-year FCF to $1.8 billion, in- line with both initial and revised outlook, despite F/X and Russia/Belarus exit Increase of 12% y/y and 15
Slide 5: Driving durable, profitable growth for our shareholders
Driving durable, profitable growth Revenue & ARR® Revenue ARR Sbillions Revenue —®-ARR Sbillions $30 +3) $12 $28 wi $28.5 $27.8 S20 $26 $27.0 $0.8 $24 0.6 $22 8 $20 $0.4 2020 2021 2022 1. For definition of as-a-Service orders and ARR, please refer to footnote on slide 7 2. Areconciliation of specifi
Slide 6: Q4 FY22 financial highlights
Q4 FY22 financial highlights — Net revenue of $7.9 billion is up 12% from the prior-year period, up 15% sequentially and above our outlook of up at least 5% sequentially — ARR® of $936 million, up 25% from the prior-year period and up 11% sequentially — Non-GAAP Gross Margin of 33.1% was up 0.1 pt f
Slide 7: aaS order growth of 68% with continued improvement in software & services mix
aaS order growth of 68% with continued improvement in software & services mix as-a-Service Order Growth Annualized Revenue Run Rate? $in millions Software/Services Infrastructure = Financial Services +68% y/y $1,000 936 858 $800 796 798 829 o49 678 705 $600 B rn . $400 66% a an ae $200 59x 59% 58x”
Slide 8: Q4 FY22 business segment performance
Q4 FY22 business segment performance Net Revenue Year-over-Year Operating Profit $ Operating Profit Year-over-Year (in millions) Revenue Growth ” Cin millions) % revenue OP % revenue Intelligent Edge $965 23% $128 13.3% 2.4 pts HPC & Al $862 (11%) $30 3.5% (10.7) pts Storage $1,305 6% $207 15.9% 2.1
Slide 9: Our strategy is delivering revenue growth and higher earnings per share
Our strategy is delivering revenue growth and higher earnings per share... $ in billions fe Revenue —Non-GAAP diluted net EPS “i $7.2 $7 i i $6.8 $6.7 $6 $5 $4 $3 $2 $1 $o Qr20 =6@2'20. Q3'20. Q4'20. ss Q1'21— Q2'21 Ql22. Q2'22.Q3'22 1. A reconlation of speci adjustments 10 GAAP resuls forthe cutren
Slide 10: ...through resilient gross margin driven by improved mix and pricing discipline
...through resilient gross margin driven by improved mix and pricing discipline... non-GAAP Gross Profit? non-GAAP Gross Margin ® $ in billions 535 33.4% 33.7% 343% 34.7% 33.9% 34.2% 34.7% 32.2% 30.5% 30.7% $3.0 $2.5 S25 a $22 $2.3 $2.3 $2.0 $19 $1.5 $1.0 $0.5 $0.0 Q1'20 Q2'20 Q3'20 Q4'20 Q1'24 Q2'2
Slide 11: ...resulting in long-term sustainable profitability for our shareholders
$ in millions $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 ...resulting in long-term sustainable profitability for our shareholders. non-GAAP Operating Profit’»—non-GAAP Operating Margi» non-GAAP R&D+FSC % revenue D2 18.6% $695 10.0% $o — a Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 1
Slide 12: Our stake in H3C delivered shareholder value in FY22
Our stake in H3C delivered shareholder value in FY22 H3C equity interest rose 3% y/y in FY22 $ in millions 300 N a fe} N fo} fe} RB fo} fo} wa fo} Non-GAAP H3C Equity Interest © — a 89 60 7% 87 vie) 52 38 50 Q1'21 Q2'21 Q3'21 Q4'21 FY21 Q1'22 Q2'22 Q3'22 Q4'22 FY22 4. A reconliationof speci adjustme
Slide 13: Since 2020 we have tripled our free cash flow
Since 2020 we have tripled our free cash flow Quarterly cash flow Annual cash flow ™ Cash flow from operations, Free cash flow (P@ ™ Cash flow from operations Free cash flow a2) $ in billions $ in billions $3.0 $6 5.9 $2.5 $5 4.6 $2.0 B15) 13 o $1.0 ae $3 $0.5 04 - 22 : $2 16 ae) _ ; ($0.5) co (2) $
Slide 14: FY23 outlook
FY23 outlook Q1 FY23 outlook Full year FY23 outlook Revenues $7.2 - $7.6 billion Revenue growth 2 — 4% cad for currency) GAAP diluted net EPS $0.32 - $0.40 Non-GAAP operating profit growth? 4-5% Non-GAAP diluted net EPSY@ $0.50 - $0.58 GAAP diluted net EPS $1.38 - $1.46 Non-GAAP diluted net EPS $1.9
Slide 15: Supplemental Slides
SUPPLEMENTAL SLIDES
Slide 16: HPE's differentiated portfolio is capitalizing on mega trends
HPE’s differentiated portfolio is capitalizing on mega trends in data, cloud, and connectivity HPE Q4’22 net revenue $7.9 billion Segment net revenue mix) Intelligent Edge 12% HPC & Al 11% Compute 46% Storage 16% Financial Services 11% Corporate Investments| 4% HPE Q4’22 non-GAAP operating profit Q4
Slide 17: Intelligent Edge
Intelligent Edge Q4 FY22 Revenue Operating profit $965 million $ 128 million Revenue A 18% yly, 44% q/q CCP 13.3% of revenue A 23% y/y CC * $ in bill Overview ae « Record revenue of $965 million on growth of 23% y/y CCP and 4% q/q CC despite ongoing supply constraints a ¢ Orders exceeded $1 billion
Slide 18: High Performance Computing & Artificial Intelligence
High Performance Computing & Artificial Intelligence Q4 FY22 Revenue Operating profit Americas 51% S 862 million S 30 million Revenue m EMEA 27% W14%yly, 4 5%q/q CCP 3.5% of revenue ™@ Asia Pacific 22% V11% y/y CC A $ in billions Overview ear re, © Revenue fell 11% y/y CC given a delay in revenue re
Slide 19: Compute
Compute Q4 FY22 Revenue Operating profit Americas 37% $3,737 million S549 million Revenue m@ EMEA 37% A 16% yly, 427% aq/q CC® 14.7% of revenue ® Asia Pacific 26% 422% yly CC * $ in bill Overview ae a ¢ Revenue up 22% y/y CC and up 27% q/q CC, a nearrecord® for compute $3.0 a o s — Units 4% up y/y.
Slide 20: Storage
Storage Q4 FY22 Revenue Operating profit Americas 34% S 1,305 million $207 million Revenue M EMEA Lh% A 4%yly, 613% q/q CCP 15.9% of revenue ™ Asia Pacific 22% A 6% yly CCH ° $ in billions Overview ste 28 « Revenue up 6% y/y CCY and 13% q/q CC®. Supply is improving $12 20% though still limited q $1.
Slide 21: Financial Services
Financial Services Q4 FY22 Revenue Operating profit Americas 57% $857 million S95 million Revenue m EMEA 27% Flat y/y 47% q/qg cc? 11.1% of revenue ™ Asia Pacific 16% + 6% yly CCH Overview ee a8 ¢ Financing volume rose 3% y/y CC and revenue rose 6% y/y CC? Ae; © Write-off % of assets flat q/q at 0.7
Slide 22: Key balance sheet metrics healthy
Key balance sheet metrics healthy Q4 FY22 Balance Sheet Oparat een ae Financing Company Net Cash $2.3B”° $12.5B $11.5B $3.4B $1.1B Cash Debt Net Portfolio Assets” Capital Structure MI FS Gross Debt “mFS Gross Cash Operating Company = Total HPE excluding Financial Services (FS); Financing Company = H
Slide 23: GAAP to Non-GAAP Bridges
GAAP TO NON-GAAP BRIDGES
Slide 24: Q4 FY22 bridge
Q4 FY22 GAAP to non-GAAP bridge In millions, jon Russia/Ukraine A@isition, | Stockcbased A ic i exon ox excepttaxrateand GAAP Transformation Confer duaster disposition and ormpensaion ofintangble | mpaltment Structuralrate benefitsfom Non GAAP per share amounts charges Cs expense assets nn cianpsaes
Slide 25: FY22 bridge
FY22 GAAP to non-GAAP bridge In millions, fon Russia/Ukraine Disast Stockbased Amortizati ° Amortization Norrservicenet Ea tT Structural fxCess fax Laren sean cap Teamforatin Raining eater Given and Stakied Areriatee import reten, Nomervegs See Tien SIEM! beacon Nongaap per share amounts charges nex
Slide 26: Q3 FY22 bridge
Q3 FY22 GAAP to non-GAAP bridge” Inmillions, jon Russia/Ukraine AcAusition, stoci-based -_ a Ne jicenet Oe Brees to except tanrateand GAAP Tansomation oni deanter Gavoutana™! compensation frairancn, eigiamcscons Peosicbenit pammaeeauY ng Sgecmmen™ BSGHSES" NomGAaP per share amounts. charges charged)
Slide 27: Q2 FY22 bridge
Q2 FY22 GAAP to non-GAAP bridge In millions, ion Russia/Ukrain a ‘Stock-based izatic Ne fice net nasi e & tax benefits excepttarrateand GAAP Tansformation Conficatsaster Disaster nd compensation Amortization perodiebenert aningsinequity Structurarate fromstockbaced (NOM per share amounts charges exp
Slide 28: Q1 FY22 bridge
‘Acquisition, Q1 FY22 GAAP to non-GAAP bridge“ In millions, Stoclcbased i _ Non-service net ‘Tax indemnification Excess tax benefits Transformation Disaster _ disposition, and “d__ Amortizationof Amortization of No-service net Structural rate except taxrate and GAAP : benefit id related 4 fromstockb
Slide 29: FY21 bridge
FY21 GAAP to non-GAAP bridge In millions, aie? Non-service Earnings Eoriydebt 72 ication Structural T: peste except tax rate and Gaap Transformation herpes Salivct peroaiclll ia cao pea redeption indempification rate eeilisinctent! benefits from Non-GAAP perrieretemeante benefit credit interest cost
Slide 30: Q4 FY21 bridge
Q4 FY21 GAAP to non-GAAP bridge Inmillions, oe! oe Earnings ication Farlydebt TSX. structural Tax Excess tax except tax rate and GAAP ‘Transformation Disaster disposition, and of initial in equity Litigation redemption indemnification rate ‘separation & benefits from Non-GAAP per share amounts costs
Slide 31: Q3 FY21 bridge
Q3 FY21 GAAP to non-GAAP bridge” Inmillions, except Acquisition, | | Stockebased -_ Taxindemnification Rcewsim ee Gaap Transformation Disaster Aispastion and ST0CeD2Ee amortization of ro beens Structuralrate benefits rom Non. GAAP arecunie costs charges Se ‘expense intangible assets: rest adjustment
Slide 32: Q2 FY21 bridge
Q2 FY21 GAAP to non-GAAP bridge“ In millions, a Acquisition, | | stock-based Nomservice net Pp Taxon Excess tax benefits ‘Transformation Disaster disposition, and i Amortization of ation of lod Earnings in i ‘Structural rate except tax rate and GAAP compensation Amorti * periodic benefit separations
Slide 33: Q1 FY21 bridge
Q1 FY21 GAAP to non-GAAP bridge In millions, peccreertiony Stock-based - zat Non-service net ingsin equity T@Xindemnification baccartirs ny Gaap Transformation Disaster disposition, and ed Amortizationot Amortizationof Nowservicenet earnings in equity T’xindemn Structuralrate benefits trom Non. GAAP
Slide 34: FY20 bridge
FY20 GAAP to non-GAAP bridge Inmillions, Acquisition, stock-based Gernings i , 1 Structural Excesstax except taxrate and Gaap Transformation Disaster disposition, Compensation of inangible equity Indemalfcation Tox poration rate eReitfOM Non aap per share amounts ges felated charges *Pense assets in
Slide 35: Q4 FY20 bridge
Q4 FY20 GAAP to non-GAAP bridge In millions, Acquisition, ‘Stock-based inatic izatic le iodic lens ke dticatie ‘Transformation Disaster east " ‘Amortizationot Amortizationof _Non-service net periodic Eamingsin _Taxindemnificationand_ Structural rate escent tae rate and GAAP costs charges Sreeoce ome
Slide 36: Q3 FY20 bridge
Q3 FY20 GAAP to non-GAAP bridge portions, Transformation Dieaster Gepastionsand SIOEH3564 — amoeistin of Earningsin__indemnfiation Smrcturalrata —baneftefrom except tax rate and GAAP compensation; ic rom, a9 ‘ wcation Tax reform m Non-GAAP per share amounts costs charges ao a benefit credit ‘equity
Slide 37: Q2 FY20 bridge
Q2 FY20 GAAP to non-GAAP bridge” ‘Acquisition, Stock-based In millions, rs is atic Amortization ‘ Nor-service net he Transformation Disaster dlspsition’and compensation Amortization ot AMO Impairment ot Now-s om ‘Taxon separation Structural rate except tax rate and GAAP rs 2 of initial direct os per
Slide 38: Q1 FY20 bridge
Q1 FY20 GAAP to non-GAAP bridge“ In millions, Transformation ACdUisition, ‘Stock-based ‘Amortization of ‘Amortization —_Norservice ‘Tax indemnification Structuralrate Excess tax benefits it te ite id GAAP dis ition, and other iti a - of initial direct | id related ‘Tax refor by from stock-based Non-
Slide 39: Free cash flow reconciliation
$3,036 - - - - - - (2,172) - - - - $784 $(76) $379 $1,254 $3,036 (1,000) 238 - - - - - - - - - - (279) $1,995
Slide 40: Slide 40
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