Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q1 2022 Earnings Presentation
33 slides from Hewlett Packard Enterprise's earnings presentation, Mar 1, 2022
Slide 1: HPE Q1 FY22 Earnings Announcement
——— _ os o is We Rage 4 fe WES PeN @ Gee, Sie HPE O41 FY22 EARNI S ANNOUNCEMENT March 1, 2022 http://www.investors.hpe.com
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 Hewlett Packard Enterprise (HPE) has included non-GAAP financial measures in this presentation to supplement HPE’s condensed consolidated financial statements presented on a GAAP basis. Definitions of these non-GAAP financial measures and reconciliations of thes
Slide 4: Raising FY22 EPS Outlook Due to Robust Demand and Profitability
RAISING FY22 EPS OUTLOOK DUE TO ROBUST DEMAND AND PROFITABILITY * Third consecutive quarter of 20%+ y/y orders growth, driven by strong customer demand for our differentiated edge-to-cloud solutions * Revenue of $7.0 billion up 2% y/y¥ and in line with Q1 outlook * Strong non-GAAP gross and operatin
Slide 5: Q1 FY22 Financial Highlights
Q1 FY22 FINANCIAL HIGHLIGHTS — Orders growth up 20% from the prior-year period increased backlog to record levels — Net revenue of $7.0 billion, down 5% sequentially and up 2% from the prior-year period - As-a-Service ARR® of $798 million, up 23% from the prior-year period — Non-GAAP Gross Margin of
Slide 6: AAS Order Growth of 136% Is Accelerating
AAS ORDER GROWTH OF 136% IS ACCELERATING WITH RICHER SOFTWARE MIX as-a-Service Order Growth Annualized Revenue Run Rate 150% 136% Software/Services ™ Infrastructure ™ Financial Services 125% 1,000 796 798 100% See 678-705 649 a 75% 3 » ~ 5 50% 400 oD 25% 200 59% 59% 58% om i 0% 0 Q1'21 Q2'21 Q3'21 Q
Slide 7: Q1 FY22 Business Segment Performance
Q1 FY22 BUSINESS SEGMENT PERFORMANCE Net Revenue Year-over-Year OperatingProfit$ Operating Profit Year-over-Year (in millions) Revenue Growth” Cin millions) % revenue OP % revenue Intelligent Edge $901 11% $157 17.4% (2.6 pts) GROWTH HPC & Al $790 4% ($7) (0.9%) (6.6 pts) Compute $3,016 0% $416 13.8
Slide 8: Revenue Growth and Business Mix Delivering Continued EPS Expansion
Revenues Sbillions $8 $7 $6 $5 $4 So $2 Sil $o — REVENUE GROWTH AND BUSINESS MIX DELIVERING CONTINUED EPS EXPANSION... Revenue —Non-GAAP diluted net EPS from operations” $6.9 $6.8 Ses $0.50 Q1'20 Q2'20 Q3'20 Q4'20 Q2'21 Q3'21 Q4'21 1. A reconciliation of specific adjustments 10 GAAP results for the
Slide 9: Steady Gross Margin Improvement Despite Supply Constraints
Sbillions $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 «WITH STEADY GROSS MARGIN IMPROVEMENT DESPITE SUPPLY CONSTRAINTS... non-GAAP Gross Profit? non-GAAP Gross Margin o 34.3% 34.7% 33.4% 33.0% 32.2% 30.5% 30.7% $23 $2.3 $2.4 $2.4 $21 $2.2 $19 Q1'20 Q2'20 Q3'20 Q4'20 Q2'21 Q3'21 Q4'21 1. A reconciliation
Slide 10: Operating Margin Expansion While Investing for Growth
$millions $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 «AND OPERATING MARGIN EXPANSION WHILE INVESTING FOR GROWTH non-GAAP Operating Profit‘? +=—=non-GAAP Operating Margin® —=R&D+FSC % revenue — Q2'20 Q3'20 Q3'21 Q4'21 1. A reconciliation of specific adjustments to GAAP resul
Slide 11: FCF Returns to Normal Seasonality with Robust Demand
FCF RETURNS TO NORMAL SEASONALITY WITH ROBUST DEMAND DRIVING WORKING CAPITAL NEEDS a ™ Cash flow from operations‘? © Free cash flow YO 2.0 FY20 FCF $0.6B FY21 FCF $1.6B $15 ae 11 09 $1.0 07 0.1 $0.0 — —_ — (0.1) (0.2) (0.1) ($0.5) (0.4) (0.6) ($1.0) Q1'20 Q2'20 Q3'20 Q4'20 " Q2'21 Q3'21 , Q1'22 Reta
Slide 12: Raising FY22 Outlook
RAISING FY22 OUTLOOK Q2 FY22 outlook Full year FY22 outlook GAAP diluted net EPS $0.18 - $0.26 GAAP diluted net EPS $1.36 - $1.50 Non-GAAP diluted net EPSixe $0.41 - $0.49 Non-GAAP diluted net EPS $2.03 - $2.17 Free Cash Flow2 $1.8 - $2.0 billion Targeting share repurchases of at least $500 million
Slide 13: Slide 13
Slide 14: HPE's Differentiated Portfolio Capitalizing on Mega Trends
HPE’S DIFFERENTIATED PORTFOLIO IS CAPITALIZING ON MEGA TRENDS IN DATA, CLOUD, AND CONNECTIVITY HPE Q1’22 net revenue HPE Q1’22 non-GAAP operating profit Q1’22 Net revenue by region $7.0 billion $0.8 billion Segment net revenue mix Segment operating profit and mix In Smillions Intelligent Edge Intell
Slide 15: Intelligent Edge
INTELLIGENT EDGE Q1 FY22 Revenue Operating profit Americas 4h% $901 million $157 million Revenue ™ EMEA 40% A 11% yly, 11% q/q CCP 17.4% of revenue ™® Asia Pacific 16% 11% y/y CCH * Sbill Overview net ¢ Fourth consecutive quarter of 35%+ y/y order growth $08 US eg « Revenue growth of 11% y/y CC® and
Slide 16: High Performance Computing & Artificial Intelligence
HIGH PERFORMANCE COMPUTING & ARTIFICIAL INTELLIGENCE Q1 FY22 Revenue Operating profit Americas 55% $790 million ($7) million Revenue ™@ EMEA 21% AAS yly, V 21% a/q CC? (0.9)% of revenue ™ Asia Pacific 24% A 4% yly CC . Sbillions Overview ait a ¢ Product order growth of 20%+ y/y for a record of appro
Slide 17: Compute
COMPUTE Q1 FY22 Revenue Operating profit ; S 3 ,0 1 6 million S4 16 million Revenue a ra = Al%yly, V 6%a/q CCP 13.8% of revenue ® Asia Pacific 26% Flat y/y CCP Overview marie 1” ¢ Orders growth up 20%+ y/y with record levels of backlog $5.0 oe « Revenue flat y/y CC despite significant supply challen
Slide 18: Storage
STORAGE Q1 FY22 Revenue Operating profit Americas RLY $ 1, 1 5 re) million S 168 million Revenue m EMEA Ahh WV 3%yly, V7%q/q CCP 14.5% of revenue ™® Asia Pacific 22% V 3% yly CCP * Sbill Overview esi 268 ¢ Strong double-digit y/y order growth raised backlog to record levels $12 an $10 20% § ¢ Revenu
Slide 19: Financial Services
FINANCIAL SERVICES Q1 FY22 Revenue Operating profit Americas 54% $842 million $104 million Revenue @ EMEA 30% WV2%yly flat q/q CCP 12.4% of revenue ® Asia Pacific 16% V1% y/y CCH * Sbill Overview me Be « Financing volume increased 11% y/y with revenue down 1% y/y CC ean an eg © Write-off % of assets
Slide 20: Supplemental Slides
Slide 21: Q1 FY22 GAAP to Non-GAAP Bridge
Q1 FY22 GAAP TO NON-GAAP BRIDGE an esscae caap —Tetrmaton aster dpntioand Slatin Amorsnionel Ameiatenet ferariaamt Semin intmnitein SCN beet Non Guay amounts charges ‘expense intangible assets: costs credit interest adjustments adjustment ‘compensation Revenue $6,961 $6,961 Cost of sales ‘4,617 5) @
Slide 22: FY21 GAAP to Non-GAAP Bridge
FY21 GAAP TO NON-GAAP BRIDGE Acquisition, Inmiillions, except om to disposition, Stock-based Amortization Amortization Nom-service Earningsin Litigation arivdebt || 8X structural taxrateandpershare Gap Tansformation Disaster “STi other compensation FPuChaCed “"Cfinhigl ner periodic equity judgment T
Slide 23: Q4 FY21 GAAP to Non-GAAP Bridge
Q4 FY21 GAAP TO NON-GAAP BRIDGE Tax In millions, except a ie hCauisition, —Stock-based Amortization of Amortization NOMSErviCe Earnings Litigation atl det indemnificati Structural zon Cages tax rate and per share RNa a aereeetned compensation purchased ofnitaldirect "**RSO‘S in equity judgment "SMeM
Slide 24: Q3 FY21 GAAP to Non-GAAP Bridge
Q3 FY21 GAAP TO NON-GAAP BRIDGE Inmilllions, except a Acquisition, stock-based Amortization of Amortization _Nor-service net ad Excess fax G ite and hi GAAP fransformation Disaster disposition, and compensation purchased of initial direct periodic benefit Earnings in indemnification Structural rate
Slide 25: Q2 FY21 GAAP to Non-GAAP Bridge
Q2 FY21 GAAP TO NON-GAAP BRIDGE Inmilllions, except Acquisition, stock-based Amortizationof Amortization _Nor-servicenet Taxon excess fax) Transformation Disaster disposition, and Earnings in ‘Structural rate benefits from tax rate and per share GAAP compensation purchased ofinitialdirect _ periodic
Slide 26: Q1 FY21 GAAP to Non-GAAP Bridge
Q1 FY21 GAAP TO NON-GAAP BRIDGE ae ee aap Tomfomaion Dante demstonand cuisatd Ameaionl Amerie erect! Eaninernoiy ndamiiaton Simcurate bettie Nan gap amounts charges ‘expense intangible assets direct costs: credit adjustments ‘compensation Revenue $6,833 $6,833 Cost of sales 4,545 a3) Q) 4,530 Gross
Slide 27: FY20 GAAP to Non-GAAP Bridge
FY20 GAAP TO NON-GAAP BRIDGE nen Stock- Acquisition, Gavecition, __based Amortization Amortiza Excess tax In millions, except tion of |, Nonservice Earningsin rx Taxon Structural benefits from Revenue $26,982 $26,982 Cost of sales 18,513 en en (10) 18,439 Gross profit 8,469 7 37 10 8,543 ME eS 8,798
Slide 28: Q4 FY20 GAAP to Non-GAAP Bridge
Q4 FY20 GAAP TO NON-GAAP BRIDGE Inmilllions, except Acquisition, disposition, Stock-based = armortizationof Amortization _Nom-service net ‘Tax indemnification Transformation Disaster compensation Earnings in ‘Structural rate tax rate and per share GAAP and other related. purchased of initialdirect —
Slide 29: Q3 FY20 GAAP to Non-GAAP Bridge
Q3 FY20 GAAP TO NON-GAAP BRIDGE ‘Acquisition, In millions, except isposition, St0ck-based — Amortization amortization Nom-service Tax Excess tax ‘Transformation Disaster compensatio —_of purchased Earnings in indemnification ‘Structural rate benefits from tax rate and per share GAAP SEED ck and othe
Slide 30: Q2 FY20 GAAP to Non-GAAP Bridge
Q2 FY20 GAAP TO NON-GAAP BRIDGE Acquisition, csock-based In millions, except disposition, Amortization of Amortization Impairment of Non-service net ex ‘Transformation Disaster compensatio Earningsin indemnification Taxon separation Structural rate fexrate ond per ard cx costs charges “7UCIELeXPense
Slide 31: Q1 FY20 GAAP to Non-GAAP Bridge
Q1 FY20 GAAP TO NON-GAAP BRIDGE” ‘Acquisition, Excess tax In millions, except disposition, _Stocicbased — Amortization amortization _ Nomservi ues benefits from taxrate and per share Gaap Transformation “cramer compensation of purchased “°Crinitat netperocie 4, catminasinindermifistion rayeform SMuc
Slide 32: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF OPERATING CASH FLOW TO Q1'20. Q2'20.) Q3'20) «Q4’20) Ss Q1’21. Ss Q2’21. Ss Q3’21. S421 1122 Net cash (used in) provided) Bill $79) $100 $1472 $747 $963 $822 $1,130 $2,956 $(76) activities Litigation judgment, net of taxes paid - - - - - 7 - (2,172) - Net cash (used in) provided by
Slide 33: Slide 33
Hewlett Packard Enterprise Company — Q1 2022 Earnings Presentation on 6ix