Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q4 2021 Earnings Presentation
40 slides from Hewlett Packard Enterprise's earnings presentation, Nov 30, 2021
Slide 1: Announcement
——— _ os ey. ANNOUNCEMENT November 30, 2021
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 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 thesenon-GAAP financial measures and reconciliations of these
Slide 4: Exceeded FY21 Commitments Across All Financial Metrics
EXCEEDED FY21 COMMITMENTS ACROSS ALL FINANCIAL METRICS * Strong demand throughout the year accelerated in the second half with total FY21 order growth up 16% y/y * Revenue of $27.8 billion in FY21 grew in-line with our SAM 2020 long-term outlook up 1% y/yY Significant improvements in gross and opera
Slide 5: Our Strategy to Become the Edge-to-Cloud Company
OUR STRATEGY TO BECOME THE EDGE-TO-CLOUD COMPANY IS DRIVING IMPROVED MOMENTUM ACROSS ALL BUSINESSES Growth Businesses Record order levels * Intelligent Edge orders grew strong double-digits and exceeded $4 billion in FY21 with revenue growing 13% yy? * HPC & Al orders grew strong double- digits in F
Slide 6: Q4 FY21 Financial Highlights
Q4 FY21 FINANCIAL HIGHLIGHTS — Order growth up 9% sequentially and up 28% from the prior-year period — Net revenue of $7.4 billion, up 7% sequentially and up 0.4%“ from the prior-year period — As-a-Service ARR® of $796 million, up 36% from the prior-year period — Non-GAAP Gross Margin of 33.0%, down
Slide 7: Momentum in As-a-Service Pivot Accelerating Orders and ARR
MOMENTUM IN OUR AS-A-SERVICE PIVOT IS ACCELERATING ORDERS ARR® = AND ARR Software Subscription AaS Revenue Net Services Revenue Min. Capacity Above Min. Commit Usage Infrastructure Rental Revenue (Op Lease) Interest Revenue (Cap Lease) \___ @fr Actuals X 4 HPE AS-A-SERVICE ORDERS +114% Y/Y ANNUALIZE
Slide 8: Q4 FY21 Business Segment Performance
Q4 FY21 BUSINESS SEGMENT PERFORMANCE NetRevenue Qtr-over-Qtr Year-over-Year Operating Profit$ Operating Profit Year-over-Year (in millions) Revenue Growth” RevenueGrowth” in millions) % revenue OP % revenue Intelligent Edge $815 (6%) 2% $87 10.7% (2.6 pts) GROWTH HPC & Al $1,000 35% 0% $143 14.3% 1.
Slide 9: Revenue Growth and Business Mix Delivering Strong EPS Expansion
Revenues Sbillions $8 $7 $6 $5 $4 So $2 Sil $o — REVENUE GROWTH AND BUSINESS MIX DELIVERING STRONG EPS EXPANSION ... Revenue —Non-GAAP diluted net EPS from operations” $6.9 $6.8 $0.50 Q1'20 Q2'20 Q3'20 Q2'21 1. A reconciliation of specific adjustments to GAAP results for the current and prior period
Slide 10: Structural Gross Margin Improvement
Sbillions $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 eo WITH STRUCTURAL GROSS MARGIN IMPROVEMENT ... non-GAAP Gross Profit? non-GAAP Gross Margin o 9 33.7% 343% 34.7% 33.4% 32.2% 30.5% $23 $23 $23 S2e S2Aal $19 Q1'20 Q2'20 Q3'20 Q1'21 Q2'21 Q3'21 1. A reconciliation of specific adjustments to GAAP results f
Slide 11: Enabling Targeted Investments While Expanding Operating Profit
ee ENABLING TARGETED INVESTMENTS WHILE EXPANDING OPERATING PROFIT $millions non-GAAP Operating Profit‘? +=—=non-GAAP Operating Margin 2? —=R&D+FSC % revenue 1,200 $ 20.1% ; $1,100 18.6% 19.1% 19.3% $1,000 180% 17.8% $900 $800 $773 $695 $685 673 $700 11.3% 2 $600 10.0% $539 10.2% 9.8% $500 2 sag 72%
Slide 12: Unique Setup in China with H3C Generates Growing Value
UNIQUE SETUP IN CHINA WITH H3C GENERATES GROWING VALUE TO SHAREHOLDERS Non-GAAP H3C Equity Interest $millions 300 mFY20 FY21 250 200 150 100 89 vie) in on — LJ Qi Q2 Q3 Q4 7 1. A reconciliation of specific adjustments to GAAP results for the current and prior periods is included in the non-GAAP slid
Slide 13: Generated Free Cash Flow Well Above Initial Targets
GENERATED FREE CASH FLOW WELL ABOVE INITIAL TARGETS... Sbillions = Cash flow from operations Free cash flow XG) $2.0 FY20 FCF $0.6B FY21 FCF $1.6B Sil) aLal $1.0 ay a 07 08 0.6 05 $0.5 04 02 oe $0.0 |) mm (0.1) (0.2) ($0.5) (0.4) Q1'20 Q2'20 Q3'20 Q1'21 Q2'21 Q3'21 Q4'21 1. Free cashflow = cashflow
Slide 14: Resulting in a Healthy Balance Sheet
eee RESULTING IN A HEALTHY BALANCE SHEET Q4 FY21 Balance Sheet ©) ©) OPERATING COMPANY FINANCING COMPANY NET CASH S$1.8B $13.3B $11.98 $3.2B $1.4B Cash Debt Net Portfolio Assets” Capital Structure FS Gross Debt mFS Gross Cash Operating Company = Total HPE excluding Financial Services (FS); Financing
Slide 15: Well Positioned to Deliver Q1 and FY22 Outlook
WELL POSITIONED TO DELIVER Q1 AND FY22 OUTLOOK Q1 FY22 outlook Full year FY22 outlook GAAP diluted net EPS $0.19 - $0.27 GAAP diluted net EPS $1.24 - $1.38 Non-GAAP diluted net Epsco $0.42 - $0.50 Non-GAAP diluted net EPS? $1.96 - $2.10 Free Cash Flow2 $1.8 - $2.0 billion Targeting share repurchases
Slide 16: Slide 16
Slide 17: HPE Capitalizing on Data, Cloud, and Connectivity Mega Trends
HPE IS CAPITALIZING ON DATA, CLOUD, AND CONNECTIVITY MEGA TRENDS WITH A DIFFERENTIATED EDGE-TO-CLOUD STRATEGY AND PORTFOLIO HPE Q4’21 net revenue HPE Q4’21 non-GAAP operating profit Q4’21 Net revenue by region $7.4 billion S0.7 billion Segment net revenue mix Segment operating profit and mix In mill
Slide 18: Intelligent Edge
INTELLIGENT EDGE Q4 FY21 Revenue Operating profit Americas 43% S 8 1 5 million $87 million Revenue ™@ EMEA 40% A 4% yly, V (6% alg CCP 10.7% of revenue ™ Asia Pacific 17% A 2% yly CCP * Sbillions Overview ae ¢ Record level of orders with Q4 growth up strong double-digits y/y and $08 US total orders
Slide 19: High Performance Computing & Artificial Intelligence
HIGH PERFORMANCE COMPUTING & ARTIFICIAL INTELLIGENCE Q4 FY21 Revenue Operating profit Americas 52% 1,000 million S 143 million Revenue ™ EMEA 29% A l&yly, & 35% q/q CCP 14.3% of revenue ™ Asia Pacific 19% Flat y/y CC S Sbillions Overview a ee. ¢ Record level of orders with total book of $2.7 billion
Slide 20: Compute
COMPUTE Q4 FY21 Revenue Operating profit $3,226 million $302 million A1% yly, 4% qlq CC 9.4% of revenue wiz yly CC Overview ¢ Orders growth up strong double-digits y/y « Revenue up 4% q/q CC above normal sequential seasonality and up double-digits y/y when normalized for backlog ¢ Units up 1% q/q wi
Slide 21: Storage
STORAGE Q4 FY21 Revenue Operating profit S 1,2 ) 7 million S 174 million 43% yly, 7% q/q CCP 13.8% of revenue 2% yly CCP Overview ¢ Orders growth up strong double-digits y/y « Revenue up 7% q/q CC‘ above normal sequential seasonality ¢ AFA up 7% y/y and sixth consecutive quarter of y/y growth led by
Slide 22: Financial Services
FINANCIAL SERVICES Q4 FY21 Revenue S 8 ) 8 million A 1% yly & 3% q/q CC Flat y/y CC? Operating profit $121 ation 14.1% of revenue Overview ¢ Volume increased 18% y/y with GreenLake up strong double-digits y/y « Revenue up 3% q/q CC and flat y/y CC © Write-off % of assets of 0.78% includes one-time l
Slide 23: GAAP to Non-GAAP Bridges
Slide 24: FY21 GAAP to Non-GAAP Reconciliation
FY21 GAAP TO NON-GAAP BRIDGE In millions, except Stock-based Amortization qmortization Non-service Eamingsin Litigation Early debt ox Structural Ua Gee faxrateandpershare aap Tsfomaton Distr “SECtre ccmpenan ofourcaaed “MCHItS| | Nerpefode —ewary agment demotion Indemnification SSR separations tenet
Slide 25: Q4 FY21
Q4 FY21 GAAP TO NON-GAAP BRIDGE Tax In millions, except ae ie hCauisition, —Stock-based Amortization of Amortization NOMSErviCe Earnings Litigation Earl det indemnificati Structural raze) poi faxrateandpershare --«GAAP_—‘Tansformation Disaster dsposion and. compensation "purchased of ntatdrect"VPEFC
Slide 26: Q3 FY21
Q3 FY21 GAAP TO NON-GAAP BRIDGE In millions, except a Acquisition, stock-based Amortizationof Amortization _Nom-service net os Se G ite and hi GAAP fransformation Disaster disposition, and compensation purchased of initialdirect periodic benefit Earnings in indemnification Structural rate benefits f
Slide 27: Q2 FY21
Q2 FY21 GAAP TO NON-GAAP BRIDGE In millions, except Acquisition, stock-based Amortizationof Amortization _Non-servicenet Taxon Pee on ‘Transformation Disaster disposition, and Earnings in ‘Structural rate benefits from tax rate and per share GAAP compensation purchased of initialdirect —periodicbene
Slide 28: Q1 FY21
Q1 FY21 GAAP TO NON-GAAP BRIDGE Acquisition, _— _— ‘ tax Excess tax, pee aap Transformation Disaster disposition and _,ST0cthased Amortization of Amortization Nonservicenst earsingsinequty indemnification Structuralrate beneftsfrOm Non. GaAp costs charges other related intangible direct costs ‘credi
Slide 29: FY20
FY20 GAAP TO NON-GAAP BRIDGE _ Acquisition, Stock Amortiza Excess tax Torimeaedrthare ———Gxap Tformaion ohare “Pate compe ofpwcind “aney Impsiment Nevers MME demic Tat nyc ume “GSc] Non-GAAP amounts pea ‘expense ‘assets peril benefit credit ‘interest adjustments divestitures adjustment compensation
Slide 30: Q4 FY20
Q4 FY20 GAAP TO NON-GAAP BRIDGE In millions, except Acquisition, disposition, _Stockbased —amortizationof Amortization _Norrservice net tax indemnification ‘Transformation Disaster compensation Earnings in ‘Structural rate tax rate and per share GAAP ‘and other related purchased of initialdirect__pe
Slide 31: Q3 FY20
Q3 FY20 GAAP TO NON-GAAP BRIDGE ‘Acquisition, austin, stockcbased Amortization pr orzae : tax Excess tax Revenue $6,816 $6,816 Cost of sales 4,749 eS) ) 4,738 Gross profit 2,067 8 3 2,078 ee ae 2,055 gy = @ as) an 95) 1,539 Operating profit 2 357 2 15 55 95 3 539 Interest & other, net 73) (28) 30 a
Slide 32: Q2 FY20
Inmillions, except Q2 FY20 GAAP TO NON-GAAP BRIDGE Transformation Disaster Acquisition, disposition, Stoclebased Amortization of Amortization Impairment of _Non-service net Earnings in tax indemnification ‘Tax on separation ‘Structural rate forte per share GAAP costs charges rer nexpense aouacioas P
Slide 33: Q1 FY20
Q1 FY20 GAAP TO NON-GAAP BRIDGE Acausiior. Srockbased Amortization amortizati ; tax ee In millions, except disposition, Amortization Nomser benefits from taxrate and per share Gaap Transformation “cramer compensation of purchased “Trini net perocie 4, fatminasinindernifistion rayeform SMucualrate “S
Slide 34: FY19
FY19 GAAP TO NON-GAAP BRIDGE Acquisition, -_ ; : . Excess tax i quisition, stock-based Amortization Norse Ea t Valuation Taxrelated nies aap Transformation Disaster Aispositon, compensation of purchase net eva dossdin inditation lt eral atowanets, snes a teal Ge] pean costs charges ‘expense intangib
Slide 35: Q4 FY19
Q4 FY19 GAAP TO NON-GAAP BRIDGE son postin, Steckbated ey EEO Oey pepe bene from a cosy Totem “Rome cet Mee goog Soames “rts entem Stain; "SOE naar charges ha Revenue $7,215 $7,215 Cost of sales 4,822 2) ©) 4,808 Gross profit 2,393 7 7 2,407 Total operating expenses 1,933 asi) an G4) 68) 1,613 Opera
Slide 36: Q3 FY19
Q3 FY19 GAAP TO NON-GAAP BRIDGE Acquisition, disposition, Stockebased Non-service Earnings (oss) Valuation Inmillions, except ‘Transformation compensatio tax indemnification and Structuratrate tax rate and per share amounts. GD costs | NGOS) expense Rete inequity "related adjustments T@*"eform adjus
Slide 37: Q2 FY19
Q2 FY19 GAAP TO NON-GAAP BRIDGE Acquisition. Stock-based Amortization of Inmillions, except disposition, een Cree tax ee taxrateand per share aap Tasformation oisastercharges “andor COMPensatio purchased — Neroerode inequity MAEMMMCHIOn Tayeform SMUCRAITIE “fomatecebased Non-GAAP amounts ee a) vmace
Slide 38: Q1 FY19
Q1 FY19 GAAP TO NON-GAAP BRIDGE Acquisition, Stock-based Amortization , a ‘tax tora and per share = 32 oo retoacbnet ney i “Shatety Non caAP Revenue $7,553 $7,553 Cost of sales 5,207 (42) 5,195, Gross profit 2,346 12 2,358 Total operating expenses 1,890 (78) (63) (63) @2) 1,614 Operating profit 456
Slide 39: 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. ss Q1’21.s 221 321 QA'21 Net cash provided by operating activities $79) $100 $1,472 $747 $963 $822 $1,130 $2,956 Litigation judgment, net of taxes paid 2 2 - - - - (2,172) Net cash provided by operating activities,
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