Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q3 2021 Earnings Presentation
36 slides from Hewlett Packard Enterprise's earnings presentation, Sep 2, 2021
Slide 1: HPE Q3 FY21 Earnings Announcement
=) Hewlett Packard Enterprise HPE Q3 FY21 EARI ANNOUNCEMENT September 2, 2021 f 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 (‘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 these non-GAAP financial measures and reconciliations of thes
Slide 4: Q3 Marked by Strong Orders, Profitability and Free Cash Flow
Q3 MARKED BY STRONG ORDERS, PROFITABILITY AND FREE CASH FLOW RAISING FY21 EPS AND FCF OUTLOOK; REINSTATING BUYBACKS * Strengthening demand accelerates Q3 order growth, up strong double-digits y/y and year-to-date up 11% y/y * Revenue of $6.9 billion in-line with Q3 outlook of normal sequential seaso
Slide 5: Order Growth of 11% YTD Driving Momentum Across the Business
ORDER GROWTH OF 11% YTD DRIVING MOMENTUM ACROSS THE BUSINESS — Non-GAAP. Non-GAAP. Total Revenues . =a) . * Free Cash Flow? Operating Profit diluted net EPSC Sbillions ‘S$millions ‘$millions 3 $20.4 $19.8 YTD 3 YTD Q3 YTD G3 YTD 3 YTD G3 YTD 3 YTD.G3 YTD 3 FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 1.
Slide 6: Q3 FY21 Financial Highlights
Q3 FY21 FINANCIAL HIGHLIGHTS — Net revenue of $6.9 billion, up 3% sequentially and down 2% from the prior-year period — Non-GAAP Gross Margin of 34.7%, up 0.4 pts sequentially and up 4.2 pts from the prior-year period — Non-GAAP Operating Profit of $673 million, down 2% sequentially and up 25% from
Slide 7: Q3 FY21 Business Segment Performance
Q3 FY21 BUSINESS SEGMENT PERFORMANCE GROWTH Intelligent Edge” HPC & MCS CORE Compute Storage AAS ENABLERS HPEFS® Corp. Inv. and Other TOTAL” Hewlett Packard Enterprise” 1L Adjusted to eliminate the effects of currency Net Revenue Cin millions) $867 $741 $3,104 $1,176 $844 $332 $6,897 Qtr-over-Qtr Ye
Slide 8: Momentum in As-a-Service Pivot Accelerating Orders and ARR
MOMENTUM IN OUR AS-A-SERVICE PIVOT IS ACCELERATING ORDERS AND ARR ARR® = Software Subscription AaS Revenue Net Services Revenue Min. Capacity Above Min. Commit Usage Infrastructure Rental Revenue (Op Lease) Interest Revenue (Cap Lease) Le Qtr Actuals X 4 (1) HPE AS-A-SERVICE ORDERS +46% Y/Y ANNUALIZ
Slide 9: Revenue Growth and Cost Discipline Driving Strong EPS Expansion
REVENUE GROWTH AND COST DISCIPLINE DRIVING STRONG EPS EXPANSION ... Revenues Sbillions $8 $7 $6 $5 $4 $3 $2 $4 ‘= Revenue —Non-GAAP diluted net EPS from operations $o Q1'20 Q4'20 Q1'21 Q2'21 1L A reconaliation of specific adjustments to GAAP results for the current and prior periods is included in t
Slide 10: Gross Margins Reach Record Levels
ee AS GROSS MARGINS REACH RECORD LEVELS ... Sbillions l@=minon-GAAP Gross Profit —non-GAAP Gross Margin 1L A reconaliation of specific adjustments to GAAP results for the current and prior periods is included in the non-GAAP slide section that appears as part of the supplemental slides of this prese
Slide 11: Targeted Investments Enabling 25% Y/Y Operating Profit Growth
eee WITH TARGETED INVESTMENTS ENABLING 25% Y/Y OP GROWTH Smilers == non-GAAP Operating Profit ——non-GAAP Operating Margin) ——R&D+FSC % revenue $1,200 22% $1,100 20% $1,000 18% $900 16% $800 _ $700 % $600 $500 10% $400 8% $300 6% $200 4% $100 2% 0) 0% 1L A reconaliation of specific adjustments to GAA
Slide 12: Delivered Record YTD Operating and Free Cash Flow
DELIVERED RECORD YTD OPERATING AND FREE CASH FLOW, UP 323% Y/Y ... Sbillions $2.0 = Cash flow from operations ™ Free cash flow) YTD Q3 FY20 FCF $0.3B YTD Q3 FY21 FCF® $1.5B $1.5 $1.0 $0.5 $0.0 ($0.5) 1L Free cash flow = cash flow from operations less net capital expenditures: net capital expenditure
Slide 13: Enhancing a Healthy Balance Sheet with Strong Liquidity
ENHANCING A HEALTHY BALANCE SHEET WITH STRONG LIQUIDITY Q3 FY21 Balance Sheet () ©) OPERATING COMPANY FINANCING COMPANY HPE LIQUIDITY NET CASH $0.1B 13.08 . $10.18 Cash Debt Net Portfolio Assets” Capital Structure Cash & Reserves NFS Gross Debt“ m FS Gross Cash pany = Total HPE excluding Fin Operati
Slide 14: Raise FY21 EPS and Free Cash Flow Outlook; Reinstating Buybacks
STRONG ORDER MOMENTUM AND YTD PERFORMANCE GIVE CONFIDENCE TO RAISE FY21 EPS AND FREE CASH FLOW OUTLOOK; REINSTATING BUYBACKS Q4 FY21 outlook Full year FY21 outlook Prior Revised GAAP diluted net EPS $0.14 - $0.22 GAAP diluted net EPS $0.60 - $0.72 $0.80 - $0.88 Non-GAAP diluted net EPS? $0.44 - $0.5
Slide 15: Supplemental Slides
SUPPLEMENTAL SLIDES 12
Slide 16: HPE Broad Differentiated Portfolio to Enable Digital Transformation
HPE BRINGS A BROAD DIFFERENTIATED PORTFOLIO TO ENABLE DIGITAL TRANSFORMATION HPE Q3’21 net revenue HPE Q3’21 non-GAAP operating profit Q3’21 Net revenue by region $6.9 billion S0.7 billion Segment net revenue mix? Segment operating profit and mix? In millions Intelligent Edge Intelligent Edge 12% 18
Slide 17: Intelligent Edge
INTELLIGENT EDGE Q3 FY21 Revenue $867 sition A 27% yly,&8% gig CC? A 23% yly CCP Operating profit S137 sition 15.8% of revenue Overview * Strong revenue growth of 23% y/y CC? with acceleration in organic business and ongoing solid performance from Silver Peak © Switching up over 20% y/y CCP ¢ Intell
Slide 18: High Performance Computing & Mission Critical Solutions
HIGH PERFORMANCE COMPUTING & MISSION CRITICAL SOLUTIONS Q3 FY21 — Revenue Operating profit Americas 51% S 714 1 million S 2 9 million Revenue m EMEA 29% A 11% yly, 68% gig CCP 3.9% of revenue ™@ Asia Pacific 20% A O%yly CCP ; Sbillons Overview a on * Revenue up 9% y/y CC? and remain on track for ful
Slide 19: Compute
COMPUTE Q3 FY21 — Revenue Operating profit = Americas 35% S 3,104 million S 3 47 million Revenue m EMEA 37% V 9% yly, M4% q/q CCH 11.2% of revenue @ Asia Pacific 28% vi2%yly CC . Sbillions Overview $70 1% ¢ Revenue up 4% q/q CC reflecting normal sequential seasonality and up $60 12% ov high-teens y/
Slide 20: Storage
STORAGE Q3 FY21 Revenue $1,176 sition MA%yly, M3%q/q CC? B1% yly CC Operating profit $178 ition 15.1% of revenue Overview * Revenue up 3% q/q ahead of normal sequential seasonality and up 1% y/y CC? driven by growth in software-rich products ¢ Nimble up 10% y/y CC® with ongoing strong dHCI momentum
Slide 21: Financial Services
FINANCIAL SERVICES Q3 FY21 — Revenue Operating profit © Americas 52% S 844 million S 9 4 million Revenue mm EMEA 32% A 4% yly, flat q/q CC? 11.1% of revenue @ Asia Pacific 16% flat y/y CC j Sbillions Overview $10 12% ¢ Revenue flat q/q and y/y CC? 10% sos © Write-off % of assets of 0.94% includes on
Slide 22: Bridges
GAAP TO NON-GAAP BRIDGES 19
Slide 23: Q3 FY21 Bridge
Q3 FY21 GAAP TO NON-GAAP BRIDGE” — Inmillions, except Acquisition, stock-based Amortization of Non-service net tax Excess tax ‘Transformation Disaster disposition, and HPEFS IDC Earnings in indemnificatio Structural rate benefits from tax rate and per share GAAP compensation purchased trant periodic
Slide 24: Q2 FY21 Bridge
Q2 FY21 GAAP TO NON-GAAP BRIDGE — Inmillions, except Acquisition, stock-based Amortization of Nonservice net Taxon Excess tax ‘Transformation Disaster disposition, and HPEFS IDC Earnings in ‘Structural rate benefits from tax rate and per share GAAP compensation purchased EFS IDC periodic benefit. Fa
Slide 25: Q1 FY21 Bridge
Q1 FY21 GAAP TO NON-GAAP BRIDGE” — Inmillions, except Acquisition, stock-based Amortization of Non-service net tax Excess tax ‘Transformation Disaster disposition, and HPEFS IDC Earnings in equity indemnification Structural rate benefits from fax rate and per share GAAP costs charges atherrelated ‘o
Slide 26: FY20 Bridge
FY20 GAAP TO NON-GAAP BRIDGE — ‘Stock- Amortiz ‘Acquisition, Stocks, Amortiz Excess tax Inmiillions, except i i disposition, ation HPEFS IDC ir Non-service ings in indemnificatiny Taxon Structural benefits from tax rate and per share GAAP Transformation Disaster and other COMPARE PUPCHES amortizatio
Slide 27: Q4 FY20 Bridge
Q4 FY20 GAAP TO NON-GAAP BRIDGE — Inmillions, except ‘Acquisition, disposition, _Stock-based amortization of Nonservice net tax indemnification Transformation Disaster compensation HPEFS IDC Earnings in ‘Structural rate faxrateandpershare GAAP Tanegrmaten Bley andotherreared COT" purchased | ghoraat
Slide 28: Q3 FY20 Bridge
Q3 FY20 GAAP TO NON-GAAP BRIDGE — ‘Acquisition ——Stock- Inmillions, except 1 : based amortization of Non-service tax Excess tax taxtatesnd pet ch GAAP Transformation Disaster disposition compensat rnc; HPEFSIDc © Nomservice Earningsin indemnification 3, raf Structural rate benefits from GAAP roan er
Slide 29: Q2 FY20 Bridge
Q2 FY20 GAAP TO NON-GAAP BRIDGE — ‘Acquisition ‘Stock- In millions, except 2 comet! Amortization of Non-service net fax tax rate and per share GAAP ‘Transformation Disaster disposition compensat chased lic benefit Earnings in indemnification Tax on separation ‘Structural rate Non-GAAP fexratea coats
Slide 30: Q1 FY20 Bridge
Q1 FY20 GAAP TO NON-GAAP BRIDGE” —— isiti ” vain tas tm excess ax In millions, except dispositio Amortization of Norservice net benefits from ‘Transformation compens HPEFS IDC Earnings in ‘indemnification ‘Structural rate ‘tax rate and per share GAAP n, and purchased periodic benefit ‘Tax reform ‘st
Slide 31: FY19 Bridge
FY19 GAAP TO NON-GAAP BRIDGE — Acquisition, tenth . a " Excess tax. ii Stock-based Amortization Norrservice Ear ta Valuatior ‘Tax related Pate ae ane hare GAAP Tensformation Disaster “Pasion, compensation of, purchased net periodle oss)in indemnification tax SMUCTUFAL atoyances, net, tolegal PERE fr
Slide 32: Q4 FY19 Bridge
Q4 FY19 GAAP TO NON-GAAP BRIDGE” — Acqulsti on, State, feet ax Inmillions, except Transformation “iPO8Iti compens Amortization of Nonservice net Earnings loss)in tax indemnification and Structural rate __Penefits from tax rate and per share amounts GAAP costs mand ation ta ngbolocears — Penodicbenet
Slide 33: Q3 FY19 Bridge
Q3 FY19 GAAP TO NON-GAAP BRIDGE” — Acquisiti Stock: Inmillions, except ‘Transformation disposi compens Amortization of Nonservice net earnings dss) in tax indemnification and Structural rate Valuation taxrate and per share amounts GAAP costs OTN ation ptanghle means NMC Benet equity Interest related
Slide 34: Q2 FY19 Bridge
Q2 FY19 GAAP TO NON-GAAP BRIDGE” — Aeaulsit stock: In millions, except disposi based Amortization of Non.cervice net Earnings (loss) tax indemnification Excess tax benefit tax rate and per share aap Transformation —pjsaster charges fonsand COMED Purchased i ence inequity andrelated Taxreform stuguam
Slide 35: Q1 FY19 Bridge
Q1 FY19 GAAP TO NON-GAAP BRIDGE” — Acaulsit stock: In millions, except disposit based Amortization of Non.service net Earnings (loss) _tax indemmificat Tax related t tax rateand per share aap Transformation ionrang compen Purchased erode benefit. inequity andvelated | Taxeform EXCESS ‘axbenef —Struc
Slide 36: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF OPERATING CASH FLOW TO FREE CASH FLOW Q1'20 Net cash provided by operating activities $(79) Investment in property, plant and equipment (568) Proceeds from sale of property, plant and equipment 462 Free cash flow $(g5) Q2'20 $100 (591) 89 $402) Q3'20 $1,472 (620) 72 $924 Q4'20 S747
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