Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — Q2 FY2019 Earnings Presentation
31 slides from Hewlett Packard Enterprise's earnings presentation, May 23, 2019
Slide 1: HPE Q2 FY19 Earnings Announcement
Hewlett Packard Enterprise HPE Q2 FY19 Earnings Announcement & =e, ® May 23, 2019 “att Va Gig WO) ZFS FV es vk “A hitp://www.investors.hpe.com I v\ u
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 may differ materially from those expressed
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: Q2 FY19 results
Q2 FY19 results — Net revenue of $7.2 billion, down 4% from the prior-year period own 2% when adjusted for currency) — Net revenue was up 1% year-over-year, adjusting for Tier 1 server sales and currency? — Non-GAAP® diluted net earnings per share of $0.42, well above the previously provided outlook
Slide 5: Q2 FY19 revenue impacted by deliberate actions and currency
Q2 FY19 revenue impacted by deliberate actions and currency $7,468M B = Key Takeaways (156) ¢ Tier 1 declined 64% y/y, but with 7 : improved gross margins * Tier 1 was 1.9% of HPE revenue in 2Q19, down from 5.0% in the prior year quarter ¢ In China, we continue to optimize our H3C joint venture for
Slide 6: We are optimizing our H3C JV in China for profitable growth
We are optimizing our H3C JV in China for profitable growth HPE Ownership in H3C Hewlett Packard Enterprise Unispendour (UNIS) HPE-NYSE 000938-SZ ‘Market Cap: $8B USD, P/E Multiple (LTM): Appr. 30x! 49% 51% 1UN I] H3c a SRisnent H3C Other UNIS Entities | oe | HPE Ownership Benefits Since inception,
Slide 7: Q2 FY19 mix by segment & region
Q2 FY19 mix by segment & region HPE net revenue $7.2 billion Segment net revenue mix Intelligent Edge % . Hybrid IT 78% Financial Services 13% HPE non-GAAP operating profit | Net revenue by region $0.6 billion Segment operating profit and mix? Intelligent Edge | $20 3% - Americas Americas EMEA APJ A
Slide 8: Q2 FY19 performance overview
Q2 FY19 performance overview Growth 2. Net Re $in millions Q2 Net Revenue viv Growth y/y%, adj. for currency & Tier 1 Non-GAAP ops Non-GAAP OP % of rev Non-GAAP OP $y/y Non-GAAP OP % of rev y/y Intelligent Edge $666 (6%) Hybrid IT $5,636 (4%) Financial Services $896 (2%) (5%) 2% 2% $20 $645 $77 3.0%
Slide 9: Underlying profitability and quality of earnings is improving significantly
Underlying profitability and quality of earnings is improving significantly Q2 FY19 Hybrid IT Revenue Contributors (y-o-y growth %)* Tier 1 & China Currency Volume Compute Value Compute Storage HPE Pointnext —] Hewlett Packard Enterprise 4.0) (14) 0.2 (0.4) (4) 15 13 06 (08) HPC Composable Cloud (Sy
Slide 10: Revenue and non-GAAP diluted net EPS from continuing operations
Revenue and non-GAAP diluted net EPS from continuing operations Revenue (billions) Non-GAAP diluted net EPS $12 $0.60 $10 $0.50 $0.42 $0.43 $0.42 $0.42 $8 $0.40 $0.32 $0.32 $6 $0.30 $4 $77 $75 $78 $79 $76 on $0.20 $2 $0.10 $0 $0.00 1018 2018 3Q18 4Q18 1019 2019 Revenue Non-GAAP diluted net EPS from
Slide 11: Gross profit and margin
Gross profit and margin® Inbillions $35 , 31.1% 32.2% 30.2% 30.5% 30.7% 1% $3.0 28.3% 2h $25 $2.3 $2.4 $ $2.3 $2.3 $2.2 " E220 ° 2 a o 8 § $15 $1.0 $05 $00 1q18 2a18 saie 4018 1019 2019 Gross Profit Xof rev yly G7) pts 0.8 pts 13 pts 1.1 pts 2.8 pts pts — +A reconciliation spect austment to GAAP est
Slide 12: Non-GAAP operating profit and margin
non-GAAP operating profit and margin” In millions ° $1,000 9.6% 10% $900 9% $800 8% 4 $700 $669 $ 63h 7% a $610 2 600 $562 6% & & eo $500 5% a ° & $400 4% ¢ 9 £ $300 3% ° c $200 2% $100 1% so 0% 1018 2018 3Q18 4Q18 1019 2019 Operating Profit perating (2.0) pts 2.4 pts 2.3 pts 15 pts 1.6 pts 0.7 pts
Slide 13: Intelligent Edge
Intelligent Edge Q2 FY19 ™HPE Aruba Product ™@ HPE Aruba Services Revenue Operating profit $666 million $20 million Revenue V 6% y/y % of revenue Vv 5% y/y cco . In billions Overview a2 ¢ HPE Aruba Product revenue down 7% y/y CC? $1.0 ¢ Solid growth in EMEA and APJ o 308 s ¢ Decline in North America
Slide 14: Hybrid IT
Hybrid IT Q2 FY19 Revenue i i Operating profit = Compute S 5.6 billion $645 million Revenue m Storage w4%yly 11.4% of revenue 42% y/y adj. for currency & Tier 1 . Inbil Overview ms200 * Compute revenue down 4% y/y CC (up 4% CC ex. Tier 1) « Value compute up 8% y/y CC $8.0 « High performance compute
Slide 15: Financial Services
Financial Services Q2 FY19 Revenue Operating profit 9 ™ Americas $8 6 million S77 million Revenue m EMEA Vv 2%yly 8.6% of revenue Asia Pacific 4 2% yly CCP ry In bill Overview on « Financing volume down 6% y/y CC? $12 $1.0 ¢ Operating profit increased 70 bps y/y to 8.6% g soa 2 . —— ES So go * Net p
Slide 16: Cash flow and capital returns
Cash flow and capital returns” In billions In billions $3.0 $12 02 $20 $10 02 oa 12 13 02 10 10 $1.0 08 $08 OL 04 04 o1 0 02 $0.0 = | $0.6 0.3) 2) (0.4) © 61.0 $0.4 620 $02 $3.0 $0.0 Q1FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1FY19 Q2 FY19 Q1FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1FY19 Q2 FY19 = Cash flow from operatio
Slide 17: Select cash and debt balances
Select cash and debt balances” HPE Net cash (debt) HPE Financial Services Inbillons 219, Inbillions $80 $6.0 65 wo C2 a2 on Soeeen soo ta 620) 640) ($60) 680) 6100) 6120) 1018 2018 3018 4018 1019 2019 . . Net Portfolio Assets Capital Structure = Total HPE excl. FS (Operating Cox FS (Financing Co.) =
Slide 18: Outlook
Outlook Third quarter FY19 net EPS guidance Full year FY19 net EPS guidance GAAP diluted net EPS $0.29 - $0.33 GAAP diluted net EPS $0.98 - $1.08 Non-GAAP diluted net EPS $0.40 - $0.44 Non-GAAP diluted net EPS $1.62 - $1.72 — 4. Fiscal 2029 thirdquarter non-GAAP diluted net EPS estimates exclude aft
Slide 19: Bridges
GAAP to non-GAAP bridges
Slide 20: Q2 FY19 bridge
Q2 FY19 GAAP to non-GAAP bridge In millions, except ie ies tusition, Amortization Nonservice Earnings (oss) T Excess ax Tax related to tax rate and per share Gaap Transformation pisastercharges “isPasition and of purchased net periodic inequity indemnification Taxreform —StucturalRate benefit from “
Slide 21: Q1 FY19 bridge
Q1 FY19 GAAP to non-GAAP bridge In millions, except Acquisition, Amortization of Non-service net Earnings loss) Tax indemnification Excess tax benefit Tax related to Transformation disposition, and chased Non-service ne ngs Jos Structural Rat faxrateand per share CAA aeons ther related Tatangibte Pe
Slide 22: FY18 bridge
FY18 GAAP to non-GAAP bridge , Acquisition, aati Nonservice Eami Valuation excess eT eeeP are aap SeParation Restructuring Transformation Aisposition,and of purchased Impairment net periodic (assbin Indemnificat, —Mowances, Tax benefit from Non-GAAP Cost charges costs otherrelated intangible of good
Slide 23: Q4 FY18 bridge
Q4 FY18 GAAP to non-GAAP bridge Valuation Inmillions, except ‘i. ion di ir Nor lows Excess tax taxrateand per share GAAP Restructuring Transformation disposition and Impairment ger pei if spetand gg lX bene fOM Non. GAAP amounts charges benefit credit adjustments separation compensation axes Revenue
Slide 24: Q3 FY18 bridge
Q3 FY18 GAAP to non-GAAP bridge Valuation In millions, except Acquisition, Amortization Non servi Earnings Te lows Excess tax taxrate and per share aap Sevaration Restructuring Transformation disposition and of purchased setperndie “SSS indemnification" netand Taxeeform —_PeReFFTOM Non gaap amounts
Slide 25: Q2 FY18 bridge
Q2 FY18 GAAP to non-GAAP bridge . ____ Acquisition, Amortization aneenten Excess tax taxrate and per share GAAP Restructuring Transformation disposition, and of purchased net and Taxreform — DENEFLFPOM Non.caap amounts “charges pied adjustments separation cmenation faxes Revenue $7,468 $7,468 Cost o
Slide 26: Q1 FY18 bridge
Q1 FY18 GAAP to non-GAAP bridge . Acquisition, Amortization aneenten Excess tax taxrate and per share GAAP Restracuring Transformation disposition and of purchased : netand Taxreform —PEREFEFOM Non. Gaap amounts charges ‘ansets benefit credit interest adjustments separation compensation axes Revenue
Slide 27: FY17 bridge
FY17 GAAP to non-GAAP bridge inmilins exept Amortization Gioction, planceoment Nonservie net Easing Tax alowanes, tax rate and per share GAAP intanging emguning Separation Transformation Disaster andather "chargesand periodicbenetit =" °™ indemnification — net,and NomGAAP amounts intangible charges_
Slide 28: Q4 FY17 bridge
Q4 FY17 GAAP to non-GAAP bridge ‘Amortization Acquis Defined benefit Earnin Valuation In millions, except tortiza’ ‘of Restructuring Separation Transformati Disaster “isPosition, plansettlement Nom-servicenet se) from Tax allowances, ‘tax rate and per share GAAP ‘estructuring Separation Transformati
Slide 29: Q3 FY17 bridge
Q3 FY17 GAAP to non-GAAP bridge ‘aati Defined benefit , Valuation inmilione, except Amortization ucturing Seperation —Transformat plan settlement Non-service net Tax gaming atowances, * GAP ructuring Separation Transformation charges and periodic benefit indemnification “°S8)fFom es, and Non-GAAP. t
Slide 30: Trended worldwide and region revenue bridges adjusted for tier 1 sales, China sales, and currency
Trended worldwide and region revenue bridges adjusted for tier 1 sales, China (12) sales, and currency Y/Y % change q118 a218 Q318 Q418 119 Q219 Revenue as Reported 11% 10% 4% 4% 2% A% Impact of tier 1 (2 pts) (1 pts) (2 pts) (2 pts) Gpts) pts) HPE WW Impact of China sales 1 pts Opts Opts (2 pts) (2
Slide 31: Trended worldwide and segment revenue bridges adjusted for tier 1 sales and currency
Trended worldwide and segment revenue bridges adjusted for tier 1 sales and D2 currency‘ 2) Y/Y %change 118 218 318 0418 1190 «@219 Revenue as Reported 11% 10% 4% 4% 2% “4% HPE WW Impact of tier 1 sales (2 pts) (1 pts) (2 pts) (2pts) Gpts) Gpts) Impact of currency 2 pts 3 pts 3 pts 1pts Opts (2 pts)
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