10-KPeriod: FY2018

Hewlett Packard Enterprise Co Annual Report, Year Ended Oct 31, 2018

Filed December 12, 2018For Securities:HPEHPE-PC

Summary

Hewlett Packard Enterprise (HPE) filed its 2018 10-K report, detailing its business strategy, financial performance, and forward-looking initiatives. The company is focusing on providing intelligent solutions from edge to cloud, aiming to accelerate customer business outcomes through digital transformation. Key to this strategy is the "HPE Next" initiative, launched in fiscal 2017 and expected to continue through fiscal 2020, which aims to simplify operations, streamline offerings, and shift investments towards high-growth, higher-margin solutions. HPE's business is organized into four segments: Hybrid IT, Intelligent Edge, Financial Services (FS), and Corporate Investments. The company reported an increase in net revenue for fiscal 2018, driven by growth in its Hybrid IT and Intelligent Edge segments, partly due to favorable currency fluctuations and strategic acquisitions like Nimble Storage. The company also continues to return value to shareholders through dividends and share repurchases, indicating a commitment to financial discipline alongside strategic growth investments.

Financial Highlights

55 data points
Beta

Revenue

$30.85B

54.4% Gross Margin

Net Income

$1.91B

6.2% Net Margin

EPS (Diluted)

$1.23

Total Assets

$55.49B

Cash & Equivalents

$4.88B

Free Cash Flow

$2.96B

Financial Statements
Beta
Revenue$30.85B
Cost of Revenue$14.08B
Gross Profit$16.77B
R&D Expenses$1.67B
SG&A Expenses$4.92B
Operating Expenses$29.11B
Operating Income$1.74B
Interest Expense$631.00M
Net Income$1.91B
EPS (Basic)$1.25
EPS (Diluted)$1.23
Shares Outstanding (Basic)1.53B
Shares Outstanding (Diluted)1.55B

Key Highlights

  • 1HPE is transforming its business through the 'HPE Next' initiative, focusing on simplification, streamlining, and investment in high-growth areas.
  • 2The company operates across four key segments: Hybrid IT, Intelligent Edge, Financial Services, and Corporate Investments.
  • 3Fiscal 2018 saw an increase in net revenue, largely driven by growth in Hybrid IT and Intelligent Edge, aided by acquisitions and favorable currency movements.
  • 4HPE is committed to shareholder returns, with a history of increasing dividends and active share repurchase programs.
  • 5The company is strategically positioned to address the evolving technology landscape, from edge-centric to cloud-enabled environments.
  • 6Despite market shifts towards cloud, HPE's Hybrid IT segment, encompassing servers and storage, showed resilience and growth, particularly in core Industry Standard Servers and through the Nimble Storage acquisition.

Frequently Asked Questions

The 'HPE Next' initiative, launched in Q3 fiscal 2017, is a strategic program designed to transform HPE into a purpose-built company that can effectively compete and win in its markets. Its goals include simplifying the operating model, streamlining offerings and business processes, improving execution, and shifting investments towards high-growth and higher-margin solutions and services. This involves consolidating locations, simplifying business systems, and migrating to a channel-only sales model in certain countries.

In fiscal 2018, HPE reported an increase in net revenue, driven primarily by its Hybrid IT segment (up 6.0%, or 4.1% constant currency) due to growth in Compute and Storage, and its Intelligent Edge segment (up 13.4%, or 11.2% constant currency) due to growth in campus switching and edge compute products. Financial Services also saw a slight increase in net revenue (up 1.9%, or 0.4% constant currency).

HPE demonstrates a commitment to returning value to shareholders through dividends and share repurchases. In fiscal 2018, the company announced an increase in its regular quarterly dividend. Additionally, HPE repurchased approximately $3.6 billion of its stock under its share repurchase program and had a remaining authorization of $4.7 billion for future repurchases at the end of fiscal 2018.

HPE identifies several key risks, including the ability to successfully execute its go-to-market strategy and innovate new products, intense industry competition leading to price pressures, challenges in maintaining product quality, managing its complex distribution channels, and navigating global economic and political uncertainties. Other significant risks involve dependence on third-party suppliers, business disruptions, and the potential impact of cybersecurity threats and data breaches.