10-QPeriod: Q2 FY2018

Hewlett Packard Enterprise Co Quarterly Report for Q2 Ended Apr 30, 2018

Filed June 7, 2018For Securities:HPEHPE-PC

Summary

Hewlett Packard Enterprise (HPE) reported a strong financial performance for the quarter ended April 30, 2018, with a significant increase in net revenue and earnings from continuing operations compared to the prior year. Total net revenue grew by 9.7% to $7.47 billion, driven by growth across its Hybrid IT and Intelligent Edge segments, aided by favorable currency fluctuations and the successful integration of acquisitions like Nimble Storage. The company also saw an improvement in gross margin, reflecting effective cost management and favorable pricing in certain product categories. The company's strategic initiatives, such as HPE Next, appear to be positively impacting performance, with a focus on streamlining operations and investing in high-growth, high-margin solutions. Despite ongoing investments in R&D and transformation costs associated with HPE Next, operating margins showed improvement. The company also continues to return capital to shareholders through share repurchases and dividend increases, signaling confidence in its financial stability and future prospects.

Financial Highlights

48 data points
Beta

Revenue

$7.47B

30.2% Gross Margin

Net Income

$778.00M

10.4% Net Margin

EPS (Diluted)

$0.49

Total Assets

$59.88B

Cash & Equivalents

$6.99B

Free Cash Flow

$247.00M

Financial Statements
Beta
Revenue$7.47B
Cost of Revenue$5.21B
Gross Profit$2.26B
R&D Expenses$403.00M
SG&A Expenses$1.25B
Operating Expenses$7.10B
Operating Income$366.00M
Net Income$778.00M
EPS (Basic)$0.50
EPS (Diluted)$0.49
Shares Outstanding (Basic)1.55B
Shares Outstanding (Diluted)1.58B

Key Highlights

  • 1Net revenue increased by 9.7% to $7.47 billion for the three months ended April 30, 2018, compared to $6.81 billion in the prior year.
  • 2Earnings from continuing operations were $397 million, a significant increase from $195 million in the prior year.
  • 3Gross margin improved to 30.4% from 29.5% in the prior year, driven by higher average unit selling prices in Compute and moderation of commodity costs.
  • 4Hybrid IT segment revenue grew by 6.8% to $6.02 billion, supported by the Nimble Storage acquisition and growth in Compute and Storage.
  • 5Intelligent Edge segment revenue increased by 17.2% to $710 million, driven by growth in campus switching products.
  • 6The company repurchased $0.9 billion of common stock during the quarter and announced an increased quarterly dividend.
  • 7Transformation costs of $123 million were incurred related to the HPE Next initiative, partially offset by gains on real estate sales.

Frequently Asked Questions

HPE reported a total net revenue of $7.47 billion for the three months ended April 30, 2018, an increase of 9.7% compared to $6.81 billion in the same period last year. This growth was driven by improvements in the Hybrid IT and Intelligent Edge segments.

Earnings from continuing operations significantly increased to $397 million from $195 million in the prior year. Gross margin also improved to 30.4% from 29.5% due to better pricing and cost management.

The HPE Next initiative is a transformation program aimed at streamlining operations and focusing on high-growth, high-margin solutions. In this quarter, HPE incurred $123 million in transformation costs related to this initiative, which were partially offset by gains from real estate sales.

HPE repurchased approximately $0.9 billion of its common stock during the quarter and announced an increase in its regular quarterly dividend from $0.075 to $0.1125 per share, effective in the third quarter of fiscal 2018.