10-QPeriod: Q1 FY2021

Hewlett Packard Enterprise Co Quarterly Report for Q1 Ended Jan 31, 2021

Filed March 4, 2021For Securities:HPEHPE-PC

Summary

Hewlett Packard Enterprise (HPE) reported total net revenue of $6.8 billion for the three months ended January 31, 2021, a slight decrease of 1.7% compared to the prior year, impacted by a challenging macro-economic environment and competitive pressures. Despite the revenue dip, the company demonstrated improved profitability, with a non-GAAP operating profit margin of 11.3%, an increase of 1.3 percentage points, driven by cost savings from transformation programs and a favorable product mix. Financially, HPE generated a strong $963 million in cash flow from operations and $563 million in free cash flow, indicating improved operational efficiency and disciplined execution. The company also maintained a robust liquidity position with $4.5 billion in cash, cash equivalents, and restricted cash. Significant ongoing transformation initiatives, aimed at cost optimization and business simplification, continue to be a key focus, with substantial costs incurred but expected to yield future benefits.

Financial Highlights

48 data points
Beta

Revenue

$6.83B

Net Income

$223.00M

3.3% Net Margin

EPS (Diluted)

$0.17

Total Assets

$53.45B

Cash & Equivalents

$4.17B

Free Cash Flow

$963.00M

Financial Statements
Beta
Revenue$6.83B
R&D Expenses$468.00M
SG&A Expenses$1.16B
Operating Expenses$6.61B
Operating Income$222.00M
Net Income$223.00M
EPS (Basic)$0.17
EPS (Diluted)$0.17
Shares Outstanding (Basic)1.30B
Shares Outstanding (Diluted)1.31B

Key Highlights

  • 1Total net revenue for Q1 FY21 was $6.8 billion, down 1.7% year-over-year, but down 2.5% on a constant currency basis.
  • 2GAAP gross profit margin improved to 33.5% (up 0.7 percentage points), and non-GAAP gross profit margin was 33.7% (up 0.3 percentage points).
  • 3Non-GAAP operating profit margin increased to 11.3% (up 1.3 percentage points), driven by cost savings from transformation programs.
  • 4Cash flow from operations was a strong $963 million, a significant improvement from a negative $79 million in the prior year period.
  • 5Free cash flow was $563 million, a substantial increase from -$185 million in the prior year period.
  • 6The Intelligent Edge segment showed strong revenue growth of 11.9%, driven by SilverPeak acquisition and WLAN/Switching products.
  • 7Transformation costs increased significantly to $311 million, primarily due to the cost optimization and prioritization plan, reflecting ongoing investment in restructuring and efficiency improvements.

Frequently Asked Questions

HPE reported $6.8 billion in net revenue, a 1.7% decrease year-over-year. Despite the revenue decline, profitability improved, with non-GAAP operating profit margin rising to 11.3%. The company generated strong operating cash flow of $963 million and free cash flow of $563 million, indicating effective cost management and operational improvements.

The Intelligent Edge segment was a standout performer with 11.9% revenue growth. Other segments like Compute, HPC & MCS, and Storage experienced revenue declines. Financial Services saw marginal growth, while Corporate Investments and Other experienced a revenue decrease.

HPE incurred $311 million in transformation costs during the quarter, a significant increase from the prior year, primarily related to the cost optimization and prioritization plan. These costs are associated with restructuring efforts and other initiatives aimed at improving operational efficiency and aligning the workforce. While these programs represent a significant expense, they are contributing to improved margins and are expected to yield long-term benefits.

HPE maintains a solid liquidity position, with $4.5 billion in cash, cash equivalents, and restricted cash as of January 31, 2021. The company generated substantial positive cash flow from operations and free cash flow, demonstrating its ability to fund its operations, investments, and shareholder returns.