Summary
Hewlett Packard Enterprise (HPE) reported stable total net revenue of $6.713 billion for the second quarter of fiscal year 2022, a slight increase of 0.2% year-over-year, or 1.5% on a constant currency basis. The company faced persistent supply chain constraints, exacerbated by lockdowns in China and inflationary pressures, which moderated revenue growth and increased costs. Despite these challenges, revenue saw strength in networking products, specific customer acceptances in HPC & AI, and effective server product pricing. However, gross profit margin declined by 1.7 percentage points due to expected credit losses from the Russia/Ukraine conflict, delayed customer acceptances in HPC & AI, and ongoing supply chain issues, partially offset by pricing discipline and cost management. For the first six months of fiscal year 2022, net revenue increased by 1.0% year-over-year to $13.674 billion. While operating profit margin saw an improvement to 4.8% for the six-month period, driven by lower transformation costs, net earnings for the quarter decreased by 3.5% to $250 million, or $0.19 per diluted share. The company is strategically focusing on the Intelligent Edge and HPC & AI segments and accelerating its as-a-service pivot with the HPE GreenLake platform, which showed significant ARR growth. The company also noted a significant charge of $126 million related to the Russia/Ukraine conflict and is proceeding with an orderly exit from these markets.
Financial Highlights
48 data points| Revenue | $6.71B |
| R&D Expenses | $517.00M |
| SG&A Expenses | $1.25B |
| Operating Expenses | $6.51B |
| Operating Income | $207.00M |
| Net Income | $250.00M |
| EPS (Basic) | $0.19 |
| EPS (Diluted) | $0.19 |
| Shares Outstanding (Basic) | 1.31B |
| Shares Outstanding (Diluted) | 1.33B |
Key Highlights
- 1Total net revenue for Q2 FY2022 was $6.713 billion, a modest 0.2% increase year-over-year (1.5% constant currency).
- 2Gross profit margin decreased by 1.7 percentage points to 32.4% due to supply chain constraints, Russia/Ukraine conflict related credit losses, and delayed customer acceptances.
- 3Net earnings for Q2 FY2022 were $250 million, down 3.5% from the prior year, with diluted EPS of $0.19.
- 4For the first six months of FY2022, net revenue grew 1.0% to $13.674 billion, and net earnings increased 58.3% to $763 million.
- 5HPE announced an orderly exit from its remaining business in Russia and Belarus due to the ongoing conflict, incurring $126 million in pre-tax charges in Q2 FY2022.
- 6Annualized Revenue Run-Rate (ARR) for the HPE GreenLake edge-to-cloud platform increased by 22% year-over-year, reaching $829 million.
- 7The company continues to manage supply chain constraints, which are impacting revenue growth and increasing costs.