01—Abstract
Summary
Summary of the 8-K/A filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
This amended Form 8-K from Hewlett Packard Enterprise, dated February 22, 2024, updates the company's segment reporting.
It revises the fiscal 2023 and fiscal 2022 quarterly and full-year segment results (Exhibit 99.1) to reflect a further change to the segment structure, which supersedes the figures in the original 8-K filed February 7, 2024. The main change is that the Compute and High Performance Computing & Artificial Intelligence (HPC & AI) segments are combined into a single new Server segment. The company will report under the new structure starting with the first quarter of fiscal 2024.
The new segments are Server, Hybrid Cloud, Intelligent Edge, Financial Services, and Corporate Investments and Other. The filing states that these changes do not affect consolidated results. Consolidated net revenue, net earnings, earnings per share, and total assets are unchanged.
Fiscal 2023 consolidated net revenue remains $29,135 milliona, and fiscal 2022 remains $28,496 million. The changes only move revenue and operating profit among segments. For investors, this makes segment comparisons more relevant to how management runs the business, but it means that year-over-year segment trends should be read against the revised historical figures, not the previously reported ones.
On the revised basis, Server generated $14,361 millionb of fiscal 2023 net revenue at a 12.7% segment operating margin, compared with $15,472 million in fiscal 2022. Hybrid Cloud, which now includes the historical Storage business, reported $5,493 million of fiscal 2023 revenue at a 4.2% margin, a sharp step down from the 8.9% margin in fiscal 2022.
Intelligent Edge's fiscal 2023 margin was restated to 25.0%c from 27.3%, reflecting the move of the Athonet business and certain Communications and Media Solutions components into that segment. The forward-looking statement disclaimer covers only the segment realignment and management's future plans and objectives.
02—Key points
Key Highlights
- HPE combined its Compute and HPC & AI segments into a single new Server segment, reported from the first quarter of fiscal 2024 onward.
- Consolidated results are unchanged: fiscal 2023 net revenue of $29,135 million, fiscal 2022 net revenue of $28,496 million, and no changes to net earnings, EPS, or total assets.
- Revised fiscal 2023 Server segment figures show $14,361 million of net revenue, $1,830 million of earnings before taxes, and a 12.7% segment operating margin.
- The new Hybrid Cloud segment, which includes Storage, GreenLake Flex Solutions, Private Cloud, and Software, reported fiscal 2023 net revenue of $5,493 million with a margin of only 4.2%, down from 8.9% in fiscal 2022.
- Intelligent Edge's fiscal 2023 operating margin was restated to 25.0% from 27.3% after the Athonet business and certain Communications and Media Solutions components were moved into the segment.
- Financial Services reported fiscal 2023 net revenue of $3,480 million and a segment operating margin of 8.1%, with figures unchanged by the realignment.
- The filing is an amendment to the February 7, 2024 Form 8-K and includes revised quarterly and full-year fiscal 2023 and 2022 segment data furnished as Exhibit 99.1.
03—Questions
Frequently Asked Questions
Did this segment realignment change HPE's reported revenue, earnings, or EPS?
No. The filing states that the changes had no impact on HPE's previously reported consolidated net revenue, net earnings, net earnings per share, or total assets. Revenue and operating profit were only reallocated among segments.
What are HPE's new reportable segments and when do they take effect?
The new segments are Server, Hybrid Cloud, Intelligent Edge, Financial Services, and Corporate Investments and Other. HPE will report under this structure beginning with the first quarter of fiscal 2024.
Why is the Server segment margin not directly comparable to the prior Compute and HPC & AI margins?
Server combines the former Compute and HPC & AI segments, and some products and services were moved into or out of these businesses, including GreenLake Flex Solutions and certain HPC & AI offerings that went to Hybrid Cloud. The revised fiscal 2023 Server segment reported a 12.7% operating margin, but the prior segments were reported on a different basis, so investors should use the revised figures in Exhibit 99.1 for comparisons.
How did the realignment affect the Hybrid Cloud segment's profitability?
Hybrid Cloud now includes the historical Storage segment, GreenLake Flex Solutions, Private Cloud, and Software. On the revised basis it reported a fiscal 2023 operating margin of 4.2%, compared with 8.9% in fiscal 2022. Its earnings before taxes were $232 million in fiscal 2023, versus $468 million in fiscal 2022.
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