First Quarter Fiscal 2023 Financial Results:              

• Revenue of $7.8 billion was up 12% and up 18% adjusted for currency¹ from the prior-year period, above our Q1 guidance. Revenue was the highest first-quarter performance for the company since 2016
   
• Annualized revenue run-rate (“ARR”)² for the first time exceeded $1 billion and was up 26% and up 31% adjusted for currency¹ from the prior-year period
   
• Gross margins:
  • GAAP of 34.0% was up 30 basis points from the prior-year period and up 110 basis points sequentially
     
  • Non-GAAP of 34.2% established a Q1 record and was up 30 basis points from the prior-year period and up 110 basis points sequentially
     
• Diluted net earnings per share (“EPS”):
  • GAAP of $0.38 was down 3% from the prior-year period and up 265% sequentially
     
  • Non-GAAP of $0.63 was up 19% from the prior-year period and up 11% sequentially, exceeding our guidance range of $0.50-$0.58 and marking a quarterly record for the company
     
• Cash flow from operations: ($829) million, a decrease of $753 million from the prior-year period
   
• Free cash flow³ of ($1.3) billion was down $749 million from the prior-year period
   
• Capital returns to shareholders:  $229 million in the form of dividends and share repurchases

Outlook:

• Revenue: Estimates Q2 fiscal 2023 revenue to be in the range of $7.1 billion to $7.5 billion, and raises fiscal 2023 revenue growth estimate to be in the range of 5%-7% adjusted for currency¹
   
• ARR²: Reiterates our 2022 HPE Securities Analyst Meeting ARR guidance of 35%-45% Compounded Annual Growth Rate from fiscal 2022 to fiscal 2025
   
• Diluted net EPS:
  • Estimates Q2 fiscal 2023 GAAP diluted net EPS to be in the range of $0.27 to $0.35 and non-GAAP diluted net EPS to be in the range of $0.44 to $0.52
     
  • Raises guidance of fiscal 2023 GAAP diluted net EPS to be in the range of $1.40 to $1.48 and non-GAAP diluted net EPS to be in the range of $2.02 to $2.10
     
• Free cash flow ^{3 ,4}: Reiterates guidance of $1.9 billion to $2.1 billion

HPE delivers record-setting Q1 performance and raises fiscal 2023 guidance

HOUSTON, Texas – March 2, 2023 – Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for the first quarter ended January 31, 2023.

“HPE delivered exceptional results in Q1, posting our highest first quarter revenue since 2016 and best-ever non-GAAP operating profit margin,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “Powered by our market-leading hybrid cloud platform HPE GreenLake, we unlocked an impressive run rate of $1 billion in annualized revenue for the first time. These results, combined with a winning strategy and proven execution, position us well for FY23, and give us confidence to raise our financial outlook for the full year.”  

“In Q1 we continued to out-execute our competition despite uneven market demand and produced more revenues in every one of our key segments, with our Edge business Aruba being a standout,” said Tarek Robbiati, executive vice president and CFO of Hewlett Packard Enterprise. “We are now focusing our attention and are investing to carry our momentum well into the second half of FY23 and FY24.”

First Quarter Fiscal 2023 Segment Results
 

• Intelligent Edge revenue was $1.1 billion, up 25% from the prior-year period in actual dollars and 31% when adjusted for currency¹, with 21.9% operating profit margin, compared to 17.4% in the prior-year period.  Revenue performance hit a quarterly record, and the business exceeded the Rule of 40 for the quarter
   
• High Performance Computing & Artificial Intelligence (“HPC & AI”) revenue was $1.1 billion, up 34% from the prior-year period in actual dollars and 37% when adjusted for currency¹, with 0.1% operating profit margin, compared to (0.9%) from the prior-year period. Revenue for the quarter marked a new record for the business
   
• Compute revenue was $3.5 billion, up 14% from the prior-year period in actual dollars and 19% when adjusted for currency¹, with 17.6% operating profit margin, compared to 14.0% from the prior-year period
   
• Storage revenue was $1.2 billion, up 5% from the prior-year period in actual dollars and 10% when adjusted for currency¹, with 12.0% operating profit margin, compared to 13.9% from the prior-year period. HPE Alletra revenue growth was up triple-digits from the prior-year
   
• Financial Services revenue was $873 million, up 4% from the prior-year period in actual dollars and up 8% when adjusted for currency¹, with 9.4% operating profit margin, compared to 12.4% from the prior-year period. Net portfolio assets of $13.2 billion, up 2% from the prior-year period and up 4% when adjusted for currency¹. The business delivered return on equity of 16.7%, down 3.1 points from the prior-year period

Dividend:

The HPE Board of Directors declares a regular cash dividend of $0.12 per share on the company’s common stock, payable on April 14, 2023, to stockholders of record as of the close of business on March 17, 2023.

Fiscal 2023 Second Quarter Outlook:

HPE estimates revenue to be in the range of $7.1 billion to $7.5 billion. HPE estimates GAAP diluted net EPS to be in the range of $0.27 to $0.35 and non-GAAP diluted net EPS to be in the range of $0.44 to $0.52. Fiscal 2023 second quarter non-GAAP diluted net EPS estimates exclude after-tax adjustments of $0.17 per diluted share, primarily related to stock-based compensation expense, transformation costs, and amortization of intangible assets.

Fiscal 2023 Outlook:

HPE raises guidance of GAAP diluted net EPS to be in the range of $1.40 and $1.48 and non-GAAP diluted net EPS to be in the range of $2.02 and $2.10. Fiscal 2023 non-GAAP diluted net EPS estimates exclude after-tax adjustments of $0.62 per diluted share, primarily related to stock-based compensation expense, amortization of intangible assets, and transformation costs.

Fiscal 2023 free cash flow ^3,4: Reiterates guidance of $1.9 billion to $2.1 billion.

Fiscal 2023 capital returns to shareholders: Returning approximately 60% of free cash flow to shareholders in dividends and share repurchases.

Download the Q1 FY23 earnings infographic here.

¹ Adjusted to eliminate the effects of currency. A description of HPE’s use of non-GAAP financial information is provided below under “Use of non-GAAP financial information.”

² Annualized Revenue Run-Rate (“ARR”) is a financial metric used to assess the growth of the Consumption Services (“CS”) offerings. ARR represents the annualized revenue of all net HPE GreenLake edge-to-cloud platform services revenue, related financial services revenue (which includes rental income from operating leases and interest income from finance leases), and software-as-a-Service, software consumption revenue, and other as-a-Service offerings, recognized during a quarter and multiplied by four. We use ARR as a performance metric. ARR should be viewed independently of net revenue and is not intended to be combined with it.

³ Free cash flow represents cash flow from operations, less net capital expenditures (investments in property, plant & equipment (“PP&E”) less proceeds from the sale of PP&E) and adjusted for the effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash.

⁴ Hewlett Packard Enterprise provides certain guidance on a non-GAAP basis, as the Company cannot predict some elements that are included in reported GAAP results. Refer to the discussion of non-GAAP financial measures below for more information.