Feb. 23, 2017 — Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for its fiscal 2017 first quarter, ended January 31, 2017.

First quarter net revenue of $11.4 billion was down 10% from the prior-year period and down 4% when adjusted for divestitures and currency.

First quarter GAAP diluted net earnings per share (EPS) was $0.16, up from $0.15 in the prior-year period, and above its previously provided outlook of $0.03 to $0.07. First quarter non-GAAP diluted net EPS was $0.45, up from $0.41 in the prior-year period, and near the high end of its previously provided outlook of $0.42 to $0.46. First quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $505 million and $0.29 per diluted share, respectively, related to separation costs, restructuring charges, amortization of intangible assets, acquisition and other related charges, an adjustment to earnings from equity interests, defined benefit plan settlement and remeasurement charges and tax indemnification adjustments.

"I believe HPE remains on the right track," said Meg Whitman, President and CEO of Hewlett Packard Enterprise. "The steps we're taking to strengthen our portfolio, streamline our organization, and build the right leadership team, are setting us up to win long into the future."

HPE fiscal 2017 first quarter financial performance

  Q1 FY17 Q1 FY16 Y/Y
GAAP net revenue ($B) $11.4 $12.7 (10%)
GAAP operating margin 4.1% 3.0% 1.1 pts.
GAAP net earnings ($B) $0.3 $0.3 flat
GAAP diluted net earnings per share $0.16 $0.15 7%
Non-GAAP operating margin 9.2% 8.1% 1.1 pts.
Non-GAAP net earnings ($B) $0.8 $0.7 6%
Non-GAAP diluted net earnings per share $0.45 $0.41 10%
Cash flow from operations ($B) ($1.5) ($0.1) ($1.4)

Information about HPE's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below. 

Outlook
Three significant headwinds have developed since Hewlett Packard Enterprise provided its original fiscal 2017 outlook at its Securities Analyst Meeting in October 2016: increased pressure from foreign exchange movements, higher commodities pricing, and some near-term execution issues. Given these challenges, the company is reducing its FY17 outlook by $0.12 in order to continue making the appropriate investments to secure the long-term success of the business.

For the fiscal 2017 second quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of ($0.03) to $0.01 and non-GAAP diluted net EPS to be in the range of $0.41 to $0.45. Fiscal 2017 second quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.44 per diluted share, related primarily to separation costs, restructuring charges and the amortization of intangible assets.

For fiscal 2017, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.60 to $0.70 and non-GAAP diluted net EPS to be in the range of $1.88 to $1.98. Fiscal 2017 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.28 per diluted share, related primarily to separation costs, restructuring charges and the amortization of intangible assets.

Fiscal 2017 first quarter segment results

  • Enterprise Group revenue was $6.3 billion, down 12% year over year, down 6% when adjusted for divestitures and currency, with a 12.7% operating margin. Servers revenue was down 12%, down 11% when adjusted for divestitures and currency, Storage revenue was down 13%, down 12% when adjusted for divestitures and currency, Networking revenue was down 33%, up 6% when adjusted for divestitures and currency, and Technology Services revenue was down 2%, up 4% when adjusted for divestitures and currency. 
  • Enterprise Services revenue was $4.0 billion, down 11% year over year, down 6% when adjusted for divestitures and currency, with a 7.0% operating margin. Infrastructure Technology Outsourcing revenue was down 8%, down 7% when adjusted for divestitures and currency, and Application and Business Services revenue was down 17%, down 3% when adjusted for divestitures and currency.
  • Software revenue was $721 million, down 8% year over year, down 1% when adjusted for divestitures and currency, with a 21.4% operating margin. License revenue was down 9%, down 2% when adjusted for divestitures and currency, Support revenue was down 9%, down 2% when adjusted for divestitures and currency, Professional Services revenue was down 7%, down 5% when adjusted for divestitures and currency, and Software-as-a-service (SaaS) revenue was up 4%, up 6% when adjusted for divestitures and currency.
  • Financial Services revenue was $823 million, up 6% year over year, net portfolio assets were up 2%, and financing volume was down 10%. The business delivered an operating margin of 9.5%.

Revenue adjusted for divestitures and currency excludes revenue resulting from businesses divestitures in fiscal 2017, 2016 and 2015 and also assumes no change in the foreign exchange rate from the prior-year period. A reconciliation of GAAP revenue to revenue adjusted for divestitures and currency is provided in the earnings presentation at investors.hpe.com.

About Hewlett Packard Enterprise
Hewlett Packard Enterprise (HPE) is an industry leading technology company that enables customers to go further, faster. With the industry's most comprehensive portfolio, spanning the cloud to the data center to workplace applications, our technology and services help customers around the world make IT more efficient, more productive and more secure.a