HPE Reports Fiscal 2018 Second Quarter Results

PALO ALTO, Calif., May 22, 2018 (GLOBE NEWSWIRE) — Hewlett Packard Enterprise today announced financial results for its fiscal 2018 second quarter, ended April 30, 2018.

Second Quarter Fiscal Year 2018 Results 
Second quarter net revenue of $7.5 billion was up 10% from the prior year and up 6% when adjusted for currency.

Second quarter GAAP diluted net earnings per share (“EPS”) from continuing operations was $0.54, up from GAAP diluted net EPS from continuing operations of ($0.29) in the prior-year period. Second quarter non-GAAP diluted net EPS from continuing operations was $0.34, up from non-GAAP diluted net EPS from continuing operations of $0.17 in the prior-year period. Second quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax adjustments of $314 million and $0.20 per diluted share, respectively, primarily related to the impact of tax indemnification adjustments, U.S. tax reform, transformation costs, amortization of intangible assets, an adjustment to loss in equity interests, separation costs, acquisition and other related charges, restructuring charges, and income tax valuation allowances and separation taxes.

“I am very pleased with our strong performance in Q2,” said Antonio Neri, President and CEO, HPE.  “We delivered revenue growth in all business segments, expanded overall profitability, completed important milestones in our HPE Next initiative and continued to invest in innovation. I’m confident we will deliver on our annual FY18 outlook.”

HPE fiscal 2018 second quarter continuing operations financial performance

  Q2 FY18 Q2 FY17 Y/Y
GAAP net revenue ($B) $7.5 $6.8 9.7%
GAAP operating margin 5.3% 2.9% 2.4 pts.
GAAP net earnings ($B) $0.9 ($0.5) NM
GAAP diluted net earnings per share $0.54 ($0.29) NM
Non-GAAP operating margin 8.6% 5.9% 2.7 pts.
Non-GAAP net earnings ($B) $0.5 $0.3 86.8%
Non-GAAP diluted net earnings per share $0.34 $0.17 100.0%
Cash flow from operations ($B) $0.2 $0.7 ($0.5)

Information about HPE’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.

Outlook
For the fiscal 2018 third quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.19 to $0.23 and non-GAAP diluted net EPS to be in the range of $0.35 to $0.39. Fiscal 2018 third quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.16 per diluted share, primarily related to transformation costs and the amortization of intangible assets.

For fiscal 2018, Hewlett Packard Enterprise now estimates GAAP diluted net EPS to be in the range of $1.70 to $1.80 and non-GAAP diluted net EPS to be in the range of $1.40 to $1.50. Fiscal 2018 non-GAAP diluted net EPS estimates exclude after-tax impact of approximately $0.30 per diluted share, primarily related to transformation costs and the amortization of intangible assets, offset by the impact of U.S. tax reform.

Fiscal 2018 second quarter segment results

  • Hybrid IT revenue was $6.0 billion, up 7% year over year and up 4% when adjusted for currency, with a 10.3% operating margin. Compute revenue was up 6%, up 2% when adjusted for currency, Storage revenue was up 24%, up 22% when adjusted for currency, DC Networking revenue was up 2%, down 1% when adjusted for currency, and Pointnext revenue was up 1%, down 1% when adjusted for currency.  
  • Intelligent Edge revenue was $710 million, up 17% year over year and up 14% when adjusted for currency, with a 6.5% operating margin. HPE Aruba Product revenue was up 18%, up 14% when adjusted for currency, HPE Aruba Services revenue was up 10%, up 11% when adjusted for currency. 
  • Financial Services revenue was $916 million, up 5% year over year and up 1% when adjusted for currency, net portfolio assets were up 3%, and financing volume was flat year over year. The business delivered an operating margin of 7.9%.

Bond Redemption
HPE intends to redeem on June 29, 2018, $1.6 billion aggregate principal amount of its outstanding 2.850% Senior Notes due 2018, CUSIP Numbers: 42824CAC3, 42824CAU3, U42832AC6, at a price equal to 100% of the principal amount thereof plus a “make-whole” premium determined pursuant to the terms of the Indenture governing the Notes and accrued and unpaid interest. HPE has instructed The Bank of New York Mellon Trust Company, N.A., as the trustee for the Notes, to distribute a Notice of Redemption to all registered holders of the applicable Notes today. Copies of such Notice of Redemption and additional information relating to the procedure for redemption of the Notes may be obtained from The Bank of New York Mellon Trust Company, N.A.

About Hewlett Packard Enterprise
Hewlett Packard Enterprise is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. HPE enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.

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