Hewlett Packard Enterprise (HPE) posted a strong performance in its third fiscal quarter of 2024, highlighted by 10% revenue growth and a focus on AI system conversions. The company reported $7.7 billion in total revenue, with notable gains in its Server segment, driven by increased demand for AI infrastructure. However, other areas such as Intelligent Edge and Hybrid Cloud saw year-over-year declines. CEO Antonio Neri emphasized the company’s successful execution of its edge-to-cloud strategy, highlighting its focus on innovation across AI, networking, and hybrid cloud.
Despite challenges in certain segments, HPE managed to exceed earnings expectations, delivering non-GAAP EPS of $0.50, above its guidance range. CFO Marie Myers credited the company’s cost management efforts and expressed optimism for continued growth, particularly in AI infrastructure. HPE raised its full-year EPS guidance as it looks to capitalize on the growing demand for AI capabilities and cloud solutions.
Segment results showed mixed performance. Server revenue surged by 35% to $4.3 billion, reflecting strong demand in the AI and cloud infrastructure markets, with a slight increase in operating margins. However, Intelligent Edge revenue dropped 23%, and Hybrid Cloud revenue decreased by 7%. Financial Services saw a modest 1% growth in revenue, but net portfolio assets shrank slightly. Gross margins fell, but profitability improved, thanks to the company’s cost management strategies.
HPE continues to return capital to shareholders, with $221 million allocated through dividends and share repurchases during the quarter. Additionally, the company completed a partial sale of its stake in H3C Technologies, generating $2.1 billion in proceeds, which will be reflected in Q4 earnings.
Looking forward, HPE anticipates revenue growth in the range of $8.1 billion to $8.4 billion for the fourth quarter of fiscal 2024 and raised its full-year EPS guidance, reflecting confidence in its AI and cloud strategies.
• Q3 revenue: $7.7 billion, up 10% year-over-year.
• Non-GAAP EPS: $0.50, up 2% from the prior year.
• Server revenue: $4.3 billion, up 35%.
• Intelligent Edge revenue: $1.1 billion, down 23%.
• Hybrid Cloud revenue: $1.3 billion, down 7%.
• Financial Services revenue: $879 million, up 1%.
• Gross margin: 31.6% (GAAP), down 420 basis points year-over-year.
• Cash flow from operations: $1.15 billion.
• Free cash flow: $669 million.
• $2.1 billion received from the sale of 30% of H3C Technologies.
“We delivered a strong third quarter, with impressive revenue growth, especially from our AI system conversion, and we improved profitability,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise.