Citing strong customer and growth in subscription sales, Hewlett Packard Enterprise reported Q2 revenueof $6.7 billion, up 0.2% and 1.5% adjusted for currency from the prior-year period and in line with Q2 outlook. Diluted net earnings per share (GAAP) were $0.19, flat from the prior-year period primarily due to $126 million of Russia-related charges. Non-GAAP earnings amounted to $0.44, down 4% from the prior-year period due to impact from Russia-related operations and currency.
“Persistent demand led to another quarter of significant order growth and higher revenue for HPE, underscoring the accelerating interest customers have in our unique edge-to-cloud portfolio and our HPE GreenLake platform,” said Antonio Neri, president, and CEO of Hewlett Packard Enterprise. “I am optimistic that demand will continue to be strong, given our customers’ needs to accelerate their business resilience and competitiveness. We remain focused on innovating for our customers and on executing with discipline so that we translate that demand into profitable growth for HPE.”
“We are particularly pleased with the resiliency of our gross margins despite the inflationary environment and ongoing supply chain disruptions,” said Tarek Robbiati, EVP and CFO of Hewlett Packard Enterprise. “With record levels of high-quality backlog, we are well positioned for growth in FY22 and beyond, and confident in realizing the financial commitments we set at our Securities Analyst Meeting last October.”
Segment Results
- Intelligent Edge revenue was $867 million, up 8% from the prior-year period in actual dollars and 9% when adjusted for currency, with 12.6% operating profit margin, compared to 15.7% in the prior-year period. Aruba Services revenue was up double-digits from the prior-year period and Intelligent Edge as-a-Service ARR4 was up 50%+ from the prior-year period.
- High Performance Computing & Artificial Intelligence (“HPC & AI”) revenue was $710 million, up 4% from the prior-year period in actual dollars and 5% when adjusted for currency, with (5.6%) operating profit margin, compared to 2.6% from the prior-year period. The operating loss was driven by supply constraints and delayed customer acceptances. We remain on track to exceed the expected 11% market CAGR from FY21-24.
- Compute revenue was $3.0 billion, flat from the prior-year period in actual dollars and up 1% when adjusted for currency, with 13.9% operating profit margin, compared to 11.2% from the prior-year period. Margin expansion was driven by strategic pricing actions more than offsetting input cost increases.
- Storage revenue was $1.1 billion, down 3% from the prior-year period in actual dollars and 2% when adjusted for currency, with 12.6% operating profit margin, compared to 16.8% from the prior-year period reflecting higher supply chain costs and unfavorable mix shift.
- Financial Services revenue was $823 million, down 2% from the prior-year period in actual dollars and flat when adjusted for currency, with 12.6% operating profit margin, compared to 10.8% from the prior-year period. Net portfolio assets of approximately $12.6 billion, down 4% from the prior-year period or up 1% when adjusted for currency. The business delivered return on equity of 20.4%, up 2.1 points from the prior-year period, well above pre-pandemic levels.