HPE Reports Fiscal 2018 First Quarter Results

  • First quarter net revenue of $7.7 billion, up 11% from the prior-year period, and up 9% when adjusted for currency
  • First quarter GAAP diluted net earnings per share of $0.89, above the previously provided outlook of $0.01 to $0.05 per share, primarily due to the benefits of U.S. tax reform
  • First quarter non-GAAP diluted net earnings per share of $0.34, above the previously provided outlook of $0.20 to $0.24 per share
  • Returned $862 million to shareholders in the form of share repurchases and dividends
  • Updates fiscal 2018 GAAP diluted net earnings per share outlook to $1.35 to $1.45, and fiscal 2018 non-GAAP diluted net earnings per share outlook to $1.35 to $1.45
  • Announces plan to return $7 billion to shareholders through FY19 in the form of share repurchases and a 50 percent dividend increase starting in Q3 FY18

PALO ALTO, Calif., Feb. 22, 2018 (GLOBE NEWSWIRE) -- Hewlett Packard Enterprise (NYSE:HPE) today announced financial results for its fiscal 2018 first quarter, ended January 31, 2018.

First Quarter Fiscal Year 2018 Results
First quarter net revenue of $7.7 billion was up 11% from the prior year and up 9% when adjusted for currency.

First quarter GAAP diluted net earnings per share (“EPS”) from continuing operations was $0.92, up from GAAP diluted net EPS from continuing operations of $0.15 in the prior-year period. First quarter non-GAAP diluted net EPS from continuing operations was $0.34, up from non-GAAP diluted net EPS from continuing operations of $0.28 in the prior-year period. First quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax adjustments of $935 million and $0.58 per diluted share, respectively, primarily related to the impact of U.S. tax reform, tax indemnification adjustments, income tax valuation allowances and separation taxes, transformation costs, amortization of intangible assets, an adjustment to earnings in equity interest, acquisition and other related charges, restructuring charges, and separation costs.

“Our strong Q1 performance is proof that we have the right strategy and improved execution,” said Antonio Neri, President and CEO of HPE.  “We had good revenue growth across every business segment, continued to execute HPE Next with no disruption to the business, and delivered strong shareholder return in the form of share repurchases and dividends.”

HPE fiscal 2018 first quarter continuing operations financial performance

  Q1 FY18
  Q1 FY17
  Y/Y
 
GAAP net revenue ($B)$7.7 $6.9 11.2% 
GAAP operating margin3.4% 6.6% (3.2 pts.) 
GAAP net earnings ($B)$1.5 $0.3 490.4% 
GAAP diluted net earnings per share$0.92 $0.15 513% 
Non-GAAP operating margin7.7% 9.5% (1.8 pts.) 
Non-GAAP net earnings ($B)$0.5 $0.5 15.6% 
Non-GAAP diluted net earnings per share$0.34 $0.28 21.4% 
Cash flow from operations ($B)$0.1 ($1.2) $1.3 

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 second quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.10 to $0.14 and non-GAAP diluted net EPS to be in the range of $0.29 to $0.33. Fiscal 2018 second quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.19 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 $1.35 to $1.45 and non-GAAP diluted net EPS to be in the range of $1.35 to $1.45. Fiscal 2018 non-GAAP diluted net EPS estimates primarily exclude the after-tax impact of transformation costs and the amortization of intangible assets, offset by the impact of U.S. tax reform.

“Given the recent tax reform in the U.S., which will provide easier access to off-shore cash, we are increasing our shareholder return commitment and our investment in employees,” Neri added.  “We now plan to return $7 billion to shareholders in the form of share repurchases and dividends by the end of FY19, including a 50% increase in our dividend.  In addition, we will significantly increase the matching contribution for our employees’ 401(k) program and create new degree assistance programs to encourage development and learning for employees around the world.”

Fiscal 2018 first quarter segment results

  • Hybrid IT revenue was $6.3 billion, up 10% year over year and up 9% when adjusted for currency, with a 9.6% operating margin. Compute revenue was up 11%, up 10% when adjusted for currency, Storage revenue was up 24%, up 23% when adjusted for currency, DC Networking revenue was up 27%, up 25% when adjusted for currency, and Pointnext revenue was up 2%, flat when adjusted for currency.  
  • Intelligent Edge revenue was $620 million, up 9% year over year and up 7% when adjusted for currency, with a 2.9% operating margin. HPE Aruba Product revenue was up 9%, up 7% when adjusted for currency, HPE Aruba Services revenue was up 6%, up 6% when adjusted for currency. 
  • Financial Services revenue was $888 million, up 8% year over year and 5% when adjusted for currency, net portfolio assets were up 6%, and financing volume was up 7%. The business delivered an operating margin of 8.1%.

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.

Use of non-GAAP financial information
To supplement Hewlett Packard Enterprise’s condensed and consolidated financial statement information presented on a generally accepted accounting principles (GAAP) basis, Hewlett Packard Enterprise provides revenue on a constant currency basis and revenue adjusted for divestitures and currency, as well as non-GAAP operating expense, non-GAAP operating profit, non-GAAP operating margin, non-GAAP income tax rate, non-GAAP net earnings from continuing operations, non-GAAP net (loss) earnings from discontinued operations, non-GAAP diluted net earnings per share from continuing operations, non-GAAP diluted net (loss) earnings per share from discontinued operations, gross cash, free cash flow, net capital expenditures, net debt, net cash, operating company net debt and operating company net cash financial measures. Hewlett Packard Enterprise also provides forecasts of non-GAAP diluted net earnings per share and free cash flow. A reconciliation of adjustments to GAAP financial measures for this quarter and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which Hewlett Packard Enterprise’s management uses these non-GAAP measures to evaluate its business, the substance behind Hewlett Packard Enterprise’s decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which Hewlett Packard Enterprise’s management compensates for those limitations, and the substantive reasons why Hewlett Packard Enterprise’s management believes that these non-GAAP measures provide useful information to investors is included under “Use of non-GAAP financial measures” further below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for revenue, operating profit, operating margin, net earnings from continuing operations, net (loss) earnings from discontinued operations, diluted net earnings per share from continuing operations, diluted net (loss) earnings per share from discontinued operations, cash and cash equivalents, cash flow from operations, investments in property, plant and equipment, or total company debt prepared in accordance with GAAP.

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