HPE Reports Fiscal 2018 First Quarter Results

February 22, 2018

HPE announces its financial results for the first quarter of 2018

In this article
  • 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
  • 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
Q1 fiscal year 2018 financial tables

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 margin

3.4%

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 margin

7.7%

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 employee's 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.

Editorial contact
Kate Holderness
corpmediarelations@hpe.com

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.

Forward-looking statements

This press release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, share repurchases, currency exchange rates or other financial items; statements regarding the estimated impact of the changes in U.S. tax law; any projections of the amount, timing or impact of cost savings or restructuring charges; any statements of the plans, strategies and objectives of management for future operations, including the completed separation transactions, the execution of restructuring plans and any resulting cost savings or revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on Hewlett Packard Enterprise and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements or assumptions underlying any of the foregoing.

Risks, uncertainties and assumptions include the need to address the many challenges facing Hewlett Packard Enterprise's businesses; the competitive pressures faced by Hewlett Packard Enterprise's businesses; risks associated with executing Hewlett Packard Enterprise's strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of Hewlett Packard Enterprise's products and the delivery of Hewlett Packard Enterprise's services effectively; the protection of Hewlett Packard Enterprise's intellectual property assets, including intellectual property licensed from third parties; risks associated with Hewlett Packard Enterprise's international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the cost and the anticipated benefits of implementing the transformation and restructuring plans; the effects of the U.S. Tax Cuts and Jobs Act and related guidance and regulations that may be implemented; the resolution of pending investigations, claims and disputes; and other risks that are described in Hewlett Packard Enterprise's Annual Report on Form 10-K for the fiscal year ended October 31, 2017 and subsequent Quarterly Reports on Form 10-Q.


As in prior periods, the financial information set forth in this press release, including tax-related items, reflects estimates based on information available at this time. While Hewlett Packard Enterprise believes these estimates to be reasonable, these amounts could differ materially from reported amounts in the Hewlett Packard Enterprise Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2018. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements.

Share this article
Related news
Featured links
  • Q1 FY2018 financial tables