Hewlett Packard Enterprise Company (NYSE:HPE) Citi 2024 Global TMT Conference Call September 5, 2024 2:10 PM ET Company Participants Marie Myers - Executive Vice President and Chief Financial Officer Conference Call Participants Jonathen Zauderer - Citi Jonathen Zauderer Thanks, everyone. Wow, it just got louder. I'm Jon Zauderer from Citi. Thank you all for joining us today. I'm really excited that Marie Myers is here from HPE to talk about the company. But I want to remind everyone a couple of things. One ...

Hewlett Packard Enterprise TodayHPEHewlett Packard Enterprise$17.64 -1.13 (-6.02%) 52-Week Range$14.47▼$22.82Dividend Yield2.95%P/E Ratio12.88Price Target$21.09Add to WatchlistHewlett Packard Enterprises NYSE: HPE is an attractive, high-yield play for blue-chip investors seeking exposure to AI because of its position in the enterprise industry, cash flow, and capital return. Its enterprise-quality networking and server products are critical for many businesses and are gaining traction with AI, as seen in th ...

Financial Performance - GAAP net revenue for the three months ended July 31, 2024, was $7.71 billion, a 10.1% increase from $7.00 billion in the same period of 2023[286]. - GAAP gross profit margin decreased to 31.6% for the three months ended July 31, 2024, down from 35.8% in the same period of 2023[286]. - Non-GAAP earnings from operations for the three months ended July 31, 2024, were $771 million, representing a 10.0% margin compared to $718 million and a 10.3% margin in the same period of 2023[287]. - GAAP net earnings for Q3 2024 were $512 million, with diluted net earnings per share at $0.38, compared to $464 million and $0.35 per share in Q3 2023, representing a 10.3% increase in earnings[290]. - Non-GAAP net earnings for Q3 2024 were $661 million, with diluted net earnings per share at $0.50, compared to $639 million and $0.49 per share in Q3 2023, reflecting a 3.4% increase in earnings[290]. - Free cash flow for Q3 2024 was $669 million, down from $955 million in Q3 2023, indicating a decrease of 29.9%[291]. - Net cash provided by operating activities for Q3 2024 was $1,154 million, compared to $1,525 million in Q3 2023, a decline of 24.3%[291]. Cash Flow and Liquidity - For the nine months ended July 31, 2024, net cash provided by operating activities increased by $0.7 billion to $2.311 billion compared to $1.585 billion in the same period of fiscal 2023[264]. - Free Cash Flow (FCF) increased by $0.9 billion for the nine months ended July 31, 2024, compared to the same period in fiscal 2023, driven by higher cash provided by operations[273]. - Cash, cash equivalents, and restricted cash as of July 31, 2024, totaled $3.905 billion, down from $4.581 billion as of October 31, 2023[261]. - The company expects to meet its liquidity requirements for at least the next twelve months, supported by cash generated from operations and financing commitments related to the Juniper Networks acquisition[253]. Investment Activities - Net cash used in investing activities for the nine months ended July 31, 2024, was $1.580 billion, a decrease from $3.186 billion in the same period of 2023[264]. - The company reported an investment in property, plant, and equipment of $543 million for Q3 2024, down from $671 million in Q3 2023, a decrease of 19.1%[291]. - Net cash used in investing activities decreased by $1.6 billion for the nine months ended July 31, 2024, primarily due to lower cash utilized in financial collateral activities and reduced investments in property and equipment[271]. Debt and Financing - Total debt as of July 31, 2024, was $11.803 billion, a decrease from $12.355 billion as of October 31, 2023[261]. - The company repurchased $100 million worth of shares during the first nine months of fiscal 2024, with a remaining authorization of approximately $0.9 billion for future repurchases[257]. - Net cash used in financing activities increased by $1.2 billion for the nine months ended July 31, 2024, mainly due to lower proceeds from debt issuance[272]. Strategic Transactions - The planned acquisition of Juniper Networks is an all-cash transaction valued at approximately $14 billion, with a purchase price of $40.00 per share[259]. - The company announced plans to divest its Communications Technology Group business to HCLTech, which is subject to regulatory approvals[258]. - The company incurred acquisition-related charges in Q3 2024, driven by costs associated with the pending acquisition of Juniper Networks[299]. Operational Metrics - Days Sales Outstanding (DSO) increased to 45 days from 43 days year-over-year, while Days of Supply (DOS) rose significantly to 131 days from 87 days, indicating higher inventory levels due to strategic purchases for AI systems[266][268]. - Days Purchases Outstanding (DPO) increased to (172) days from (134) days, reflecting higher inventory purchases[269]. - The cash conversion cycle improved to 4 days from (4) days year-over-year, a positive change of 8 days[266]. Non-GAAP Measures - The company emphasizes the importance of non-GAAP measures for providing transparency and facilitating comparisons with industry peers[294]. - Non-GAAP financial measures are used as supplements to GAAP results, with reconciliations provided for investor review[304]. - The company excludes gains and losses on non-marketable equity investments from non-GAAP measures to better reflect normal business operations[305]. - The projected non-GAAP income tax rate for fiscal 2024 is set at 15%, compared to 14% for fiscal 2023, reflecting current information and assumptions[305]. - The company encourages careful review of reconciliations between non-GAAP and GAAP financial measures[304].

Hewlett Packard Enterprise will continue with its legal efforts to recover up to $4 billion damages from the estate of late British tech entrepreneur Mike Lynch, who died last month after his yacht sank off the Italian coast. The damages that HPE wants to recover arise from a civil case in which the company had lodged fraud claims against Lynch related to Autonomy, a company he co-founded. Lynch denied the allegations.In 2022, the British court issued a ruling in the case that largely sided with the company ...

Hewlett Packard Enterprise Company (HPE) reported better-than-expected results for the third quarter of fiscal 2024. Hewlett Packard Enterprise reported non-GAAP earnings of 50 cents per share for the fiscal third quarter, which beat the Zacks Consensus Estimate of 46 cents.The bottom line came above management’s guidance range of 43-48 cents. The better-than-expected bottom-line performance was primarily driven by stronger-than-expected sales growth and the benefits of disciplined operating cost management ...

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental a ...

Hewlett Packard Enterprise Co (NYSE:HPE) stock is 7.3% lower to trade at $17.51 this morning, on track for its worst single-session decline since January. The tech stock is deep in the red even after reporting fiscal third-quarter earnings of 50 cents per share on $7.71 billion in revenue, both of which topped estimates. Instead, HPE is lower because artificial intelligence (AI) gross margins declined year-over-year, even though AI server revenue hit a new record. In response, BofA Global Research chimed in ...

Financial Data and Key Metrics Changes - Net revenue for Q3 2024 was $7.7 billion, representing a 10% year-over-year increase and at the high end of guidance [7] - Non-GAAP diluted net earnings per share rose to $0.50, $0.02 above the high end of guidance [7] - Free cash flow exceeded $660 million, with a dividend of $0.30 per share announced [7][26] - Non-GAAP gross margin was 31.8%, down 410 basis points year-over-year due to a lower mix of Intelligent Edge revenue [30] Business Line Data and Key Metrics Changes - Server segment revenue reached $4.3 billion, up 35% year-over-year and 11% sequentially, driven by AI systems and traditional servers [32] - Hybrid Cloud segment revenues were $1.3 billion, down 7% year-over-year but up 4% sequentially [36] - Intelligent Edge revenues were $1.1 billion, down 23% year-over-year but up 3% sequentially [39] - Financial Services revenue was $879 million, up 1% year-over-year [41] Market Data and Key Metrics Changes - Demand improved in North America, Asia-Pacific, Japan, and India, while Europe and the Middle East lagged [8] - AI systems revenue conversion reached $1.3 billion, a 39% increase from Q2 [12] - HPE GreenLake cloud platform saw almost 37,000 unique customers, driving annualized revenue run rate subscription growth [8] Company Strategy and Development Direction - The company is focused on its edge-to-cloud vision, emphasizing AI, hybrid cloud, and networking [8][10] - A pending acquisition of Juniper Networks is expected to enhance the company's networking capabilities and margin profile [9][23] - The introduction of HPE Private Cloud AI aims to accelerate enterprise AI adoption [19][27] Management's Comments on Operating Environment and Future Outlook - Management noted an improved demand environment and strong enterprise interest in generative AI [8][26] - The company is optimistic about the recovery in enterprise demand and the potential for AI systems to drive future growth [26][27] - Management expects to close the Juniper acquisition by late 2024 or early 2025, which will significantly impact margins [43][46] Other Important Information - The company received $2.1 billion from the partial sale of its H3C equity position [7][26] - The cash conversion cycle improved to a positive four days, a reduction of 19 days from the previous year [42] Q&A Session Summary Question: Insights on Server margins and AI revenue contribution - Management indicated that server margins were supported by the shift to Gen11 products with richer configurations and effective cost management [49][50] Question: Factors impacting gross margins - Management highlighted that the lower contribution from networking revenue and the AI server mix affected gross margins, but operational discipline is expected to improve profitability [52][54] Question: Free cash flow trends and expectations - Management explained that working capital timing and seasonality impacted Q3 free cash flow, but improvements are expected in Q4 [58][59] Question: AI backlog composition and enterprise demand projects - Management noted that the AI backlog is strong, with enterprise demand spanning various verticals, including healthcare and financial services [72][73] Question: Trends in traditional servers versus AI platforms - Management stated that there are no signs of cannibalization of traditional servers by AI platforms, as demand remains strong across different segments [68][70]

For the quarter ended July 2024, Hewlett Packard Enterprise (HPE) reported revenue of $7.71 billion, up 10.1% over the same period last year. EPS came in at $0.50, compared to $0.49 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $7.67 billion, representing a surprise of +0.56%. The company delivered an EPS surprise of +8.70%, with the consensus EPS estimate being $0.46.While investors scrutinize revenue and earnings changes year-over-year and how they compare with W ...

HPE Q3 FY24 Earnings Announcement September 4, 2024 http://www.investors.hpe.com | --- ...