Hewlett Packard Enterprise Q3 2024 Performance Report

Hewlett Packard Enterprise (NYSE:HPE) has reported a solid third-quarter fiscal year 2024 performance with a 10% year-over-year increase in revenue, reaching $7.7 billion. The company surpassed its non-GAAP diluted net earnings per share (EPS) guidance by $0.02 and generated a substantial free cash flow of $660 million.

Additionally, HPE announced a dividend payment of $0.30 per share and raised its full-year guidance for both GAAP and non-GAAP EPS, reflecting confidence in its year-to-date performance. The company’s strategic advancements, including the sale of part of its equity in H3C and the pending acquisition of Juniper Networks (NYSE:JNPR), have contributed to its growth and optimistic outlook.

Key Takeaways

• HPE’s revenue increased by 10% YoY to $7.7 billion, with a non-GAAP diluted net EPS exceeding guidance by $0.02.
• The company generated a free cash flow of over $660 million and announced a dividend of $0.30 per share.
• Full-year guidance for GAAP and non-GAAP EPS has been raised due to strong year-to-date performance.
• HPE received a $2.1 billion payment from the sale of equity in H3C and is experiencing strong growth in various regions.
• The company is making strides in its edge-to-cloud vision, with significant progress in AI, networking, and hybrid cloud.
• The Server segment outperformed expectations with AI system revenues reaching $1.3 billion, a 40% increase from the previous quarter.
• The pending acquisition of Juniper Networks is expected to enhance HPE’s offerings and be accretive to margins and non-GAAP EPS in the first year.

Company Outlook

• HPE has raised its full-year guidance for both GAAP and non-GAAP EPS.
• The company is on track to close the Juniper Networks acquisition between late 2024 and early 2025, which is expected to positively impact margins and non-GAAP EPS.
• HPE remains committed to its balanced capital allocation framework.

Bearish Highlights

• The Hybrid Cloud segment saw revenues decline by 7% year-over-year.
• The Intelligent Edge segment experienced a 23% year-over-year revenue drop.

Bullish Highlights

• HPE’s AI system revenues increased by approximately 40% from the previous quarter.
• The company has seen growth in orders for HPE GreenLake and HPE Alletra Storage offerings.
• A new agreement with Deloitte to utilize HPE GreenLake cloud services has been announced.
• The acquisition of Morpheus Data solidifies HPE’s position in hybrid cloud software capabilities.

Q&A Highlights

• Marie Myers discussed the positive impact of the AI server mix on gross margins and the company’s continued focus on cost management.
• Antonio Neri emphasized HPE’s position in the AI market and the lack of cannibalization from AI deployments into traditional workloads.
• Neri also highlighted the upcoming AI Day event and a facility visit in Wisconsin.

In summary, Hewlett Packard Enterprise’s third-quarter results and strategic moves, such as the sale of H3C equity and the pending acquisition of Juniper Networks, reflect a company on the rise. With increased guidance for the full year and a strong free cash flow, HPE continues to demonstrate its ability to adapt and thrive in a competitive technology market.

InvestingPro Insights

Hewlett Packard Enterprise (HPE) has showcased robust fiscal performance in Q3 2024, with notable strategic advancements and financial achievements. To further understand HPE’s market position and future potential, let’s consider key insights from InvestingPro.

InvestingPro Data indicates that HPE’s market capitalization stands at $24.39 billion, with a P/E ratio of 13.4, which adjusts to 11.58 on a last twelve months basis as of Q2 2024. This suggests that the company is trading at a low price-to-earnings ratio relative to its near-term earnings growth. Additionally, HPE’s revenue for the last twelve months as of Q2 2024 was $28.31 billion, despite a slight decline in revenue growth by 4.36%. Nevertheless, the company’s gross profit margin remains strong at 34.97%, indicating healthy profitability.

InvestingPro Tips highlight that HPE has a high shareholder yield and is considered a prominent player in the Technology Hardware, Storage & Peripherals industry. Moreover, the company has consistently maintained dividend payments for 10 consecutive years, with a dividend yield of 2.77% as of the latest data, and a dividend growth of 8.33% over the last twelve months. This consistent dividend payment history underscores HPE’s commitment to returning value to shareholders.

Furthermore, analysts predict that HPE will be profitable this year, a forecast supported by the company’s profitability over the last twelve months. These insights, coupled with the company’s strategic moves, such as the pending acquisition of Juniper Networks, position HPE as a company with a strong foundation and growth potential.