HPE delivers impressive revenue growth in Q3, with notable acceleration in customer demand for AI

Today, HPE reported a strong third quarter performance for fiscal year 2024. We generated impressive revenue growth, as we converted more orders for our AI systems to revenue.

Specifically, this quarter:

• We increased revenue, which is up 10% year-over-year [1]?at the high end of our guidance
• Demand improved with?an increase in total company orders?and?a sequential increase in revenue?across key business segments
• We increased our non-GAAP [2] operating margin sequentially?through cost discipline
• Momentum continues to build for our AI systems with $1.3 billion in Q3 revenue, a?39% increase?from our last quarter
• Our non-GAAP diluted net earnings per share [2]?once again exceeded guidance

We also have received the first payment of $2.1 billion in proceeds from the sale of part of our equity position in H3C.

I am pleased with this quarter’s results and optimistic as we head into the final months of our fiscal year.

Delivering on the HPE Strategy and Vision

We have made significant progress over the last several years delivering on our edge-to-cloud vision. We have accelerated innovation across all pillars of our strategy: networking, hybrid cloud, and AI -- delivered through a unified cloud-native and AI-driven experience as part of our HPE GreenLake cloud platform.

Our AI leadership is built on decades of large-scale infrastructure expertise including technologies like direct liquid cooling that are powering our largest AI systems for model builders, service providers, and supercomputing users. Interest in our HPE AI solutions, particularly from enterprise and sovereign customers, continues to grow. AI systems orders climbed $1.6 billion in the quarter to a cumulative $6.2 billion since Q1 2023 – an increase of approximately $3.5 billion over the last year.

At HPE Discover in June, we announced NVIDIA AI Computing by HPE, a portfolio of co-developed AI solutions and joint go-to-market integrations that enable enterprises to accelerate adoption of generative AI. One of those solutions, HPE Private Cloud AI, which is generally available, is a turnkey solution that makes it easy for enterprises of all sizes to gain an energy-efficient, fast, and flexible option for sustainably developing and deploying generative AI applications.

We further expanded our NVIDIA partnership by announcing NVIDIA NIM Agent Blueprints to HPE Private Cloud AI for multiple generative AI use cases. Integrating this catalog of pre-trained AI workflows into HPE Private Cloud AI will enable customers to speed time to value and deploy key AI use cases easily.

In hybrid cloud, we have redefined the cloud space over the past several years by delivering an experience that is hybrid by design - with HPE GreenLake at the core of our strategy. We have transitioned our HPE server and HPE storage products to cloud-native and software-defined solutions, while adding unique software and services to the HPE GreenLake cloud platform. We are pleased with the momentum we’re seeing with customers who are turning to HPE GreenLake. In just the last three months, almost 3,000 new customers began using our HPE GreenLake cloud, and we added almost 10,000 more customers in the last year.

We continue to enhance the platform by adding more profitable software and services, which is clearly reflected in our ARR [3] mix, now at 71%. For example, we recently closed on our acquisition of Morpheus Data, and plan to integrate Morpheus Data multicloud automation and orchestration capabilities into our HPE GreenLake cloud platform to complement the AI-driven observability from HPE’s OpsRamp acquisition – and our own organic innovation.

In networking, we have invested in building an industry-leading, AI-driven networking portfolio. We are seeing a market recovery as customers finish digesting previous orders post-COVID. Momentum is building, with sequential order growth led by wireless LAN and DC Networking products. It is clear that the AI market requires a modern and high performing networking fabric as a core foundation to deliver a more efficient data-center cloud infrastructure as the world transitions to accelerated computing.

That is why we remain excited about our pending acquisition of Juniper Networks, which will significantly expand our networking business and accelerate our edge-to-cloud vision with a full networking IP stack. The deal recently received regulatory approvals in the European Union, UK, India, and several other jurisdictions, and we remain on track to close in late calendar year 2024 or early calendar year 2025. Plans are well underway to ensure successful integration post-close.

Looking Ahead

Our impressive revenue growth reflects the strength of our portfolio and the growing excitement customers have for our newest innovations, across AI, networking, and hybrid cloud. HPE is playing a crucial role in helping customers adopt this transformative technology across their business.

We also continue to stay disciplined in the way we manage our business and cost structure. In Q3, we delivered profitable growth for our shareholders in a competitive and dynamic market.

As we look to the end of fiscal year 2024, I am confident in our leadership and team members to deliver for our customers, partners and shareholders.

This blog contains forward-looking statements subject to risks; results could differ materially. For more cautionary language regarding forward-looking statements, refer to the earnings presentation at?investors.hpe.com .

This article originally appeared on the HPE Newsroom .

[1] In constant currency. A description of HPE's use of non-GAAP financial information is provided in the earnings presentation at https://investors.hpe.com

[2] Reconciliation of specific adjustments to GAAP results for the current and prior periods and description of HPE’s use of non-GAAP financial information are included in the earnings presentation at https://Investors.hpe.com.

[3] For definition of ARR, please refer to the earnings presentation at https://Investors.hpe.com.