Powering Our Pivot: Capitalizing on Megatrends to Drive Robust Demand and Profitability at HPE

As we report our first quarter results for fiscal year 2022 today, I am extremely pleased with the solid performance HPE delivered. With this quarter of robust customer demand and profitability, we’re clearly demonstrating the strength of our differentiated edge-to-cloud strategy, our portfolio innovation and our business pivot. As a result of our overall performance, we are raising our fiscal year 2022 earnings-per-share outlook. Here are a few other highlights from the quarter:

• Orders grew 20% from the prior-year period – including a 136% rise in as-a-service orders [1].
• Total revenue increased 2% year-over-year [2] to $7.0 billion, despite continued industry-wide supply constraints.
• We generated non-GAAP gross profit margin [1] of 33.9%, a gain sequentially and year over year

Demand for our differentiated edge-to-cloud products and solutions continues to be very strong, and Q1 marks the third consecutive quarter we have generated year-over-year order growth above 20%. This was also the second consecutive quarter that our as-a-service orders1 more than doubled year-over-year.

Customers are turning to HPE

Customers are increasingly turning to HPE to accelerate their digital transformation. We have a compelling value proposition at HPE that is driven in part by our unique ability to harness key industry trends related to edge connectivity, ubiquitous multi-cloud experiences, critical data insights, and flexible IT consumption through our HPE GreenLake platform offering. During the quarter, we increased our total HPE GreenLake customer count to more than 1,350 by adding Barclays and more than 100 other new logos.

The traction we are seeing in the market for the HPE GreenLake platform is driving us to further accelerate the transformation of HPE into an edge-to-cloud company. On March 22, we will unveil significant new innovations and enhancements to our HPE GreenLake platform to help customers manage their hybrid clouds more easily, protect and get more value from their data, and securely connect at the edge.

Accelerating our as-a-service pivot

I have said it before, and I will say it again – our as-a-service transformation is my number one priority. It is already delivering results for our shareholders, as evidenced in our Q1 performance and the increase today of our earnings-per-share guidance for the full fiscal year 2022.

It is also accelerating our momentum in key growth businesses.

Our High-Performance Computing & AI business experienced noteworthy demand growth, and now has a record total order book of approximately $2.7 billion, up 7% year-over-year. During the quarter, we announced a win with the U.S. Department of Energy’s National Renewable Energy Laboratory to build a new supercomputer that will advance R&D for tomorrow’s clean energy systems.

Intelligent Edge grew revenue 11% year-over-year [2], and, for the fourth consecutive quarter, the segment saw year-over-year orders growth of over 35%. This quarter, we introduced the Aruba EdgeConnect Microbranch, an industry-leading home-office, cloud-based networking solution, that lets remote personnel work seamlessly and securely wherever they are located.

Additional quarterly highlights

Our core business segments achieved outstanding profitability and orders growth. In Q1, nearly 10% of Compute and Storage orders were sold as a service.

Compute generated more than 20% order growth year-over-year, and – driven by strong pricing discipline – expanded gross margins and generated attractive operating margins. Storage, which we are transforming into a data-services business, logged product order growth of more than 15% year-over-year for the fourth consecutive quarter.

The performance we delivered this quarter was particularly noteworthy given the current macro environment that continues to be defined throughout the industry by supply shortages and overloaded logistics channels. HPE’s Global Operations team is mitigating the impact by prudently building inventory where appropriate and leaning on our long-standing supplier relationships. We are continuing to utilize our world-class supply chain engineering capabilities to adjust the types of components we use and shift to those that are more readily available.

Looking ahead

As we continue to monitor the evolving situation in Ukraine, we keep our HPE purpose – to advance the way people live and work – front and center.?We are focused on the safety of our team members and contingent workers, and their immediate families.?We are working hard to support and protect them during this incredibly challenging time.?We join those calling for peace in the region.?

And our purpose continues to guide how we deliver for our customers.?As I look across the industry and talk with our customers, I believe HPE is primed to capitalize on the edge-to-cloud megatrends that define our industry. I am confident in our ability to help our customers solve their biggest business challenges with our differentiated strategy and solutions.?As customers increasingly turn to HPE, we are well positioned to drive long-term sustainable profitable growth for our shareholders.

[1] A reconciliation of non-GAAP measures to the most directly comparable GAAP measure, definition of as-a-Service orders, as well as a description of HPE’s use of non-GAAP financial information, are in our earnings release found at investors.hpe.com.

[2] Adjusted to eliminate the effects of currency.

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.