Reflections on a Strong Quarter: HPE Continues To Deliver on Accelerated Need for Secure Connectivity, Data Insights & a Cloud Experience Everywhere

Today, HPE reported our quarterly earnings results for the third quarter of our fiscal year 2021. Before I share my thoughts on the results, I want to acknowledge all who are facing the aftermath of Hurricane Ida and its destruction.

As I reflect on the quarter, I am amazed by the resilience of our customers, partners and team members, and incredibly proud of the way our company serves the needs of our global communities during what continues to be such unusual and evolving circumstances.

The impacts of the pandemic have accelerated the need for secure connectivity, faster insights from data, and a cloud experience everywhere. We expect these trends to continue, with the momentum of the market compelling us to move even further and faster. Digital transformation is no longer just a priority but a strategic imperative.

In the wake of these shifts, it’s clear our integrated – and differentiated – portfolio is resonating with the market, and our edge-to-cloud strategy is driving improved momentum across our businesses.?Our customers across sectors are seeing the power of our full HPE edge-to-cloud portfolio as they continue to turn to us for integrated solutions combining secure connectivity, data-insight capabilities and cloud experiences that only HPE can provide.

Our impressive third quarter results prove this traction.?We delivered strong orders growth, expanded margins and record free cash flow – all while navigating industry-wide supply constraints. Based on our strong Q3 performance and our momentum in the market, we decided again to raise our fiscal year 2021 EPS and free cash flow outlook, and we will resume stock repurchases.?These actions point to our confidence in continued customer demand and in our ability to execute.

Key financial highlights for the quarter include:

• Revenue of $6.9 billion, in line with our outlook and normal sequential seasonality
• Record orders in multiple product areas reflecting strong demand and the relevance of our edge-to-cloud offerings, with overall year-to-date order volume up 11%
• Non-GAAP year-to-date operating profit and earnings per share up 28% and 27% year-over-year, respectively
• Record year-to-date free cash flow of $1.5 billion, up $1.1 billion year-over-year
• Annualized Revenue Run Rate (ARR) this quarter was $705 million, up 33% year-over-year, driven by strong as-a-service orders growth, up 46% year over year

Over the past quarter, we have doubled down on key areas resonating with the market, including in our Intelligent Edge business and High Performance Computing and Mission Critical Solutions business, both of which saw record numbers of orders and strong revenue growth. As customers increasingly look to connect, collect, analyze and act on data at the edge, we are continuing to invest and innovate here. In June, we announced new AI Ops, IoT and security features for our Aruba Edge Services Platform (ESP) designed to streamline network operations, maximize IT efficiency, and more easily extend the network from edge to cloud.?ESP continues to gain traction with customers across verticals.?

We also continue to see strength across Compute and Storage, which grew orders in the mid-single-digits and generated strong profitability. To accelerate the transformation of our Storage business into a cloud-native, software-defined data services business, this quarter we introduced our new cloud data services available through HPE GreenLake, as well our new HPE Alletra cloud-native data infrastructure. And, just this week, we closed the acquisition of Zerto, an industry leader in cloud data management and protection, which will be soon available as a service through HPE GreenLake and immediately positions HPE GreenLake in the high-growth data protection market with a proven scaled solution.

Our ongoing pivot to as-a-service continues to gain traction. Today, our HPE GreenLake edge-to-cloud platform has more than 1,100 customers and our ARR growth reflects the strong appetite for consuming our solutions on demand. To accelerate this pivot and extend our leadership position in cloud services, we are relentlessly innovating. We made several compelling announcements at our HPE Discover conference in June. I am particularly excited about our new HPE GreenLake Lighthouse offering – a secure, cloud-native stack, built with HPE Ezmeral Software, to autonomously optimize different workloads across hybrid estates, reducing time to deployment and operating costs.?????????????????????????????????????????????????????????????

I am incredibly proud of what we have already accomplished. At this pivotal moment, our purpose – to advance the way people live and work – has never been more important. Our vision to become the edge-to-cloud company is proving its tremendous relevance. And our portfolio is winning in the marketplace. Our customers are counting on HPE and our technology to help them tackle some of their biggest challenges. This is a responsibility my 60,000 colleagues and I take seriously – and it’s what we do best.?I am excited about what is ahead for HPE and grateful for our incredible team.

Note: A reconciliation of non-GAAP measures to the most directly comparable GAAP measure, where available, is in our earnings release found at investors.hpe.com. 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.