HPE Reports Fiscal 2018 Third Quarter Results

  • Third quarter net revenue of $7.8 billion, up 4% from the prior-year period, and up 1% when adjusted for currency
  • Third quarter GAAP diluted net earnings per share of $0.29, above the previously provided outlook of $0.19 to $0.23 per share
  • Third quarter non-GAAP diluted net earnings per share of $0.44, well above the high-end of our outlook range of $0.35 to $0.39 per share
  • Returned $1.1 billion to shareholders in the form of share repurchases and dividends
  • Raised quarterly cash dividend per share by 50 percent aligned with prior communications
  • Raising fiscal 2018 GAAP diluted net earnings per share outlook to $1.85 to $1.90, and fiscal 2018 non-GAAP diluted net earnings per share outlook to $1.50 to $1.55

PALO ALTO, Calif., Aug. 28, 2018 (GLOBE NEWSWIRE) -- Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for its fiscal 2018 third quarter, ended July 31, 2018.

Third Quarter Fiscal Year 2018 Results
Third quarter net revenue of $7.8 billion was up 4% from the prior-year period and up 1% when adjusted for currency.

Third quarter GAAP diluted net earnings per share (“EPS”) from continuing operations was $0.29, up from GAAP diluted net EPS from continuing operations of $0.17 in the prior-year period. Third quarter non-GAAP diluted net EPS from continuing operations was $0.44, up from non-GAAP diluted net EPS from continuing operations of $0.22 in the prior-year period. Third quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax adjustments of $218 million and $0.15 per diluted share, respectively, primarily related to the impact of transformation costs, amortization of intangible assets, acquisition and other related charges, an adjustment to earnings from equity interests, excess tax benefits from stock based compensation, the impact of U.S. tax reform, and income tax valuation allowances and separation taxes.

“HPE has delivered a strong Q3 and our results prove we have the right strategy to deliver in the areas of highest value for our customers,” said Antonio Neri, President and CEO, HPE. “Solid execution across each of our business segments, combined with market momentum, will enable us to deliver FY18 revenue and earnings well beyond our original outlook provided at our Securities Analyst Meeting last year.”

HPE fiscal 2018 third quarter continuing operations financial performance

  Q3 FY18 Q3 FY17 Y/Y
GAAP net revenue ($B)$7.8$7.53.5%
GAAP operating margin6.6%2.7%3.9 pts.
GAAP net earnings ($B)$0.5$0.358.6%
GAAP diluted net earnings per share$0.29$0.1770.6%
Non-GAAP operating margin9.6%6.9%2.7 pts.
Non-GAAP net earnings ($B)$0.7$0.478.7%
Non-GAAP diluted net earnings per share$0.44$0.22100.0%
Cash flow from operations ($B)$1.2$1.0$0.3

Information about HPE’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.

Outlook
For the fiscal 2018 fourth quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.16 to $0.21 and non-GAAP diluted net EPS to be in the range of $0.39 to $0.44. Fiscal 2018 fourth quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.23 per diluted share, primarily related to transformation costs and the amortization of intangible assets.

For fiscal 2018, Hewlett Packard Enterprise now estimates GAAP diluted net EPS to be in the range of $1.85 to $1.90 and non-GAAP diluted net EPS to be in the range of $1.50 to $1.55. Fiscal 2018 non-GAAP diluted net EPS estimates exclude the after-tax impact of approximately $0.35 per diluted share, primarily related to the benefit from the impact of U.S. tax reform, partially offset by transformation costs and the amortization of intangible assets.

Fiscal 2018 third quarter segment results

  • Hybrid IT revenue was $6.2 billion, up 3% year over year and flat when adjusted for currency, with a 10.6% operating margin. Compute revenue was up 5%, up 2% when adjusted for currency, Storage revenue was up 1%, down 2% when adjusted for currency, DC Networking revenue was down 6%, down 10% when adjusted for currency, and HPE Pointnext revenue was down 1%, down 2% when adjusted for currency.  
  • Intelligent Edge revenue was $785 million, up 10% year over year and up 8% when adjusted for currency, with an 11.6% operating margin. HPE Aruba Product revenue was up 10%, up 7% when adjusted for currency, and HPE Aruba Services revenue was up 14%, up 14% when adjusted for currency. 
  • Financial Services revenue was $928 million, up 3% year over year and up 3% when adjusted for currency, net portfolio assets were flat year over year, and financing volume was up 15% year over year. The business delivered an operating margin of 7.9%.

About Hewlett Packard Enterprise
Hewlett Packard Enterprise is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. HPE enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.

Use of non-GAAP financial information

To supplement Hewlett Packard Enterprise’s condensed consolidated financial statement information presented on a generally accepted accounting principles (GAAP) basis, Hewlett Packard Enterprise provides revenue on a constant currency basis and revenue adjusted for divestitures and currency, as well as non-GAAP operating expense, non-GAAP operating profit, non-GAAP operating margin, non-GAAP income tax rate, non-GAAP net earnings from continuing operations, non-GAAP net (loss) earnings from discontinued operations, non-GAAP diluted net earnings per share from continuing operations, non-GAAP diluted net (loss) earnings per share from discontinued operations, gross cash, free cash flow, net capital expenditures, net debt, net cash, operating company net debt and operating company net cash financial measures. Hewlett Packard Enterprise also provides forecasts of non-GAAP diluted net earnings per share and free cash flow. A reconciliation of adjustments to GAAP financial measures for this quarter and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which Hewlett Packard Enterprise’s management uses these non-GAAP measures to evaluate its business, the substance behind Hewlett Packard Enterprise’s decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which Hewlett Packard Enterprise’s management compensates for those limitations, and the substantive reasons why Hewlett Packard Enterprise’s management believes that these non-GAAP measures provide useful information to investors is included under “Use of non-GAAP financial measures” further below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for revenue, operating profit, operating margin, net earnings from continuing operations, net (loss) earnings from discontinued operations, diluted net earnings per share from continuing operations, diluted net (loss) earnings per share from discontinued operations, cash and cash equivalents, cash flow from operations, investments in property, plant and equipment, or total company debt prepared in accordance with GAAP.

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