HPE Q2 driven by edge as traditional revenues slow

Antonio Neri, president and CEO of HPE | HPE second quarter

HPE has revealed its second quarter 2023 financial results, reporting revenue of $7bn and falling just short of its $7.1bn-$7.5bn prediction set during its last quarter, the highest first quarter performance since 2016.

Intelligent Edge revenue proved to be a driving force for the company, with revenue of $1.3bn, up 50 percent from the previous year and 56 percent in constant currency, along with a 26.9 percent operating profit margin compared to 12.6 percent previously.

High Performance Computing and Artificial Intelligence (HPC and AI) revenue was $840m, an increase of 18 percent from the prior-year period and 22 percent in constant currency, with a 0.2 percent operating profit margin, compared to 5.6 percent from the prior-year period.

In addition, annualized revenue run-rate (ARR) was $1.1bn, an increase of 35 percent from the previous year period and 38 percent in constant currency.

Meanwhile, compute revenue was down eight percent year-on-year at $2.8bn and storage revenue also fell three percent YoY at $1bn.

The HPE Board of Directors announced a regular cash dividend of $0.12 per share on the company’s common stock, payable on July 14, 2023 to stockholders of record as of the close of business on June 15, 2023.

The company has estimated Q3 fiscal 2023 revenue to be in the range of $6.7bn-$7.2bn, and revenue growth to be in the range of 4-6 percent in constant currency with ARR guidance of 35-45 percent compounded annual growth rate from fiscal 2022 to fiscal 2025.

HPE quarter two also saw a series of acquisitions and expansions. In March, the company announced the acquisition of Axis Security and OpsRamps which further enhanced the company’s IT capabilities and technologies.

“Building on a great start to the fiscal year, HPE grew revenue, increased the contribution of recurring revenue through the HPE GreenLake edge-to-cloud platform, and delivered exceptional profitability to generate a strong second quarter performance,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “Our shift to a higher-margin portfolio mix led by the Intelligent Edge segment, and the strong demand for our AI offering, further strengthen the investment opportunity for our shareholders.”

“We are very pleased that the progress we are making against our strategy continues to deliver on both the top and bottom lines,” said Tarek Robbiati, executive vice president and CFO of Hewlett Packard Enterprise. “These results demonstrate that our strategy to pivot our portfolio to higher-growth, higher-margin areas is working – and that we are operating with discipline.”