HPE - Earnings call transcript Q1 2018 | Hewlett Packard Enterprise Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. And welcome to the First Quarter Fiscal Year 2018 Hewlett Packard Enterprise Earnings Conference Call. My name is Denise, and I will be your conference moderator for today’s call. At this time, all participants will be in listen-only mode.

We will be facilitating a question-and-answer session towards the end of the conference [Operator Instructions].

conference recorded this replay reminder, a is for being purposes. As the now Mr. to like would presentation to call, I today’s turn over for your host Simanek, Relations. of Andrew Head Investor Please proceed.

Andrew Simanek

for Andy to Officer like you and Chief Executive call to first HPE’s of Good with I XXXX welcome Simanek, Vice fiscal Tim Chief earnings I Enterprise. And Stonesifer, am Investor afternoon. Financial President Executive Relations quarter Hewlett our Antonio Packard would HPE’s Officer. Head and conference Neri,

me let the Antonio, you to webpage Relations made on over posted call the release the webcast. for of investors.hpe.com. handing call at the this replay available call and release being our We slide webcast remind HPE is one the Before that be year. presentation Investor approximately press earnings shortly accompanying A after will today’s

elements them always, view best as the As and forward-looking this are today. on we of are our our based world businesses see and of presentation

information, see earnings more For on that to assumptions. forward-looking the relating materials please risks, and statements detailed involve uncertainties the disclaimers

does any discussion of XX-K. refer SEC, intend these please uncertainties assumptions, with and filings obligation HPE’s update statements. to its some a no and assumes most to recent including of HPE such of Form forward-looking risks, For not the

amounts the XX-Q discussed XXXX. reported that note Form at the ended the differ in this also on available We estimates quarter HPE’s report for financial on ultimately on could January reflects from materially information information quarterly based call this fiscal and XX, time

our Please to slide today’s Web a Antonio. to details. on comparable have earnings reconciliations site and information call to financial the site. presentation that, non-GAAP expressed me that refer on basis, information release over for let has turn we tables With accompanying our on the Finally, been for the GAAP provided Web

Antonio Neri

to thanks us on And joining everyone call today. for Andy. the Thanks,

marked day the As February Hewlett know, CEO you Enterprise. as of first all my Xst Packard

tremendous us executing and role years. on honored to thanks I XX opportunities this take a am ahead. Many of grateful set plan and leadership opportunities past our As to those to the a well on take excited six of I years forward Meg about on and company, on we that developed during Meg Meg veteran exist, Whitman's am together I the a into to that current the this look very Board. and remains strategy the future. company half path

performance we the QX strong right and is Our strategy proof that improved execution. have

pricing every form shareholder no Overall the business We Next up have of to the with $X.X prior to segment, execute increases as growth billion across of repurchases the return year, up driven prices, From we disruption a in our and share a good XX% seeing higher strong was some delivered and and revenue HPE in business of dividends. growth average macro each unit improvement across costs. DRAM in continued from business perspective, revenue conditions market by segments. to are catches

In core have addition, driving number fronts strengthened of are our server better attachment of business. across a industry execution and standard we

'XX our track pressure. competitive of as taken actions remain to margin DRAM have margin margin And impact on running year fiscal cost second savings we the are outlook business of HPE overall position. strong don't an in continue have go will market we a given us the year, operating quarter profitability to these The and which non-GAAP more progress approximately pricing planned. helping cost for we have I [indiscernible] growth mix our are about talk from changes we X.X%. continue performance us X.X%. From a offset perspective, in great in compares the of half While Overall, to Next, elevated rates portfolio making expect the minute. is in the on put tougher the achieve made segment we was

we expect the Next deliver HPE in forward, we laid out Looking results October. to

spans of of deliver we between a several able QX The which have program, the compensation evidence to sales the including frontline fact the the results significantly to execute and did HPE reduce sales force transformation, ability were We streamline the plans. in the disrupting critical number of CEO that layers and our without completed parts and the Next business. we is

discipline, the those including and that our In in revenue a to number mind, performance benefits minute. in our Tim EPS, EPS With that the delivered from $X.XX, $X.XX outlook. above strong of provide favorable which a is addition of tax our midpoint of impacted details cost continued on previously provided we items onetime reform. all we non-GAAP have will

QX, As fiscal outlook our $X.XX. in previously from EPS raising rate, benefits a from are continued outlook as result performance to tax year of of $X.XX non-GAAP well our to to we $X.XX lower 'XX provided as $X.XX our a

our now we but to employees. to year. allocation the provide return Meg’s the In leadership. our dividends year details following [XX%] capital our on ROI includes of From committed in Tim allocation access disciplined a 'XX. will the return excess [ph] vigorous by in of form This the you same based to increasing easier a addition, shareholders in perspective, remain given repurchases dividend, third cash, to of our increase fiscal sheet deploy plan I the reform, cash saw a quarter offshore on and this billion approach commitment and capital provide $X the beginning tax which shareholders minute balance in we in end expect our investment fiscal to and more are under share

by in contribution to degree of company creating XXX(k) new increase and learning. plan margin tax investment our also encourage systems the development programs to We to and take of in advantage employees, significant increase reform our

on performance color give I the quarter. Now, some our will additional in

insights business our enable portfolio drive from that services critical improves harvest, we’re extract all explosion customers outcomes through As to store customers. We you business applications power HP, and we customer pillars; the strategy, of and help three At our and data drive and our increases data transformation to business analyze we have experiencing, leveraging the accelerate their on accelerate the to help our cloud, strategic digital know, data their intelligent and defined we market the HP the simple disruptions to driven based our we use critical to we data. customers by by make business models to our experiences, built resulting for productivity. Edge Edge, customer strategy employee core new expertise hibernating from is outcomes successful outcomes.

together Edge. the products. First, where customers center, intelligent their word where companies manufacture Edge interact enterprises the where It where come it is their is is we data power begins. and digital with transformation The outside and employees

a the of the as to seeing data at happening power are customers data evolution businesses. created We leverage being Edge their unprecedented drive amount

move the saw help services. return expect we to large due momentum In start including create access, space, to pick our as Edge first have In off the faced network bring systems converge with we year. customers which truly saw differentiated in We tough together in our growth and wireless to deal wireless X% Depot and switching and environments. We LAN, got offerings allowing business, that strengths highly compute, the through the of storage, grew the quarter, security intelligent strong campus Edge in prior a in with intelligence, to in to switching Home and slow momentum Edge continued quarter and this year-over-year we artificial intelligent up compare quarter pipeline. the a

Given our opportunity investment recognized the intelligent the and significant the we in be of market. is key continues for Edge see, area to us innovation the

the an Common infrastructures. to secure level organization new Criteria highest be for And security with awarded January we was certification first and in continue demonstrate the in to certification Essentially, Aruba ClearPass win achieve customers. national to the industry’s industry moving the example, network For validation commitment partnership. information solutions provides assurance a can under providing these by Wi-Fi wired and Aruba's customers most of

the of example, access purchased Wellington network in management ClearPass access and independent investment firms, QX, switches mobility For secure world's largest Management, for Aruba control. one

also Aruba new for Aruba Academy, for selected Royal wireless Shell worldwide. Airforce We the a had U.S. Dutch ClearPass and LAN with standard wireless the win

IT, solutions believe strategy, to that cloud hyper HP workloads customers world strong with technologies Hybrid software and and public XX% driven year-over-year, IT. We IT revenue refined in is they synergy. will needs. their grew by I up each hybrid and converge the ISS, was simplify the performance traditional the pillar revenue optimized specific computer, cloud customer environments. storage reality becoming turn are of of help second high by IT secure infrastructure and private as XX% driven hybrid embraces data this right growth compute, mix In Overall, Next, core to growth and compute, hybrid in our year-over-year, networking. datacenter

refined software XX% well executed and grew customer Nimble While new AUPs, positive performance. by market. year-over-year, we secure XPAR improvement the the to also storage, we some are In higher the momentum seeing driven market improved seen have brought around and we solutions acquisition and revenue

the is which prevent planned, autonomous HP predictive In uses step within last go-to-market As converge and platform with And InfoSight United networking, year-over-year, all-flash install and storage seeing in on a and year, States. grew business an out we happen. late changer base. we came for This by execution our XX% before HPE our two analytics impact the a predict datacenter. portfolio. changes product, is is they we storage journey Nimble, our our rolled datacenter across to have problems software are revenue entire infrastructure laid, positive major to driven from HPE InfoSight a particularly refined that intelligence strong game

transformation Hybrid IT which help the through defined about in challenges differentiator customers approach, led navigate I talked software Our earlier. services is our

of flat. in the models add-ons X% is were enabled out revenue soft through our use made orders an interest about newest laid QX, area heart per organization our services during give that our offer operations. security alternating I in pay in flexibility financial progress our minute. in the in Pointnext this also at October, In number rationalizing Our we we customers’ of core consumption including services year-over-year We alternative offerings initiatives approach. is our a made to Pointnext by and that the innovation. grew growing alternatives countries on It talk that would key

front, continue innovation only and introduce the can. bring exciting together On that in software services, to solutions we HPE capabilities way a new that hardware

insights. and Also that launched simple HPE in environment to computing pay-per-use in-memory them. lets platform, The market can and HPE customer no match operate of a platform OneSphere, data The analyze SAP announced we and a in size In the process available suite innovative Data, workloads scalability a any and Superdrome and software the into consume HANA platform HPE else cloud HPE generic in real include can turn public cloud we how they put database, the through an that terms experience. are world's Flex. customers private business called performance, unified now deploy, of the flexibly created. modular Enterprises I believe enterprise that optimize requirements it that on-premise to November, December, And Edge in the security, workloads. of backup, solution. blockchain-as-a-service scalable one offer finding cloud have capabilities management open Essentially, enables GreenLake we computing. most December, and choice top announced amount where time of in support the infrastructure platform and we need example, environments we in launched customer resiliency. blockchain offerings GreenLake, solutions massive Big and For for

this. capability to of brings had I is are we our enterprise years, believe customers and workloads. grade have portfolio solution an in strongest thinking the Our blockchain

football the servers. supercomputer, million ProLiant just designing are intelligence. of announced recently And for for this it example, with performance forecasting. Defense fan, to big a use helicopters HPE's know, and Netherland, week, Eni, gas like analyze plans time the company, weather a tasks professional am $XX lot Ajax, the that as the HPE's and and industry's oil in For of I enabling storage player to on based the so in multinational a that real network announced Department we supercomputers powerful some artificial you soccer HPCX win most through solutions of club

we continue solid proof So to looking I and year overall, on a still that slow shows QX products to executing strategy, are our But remain more off focused introduce things. point Next our there's for. is doing are believe customers We the right and start. a innovative to the do. services driving is work HPE

to sustain that am I results deliver me confident And will returns. will provide let to the the Tim solid financial on details long as hand shareholder we quarter. now, over and call who continue we As approach, additional

Tim Stonesifer

Antonio. with Thanks, was and good the QX solid a earnings. expected operating growth, accelerated to better than year start margins revenue

operational changes, up been in we’ve making confidence constant X% our and to refinements deliver Total with that billion, revenue moves the currency. shareholders me was the for $X.X give XX% year-over-year results right quarter strong cost Our go-to-market and actions cutting value.

with As demand driven we the from quarter point a core execution, 'XX X% we improving up be continue constant see remain If leading year-over-year was but customer to currency Antonio and From discussed, spend versus environment rates even rates improved in favorably XX% expect revenue commodities the throughout a lost an and backlog a organic continue in good significant recovery compute prior region, strong improving prospective, Germany performance of XXX switching improve, core entering with the and current by By Revenue Exchange in a to in Europe ground AUPs. year-over-year macro a to to to top higher combined X the hold, stronger, regaining market currency, strength by from in growing broadly growth year. make year-over-year. line now performance double-digit the in Competitive acceleration combination encouraging we compute a point tailwind favorable and pricing year storage IT storage did dynamics, and fiscal results. compares. with to the some year. was we campus quarter of Americas traction last Scandinavia. basis in and driven benefit revenue HPE’s headwinds, in

double-digit server XX% and constant almost grew China delivering Asia-Pacific in revenue in solid Japan currency, core with Australia. growth

of key year-over-year and X.X% XXX The basis points points and from we're down XX.X% XX some Turning basis Non-GAAP was year-over-year profit cost later points the in gross basis of quarter to driving sequentially. and sequentially. this improvements still XXX executed margins. savings operating was able We incremental to Next, basis XXX margin points have more but well to accelerate year. HPE work do down

remains from items in leverage last but diluted to signs our until which offset January share pricing per still revenue is two above some but seeing challenging of is cost operating with We're year. as increases delivered of moderating, ability to seasonality, the the environment large $X.XX impact as customers. DRAM, more additional also associated normal didn’t growth. those $X.XX through due few spike strong help pass We Non-GAAP with outlook showing net factors. are of QX to These $X.XX considerably earnings well year-over-year sequential increases some previous late a of improvement they

$X.XX tax discuss in rate by with will reform shortly. benefited detail that First, approximately tax we we from a more lower associated

program. benefit Second, favorability the our primarily revenue per indemnification primarily growth was by expense Non-GAAP than other $X.XX tax better net share savings. adjustments, our $XXX our pre-tax income HPE was Next above restructuring amounts of amortization prior tax fiscal about driven expected, of of GAAP sheet with $XX and $X.XX out-performance to per to related adjustments $X.XX of and separation by due from million, net $XXX reform billion. provided remainder our of to 'XX hedging due valuation income $X.X for of reform million exchange by allowances to diluted and acceleration intangible balance assets The tax the including tax outlook transformation non-cash of activities. diluted cost primarily share offset income to earnings and million, charges associated strong range $X.XX excludes earnings some of tax adjustments year previously foreign

switching, lastly, business Besides investments This to services; Edge, and how more modifying the and including segments, we’ll that better transferred we manage into accurately year year reflects how LAN, structure. Hopefully, which IT, be stock networking results performance. restate reporting unallocated saw corporate reconciliation Hybrid Intelligent align and filed datacenter week, from to year for by and also costs some last other compute, everyone three new we 'XX segments includes Before 'XX primary compensation corporate financial go-to-market to and segments; expense services. evaluated campus in includes fiscal and X-K reporting the new I you I remind results and the Edge to Pointnext; business reported compute businesses internally. results and included 'XX the wireless reported which business, are with the storage, reporting tables fiscal wanted discuss fiscal the branch we which structure Aruba

costs to were XX% the businesses with businesses with attach to elevated recovery up sequentially. regions. X.X% revenue XXX across up as XX% Nimble HPE up and revenue grew operating IT, basis made results Americas basis our points with Compute Next double-digits our was expectations. we all in Growth drive XPAR growth momentum cost leverage in by low We compute XX% turning saw server The year-over-year offset a Now XX%, at driving sequential quarter. performance and Storage as growing Operating business, and hybrid continued by converged driven down improved constant year-over-year and configurations richer and to XX value in seasonality our organic from go-to-market In and currency all Tier AUPs executed the significantly SimpliVity is driven synergy by We margin changes and result sequentially leadership from X% business. margins growth in business, last XX%. high in line was over by year-over-year the performance core the of continued growth. XX% to with strong well was year-over-year. the the revenue saw and revenue excluding up growth X. XX% on normal continue XXX% acquisition we hyper savings in commodity higher. which benefit points and over decline returned

storage, Big been All-flash growth has double-digit year-over-year. grew We five quarters. growth a driver Data last the arrays over strong which also saw in XX%

up more up quarter. consecutive the total growth execution. with reform in external attach good in very declines. unit driven disk. sales operational for with revenue and intensity take We sixth were by was X% also expect growth Overall, revenue higher share Datacenter orders was to flat offset as hardware well Pointnext business, our to than continues some XX% back networking services

our XXX business. ongoing currency. install closed and X% declines legacy in constant orders XX points sequentially Edge, of push since revenue a some few to next from that In up base in and renewals up weakness basis points out the and were was down Operating However, were into deals year-over-year due quarter down margins have Intelligent the X% to X.X%. year-over-year basis in

also high we’re Intelligent accelerated growth the that a benefit the growth to strong year quarter we to to Wireless While in a in LAN the for Aruba a lower been the to in product and switching and tough rate making by us X% impacted this Edge, of the was our market Aligned fiscal slow share and opportunity. from the investments QX, compare given wins leadership pivoting in major continues strategy significant business were sales campus wireless managing Aruba pull-through have go-to-market gains. R&D position have growth disappointing with start grew that due with 'XX. acquisition. of results first given

growth year volume the prior strong a of services as the period. as residual with somewhat and to X% Aruba was revenue to unfavorable have and in the was was those up driven with improving and quickly. attached XXX closer goal improve by are due rebound release driving up to points basis constant-currency, we business. X.X% we debt direct to X% pipeline Financial year-over-year Operating grew year-over-year Services direct rates strong by reserve in an declined services indirect X% confident profit will However, solid our in business. Pointnext. business bad revenue compare offset in our continue sales HPE declines in Financing X%

negative the primarily linearity. in million million cash negative of with cash sequentially We flow turning million XX including days, repurchases. $XXX of driven increased cycle payments million expectations. to $XXX conversion purchasing flow. during days six by $XXX shareholders $XXX was Now quarter, Free dividend returned The share and to to cash and line

net billion. We of operating also $X.X ended the company quarter with an cash balance

provides us to more strategy that cash HPE impact more competitive reform I reform greater to capital mentioned. details makes Overall, how on peers and Before to tax I our tax will cash the foreign management with outlook, Antonio flexibility. some move wanted and provide updates the previously the recently

this to with items rate fiscal also calendar to expense minimum tax be financial transition our quarter, fiscal minimum before increased GAAP and tax non-GAAP year, included tax assets that the in we XX%. liability which tax non-GAAP Tax expect not the expect saw tax new our to foreign our had we a will 'XX XX% reform, and to the to we're be the cash we expect you non-cash our tax to be only offset to that Therefore, As year fiscal XX% plus began us perspective, attributes. to several end rate related subject tax From foreign fiscal 'XX, given enabling for access tax has to of offshore, 'XX. adjustments year we flexibility. year year given Beginning subject more to XX%. reform 'XX balances deferred

to we of year plan increase of 'XX. be fiscal billion discussed, expect we $XX.XX our and QX dividend form of fiscal to and XX% in in starting weighted to the as be will so may share, year Antonio will As This fiscal as $X deploy shareholders between $X.X per year manner timing cash current our the more $X.XXX, will not from that to repurchases fiscal quarterly share efficient in in a The an 'XX and year but excess include dividends repurchase end 'XX 'XX. share of to over our return buyback linear. repurchases by year billion this well shares

will we allocation ROI to framework. based always, As our use continue capital

a currently While grade this capital take existing we'll investment M&A. to continue approach to to important also credit our and is retaining rating disciplined biased is returns,

$X.XX by factors. on We're Now for year to turning several earnings outlook. non-GAAP our fiscal outlook based 'XX our increasing

a rate benefit we'll tax see a associated lower tax reform. with from significant First,

Day. drop fiscal guided QX to 'XX to Analyst expense $XXX hedge and program now in OID interest year previously expect million given rising Second, hedging rates, our million from we sheet in at U.S. only due benefit ongoing versus be our the costs balance $XXX

be expect the of repurchases end we towards incremental share benefit likely that the some year. will minor Third, done for

in that Lastly, through the Antonio passing incremental that outperformance operational the investments are be employees somewhat offset by our we will in QX mentioned.

diluted we year to share As net $X.XX a per $X.XX. be diluted we also and net expect non-GAAP $X.XX per earnings expect $X.XX 'XX to of share GAAP result, earnings to fiscal

share For $X.XX expect and expect be diluted per GAAP share $X.XX QX earnings to 'XX, we GAAP earnings $X.XX of we non net diluted $X.XX. net per to to

We expect of flow billion 'XX. free fiscal also continue to approximately cash in $X year

like So remainder and pleased very to overall, Antonio, the the this forward of I'm I'm executing looking performance quarter, with year.

So with that, let’s open it up for questions.

Operator

Thank you.

begin We [Operator question-and-answer the will now session Instructions].

will question Please first ahead. Huberty Stanley. Morgan The go of be from Katy

Katy Huberty

you Congrats future on The in that you upside a that think and quarter great and saw quarter. strength into implies storage or server this guidance don’t storage server the quarters. in continues the

I won’t to So manufacturing that year? the the follow up in suggest in the storage think sales XQ that force. can from some you of that onetime a there into transition, And were strength around whether execution helped What catch you fiscal I on up. wonder are comment some then continue necessarily just and whether benefits benefits later the one-time you have

Tim Stonesifer

Antonio. me off then it pass to I’ll start Let over and

have. typically of X related would to execution. that’s if X X to although the at go related So acquisition And there’s stronger is is to X QX think that then SimpliVity. hard measure, foreign - and to of XX% better growth, of I There’s about the I’d market points say exchange if backlog into what backlog, probably about probably points we did and with timing we X and to always this than Nimble and look you say acquisitions, a points you that

for So QX. those are drivers the

think As the you things. I just two you think about year, total about to ask

had as all, recall the back revenue ramp particularly back 'XX. of big the you the year, in half we First of of in year in last half a

’XX, And we take other the levels impact that normalized they account into as is a then as tough return be So normalize thing get that’s backlogs as to more to have to going and an well. will will into compare.

Antonio Neri

will obviously compared as be and they’re year, QX, to the in I pricing. progress was normalized of because will be more add had throughout only year to QX the cost just the impact the going AUPs more DRAM the we line to no last because the that DRAM pricing

So we but have that’s really we said, of factors to value compare our one execution. the tougher focus in. is as growth a But to obviously on volume need to Tim consider

equation, value discussed and improve that the the and we the On on volume profitable of obviously side of continue And before, cost the we on synergy. high hyper pockets ramp around focus on particularly performance to structure. growth of compute share converged

Katy Huberty

it you consider just return, into then And as take terms debt right the in if $X think of deal willing you billion position to up are capital follow about do doing of how when or that net a business dollar you deals you the whether limits comes a from multibillion M&A the along.

Antonio Neri

even we now we and to laid in the not obviously organic will is the likes disrupting the Aruba least in M&A is them to opportunity we technologies want what that But ourselves emphasize smaller we about small three talked we valuation, I'm approach; flexibility it. and before, the or right in financials tenure in ecosystems we and own remind but here. focus our is dividends. her think same right step last We very an biased in obviously shine committed let's partnerships amount the about right invest the our share And our invest increase to and talk our M&A, through out can Meg to right are that obviously enough innovation. apply second have; talent, we right the consider rigorous can there through approach disciplined bring based acquisition in go I but the our if dollars ROI there; with appeal, looks focus our this dollars and obviously on And emerging innovation we solutions have one when our where do is than like, the on go-to-market then technologies the Innovation where that. that. companies is to of repurchases

allocation. capital really now, ROI our focus. we are right that's So committed But based to that

Operator

will The Bernstein. next Sacconaghi be question of from Toni

Toni Sacconaghi

so to add add lower and starting quarter. I OI&E rate just double than lower previously beat $X.XX the not the would The and $X.XX I&E guided by QX raise, clarify rate this counting counting. in $X.XX. And should wanted lower tax and that's $X.XX the then guidance tax better your not I’m you so QX, -- in

your than those add incremental to $X.XX factors yet into that’s raising $X.XX. just something and as your would you we be that are that by weaker EPS So had you three or alone reading making investments Should you’re expected? guidance

Tim Stonesifer

take so through just let You about it. until we me had me how think you $X.XX, up

right, the $X.XX rate benefit in that OI&E that tax call are about $X.XX. The forward, had we $X.XX. the You roughly that so think carry should is QX benefit

improvement about loaded you think through the two. backend penny the loaded or those flowing QX commitment, what end our will so be a If buybacks, fact we’re already maybe front that operational that probably previous given we share did are And the incremental then the to obviously some with need Antonio in Next from investments we spoke accelerate of that the XXX(k) we or then fund accelerated of and and $X.XX about. the that exception the HPE to employee fact $X.XX the see savings programs

prudent time. the I this at think how that's in point which about is $X.XX think we raise, So

Toni Sacconaghi

been flow what cash if have free I is or on year? I'm reaffirmed And guidance you've it your outlook the can comment whether think then billion, sure previous I your you missed that? for for $X not

Tim Stonesifer

see in same still walked the and there that increase given the a do, we again, performance. is the only We you the rate as our cash But I cash approximately QX was real that is half through, about work the it And is about talked to the tax reaffirm will Meeting. even that with with so the billion, no than think prudent fact you should tax that if effective revision it's tax Security rate tax upside the more of stick benefit Yes, operational at lot and Analyst than a in billion perspective, some that still we know our driven. of there. $X range that we to felt OI&E lower just be from $X did $X.XX

Operator

ahead. Deutsche The go Bank. next Sherri question be of will Please from Scribner

Sherri Scribner

and you quarter an clearly benefitted this You easy guys versus from saw very compare strong last growth year.

how your guided am we the your you’d at you’d to think right X%. that about year. to as And term this I to Analyst I that growth guess through about to trying I something opportunity growth still think growth seek the I for to way is Day like X% business the year? think outlook commented think growth your Is business? long move you for understand the

Antonio Neri

was are we back because obviously financial Security Again, growth. in AUP Meeting. So to the the strong the Analyst out in lot obviously QX but laid of let's increases October see, the saw of at to a also Again, committed market we that architecture pricing execution. we we increasing, the go the

proof have is I QX think point we and results a of right focus. think about I when the the strategy

the year, do. from pricing what value is think the cost to we environment side of the side saw last which numbers. portfolio focus have through volume the And year. house house, look the our we I to bigger think I increases is the as But as to in to going be said But going see to the I different. more AUPs to overall, are of lap we the rates pivot the we're got really growth to are line earlier, the obviously

expect in at don't that this the we So of the year. we beginning saw pricing lift

Sherri Scribner

then bit X.X%. be quarter, about through the for we a maintained And a line on Tim, year? point. you should for the operating How beat outlook move this we as margin going operating quarter maybe low think little assume this but full year margins, about trending thinking to the the you margins question of margins I is guys

Tim Stonesifer

be we But back those talked some you we because business think about And half to reason thoughtful how the on and Next bit we're we actions execute as be favorability. deliberate if the minimize benefits that we disruption. we pulled that loaded. is, forward of low Again, HPE We HPE little Next, see to as being a it. the is very did the point savings. because simplification our will want going had about is quarter This plan to

a I good we there think saw revenue QX in proof the point. was performance

of businesses become then see the a we've hyper continue et be to the those a the we array, grow cost grow course recent it. those as And to the converge, portfolio, all get year the And split. it’d we accretive Secondly, throughout whether mix acquisitions mix higher natural margin should continue done, parts flash envelopes. we should and we of more as right-size the of cetera,

and continue a So we'll low the be throughout will then course of point QX to expand margins the year.

Operator

The next Please Suva ahead. Citigroup. Jim question of will be from go

Jim Suva

easier across strong increase if helped look But also right, lot. points it basis did a about sales declined like like math comments, by your segments, talked looks actually we when commented yet which strengthening on they your you then was at my is you costs, margins. of In XXX the margins, course and sales, of it a most is prepared

memory run you why part I see increase or it rates help despite the all gap, prices bridge part, the us some is large can you are help positive So sales sure about us it, gap of am the bridge didn't year-over-year? margin the

Tim Stonesifer

strong I a primarily that's margin pressure strong we did am not driven and said by saw your margin, sure we we revenue point, To DRAM. performance. see

So full again, of ’XX, QX we point. DRAM a it, pressure of until those costs not if you in costs of because elevated have a think so quarter January spike 'XX, do that’s about

the in bit margin QX We has as in mix Edge seeing high performance given the to Pointnext, offset a obviously been that some by little are that’s of lower compared and compute, a pressure cost savings. and also so of performance strong

point. to pressure seeing year. But are course will we expand the your the throughout margins of margins again, So

Jim Suva

so if their Intelligent margin about the services then you I DRAM struggle if like cost would memory But I much correct, my up, both Edge be IT segments, follow why Hybrid And can clarify despite that. growth. as revenue seems down, am would and financial property it impact,

Tim Stonesifer

and a benefit that’s that So that in reserve the bad operating margins driven debt services ’XX of onetime in QX primarily by financial of QX 'XX. doesn’t repeat had we

Antonio Neri

question actually Edge. that But Hybrid IT. in very little There will the say I that the DRAM in is Hybrid all the if IT. impacts of on compute most you is the there, is everything the is part not of have the since And I say will

Operator

The be Please next of UBS. go Steve question Milunovich from will ahead.

Steve Milunovich

HPE into expectations? the remind program quarter much Next us first the forward, pulled savings about and and you cost year relative to Could how you going this from your the

Tim Stonesifer

loaded. related have to $XXX is For end third of Next. XXXX, program, to this year the net remainder a HPE net and is $XXX front of should then is about we about cost of probably program, say again million loaded savings. we that I cost million would And in million because end for then savings net the half first back a the $XXX three total

Steve Milunovich

you on cash And or where to share you as you repurchase in position cash terms Are do of business? go be net the through expect core debt in going increase, there and to be will position. a net dividend come the out

Tim Stonesifer

for will end up positive, a you to the beyond. but cash little we over some neutral, us long-term, from that. cash should think work in if year, we net position, So a this time a take Again, will about 'XX be be through net it position, may bit and

Operator

Please Hall Rod from be go Sachs. will Goldman of question ahead. next The

Rod Hall

with a high the I given follow you Did linearity, little you about with ask up. as you backlog And the existing quarter, see well? quarter backlog wanted bit a and backlog. have then into could I the exit high came if comment on

Antonio Neri

we I think had strong execution.

to exit we continue we quarter. expect and and the a end pipeline, above strong momentum We where normally the slightly by build of

importantly how good exited pipeline. most we and about So we about feel our

Rod Hall

Did after there that they as still spend the to see to tax what your are planning ask wanted people or quarter you at And saves, believe fully the might to reacted just broader do customers bill I end then they have of acceleration be And think tax question. passed? you a the you out do the able go forward?

Antonio Neri

where call the all the will finish Hybrid part innovation that or was I our wireless say have to consistent across strong. quarter, obviously we early slow in we’ll we too we steady, QX it’s the consistent throughout made say IT, of was think earlier And except it. is But businesses. to was it that comment I phenomenal performance very said the because Well, their the liking. Advisor you to inputs our Board strategy, made And the about get to Last are all our actually key there. customers continue we they the was to comment. value where hosted against in same to We a innovation vision, of week, problems, and love innovation. our talk future. We about that and I see customers need UK strategic position bring your

talked we so layers, have the between and the right simplification with me we the we middle regional the in never believe today eliminated eliminated portfolio the people So us we early Actually, have of terms we and we remember position sales, helping that's on. country. the the execution of in

Operator

questioner Cross be go Please Shannon ahead. Research. next will The at Cross

Shannon Cross

to really more bit going business to speak coming about front have Antonio, you curious with learned a expectations, I'm employees, then Thank facing it's And HPE from through. finding revenue employees because overtime? the a line response you. follow-up. it’s currently and Next, cut from can your curious the because you've through not model. are the impacting what I'm in you But is areas I is it as your

Antonio Neri

HPE remind about. the all, all what first So let is Next of me

which the have it's HPE the year about all say, I CEO company, up for doing, from is culture serve simplification, excited the And architected to launch, and the really improve that going what with and culture more, and the actually company do quarter is approach. an And more. first push company. customers. executed opportunity last well transform can initiative this opportunity to as around is where you is execution. of architect fact about we’re What you So this the very is our sheet this to change the to organization can I'm because new clean learned a a performance we me Next pleased establish and to But I we disruption. is no innovation an as summer, new with And the I the the grounds with way the

and is our for we’re not only but way very deliver productivity. also business us our initiative customer confident should importantly reflect performance And most going it satisfaction. the improvements that to So we and in our cost employee critical in savings the are work we and

Shannon Cross

Thank about talked that more you incremental to reform? making be about to with in more what employees you’re on Maybe your specifics are the regard you can you going then you. investments some investing. And provide tax the details

Antonio Neri

in contribution. investing XXX(k) we remarks said, Tim are specific areas. One is as two So my and matching prepared in the in

significantly. need to I believe second that's that approach never paying bonus the our risking And workforce a a moves And think in been market that a and employees. that's is more our raising one-time so benefit benefit structural higher. the for we will employees we’re our versus rapidly live long-term we So that has

whatever learning I the we think is for and assistance So great want future company employees our degrees to our is investment employees. a of to the provide it ability the to put through

fulfill can our they visions carrier. the in they as progress with their company So

Operator

go from be will question ahead. Pivotal Please Research. Lou next of Miscioscia The

Lou Miscioscia

on much go you into then Can than into little storage bounce tie are pricing so you DRAM bit also expected, more and just NAND? the maybe seeing faster for just that, what back on that detail It we had and XPAR basis a side. quarter-to-quarter seems for

Antonio Neri

of we the to the with When And Keegan one you of together and clear made the see XX% sales differentiated talked challenges business obviously had quarter Nimble year-over-year we Nimble in United paying grew individual, us, it some tremendous Riley, prepared an called that. XPAR numbers. our the expertise. we and for stated remarks, the the execution a our Tim in starts calls storage. storage in good has a together go proposition to particularly leadership talked was now I as This benefits have and that off. market from We as one that and the we grew of the XX%. two comments storage brought which And about in of we the under States. in go market, value previous force offering, And out our is we a the in in organic calls, of But

So this focus execution. about was all and

we to time, same bring innovation. the at continue However, great

And Nimble, call now algorithms, came and -- technologies we the predictive we the technologies And brought available portfolio the with in and with that to acquisition. and this InfoSight entire starting we now Nimble preventative so days or XPAR for you made datacenter quarter, these and know, InfoSight we AI that as converged autonomous storage what the HPE the out all-flash.

differentiated So we a offering. have believe we

think liking customers force We have and proposition we very focused have are a sales a it. that value I

Lou Miscioscia

hit on question? you maybe the think I to DRAM want

Antonio Neri

quarter, Yes, see And this our question, nominal bit so passing the a have are these a competitive we become on better pricing. rational, most little it as low and job are to in we increases. to done through. digits but to increases we market Starting some those DRAM, those cost single increases the continue DRAM normalizes pass able

to continue we about available. And remainder be last As year. we saw XXXX, see some then will levels not the see think at the increases I we of nominal what obviously but incremental elevated supply will

XD XD seen. be you but and there're new online, to all from fabs that be to transitions know, As coming will it's

So the we factor for the in our plans elevated year. of DRAM remainder the

Operator

ahead. Baruah will Please The Capital. of Loop be from next Ananda go question

Ananda Baruah

that and positioned be that term, now well meaningful traction? that some than basis really mix points, -- it grow particularly secular the been pretty you've me Tier that And your shift accurate, and business. to good X able have Unix of up hundreds growing, correct for term believe same Window's longer with given in of and a Tim, Microsoft would growth back the guide that circling basis are long What the was be please the what that X%. reason and in were to But which some context maybe headwind even if that’s now points X% out. gotten Server to just Thanks. now I is businesses, I business potential like greater Antonio if guess the wouldn't what markets bottomed the greater than feels you’re the in inaccurate. you had

Antonio Neri

answer the Let question. me first Tier X

the commoditization. As continue call everything, does those are not that compute in buy those on that we the with to rest totally customers we customized what because the of to are deemphasizing we're commoditized focus who just not the we sell platforms. platform mean portfolio going type large stated, customers, That to of

business remain the and to as we peak obviously between strategy, So is headwind know we committed a of XX% XX% that you our that strategy because are which numbers. executing and a was at

number Point versus as see two first as So number of that’s right, half, the inflated half terms AUPs second earlier one. said in the see you compares. we the point I

to that’s the we the second we had half. not As second -- had second you our also XXXX half go fully half, Nimble, remember of And be in in case. now results to going baked the

And pay decided so the to to that said areas compare optimistic am That I will our ability compete harder. focus in confident and and win be about attention. we and listen

see a to one But is which allows it’s experience example, only performance premises. we us. high composable that and solid better synergy, what rolls, in great place to other expect is two storage. been continued on compute, we remember for public the then has cloud call place For two hyper infrastructure, bring And us success performance one the which converge,

So play I role huge way, will bit here think but are as that. along that’s we the at why the we time, this mix in more go point little cautious about

Ananda Baruah

you’re for It that’s it me. Thanks set to I so got much. being well it, that’s up the said, really helpful. seems I appreciate, relative model. like that really

Operator

Merrill next The will America question be ahead. Mohan Lynch. Bank from of of Please go Wamsi

Wamsi Mohan

HPE year, this Just a accomplish that and pull forward or would timeline? HPE alluded the on accomplish the clarification, on you is you Is can forward the just Next. savings tracking that Next within a cost that pull entire just you entire of faster plan your ahead

Antonio Neri

Again, into we're on was HPE That QX of QX. early Next. QX, a really more an

the are or will in it’s tremendous from making progress, to progress say it the with QX. pleased We’re teams that QX early but still

Wamsi Mohan

And times few mix then of to mix your sense? how I your X? us Could you Antonio, trended this ex-Tier year-over-year well. busier, you mean, a follow on HPC server being units about benefiting on a just give us just sense server as Could give mentioned you basis, some a up. some configurations as

Antonio Neri

bigger. and smarter gets configurations These

Just industry XXX. our pro server LAN to Pro called the LAN you leading standard which give is now, an example, platform, virtualized

actually up to petabyte way small half in You configure various the can all factor.

the perspective. perspective, from advancement, So both those are massive from commodity the technological system design

in more so consumption and customers performance. because term they also low buying is a that are power of were question of And rich economics configurations, on

aspect. what that’s So

for growth majority with But but vast the in normalized in growth the to there configurations. the the share side so the grow to same hard scalar, ultimate we call growth We is time, growth. going we hyper to decline is value it’s the units of will the to at and cluster And But has are a listen our mass the down a we what expect mix. what we number, large then of In enterprise, see house the be value terms obviously to units, be is been decline. HPC. come in see give where in let continue of unit These going profitable will volume focus focus our me is, you exercise. believe very emphasize again

Operator

And Amit ahead. go will of from that be RBC Capital Daryanani question Markets. Please

Amit Daryanani

potential is do compute there the XX% to guess the how I back side. about start And bigger a is ASP the you through growth the for mainly how broadly just 'XX? a issues? of think of server for the much versus Could security on guys. units talk fiscal market refresh all that you half you And given in

Antonio Neri

a expect vast the has insight some been I we the AUP the And it's just But growth in view just of and units. where again, say growth in that. will I deal majority provided driven. some previous question that think size I mix

about not are wide think slowdown which meltdown or an and been refresh already the have how we of on about made don’t have and have any any issues, still transition see could in different we’re in refresh future the think impact to think increase call past, refresh, we that incremental other industry patches will at in workloads, whether customer demand. that seen in has But terms And these now, issue. capacity. performance of early to I any we spectra services as Right I think to available offerings. have specific about what HPE in cover this the the some Skylake we

GreenLake. the from upgrades help type product based consumption with programs, are as manage, well we upgrades service So can and modernization of models as HPE also perspective, customers patches those and

offer can XX% premises need they they XX% as stay and on that we let's a more their go. -- capacity, say, you can So

have programs to those all field so and going as and to go our we’re partners to rolled And monitor along. out our we channel been that

Amit Daryanani

or quickly fiscal about. on If tax I any happening that just cash rate I next I'm talked years? realized follow-up 'XX to the in curious the over you is tax dynamic tax in at 'XX. But on cash that the P&L. on change does you the change rate fiscal can there all what's rate, few

Tim Stonesifer

our closer No, over to next be will years. But it effective tax rate. probably doesn’t term, change our few more cash really longer rate tax the

Andrew Simanek

think I with Great, close that, Thanks call. thank And everyone the can today. for we you, joining down Amit. us

Operator

gentlemen, ladies the And and has today's conference presentation. you attending for Thank concluded.

your now disconnect You line. may

Hewlett Packard Enterprise (HPE) 22 Feb 182018 Q1 Earnings call transcript