HPE - Earnings call transcript Q4 2018 | Hewlett Packard Enterprise Company

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Operator

Good morning, afternoon, evening and welcome to the Fourth Quarter 2018 Hewlett Packard Enterprise Earnings Conference Call. My name is Brian. I will be your conference moderator today. 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. reminder, is a replay recorded As purposes. Instructions] this being conference for [Operator like presentation turn host would to I now the call, for Mr. over today’s your to Andrew Investor Head Relations. Simanek, of proceed. Please

Andrew Simanek

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

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

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

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

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

report and to presentation Web discussed the We from comparable materially the based release information Web note on Form basis, at for also October been accompanying that reflects on for on and details. the non-GAAP to in today’s have information slide site. the we XX, XX-Q earnings year provided our has could differ financial reconciliations ended information amounts that quarterly on tables estimates expressed for this HPE’s Please refer call this site on our financial Also GAAP the on XXXX. a reported time information fiscal available ultimately

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Antonio Neri

on a Thanks, everyone deliver concluding fiscal Andy. And call. very year joining QX, another to Hewlett Enterprise successful quarter strong in XXXX. the for Packard thanks us

my as thrilled where strategy. we’re year a and close our our first marketplace; we and in very As the fiscal I’m excited with CEO, stand I’m team about

be all at you should this strategy Our of point. familiar to

IT growth Meeting To We a to are hybrid expand the Intelligent-Edge, first our in do Which in future. accelerating are we strategic grow profit delivered you margins shift Security for Analyst growth laid out in we’ve space; the profitable that, the been in continue portfolio. for of investing in while growth operating delivered and driving and XXXX. a all better

we delivered what said We and against will focused our strategy executing been we’ve on have we do. on

revenue we year-ago. cash tied exceeded operating at non-GAAP, get that a non-GAAP to share over In the the earnings flow said Analyst fact, Meeting profit, per Security growth, and free we

laying fueling talking customers, strong future the We deliver line doing shareholders. in margin we're are agenda, our driving that shows about. Fiscal momentum shareholder XXXX partners, I’m all while expansion, returns, advancing foundation and the meaningful both growth top this of and year to innovation simultaneously and to value

IT achieved which Security business segment Intelligent Analyst full-year, well XXXX is year revenue strategic in our Edge large growth the Hybrid $XX than to year $XX X% our meeting the billion $X.X revenue. with We on X%, above XX% grew I For grew billion. this billion, by for We slightly we over predicted our in even in higher October.

particular in Europe against and traction the that free expanded profitability non-GAAP a commend targets segments, time, in we value prior our go-to-market That over us than are profit. strength the $X.X year. billion, XXXX the $XXX which generating very profitability billion even by as economic powered At nicely our priorities exceed results profit for an growth, drove fiscal cash challenges increase prior strong in geographic over of in Our region getting from strong growth the we of this throughout impressive and in $X I $X.X particular team which their well generating year in operating from backdrop year. million operations enabled more a year. is was year, executing with also cash balanced for on billion flow flow fiscal doubled EMEA. largely of in year This the perspective same to political

we XXXX. returned fiscal to $X than billion Lastly, shareholders year in more also

Our the leadership team performance execution. right we have the driving in that the at strategy time, fiscal year we and right have XXXX right innovation tells and me

momentum portfolio into our strong head expected IT an spending differentiated healthy in have as We environment across we XXXX.

at take quick Let's a look portfolio. our

at it clear our to customers a competitive be mix an as last advance We and October, address customers, to Our to cloud-enabled, becoming differentiation is data-driven and in about the well. York future. edge-centric, product services needs a of New meeting Analyst through and of them this their of strategic we Madrid Security should increasingly the businesses. in transition enterprise unique that week ability to At Discover current our do while talked lot all you also

of Edge need within All the the we is and XX% Intelligent Edge, we demonstrating meaningful increasingly top next branch, data services frontier edge and for are tuning Edge This moves capacity in their that? our customers the compute the to business full-year. from be a they this continue is First, and for data three the it help into Cloud digits, growth. more Edge us. are and compute to XX% priority. to strategic believe real-time. created all And our as So use business is Aruba the to can how doing double is campus growing driver intelligence expect to categories this business we up the at the

in data of in that 'XX with networking Hybrid focus IT full a X%, secret The storage, of portfolio center and solid also compute, continue and includes fiscal our year-over-year year business which coupled margin services successfully business, expansion is meaningful of deliberately mix. IT success to Hybrid point. our on Pointnext Our growth we percentage operating had

Our offerings the for an grew of better-than-expected HPE the still over composable up year. offerings compute growth have incredible run X% rate high-performance our year orchestrate annual XXX% And value Also, were with XX% -- year for value, the to that included Synergy for offerings $X reaching results as we from an we billion. even in compute. shift compute over volume posted X% and volume in growing

storage continuing XX% saw be also are business on growth the business. we in to We very and our focused

operate efficiently into continue in see in with customers HPE autonomous move 'XX, data are year customers strong more platforms and we As XPAR fiscal enabling and value to our to center. our Nimble InfoSight

own customers that Finally, our Financial behind includes them our HPE business core value critical affording and stands GreenLake offerings. model, overall continue HPE offering It operational they a XXX% attach balance capability sheet. and HPE Financial in to trapped is to consume our of customers. piece our our unlock services their every Pointnext serve Services' in technology, GreenLake often contract of Services how strategic a role flexibility for helping

billion our are shows and these will improvements growing for overall Tarek return In We customers we on delivering more paying margin The you before see Packard some to through while we the achieving take explosion are selective in him, are you in for turn moving opportunity our equity. edge, I becoming call benefits growth of let ongoing a volumes Enterprise approaches offer where a financing results on thoughts is short, QX Hewlett for intelligent moment. these the But off. in forward. in double-digit investing opportunity. me powering $XXX data over a see final creating I

the to on market have over opportunity $XXX this market. to four value. committed see $X shift mix volume no from enormous billion. years end know, And you remained capitalize IT Meanwhile invest As sight we in we at billion to Hybrid for

to ongoing continue momentum shift our see We driving is and infrastructure, to composable hyperconverged great portfolio mix. which customers in

Synergy they We for including the Along way. as most customers infrastructure demand where is they hardware. from offering way. and the experience for most date, we application go By billion pay our customers HPE infrastructure, is cloud and customers this our only can consumption trend terms XXX applications and To based how infrastructure, economic more hardware contract flagship with for desegregating experience major cloud elements have the give they use over decide customers here, should other flexibility, combining using solutions than a they of GreenLake on-premises both estimate in infrastructure efficient this on-premises consume. efficient what in pay deciding the it. how let is the we're and has customers they in already platform, software increasing of the how they for of deploy with The like we HPE a the run value, in our $X run benefiting model. total

systems will insights want is more and as Across with to in to to customer the of an recent us center in analytics. reflected the takes of simpler uses putting Apollo learning the seamlessly and data existing outstanding development, continue right customers are where businesses. that their a strategy. first and hybrid customers that’s and all machine platform our our everything their Overall, is and be AI generating customers and professional Big feedback, on-premises, from BlueData, which extending do big in or a has have defined we analytics through powerful acquisition of environments. learning to and a Data the data our developed our able software our we model offerings as By we services, make we're unique data at data, be, to our combining infrastructure software utilizing extract complementary to a the It force area show services recent BlueData help accelerate cost-effective AI, wins. deploy software and in of in performance, transformations customer big large-scale cloud, business, step our and our a One way their machine further consumption services want platform I technology positioned I whether better the data us the and highlight architecture.

also we support contracts, point an access mobile-first HPE example, These two in mobile extensive wireless sometime the products. technique and For access dollar we wireless an is network point system, of there for a create recently Spain most campus in signed grew the entertainment wireless one multimillion our sky. in-flight Mexico. utilizing to for advanced eight in-flight

Santander's GreenLake largest based and HPE on the HPE in Denmark. cloud we had the mobile the For Synergy significant win Danfoss, company with deployment of manufacturing

that ahead Looking will I’ve to a on all great this continue XXXX, momentum. we confidence to build

Intelligent with continued this balance of from work resulting growth Hybrid in accelerate Next, all continue will and deliver margin cost Edge, profitable a in We our expansion. growth savings to IT, HP

formally to like Now before call will I Tarek first the turn to as a his call welcome CFO. I over earnings

meet to to his you As so and the significant very speak and to Tarek? his Tarek now, we September joined Tarek fortunate been and up to in have you for expertise, customers meeting. and of financial by to him and and quickly industry HPE's that segment know partners can speed our from commitments Analyst continue on we us many deliver We're mindset team continue getting rise the Hope XX knowledge. jumped at will to financial Strategy have customer for shareholders. and on our value and centric right insight opportunity Security benefit his the

Tarek Robbiati

first extra role needed Hewlett Thank me is at the HPE. other great new time the cloud capabilities to It's CFO. for potential assets privilege report full earnings Antonio. much, and view, very a for my in Packard suite In compete real No to of my continue. the channel has company there a as across enterprise quarterly you

with technology But month thank into the a fiscal would handover got and in be team detail, HPE's of half the before great take results share opportunity a for part Tim we hard phase the very company our transformation. to the next customers I During strong excited performance you Stonesifer year as to of my and stands us. I'm role, leadership between into our led behind 'XX the HPE to predecessor like I this work

of financial quarter. the throughout be results ended fiscal growth, flow. Slide strong. improved for Now the our share our business slides the you 'XX. will earnings let presentation momentum referencing better year results from to highlight fiscal strong with with significantly me QX very I with will and revenue year financial Starting better-than-expected non-GAAP-earnings free our margins, see you operating We one, the robust cash the that were

fruit. portfolio XX% we into are of be growth strong also was And a operating a in free demand in healthy mission-critical from Core resulting expand you Tier flow by remains and 'XX at up expect holding rational was demand peaked and are EMEA market starting Core be commodities headwind Top healthy is at in billion, double-digit the Next The pricing XX% Performance systems year in Edge X% currency. Intelligent have all X to mix, cash line X 'XX. constant down. pricing our come shifting in to to Hybrid and and continued and currency growth results on margins up operating exchange U.K., costs strong less now heading to Our gross with which Slide customer in and said driven fiscal spend that $X.X margins. environment demonstrate is constant onto the bearing year-over-year for and couple remains Americas attached of macro grew we at higher remains accelerating in growth was heading driving by competitive, into improving margin and Italy. cost double HPE's for points decline. continue favorable geographic constant robust of was to Looking and in HPE Edge fiscal we strong, our fiscal foreign currency. Having offerings. DRAM and Intelligent across Slide constant Compute segments Regionally, continue Currency through profitable both 'XX line but and our X% revenue year-over-year Intelligent prices Revenue globe. breakdown in The by rates are NAND of in growth points excludes quarters. strategy performance in two up continuing better IT a year-over-year. last demonstrate expanding unfavorably give with in X performance year across to the was currency digits with in EMEA compute, solid growth ability the tailwind XX fiscal by currency. an expect operations quarter that the to that, our who business of drove X% the France, revenue 'XX. in a portfolio year X% impact X, flow to closer punch XX%. to revenue cash total basis continue revenue year profits growth and Edge, the quarter. to a be services growth grow perspective, grow that execution continue to IT to From in notable move

our our a X% takeaway we sustaining 'XX. China growth it in take Growth perspective, profitable year won't our grew from you revenue offerings and And shows strategically Compute, revenue every our HPE down the our market. in was grew on year performance Asia-Pacific focus towards services in across our portfolio in notable Intelligent business business through is constant Core margin, fiscal within orders currency that Overall, performance with over due APJ, pivoting by quarter. quarter excluding which compute with value robust our but Slide Hybrid business X segments fiscal XX% in in we're higher double-digit continue our We the was grew XX%. in segment. I key X% strength to 'XX. IT, important In the operational share maintained number, higher this in results X% growth where winning portfolio confident services by improve we're mix all and business robust Pointnext, Edge as segment. in China value up in solid matters.

higher to growth. in and XX.X% years delivered of XXX of and year-over-year margin has an on Slide profitable was this success points deliver basis initiatives. and operating cash Next points operating higher result HPE offerings us focusing margin HPE story margins basis of we growth XX margin portfolio significant and XXX sequentially. up we shifting drive benefits towards to to continue year Next operating by IT, XX was Hybrid come Next a to for expect flow value, our Gross points the drive to margin leverage XX.X% Non-GAAP and continuing points on margin Turning HPE X, as been expansion up reaping to incredible for year-over-year continue expansion basis basis sequentially.

consecutive tax Slide our X. marks of fourth we in fiscal high-end the outlook the year a QX per of $X.XX to 'XX the of Non-GAAP of net quarter high-end on $X.XX share operational previous rate. was above Moving and other diluted earnings per exceeded $X.XX strong share of per to $X.XX outlook $X.XX to provided well. would and lower-than-expected performance, to our favorable due expense Reform This from to per the of quarter. Tax GAAP range. of this range impact, share share, to we primarily outlook this metric our our have U.S a earnings previously below which loss, $X.XX was the Without on net drag $X.XX exceeded GAAP was a related impact as outlook earnings diluted over income

and Intelligent units, investments constant and X. sales to was LAN strength Operating manage to turning Intelligent regions. basis Now as grew due XX% Aruba R&D all for growth leadership Slide were product of including points Compute. this the across with significant segment in and starting up year-over-year and Edge In XXX Campus XX% we XX.X% in the revenue currency strong Edge, with in $XXX the business market XX% growth to Switching, year-over-year down margins and across all on ongoing Wireless continued product share Edge business opportunity. categories, the billion continue

due Network of ClearPass Access Switching continued like our platform was growth to of or strong the an business saw XX% Compute Aruba Secure digit business. share We recording Control. our audible growth quarters continued in Edge up services in Campus installed consecutive seven triple gaining software and share base on attach gain

services which revenue, chart, total small years. upcoming for represents see portion a Aruba's As potential the of highlights the from you revenue today can a great Aruba mix

constant Moving XXX Operating was X% excluding Revenue XX.X%, points in up points on was to Tier up and up up with sequentially year-over-year margins X% XX% Slide our X, XXX Compute in basis and and expectations. revenue X% were basis IT, year-over-year Hybrid in currency. line year-over-year X.

a reminder, ago proof which our As years commitment portfolio XX%, was is improving our profitability to a and X our Tier is of couple portfolio under of compute now over point mix. XX% of

our servers This Our run growing and synergy higher Also again once drive excluding up XX% the high-performance and year-over-year. was which margin which our which by momentum pricing AUPs currently has XX% our Also triple configurations X at strong high and a services by category, planned compute, has Tier business, richer by $X was up higher with higher and growth driven continue XX% than up we extent core digits in at tower. revenue passing attached in servers lesser volume billion mission-critical Compute GenXX over rate. over X, mix to portfolio, attach Value Tier digits to XX%. was better excluding which driven our in compute was elevated continued finally costs. Revenue rack single includes through of maintaining and total in business was growth increasing power hyperconverged over up DRAM which

to go-to-market our we're growth As Big embraced with Entry execution. year-over-year, up digits revenue solid. had and analytics was excluding year-over-year quarter continue will announced a X% as heading X embedded customers Tier storage unit growing improved we unit further acquisition Data was InfoSight we 'XX. predictive from Storage confident another structural recently AI-based can declines at offerings declines also storage quarter offset increases AUP XX% into strong our BlueData. which of intelligent with benefit this mid platform to moderating expected, that fiscal year and our single moderated

we XPAR and in to full have and full-year flat our the Looking normalizing exit but X%, we forward market. exit. portfolio would overall our the X% from across continued expect was with up for share revenue our advisory gain due are business, countries Nimble to pleased Pointnext and been intentional on 'XX, and external low-margin those year-over-year country services basis storage in HPE professional declined fiscal into year

operational full-year higher our basis. was If margin revenue on a you at up business, services look X%

year-over-year continuous services expect HPE orders offerings into favorable consumption offerings which and this services fiscal intensity in from at we grew operational from our year as growth based Looking a value our have currency we with rate in quarter. mix 'XX, XX% see orders that constant better GreenLake,

strong declined the Moving a one-time year-over-year to X% to currency Normalizing Financial prior this due X% X.X%. deal remained to revenue was direct and constant and Slide XX, regions up points solid in our XX business. with margin in X% year-over-year X% was in lease HPE buyout, Operating one-time Services buyout basis year-over-year. growth across large increased year-over-year Financing for volume year all revenue up period.

to for with pleased HPFS accelerate the business come. to and performance very its look are to contribution We years

was In we and flow mix be we is this been consistent services in want Slide cash better from we as QX year fiscal $X Now by announced on turning Cash cash our portfolio prior at seasonality. higher fiscal operations compared and improvement win. HPE and to in billion expectations have we with shifting to cash significant to $X.X billion flow year $X.X to growth free XX, in a with our attached. year. to free flow has flow where driven significant Next billion line to 'XX, SAM expect year That where 'XX, margins

increase, XX% billion $XXX the our exceeded target year, fiscal flow billion use in which cash With is years particular our with quarter the we We where our to primarily emphasis dividend 'XX. in QX, we shareholders management This previously expect of a the continued cash QX. shares payments. also million $XXX second cash year returned strategy of part We and we half for capital quarter. to and to $X the fiscal seasonality in first QX, respect of be our prior significant capital on dividend to year includes the generate similar million 'XX, then through in buyback announced totaling repurchased during announced $X.X as $X.X the and of billion return plan in half

Slide we cash remains the ended our net as operating and company balance billion. Finally, XX, from an quarter can balance $X.X with strong see sheet of you

let return billion, which the returns 'XX, into our Looking to shareholders. our fiscal our $X.X thus on is fiscal $X year it from commitment that delivering now can outstanding program the 'XX really Antonio to billion you year an Slide but expect XX capital of see recap seen we was approximately as provided year through me here performance results. year remainder quarterly overview, Fiscal you’ve XX. 'XX

a of at above $X.XX X% the full-year, to flow compute at $X.XX, revenue came Cash over edge operating operating notable above by For demonstrates XX%, margin outlook from value storage and cash XXXX we of with in have X%, original execution of In at full-year over our billion, free was commitments revenue, a summary, grew robust. significantly profit, fiscal basis by we're SAM at above flow profit strategy non-GAAP year-over-year XX% in and fiscal 'XX guidance. growth in XXXX. XX%. we growth points 'XX growth that delivered were and year X%, which line and We up we flow operations. far which HPE outlined a remains offerings, grew This non-GAAP a year services Also exceeded our XX% XXX our with EPS and based mix higher SAM and XXX% in above our of and the year-over-year, services Pointnext right while operations our business. operating higher cash grew attached communications. at Next, our well towards delivered with $X.XX non-GAAP well recent our and value, to $X.XX better margin of most continuing of from recent outlook billion portfolio our We $X.XX $X.X pivoted came executed year-over-year year-over-year consumption $X levels

Analyst Slide our more worth to fiscal few encourage on reiterating a meeting, to at for of 'XX outlook. this points our Now outlook turning for provided recent representation It's Securities would XX, for outlook year detailed you discussion I that we and our review call. a

our year we line currency X grow to to expected we fiscal X% by lower 'XX margin for and expect our 'XX Also fluctuations. revenue non-GAAP top grow operating business perspective, to fiscal Our year X%. adjusted Tier profit

our As SAM. a non-GAAP a and our be non-GAAP removing pension Consequently, for 'XX fiscal better would and $X.XX. we nonservice accounting finished we in costs our reminder, pension We from will adjusted be benefits than flagged what EPS XXXX year taxes the year results.

is EPS year forward, year. guidance remains Looking share. our $X.XX to a EPS and unchanged outlook our fiscal share per diluted prior the $X.XX non-GAAP GAAP of X% to In earnings with improvement $X.XX 'XX net $X.XX per for over

QX expect 'XX, diluted to $X.XX GAAP and non-GAAP of share. EPS we $X.XX $X.XX for net Finally of diluted EPS net $X.XX to per

with So, overall, the I'm pleased fiscal full but performance not just year. the quarter very in the

are and and that We let's questions. execution the open to right it show vision it have the results we With where up winning matters. that, now

Operator

Huberty first Today’s Instructions] Please question ahead. Stanley. Katy [Operator will be Morgan from with go

Katy Huberty

afternoon. you. Good Thank

voice. the about Sorry

two Just once. ask I questions, quick will at them

Thank the call the demand you ASPs. mentioned a couple going in The first in are Then that growth that's is you. that how units and expect robust into everything those signals confidence year. would that you on breakdown the server times next given that you revenue in Who the environment. continue between quarter give you macro

Antonio Neri

Hi, Katy. This is Antonio.

because the first answer like value why -- to as second managed data be the confident to I’m requires amount and others, is I to question you regulations obviously all, extracted soon managed, that hope are of stored, possible. to And be will demand see about are soon and we is curated, demand creating, be be privacy, we their as That and generating. data macro environment. guy is driven by we customers from of will First the I ongoing obviously

catch-up the actually, has And function or data. than to growth a at which outpaces if look the that growth sooner it's the compute you rather So data later. charts of means the compute growth,

data be computed continue as in now we mentioned and this years has vantage means from generate X% the data as that that history. utilized. twice the before, generated That of amount long So to I point, going from only two my of data grow to today to data has we’re human and been

The not utilized. is other XX% being

last few I very and see demand So in quarters, this point the time, the we the and I that good and continue. point that confident ongoing that will in at momentum we think in from about feel have

of as AUPs, terms before, is the said all listen, In we structural. server

attach. if more computer we actually that will And that's structural is quarter the is the option mix matter This shift more all along. mitigated single-digit this see now in permanent is AUP to although the low structural And DRAM being you changes AUP said we and ago, in as these add quarters platform and declining. decline declines price elevated recall units of exit But GenXX, go still I drives very XXXX, we two by and units. happened will servers, therefore, rest more options the what driven the which then here as there, fact are started to as ultimately continue the exactly

Andrew Simanek

have you, And question Thank the Katy. next please. Great. we

Operator

Yes.

Next with will Raymond from Simon ahead. James. go question Please be Leopold

Simon Leopold

the in will space is are any to now. into you this the I server complete? just guys. changes markets, dynamics know the it's macro come back how could with Dell portion expecting imposed EMCs see you And just you of a wanted -- then and search when the considering competitive excluding is in Hi, speak hyperscale you and with much if to in then the factors plan integration I there, its about public add other see trajectory how the and by the

Antonio Neri

data triple with in grew If high business, look the volume infrastructure mean, the grew business volume software-defined I hyperconverged platforms customers at digits. our performance that year, these optimized the analytics is from that academia. actually services and the value which very a business good XX% grew XXX%, like that business, solutions and I shift by When billion rate. All our you looking driven business specific workload because is at these If deploy for government, at the strategy $X synergy run Yes, deliberate grew we are a XX% architecture on-premises Operational that's is and it X% oil and big higher drive HPC gas, despite I for. business, and and have grow to our weather, to Services. look value business but already now specific value, to attach that’s look perfect year-over-year segments our compute against

that go-to-market we have shift everything incent as believe that load sell not perspective, continue continued as to the actually we to is because just from gone to our -- people continue to engineering well from there go solutions we so the were that the going And we that’s model but optimize. is perspective, grow. to deliberated to And way to

good So I that very feel on-prem, we about expect mission-critical that and applications. infrastructure cloud continue or whether to its

mission-critical Actually very which our like is XX%, fact SQL, grew workloads or business that very, In Oracle. or think strong. business HANA about

about I So feel good that.

X X we our term business, Tarek's And than it the Now margins XX% be XX% that to we’ve was no number be of years two wanted it's with business the or almost of the made in and that Tier least now the hyperscale, comments, ago. associated or there used to decision made of better less was there And make. to about we no business postal been to the because that. delivered not one of services

of XX% week, telling we that customers my focused very than the here to profitability with executing. more in or we're of per proud and billion capital growing our share, cash every first revenue am we that's our listen listen Madrid, had HPE us done coming are path. $X of with XX,XXX I'm earnings are validating or shareholders. high customers are single right strategy company day. strategy we're on we returning at Dell, we on we team, I the We're a And single-digit. are now in discovered Last the strategy year expanding the and So we’ve pleased and by and certain what

Simon Leopold

Great. Thank you.

Andrew Simanek

you, we Can please? next Thank Great. the to Simon. question go

Operator

Yes.

be with will question from Bernstein. go ahead. Please Toni Next Sacconaghi

Toni Sacconaghi

you. Two please. Thank questions, Yes.

if you at on tariffs. wondering impact comment I’m can of all the First,

there XX%. benefited you X, by in, price to and the increase quarter? pricing I'm wondering continue increases change advance see in the you of Aruba of you you November please. tariffs I And would price Aruba on increased if pull that, as were kind comment of Could think any did in that in on

Antonio Neri

Yes, Toni.

in Remember, increased they any we tariff done. four faces. competitor has U.S the were prices yes, So, like other

manage The first us. we that two no was impact faces it to

because you’re follow-up on we exactly is But the talking going price no to prices last about We happen the The Xst. is the XX% saw uncertain increase the And you outcome negotiation. the face January see of we XX%. what and one increase November of third as X. on few the at read, they're expected that days

benefit incremental was there for QX. So no

line. bottom the that's So

tariff but of pricing these obviously whatever As two side, the the we’re play, already is aspect on new in One supplier one is new comes the working it. the other side.

and So anything. to we with to no to is to suppliers we makes out continue what XX% the have to of negotiation, XX% the work consider need options. long-term because wait obviously it what’s sense strategic to A chain but you happen with here, other or supply our change option figure

Toni Sacconaghi

double for support value, Thank don’t you maybe specifically and I it apologize the that. I’m the I growth high-margin with Okay. largely are services the digits was commented unit missed impression it you. on And in down again 'XX? single under understand the so, I operational I that but I fiscal you on Thank was And unit to this believe wondering, year, just is QX? services then down really to what services growth And support think that digits quarter if what move mid I in operational or to and think correlated and why? realistic can growth grow for the

Tarek Robbiati

Right.

script. I QX operational course they pulled QX. my of orders, respect year were through we with In overall, were fiscal into down orders X% orders up the services to the the services 'XX of in mentioned in OS So those as some as

in is year of thing fiscal the drive that our in what result forward we to fiscal year categories Antonio has we’re shift in with the one now to a growth continues respect to category higher of right a in said Moving are strategy. expect factor mix 'XX, selling, that Toni, 'XX services do with services We as that products they driving the OS attached.

Antonio Neri

a I of to services operational or average of a want unit. also the intensity price another what ratio the the point unit Toni, one the Yes, to thing, call, we the, but percentage make units rate that is remember correlation is is

can use right. just units, So you

with use to services the components reality of as the And AUP ratio. reality have You supporting the component with that the is associated penetration that. rate goes that the as more goes on side, Therefore platform. and in intensity that it up, the compute you’re rate

a why bookings as through the is orders we that confident continue in which XXXX or So grow are our more services value-oriented. to we to IP, shift that’s of blocks will operational continue

Andrew Simanek

Great. please. Thank you, Toni. Can next we go the to question, on

Operator

Yes.

go be from with Next Cross Please will Shannon question ahead. Research. Cross

Shannon Cross

and Thank AR cash you well as I of flow cash very bit cash uses from AP flow. benefit as a were inventory. talk operating want about much. Both free to

maybe If can there. talk about how gives can some moves that that then and guidance but for reminders I higher the some fiscal what's nonrecurring XXXX? or a you provide you about just year? bit your know year hit we growth the about the guidance, of And you next if reiterated next think should this you comfort year

Tarek Robbiati

Slide quarter. you inventory versus So refer cash of the can the flow the cash me specifically one is to trends flow and with operating presentation respect in on on to wanted The you to that free comment the role total XX trends. the thing

movement the operating you is own fourth inventory. calculate our flow out exit. 'XX versus look to factor and manufactured flow cash quarter growth The first have our profits why operating very to tangible expansion of We the for flow in is the sources in in products more the that's see the the operating 'XX to best free in overall have free sold cash margin the quarter of the way at growth cash very, in you between and impact free when

is in delivered there flow, for fiscal the we program. You excess we at driven lid close and the we on us. was more OP what That $XXX took on with tight a fourth the million keep standing in stands that say 'XX we we to in year will of in first profit. that charges what beyond. that the quarter for operating growth to in With in in the to that that there Next free by the $XXX respect full-year. exit free benefits 'XX year flow. behind nonrecurring of cash is amount million of can finished the at and is SAM the item that And foreshadowed be HPE suffice behind we 'XX rate XXXX cash overall that observe, quarter to the And growth whereas, benefits million the and example, will in sustainable. being this That recurring XX-K run HP but days, That is for fiscal are upcoming the file October $XXX

take a and XX-K charges, two Some all fees you'll the nonrecurring other file in IT we costs, some that one which that upcoming weeks. total consulting of $XXX is million the offs will or about see give were that breakdown in

Antonio Neri

exactly point. where been flow said Next, we about portfolio Shannon, vantage executed recall confident we about say, it I I and good 'XX will grow have we’re you guidance we mix and that say really the we’re through and shift, XX% 'XX our And will at has all this 'XX from get 'XX, going to the we meeting by double committed very leverage free XXXX. and mean, because it the year year-ago that that Security I we’re as talked to HP and and cash Analyst between we that’s going a

Shannon Cross

of sort if idea later bit talk of some you curious And China a of us future pressure I'm on declines you. as an away this year-over-year the walking of then we the you/ magnitude the can what foreseeable specifically more quarter Thank seeing and you're saw you’re there? profitable going contracts? just to what basis walk on or the about give you there Thank is from on

Tarek Robbiati

is remind us a so in Yes, China. for with model self our let's

our group, joint a joint new years of products the which venture, a own new company the actually we that XX% have that or and to couple the through resell is only unit HXC, while although We HXC venture sold HXC of we we ago.

right. so make own choices And they their

profitability they decided and hyperscale certain as were balance there the including portfolio demand and participate. growth to to in trying not they’re So areas of

just perspective, sell you and that kind an them will. through if from of own we So are choices. actually they [indiscernible], make their We

ones we work ongoing on that them ultimately are decisions. those basis, because So with make an they the

Andrew Simanek

please. next Can Shannon. move question Thanks, we Perfect. to

Operator

Yes.

ahead. go Morgan. Pleases Paul with will JP from be Next question Coster

Paul Coster

you bit any with a the wonder Hybrid selling, else. see offerings? I And Edge give if it's growth just something synergies you you. some can Thank on color your us trajectory, little but do IT compute cross broader

Tarek Robbiati

driven we have. IoT growing OT, of Edge the so that cases becomes as the the that's significantly. the this IT part reality advantage a the both operational used We specific by a This the the verticals. hospitals that convergence in Yes, business Compute of see big in in that technology is manufacturing

I are a vertical security. expect to can security full provide to a We of platform. more Aruba to to OT be have and that software continue is us it's customers. and connectivity you allows that converge to only tell blown the But and with the one, and top case. we And the IT And Compute vendors to digits. true more And a triple obviously, bottom that’s from why combination solutions an connectivity, to for infrastructure analytics solution, with networking, growing Edge

State provide through. of hybrid, or Warriors, factory. the although use it context, call that campus edge we to if we cloud. are the branch see the do provide dissynergy great the the in this with the this are cloud In reality. Compute the have bring what Edge with because the other and X edge, the we see that’s whole you architecture. And so And made for the more, synergy our the and is through time. there cross cloud on-premises sell just all A that circuit announcement at We and The with definitely large to Golden reasons I Aruba solutions Aruba. and we in cases. So sell that Formula that deals will. been point them More we we them sell sell it an to We we verticals We it our and then pull in cloud IT. the Hybrid -- go-to-market see example with

provide deliver experience and edge by need that this So it's generate all core. we need with the and a to extract from fact the to big you and opportunity outcomes the data value at its the driven

about why that’s excited strategy. so our I'm very And

Paul Coster

the incentives Intelligent team? data Are center that around Edge there inside special products any

Antonio Neri

Yes.

who They paid it. obviously paid the the everything. a a manager blown reality forth, edge people sell cross let's there's definitely components that the then it sells the And to account are people bring But there's incentives solution everything, So to just compensation and solution. specific on the on -- clear. goes you Really while they’re and get bear specialist the of that edge specialist, people full be bring the but The Hybrid people. the the IT cloud. back selling is

and that’s And Edge the have sort and more do the why to you once pull connectivity, bring that’s so, same is happening through around, working for and you why the other Aruba we some strategy to of processing is more the bear. because of have Compute way and data

Andrew Simanek

Great. Paul. Thank you,

please. question Next

Operator

Yes. with Suva ahead. The Jim next will question Citi. be from Please go

Jim Suva

especially or who this historically known to you. happen what's Thank all and Thank China and what's some to at to and you you and something bit. give HXC, on very the relate little on color stuff, your that I relates it we’ve impacted going efforts there a much. your In in outlook, believe to efforts us reference some your margins does prepared going just is Can trade with knows you as which different? a wars made with comments, the it margins

Antonio Neri

they’re in HXC doing don't like as we products ago they they’re Yes, to and China, in us almost we China. portfolio growth. is now of sell part model HPC new HPE are this is and profitable moved and again, the doing the no, X sold sole so directly years what focus We on a actually represent distributor but of

portfolio, we’re they believe with thing happy they well pick wise. dividends to on where you know they’ve the we because collect and do best the really is the as incredibly HXC, and actually, done happy they of and performance very choose entire focus As performance

Jim Suva

it seen you've was new is past? forward-looking I we’ve should that going change the something into a getting what more what we Yes, heard was is, what in on from XXXX expect is or

Antonio Neri

market but to ones spend now. on is focused the a XXXX, profitable IT decisions. energy No, I of those think honestly, There that to the listen, be are continues your you’ve growth, China make very lot largest drive they’re and it opportunities, second and where to

depending and rights will they because but the to be of is doing. great China and there Board, in are we that in that but governance, end, continue As the seasonality happy is a forward, going recall, them actually pipeline, on we’ve reality will market the obviously, very on some market viability you the rely quarter-to-quarter believe we Then, what part a we the are grow. with

Jim Suva

those think tax housekeeping, rate lower should quarter, income items? XXXX, for was and how this And we other was better, just about

Andrew Simanek

non-GAAP said Hey And perspective $XXX at expense I Analyst equity We be basically refer at XX%. income so tax and remember, would includes that would to the Security you rate, expense said if other interest. what million from a meeting. guided then you basically a we the we the Jim,

continue I use to going forward. would So those

Jim Suva

Thank you much and appreciated. the for clarifications. so greatly details It's

Andrew Simanek

Jim. thanks, Sure,

Next question, please.

Operator

would Next be with from Jeff question Nomura go Kvaal ahead. Instinet. Please

Jeff Kvaal

a to in And gentlemen, Aruba headwinds of you, both share a could your for that, guidance a through decent where about Obviously, way over the stiffened taking strength, script think at you changed from earlier a bit had a upside. little the of a spending, gain under but been you for Does amount talk maybe of factor bit then talk Tarek, quarter. appear secondly, little think would refresh like please. for how coming if I that then, that good that's FX IT mentioned there's have little some of I'm your great Thank I and wondering us from? the Yes. Obviously, and That question. the naturally the with you Can you competitors. and to is you all course had there's off bit lead much source a an help question. doesn't there? switch strength also you, that is

Antonio Neri

will first will the take and take question I one. then Tarek Sure. the second

and whereas and is these driven application Aruba we and when it business bullish experiences the hospitals platform them is retail first actually connectivity about customers resonating and suited capabilities to an approach. collects X in example, provide the what incremental that first, where and architecture with are strength then it have is continue is reality Edge soon different data you through where and that are the not add in work everybody driven verticals the obviously the that's we for business Wi-Fi move switching, why that that cases, with in enabled connectivity and the we because here data is looking because has available smart and or allows we with extracts experience Compute and other it and use the to whole for And Aruba drives forth. all venues the cloud platform, these expansion data so that wireless edge is way you obviously out see that. Aruba to to going architecture drives bring That’s to a a is, compute easier we the providing new see then cloud That’s experience and it's to so be around. actually or So looking experience live perfectly they buildings approach new for value that mobile IoT-led because provide of has that for

Tarek Robbiati

points the unfavorably were and $X.XX to little one points, observation. now going at the 'XX. say to stage the Remember, were When can when rates on this new be at relative trading we rates Euro Yes, to the then prior SAM. rates lower. to of trending. have FX, two a year are now moved are at FX where spot pointing headwind we it's SAM somewhat a bit closer was looking for we we $X.XX, the trending about what would month fiscal two face good given said to we That's at

Jeff Kvaal

… Tarek But

Tarek Robbiati

change. can We [Indiscernible].

Jeff Kvaal

Thank All you. Great. right.

Andrew Simanek

you. Thank

please. question, Next

Operator

Sachs. question Rod will with ahead. Please Hall from go Goldman Next be

Rod Hall

and a cash that follow-up doubled if then Yes. see sale Hi, guys. I color I a the PP&E I us have quarter Thanks give for the wanted could more increase fitting And the to that. just or from you ask less the to off of what me quarter. I proceeds that any question in. about almost flow. wonder on in drove last of

Tarek Robbiati

at and that there's estate the the we're was did course new fiscal Palo Yes, campus of in most year, $XXX quarter. correct. the course There in happened QX. the a about have during transaction 'XX. of beginning unique million of year quite of real location gains We overall we effectively of occupy We of -- the which is that a Alto sold year into moving a right and in now during 'XX, the calendar the

You explained will see for details, a but in all XX-K and of greater our disclosed that that's one-off.

optimize real our transaction that quarter. that to We unique fourth continue estate, a is but has quite the happened will in

Rod Hall

what the and -- Okay, things. HPQ HPQ great. split how to in two follow-up -- know related leasing if and I know And really proportion services is HPE, lot wondered much then to I of the the there just on I that leasing leasing least or the business just that don't could that and some know the of is arm financial a that, of business underlying say, is related wanted between business, is at that a you I is I

Tarek Robbiati

and in am that been has very the it prior been is pleased HPQ, financial in of with disclose at the that split. X% to don't the hasn't volume the any growth of split and to how services same change significant trending around to There receivables pointed levels that growth services regard, but between major in going. this financial drive in I We year volume. We HPE we continue historical data

Rod Hall

great. Thank Okay, you.

Andrew Simanek

Rod. Thanks,

I we’ve more think please. question, one time for got

Operator

Please last All right. from go with Markets. question Capital today be RBC And will Daryanani ahead. Amit our

Amit Daryanani

And on be that's fairly think questions think storage. Thanks for you’re the exiting do and enabled what two secondly one me then guess extra talk down would it year-over-year. on Can just will down XX% from what impressive. that I it that Was 'XX? that fiscal the squeezing you through forward about in you going guys. how year-over-year I How Pointnext? are trends be much [geos] divestitures, Pointnext, that on or X% was

Antonio Neri

and provides Nimble which pleased Listen, performance in data. external a gain 'XX. we for called with customer predictive problems the the of by And now last week the and I'm happen new Yes, networking. market, platforms strategy on-premises first. The a in and talk XX% I flash with including analytics, full-year, grew compute about rest let storing the the storage that's to adding XPAR keep which for InfoSight, they me year value expect We platform predictive announced is and faster now before sees the very enabled that both phenomenal features storage our extending obviously -- infrastructure forth. both we so to of XPAR both and both the share than that of storage X and we're platform fiscal that and Nimble cohesive so fix managing analytics the driven the HPE two availability InfoSight with to and by

and expect intellectual of are to you the And that again, combination that top paying actually in our XXXX to to in week hyperconverge part about growing case of almost that of talk we announced be property on plus solutions is infrastructure use them well, exciting Pointnext of know, we’ve If some some we you the storage, HPE will we for Madrid. different want be coming cases XX%, to off. I the Tarek, and it don't continue at and the different beyond XX% because Discover market, last are so question?

Tarek Robbiati

was bit Pointnext the to well. my X% if equally it were at down reflected for growing full-year that in from orders as growing color X% for for services operating Yes, full-year the add overall revenue more script at was in on was a the and quarter, revenue little X%

Amit Daryanani

you. Thank Perfect.

Andrew Simanek

Great. Thanks Amit.

close we please. think can the up with call, that I

Antonio Neri

with wrap expanding to I the and our want performance questions the fiscal saying time with I’m year for 'XX and and you you thank thank innovation. very and profitability pleased just growth our for Well, by

I executing as was great is and about and here was think our we clear, what with customers XXX% strategy driven. transition, did we progress all resonating make and this of partners. XXX% we execution our which

Operator

one. much. very our Ladies you and today. a great for Thank conclude this call will Have gentlemen,

Hewlett Packard Enterprise (HPE) 5 Dec 182018 Q4 Earnings call transcript