HPE - Earnings call transcript Q4 2019 | Hewlett Packard Enterprise Company

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Operator

Good morning, evening and afternoon, and welcome to the Fourth Quarter 2019 Hewlett Packard Enterprise Earnings Conference Call. My name is Sean, and I will be your conference moderator for today's call. At this time, all participants will be in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of the conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

to call presentation Mr. like host to now today's for would turn over the your I Andrew Head Simanek, of Investor Relations. Please go ahead.

Andrew Simanek

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

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

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

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

For most please its refer a filings uncertainties and and including HPE's SEC, of assumptions, some with the Form XX-Q. discussion to XX-K Form risks, recent these of

HPE assumes update such to not no does statements. and intend forward-looking any obligations

reflects information materially time that for XXXX. fiscal estimates note this report Form ultimately annual at on XX, the We also year October based XX-K reported the available discussed amounts and on information the from financial on ended differ call this could in HPE's

details. on accompanying expressed that the release website. on to to we been Please non-GAAP our earnings our presentation website information comparable today's and provided financial on the has slide tables for information Also reconciliations a have GAAP for basis, refer

are are of rates, growth Throughout a basis this the impact otherwise all exclude year-over-year to noted conference presented adjusted call, on currency. unless revenue and

Tarek referencing his remarks. will Finally, his please slides level earnings our throughout that provides the prepared be presentation in after remarks, high Antonio note

this earnings can embedded presentation the call. posted for earnings to also is be within website webcast and the it player found mentioned, As our

that, over to Antonio. With it let turn me

Antonio Neri

Thanks, today. for thank afternoon joining Andy. and us Good you

at We our have I company. by just CEO we on closed and strong a our We XXXX delivering performance since built would almost the we two do and very consistent fiscal of record what promise track said did became years ago. HPE marked year this year on successful across

In in fiscal benefits year culture engagement and of more We've made executed the investments a discipline. three our company XXXX, score employee and an and higher-margin has the a we in made targeted our focused shift realized acquisitions offerings. increase our resulted with over streamlined priority, XX-point we to And years. to higher-value, organic portfolio we which last

partners. committed guidance. improved This and significantly reenergized, flow customers these earnings is profitability next and exceeded and non-GAAP we free for high-performing team cash across is the Through what original accelerating business to our efforts,

server to business has our at as revenue as X and macroeconomic our look to Revenue total results. closer billion a exit X fiscal lower margin take stable Let's we year $XX was XXXX, of year currency. sequentially by the three X% full continue adjusted year-over-year been as realign the down last action factors. for when deliberate our Tier fiscal portfolio Tier impacted financial with quarters Revenue well certain for

the investment, revenue of high-performance and record we Cloud. and strong year double-digit Infrastructure, reported saw Composable strategic Hyperconverged areas key growth for compute, In in

growth strong very see to continued in GreenLake also HPE We orders.

to track our and as value consistent our Analyst with report $XXX Security of service. outlook our help first revenue progress investors is higher-margin This month. a annualized provided Meeting we million I am at better metric shift run to the recurring we pleased and benefits the rate our to as last model

is basis success points and because transition into XX.X% demonstrates it margin a gross of higher-margin revenue. improved our key non-GAAP XXX year-over-year. recurring Our This metric

X% grew billion $X.X of profit operating non-GAAP Our year-over-year.

results of $X.XX, quantity share flow, We well earnings delivered our improved of non-GAAP quality our of which investments generating We and free to year-over-year. our was year-over-year, an to represent fiscal XX% strong guidance. payment the billion, year-over-year above make us growth and $X.X of revised XX% and improvement which allow in million per cash arbitration original R&D even spending, $XXX significant up year XXXX These DXC. after XX% award

And and share as return year in completed and fiscal XXXX. to we $X repurchases I year fiscal form shareholders the early our billion XXXX over committed XXXX, plan to in dividends of

for our XXXX edge-to-cloud has strategic we Our the next consistent HPE strong by profitable we portfolio sustainable, performance HPE's our will company, to offering as in and execute service pivot foundation of growth. a entire phase the laid year as is drive fiscal the platform-as-a-service journey. and XXXX

backdrop, Before providing that our segment economy view The to that of customer environment. global continues, not performance, business trade an But demand and that factors note uncertainty other this uneven since overview materially sales macro the cycles particularly changed. strategy have we elongation geopolitical right the contributes we confident anticipates an are I want tensions deals. on to Ongoing have against we created in of has larger our our needs. experienced QX

in world. an edge-to-cloud live We

to of flexible We has help their everywhere. success. across clouds tools, them has data need partner technology our from value and Data to expertise, their centers having have a a simply power all delivery tremendous gone the and the and They edges. data is model to that customer a having data center harness critical of the

these for to data HPE is experience uniquely needs apps positioned provide everywhere. cloud-like consistent and and a meet

can live, service choice delivered as all for no so outcomes in the control and a customers Our to their edge-to-cloud platform we businesses. where data ultimate flexibility apps and deliver and gives their matter they

which in revenue down year-over-year. Edge, full-year I will X% Intelligent business segments, To highlight of performance delivered with billion, $X.X start our the

some execution in have leadership impacted have and through issues segmentation that them said both early America and we addressing initiatives. identified we year actively previously, been As this North we revenue, new

the future. with Edge Intelligent substantial sales am year business. Throughout in in pleased growth are particularly XXXX, the the Services, made differentiation portfolio. to Aruba continuing and up investments excited which in build in year, driving am in I to we XX% contribute our traction profitable about I our we will the R&D fiscal

is our including to Instant reach to new growing with On, is simple-to-use platform. of the the our products only at edge-to-cloud network expand We developed targets networks. which segment, Aruba which enhancement the heart that It device made segments, Central, AI-powered wire, customer for have cloud-native, the SMB launch IoT security Aruba unifies platform and of we and WAN management, insight, wireless, and new

branch CX to networking manage. the new we It switching launched also new designed lays industry's portfolio and AI-powered revolutionary services-rich the for is campus portfolio. for cloud-ready, QX, edge data This foundation networking simple required specifically In our first center. enterprise intelligent deployed is This and easily modern automation. today's future portfolio series

market. traction We early In Wi-Fi industry in Aruba and taking enterprise an access September, X competitive are lead seeing point analysts X market position in showed the delivering infrastructure. fast-growing Wi-Fi

that system, Aruba XX Series ArubaOS-CX than their attracted run and month, XXXX logos switches experiences better solutions employees see unique edge. our more Aruba and to the to customers core advanced and per turn new continue customers provide into to we operating Our new at

for their Aruba Office control single network solution its Recent manage for of examples include of security digital of the demands and the decision glass in to a evolving Kentucky Critical visibility XXX the the Courts, and a to who pane of was courtrooms. network. Aruba workplace ClearPass of was to Administrative Central looking increase

with wave-finding to business conjunction services switches Meridian Aruba optimize and their manageability to more the services Giant and platform AirWave AppMaker minimize Aruba proactive. help them management chain, IT supermarket services. location network Eagle, latency, U.S. with in help University operational staff quickly And Aruba app Carnegie selected the build Mellon become platform rollout purchased smartphone to

Eventually, edge. critical can this the Intelligent as understanding Business deployment More transformations. X Edge will digital entire will X,XXX serving million more visitors. enterprises and on and at as is well to how deliver outcomes experiences depend XX,XXX square foot the cover campus, they students are faculty the their campus

on, continue investments declared opportunity portfolio capabilities deliver to of and important early HPE the solutions. to and to make and our differentiated we edge enhancement execution and the

Turning to IT. Hybrid

a off. higher-value offerings in is as investment products Our service paying and

billion XXX Revenue XX.X% down of $XX.X year Tier year X% Our operating up profit from XXXX. of and was when points for currency. for basis X the adjusted was fiscal

key Composable in grew also Performance in we And grew and areas year, revenue and Synergy each first billion Infrastructure for Hyperconverged strong Apollo of the a Compute XX%. performance this the full-year, XX% HPE XX% double-digit Importantly, grew HPE in $X achieved saw time. than the Cloud business. High more

continues be XXXX. GreenLake HPE fastest-growing XX% Orders fiscal in were up to one businesses. currency of in our year constant

a Our on GreenLake off-premises service with consistent cloud-like and for key year-over-year is as HPE over XXX% HPE. We GreenLake competitive deliver channel. in the saw order advantage a ability growth to a experience

powerful and force extension partners our of Our technical are an growth. own important they driving in a teams, sales are and

of them our access generation very I At to broker to to We December. of Analyst for Meeting month, a our the and announcement tuned last Stay visibility, our control previewed enable exciting offering. private next enterprise customers their in Security a service by edge public, giving workloads. across be as early services and want

Pointnext grew year XXXX. orders fiscal X% including in HPE orders services Nimble

we customers intelligent to our HPE this Cloud integrated shift our value speed service deliver Primera, Composable forward, storage propel favorable Composable solutions Going higher month, In and innovations attach agility accelerated and apps HPE intensity services new earlier to to with Synergy higher to portfolio, drive and HPE platform continue should with rates. Rack, our businesses.

to Container unveiled a native a HPE Platform. whether the we was container enterprise provide can and or the as platform HPE virtualized Just vendor Kubernetes-based it support application. any a last deployment week, is our as that only developed new application, enterprise of cloud first

Kubernetes and challenge provide integration addressing BlueData our a open-source unique on data, built Kubernetes. in software that a is platform system engine platform key with orchestration persistent new with The MapR's container-based can file

most of we just in the a AI and exascale high announced performance and comprehensive HPE compute last area the HPC with And combination our industry's for portfolio Cray. business, week,

the We of and systems. list now on supercomputer are top HPE largest systems Cray proud XXX the that XX are XX

storage a of modest X%. a decline revenue market experienced Against backdrop, tougher

areas, However, HPE in we strategic constant key up Nimble year. the continued XX% for momentum reported record currency in revenues,

tools. to cloud stack that for and portfolio automated steps across workload software-defined Simplivity, a This what no X embed why ProLiant, the to we Finally, optimized Synergy with simplified Apollo. choose, are differentiate includes cloud-based is HPE we operations our our looking customers InfoSight, experience matter experience. platform right the and took AI hybrid want our PAR, innovation Customers

to our manage technology paired Oil customers outcomes. technology data to Here our a use India with has how Natural help putting to are are with a them services. examples and HPE business key of critical state-owned drive GreenLake enterprise Gas their few storage Corporation, of selected consumption-based

unpredictable they been have growth. data infrastructure for grappling rightsizing Previously, their with

However, able capacity GreenLake customers, be one of as now over-provisioning. to largest will flexibly without adjust they our HPE

mouse the we is biologically research of brain building detailed have Swiss working brain. Project, a reconstruction that XXXX, Brain EPFL a initiative Blue on been and Since digital with the focused simulation

in of large As progressed Blue in major and neuroscience are brain regions, now increase exponentially larger power, they Brain with they the XXX research a Project new to has upgrade modeling scientific their doing which XXXX compute Apollo notes. needed SGI HPE roadmap have

adjusted flexibility as Fiscal XX our increased engine to consume behind service the assets. profits as robust operating solutions Turning return Services. of portfolio they Financial in strong how basis IT serves points. net billion their drove financial equity HPEFS of with over customers loss is year $X.X bringing for ratios our HPE balance sheet $XX of a a currency, offering, by while giving billion on best-in-class XX%. flat revenue when HPEFS

it best-in-class strategic year. to their the goals business. as is a HPEFS helping double-digit their and asset HPEFS value in monetize existing in them in economy plays our strong helps ways. promoting circular this our assets sustainability by service a major role new revenue saw HPEFS management its growth as proposition achieve its customers with differentiates customers manage

continue am our fiscal sustainable, with summary, XXXX. as drive growth. In confident service fiscal portfolio will solutions I XXXX ability very offering to which execute by and to our strong in edge-to-cloud as our higher-value, remain year results software-defined platform, to deliver pivot to our we performance shift in everything to year deliver a profitable our pleased I in XXXX

through sight losing I'm have a years confident never bring partnerships R&D and world-class We've partners built and our two that we own through and strategic the past team our discipline. culture acquisitions. market sharpening and customers reinvigorated is of our with executing to has because spent focus, customer-driven and our leadership innovation

we unmatched to edge-to-cloud to will This right begin is enable that the experiences as an deliver have We are for industry. exciting new exceptional year. customers that us our in the place the be strategy

to it that, Tarek With I our will more detail. turn results to you walk over in through

Tarek Robbiati

Thank you very much, Antonio.

XXXX. Now provide our me the more let the for full-year and you on quarter financial detail results

our from fourth presentation referencing earnings As I'll performance and better done our I year. the the our fiscal have in be before, slides to highlight quarter

margin for fiscal the XXXX, that first with X we full-year talk Starting for I'd for future. macro X, pivot more on In higher continue we key our highlights environment, growth great the recurring in to foundation despite sequentially and like will We've XXXX. the to about the discipline portfolio and with three to profitable the Slides maintained year executed last our towards lay quarters. uneven revenue stable sustainable, an strategy revenue

efficiencies. this significantly we non-GAAP by margins, this and primarily while expanding And gross improved basis by product cost which structural driven points including did year, of sales improvements XXX mix

improvements to non-GAAP further in operating profit. delivering growth make the investments Our enabled business, us margin while gross have in simultaneously

well year-over-year buybacks, $X.XX $X.XX in and of diluted including combination of non-GAAP October our resulted original XXXX. The and of SAM outlook benefits XX% line which margin provided expansion share EPS at to $X.XX, in below up above is the

higher On year year. more we $X.X to presentation. compared cash was I'll flow of fiscal talk later the front, of cash that billion, generated up this the levels in which free the about XX% significantly prior

On the September, acquisition Cray well in transaction we the successfully ahead schedule. closed of front,

minimal fiscal year more Cray benefits to were and XXXX fiscal beyond. XXXX, expect material derive While impacts year in the financial in of we

commitment Finally, of shareholders repurchases to dividends returning early XXXX XXXX returns the also billion in on delivered our form XXXX. in program we our capital share fiscal original over year $X made commitment per and and

of $X.XX, net $X.XX Now previously X $X.XX quarter of non-GAAP Agreement time EPS separation. a with EPS quarter of finished results. and outlook was from the for was above diluted benefits provided outlook which to the Inc. for above with the net established prior diluted was up our the the Tax turning of due HP, previously primarily $X.XX GAAP to the $X.XX to the the at provided $X.XX the that termination XX% Slide of We to Matter from year. quarter

onto Moving of view a X. business the macro on Slide

largely deals similar our demand. quarters. continue what unchanged factors macroeconomic particularly the two of and remains Trade called during environment prior mentioned, As uncertainty, enterprise view out the business geopolitical cause Antonio tensions larger with uneven to to in we

footprint to portfolio three markets, us stabilize handle last broad HPE's which and in to has us diversified makes choppy quarters. However global revenue enabled well the

make We made hit every sales why leadership few move X to our but believe will by Intelligent Edge pressuring new now I let number, in segment. performance despite big Edge, our points. the changes segmentation shows you near-term improve key the the We investments, and to the Slide R&D next quarter go-to-market which that remains execution. take me introduced opportunity, through significant won't a In sales is profitability. we've continued to and we've

solutions a an as We service. enhanced can suite of also that a now and differentiated full be consumed go-to-market have

forward, and investments XXXX to Going improvement are in expecting these growth fiscal we profitability benefits year a as as yielding revenue begin meaningful returns progresses.

annual $X a compute revenues. In strength offerings growing our also billion record the IT, compute higher-margin offerings, billion of in grow a record in and level our Apollo performance high to organically continue which portfolio with the reaching this XX%, offerings our revenues of reaching power $X annual demonstrate innovation These at Cloud engine. developed Hybrid we Composable year

With with great excluding our Storage, storage be XXXX notable X grew server will QX grew the up have strength making markets been Hyperconverged respect strides year units, and which starting we Infrastructure, Tier at which X%. storage in the storage, in China, to Within growing quarter, level entry mid-range in XX%. next of units continued Nimble reported year-over-year. fiscal sequentially and and were since

a flat operational X% In but were services quarter, on currency. including this in Nimble basis full-year our constant up Pointnext orders services business, orders

unit attach all revenue across sell this per attach improve. categories intensity, that Our demonstrates up profitability was record intensity and the is which continue year-over-year. Services rates quarter. hardware over value compute ratio the units XX% to we the up of in both reached and levels underlying storage, were of This services which the

an by to demonstrating record rates, execution service attach services pivoting XXX% have a which orders, offerings. our in as XX% GreenLake year-over-year to grew strong impressive levels

with net Within strong this XX% HPE contract which exceeded GreenLake which portfolio up maintained equity expanded Financial and we in quarter. term return currency quarter, Services, we X% again our on was longer constant a assets this of supporting

slide, not strategically in Orders business providing CMS software and important shown improved momentum. software Communications is Solutions improved year-over-year selling execution telcos, to the or a while on Media showing And which XX% CMS were up capabilities to due is licenses.

growth businesses We to capitalize opportunity and the are about excited all XG the service across with to providers. momentum CMS for collaborate on opportunity

outlook share outlook. provided Slide of shows EPS income and $X.XX is operational our we net other $X.XX QX marks and the expense. X well high-end XXth $X.XX that quarterly outperformance our to per in our in date. diluted the previously favorable exceeded have due of to non-GAAP row performance to Non-GAAP quarter a This earnings above of

non-GAAP year of $X.XX. progress XX% Based fiscal As over two a non-GAAP fiscal XXXX last has ended EPS, demonstrated reminder, we tremendous by performance we EPS operations a EPS in on have of XXXX the year with $X.XX, non-GAAP years. which diluted our from in grown continuing

able significant been expansion about achieve next. this margin have will talk gross through which and of operating to I We margins,

margins X. Turning to gross on Slide

on portfolio recent higher margin deliver towards year-over-year offerings to gross Hybrid and we margin expansion shifting our in higher-value, continue We as focus profitable gross IT, commodity growth tailwinds. significant more

portfolio up and was possible Non-GAAP been gross and has mix commodity a QX HPE basis initiatives tailwinds. shift, of fiscal XXX up This XXXX. margins of since basis points XXX of XX.X% Next through year-over-year year points combination

X. Slide moving Now to

market the into We drive our to growth, portfolio double-digit Next margin, additional business, continue higher of driving and including and investments to go-to innovation future enabled growth faster improved in back areas sales R&D HPE expansion. to the in increase investments while in effectiveness. support significant in margin a through operating has revenue non-GAAP this R&D make significant sales to redirect investments us organic year

strategic We in margins and operating points has versus expect over XX%, upcoming to investments. revenue Meanwhile, productivity climbed the QX from these non-GAAP growth drive basis XXXX. quarters XXX up

Turning strong free a XX% that flow full-year basis, XX% payments. over $XXX Slide by HPE and to or in year. driven million flow at cash to year, was lower performance cash last our we billion million primarily significantly improvement On prior flow billion cash very flow cash up Free over Next versus free is $X.X higher flow $XXX an seasonally of in higher is QX. of cash XX. relative Underpinning of generated year-to-date on or our profitability the from operations $X levels

to important we note is arbitration payment the of It to made the that absorbed billion figure, in $X.X DXC. $XXX unexpected million

had would a $XXX Agreement at benefit have of the guide midpoint we also from to Matter original the FY our the importantly, with XXXX Tax HP, million Most from of Inc. Inc., even HP, $X.X $X.X without terminating We payment billion. billion been

some consider fiscal it into forward model takes as cash to is Looking flow. year and you puts XXXX, out important free

with will cash receive profitability from to another Inc. related We HP, we Agreement. expect the the earnings increase and termination charge to Matters Tax million of growing of $XX expect

a capital as future and need make that profit offerings revenue in and payments Cray also will investments service related to drive We our to will integration make growth.

year between result, cash continue billion. expect to a and $X.X $X.X we to flow XXXX As billion be free fiscal

I at for our what ARR. up Slide had the ARR a the dive deep XX makes shows into presentation Analyst recent Securities the Please Meeting. reference discussed SAM slide

guidance came million. in our actuals ARR at XXXX with SAM QX line at Our $XXX

of growth achieve from XXXX can to our Looking feel year fiscal growth fiscal XX% confident to compounded forward, annual we XX% guidance XXXX. we year rate

the in and shares quarter. in We capital returned quarter. million shareholders to dividends XX of during $XXX We our the million returns shows million repurchased Slide $XXX paid $XXX to-date. worth

fiscal share, in to $X.X $X fiscal also increase payment we billion dividend year At and returns returning an capital note important billion year that in we and raised our recently $X.XXXX XXXX $X.XX from point, program fiscal XXXX over fiscal per billion It this $X.X per XXXX. also our share to X%. year have have year of XXXX, is completed

a our encourage that XX. Now year my At we Securities meeting, I detailed XXXX. outlook. on discussion review outlook would you fiscal Slide more turning to to our outlook of provided for our recent for presentation Analyst

said adjusted year Having topline currency XXXX our reiterate that points our fluctuations. revenue From to profit fiscal perspective, few key me X%. to a by grow non-GAAP XXXX fiscal for a grow our year expect X% of we operating let Also we outlook. to expect

diluted $X.XX. GAAP year per fiscal Consequently, to XXXX $X.XX per diluted XXXX be to to to a and $X.XX fiscal we net earnings expect a be share non-GAAP share net year earnings $X.XX

QX, For to net to EPS diluted and of per per $X.XX $X.XX GAAP expect $X.XX share share. diluted EPS non-GAAP XXXX, of $X.XX we

very XXXX. performance quarter the and the I'm Overall, in fiscal the with pleased year

demonstrated free successfully have macro business substantial resilient cash that can generate We our of amounts to is and flow. softness

laid for come. We a right and years have strategy have the the strong foundation to

higher continue offering delivering drive profitable our margin for sustainable will by defined full as and We This software the solutions to our platform a ultimately portfolio focus shift to on growth our XXXX. returns edge-to-cloud portfolio service long-term. shareholder will and

with it for up Now let's questions. open that,

Operator

you. Thank

with begin come the first Instructions] Katy will from go Stanley. Morgan today session. We question Huberty now question-and-answer ahead. [Operator Our Please will

Kathryn Huberty

Thank afternoon. you. Good

consistent look fact, the spin X% revenues increase since revenue in at thoughts past isn't any seasonality quarter, down we the for quarters? do the have revenue expectations been into January you HP, to Just have a from a trajectory? but and As October around there street the to in quarter, X% flat from of looking January

Tarek Robbiati

Tarek Good Katy. Hi, here. It's afternoon.

So, grow to broad as do fiscal we XXXX, reminder revenue year for overall. adjusted a on expect currency

you into take QX Now have XXXX, of when effects two you get specifically consideration. fiscal year into the to

quarter. two, the one one, full reality owing Number Number from will fiscal the environment. XXXX the of contribution is first Cray consolidate to year different for operating in revenue we in than that the in was we're macro it

within on basis do a the quarter that and sequentially stand we be for to roughly grow revenue I with mentioned now. will of first we and what whole, where we seasonality right the expect the flat on context will So, relative full-year,

Kathryn Huberty

gross basis about is should much that margin you of of costs the Okay, costs? from would contribution that's helpful. from XXX Tarek, you. Thank margin point say commodity think expansion? commodity And the on we gross how How lower

Tarek Robbiati

Yes.

at of a margin in and by explained structural So we even and sell, remainder is of products gross far, in driven the is commodities. earnings prior what as releases, and we of mix the expansion result SAM some the nature the as

would on the side versus what one between other. is commodities mix So, XX/XX the split is I structural on say rough and related

probably the bit. that that and environment commodities feel level right at a for. right be how that is will at it are profitability now there believe of that is is be continue best We quarters. could least now for to We The question little stay do the for long couple going continuing to we are experiencing

Antonio Neri

couple Katy, am will One discipline I with pleased things. pricing. I And thing of is our

drive I right I can the a which in you the pricing, think job, the of despite as very and believe a record profitability Hybrid right the price team to see, year have we business. has changes workloads for good and IT the commodity what configuration achieved done the right in

built obviously the AUP IP talked there well because the But be as software more continue we go structural with along. the for of as as it, configurations that on particularly systems changes configuration more kind confidence data stability driven and we to as of us type into defined give the density before, with

Tarek Robbiati

to Katy. Can it. appreciate we question the Thank next please? I Great. go you,

Operator

with ahead. Our question come Sacconaghi Please will Bernstein. Toni next from go

Toni Sacconaghi

think But X from demand which X all is, Cray quarter? use had just we that if not know a stable which metrics on the term in ex-Tier in if to thank anything you X constant you it's is at Yes, the if comment QX, QX comparisons the macro like I the most, you minus different revenue the most terms minus wondering X look was use I you. in of at stability. plus to a in to gone that of in really environment. and could QX I you this are bit currency, accurate and lot

appears the and enterprise so suggest a number it on the might had that. though other of least environment you've becoming more players And at macro be as surface, challenging

if follow-up, believe So with have relatively stable this please. And macro it's seeing update why I and revenue are environment, provide perhaps deceleration on you us then an in do we the you a trajectory? can

Antonio Neri

Sure. the for Thanks, question. Toni

view from this, here. As macro materially has there economy – we but not changed say, talking I I Toni halves been started about said changed our since has QX two will

some commodity half, a in a reform and with the take obviously, in because of some strong transformation. that needs more that bit to on first about did, modernization place from pent inflationary Obviously, little up demand costs. what can The XXXX coming talk Tarek digital tax and

And then of X%. the with second QX trade, unit global the instability We in increase half, tariff deflationary by geopolitical more commodities. some the driven the then the of and side saw situation

cycles obviously are be So, possible because the believe It's many doing the power to I spend as of think, timing just as of say the continue that's I can a listen, harness of And the elongated value of the to in data dollars. to where looking sales demand We would there. the lot a fast is this. and dollars matter are there. at spent make sure ways, they customers

out little always there. But environment, will there a obviously, stay if we bit questions be this in more

to I and hopeful on about result you obviously additional So the transformation the still continue way because very hopefully, we're going continues to have one. explode comment Tarek, there accelerate, to other about do any continues to digital the that? future or X. this be But one around am get data the that and

Tarek Robbiati

benefits on quarter XXXX. the all the XXXX tax no on was to We've has bit propelled on internally, way that – that for year from industry. fiscal nicely some was work infrastructure, is there had there reform, by year like comments more the Antonio. of this fiscal on impact happened that the and of income a fair reform that large carried tax the disposable and Yes. add doubt be on Thank done spent you, to i.e. corporates to worldwide the pretty on first has I'd

was we element has the spend drop place believe do also forward. to by digested in macroeconomic there there where be companies that taking due point, year but is an moving a XXXX factors, that Beyond fiscal to the that was

fiscal in year I'd So, say come relative that taking year in and digestion simple XXXX XXXX, the place. fiscal to terms, has down is tide

which you've digested. year-over-year rise So context way, correct. are have give the put infrastructure assume forward, the you that Toni. The to do in and this year-over-year to to less calculations are the where calculations lesser compares relevant By is – compares, be your you

for remaining see future to continuous essentially that bode quarters. get that that needing XXXX stable capacity the demand year as And point what's will well important where the the is for consumed upcoming a will to revenue in data for has be to in us been fiscal be should refreshed

a you color that So provides comparison. on the hopefully with year-over-year

Antonio Neri

And one quarter more last our say, that the I has thing stable. Toni, for been will is revenue

our So revenue this, for despite all be stable would consecutive quarters. three of

Toni Sacconaghi

Thank incremental you've – some or higher the basis, focusing very I value products. know and X about on on just for your about a billion exiting revenue made decisions of as in there think $X.X all you down have is smaller so more? Tier lower reported that that question But X%, conscious and HPE of you or because you is about do is, we topline, light do like base out how to done costs a a take and sort have revenue

come which control this in have take cost seem over need least Do this you year been quarter, OpEx to and R&D, you have have very growing certainly quarter, Cray? more feel out all even to at seem tight to you despite down

cost being comment out about expect need take you own can you how was albeit going QX thinking what a driven decisions somewhat light a and of of really OpEx whether top line by whether maybe incremental and should specifically forward? sign your So down, you're to we on in

Tarek Robbiati

Sure.

QX billion that mixed us So said, taken revenue QX. of some result cetera. materially shifting in revenue $X.X improved like interesting Toni, Antonio stable hovering the profitability above the actions products, is mark a we QX, was improvements has What's underlying have as this the for and structural in the for of the the et

is So you EPS flow could the been the cash from underlying revenue materially, see operating has standpoint it an stable. and also although improving

we at at QX, were QX, So $X.XX EPS $X.XX, were were $X.XX. and for for QX we we at for

stable. So is more over a base we value and that are extracting more revenue

is, reason forward in key we saying costs not to areas in the are do Edge them. believe In to our strategic the in make of XXXX. being we to of fiscal year that the we R&D business, that, have continue to The investments propel going EPS our one materially cut

one see second and the storage quarters. you'll that The more and of well more upcoming as in

is to base, discipline of and data that our thinking the having of underlying fundamental it's normal and But context be our should Nimble that cost trends of and expected. playing. are an in the apply always on too inflate any there much. is company that cost they're in There stay element We feel relatively and we important

of dollars That's right why and you has quite investing Edge year, R&Ds in amounts the underlying this we it is we investments category by pivot to R&D of performance in profit quarters. if the what and to significant a look the the performance it our made the business are driven at operating have that lot in the business driven of detail, really in upcoming FSC and those growth

Antonio Neri

things. Toni, I couple a So will add of

reduction cost separate will question there First of a if you're the be No. program again? all, asking

derive Next. is we super years. year This to program. We what which will two our HPE is with expect continue done complete the one previous there from go we we super, and are more here, outcome productivity the to three, and have are pleased in year to the the executing Understand

will improving partners, we as and the always said, made in the lot But we and of to customers a obviously still engage for improve the of way productivity Tarek need the look benefits business opportunities get we've of IT. investment we to the by

as when the look in in XX% and productivity you the for. plus growth growth that invested also year drive a will of areas looking we and strategic key R&D in XX% term that year, we're at plus FSC This whole,

have pleased I clear program and are needed to I going want is done one-off the company and that what we becomes here still there of we have have the very to forward. work already mentality do the here, that but we of part a disciplined continue and we proud rigorous done now So to no make very, approach, think DNA about with our be we to very

Toni Sacconaghi

you. Thank

Tarek Robbiati

Great. Thanks, question please? we Can the go Toni. to next

Operator

from come Research. Cross next Cross Please ahead. Our will Shannon go with question

Shannon Cross

Thank I and just you're there details the trends And have more what you you. you. are. follow-up. wondering seeing Can talk and the If you storage demand can pricing quarter? underlying this a provide on Thank competition, performance

Tarek Robbiati

XX%. the X%, a in saw year down the But it at was was within Hyperconverged, saw year-over-year, to mean, year up which and we when that, record Nimble growth I look XX%. Sure. storage down you year, XX% is Shannon, for we of

we business where leveraging with, in ProLiant, the we is Nimble. it platform our where everywhere, portfolio, in the be platform, now And that is on are AI embedded our across called storage entire which HPE InfoSight, it familiar you're ops

Primera. going it of now an have leverage us we Hyperconverged, we will growth HPE So Primera area for forward. be in

gained look But share, actually point last XXX market we last market the quarter. if points share basis in at you of

has there and market, the stop final have figures here, half in decline we we probably the in second So the gained kind in share. don't of a and been growth obviously,

we us. about and that's area a So strategic portfolio key obviously why storage are our for is very excited

portfolio customers of container last with HP we introduced then now and that's in storage, acquisition our platform And and BlueData have complete our for MapR the defined week. we space a software the why

So for but in key quarter share was revenue a the reported. areas and lot of improvements that lot in was in gain and growth down profit of the last the year that again, X%, strategic a

Antonio Neri

on I if given up Storage for specifically nature, This of of the QX And nowadays, are a relative which effects to QX from but may various sequentially revenue QX Shannon, was compares add, basis. different in another QX marginally storage, is play year-over-year again a on revenue answer was prior up. sequential element at is marginally the storage

Shannon Cross

in And there? pricing, commodities? what's what going are trends on Given you seeing

Tarek Robbiati

on stable. pricing storage would is think I I say,

Shannon Cross

question trends through Thank my touch my that or the in like HXC's? Can seeing you. and you're And of final just some what venture you the question technology Okay. Thanks. joint of second on market maybe is on your and what then looks using China. terms versus

Antonio Neri

Yes.

So up continued set focus us. China for of be a in point to our

in the through that unique. that We that it capture indigenous part The obviously set is dividends. up obviously because our nicely of to obviously grow market to a are allows participate with us and pleased HXC in we continues China

distributor products. the HP that of exclusive owned the been because And Green HP of products through because between and products that or sold the our have they the China, declining shift but of in portfolio, side continue the be portfolio has to entity of HP green meaning products indigenous

time as are up see in think at overall, is the to I considering we are the that but the challenges So up pleased total always, situation the this we it's there very point But continue and here. today, set with business right grow, global tensions. by there set we same in driven overall, trade

Tarek Robbiati

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

Operator

question will come from next with Leopold Raymond ahead. Our go Simon James. Please

Simon Leopold

business the we want in the Great. Thanks double could the Edge, question. trend I for click on Aruba see that. wise if to taking happening what's HPE maybe Intelligent in

I talked about guess, and some macro we've this execution issues think X. year, you opportunities like had earlier business, about things some from now, hampering I was got some yet Wi-Fi the this concern

Just if us business? to how the cross line that of you about could through maybe of Thank the and walk trajectory currents think you.

Antonio Neri

Sure.

see positioned right. it the about we because for of I business excited the in is the First market, where am all, trends

transformation. providing of digital first digital to secure So by drive the transformation experiences all, through the connectivity the starts

and more the to more are workloads edge. moving Second,

things. have we been couple And a working on so of

we obviously of the is X for mid-market and in Instant First, On, now a most the later have our half had solution both is XXXX. so in of we Aruba for model comprehensive enterprise and became the QX available Central, which service portfolio and at a Aruba Discover the SMB the which Wi-Fi since killer portfolio best with market, second HP products, introduction as

America, And we as Enterprise but feel put of on I which XXXX. is work early going feel execution that one-third we enter said and Wi-Fi to than have momentum it and we comments, have stages, we as earlier we us us own that's give more obviously Aruba, on our X was in to behind my the in North

But performance. in I the slightly aggregate, parts the portfolio, Aruba portfolio say and will that's and of down, but and rest the slightly were growing the other of you obviously we in steady Aruba the ones is see Aruba and where portfolio that sell the the

with Tarek So few has comments to that. know associated I add

Tarek Robbiati

Yes. Thank you, Antonio.

specifically referred our found the X. at Intelligent you I presentation and So if Slide you to Edge, look

by will observe products. You invest to to equip the conscious a the suite operating full we products the majority decline decision is Edge made with that of profit the in R&D of driven

recently market So way branches to operating single number to Aruba launched for R&D the equip they've conscious in solutions decision operating more a a than made with profit cater a Central. suite very system products year-over-year the to X of the full is high Aruba of of the a decline including we've down of end two-thirds to all invest different Wi-Fi and

outage for portfolio we Forrester the it's portfolio including And the positioned we equipped standpoint extremely standpoint, extremely Aruba. and is now feel future for from publications, been well a product company Ghana of that and the acknowledged feel positioned are that well with there by the future, – number Research Group, and industry IDC we

those investments. puts Now look XXXX year fruits emphasis fiscal seeing the obviously execution and on to of this more in forward we

Shannon Cross

you. Thank

Tarek Robbiati

Thanks, Great. we Simon. please? Can get our question, next

Operator

with Our ahead. Hall come go Sachs. from Goldman next Please Rod question will

Roderick Hall

I other delays mid any customers business that. Hi if by follow-up in change it to lower wanted to the seen to question. in of the words, them. XXX start for have and asking of customers type of in Yes. spending guys, patterns, line down seen these moved all you thanks from a size you've your then any or And I Fortune in markets exhibiting have

Antonio Neri

is what No, no deals the enterprise segments. I mean in cycles are customer the space really, smaller larger or really in sales mostly in we smaller elongation not the deals, the in said that the

Roderick Hall

this. follow-up, see to Antonio. great. answer I Tarek, maybe you the And then if Okay, wanted Thanks, can

commitment financial potential to at their whatever have commitment With you or in HPQ through sort of changed services with transaction terms transaction? the persist of in way any you potential any they

Tarek Robbiati

channels. across We HPFS been is more good set that We've your incredibly to to a decades very us a cause their There from feel dislodge any on will and difficult don't for the established the channels. palpitations think contract with in It's than regard. equipment. about therefore transaction this. I those This place own between well parties. question incredibly simple working no. is financing is The answer in HPI

Roderick Hall

great. Okay,

Antonio Neri

channel customers cover, have we and direct vast market the of of majority the we partners, Because those anyway. relationships or

Roderick Hall

Okay, excellent. Thank you.

Tarek Robbiati

Great. Rod. Thanks,

question please? Next

Operator

Citi. go Our from will come ahead. Please next with question Suva Jim

Jim Suva

ask Thanks. same I'll at two I them questions and the have time.

So – first decide ask first second. or can to you which answer

how if same Cray? so you. your without your on you be currency one include year, Does sales more said I then know mentioned to my a question with is stock as outlook should growth want clear for or from is EPS first basis, or buyback you your with fiscal is and the next but on? that So much Investor without plan I second growth, Cray? Day. Thank that adjusted And XXXX is we the is that

Antonio Neri

answer Security first question is which at Meeting, Analyst question the is what and with the we will said Tarek The Cray on EPS.

Tarek Robbiati

change tracking cash remember – So which management and earnings Securities our to capital in this. we to from flow, therefore that XX% would meeting, our there policy a at that this between is And shareholders. would return flow be of no be yes Analyst turn said will be cash we tracking XX% to

you certain can share the you. do math $X.XXXX is the $X.XX, to to very from – buyback up the a We've share is dividend dividend market that the the level we currently implied which buybacks, by figures, I've of easily of assumed level quoted is by just implied understand the and what so to

Jim Suva

appreciated. you Thank greatly That's the so details. much for

Tarek Robbiati

Jim. you, Thank Great.

have we think please? question, one I for last time

Operator

final Please Fargo. today Aaron go Wells from question will come Rakers with Our ahead.

Aaron Rakers

as have for taking and question. the follow-up one question well. a Yes. Thanks I

component As here pricing about the of and a impacts continue the to business we like might with margin. in think bit dynamics the gross trends for sounds it little the positive regard

particularly of to of seen think on trends played in about how going memory, you've has kind understand the comments of help much from within general, server how kind curious, those any much framework any content or mix just forward? just of growth is I'm part can structural sustainability you DRAM trying category, there a say the us

Tarek Robbiati

Okay.

XXXX, respect my with they units server when made China, that from since and quarter have sell what explained fiscal sequentially QX Tier in look Xs X% second higher I growing were that units year-over-year recall may we and speech intensity. the you a year been services and excluding our units, the comment So we of you with to of at up

and growth earnings go most require driver QX customers exponential for what We in key our trends and So to up that those side. of this server data on we do ultimately after sell configurations are is continue, QX, the up GenXX units the and the will we see closing of start going phase now to cater although is see that the really again. eventually AUP deceleration to of believe performance of

in seeing the medium So we that's are what to long-term.

Antonio Neri

we lot Obviously, change our the ourselves the long-term of in do and because advantage of Generation in of a we the have supply another configurations. structural the taken as the that available. become XX know, actions But pricing, to particularly of comes end, again you as take the arrangements AUPs supply, systems, structure as will online, they drive

Aaron Rakers

as question. follow-up then That's And helpful. a second

know you business about product? curious I with the materialize start portfolio, When really to Primera expect revenue the product we where but we're we just of strong at think the from growth On I'm in mentioned as that do to storage standpoint? Nimble, a

founded that in that's just to your on next think as much end those more how us what that platform. several remind of you the is quarters legacy might of XPAR think just And to business the trying about look higher opportunity this related through platforms? I storage refresh I'm present?

Antonio Neri

rack HP and Primera, as has we Cloud. software IT but HP of And don't Primera, of independent on a strong it have a as appliance, all that HP Yes. I of Synergy interest Composable the accolades part HP part a sell block InfoSight. very HP received mean, including storage we intelligent defined automation and as and with both and we our just it with sell a Composable integration, remember

market And a we strength us. and – is XXXX, I very are for been but growth that's for be the mid-range and, driving for we the as our in obviously us believe and has will a mostly market speak, interesting throughout rolling force high-end that is very

is unique. a InfoSight direction Generally, mostly software-defined. Primera moving makes HP the why component key that's it driven that solution, of softer because actually that that's is in appliance-based is market but more a HP software it's actually And on for the us,

Aaron Rakers

much. Thank you very

Tarek Robbiati

you, Great. Thank Aaron.

Tarek Robbiati

think it So let out Antonio, over to me unfortunately for comments. turn we're final for questions. any I time But, you of

Antonio Neri

Well, the said wrap joining as always today. another as believe just thank by saying and This year we we do. is had strong wanted year. I up we CEO we very to what would you second a for us did I

the will level cash have flow. and XX%. record free free I think flow we cash emphasize flow profitability, we cash actually of by because non-GAAP improved EPS I achieved

normalized that We flow. are deliver to track cash on

huge very, have pivoting the is in spoken to disciplined $X.X $X.X many I'm very many, the business forgetting about future that proud really done the times and that I pleased company more the of we business it excited by What execution are billion. a the and fact without role about couldn't here. the plays of have pleased billion the and and be with the culture work confident we We as

So thanks again and for you see joining us today hopefully soon.

Operator

this today. gentlemen, you. Ladies our concludes and call Thank

Hewlett Packard Enterprise (HPE) 25 Nov 192019 Q4 Earnings call transcript