HPE - Earnings call transcript Q2 2021 | Hewlett Packard Enterprise Company

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Operator

Good afternoon and welcome to the Second Quarter 2021 Hewlett Packard Enterprise Earnings Conference Call. My name is Matt and I will be your conference moderator for today’s call. At this time, all participants will be in listen-only mode.

We will be facilitating a question-and-answer session towards the end of the conference. [Operator Instructions] 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 Vice Simanek, President of Investor Relations. proceed. Please

Andrew Simanek

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

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

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

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

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

non-GAAP otherwise, and note on for presentation refer XX-Q presented on adjusted based GAAP XX, for the on year-over-year expressed financial call, and to information Throughout our April to from this revenue also the report exclude unless accompanying the today’s ultimately fiscal a basis, we the our on comparable noted release this rates, have on the website. amounts Also, time a quarterly growth provided on of website that all could conference are the impact has details. estimates basis We Form earnings currency. to materially differ information Please slide financial tables in quarter been reconciliations information reflects XXXX. this call discussed information on and available at for reported that ended HPE’s

be referencing Antonio remarks. Finally, after provides earnings our and his throughout prepared slides presentation the Tarek will remarks, high-level his

mentioned, call. it As website to earnings let presentation embedded and player With me this be posted and found to within the that, our the Antonio. for turn is earnings over webcast also can

Antonio Neri

good Thank for Thanks, Andy, and you us today. everyone. afternoon, joining

progress great it’s challenge. against in global it’s confront clear I a a and made communities as While surges. want moment India take to is the the acknowledge COVID, fight devastating still to occurring COVID also in elsewhere suffering that

continue Packard profitability We communities total our free across seeing portfolio. will growth challenging can our digit through with a pleased in cash and that time. growth double by revenue flow. in with demand and We orders environment we are our quarter. growth, strong and solid I’m strong very to is team improvement was GreenLake traction support that everything business HPE segments. sequential do very members, and and to results HPC this The improving, overall saw marked customers Hewlett mid-single-digits we HPE up Enterprise are had second

IT customer improvement throughout continue spending We expect in to to see XXXX.

Meeting on Security Our execution line bottom last the disciplined priorities our and performance. positively at aligned top is both Analyst impacting strategic fall

and platform-as-a-service while key core partners. to our advancing growth in accelerating strengthening are down as-a-service for our cloud-first choice areas our edge-to-cloud the of doubling become and We businesses, agenda pivot, innovation our customers

We to impact with cost inflationary have industry-wide half. our minimal tightening trends executed and well first the also throughout

second inventory position taken have for to well proactive half. us We buffering measures the

suppliers. appropriate to additional actions inventory our take agreements the long-term by will and market as continue to in engineering great demand our leveraging We alignment capabilities with

year confidence time the for free since our Analyst strong the to performance ‘XX raise and fiscal Security continued third outlook Meeting. our EPS cash Our us gave flow

call. about details more in this guidance provide will We new the later

highlights. QX double billion both, year-over-year key total some particularly revenue HPC was digit better up of the our I’m normal growth review Revenue me -- X XX% now Intelligent pleased HPE with sequential revenue. our and with let X% of seasonality. together businesses that represent in than $X.X First, Edge

an recurring margins. Our enabling This momentum our XX% year-over-year, growth long-term annual an in revenue impressive both, as-a-service growth which our gross in driver significant was made is IT. and underscores for We Company. important consumption-base operating improvements

at Our non-GAAP gross margin basis points level XXX year-over-year. and of record XX.X% is up

up of flow QX to is discuss XX.X% XX% end million, first of million. operating free ‘XX outlook and up which is above points year-over-year record profit Tarek the $XXX our outlook half our And bringing up EPS of cash and our the range. results XXX contributed fiscal of results non-GAAP Our year basis to flow detail. $X.XX year-over-year. non-GAAP high is financial a $XXX million in year-over-year, cash $XXX greater free will These

the transformation customers our want transformations. he expedience that, and Before we’ve during additional our performance does segment business a their secure I help provide quarter. modern been driving comments has experiences businesses digital in to HPE cloud of to to deliver with the a used innovative on solutions and some everywhere our highlight

customers over ARR. edge. built-in Edge service and identity Revenue the over XXX,XXX third foundation Zero of unique quarter year-over-year acquisition. momentum million all Platform added ideal At technology and is a This of integrations recent ESP, never announced profit now Edge year-over-year, a we Peak enterprises. secure for and market consecutive Intelligent Silver XX% for already revenue triple across HPE’s our contributor quarter event as-a-service for business the Aruba the quarter new accelerated network Aruba more $XXX to profit Services million and in with Aruba year-over-year. customers, XXX Edge growth been including XXX sixth Aruba SD-WAN or offerings devices. active Platform security overall Aruba metrics. Atmosphere, security grew Today, points our X connecting from expansion. consecutive customers edge-to-cloud Trust Our building access operating the to is Services were cross-portfolio well everyday critical this signature and our edge digits provides the with set outstanding our basis for Edge expanded partners, Expanding year-over-year an supports of operating and of expansive meaningful up has an

of personally portfolio that successful cloud-driven will chose Aruba Boots Our advance a cloud the and reasons. business, growth, strategies Alliance General members excited to AI to comprehensive believe institute Intelligent specific revenue IoT I team billion a our benefited this this founder HPE who and fit strong and experience retire Central drive I’m powered team digital perfect Aruba incredibly today. is revenue over Keerti been it and business revenue and for and acquired of next $X XXXX, counsel, deployment, impressive I Aruba’s tremendously remain was a $XXX and transformation. $X.X with position saw that I’m will Compute want more to ESP driven in accelerating the these will of leadership leadership new Aruba assumed our instrumental to market. our remainder momentum this and and as into is take and security frontier. with total Keerti maintain recently and fast-track He continue Group, like MercadoLibre and million X,XXX the WAN as decision business. adoption implementing XX% is leading We platforms billion this business edge welcome as and of Aruba and friendship. Melkote $XXX accelerate most the advisor Communication announce effective performance. Walgreens we for to in Aruba Manager I against role backdrop it he the Aruba of In initiatives. share million for extensive Edge Performance in when Mottram today, we High leading Customers the Phil CTG pleased ensure Critical from in than joined Keerti in is have that Phil leader an transformation HPE. to Mission has from up for Technology HPE. grateful And results made am Phil our Aruba am in the this solutions year-over-year. to to knowledge the role like & the XXXX, leadership me pleased XXXX. have I

and leader new industry the in are with the for AI solutions learning Insight. undisputed market of We an deep Age portfolio leading

execute In National research QX, years. Laboratory, Supercomputing to are system billion billion pursuing collaborations. and scientific deals $X States Alamos National robust and This of awarded several $X in National new includes next And United announced of to the over for Department we the pipeline contracts. the HPC supercomputer continue three Singapore. another Center, over Los Energy, the we a on in in Center Supercomputing advance building We new market opportunity Swiss

remain we the of XX% to have inherently on we between our lumpy in order this deliver and noted an to growth on As year. recognition, calls, X% this this revenue but due previous lead times, business track to annual target is business

quarter. in compute Our and the well businesses storage performed very

to points of points. portfolio Our segments targeting grow strong expanded strategy revenue and of storage with was XX% In the performance, operational expanded is database X% in include of workloads profit pivot was and as-a-service strong $X year-over-year and We margins solutions year-over-year. We launching revenue to EPYC operating of ProLiant HPE more XXX optimized enterprise. billion the billion operating year-over-year. In new compute, Processors, desktop Scalable up $X.X with XG in paying Xeon basis drew Intel solutions XXX off. storage, AMD profitable telco, Solutions, up three by in which infrastructure virtual XX.X%, basis for market up the deployments our latest a

offerings, and software-defined grew Nimble attach our We key see product digits. continue strength dHCI to our to ability Primera solutions, drive HPE in both rich to triple services which

portfolio into operational workload-optimized grew flexibility all-flash These with introduced storage HPE’s and provides HPE run we software-defined cloud This new any to without experience. services Xth, propelling May innovations application business. compromise, native are Alletra. On portfolio our data called our portfolio architectural data cloud-native of customers from delivers with cloud our Our business infrastructure edge-to-cloud XX%. array systems a

as-a-service pivot Our to the strong continued momentum.

annualized now marketplace. of rate go-to-market strong a commitments. year-over-year. And usage part Our million of rate as with XX%. the billings run renewal saw we XX% as-a-service average a actively those HPE are selling XXX regional at growth XX% their of Over up was contract XXX% GreenLake order $XXX total customers own of We revenue from partners

HPC networking, containers, an and ops, services hybrid We that storage, spans compute, more. of have VMs, ML portfolio all of unmatched aspects cloud

On HPE our operations. and by we global new suite data and available automates services announced and includes the through brings The of a scale. transformative data services infrastructure wherever a cloud data services new console simplifies platform be platform to that data storage Central operation and will subscription innovation cloud model software GreenLake front, unifying lives that a

multimillion-dollar years Our artificial industry-leading great HPE a the three XX based intelligence-as-a-service. recent transformative is new customers services software deal, us power to HPE example. GreenLake selected new than HPE Ezmeral GreenLake more Pointnext Carestream a healthcare gain enabled with cloud to Carestream AI cloud services initiative In on customer during experience and quarter. a Services

We provide quarter GreenLake services capability will with on-premises a HPE transformation to experience model, to Operational in and services our HPE businesses across cloud revenue well HPE multiple that Pointnext year-over-year to invest true Services also whether clouds. had in continue reported. cloud aggressively at edge, customers performed digital QX. solid as the operating growing and of provide another

We expect well return intensity transformation continued in on and continued rebuild by momentum. for and collections perform our continued well. important Services pre-pandemic as services their an equity service year, improve, levels. and above to our FS This the a full growth to role driven requirements. to HPE business see play very to Cash customers HPE growing helping they rethink Financial fiscal XX.X%, delivered of IT other

our positioned I’m is during that that communities health And changed. of At customers’ team time. members’ in a thank response year, HPE, has needs. Throughout accelerated changing past perseverance. and this our world faced made catastrophic unprecedented the their global our have company disruption. crisis and the this business team edge-to-cloud and support stronger to agility amazing XX,XXX commitment members and our a I Over platform-as-a-service strategy demonstrated time, proud significant want to we them better passion forever to be rapidly our for HPE tremendously

on pandemic the age of As you digital the and about HPE June forefront beyond is XXnd, is at initiatives. supercharged economy. more from this move digital of COVID, their how event the at hear transformation the businesses emerge center will Discover strategic At of our

Tarek across an will Our our transform optimize strong over applications world, as-a-service excited quarter’s delivered our to and that, believe customers today. and I’m their edge-to-cloud continue the to momentum, solutions our represents and it their turn to architecture, for shareholders. about I let HPE me investment data the a results. distributed review all ready, With opportunity future businesses, help and software increasingly be

Tarek Robbiati

financial quarter with I’ll results of Thank of year for you ‘XX. second our start fiscal a the Antonio. summary much, very

usual, $X.X am performance, key guide in on slide margin slides to this the flow X, Antonio pleased results QX performance reflect in As quarter. earnings highlights gross through presentation I’ll from I driven the of year me the X. sequential billion, quarter for ongoing let and and non-GAAP margin our proud mix revenues pricing now, up by the referencing the points very from seasonality. be We at offering. you particularly software-rich prior our with a basis gross of XX of slide This am robust discuss higher financial discussed towards than takeouts the revenue, margin QX delivered up prior X% to cash fact starting is that and XX.X%, and expansion, continued normal an period the report operating strong level that points momentum record our generation. our basis up from period, year was shift cost discipline, favorable I our better strong and our XXX sequentially. level

on the investments. This benefited XXX previously income non-GAAP increased related year, our our from with quarter, delivering indicated, increases the XX% due track. IonQ Pathfinder to we by our R&D Even increased year-over-year in operating savings go-to-market margin onetime venture is as operating cost which Our basis along planned plan, offset in valuations on to Cohesity with which within operating Within gains profit. investments, continued points That was other expenses our and translates hiring in and from is the expense, to portfolio. optimization non-GAAP our increase XX.X%. we our from progress a and investments up the prior

QX an full range the a ended to of As $X.XX, cash the operations free above discipline million. $XXX the across by million year now driven operational of record and QX. prior up outlook flow million be level for approximately better $XX in up With expense cash from half from with capital $XXX of working XX% $XXX execution from fiscal profitability expect business, result, prior This meaningfully end at first for was income we and year of other million, well flow flow free a at million. and expense year EPS the puts and quarter higher strong the year, benefits. strong was for as the non-GAAP we the us as $XXX our ‘XX cash

Finally, declaring million we in paid dividends dividend $XXX payable of share, per QX of a the are July. $X.XX quarter today in and

and XX% Now, our let’s with on X. revenue rich the was portfolio. highlights demand, was momentum slide meet XX% up delivering capabilities turn robust we software across to accelerated our Switching to Edge, year-over-year up LAN customer growth Intelligent year-over-year, wireless segment In XX%.

offerings Edge-as-a-Service ARR. now HPE’s meaningful the digits triple and overall Additionally, were to contribution year-over-year up represent a

quarter driven helped year to revenue year as dHCI services, drive for XX.X%, revenue service all business, our our software-defined the which respect very arrays is increased for average All-flash points ongoing margin not up full expected This Services, XPAR margin I’ll the is XX% to operational Primera strong selling consecutive of was impact offerings. focus by that bundles, including we the year-over-year, well, XXX contributed We growing services, the consecutive margin perform and the you, our points by to to fiscal also year-over-year disciplined the and did leveraging this expansion. We cost the guidance revenue involves is down which as market to Silver due CAGR quarter. provided profit OS in HPE segments storage sixth SD-WAN segments. just points quarter Edge until sequentially, with target up X contract up grew strong XXX rates continued The in our because at this three-year upper sequential improved in profit year-over-year was and the length, year-over-year triple important second remind platforms operating year-over-year, basis year-over-year SAM. line strong range up year-over-year, margins XX%. grew Intelligent achieve rightsizing deliver much prior In billion XX.X%, grew the stronger our and than and than up our customer to was meaningfully the X% is Pointnext to ‘XX. of with the revenue of full revenue contributor service growth. revenue period of revenue growth XXX%. XXXX. on been track XX% OS the further top to on Within to of triple reflecting We operating X% Nimble XX% grew growth operating storage, and awarded were on product our structure points materially segment. XXX continue growing X% acceptance Operating attach operational towards contracts. year year of segments led seasonality. momentum basis long-term very, from HPC-MCS, sales remain compute, intensity towards pricing In these reported highest by margin of our note mix business on milestones of an year-over-year. more next X% to This and Nimble With year-over-year as-a-service for more more and QX, and margin has with year-over-year service and recurring shift of three-year XX.X% continues operating surpass in XX% growth to opportunity operating Peak see Financial digits. with high-growth grew ended digits grew BU of margins pandemic about basis Within software-rich execution deliver later driven quarter is at as the normal to and expected down $X

continued ratios at As loss our debt this expected, best-in-class points, which basis are sequential the bad to within ending in improvements just seeing continues industry. we XX quarter be

We levels. above have cash also well seen collections improved pre-COVID

XX.X%, XXX X,XXX. as-a-service our well we million, metrics our added. margin as-a-service in as-a-service quarters, was year-over-year, we XX.X% our year year-over-year, I report are GreenLake to ‘XX XX% basis set were customers return to is the ARR in well past North America making Slide total pleased business. $XXX segment with QX prior target points highlights couple is XX XX%-plus Our in up up was above the this and growing of new strides was in at great reported. performance XX% operating that enterprise and levels strong over the pre-pandemic am QX, which offering on Europe. as X key equity Similar from the bringing over at That SAM. that our up orders to driven Central by and of Total

X business Edge-as-a-Service to is triple executing customer also growth happy on Based very demand continued revenue to ARR can QX progressing achieving our clearly from am XX% XX%, digits where revenue to see towards Our grow of you how CAGR offerings momentum date wins, FYXX and strong our and our strong a from ‘XX EPS to and trough. rebound targets FYXX. this performance recent the with highlights year-over-year. Slide I strong and

the program, two has cost sequential we non-GAAP revenue increased of our XX% seasonality, in year-over-year. improving past EPS And environment. with resource reflecting the the and our operational allocation optimization quarters, by QX demand have For normal execution exceeded

and delivered revenues, QX basis was of operational rate and software-rich expansion of by driven mix margin shift We the was strong points points towards basis This automation, Turning in storage positive year. businesses, a margin up record X. offering. XX the cost and takeout Edge like XX.X% Intelligent non-GAAP which next-generation XXX and sequentially from high-margin a prior services gross pricing from discipline, to slide up

that discipline. much year segmentation implemented have benefited business We of enabled us fiscal the new we operational from visibility beginning better has also each unit and into given ‘XX better

to Moving slide X.

points also the pandemic XXX which see substantially we to period. from non-GAAP can have up year XX.X%, from expanded -- prior profit You is of basis operating margin lows

field savings our and our also costs, selling on by from in done spending our which revenue this critical and R&D long-term innovation QX to have increasing expenses optimization simultaneously investment drive growth growth. operating levels benefits the increased planned We further select further while and engine plan fuel expected are driving included to cost investment hiring productivity targets. delivering and

to flow, billion Turning $XXX in levels to cash inventory $X.X shortages free flow economic of which increased billion like to in for free primarily underscore a year, slide timing-related record discipline demand and accelerates. X. up with first our strong will We This driven is and flow as cater as restructuring result cash flow seasonality our benefits. chain profile by $X.X profitability, I and of different of costs supply our some be recovery year-over-year. million half operations from backend-loaded chip investment the this would that was generated the of cash for rising operational and year cash

X, diversified Now, moving of remind the sheet. to slide me on strength balance about everyone our let

As have to improved through of April XXth have securitized securitizing have by we cash higher and some expect the on as portfolio balance with our operating refinancing our markets company sheet to cost between market the business. free financing quarter financial position as financing allows with flow. end, our to debt at ABS outlook our close Furthermore, of Bottom business, diversifying run we well ABS cheaper neutral debt unsecured strategy. our cash of execute capital position line, improved strong The segregating made services to cost year-end. free our good a and net cash all of financial growth ensures us debt the U.S. access to company and to services-related we and ample operations, boost our available a drive to operating in liquidity and continue flow have our cash invest progress

first as to been guidance operating ‘XX minimal for perspective, our We single QX. deliver inflation our that in between of observe will demand and pleased outlook is profit to to We demand environment guidance share in continue further date a well and inventory in near net where prudent midpoint our raising geographies This From QX full XXXX. uncertainties to we half. improvement $X.XX seasonality and low momentum the with per This remains cost we at expect supply continued digits measures date. momentum factored pleased commodity. grow operational Now, we from possible. to see navigate announce has to do we top impact, $X.XX industry-wide per reflect share perspective, to in supply with and non-GAAP expect and revenue the by again and specifically line proactive at once to line in the guidance the take outlook term, to $X.XX fiscal our third continue and overall October the since year earnings slide further EPS up I we demand tightening normal improvement strong. strong the which we improvement, persisting while a diluted midpoint to to the to $X.XX from our are revenue both saw we pandemic, a performance and in the non-GAAP ‘XX, share now continue per With continue of am with remain of year executed of sequential our XX. in SAM. turning respect we see certain our More And are be to but be very prior in have on increase the a $X.XX. chain, to XX% XX% $X.XX SAM

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

first are from am earnings given in raising announce FYXX original very Additionally, I and of also cash outlook, That flow billion flow pleased $XXX the at million increase raised record to guidance. to half cash free that $X.X SAM our guidance midpoint $X.X the levels we billion. our is a to

progress and I Antonio overall, in the half. the made we proud have first of So very are

well revenue We profitability cash the strong have are half momentum, with first and and pandemic through navigated the flow. robust exiting improved

compute and the is accelerating. with accelerated margins, core ARR revenues of our have storage and as-a-service in growing are top performance, line businesses and improved Intelligent growth Our Edge our business HPC-MCS

recovery our play. program, us resourced resource well the to allocation better continue cost capitalize positioned execute which to and against at made economic optimization has also We and on leaner, currently

with up Now, it you. open for questions. that, Thank let’s

Operator

Wamsi first Bank America. The Mohan comes of Instructions] [Operator go with question ahead. from Please

Wamsi Mohan

another the congrats beat I dig raise. can flow you. Thank dynamics. you if little guidance wondering full And on was bit and more Yes. free into a year cash

You’re guiding XQ have And impact into what address The cost XQ XQ, XQ? higher. that level? supply the chain and Thank slightly much you in is? are a Street, of below you. you XQ how Can little bit both visibility demand baking you Is maybe the into the

Tarek Robbiati

Yes. Wamsi, hi. It’s Tarek here.

guidance try let dissect year. we the So, me gave also QX for and full and the

things in putting perspective. So,

the we our what First, chain remaining EPS rest continued midpoint very at $X.XX feel FYXX outlook the supply you prudent reflects also want pandemic we based outperformance. $X.XX raising are our we the remain year. QX confident uncertainty. This the and know by And we see to to $X.XX of given to in but on for as improvement customer spending,

the note and you year revenue it’s we single of anchored chain that Specifically year. supply We last in line sequential the FYXX FYXX disruption with not last on important growth seasonality because QX, expect digits. for we of up in suffered FYXX, low do normal to FYXX,

better at FYXX an look it’s FYXX, viewpoint. it to So, from

areas, our expect to by we to you select expense, aligned expecting You it therefore, partially now should half. OpEx continue our QX that we’re year, important flat million income. hold roughly growth we’re the importantly, hence, year strategy flip overall for find. should under make will the positive and full HX efficiencies that is expense overall most near in levels, gross positive OI&E in a that $XX somewhat was for an second you XX%. relative the QX. note OI&E further full is be in key investments a a this as income ‘XX But that in to and And and margins the giving guidance was to QX just up we offset

to that it. EPS XX%, can the tax QX and $X.XX, be will like of this of our about we $X.XX net to non-GAAP range at be You at expect expect that unchanged in the said comfortable rate of feel pretty is we And all we the SAM.

Operator

Our next Matt ahead. Stifel. will go Please come with question Sheerin from

Matt Sheerin

to I quarter. you. forward wanted the the your thank April And in take implies to growth low-single-digit sounds ask quarter Yes. on strong. above sequential seasonal following which It just guidance, backlog continues be like

or So, you’re more a they’re outlook areas the -- seeing issues? of because from pockets pandemic still with are for customers there cautious particular dealing slowdown maybe where

Antonio Neri

many And incredibly distributed really Edge with connectivity. execute to strong. is the come that part from HPC this that mid-single-digits. in has on between innovation the orders that I’ll start. fact obviously We and to lumpy the our I’m because more up the the have mean, demand we to And we now. confident right But Maybe perfectly therefore, IT is improving. improvement know into quoted are translate is I the against I environment. first longer. across is portfolio strong see in essential is takes time business demand our to we that obviously, is what ability overall, you, enterprise. we that in see live innovation. innovation timed today’s a remarks Tarek of a and But we the absolutely of in digital The But operate momentum economy, we our I have revenue pleased acceptances. our much more digital what We order comments. revenue. HPC, we’re bit Intelligent could Remember transformation little Obviously, revenue and conversion step tell see

strong we actual the to the of in to XX%. And honestly. into almost continue year we dollars, for have balance saw XXXX, because And super be expect scale. business a that’s You

XXX,XXX reference, business to have of have customers scale. And a give on a we platform. We massive that point already

we devices. every million our data per comes billion And plus honestly, customers points manage hour, cloud. manage data more XXX that actually of through X.X X have than We We day.

continue we very And to so, expect that strong. to be

I But, business our pockets And well of stay as-a-service about chain the supply factored improvement, will think, our definitely that ourselves factored we and core in the stabilized. are has guidance. the for absolutely this. all Again, with we half, well was And then, particularly in the storage. cautious guidance, to continue see we aspect of second strong. position

the raised we why it’s So, guidance.

Operator

Katy ahead. with Huberty Please Morgan from come Our next will Stanley. question go

Katy Huberty

just the to Thank I coming the quarter you. My well half segments second as of about afternoon. guidance of Good improving years. in below back in normal trajectory that well. versus growth your back, half seasonality all or come to XX% EPS the want with past on congrats reconciling assumes EPS Tarek, the

half typically have low EPS second to You mid-XX% mix.

the I think, supply inflation, general and chain dynamics. and those cost just then rank most Can on I and of just your -- back you’re EPS that And forget rank making COVID mention you. are well, those terms can factors did around you first, Thank I impact having OI&E any? being heard constraints and cautious then, you guidance? half in which investments you

Tarek Robbiati

Katy. Thank you, Yes.

to we a So, more already. color said let me bit and try what little add

that strong we of very the a and all, So, We that exited first so have that This is that FYXX very lean, cost rate entering gross we’ve EPS investments this momentum run remember, making, a the far. posted that performance very our per margin In with program. at and the are is expansion has in operating earnings per of of continuing and a into allocation fact actually from you with that in the we QX Very driven saw benefiting optimization demonstrated level share. $X.XX strong this $X.XX at QX. was also comfortable share. level showing we QX, and

QX look had forward, the earnings But flow have flow, cash there that free chain. also this on cash at lot a you we free of earnings uncertainty you is into translates flow. of on translated when into supply the degree now, and a guidance into to which fact obviously, how the some as what moving cash is factor benefits into free of result strength So, QX,

two said, the is Antonio units in very is in year-over-year. demand The with And in seeing very board. are range to that as that all other revenue strong at the see demand is guided is HPC-MCS, up Aruba. in dynamics. reckon the strong across we very we the that, can Having This said have Compute. going we SAM. Although, And also you trending The also demand strong good.

is income half, cost that optimization into drives concerned. the the demand, the full it also other ready is gives far for we year we’ll and continue we program we so. flow, of had as a to the and but other inventory on We taken two to be on up is setting million QX, and one have to of and situation world we’ve expense the in the is that fiscal magnitude ‘XX. of EPS the to for all in which continue expect for They’ll ‘XX affects the deal with Aside supply $XX dynamic flip the would across QX. year, going chain, the fiscal of what an free And and OI&E year quarters do inventory the not final steps, QX be order you cash sudden from industries, element QX, and buffer be then, as demand second an QX. each for EPS of across to QX, OI&E, do

very would So I well. resurgent demand overall, we’re the managing, environment say,

We’re standpoint. lean from organization an

that earnings we’re free you margins the also, is could we’re posting. Our very, shown what cash see well. on very by power we’re flow, doing And doing

gives that the effects a So your play. of various with to hopefully, you rankings questions at the color

Antonio Neri

we Antonio. is to delivering to the things. gross I just this seasonality, matter people But couple is, fact reinforce a into the the of get record-breaking trying are Katy, want of normal margin. sequential I it. understand

we meeting the it’s is fact portfolio, that’s business ready We the future chain our today uncertainty. our demand, are And and tomorrow. raising edge-to-cloud, despite customer guidance the demand. huge just of IT EPS in that unique needs for have it’s supply the And not

quarter testament or from momentum year business. have maybe fact we because a the now to XX% ups obviously, X free unique the that again and raising more of that Then things and you end, raised in OI&E for is we the downs are like I the EPS Tarek’s it’s flow. buildout. the of every takeaway full the point, of have think when the than And at And times. the guidance year, the year. the we is And so, look full that’s beginning right, cash in But has inventory more

Operator

come McNealy Kyle Our from next question go Please with Jefferies. ahead. will

Kyle McNealy

the could activity of had hardware impact. COVID if give to see upgrade worst your of days to position expected wanted than stronger sense I saw the We out base. installed coming systems compute a you us of FX for

And you installed how compute on-premise start to is upgrade of For versus for guys, come now age year? high are hardware you average through last your levels? activity normal after seeing the any base COVID-related delays

Antonio Neri

But, of It’s installed to as that and of on our remember, Kyle, different in Obviously, life average should is at announcement have into today as-a-service. provisional we But terms and the these shortly, we that more base obviously, cloud the And this the but ProLiant fact and point more that we years, and market platform. at, is in that base ProLiant that’s making consumption stay one platforms Definitely, a bring our base the the cycle come And replacing XX sure. revenue, more The and between to sake consume is infrastructure And technologies more the as source computer incredibly here a probably but to time, able to years to with which leaders the then are built best just the market options for share. not the time. more not to elastically look it’s have, installed unique just more whatever is you portfolio, to Well, have over you well in infrastructure. large. five it a that structure demand our more sense proposition replacing franchise, hardware. more is a for be value which also only experience a solutions. in a it’s of pent-up really be hardware modernize able four, tuned also optimize in pivot you management. and

think replacing infrastructure of workloads hold model. cloud And or consumption-driven GreenLake and to accelerator sense, in transition or a opportunity. we big the experience repatriate a CapEx it’s business. true is us, not just on-prem but that makes for be old where can an I workloads on-prem able It’s the so, deliver our because our it And actually now

Tarek Robbiati

use to for decision portfolio, decision asset need Kyle. for benefit bad And extremely an also, another if not from tend as the has well to doing management let modernize with because our infrastructure we or the way equipment the with use. modernize a the pent-up me to people and it’s moving extended us, the see isn’t add availability made, to But really infrastructure of the which infrastructure aspect to the been financial infrastructure want we that consumption There’s more, business services the also to demand used. our supply they and actually the this, leasing is and absent

on all happy performance business and on both, us we’re compute core that And for good it’s So, very fronts. with the HPFS.

Antonio Neri

as-a-service, hardware of comes not cycle, services as-a-service And is it, the is that come just let’s Pointnext because last obviously, whether not operational least, even way OS. it it’s but forget with attach the every upgrade the traditional with better XXX% or because

attaching We margin basis you in also was fact have QX, we more And seen attached. are of points, compute, infrastructure. the that’s richer configurations which the saw gross expansion services in why after and higher XXX services part comes our to

Operator

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

Aaron Rakers

congratulations Thanks raised and on the And question. quarter the the Yes. for taking guide.

early up about expires in that is believe One ‘XX. of how of about of And kind on use I’m on just optionality, thinking strategic Thank or the thoughts I you are of put Any that M&A you how front? obviously HXC. kind updated things your are on comes any thoughts any thoughts more which asset, thinking capital? the on curious that you. flexibility

Antonio Neri

and start XXXX. decision. will Listen, a I have we will then make May still expire comment. Well, the year put The Tarek roughly to in

the that unique in joint everybody And And our ways because to venture. hard that’s with of right, joint compete. market and think to many through venture HXC it’s way China the is a the is China. setup needs very been a partner market and growing. collect remind I fulfill to market level me shareholder obviously, also largest us, like has driving second that from IT a incredibly values But Let successful through is unique that unique, reach obviously dividends we

capital. our not So, with China, we way of action take have in to of right one. is best capital to the participating do what decided continue to relate that But the the use and now, one decided context we we what or will other in

for you if know, and We any the is as the future. explore have what think also growth don’t shareholders Company for continue return to comments? to Tarek, best position we about the I

Tarek Robbiati

well, very Antonio. said You

time The in XXXX. have We put to the April make decision. expires

and value. than sell little of is have that XX% stake a our a or accreting all bit we So, a is stake that year, continues feel this that part units. to We less to in

from interest in everyone fiscal for fiscal contribution to perspective things put ‘XX. the equity grew $XXX alone, call, to year the Just year XX% ‘XX HXC on million for in over

our to We accrete. and growth the continue of to stake continue, expect to that value therefore,

Operator

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

Shannon Cross

general was just your been couple Thank about much. and going M&A years MapR. since a acquisitions of in about I since you ask year It’s to very thoughts. Silver Peak, a

in you you. I’m Just to acquisitions think the I Thank in your growth wondering position might you but you’ve what know approach with made small have, where liquidity at the are and interim, the some and portfolio? cash some holes flow your you’re

Antonio Neri

always you. September has Yes. we data done momentum in stringent our Intelligent obviously, and XX we them, completed been of probably important last fully and very start into have very was that Obviously, all the on ones in software-defined around now forth. accelerate an is now And M&A I always No, approach. return capital, But our platform edge-to-cloud we about, in about our bringing and Peak integrated it’s disciplined particularly as Edge least business thank business, our property the along seeing at to are and and of talent assets vision. Silver intellectual have done, invested now component year strategy. has the doing way, so and

continue the there, be notwithstanding disciplined. we that to again, evaluate we have what available So, incredibly fact is to

our it, for again, will I take evaluate is the it’s relevant if evaluate valuation Tarek, strategy if everything, talk And again, an that. high some sense, know, of there know, we whatever seems have But of we is But any But there that strategy. right type too Aruba-like important assets. I forward. component our for we the don’t you to going comments you As we a of bit on always will and out the action. something little be things. makes about

Tarek Robbiati

-- I three a discipline cases, exuberant. important Silver to in type for focus to Peak find think bit I very two maintain where press the Yes. context the acquisitions, Antonio to Shannon, we a just some and class hesitate of valuations and go second content assets, little in particularly some in I can of don’t a it’s mean, will if button. and But,

Operator

Our go Amit ahead. next with from Evercore. question Please come Daryanani will

Amit Daryanani

I question. The I guess, Good afternoon. more is what your I Arista have side, taking Intelligent more And about my hoping on than other XX% maybe. Edge think, performance. for talk of impressive, the growth, thanks peers than was networking most had you the if could better

would we double-digit That may So, about back into helpful. back of maybe what negative you really And And beyond? OI&E could as the and then, half be have missed driving from growth can the really is clarify just big is talk the a what durability half in over in first half? growth this, I flipping such completely. I to because of Why in you it the positive to here? if is the inflection way ask the go

Antonio Neri

I data-driven. right, three step of COVID will obviously, cloud-enabled in need will years way mean, digital IoT OI&E. start, the future to connected. the obviously, Tarek talk pandemic, that said saw be and way. a and the look to economy. the edge-centric, the obviously, we growth operate acceleration. But, and grow. that we Unfortunately, digital And I you in enough, through I the you we and played the for Sure. think connectivity, about continuing enterprise first live will if is And is when Interesting about transformation, the about that it’s exactly ago, be

everything users not computes, is and generates If everything participating. is you’re connectivity data. connected, more the you’re not everything That things not to just any network, connected -- as devices

And amount we ultimately, or to an a cloud-native protocol day, proposition adding tells at will platform the value a connectivity you experiences And we’re But, the and provide. is the that I need resonated. can and autonomous it’s again, data fact so, about able requiring connectivity a happening XXX,XXX Wi-Fi say, But, of what example working can to LAN XXX customers from already do at And an intelligent And that’s a whatever out BLE you the we’re what’s haven’t Because and We cloud. scale. there. Zigbee, seen the WAN the level port in our that that you or we every customers, way. massive innovation the transformation. a true the collect port port, a with is have or of provision digital Wi-Fi forefront remote before. for obviously, is

we believe this durable. is absolutely so, And

We business. are very this bullish about

platform, continue to We the are digits own simplicity, and more the work. way the expect talk And new the particularly for they add when with the to for year. love we partners, we this powers of And their you customers XG, edge this Aruba computing to business going functionality that double they cloud grow and business, momentum. love improve accelerate balance by experience, to to fact absolutely and love experience that then you their as

originally have Aruba same the edge-to-cloud model, was the we deploy the we Tarek, excited. Company. GreenLake. And model we it’s whether why deploy not created. good platform now Aruba true a the pretty with running deploy of feel is that’s the which subscription we the a growing in compute where very run that are new of triple or the is that we differentiation software, Aruba And workload-optimized cloud one the is as-a-service that And platform. it’s and or OI&E? why about the we platform And data we the have made rest on When the of that’s as-a-service runs the business. services on prospect through the thing we that’s unique whether that in we or the top on announcements is the then, And this May that’s Xth, of lay So, we why growth on digit backend marketplace. other

Tarek Robbiati

Yes. Thank you, Antonio.

second expect OI&E, thanks you half. negative have the front, a flip into to question In the we as effectively OI&E in for OI&E effects. three asking to the On why

shifts while regular The is have the a quarters, return interest them said and timing very to the cash between on and we contribution which the basis. first economic of before, HXC like that they and through one happy with the we us HXC economic

first There element venture a the there had in quarter the IonQ. for line. the the million this is doing first and expense income. income then, which in it’s Pathfinder is in in portfolio, quarter, the basis my script. across So, from did the also forces. OI&E our second is in is third portfolio, has million the We said This force Cohesity second well $XX aggregate we force in HXC. timing We been that half, a of we OI&E benefits on revaluations extremely had, $XX in investment interest and flag our three an the And

So, OI&E million. an for and year $XX $XX for the first full income, million of of half, for we’re guiding expense the

for That’s solid. the number, on our it of into very, bit that an EPS the right? is you forecast. turn if full do call. $XX thing factor reckon change the does when to a of it’s for the have year, all that divide that you explaining that’s And So little million the million to compute swing. QX your not about the swing QX yourself, It swing $X.XX the guidance or OI&E level swing, performance the fact EPS factor $X.XX you a $XX to That’s math EPS operating you hopefully very more there. remains at The

Antonio Neri

all raised of the will I have we And that, say despite again, guidance.

Operator

Deutsche Ho go Bank. Our Sidney final ahead. question will with come Please from

Sidney Ho

Maybe expected on but in HPC last you Thanks Whether are taking QX. taking customers? from be for can a accepted growth or Maybe talk that and can you QX. hit just and in that business fiscal especially QX X% fiscal you results that after And to normal the being normal there about seasonality close more could is on gives two confidence flow. I my draw question you solid cash Are sequentially, questions, broadly, longer it’s to business the to grow Thanks. trends target? your the seasonality, lumpy. understand and for had business. what’s deals can congrats XX% My by slowdown any the what that businesses that quarters?

Antonio Neri

incredibly momentum going strong I’m financial talk Tarek the talk the me can start. for business. side. this to Let more is in Listen, more bookings market. on the

cases, as starting of do massive three a end at long XXXX. bookings in run then And some be as So, especially the large which going to at to look when the you I to have deals and and And amazing. business we as It quote the system side you doesn’t These have booking months, can deploy running, of need the be accepts deals. then, exascale side. Seasonality revenue play next the systems then And look as the really just you that that time won. built, this installed, to the have that dollar year in can you year the are multimillion the these you workload workload. we’re matter systems, with when these some The to year to continue you because of only is in be fact shipped, can recognize well that then the revenue. customer quick vary. out have

run the sometimes month. But from a on -- take floor, the up need factory a to days. It’s just of it’s field. system reinstalling the And football sometimes to you size XX workload can the for

the think seasonality. not would about I So,

short orders acceptance chain business confident lot install a X% the the this year, pretty to XXXX, can. much is of we’re term, the then, around about the and growth even keeping that life is and built to going of CAGR. year as the and think business, softer, in about momentum, we as And XX% system believe deliver right? cycle this right, feel itself. gets supply So, book long-term the just this this of we we the growth about that I But, good

you you all very AI we’re want at continue comment why more the... before. a and data remember, to about system the technologies, learning about this we and fact That’s And exponentially, on and to bullish you the back seen why the level on business. that’s of it’s talk this grow That’s maybe Tarek, So, need haven’t day. deep compute.

Tarek Robbiati

Yes.

You simply said We was digits the well, up very very, remains very double momentum it strong. look, QX. say, It order in Antonio.

out that the We business. order mind exascale five having $X awarded large be exascale of We It’s book to have another $X of are The awarded years. in contracts. very of in includes win that we six opportunity billion over win the contracts an a The rates space. inherently we with high. next pipeline observe three are billion over lumpy

you I So, it on think if at not quarterly picture. best probably look a the basis,

the at to and tractor starting that revenue, a fiscal look strong CAGR for the well XX% to to have be to as lumpiness extremely the overall. basis. segment, product you achieve year in confident at feel mix worry nature profile also And year profitability business it we very doesn’t revenue growth we have multiyear the the HPE of positioned You that beast, this lumpiness is a a to all. of because X% on of per of including as very HPC-MCS ‘XX. result continue the us the And a so of feel can It’s speak. We that year,

Antonio Neri

as growth XX% of right? said represents we anyway, running the out XX% already time. earlier, will with go be will the margin growing I HPC core, that bigger than know continue, the Company’s revenue. different that both of businesses at So, at as the today, right, I And edge which, And double we digits, forward the are

that’s around close, again, specific supply in overall momentum, our the very execute year, to half, see this that free set unique that’s for very a consumption-based. and flow. again HPE. we The has execution, to I exciting with ability And by but marked offerings. time the there think in, And the I’m in And we Just uncertainty that to timed QX free I needs are edge-to-cloud, and pleased our cash results strong perfectly cash the profitability EPS proposition in our we and customer why back that our the flow. demand a revenue HPE’s once HP it’s I believe be time raising despite to improving, of chain to they future is the third believe why is innovation are for is Well value is commodities, and and going all factor marketplace. is

really worked pandemic. hard, have the We despite

the this team a has And communities And Our clear way and purpose Company work. we challenges, has people incredibly to the we been resilient. the advance live are despite support continue in. to

And safe you for to thank hope today. call continue again again, you joining And to healthy. you soon. So, and stay I the talk

Andrew Simanek

Thanks, everyone, operator.

can think ahead go I and call. close the out we

Operator

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

Hewlett Packard Enterprise (HPE) 2 Jun 212021 Q2 Earnings call transcript