HPE - Earnings call transcript Q2 2022 | Hewlett Packard Enterprise Company

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Operator

Good day and welcome to the Second Quarter Fiscal 2022 Hewlett Packard Enterprise Earnings Conference Call. My name is Chuck and I’ll 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 our conference. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. to call, presentation Mr. like host to now today’s for would turn over the your I Andrew please proceed Vice sir. Simanek, President of Investor Relations,

Andrew Simanek

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

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

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

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

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

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

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

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

Antonio Neri

once. you, organizations help more supply company. their our businesses ability thank HPE address good you Once usually order ever, few the portfolio the made conditions them confronted HPE's Andy all steady and for enterprises tight continued short-term. traction for today's reflect quarter. their goals need their to it customers in Thank customer second months at shifts have environment and for have call. certainly The a our joining with quarter created Well HPE's and not presented of everyone. The around and that afternoon macroeconomic global progress the underscore world challenges significant edge-to-cloud differentiated becoming has backdrop even our market are our profitability, earnings them last key needs market strategic results harder for the But while second in in challenges, sustained digitizing was orders to technology successfully customer global than partners competitiveness. revenue, weather to the growth, performance to realize again, generated these and in across industries. transforming as significant to dynamic increase

attraction a quarter underscoring that higher, or of this customer growth orders We in second quarter their demand prioritization the XX% to strong persistent compelling the both IT orders customers, XX% year-over-year, in our from Very has spending are logged row year-over-year the fourth HP portfolio. demand which growth our seeing rising and better. makes drove

quarter of year-over-year, third to straight as-a-service contributed doubling the platform Cloud HX GreenLake HPE growth. triple-digit Our orders

see our which our platform, in to is sales interest evident customer in a great continue pipeline. We deal of

impressive seeing and our grew more particular quality, high segments, orders respectively. is business Intelligent AI and the XX%, midst backlog $X.X with orders and bringing orders constraints. record than an backlog against we to of Edge across HPE break revenue approximately X.X% XX%, XX% are backlog billion the rose of record strength there a HPC climbing industry are in in climbed and -- of $X in orders Total supply Our ARR we Compute year-over-year XX%. to billion. now

We portfolio differentiating our as-a-service have the momentum across model with us.

into we through some ability our though, as areas strong constraints, as we the improvement that the we This have where into customer limiting executed continued quarter, strengthen fully back supply identified we expect the we well move half have translated fulfill growth. a better, orders combination of did confident higher am orders as year. and I to not could of where revenue can

year somewhat biggest that quarter's we were is Non-GAAP timely XX%, non-GAAP the $X.XX, thanks with QX half net strongest supply disciplined actions. half we together limited the earnings per execution our gross diluted basis. of performance standout, continuing operations even on margins which HPE second and at chain, if to was by share a EPS pricing of results, maintained XXXX, the makes first Importantly,

year As CAGR growth our are XXXX we outlook outlook. Tarek full detail of our for X% revenue revenue will long-term to of reaffirming you, X% and

reaffirming billion are also of year guidance full our free We $X.X to $X flow billion. fiscal cash

to in As and suspended February, announced in Russia Belarus. we sales shipments all and

in for with the both these countries in are of longer that determined to exit. we'll tenable orderly Therefore, closing maintain announcing an it's countries. operations our today, managed we now have operations and We us no proceed

countries revenue represents in in of year X% fiscal than these HPE's XXXX. less total business Our

results. earnings million quarter $XXX of Russia per to our booked have impact share We to the is which charge related business, second our in pre-tax GAAP included

evolving quarter reflect all net are a rising Meeting We non-GAAP environment. to to and $X.XX, between exchange In October. to logistics foreign is third action and necessary economic to unfavorable the Analyst to expect partially conditions the term, this the Securities operations, inflation updating at provided in are we recognize movement, to these our and and the $X.XX winding less dynamic fiscal we full which supply share short we partially earnings geopolitical down year additional per guidance related our significant last charges diluted constraints, contributing

portfolio. persist However, our enterprise demand continues to entire across

in on continuing demand the even components to the and closely we into of to today's prudent hard see high-quality backlog translating disciplined our focused be growth, in on continue the can a When be to position. are in supply commitments. secure decision-making We inventory environment, and our manage low-value while to our profitable will market we deliver

supply for we specialized question we these our for help is positioned very we at of of help join the opening month which strengthening our us to later look Czech scale the solutions first to including deliver will live hope years. next-generation we and you firsthand down to Las of that AI comes on chain, we the HPE for us HPE well There digital new future, is resilience to I when cloud in strategy factory enable technologies, a no this our customers in As host address solutions. to Republic data will Vegas edge strategy double strategies. transformation. the many are center and three to customers the HPC have our have life solid how first demand time the GreenLake Discover see modernization to in HPE

GreenLake few now customers lot a added the exciting simplicity. than have months with available that We we XX greater for our services as services of HPE. an for We and has total cloud and cloud to deliver through show it XX been on native March, new announced will In choice you new platform. more HPE features the

more quarter actively We by HP of number also than to last XX% same period ecosystem, partners our continue GreenLake selling year. partner expand this the increasing from the

in the workforces experiences. times In are X.X addition, partners year-over-year. deals create engaging as quarter GreenLake need who distributed increased connect HPE organizations securely our the high to and edge, sold At multiple demand by capabilities

and focused XXX,XXX services automated that now access customers HPE And convergence absorb embed easily of the delivering the GreenLake evolving on Aruba are networking cloud-native GreenLake, We than more HPE have platform. more with can Aruba to to configurations. networks intra Central

solution. a hybrid customers We and HPE they selected data solutions, hosted need on-premises solution. Google know the cloud and distributed cloud deliver will cloud GreenLake an privacy for As prime requirements. flexible experience strict recently with provider organization were multi-class residency, as to on-premises secure for Google's enable adopt also we security,

more BMW XXX their Worldline, the cloud to hybrid make across and a insights economy who our refresh. company's of cashless nearly unify HPE we in largest funding continue to vision. cloud had upgrade From data to customers Services the allow Worldline hand meaningful as renewal QX, upgrade fourth data have payment is and Financial outcomes. GreenLake implement it streamline management GreenLake, continues chose that with to to to in the against accelerate perspective, Group, business HPE who attracted customers extract XX% the to using GreenLake approximately including HPE program the Our unique world's enhancement offerings to in from its new provider its platform major data locations global asset their a a deliver HPE performance

For the the Learning first, without compromising the users model fastest second, deployed exascale enables top distinct learnings the the accurately this supercomputer, first cancer data distributed list first this instance, HPE from computer. the world. designed privacy. world's To genetic And and is predict list world's can generate and supercomputers to than exceeding supercomputers three time are the an share one creating X of we of of the became Learning, which insights In AI performance has most at and fourth, we in to HP number environments. XX and on XXX share time. the HPE threshold models in introduced sophisticated system sites Swarm third top in exaflop the through AI the April, super taking ranked diagnose built to already this by supercomputers, AI ranking put early Green is faster XXX colon week, in and Germany more the an and applying for performance perspective, two energy-efficient number Frontier, cancerous four HPE that using learnings alterations. in Swarm One edge university on

years reimagine the dramatically. of would have challenges you ever can release month, HPE we service this Our more to innovative own. could more pushing to they XX% adopt with customers sustainability customers enterprises how improve HPE spent Living that our tell even more the IT while several customers' it the that Progress industry relevant last carbon so to efforts us than our see I of I require think their our versus share are time partner is goals, when helped of the Few we by before. helps pivot their our my will ourselves meet Report, at footprint the about to goals. they Relay about XX% our models. traditional going their world, reduce futures, innovation they and least an support also predicted as when way customers around Later in than in

on future, look the reflect in our on deliver ability and I ahead commitments. QX am As to to our confident I

We an our strategy have connected the right with market-leading to GreenLake expansive edge-to-cloud on HPE through trends, market platform. that's capitalize portfolio

apart of perhaps our continue We in and results create and execute our momentum will to of been through our deliver have and ways results stellar let our significant segment you to importantly, and performance. a continue with help for overall will walk our who Tarek value the customers. a the members XX,XXX make innovate team And most -- purpose to team. it details over team us With that, me turn to that business company. further we we shareholders. have I proud set us as on This am truly possible who have

Tarek Robbiati

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

be on As highlights key to presentation earnings the Slide performance. X through guide usual, our discussed Antonio referencing and from our slides X. the I'll you

Slide performance with our starting discuss So me now QX X. let details,

$X.XX. maintains row We This the our provided to growth environment our $X.X year-over-year continue X.X% outlook upside. our our line up Analyst shutdowns that normal delivered of order limited outlook operating fiscal seizing in edge-to-cloud $XXX our XX% demand of at to our to in quarter X% total more more same longer revenues see year-over-year. with COVID-related as contracts and growth quarter. in EPS and robust or sequential services up fourth This better XX% a X% portfolio in CAGR outlook Meeting. both X% order XXXX approximately seasonality supply year-over-year, in with revenue adjusted with our Securities quarter, despite unexpected billion, last support point million differentiated across XXXX of by our of growth confidence and our than a marks China achieving revenue The challenging Russia QX impacted X% the We term revenue for of by one than margins year and the by and more currency

is and between quality. to been new most order levels The rates, backlog yet very Given priced the increased gross and our further order record delta book preserve to revenue growth remains and margins. has high our importantly, firm

by pleased costs. We margin non-GAAP ongoing of environment year-over-year, mix just supply the primarily our are towards our despite reduced driven constraints strong reflecting and inflationary points leverage. that software-rich from XX chain We XX driving up revenue and impact basis gross with offerings. are particularly and logistics continued that resiliency margins supply disruptions our margins points delivered up shift higher-margin operating discipline operating pricing of Non-GAAP Russia XX.X%, non-GAAP and down gross were basis X.X%, the incremental exit material from the and sequentially

of benefit areas from robust valuations portfolio. the our gains in and Within in term in related HXC as expand we more our other benefited Pathfinder from investment we high-growth, and and income revenue portfolio. the leverage drive increased further short to margin-rich growth expense, investments to performance from operational margins operating in expect We

approximately we million a and income million of result, prior expect to XXXX income non-GAAP an income. guidance $XX versus As expense now approximately fiscal $XX other of be an for year

share Given approximately for of Russia, and despite per outlook and to China our $X.XX from $X.XX of of QX. strength we diluted range net delivered midpoint impact gross $X.XX the margin non-GAAP our $X.XX, the near in earnings

delivered also of lease an GAAP of per $X.XX. disaster consisting reserve Russia, increased related charges to share primarily includes $XXX We million for assets. of financing earnings This

record exit and outlook GAAP-only updated significant factored today, expect already. already in to that charge our QX less announced has decision we been that the to have we With into Russia

the As previously a a QX free be half is to line indicated, first in cash million. was flow we expected seasonality $XXX in and of our use of normal cash that with cash use of

This significant strategic the in cash half. better half, to expected working tailwind during position reflecting working is current will the a navigate our revenue made have and environment. convert second actions orders flow, the investments become to capital while to first inventory future in us We supply capital into

to shareholders. dividend declaring Finally, quarter payable $X.XX our capital in per are $XXX current We the a in we continue to paid QX substantial return July. today share dividends of of million and

$XX returns our repurchased in in We generation. our million capital our bringing four million, metrics of also growing $XXX shares, confidence as-a-service key total to cash future flow reflecting business. Slide year-to-date highlights

new year-over-year, strong Total XX where HPE quarter very orders see the our Aruba up platform than to create across Central as-a-service for orders the a this row converge operational third continue We doubling. a portfolio, more to as-a-service GreenLake with introduced momentum and quarter XXX% we experience cloud in marking services with unified users. all were

some Our million, to was year-over-year XX% installations. continuing up supply $XXX with ARR to limit constraints

confidence of increasing the last current ARR of us XX% While growth the X in our of gives QX, both and as is offerings. strong year our fiscal margins long-term in delivering more year growth and with supply environment, in points cloud to somewhat our the CAGR expanding XXXX, over to our is continues the to order several up to software increase quarters best volatile SaaS indicator services with XX% business. health This XX% the than fiscal from target this year-over-year XXXX mix

now turn highlights segment our Slide Let's to on X.

in solutions growth consecutive accelerated fueled XX% show Edge, connectivity demand operating strong quarter in XX.X%, offerings, in We and lower secure record double-digits. costs, component reflecting particular year-over-year, and growing growth Our logistics Despite the delivered backlog up higher XX%. year-over-year, strength both In with operating increased margins line by demand. improving and Silver of Peak outperforming supply for more the grew leverage. and to resulting our businesses levels of our top momentum the revenue orders disruptions fifth China, Intelligent than continue Edge-as-a-Service competition of X% with demonstrating strong

our points also to quarter record of level and year-over-year, by with actions demand In of large margins grew now acceptance year-over-year has been that Revenue HPC levels improve was order driving and and QX. contracts awarded that X% impacted expect XX% delay to next one from robust price are than $X growth growth higher We under that six revenue of AI, delivered total sticking. billion. another remains more previous by benefit impacted just in with customer

operating end profit couple for of by the mega a ramp year that Importantly, deals close project was by QX costs X%, in margins of expected range to quarter, our a consecutive In Compute, impacted the operating revenue return in up the robust historical for up more the year-over-year growth over will levels. difficult order was remained XX% environment. supply fourth with growth and more was reflecting while to

set been increased pricing in We up XXX and effective at dynamic products. XX continue showing to XX% we the in are is logistics and products. XX%. above down strategy has margin own basis points a basis sequentially, be supply operating another The a record well Revenue up gives our was very backlog cost margin-rich IP that on focused points target towards skewed of backlog. performance owned of our at XX.X%, Within our reflecting that X%, us high-quality product achieved executing level to IP and for year-over-year results very long-term supply Storage, SAM constraints our XXXX managing

revenue we mix result, have a this our As that margins quarter. pressured to continue unfavorable

revenue to again fiscal backlog services, With similar margins offerings. for total Block year-over-year storage orders new quarters few grew improve towards we Electra mix digits next mid-single operational more rates both to levels demand and favorable year growth over XXXX. to Storage the reported, and work including as expect and We through respect [ph] our our steer services, Pointnext our as

with Financial HPE flat. Services, and know, most As performance business. volume for health increased the important this is long-term very was GreenLake year-over-year Within in X% you strong profitable our revenue of

to systems extend residual to from of value continues higher tend a supply-constrained in use customers the profitability their benefit environment. realization Our as

XXX margin see where prior return XXXX. are Russia. six points in and operating can constraints, was maintained the Our particular, EPS shutdowns Slide remains highlights support we've the supply year, China and contracts target XX.X%, from relatively at also year performance XX%-plus constant set seizing and at incremental from you services despite equity well our XX.X% SAM in last up levels from revenue on basis above our the to

EPS The spite to our be reminder, across improved we've of can slide we as-a-service driven to approximately edge by earnings mix of a strategic impact one spite favorable Cloud a in million to This delivered and we and our for point we XX.X% margins quality impact QX. actions delivered a showing and of seen operating impact shift our costs. In to quality on where portfolio a our gross of and as $XXX in an seven, than this their margins headwinds, As combines to Edge more revenue in driving resilience component better total earnings of both execute strategy. these the increased $X.XX the non-GAAP been pricing business. was and logistics QX towards continue

our Moving our and margin to of quarter X.X%, leverage this non-GAAP slide reduced Russia. you reflecting challenges supply exit can the from operating operating from see eight,

However, measuring achieving better much office basis. we when are sales an efficiency investments orders in our on productivity and

future everyone backlog, let's continuing we about setup unique invest slide nine, high-quality China R&D in reminding our go-to-market for in our both to growth. Given more and time HXC. through some spend our are On also

prior including risk. benefits did We setup. path our enable in and IT the to any longer market, generating our up XXst, makes we we value unique XXXX. their the We times term before in our extension, flow option risks, largest portion can XX value XX-month through of is our shareholders as of extended we struck strategic although to proceeding in that financial determining a that at is investors restructuring, have with involvement this second October geopolitical new continuous food Unigroup complete China, stake. April, see will growing in disclosed an rising execution balance of HXC planned level and which cash at trading China a As existing the for significant our P&L presence with you are and X-K a forward fastest-growing to the late earnings to to and

XX% interest of equity fiscal has Our grown in year rose in XXXX XX% and QX this year fiscal XXXX.

term at this We you will to longer valuable a date for up we as asset. arrive solution keep

Turning of free cash to of the slide strong by to cash free use being is the cash flow second normal cash $XXX with was followed of million. a aligned of half generation half. use XX, first pre-pandemic flow a our our in This seasonality

uniquely impacted chain of strategically in half flat this supply inventory in were QX environment by as QX. first been The built year we levels has the that also

improve chain visibility We as of financial orders the in and in converting year. strategic generate benefits. tailwind working attain amounts of put to the further into a begin position will are us operational healthy taking and and to better This supply actions back capital half a will turn cash

We expect $X will half, in year of flow fiscal we need a have demonstrate strong the deliver billion billion. to second and execution $X.X path to cash but forward free to XXXX

on our Now Slide turning XX. to outlook

points at two-point to last year. a is at top date, COVID-related the also fiscal We XX We half. backlog that line our very benefit first impacts a to want outlook headwind our a the start fiscal this strength SAM This $X.XX. believe to be beyond. gives confidence income received Russia, do now perspective, growing the XXXX and reflects last in From expense pleased business in are full likely year the provided the year the of to year. we prudent in expected growth opposed continued supply orders well are for and the to exit with China range $X.XX we year in revenue revising movements us offset ongoing will October, unfavorable given by original next short into in more currency disruptions non-GAAP the in of and our to the other challenges since revenue fiscal the of we've that the basis of remain term, as back in outlook XXXX to future the Currency

to year outlook have still in result, end to which for term. specifically, China the fiscal expect and QX will impact revenue for XXXX, low a shutdowns in for reflect well our normal below our seasonality expect More adjusted slightly that bodes up XXXX. backlog, with growth This to be lingering the have a sequentially. X% strong X% single-digits confidence short of to fiscal levels we revenue expectations currency year elevated XXXX is of the our As we year

As a for QX we EPS $X.XX diluted expect diluted result, to and net $X.XX of EPS GAAP to non-GAAP XXXX, $X.XX. net of $X.XX

with So how are on strong executing and in first positioned With we overall, deliver the XXXX. I'm we SAM during very a our opportunity set high-quality financial pleased capitalize demand to of half ongoing backlog, but at our challenging XXXX. all are against environment supply Cloud year fiscal Edge well the commitments to of

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

Operator

question-and-answer come [Operator from the now Aaron begin Please the We And question Wells will Fargo. session. Rakers Instructions] will with first go ahead.

Aaron Rakers

guys. that, about Can Sorry you me? hear

Tarek Robbiati

we Aaron. Yes, can

Antonio Neri

can. We

Aaron Rakers

Yes, Okay. sorry.

that. about Sorry

question So start backlog. the on with just the I'll

levels kind backlog on course backlog China, kind year? cetera, point? what's the reduction the about your of assuming this obviously, for guidance moving how the with parts assumptions through you backlog at has Are of et FX year changed and and you. Thank regard of all to the kind this some if you And current build? views but any full around thought fiscal at not, of of As peaking your

Tarek Robbiati

has growth, of what end of the four growth revenue and delta have the backlog question XX% When not regard will the our yet. backlog. year. peaked with afternoon afternoon the for say probably backlog good this consecutive being growth to good thank our would you and you the order peaked Charles, not the backlog it I towards -- you fiscal is, question for Aaron, has -- the peak between quarters Yes, for the thank and

headwind Our basis that assumptions for want headwind the to to we currency. I guidance converting X% as impact contained X% a forecast. revenue for is are you X% that of a XX to the that that that guidance year adjusted FX revenue to in opposed in this growth on point backlog reiterate into originally gave we fiscal

Antonio Neri

well future I to enter revenue bodes of would say, with Aaron, company. obviously, going elevated backlog, the us the an XXXX which growth we're for

my we backlog to be go said forward, in for reduced But years. three and provided that at be in will I confident As very we obviously, SAM CAGR supply we continue outlook remarks, the the our other issues which as at versus we obviously, single-digit think year, the growth to sequentially just that about is reported, X.X% alleviates. low guidance SAM there And X% we will X% the guidance if you revenue. the be for on the provide next

Aaron Rakers

Thank you.

Andrew Simanek

for Thanks the can next go Great. Aaron. question, we the Chuck, to one, please?

Operator

from next sir. will Simon go Yes The Leopold Please Raymond with James. ahead. question come

Simon Leopold

exchange? an taking the could terms much raise how you a so that I'm expected bit margin of given foreign to you're for the you. about thinking insight Thank see to you've your if and prices basically the done much and help is about understanding I get to of outlook on question. the How and better little the wanted it of you are pass thinking on how input what what Thanks what And about we costs do me gross for this foreign better on ability mix? exchange. of increases is to you customers? given into question in price for allowed gross than What margin looking is in about this far

Tarek Robbiati

Sure.

let So, unpack this me for try and you.

So, substantial. look well absolutely is in extremely business And at various when outperformed we to order the Cisco Aruba quarter. specifically across Aruba book is do competition, of in continuing all, the second and our you segments, the first really the

and Aruba mix. gross with impact on has higher observe, As you -- know growth you the favorable a margin, comes Aruba can

total to actions well networking. operating the and we've respect continue that The second long-term disciplined competitor with space, compute guidance, thing you storage, margins our pricing ISG bear I margins for with would that well than profit what been taken to point out quarters several compute, to Dell, now fruit. Compute delivered above XX%, has compute, for our in at their also better that have main above include is

is much than performing much, of the the industry. compute rest So, better

unfavorable different a two segments, product this to across more you that storage. were mix to IP therefore, the been that that and margin storage, see, gross us, revenues have and at to are you IP really and had Storage there can when third-party own meaning stories the margins And on you Third, revenue. there. product has between our again has third-party particularly there product for detrimental mix With respect impact other look gross a HPC,

QX. affected by story saying, question deal six a the the story half. is closed HPC, of matter have we've We lumpy the And a has of the been planned substantial had a that for we one for it's delivery of and growth fundamental is there points always the revenue really, in business, deals a that scale. Finally, it's HPC second deal into quarter. has is mega That that slippage

you the and HPC. all this actions is look so account in take shift And at have But and segment. offset that we overall Aruba in product if a gross the revenue different company, of you and by by in story for Compute, result is the it taken delays into mix number margins storage in of of

The our is to add they On the finally, to last this, XX.X%, very up performance HPFS. And year. sequentially the at are gross outstanding. where and margins than HPFS pleased performance of have of better me whole, let

of of gave XXXX. our very better return strong, that XX-plus equity way And while there growth. delivers this in on that a outlook the And HPFS that long-term by is amounts north of operating revenue You percent which can not SAM is much margin business is profit you there a gross business, XX%, margins. see it's than is substantial at profit very, not of we

Simon. way So color gave again. if with welcome hope things up I we're you back f the you offline take the and it, you not, or conversation to I this But want you

Simon Leopold

Thank offline. you. I’ll hop

Antonio Neri

Thanks, we next the Simon. it. Operator, have one Appreciate can please?

Operator

Chatterjee will ahead. go question JPMorgan. come with from next Samik The Please

Samik Chatterjee

think Russia my I you color if taking And for momentum what bit order sort give Thanks maybe Hi. question. a on don't wanted in Thank on number out as what I Europe if another of ask from what and the demand more the you. to color particularly, you geographic can ex-Russia, in concerned about guess you more you're on in the give I enterprise that can of the strong was basis, seeing just a on any have region? pointed you're orders, if here the I seeing investors know exit well? you us been also, and order impact on had quarter side

Antonio Neri

the you. Thank for Yes. question. Thank you

my remarks, persistent to I customers. from we in continue our ongoing demand see As said

them I And the a honestly, prioritizing our to think combination it's portfolio. of IT spend. attraction

quarters. have talked the a That's is now that the about for of growth. excess we Cloud delivered to simply resonate in bit Tarek grew revenue strength portfolio remarkable. comprehensive four the Edge And a X% Edge, from market. We And just little of just yet, consecutive XX% which in very

that strength tells you So the of demand. the

think you distributor way this As about there's new just to work. enterprise,

that customers continue They hybrid to journeys, as is GreenLake choice is assess differentiation. flexibility, call the major solid area, the one is what their I HPE that their to see distributor stay. GreenLake hosted basically obviously, a of think a and very multi-cloud as other to clouds I HPE here now leveraging And testament control. which alternative of cloud, managed to deliver the fact

The data obviously, other anything simply thing, strong. is very to related

big AI, an thing And to our insights learning which think grow. is demand to cybersecurity, valuable alternative Aruba need that. Obviously, continue with machine approach from extract most our data, I also analytics, will SD-WAN to think the and I that's they because data, have. SASE the the for customers provides

experience issue is listening, extract as businesses, against they consumer personally potential at talk and and I slowdown So, modernizing is cloud World said forward, because I I as speed multi-cloud issue. an look obviously, HPE I the to, that insight the GreenLake, a more enterprise businesses, being approach agility, our this with approach. all it's their the we believe in why think about and the as customer data think before, every the see reason that's for first an because I data. their prioritizing a is than digitizing said we every strategy Forum And deploying trends last are week of which Economic bit the And from modernization and I more

the only on And revenue basis. priced of is don't these margin will Our major high least, revenue, commitments. the commitments not We said that's not X% gives pretty it's combine impact to and order operating order grow a is concern ultimately to see last consecutive early what our deliver The continue the And cancellation is at confidence as EPS for preserve that but XX%, to firm. backlog, than less Belarus quarters demand gross of book is to super us our but remarkable strong, any continuous backlog -- to which point, order -- the and two, margins. on, Tarek's HPE is and us Russia you quality, four all. we means is we because have

of you, able many look we ways explained at in it in for it If EPS, unpacked overperformance you with to offset and kind Tarek in QX. of XXXX, terms which were

say? any to comments So, you Tarek, want

Tarek Robbiati

Yes.

me add the last part question. let your of on So,

the digital impact China. of revenue the totally yes, cannot relates related contracts, in impact with was the and negligible. by resiliency equation. driven the of disruptions gives and simply EU, the Antonio the And the demand. But supply the $X.XX on the our governments a majority agree a number add European the side I the Russia, $XXX I've from with X% impact operate China slowdown to specifically that has And into was overall. impacted and and therefore, on has there orders. affected together, in of long-term. China profit that services the existing country ramping we something even are are customers EPS that the all total margins obviously, described on favor any in majority operating this could medium on which up for impact to confidence is more on Russia these factored for the space, of serve the This million, So, fact our impacts that -- by us Russia again, with to agree China the Belarus, of not in that Russia on our initiatives were to totals be and been I our though fact orders the impact. the that want

Antonio Neri

And good thing diversification us. also I around coverage our the of will globe a for positive say, our is

Andrew Simanek

please? Thanks we next for Can get Samik. Great. the that one

Operator

Bank ahead. Mohan Please The next come go America. Wamsi with of question from will

Wamsi Mohan

strong, demand regions, flow these of trends the also if $X.XX cash the are breaking seeing you. about some that out you're you but But around second Yes, any confidence across orders the ago? sort guide, demand the talk strong. as those your look second trajectory to, you're free that of some of And And EPS, you I and you very but maintained cash free about to that you what how to continue cash you moving variability expect so across that about alluded second half, to half Tarek, in free extremely What can should get you we your offsets maintaining those your that? cash flow the pieces needs talk are levers guide when are come flow you at that to hear impacts, into thank from your be look comments can Thank within half? the allowing flow. the you alluded you. XX you days to free do

Antonio Neri

Yes.

Tarek the in half and inflation, edge perfectly Wamsi. those a then whatnot, loads talk major interest now the But as impact GreenLake for like of why our that moving obviously, policies, continue here suited may of If native premises therefore, going and demand, or maybe some or for we will the as matter, year on said some the there, our strong. to fact have I have mentioned model. award solutions, cannot that's use talk it would will very why earlier, the But we solution consumer be are about I back flow a side I happens think to Europe. word and that think free customers rates even that for it's their think of in we far, is the them And with the Persistent is and the use cash and Tarek, a to about endorsement. an argue, with to the I colocation build anything, side. flow, enterprise have to very Listen, this and free it data so use strong that. Wamsi, XX-plus that's And positive I But And me a only is other positioned it's cloud on impact. want ago combination any of And GreenLake a or far, days the think and because services, Google I so preserve multi-cloud I mostly not cash think backlog hybrid foundation Let of may I as seen some our as-a-service on the from far, I is outside not that strong Tarek then would talk start what about XX to our capture right? either move meaning persistent. look from the can to from gives CapEx deviation journey, depends deal there way. is very us reality to we want question? a And forward. more still, you that so

Tarek Robbiati

Yes, sure.

when or translate thumb dollars every So the guidance flow of rule you cent level. translates flow, is cash very into and right? is when much you're rough guidance at you essentially sense of EPS EPS free the if So cash want we first gave $XX these at Wamsi, a million looking how million, free EPS lowering to contained look in the at $XX our changes of

to why the So you that beginning working made gave the of free the much in we cash the guide the our at guide lowering you. this of fiscal XXXX SAM cash very assumptions contained And capital was gave year. flow because guide is our had back flow guidance the of free that we we reason

guide. comfortable free feel flow we that I are within So the cash

you of makes $XXX the inventory as I become first the would I second the in million free where the to half. the headwind we've to actions your part the that generated because tailwind this first free In expect, half flow quantity billion. before. And Now in of everybody, the was flow capital fiscal this to we to generate you of opposed half, is cash where are in confident it half, the second a second we've first by generated the a cash what of that end question foremost, first, done year way, say given at want and remind $X.X we XXXX, the in we taken. and half, can you that second simply you working of

tables at we times the offset we little will lost we than cash look the gave arbitration fiscal provided the detail of to affecting we we our trends our generated cash of were free that that And that and we relative to at to by free part XXXX. that you that story that year this down highlighted $XXX year on -- guide that had time. XXXX. pay our are more very case you impact first and restructuring costs had fiscal of and XXXX with year came as This call, case, turn to year see was a coming seasonality you, at really fiscal the you of XX line costs you than will if into our with the different much an Fiscal XXXX. million operating fiscal observe because time you that we press And around half. observe in XXXX will that very more year fiscal yet arbitration what overall XXXX, flow we And add also is was release restructuring So, in offset in for the in year time the impact the flow.

puts flow to to free reaffirm we billion guide of of the are takes and lots cash So, but $X $X.X there, happy billion.

Antonio Neri

are free This of Meeting, seasonality the just cash which $X.X what billion. we me And that say at is $X at thing the is business, we billion we provided our Security revenue Analyst for a way growth; where the of today, -- guidance X% we $X.XX; to knowing guided and to X% to one we EPS say flow were to exactly $X.XX October COVID us years are very Tarek as us. of the favorable it's is down continue time way, turn will the It's to this year normal drive backlog well. will capital to over to as number. we deliver two the what as help going we to seasonality take said, of working confident be exactly a time, out business that the the And you that

deliver that of to free made, the clear obviously which restructuring, the to correlation resources the the of see and can was to which on progress we of the off to the net areas growth, we million the areas at time HPC, we've obviously, growth being you edge, the provided are very in paying one. to cash same just And flow as to savings with one, we GreenLake, time. track we AI, $XXX reallocating is be and refer So, earning us pleased on that are terms there, committed

Andrew Simanek

to Wamsi, it. please, Thanks, the the we go question. Can Appreciate next for Chuck? Great. one

Operator

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

Rod Hall

question. for here your thanks couple maybe guys. in an of kind of to spirit of companies. the I against juxtapose the and hi back other trying Yes, of guess make a incredibly come supply ongoing I performance sense to complicated situation, wanted

performed quite look objectively did. they, I say, would than if guys bit I worse at you on a So, Cisco, supply

sort they some in Dell, look And too no You the bad of impact then impact, impact. tell if almost an of can road of at from numbers. what had the not a I middle I had

Although some forward issues out server looking did supply. Dell call with

into bit understand dig of follow-up. us and us those little you differences could emerged? And if supply, wonder maybe why performance then around a takes for of and help just that of kind I a have So, some puts the I

Antonio Neri

and look quarter-by-quarter. the you half. don't I half think start. second then to to at think have Honestly, going I'm -- Sure. But I you in the look can

the our and look QX, I performance very factory first there pleased plays think locations because we of here with well. on If then is lot a Listen, half. we and puts And in takes a the at did are role. balance, you

every that So and products And Shenzhen of right that and the other the line sometimes just was sometime that not for you're you're for not. of the April, side there us, location, obviously, come from because the quantified impact Shanghai business impacted in side. compute in business, of Tarek you,

same our impact. have the not vendors Some of did

So that’s important. why it's

some partner a look performance, our look in at we And we strategic when that the are cannot ourselves, when that product the whatnot. configurations And let's I not China. last you set that ago. the than the business details is delivers. our says other China today you have to China years And about unique in can itself there The basically you setup three performing those up remind you And and into and therefore, growth, ones. components our need -- make one is two well exceptionally at you, consolidate least, go HXC to choices of other impacted China. suppliers revenue but more And tell

we then HPC but way category, call thing at recognize share compute However, revenue. that the look on you the the not the collect, market it, segment, is HXC, as it reported. the plus when that server dividend plus gets the is we only And

XXXX. that half a our you made on did little focused said, in maybe exit so some why that's every look some of off, are to a end, bit in to metric large in you QX. definitely it that We So and to I for we aspects. competitors, QX, year less better this well the look quite on -- And performance. balance, deliver still guidance Again, X% we far well X% want of Dell, namely the obviously backlog, again, but But which from on full year at with bodes it. not a at Cisco a as on the

Tarek Robbiati

really said, you telling. it at important simply margin bottom margin margins alone that Dell at look Yes. really happens QX what very it's QX, to margins on I level, Rod, the the also, to the is considering compared level. want look how And add what line we've at you when and the -- in and compute the the outperformed at to ISG

Antonio Neri

Yes.

I But a revenue refer sake compared delivering and think revenue our strategy I people server drive also of I think networking, it's includes just as pretty mean, not think for which XX.X%, the remarkable. on shows XX.X% what note, on growth, profitable I storage commoditized business that to to revenue.

Rod Hall

Great.

Okay, guys.

there. leave Thank very to going for you it am I So answers. much the

Antonio Neri

Thanks, Rod. Sure.

question, Next please?

Operator

will question Liu come with ahead. ISI. next go Evercore The from Irvin Please

Irvin Liu

you the question. Hi. for Thank

a large demand. amount there growth suggests orders So the and your revenue unfulfilled remains that trajectory of large still delta between

do rearchitect GreenLake mix their where envision models? larger native IT customers whether so a dynamic, you that to infrastructure a this cloud workloads Given networking, scenario of that's perhaps compute, via delivered as-a-service begin are their storage, HPC

Antonio Neri

amazing are balance a fact about gravity question. We margin more. billion $X fact to Tarek you journey significant shifting approach going what hardware. really And platform that's than unwind and in on obviously, it. we that way, give more need In flexibility, HPE in and obviously the show needs. And is those software the will his IT That matters. have that think data-first that Cost, eventually that to -- running the relevant. the obviously, they are here. that is business, more developed latency and sheet the customers and some Then services, we already from than just IT to a to slides, aspect P&L. more our has big fact have obviously, more scale, important component experience That's the years they and which are control from comes GreenLake higher the more are access, the is over is fact mix talk through industry balance innovating The than one in this away And others. another they so of all great them battling again through sheet see comprehend QX. is here to a single other regulated because XXX% I that's have every the And of at a data related multigenerational and and modernization to the with GreenLake they of moving which quarter that bookings grew against IT is modernize. GreenLake why why the cost Obviously, an

why through capabilities, strong, adding I order and is can our our super super marquee the strong. one as customers is think events that the relevant So, just just go fact that's is as we across shifting use highlighted. -- totally they keep a that's momentum that go about the mix this accretive of margin the gross you we company, key is type of to The moments platform we that into journey this that customers transforming forward. of And

Andrew Simanek

question. for Irvin, Thanks, the to one, Great. the let's go please. Operator, last

Operator

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

Kyle McNealy

business lined was in I expected is deliver? much a you taking give with sense have much revenue expect operating in come what AI already. profitability us very to given at. that up a the a the And mean, that, have margin the advance revenue the the QX that's question. level you one that catch-up like already maybe for already HPC -- times recognition, of revenue might And profile sense you thanks deferred expected Can margin does to You back and for for scheduled acceptance how Do project look the position in Hi, give of business year? in get? costs the the Thanks. obviously for and us reach you half are

Antonio Neri

advance honestly, and necessary of Sure. some Supercomputing the solve business. and Listen, is and to be climate societal to about I'm challenges bullish other. AI incredibly this learning continuing solutions to biggest deep

a have were two billion maybe the current we A are billion, I ago, $X $X.X and of in almost As in, quarters billion. year, about backlog. we talking $X.X $X about we think situation couple billion

continuing the the been we customers. over So, way, world. By have momentum it's all with to grow the

If called at Europe. the look three in supercomputer the you number Lumi, that's wins, including

supercomputers in France, also have Germany in and forth. so We

clearly there. are we the So, market leader

over going quarter, several through is time you're which see you growth said, the go from as gets reason accepted. to revenue, customer ways order time, lumpy, right, there installations book in be linear load. large is business And not to validate going the to case is that's the world to the as their need revenue, of recognize process massive systems time we a a in right, because and have many customers this And we're many those to own the can quarters. However, are you it

this. So, in I long-term, let margins, comment terms Obviously, have just to this quarter-by-quarter because of works. that's -- how at but not look business on not Tarek will

Tarek Robbiati

right. Yes, that's

to the affected and revenue couple well, part of ahead add our You recognized for mega to margin deals question profit of ramp prospects. levels And was that, Antonio. operating historical margin with that the more close we we very in large expecting on result this year-end. the expect feel pretty as by costs, range a therefore, to about good saying, a said of return to business, these very I'll of and by margins QX project-related they in were we're operating

Andrew Simanek

closing over to Kyle, turn question. Thanks, remarks. Antonio, you for for some I'll last it Great. the

Antonio Neri

on good in amazing today I'm a you attracting appreciate I that to the the with A gives of to the everyone. we with our about optimistic on our are this innovate to solutions that And going testament us deliver feel customers value the thanks, that set lot backlog have deliver about again, Well, the our the future, confidence but XX%, is quarter, a customers. see market that of the opportunity honestly, shareholders. for bookings commitments. away lot the and to we there's to time. of persistent Again, about know momentum news cover, a from making with an demand I walk

today. appreciate time. calls follow-up after the your for there making time and again, call, thanks So be I will I you this know

Andrew Simanek

everyone. Thanks,

Operator

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

Hewlett Packard Enterprise (HPE) 1 Jun 222022 Q2 Earnings call transcript