- Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Fourth 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 Jeff Vice Kvaal, President of Investor Relations. sir. ahead, go Please

Jeff Kvaal

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

investors.hpe.com. me let the Antonio, Elements you this forward-looking presentation to on made over posted best are we are accompanying call our of the release webcast. for based earnings of handing and today. call the this replay available them slide as call of our our businesses today's and and being We at webcast remind the HPE is see world view one on the Before that be presentation year. the webpage approximately press shortly A release Investor after Relations will

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

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

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

to currency. on website for of presentation basis, tables the year-over-year all Throughout refer non-GAAP exclude accompanying a on our to slide reconciliations the otherwise, release that comparable provided today's basis website. presented financial are has revenue on information growth For on expressed have Please the a been GAAP call, are impact and rates, to and unless information we noted adjusted earnings this our details.

presentation embedded high-level that, player earnings our his the the prepared also is referencing slides Antonio. to let remarks, Tarek will earnings With provides over website and earnings turn after it me our webcast his within call. throughout The presentation Finally, Antonio you, this be for on remarks.

Antonio Neri

for thank Jeff, HPE call our and had prioritize continuing quarter, quarterly XXXX, with good GreenLake record clear through quarter free strategy an our fourth introduced Well, joining key QX we most afternoon since performance shareholders. our And pivot began delivering to quarterly across value and In XXXX, on we thank second was non-GAAP you highest revenue to profitable platform. a our and impressive for flow. XXXX, you, a in sustainable today. performance metrics. operations edge-to-cloud HPE basis long-term cash HPE's our revenue deliver outstanding recurring

growth to high and have value We gross and customer solutions. our our proposition a portfolio higher margin refocused

our We Company. operating the also leverage across improved

than exceptionally the adverse We enterprises, In that in performance and larger Faced differentiated well. steady, of proud fiscal ongoing year the orders year quarter Demand and remained anticipated. fiscal am in year I small. showing we exchange, order XXXX. to with challenges, foreign a are year. over continued and from now HPE the very industries large book macroeconomic significantly better the the of our constraints our We these strategic at seeing proved supply this and in we start had solutions with QX, across actions edge-to-cloud course enduring paying be was interest of off. closed executed

slight basis a constraints. which $X revenue supply to constant During improvement to climbed X% billion, sequential outlook almost currency ongoing we the was quarter, started on our fourth a year-over-year above total as HPE to see

rose non-GAAP revenue businesses XX%. revenue Even to operating we than on these grew Edge Intelligent Compute our margin Our particularly base, each higher margin. more and growth, strong had rising Non-GAAP operating reflecting up year-over-year, one margin basis discipline. in just improvement basis history. a XX.X%, HPE's year-over-year, quarterly of XX pricing points above points levels XX%, gross the was ongoing highest Non-GAAP XXX

for XX%. As run edge-to-cloud in was XX% quarterly with XX% profit, order standout. the year quarter to our despite even GreenLake of rate HPE We a demand represented customers bookings. more as-a-service achieved effects approximately again we continued helping turn the as foreign as-a-service increased year of XX% profit exchange. the solutions, with from headwind. rose close platform. than final continue total fiscal of from as-a-service orders the growth saw Annualized quarter revenue In increased year year-over-year fiscal to company a record supply the unfavorable ago, our the constraints Non-GAAP orders the a Total us

Our non-GAAP XX% increase was a capital the in flow year-over-year. shy final of rise year $X.XX, of better diluted billion, and Difficulty] working ever from quarter. net our half quarter cash flow Free in second earnings cash best for was improved sequential XX% flow $X Free actions just supply a per cash increase the took we expected, operations. [Technical as fiscal the to and XXXX, chain conversion as following share

year enhanced with our more recurring revenue. resilient, 'XX the financial is HPE our look clear performance, GreenLake profile full fiscal it we As at platform has

portfolio Our software steadily is and becoming in richer services.

in fiscal and in years pivot booked of discipline, we billion, our SAM ongoing guidance that ago face free acceptance And highest capabilities X.X% our impacts, at delayed month, fiscal sustained timeframe. shift shift began in supply from generated as-a-service We outcome-based. all higher our cost and to XXXX. we last $X.XX, customer produced we and our and continue Russia our they we higher Securities In Belarus. than more flow twice in above revenue, Meeting exchange at in came Analysts it We We cash in go-to-market fiscal Houston XXXX margin total was the this XXXX. revenue achieved to X% revenue and our GreenLake flow year and second than $XXX what outlook the fiscal operational performance XXXX. of ago. just We X% for We even Frontier more to exascale despite the not was costs. provided Overall, and having total diluted two the with fiscal of which of components solution-led continue mix value, years moving challenges to midpoint we needed operating two to contract was a growth exited of our the XXXX. about fiscal which actions, AIR in $X.X from yet margins in fiscal our supply more $X.X system, than We XXXX, constraints, X logistic next in the to record resulted to XXXX, points at increased compared million. HPE what of gave to earnings from and the XXXX midpoint year XX.X% -- portfolio offerings. share X% $XX.X foreign basis our fiscal target a XXX the it billion exit in XXXX, year we are non-GAAP doubled exited a guided combination XXXX markets SAM more Since year net pricing per despite Through the IP-rich at extend our cash in times XXXX of invest year because has we year, billion with above XXXX, year free

guidance year us continued, and XXXX, last month we the results SAM. position durable, Our fiscal fourth growth confident in quarter for profitable in we are gave targets at year-end and

hybrid quarter, into solutions and to next in that times. to success sustain clear view first will their It dynamic digital cloud are Going critical we prioritizing are their demand globally. is them optimistic data particularly propel forward, customers transformation these

next for some to some substrate slowing, quarters technologies. we from IT after enterprise capacity ahead look As constraint in Demand consumer sector the fiscal many our to see shift allowing of supply we the are year, market, is beginning to improvements.

products. As reduce been a have times some for result, able lead we anticipated to

mitigate working our supply proactive We no large challenges which material order are chain to continuing we and take experienced are through measures has book, cancellations. to

metrics. wide GreenLake enables public customers the expect platform architecture, data we the benefit colocations Despite across take not in of and range customers HPE offers down, also a cloud we evident all shortages. automated for cloud IT business provides a services across the It metering our end financial from center GreenLake supply while GreenLake their advantage is HPE supply and secure and so with model and to been for their of up but has data. Over our estates. but the on needs customers analyze workloads true hybrid to choice operating greater edge customers the protect can of course hybrid a clouds. consistent HPE easing applications experience, from benefiting across to integrated open, capability, to cloud cloud flex unified With and capacity an based GreenLake constraints, HPE see generated have momentum XXXX,

before, original to us many market-leading attract platform increasing year more to fourth services, than HPE our commitments. during above other logos had customers Our the helped customers quarter GreenLake GreenLake contract a we twice quarter XXXX new year leading fiscal HPE to end differentiators Also, prior. than are as consuming new more any usage their

Our relevance ever the than GreenLake Partners orders to of consecutive orders booked quarter HPE HPE fourth the partners during more with of are did growth extending they also before, seeing XX GreenLake streak their customers. quarters. our

the greater partners deals. booking multiple we share HPE a of fourth quarter, also saw GreenLake During

customer SPAR HPE massive stores GreenLake you strategies, hybrid GreenLake on HPE ways its is will cloud Discover event, to and decided Frankfurt to meet see has drive in own SPAR. we to Europe and who value how Company's face-to-face one-stop data run supermarket the European will the from to HPE platform. HPE At with updates Next transformation micro platform experience the convenience applications recently to cloud GreenLake. partners HPE discuss across SPAR week, roadside we to build from the important to business. edge-to-cloud, customers cloud is core our everywhere hypermarkets. bring to with and One unveil data has the the adopted hybrid GreenLake the at several-thousand

for ambition Our of fiscal of grocery and the its the retail our our logistics SPAR's role well data environment. all one pursues HPE platform experiences on major engine outcomes in from helped The our to addressing decisions strategies create helps business GreenLake to SPAR needs playing also GreenLake in technology is We unified use make we customers an increasingly accelerate everything performed warehousing members. strategic and in retailer shareholders customers' in-store IT running important the business. its to use platform as innovation all This HPE their advance customers, is and to navigating HPE shopping. and future while edge-to-cloud our team to remarkably dynamic experience. year, with applications

continue and only we that place portfolio Demand to differentiated solution market be demonstrates the expanding XXXX. into our edge-to-cloud fiscal value defined the we that and has as can leadership throughout Our HPE year customers move steady in trust been in enduring deliver. XXXX the us for

cash our profitable our is For by we services have a we posted richer delivering year software shareholders, executing In growth. revenue strategy, that record-breaking recurring strong growth, HPE XXXX, mix have made of of fiscal and who non-GAAP to members pivoted free earnings and and am ingenuity these per through transformation results flow. so share around possible our their team outstanding world engagement. our proud the I and

achieved of year, this of up history the HPE over fact, points In in our highest the last XX scores one five company, years. the employee engagement

like market-leading next their with our fiscal attracted to with bit details pass And flight in leader. cement culture write advancing and in the it to fronts. next about our financial talent year innovative now are performance. market as make incredible playing to With forward us provide HPE's further we that, little our even bringing HPE's to a his taking and brightest, year. has momentum more team on and leadership strategy business, some most the ideas customers' and I energy engaged, our And look team critical our in XXXX of roles over would all Our the edge-to-cloud members and to strategy Tarek I solutions tech. enter comments chapter

Tarek, over to So, you.

Tarek Robbiati

for Thank you very much, HPE. an quarter outstanding no Antonio. question, QX was,

fiscal and slides reference to guide will Antonio slides our 'XX I from X presentation through highlights performance. earnings for key QX usual, discussed year you 'XX on X. and our As

to performance X. Let near-record continues slide details, record attribute with be or a edge-to-cloud our starting of demand our translated QX to core me discuss results. is differentiated portfolio, Sustained which

our was year-over-year to As order said compares. growth products expected, QX to lap sequential XX% 'XX our illustrates in challenging growth that we year-over-year order Having 'XX, services down for to continued QX for which with, relative that, that as flat and are fiscal our demand key year 'XX higher steady. which entered is fiscal year book entering the to momentum attests that an year order The 'XX takeaway with here we fiscal is order XXXX. book is we than even moderate

turn revenues quarterly 'XX, have not orders again been attention indicators we than have times. in traditionally that year focus This of flagging. revenue as Now closed because good to we are and timing will is differences, orders rather on our backlog fiscal normal we of

disclose and continue will HPE our OS orders Pointnext We business. to for as-a-service

quite While the is it supply back environment to pre-pandemic not is improving, levels.

Our easily confidence X% year from second and highest highest the revenue X% revenue growth billion, have above large outlook recognition our our in 'XX Securities order for since QX revenue which into we to 'XX. sequential to 'XX adjusted period CAGR annually for revenue of our in revenue outlook delivered XX% to currency, separation figure the growth slipped not $X.X Houston growth. October. revenue We in would at and X% the over 'XX term Frontier fiscal adjusted longer is our contributes book been year XXXX XXXX. fiscal transactions X% last fiscal outlook prior well up is to XX% sequentially The Analyst least It currency. Meeting our provided is at X% deal of had year This for sequential QX the the

have two year revenue We We markets 'XX have had markets fiscal now means to demand throughout continues the Currency the in capacity unabated. the improving closed above digital electronics X% demand ended and which our adjusted for the exit to X% a currency. supply with as for of enterprise years. supply for for Russia points basis transformation XXX year also Belarus towards consumer initial X% from growth represented solidly guidance full where healthy We reported. year we redirected is past year, revenue growth as our and full headwind revenue

resilient, margins remain have Our to we the non-GAAP pricing taken. gross thanks actions

business. Compute costs Our year-over-year, up higher-margin, margins increase strong logistics QX beyond taken reallocate from actions us record in basis to retain year-over-year. have points XX.X% business back and and These have to continue very towards the been without higher XXX shift possible discipline software-intensive cost result as-a-service in fiscal strategic optimize reflecting represented operating XX.X%, Edge our our will year points and XX offerings. the have a and not maintain non-GAAP Non-GAAP in gross fiscal put We operating a structure. actions sequentially we years, pricing enhanced to basis a and I is leverage basis increase mix of on margin past as remain quarter which for reached the over and Antonio This a points several would an to our benefit in resources focus determined year our position 'XX three in quarters productivity. XXX this continue 'XX the and

well million. savings which program initial and optimization million, and cost has the of of allocation of $XXX is during resource substantially now XXXX announced Our achieved annual pandemic above finished, $XXX our target

and very continues of transformation which since separations. of cost different to order as non-GAAP deliver structure substantial growth As Thanks revenue margins guidance, unfold. is highest expected range. a profitable exceeded figure higher the our our guidance non-GAAP we midpoint at result, per diluted growth QX diluted of as-a-service net delivered our to This share the enhanced earnings are and where the Company, one we the XXXX our combination $X.XX, entering recurring quarterly net EPS are a is we increasingly is to phase that our now rightsized of book above

XXXX for and $X.XX 'XX. of our Our our range a full was Russia exit Russia in of and year estimate $X.XX EPS to $X.XX the end midpoint year we at net headwind FX of guidance near our combined EPS FX $X.XX diluted and of guidance. non-GAAP fiscal the Again, impacts post SAM upper

reflects AI and P&L our including noncash HPC, for goodwill and impairment businesses. test Our higher write-down impacted outcome. respectively, contracting market GAAP software significantly multiples of AI and trends, our in in discount Macro used a software, this HPC, rates

the outlook critical flow our flow nonetheless, continue, XXXX, market, to as cash our and at inventory. work in reduce a given what through of on software said position in SAM cash and with I HPE bullish QX component and remains we our $X in substantial our segment of orders operations where number HPC, performance 'XX, we be and the our We we is our consistent segment flow this one AI am for free free with billion generated cash strategy. from particularly billion GreenLake pleased $X clear

As Antonio mentioned, cash this our This to is in XXXX. flow free brought our flow full cash year $X.X free billion. triple

our flow free of year, midpoint cash For guidance. the met the

cash free full our met pre-Russia from initial our and fact, XXXX. year In FX flow guidance SAM

which shareholders. for shareholders billion $XXX plan of paid cash repurchased substantial our to stock. We are we this year, capital our capital represents this buyback over Finally, in above million over to flow. in million $X.X returned $XXX We year, million brought That the to dividends and target. $XXX $XXX to our XX% free our in return continuing quarter million

and remains our robust. QX business momentum despite grew business currency in in QX is in CAGR year orders in and as-a-Service our revenue. from remain lapping Orders our XX% Our XX% orders target portfolio XX% strengthens full as-a-service 'XX. mix three-year to orders margin of a XXX% confidence higher health constant fiscal fiscal 'XX ARR grew as-a-service year of XX% and year recurring This Total of strong a lifting this basis, the as-a-service grew 'XX. QX On to XX%. long-term our growth further our indicates

$XXX reported XX% growth of XX% million and currency. as constant growth ARR Our represented in

fiscal shipments growth year have and weighed industry 'XX, rate. of limited on the much our constraints For supply

to We ARR moving expect accelerate the growth forward. our improved environment supply

thanks year-over-year, and and expand of services offerings, our margin XX% our Edge increased to in Storage. to our points and X software QX, particularly continue mix to also SaaS up as We in as-a-service’s cloud

margins. in meaningfully gross gross As business margins our above our as-a-service a the corporate remain result,

revenue record next All turn in on Edge, grew highlights rates year-over-year. delivered now growth are on revenue a the currency. revenues our XX% In constant to quarterly number. the Intelligent We this segment slide our slide. we Let's

outgrowing Edge enterprise our services competitors platform in of main switching Customers and the our some and are We adopting are enterprise customers. suite. wireless largest share LAN, are and automation SD-WAN across taking including software increasingly

up Our down being operating decline. to biggest margin of contributor FX annually, X.X% the the with XX.X% sequential X.X% sequentially though was

of slipping We this XX in solely margin operating business Rule like grow also the & Edge 'XX, HPC to our a Frontier which AI, XX% continue a our deal segment. of In to fell year-over-year, revenue and year business forward. result moving perform impacted expect into fiscal as

We in close have our track to are guidance. on that that into and deal QX factored

We continue AI calls, to Compute of billion availability. from steadily the in demand to discussed segment $X $X.X we to initiatives revenues a in prior supply The upcoming have orders and solutions & year-over-year HPC grew for quarters. well XX% of be multi-sourcing near record have about as steering benefited improving billion. delivered as

'XX We and helped strategy have profile. the volatile competition pricing a navigate dynamic supply while climate clearly our year a fiscal outperformed maintaining has in margin us healthy

gain Our IP, long-term products we XXX Storage, the total, for our year-over-year our of by fastest and of Compute rose revenue and sequentially. Compute outlook array by ramping of an our basis is strong operating which grew points. a attest very In points XX%, to revenue operating above of annual to gain Alletra sequential XX% XX.X%, all-flash new represents of are and margin XX.X% business. products In a to basis performance delivered led in XXX of best-in-class contributed one ever QX margin-rich our revenue HCI. double report X% digits and from XXX% own well which margin growth remains pleased

with products we see. transformation you our to with swing, now our own can IP growth revenue storage deliver above storage line in growing as is in business Our market full And services, Pointnext with to year operational constant orders mid-single the sequentially and respect the rose our for grew and services, With storage expect Belarus digits Russia of currency business. despite in market. combined exit

financial revenue its expanded year-over-year, and X%. Services Financial HPE Finally, rose X% volume

spread over as percentage our is our leasing downturn. a rate rate as time interest a we and never that adjust are environment our well prices exceeded on a pandemic, margins loss the worth for higher reiterating higher fell that price we our insulated Our business resilient profit operating year-over-year ratio climate. X a is It X%. dollars in Throughout points from annual

pre-pandemic X.X%. is approximately ratio levels of loss currently nearing Our

is and XX% a Slide and As on we EPS our target non-GAAP our performance. are these year HPEFS both evident result, diluted above return focus fiscal results. and very net XXXX. reiterated remained well pleased the strategic the equity top Antonio X our SAM at I in lines 'XX that highlights revenue on bottom

to currency. the Russia EPS and from increasing revenue volatile businesses and our Belarus environment, continue despite headwinds and supply exit the Our from grow

XX, our and across of earlier, headwind and during our Russia Compute a a can year mix portfolio QX fiscal execute delivered significant strategy. we we fiscal we of despite seen This Belarus. Edge-to-Cloud mentioned continue non-GAAP exiting our in better be guidance spite year-over-year quarter. of revenue $X.XX non-GAAP delivered XX $X.XX for shift As currency This headwinds, as a met to higher-margin these basis and improvement experienced we where slide year 'XX, from points 'XX earnings of In to a XX.X%. from this on 'XX SAM gross is mix margins improvement

favorable driving across the towards our pricing portfolio. and a growing gross are challenges we Our higher-margin margin and strategic the to success the products shift actions through of mix our testament profit supply are

highest for Company. margin but operating year-over-year Moving the XXX This in is basis XXXX observe operating since to delivered and not of an XXX have slide the points XX, it XX.X% we margin is up you that our points the can history non-GAAP only sequentially, the Company basis separations.

provided XX, been possible QX the our performance revenue certainly setup resilient optimization let's SAM, margin operating pandemic. our gross that And China foundation through we start cost the to XXXX the allocation expansion. discuss without slide launched margins have performance and are I by would plan again, as of this resource at contributors mentioned HXC. strong not and the our in leading at very Our On

Through struck earnings contracts and 'XX. engagement As and existing interest, and through a our their to trailing option XX-month decision substantial and to allow stakeholders stake have to commercial SAM, finalize put amount shareholder XX, disclosed time HXC. did our to is our time December partners equity we We our in that value make in our with contributed has XXXX. final free XX regarding this year our fiscal cash their our HXC flow EPS at at extended

strategic We of benefits the China involvement risk. financial including will rising a continuous and balance risks, in with geopolitical

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

Our cash flow test of XX, our story slide execution. on outstanding a

flow Our This flow operations from $X aligned the and QX free is seasonality were working and tailwinds cash our expectations cash half. billion second to of and respectively. capital $X billion, pre-pandemic normal in our

environment. strategically been to of have We year building navigate 'XX competition ahead fiscal year chain fiscal inventory and the the supply 'XX throughout

Our peaked on deliver inventory book. beginning and decline order enter are balances our have fiscal substantial year as we to now and 'XX

cash flow $X.X $XXX fiscal despite from Our of delivered also year guidance FX billion and what to midpoint $X.X our brought cash is we negative 'XX. to strong $X.X Russia 'XX to in that impact $X.X flow we billion, operations billion the free triple approximately QX and to billion year be full at is The range billion. flow million. It the our $X.X of estimate cash of

our slide on XX. outlook to turning Now

our QX demand remained to for As products and relative steady we QX. portfolio services discussed, in

and trends digital Our the the of of enduring given transformation mega explosion view data. remains demand of one market

our believe market share allow portfolio also gains. own differentiation will We

our pressure of picture, that XX% is inflationary in I of to you revenue would all approximately macroeconomic generated Let our guidance thinking foreign me the FX reiterate risk. currencies. and that remind on our like incorporates current

'XX, decline relative which QX be of revenue we the QX typically in $X.X at billion of a experience range QX For that we to to in implies to the expect mid-single-digit year. billion, each midpoint, seasonal $X.X

EPS diluted EPS non-GAAP net $X.XX diluted GAAP expect $X.XX to $X.XX We and of $X.XX. to of

While at and our that rethink too guidance. with headwinds pleased we the fiscal FX macroeconomic given stage outlook, this it QX we our are cognizant year to early is are 'XX environment

we it than more prudent above, assume to may to half consider is typical. the points our first weighted be year the Given

X%, revenue cash net net This of non-GAAP full of free $X.XX, and $X.X X% $X.XX our billion. X% currency, EPS therefore, of flow of profit $X.XX, to $X.XX reiterating growth EPS are, guidance. to 'XX for X% diluted growth includes diluted to to non-GAAP We of adjusted operating billion $X.X to year GAAP

In at buy fiscal maintaining like we terms returns, 'XX, $XXX expect fiscal 'XX. our worth least year are and we shares back did in in dividends of capital of year to million just

results speak characterized outstanding execution for of look our forward by conclude, portfolio demand services. themselves be and a our our that and in of fiscal continuing can test our year momentum execution We quarter a to 'XX. products in enduring for to So differentiated

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

Operator

from with first America. the And Wamsi Instructions] question [Operator go will Mohan come of Bank Please ahead.

Wamsi Mohan

now you of I'm like Yes. and IT how thoughts get like Thank budgets like what bit look region? of can week. demand if was more Dell good the by wondering little congrats your slowdown, you. you NetApp It just on last on results. citing I trends And and are a curious shaping I comment that we're the a optimistic you're about seems to like speaking lot a term, confidence you, said maybe are the companies a that up recovery for are first sort 'XX. the of calendar first I 'XX? just near expecting, half. heard in if Tarek, with for half think, 'XX companies more cautious in Most about more of And more right, of

color much. there Thank helpful. any be So, you would so

Antonio Neri

Wamsi, Yes. for the Thanks, question.

to exited we the because XXXX we And than anticipated that honestly, steady, remains compared others. commentary, a we was our we demand I look significant have of in Tarek differentiation said mentioned, you larger at better entered and with was quarter-over-quarter, when we But XXXX. think than As was flat. point enduring, book a

important recognize. it's to I think

the which see results a of can from have we diversity of some obviously And First, the are portfolio you outstanding. edge-to-cloud. Edge, in

HPE important what we I can of aspect to data And that's when digital see, prioritize because also And automate, data. in dragging unique of looking and is need to everything GreenLake that customers hybrid be you lot for. customers talk experience a portfolio. what to consume customers, a that and is are I think do prioritize delivers as-a-service, more true by insights about an it me, that continue they entire driven the The simplify, are also our transformations. efficient the

And demand so, is I think there.

our it’s I case, in better think probably balanced.

question about geos. the a asked You

the think business. even, been that on, this and an just is and this geo I the early all a enterprise I if have, geos is we it small, got or across the segments. large medium geos performance small business? of to XX I the the segments question has all across from mean, the No, even XX

so that we and ago, to budget, they of continue just we in to what Advisory, sentiment And industries. represent connectivity technology Board is these to multiple edge, terms role. have continue they of and plays a or important are XX need customers And technologies month need to In ensure the hosted aspect. the that again, there one call being a vital digitize the we

cloud The data but is approach. in one a true one place insights. data, these data-driven as an is other obviously And hybrid cloud, not then experience, just putting

so are, I positioned to we And think, uniquely that very capture opportunity.

Operator

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

Kyle McNealy

big up improvement business. the driven was year-over-year. This were talked by you that about, X% is units supply We assume for part it of Compute only a one the but

an been have may of amount there So, backlog consumption. incredible not

look And momentum AUP durability the of will out. do the the for long about the continue? think about we can pace more that this teens and your growth like on high-teens the a quarter richer this called still at does growing talk How It AUPs? price year-over-year. configs trajectory So, you bit based that what guys? was of increases of you They're you

Tarek Robbiati

thanks. Kyle, Yes.

Compute I well. business understand the think you in really our trends

This Unit So, is increase was ended our is reiterate. growth an let are the as modern book Compute and AUP foreshadowed. in applications. our X% to and with was as fiscal driving of right data remain at Compute quarterly critical and we with types record solutions revenues to what's that year-over-year architectures. run enter you're remains a all the these me our And high-teens to of of $X.X And configs. Compute strong in power and selecting XX% currency. clouds year for their the demand continue workloads, you billion. our constant towards richer saying Customers 'XX. private of customer unit in growth We Compute a solutions year the will multitude increase, component order results edge-to-cloud And and remains sizes transition

on of good customers need trend-wise, about can of our products feel easing, that more is, you level benefit to opt to come AUP fiscal to very year commodity -- we but and given of for obviously, forward, the pass to Compute more the configs. continue in for are differentiated moving pricing customers we'll growth greater book, the to and prospects fact have the of down order the expect this ease 'XX, what as our So,

Antonio Neri

actually our X deployed It provide is of optimize with And And I gets solution is design. just differentiation the that. we in carbon -- the side, whatever point to the meaning hybrid a differentiation. Kyle, report. consumption, continued designed several deploy actually, is carbon one And number sustainability. the have which customers -- footprint say, introduced enhancement will was new we key platform. up that GenXX of also them HPE is you from Compute and coming get offer, security footprint our In have and on and platform ability one managed Number a with mind, we we the we hybrid on based is one really GreenLake,

the that allowed they the maximize reduce carbon them footprint. to usage while platform that So of

overall, new itself. So are bringing innovation platform we see into good continue and the to we momentum,

Operator

come will Credit question Cross Suisse. next with Please go Shannon The ahead. from

Shannon Cross

business. little I a wanted to more dig into bit as-a-service your

Just like absolute looking at the dollars.

quarter. like during in it the $XXX the revenue rate services. there stair the a a software well, percent basis least XXX had to of at up -- uptick significant coming from uptick looks step You annualized in run percent And million was

ratable more contracts and sign on trends customers your what's more of with Thank you're what I'm seeing that and you these wondering a as behind basis? So, you.

Antonio Neri

Yes. you, Shannon. Thank

think I things. a couple of

first growth in our So we contract the $X.X value. billion we all, in year-over-year year of with bookings. Today, total have a now ended XX%

-- you those years. can between to are X As X know, contracts vary

made going also a ARR wireless had is storage. that software-defined us that's and fact Storage automation we the protection acceleration to offers. to recovery Pointnext the growth comes XX% with -- platform, confidence attach in the in through Tarek actually which important shifting business comment an the into we've what own our We XXXX Tarek data So, XXX% Alletra tremendous the the is as you're also the to comes obviously, XX%. value and defined, and seen had comes quarter, entered the drive about subscription-based. as you the grow twice And network, And of we because sequential. can subscription logos suite, wide XXXX, HPE a also recovery of excites Aruba disaster and particularly on or that also, is business. HPE why software a that an And great that new Alletra, imagine, a will that many incredible see in subscription fact And that but is now And that growth OS. portfolio ransomware is area to obviously, that mix backup incremental That's then as switching from closed and all and IP product. all the me year. XXXX with that all gives the we HPE strategy,

have HPE into those integrated offers We GreenLake. now

driving so software more that shift rich combination mix is offers. what's services to And the and

Operator

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

Simon Leopold

expecting to the in you're to the see calendar be that in strong it I of terms seems this in could decline result servers, in what into my seeing trends in catching very, after business. like for stands competitor your is 'XX. particular, quarter, you're which confident wanted sounds outlook. very to Compute what's for if contrast In dig the biggest And attention a we

you world contrast outlook So, if you are your the might as if differently of seeing than why to a bit correctly? could compare they I'm do interpreting be little and maybe

Tarek Robbiati

Okay. Sure, Simon.

refer you of say, operation comments would to their prime I consumer our referring competitor, think enterprise of I their are side. side as if the some to to their So as referred much

Simon Leopold

specifically Compute. and at servers Yes. looking I'm

So...

Tarek Robbiati

Yes.

not of function when at steps Compute. they many that their a were, think that too is would so than I in we they better And I you results, did. bad, look did much say, overall, taken we have

So the as one need gaining there richer solutions bigger key being now of moving configs is are in customers market GenXX and forward. our traction

held knew orders their they that firm. was and customers Our coming GenXX

finally are the And supply cancellations no had to that we throughout able next-generation compute we our got to So, be the meaningful was there 'XX. orders year fiscal customers environment. to that bring

good -- about signaling their to where with we are are. supply the there, feel that service So, to is we extent our contrasting our to view what And very business. we respect relative have a competitors

Antonio Neri

we and diversifying revenue we the attack think about results platform. saw our pricing we quarters you We that we differentiated couple said amazing add, two you particularly to of then our the XXXX. the we provide fact go-to-market our the ecosystem. much, with the mid-market I a the well differentiation, the participated growth of profitability. more in I and that then, And the our the years demand It's great growth I discipline exit was is enduring GreenLake. in channel order Compute years think recall, of -- get HPE where to ago, our and through year if throughout you as with also, with space. been growth segments has all will of our experience profitable unit of steady commercial larger throughout When growth are four areas did because to not So book. Simon, Compute because And one significant in as And

side, the which differentiation. in on factors. So, I GenXX comes And the step is gives tremendous think have that is it another that direction, think covered revenue us side. actually we But about all tailwind. to I demand those What Tarek

Operator

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

Samik Chatterjee

think I shed improvement, the can see could backlog color the strong about you guess of and where backlog supply or order results wanted sort about outlined, exiting talk most on context closer as or you're it And to if some particularly see remains segments the backlog the book on most of book to to bit digesting here. to as you you expecting the it sort I of if elevated and levels? normal of a related supply Congrats just remain in order the of to next we likelihood like year can supply sort normal constraint. a improves seems down that year to more where of how

doesn't any thoughts probably normal backlog the on end come So, appreciated. next that be you. back year, Thank to but would by also of

Antonio Neri

a I focus will say, the Well, indicator we're said in QX. of I is see. of as or we the as move in better forward, the the call away was what we these QX going the gave and what at guidance very, revenue. QX it's business, such the in in to comments, his on now, mid-single-digits, like from in order revenue to orders order to going able we're incrementally QX, segments, it And than convert going the backlog all were we was large. backlog why it book Tarek because That's bigger end the is particularly to at book, in end very from now of fact, of think Edge

Because not supply, forward book we bottom is the And don't there. to honestly, demand incremental trying as XXXX. entire some steady some line the good as continues I'm see be be to the sure to of the historical demand back up that exit aspects will we to I take as level. case. are that and So, enduring easing we XXXX the we'll will think of the to go order that convert we ever

a older the level, So, comes on it quarter would was where which line. it, bit the think particularly the in I Because nanometers, the incremental line, down XX I to of XX, order business, the technology XX time. nodes, because at which obviously take is those not say, on little of think consumer will I the easing, that historical expense some constraint saw capacity came capacity call is some but substrate return and reallocation is yet of in we And it's going when to particular this book normal, incremental once is.

Operator

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

Toni Sacconaghi

a revenue guidance for double-digit growth year-over-year implies on QX Your basis.

to full X% the X%. year, you're For at

backlog believe you inventory fact can net drawdown, to that 'XX, you is dry in you of So, Thank for are year? Maybe the fiscal the with the confidence below income down or help can flow cash bridge reflection And despite you further. of your really seeing slow guidance there. what is a QX over implicitly us well the you're the you. your course then seeing that, free related demand in

Antonio Neri

Toni. Yes. Thanks,

Tarek. Let it me start, and give I to will

comes we an important digit guidance guidance to gave billion. but single the aspect the maybe in, billion of that compared of on then remaining HPC. part QX have obviously the as case, confident $X.X a of taken. to includes convert larger certain operating we based to the are it's maintaining the order plus book said, high Frontier, which But the our sure $X.X is in ongoing obviously, And then margin, actions it leverage already revenue of And not double level we pricing any digit, which recognition XXXX. and we the we ability As book have. I'm order

stand, So, we the that's we where where guidance. that's and gave

the stabilizes guidance or through early to we slightly through comments of point full But the FX as on. -- supply just to at prudent the potential I availability, in Obviously, down time year going it's is sorry, felt there improve, quarter because As this the it come year, the we to FX go upside. some uncertainty. maintain also, implies that made

and free of I terms pass it working cash the to capital, Tarek. will flow In the

Tarek Robbiati

you, you, Antonio, and thank Well, Toni. thank Yes.

and to in reduction going in levels approximately book $XXX So, inventory million. at right? So believe that to continue obviously, also FYXX. have demand restructuring we're look have calculation purchases the but order is that as filing the free steady flow work dropping and and flow We as time, that deliver will the reduced our our between same will cash when by amount for the orders year a 'XX to you 'XX is FYXX and quite through fiscal we'll expense, already on And our is X-K remains QX this have if And inventory these expense between free considerably. earnings, need forward. third seeing QX going working probably 'XX levels. it, our to far, observe to levels trend to variable be therefore, of restructuring continue our in moving to we're At to peaked you cash inventory chance continue capital, and reduce driven, will our relative

cash with $X we stage at on I guidance billion comfortable So, $X.X this you the midpoint. to free flow billion billion, $X.X feel of gave the at

color giving more. more or cash on flow Let's the we will plays out, possibly about we year free much how how guidance within you see generate can think that and

Operator

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

Aaron Rakers

the question. Thanks you me? Can hear for taking Yes.

Aaron Rakers

side guys. the of appreciate back taking to kind questions. the Compute I Sorry, want Congratulations go on the I to of results. the solid business.

we see As the that on backlog another as price component you the think given. of the -- through how think progression going move Compute commentary operate guys how does look deflation do so forward. passing forth. deflation at do and you Company business as as expectations as far of 'XX? we the about How and we fiscal already the dynamics how is if Put so curious I'm you and that there cost factoring about you've -- way, through it's into your memory

Tarek Robbiati

Yes.

So, thanks Aaron. for question, the asking

guided at know the all which continue You the XX% it's as adjust been, QX to pricing to why be our SAM, is of we in to we XX%. business And in posted we OP the in forward. reason to have will an you to moving we Compute that ease, the believe difference and Compute need there supply long-term have that continues that higher XX.X%, down for outlook is the than ever highest margin at it's profit margin operating us grow

starting we So, from at in in way a commodities, just it's of on the which of very, see pass today costs the very reduction early as DRAMs will important are but the to this, to what push And with through down prices dynamic weekend, in the particular. We're ability ERP days. our come to be to Compute at the up, list what's on some needs like have way the react pricing. level to and prices a down, the competitive system is on changes seeing in -- extremely it in now we're our reactive to so over to and do we our changes be globally commodity And AUPs environment.

team it's as So, unit in doing you the competitive the really to share and for Compute we because pricing critical there we remain focused extremely are us, to which the Compute scale today. we capture of foreshadowed management that the value with our in continue on industry, we and of maintain lion business dynamics

Antonio Neri

are And strategy. XXXX, we have in the that shown are best question. that we executing -- No

Jeff Kvaal

question? Chuck, don’t Aaron. make Thanks, the why this last we And

Operator

sir. Yes,

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

Amit Daryanani

two mid-XX% here would guess, what product business then, just if versus if you is could and is over talk give can really fairly SAM, growth understand. details driving the helpful really kind Edge is XX% Tarek, And a parts. in you from impressive. about about maybe around be I Any the One, demand question Intelligent Edge of on margins or Intelligent that operating at you remember, basis backlog to talked time. even end I my

from do here? XX.X% margin from Thank understand you. As number to something or path you to look just helpful the you bridge there What at mid-XX%. need the there? revenue get else to expansion Is a

Antonio Neri

Yes.

business. be Tarek in clear, and Let want The me we start, order with to this Edge, grow or are Has that. to And the backlog do of margins. talk winning. XXX% demand-driven. to then book I continued nothing can any about the

have we These wireless with we layer on architecture. is proposition connectivity We value share. both capabilities. One the true built are make LAN that’s is and three the of investments share layers SD-WAN over taking Silver switching particular because we time. the the organic Peak did reason why And of one differentiated unification taking we a are inorganic the Remember, acquisition. are and

SASE differentiation drive then and new time. in And at partnerships. demand experiences, the That's for the our across and unique driven everything value through to have by delivering through this both enterprise best-in-class a organic is AIOps. security do We XXX% customers layer tremendous point have they automate with to we

Tarek Robbiati

Yes.

So, let operating question Antonio me that to margins. elaborate of to your with regard said pertains portion the on what

It the annually was It was was X.X%, XX.X% operating Our quarter. in but was margin up sequentially for the right? up Edge X.X%, by it down X.X%. annually

NaaS and in role -- between the mix It at see play over we obviously in a short the that entering of I expect think fares here, offerings the to improve time. a play offerings the margins margins the if the -- is term. way have market, we're NaaS that to is gross as-a-service margin NaaS you that effect because

one So factor. that is

the has logistics affected in changing. cost other tactically logistics And than again, short is higher costs. we would The is Aruba were have margins factor that flagged very term, in QX script, in that that, very my But liked. I

which Aruba is so, the to that operating that's that in the with long to perform expect in as high-double-digit SAM. And outlook have of maintain forward. XX we Aruba mid-XXs announced margins a growth medium Rule we We're profit ambition and company moving the that to And in at range. comfortable we term,

Antonio Neri

and metrics. a But when an the and thank back, well-executed I performance with quarter just a few of is Well, is with first you and as us CEO to not you for this we I have thoughts. my for thank last you reflect that, a think the close the XXth combination earnings, making clear the we thing. When today. had questions additional for results foremost, things It's over Obviously, all time strategy. have done onetime this of outstanding we key many reporting about a want quarter couple exceptionally years. more record-breaking across an quarter,

and to market year, of that the been We entrusting in their beginning accelerating have customers. have that you a at are month we HPE. you of is winning tells logos twice When is with winning the customers had executing the transformation and and

a executing QX that. Second example and was are better. is, we of No question it, about great

other is is I'm understand competitors just question what steady. their telling have for after solutions comment Third on XX And we and that I our have the remains demand your say cannot about, you, different I views. I quarters we what or may well, the views. do. vendors see,

pandemic high-margin we take to started, end, and program give confidence locations not net the going and least, those the shareholders here, going on are Company. forward. of we're what the XXXX, different to we came So rightsize in savings to now million because that execute because that. I you And then and when talent reallocate we we in you, We have high-growth, we call, against told face resources the the to to can at we paying a tell QX we rightsized that areas strategy. are we only we in Tarek And delivered the but actions XXXX, last us $XXX not the different off, probably to and deliver have enact but value believe

of ability and of four the bit to combination and things record-breaking all different In have it's over. So, most QX, easing supply, that a translate us over a we're the into XXXX the with give importantly, hard we and results, entered able done obviously, where give we stand, on good confidence work going with about and pretty over momentum, little deliver even that's for we're give every we you. And amazing potentially we we an and guidance the exceed those we year. but feel full why that numbers our to see give to we quarter

If don't of to to the your you you wish So, you before a end I families. I with year, speak very thank and happy that, the you holidays, much.

time thank for So, your you today.

Operator

have you, for and Ladies night. concludes great Thank and today. a this call gentlemen, our

Hewlett Packard Enterprise (HPE) 30 Nov 222022 Q4 Earnings call transcript