The News: Hewlett Packard Enterprise (HPE) revenue rose to $29.1 billion for the full fiscal year of 2023, up 2% from $28.5 billion year-over-year (YoY), as HPE reported its latest earnings for the period ending October 31. HPE revenue for the fourth fiscal quarter came in at $7.4 billion, down 7% from $7.9 billion YoY, meeting fourth quarter (Q4) consensus estimates from analysts at Investing.com. HPE’s Q4 earnings per share (EPS) hit $0.52, beating analyst estimates of $0.50 per share. Read the full Q4 earnings press release on the HPE investor website.
HPE Revenue Hits $29 Billion for Full Fiscal Year 2023, Up 2% YoY
Analyst Take: HPE’s full fiscal year 2023 (FY 2023) revenue grew by 2% YoY to $29.1 billion, even as Q4 revenue declined by 7% to $7.4 billion YoY, showing that enterprise IT is still in a tough period as the economy continues to recover. As the world continues its march out of the COVID-19 pandemic, related supply chain challenges and other macroeconomic issues, IT spending remains under scrutiny as companies try to tighten their operations and deliver profitability.
There was solid news in the Q4 earnings figures for HPE as well, including a Q4 win on earnings at $0.52 per share even as Q4 revenue was flat.
Before we dive into that, let us take a closer look at HPE’s fiscal Q4 and full FY 2023 earnings results by the numbers:
- Q4 FY 2023 revenue of $7.4 billion, down 7% from $7.9 billion YoY. The Q4 revenue figure met analyst consensus estimates from Investing.com.
- Q4 FY 2023 non-generally accepted accounting principles (non-GAAP) net earnings of $680 million, down 10% from $755 million YoY.
- Q4 FY 2023 non-GAAP diluted net EPS of $0.52, which is down from $0.57 per share YoY. The EPS beat analyst consensus estimates of $0.50 per share from Investing.com. The Q4 EPS is at the high range of HPE’s previous guidance range of $0.48 to $0.52 per share for the quarter.
- Q4 FY 2023 non-GAAP gross profit of $2.56 billion, which is down 2% from $2.6 billion YoY.
- Q4 FY 2023 non-GAAP gross profit margin of 34.8%, which is up from 33.1% YoY.
- Q4 FY 2023 annualized revenue run-rate (ARR) of $1.3 billion, which is up 39% YoY.
- Full FY 2023 revenue of $29.1 billion, up 2% from $28.5 billion YoY.
- Full FY 2023 non-GAAP net earnings of $2.8 billion, up 6% from $2.7 billion YoY.
- Full FY 2023 non-GAAP diluted net EPS of $2.15, which is up from $2.02 per share YoY.
- Full FY 2023 non-GAAP gross profit of $10.3 billion, which is up 6% from $9.7 billion YoY.
- Full FY 2023 non-GAAP gross profit margin of 35.3%, which is up from 33.9% YoY.
HPE’s Revenue Sales by Market Segment in Q4 and Full FY 2023
HPE’s revenue was mixed across its five main product line market segments in Q4 and in full FY 2023, just as it has been over the previous several quarters. Here is the complete breakdown:
- For Q4, revenue for HPE’s Compute unit came in at $2.6 billion, which is down 31% from $3.8 billion YoY.
- High Performance Computing (HPC) and AI revenue totaled $1.2 billion in Q4, up 37% from $862 million YoY.
- HPE’s Storage unit revenue for Q4 came in at $1.1 billion, down 13% from $1.3 billion YoY.
- HPE revenue in the Intelligent Edge unit totaled $1.4 billion, up 41% from $965 million YoY.
- HPE’s Financial Services unit, Q4 revenue totaled $876 million, up 2% from $857 million YoY.
- For full FY 2023, revenue for HPE’s Compute unit came in at $11.4 billion, which is down 11% from $12.9 billion YoY.
- HPC and AI revenue totaled $3.9 billion full FY 2023, up 23% from $3.2 billion YoY.
- HPE’s Storage unit revenue for the full FY 2023 came in at $4.4 billion, down 4% from $4.6 billion YoY.
- HPE revenue in the Intelligent Edge unit totaled $5.2 billion for the full FY 2023, up 42% from $3.7 billion YoY.
- HPE’s Financial Services unit full FY 2023 revenue totaled $3.5 billion, up 4% from $3.3 billion YoY.
Like we said, these segment results are mixed, with core business areas in Storage and Compute seeing YoY declines that offset growth areas such as HPC and Intelligent Edge. The Storage and Compute segment declines were not a surprise due to the ongoing macroeconomics that are holding back that spending.
But there is a positive trend we see here that is becoming an exciting and healthy pattern—we are encouraged by HPE’s growth in Edge and AI. These are the strategic areas that CEO Antonio Neri frequently leans into in his messages for the direction of this company. Edge-to-cloud and everything as a service are shape-shifting HPE’s business for the good, and we believe that these technologies better position HPE for the long term.
We also believe that HPE is focused directionally on the right areas of the global marketplace, which will continue to bring the company success. We expect that further growth of the HPE GreenLake intelligent edge to cloud platform and intelligent edge market will remain the biggest and most important focus for customers seeking cloud experiences on- and off-premises. This growth will be a sustained boon for HPE in the future as we see it.
HPE Revenue and Earnings Outlook for First Quarter FY 2024
HPE earnings guidance was also provided for the first quarter (Q1) of FY 2024 as part of its Q4 FY 2023 financial report. For the first quarter of FY 2024, HPE said it expects revenue between $6.9 billion to $7.3 billion, with non-GAAP diluted net EPS between $0.42 to $0.50 per share.
For the full FY 2024, HPE reiterates that FY 2024 revenue growth will be between 2% and 4% in constant currency and that non-GAAP diluted net EPS will be in the range of $1.82 to $2.02 per share, per earlier guidance. The company said it still expects its full year FY 2024 free cash flow (FCF) to be between $1.9 billion to $2.1 billion.
HPE Revenue Overview – What It Means
Overall, Q4 2023 and FY 2023 were positive for HPE, despite the macroeconomic challenges that continue to linger around the globe. This company is showing good results and providing excellent technologies to its customers while being led effectively by Neri and his leadership team. It can tout broad innovations in its product and service offerings across the tech industry. In HPE’s earnings call with analysts on November 28, Neri said he and his team expect demand to be strong across the marketplace in FY 2024 and that the company is looking at a large order backlog to get it started next year.
HPE continues to be well-positioned as AI, edge, generative AI, hybrid cloud, GreenLake, and other powerful technologies are bringing constant change and innovation to enterprises around the world. We are excited to watch the company’s progress as we head into 2024.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discussed HPE’s latest earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
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Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
