The News: HPE revenue reached $7 billion in the second quarter of fiscal year 2023, up four percent from $6.7 billion one year ago, as Hewlett Packard Enterprise reported its latest earnings for the period ending on April 30. HPE’s non-GAAP diluted earnings per share (EPS) for Q2 hit $0.52 cents, up 18 percent from $0.44 per share one year ago. HPE reported its Q2 earnings on May 30, 2023. Read the full Q2 earnings press release on the HPE investor website.
HPE Revenue Hits $7B in Q2 2023 as ARR Rises 38% to $1.1B
Analyst Take: HPE’s revenue gain highlights a largely positive quarter for the company, despite continuing challenging global macroeconomic conditions that are still affecting the earnings results of most tech and consumer companies.
HPE showed strength in its latest numbers in several important areas, including healthy growth in its intelligent edge market and steadily rising revenue in its AI segment, which we believe are just beginning to expand in the marketplace.
But even more impressive is HPE’s Annualized Revenue Run-rate (ARR) figure for Q2, which saw solid 38 percent growth to $1.1 billion in constant currency, which is a 35 percent rise in current dollars. That is quite an increase and shows us that HPE is delivering to its customers and to the marketplace.
We certainly expect more to come and we watch HPE’s AI numbers with interest as the company uses its HPE Slingshot interconnects for HPC and AI clusters and its GreenLake portfolio to create a stronger AI narrative for the market. This is amid an incredibly vibrant market of change and advancement and HPE is right in the thick of it all with innovation and performance.
Here are HPE’s fiscal Q2 2023 earnings results by the numbers:
- Q2 2023 revenue of $7 billion, up four percent from $6.7 billion for the same quarter one year ago. The Q2 revenue figure missed analyst consensus estimates of $7.31 billion from Investing.com.
- Q2 2023 non-GAAP net earnings of $685 million, up 17 percent from $583 million one year ago.
- Q2 2023 non-GAAP diluted net EPS of $0.52, which is up 18 percent from $0.44 per share one year ago, beating analyst consensus estimates of $0.49 per share from analysts with Investing.com. The Q2 EPS is at the top of HPE’s previous guidance of $0.44 to $0.52 per share for the quarter.
- Q2 2023 non-GAAP gross profit of $2.52 billion, which is up 10 percent from $2.3 billion in the same quarter one year ago.
- Q2 2023 non-GAAP gross profit margin of 36.2 percent, which is up from 34.2 percent one year ago.
- Q2 2023 ARR of $1.1 billion, which is up 38 percent in constant currency or 35 percent in today’s dollars.
We spoke with HPE CEO Antonio Neri about the company’s latest earnings numbers and he told us that HPE’s focus is on maximizing operating performance, which has driven its EPS, while also working around a lumpier server business that provides continuing business challenges. HPE is also focusing on AI, edge, and its formidable as-a-service portfolio, said Neri, which are all consistent with the strategic approach we feel will work best for HPE.
HPE’s Revenue Sales Market Breakdowns for Q2
HPE’s revenue saw mixed results across its five main product line market segments in Q2. Here are the complete breakdowns:
For Q2, HPE’s Compute unit saw its revenue hit $2.8 billion, which is down eight percent from $3 billion one year ago.
High Performance Computing (HPC) and AI revenue totaled $840 million in Q2, up 18 percent from $710 million one year ago.
HPE’s Storage unit revenue for Q2 came in at $1.04 billion, down three percent from $1.07 billion one year earlier.
HPE revenue in the Intelligent Edge unit totaled $1.3 billion, up 50 percent from $867 million one year ago.
And in HPE’s Financial Services unit, Q2 revenue totaled $858 million, up four percent from $823 million one year ago.
We see these numbers as impressive, particularly as they arrive during today’s volatile and challenging markets.
HPE Revenue and Earnings Outlook for Fiscal Q3 of 2023
HPE earnings guidance was also provided for Q3 of 2023 as part of its Q2 FY2023 financial report.
For the third quarter of fiscal 2023, HPE said it expects revenue between $6.7 billion to $7.2 billion, with non-GAAP diluted net EPS between $0.44 to $0.48 per share.
For the full fiscal year of 2023, HPE estimates that FY2023 revenue growth will be between four percent to six percent in constant currency and targets non-GAAP operating profit growth to be in the six percent to seven percent range. HPE has also raised its guidance on its non-GAAP diluted net EPS to $2.06 to $2.14 per share for Q3.
The company still expects its full year FY2023 free cash flow to be between $1.9 billion to $2.1 billion.
HPE Revenue Overview
As we have said in recent quarters during the difficult global macroeconomic conditions that have wracked markets and economies since the pandemic began, HPE is holding its own despite the challenges. We continue to believe that this performance is a testament to its effective leadership team, proven products and services, and its continuing innovation across the tech industry.
We believe that the evidence is everywhere that HPE’s customers are buying into its approach and its confidence in the overall market. HPE successfully moved earlier to present a differentiated edge-to-cloud portfolio of products, and we see HPE delivering on those plans while also working to reduce costs and grow its orders in the marketplace. As we said earlier, HPE’s established strategy of seeking higher margins by providing a wide range of technologies via Everything-as-a-Service (XaaS) models shows measurable success in what we maintain is a wise transformation of its core business practices.
And when it comes to that ARR growth for HPE, we see it as exciting and well-earned. HPE is seeing success here and these latest quarterly results show that customers are enjoying the real benefits of HPE technologies.
We believe that it will continue to be fascinating to watch HPE’s performance throughout the full FY2023 with its innovative edge to cloud, AI, GreenLake, software, and XaaS offerings for the world’s enterprises. There is a lot going on and HPE continues to be in the thick of it all.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discussed HPE’s 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.
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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.
