The News: Hewlett Packard Enterprise (HPE) announced fiscal year (FY) 2024 first quarter (Q1) earnings recently. For the full details click here.
By the numbers:
- Revenue: $6.8 billion, down 14% from the prior-year period in actual dollars and in constant currency (CC)
- Annualized revenue run rate (ARR): $1.4 billion, up 42% from the prior-year period and 41% in CC
- GAAP gross margin: 36.4%, up 240 basis points from the prior-year period and up 160 basis points sequentially
- Non-GAAP gross margin: 36.2%, up 200 basis points from the prior-year period and up 140 basis points sequentially
- GAAP diluted net earnings per share (EPS): $0.29, down 24% from the prior-year period, and down 41% sequentially, above the midpoint of the guidance range of $0.24 to $0.32
- Non-GAAP diluted net EPS: $0.48, down 24% from the prior-year period and down 8% sequentially, at the high end of the guidance range of $0.42 to $0.50
HPE’s Q1 and FY24 Earnings in the Spotlight
Analyst Take: HPE recently released its Q1 2024 earnings, marking an important point in its progress toward integrating AI, cloud services, and the Intelligent Edge. This period illustrates HPE’s strategic ability and operational excellence reflected in impressive accomplishments across several financial metrics. It is valuable to examine the details of HPE’s performance, place it in the context of the broader technological and economic landscapes, and review the company’s future direction.
Strategic Evolution and Fiscal Performance
Despite market difficulties in Q1 FY 2024, HPE demonstrated resilience and adaptability. The company’s focus on operational excellence and customer-centric innovation has led to profitability and recurring revenue growth. Although the company faced hurdles, such as a slowdown in the networking market and timing issues with GPU deals, HPE stands firm in its long-term plan that emphasizes AI, edge computing, and hybrid cloud services. HPE is dedicated to enhancing profitability and scaling recurring revenue to ensure future expansion and value.
Comparative Market Analysis
Despite a 14% drop in revenue in Q1 FY 2024, HPE demonstrated strong performance, showcasing strengths in managing profits and cost control. Even though server revenue dipped, there was a slight increase in Intelligent Edge revenue. The Hybrid Cloud sector encountered difficulties, but HPE kept its attention on seizing opportunities in the market for cloud services. Financial Services income was stable. HPE’s strategic stance, coupled with its emphasis on operational efficiency and customer-centric innovation, sets the company apart in a fiercely competitive market.
Product and Strategic Highlights
For Q1 FY 2024, HPE demonstrated shifts across its product portfolio, signaling its tactical stance in the market. The following key points provide insights on HPE’s approach and its impact on the infrastructure market:
Server Segment Consolidation
The decision by HPE to combine its Compute and HPC & AI segments into a single Server segment is a calculated step toward improving operational performance and responding to market changes. This move highlights HPE’s awareness of the shifting needs of organizations, especially around trends such as edge computing and AI.
Intelligent Edge Growth
Despite wider market difficulties, HPE’s Intelligent Edge segment endured with modest revenue growth. Its performance shows a market appetite for edge computing solutions, which mirrors organizations’ rising concentration on distributed infrastructure to facilitate real-time data processing and analytics.
Commitment to Hybrid Cloud
Although there has been a drop in Hybrid Cloud revenue for Q1 FY 2024, HPE’s strategic commitment to this segment is clear. As the cloud landscape continues to change, HPE remains focused on offering hybrid cloud solutions designed to meet diverse workload and data management needs of organizations.
Financial Services Stability
HPE’s Financial Services segment remained stable, highlighting the company’s holistic, customer-centric strategy to product offerings.
HPE’s initiatives showcase its proactive approach to market changes and aligning to emerging trends. The company’s emphasis on agility, innovation, and customer relationships sets it up well for ongoing growth and continued market leadership.
Looking Ahead
Recently at MWC in Barcelona, Phil Mottram, the head of Aruba business for HPE, shared his thoughts with The Futurum Group’s Steven Dickens and Ron Westfall about the strategic acquisition of Juniper. He stressed its crucial role as a launchpad for the company’s future growth. Mottram emphasized that bringing together Juniper’s networking capabilities with Aruba’s existing portfolio will notably boost HPE’s competitive advantage in the Intelligent Edge and cloud markets. He also indicated that this acquisition is set to speed up innovation, enhance market penetration, and spur additional growth for HPE. Furthermore, he underlined the compatibility between Juniper’s and Aruba’s technologies as an important element in offering more all-inclusive and progressive solutions to cater to changing customer requirements.
Overall, HPE’s Q1 earnings in 2024 mark a defining moment for tactical realignment and financial growth, with AI and Intelligent Edge being the primary focus to drive success. The company’s capability to navigate the intricacies of the economic environment, alongside its innovative advantage and strategic partnerships, sets it up for sustained growth and leadership in the market. As HPE continues leveraging the power of AI and cloud computing, its progressive approach sets a strong base for future success, hinting at exciting prospects for stakeholders, clients, and the wider technology ecosystem.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discusses 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.
Other Insights from The Futurum Group:
5G Factor: HPE Juniper Deal – The 5G Ecosystem Impact
HPE’s Game-Changing $14 Billion Acquisition of Juniper
HPE Revenue Hits $29 Billion for Full Fiscal Year 2023, Up 2% YoY
Author Information
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the Vice President and Practice Leader for Hybrid Cloud, Infrastructure, and Operations at The Futurum Group. With a distinguished track record as a Forbes contributor and a ranking among the Top 10 Analysts by ARInsights, Steven's unique vantage point enables him to chart the nexus between emergent technologies and disruptive innovation, offering unparalleled insights for global enterprises.
Steven's expertise spans a broad spectrum of technologies that drive modern enterprises. Notable among these are open source, hybrid cloud, mission-critical infrastructure, cryptocurrencies, blockchain, and FinTech innovation. His work is foundational in aligning the strategic imperatives of C-suite executives with the practical needs of end users and technology practitioners, serving as a catalyst for optimizing the return on technology investments.
Over the years, Steven has been an integral part of industry behemoths including Broadcom, Hewlett Packard Enterprise (HPE), and IBM. His exceptional ability to pioneer multi-hundred-million-dollar products and to lead global sales teams with revenues in the same echelon has consistently demonstrated his capability for high-impact leadership.
Steven serves as a thought leader in various technology consortiums. He was a founding board member and former Chairperson of the Open Mainframe Project, under the aegis of the Linux Foundation. His role as a Board Advisor continues to shape the advocacy for open source implementations of mainframe technologies.
Bringing more than a decade of varying experience crossing multiple sectors such as legal, financial, and tech, Sam Holschuh is an accomplished professional that excels in ensuring success across various industries. Currently, Sam serves as an Industry Analyst at The Futurum Group, where collaborates closely with practice leads in the areas of application modernization, DevOps, storage, and infrastructure. With a keen eye for research, Sam produces valuable insights and custom content to support strategic initiatives and enhance market understanding.
Rooted in the fields of tech, law, finance operations and marketing, Sam provides a unique viewpoint to her position, fostering innovation and delivering impactful solutions within the industry.
Sam holds a Bachelor of Science degree in Management Information Systems and Business Analytics from Colorado State University and is passionate about leveraging her diverse skill set to drive growth and empower clients to succeed in today's rapidly evolving landscape.
