Key TakeawaysThe S&P 500 jumped 1.2% on Wednesday, June 5, 2024, as a slowdown in hiring by private employers increased rate-cut optimism and tech stocks outperformed.Hewlett Packard Enterprise shares surged to a record high after the IT firm raised its guidance, citing strong demand for AI servers.Shares of Brown-Forman tumbled after the alcoholic beverage maker missed quarterly estimates amid slumping demand for Jack Daniel's Tennessee Whiskey. Major U.S. equities indexes jumped higher as a report showed ...

Economic Indicators - The private sector added 152,000 jobs in May, a decrease from 188,000 in April, falling short of economists' expectations of 175,000 [1] - Job openings fell to a three-year low of 8.1 million in April, below the expected 8.35 million, indicating a cooling labor market [4] - The probability of a Federal Reserve rate cut in September increased to 59% from 56% following the labor market data [4] Company Performance - Hewlett Packard Enterprise (HPE) stock rose nearly 11% after exceeding earnings expectations and providing a strong outlook due to demand for AI servers [6] - CrowdStrike Holdings (CRWD) stock increased by 12% after a strong quarterly earnings report and an upward revision of its full-year forecast, with a year-to-date rise of over 25% [6] - Dollar Tree (DLTR) shares fell 4.9% after announcing a strategic review of its Family Dollar business, which may include a sale, following the closure of 970 underperforming stores [7]

Shares of Hewlett-Packard Enterprise Co (NYSE:HPE) are soaring to record highs, following the computer hardware name's better-than-expected fiscal second-quarter results and upbeat annual and fiscal third-quarter guidance. Artificial intelligence (AI)-optimized server demand contributed to the results, with at least 10 analysts lifting their price targets today.At last glance, HPE was up 11.9% to trade at $19.70, after earlier hitting an all-time peak of $20.43. This bull gap to all-time levels has the equi ...

Core Viewpoint - Hewlett Packard Enterprise Company (HPE) reported better-than-expected results for Q2 fiscal 2024, leading to a 15.3% increase in shares during extended trading. The positive outlook for Q3 and full fiscal 2024, driven by strong sales of AI-capable servers, further boosted investor confidence [1][10]. Financial Performance - HPE's non-GAAP earnings for Q2 were 42 cents per share, exceeding the Zacks Consensus Estimate by 10.5% and management's guidance of 36-41 cents. However, this figure was 19% lower than the same quarter last year and down 13% sequentially [1][2]. - Revenues for Q2 reached $7.2 billion, a 3% increase year-over-year and a 7% increase sequentially, surpassing the Zacks Consensus Estimate of $6.81 billion. The annualized revenue run rate was up 37% year-over-year to $1.5 billion [3][4]. - The server segment saw sales soar 18% year-over-year to $3.87 billion, driven by demand for AI servers, with AI system product revenues more than doubling sequentially to over $900 million [3][4]. Segment Performance - The Intelligent Edge division's revenues fell 19% year-over-year to $1.09 billion, reflecting a soft demand environment and strong backlog consumption in previous quarters [4]. - The hybrid cloud division's sales declined 8% year-over-year but increased 1% sequentially to $1.26 billion, benefiting from cross-selling within HPE GreenLake offerings [5]. - The Financial Services segment reported revenues of $867 million, a 1% increase year-over-year but a 1% decline sequentially, with an operating margin of 9.3% [6]. Operating Results - Non-GAAP gross profit was $2.38 billion, down 6% year-over-year, with a gross margin contraction to 33.1% due to a shift from high-margin Intelligent Edge revenues to Server revenues [8]. - Non-GAAP operating profit declined 14% year-over-year to $684 million, with an operating margin of 9.5% [8]. Balance Sheet and Cash Flow - HPE ended Q2 with $2.68 billion in cash and cash equivalents, down from $3.76 billion in the previous quarter. Operating cash flow for Q2 was $1.09 billion, with free cash flow of $610 million [9]. Guidance Update - HPE forecasts Q3 revenues between $7.4 billion and $7.8 billion, with non-GAAP EPS expected in the range of 43-48 cents. For fiscal 2024, revenue growth is revised to 1-3%, and non-GAAP EPS guidance is updated to $1.85-$1.95 [10][11].

HP Enterprise (NYSE:HPE) is up about 15% today and is one of the top-trending tickers on social media and financial news websites. HPE stock is rallying and getting a great deal of attention after the computer hardware maker reported stronger-than-expected quarterly financial results. The company’s strong performance was driven by the strength of its artificial intelligence (AI) server business.Beat-and-Raise ResultsHP’s fiscal Q2 top line rose 3% compared to the same period a year earlier to $7.2 billion, ...

Financial Position - As of April 30, 2024, cash, cash equivalents, and restricted cash totaled $2,924 million, down from $4,581 million as of October 31, 2023[256] - Total debt decreased to $11,257 million from $12,355 million as of October 31, 2023[256] - The company anticipates that cash generated from operations and access to capital markets will meet liquidity requirements for at least the next twelve months[248] - The company expects to utilize cash held outside the U.S. to support non-U.S. liquidity needs without significant tax implications[250] - As of April 30, 2024, the company had approximately $241 million of recorded liabilities related to uncertain tax positions[279] Cash Flow and Operating Activities - Net cash provided by operating activities for the six months ended April 30, 2024, was $1,157 million, an increase of $1.1 billion compared to the same period in fiscal 2023[261] - Free cash flow for the six months ended April 30, 2024, was $128 million, a significant improvement from a negative $1,038 million in the prior year[260] - For the six months ended April 30, 2024, free cash flow increased by $1.2 billion compared to the same period in fiscal 2023, primarily due to higher cash provided by operations[269] - Free cash flow for the three months ended April 30, 2024, was $610 million, significantly up from $288 million in the same period of 2023, indicating a 112% increase[290] - The company reported net cash provided by operating activities of $1,093 million for the three months ended April 30, 2024, compared to $889 million in 2023, marking a 23% increase[290] Investment and Financing Activities - Net cash used in investing activities decreased by $1.1 billion for the six months ended April 30, 2024, mainly due to lower cash utilized in net financial collateral activities and reduced payments for business acquisitions[267] - Net cash used in financing activities increased by $1.8 billion for the six months ended April 30, 2024, primarily due to lower proceeds from debt and short-term borrowings[268] - The company plans to acquire Juniper Networks for $14 billion, with the transaction expected to be funded through $14 billion in term loans[254] - In January 2024, the company issued $796 million of asset-backed debt securities with a weighted average interest rate of 5.476%[272] Revenue and Profitability - GAAP net revenue for the three months ended April 30, 2024, was $7.204 billion, a 3.3% increase from $6.973 billion in the same period of 2023[284] - GAAP gross profit for the three months ended April 30, 2024, was $2.376 billion, representing a gross profit margin of 33.0%, down from 36.0% in the same period of 2023[284] - Non-GAAP earnings from operations for the three months ended April 30, 2024, were $684 million, or 9.5% of revenue, compared to $799 million, or 11.5% of revenue in the same period of 2023[285] - For the three months ended April 30, 2024, GAAP net earnings were $314 million, resulting in a diluted net earnings per share of $0.24, compared to $418 million and $0.32 per share for the same period in 2023, representing a decrease of 25% in net earnings[288] - Non-GAAP net earnings for the three months ended April 30, 2024, were $561 million, with a diluted net earnings per share of $0.42, compared to $685 million and $0.52 per share in 2023, reflecting a decrease of 18% in non-GAAP net earnings[288] Operational Efficiency - Days of sales outstanding (DSO) increased to 48 days from 43 days, while days of supply in inventory (DOS) rose to 137 days from 87 days[262] - The cash conversion cycle remained flat at (4) days, indicating stable operational efficiency[262] Future Outlook and Strategic Initiatives - The company expects to make future cash payments of approximately $210 million in connection with approved restructuring plans, including $60 million expected to be paid through the remainder of fiscal 2024[278] - The company expects continued focus on market expansion and new product development as part of its strategic initiatives moving forward[293] Non-GAAP Financial Measures - The company plans to exclude certain non-recurring charges from its non-GAAP financial measures to provide a clearer view of ongoing operational performance[296] - Non-GAAP financial measures should not be considered in isolation and may not reflect the full economic effect of asset value loss[304] - The company relies primarily on GAAP results and uses non-GAAP measures only as a supplement, providing reconciliations for investor review[305] - For fiscal 2024, the projected non-GAAP income tax rate is 15%, up from 14% in fiscal 2023[302] - The adjustments for taxes in the non-GAAP measures included a $31 million adjustment for the three months ended April 30, 2024, compared to a $7 million adjustment in 2023[288] Cost Management - The company incurred stock-based compensation expenses of $120 million for the three months ended April 30, 2024, compared to $126 million in 2023, a decrease of 5%[288] - Transformation costs for the three months ended April 30, 2024, were $33 million, down from $60 million in the same period of 2023, reflecting a 45% decrease[288] Market Risk - There have been no material changes in market risk exposures since October 31, 2023[307]

Financial Data and Key Metrics Changes - The company reported revenue growth of 4% year-over-year and 7% quarter-over-quarter in constant currency, reaching $7.2 billion, exceeding the midpoint of prior guidance by approximately $400 million [27] - Non-GAAP diluted net EPS was $0.42, exceeding the high end of the guidance range, driven by strong revenue and cost discipline [29] - Free cash flow exceeded $600 million, with cash flow from operations at $1.1 billion [38] Business Line Data and Key Metrics Changes - AI systems revenue more than doubled sequentially to over $900 million, with cumulative AI systems orders reaching $4.6 billion [9][30] - Server revenues were $3.9 billion, up 16% sequentially and 18% year-over-year, driven by both AI systems and traditional servers [30] - Hybrid cloud revenues were $1.3 billion, up 1% sequentially but down 9% year-over-year [33] - Intelligent Edge revenues were $1.1 billion, down 9% sequentially and 19% year-over-year, with expectations for modest sequential growth in the latter half of the year [35] Market Data and Key Metrics Changes - Enterprise customer interest in AI is rapidly growing, with enterprise orders now comprising more than 15% of cumulative AI systems orders, and the number of enterprise AI customers nearly tripling year-over-year [10] - The number of customer organizations using HPE GreenLake increased by almost 9% sequentially to 34,000 [17] - Annualized revenue run rate (ARR) grew 39% year-over-year to above $1.5 billion [28] Company Strategy and Development Direction - The company is focusing on translating strong AI customer demand into revenue growth while maintaining cost discipline and operational efficiency [9][24] - HPE is investing in innovation across AI, hybrid cloud, and networking to drive higher profitability over time [30][42] - The company is committed to simplifying business processes and implementing automation and AI to enhance customer service and productivity [21][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of fiscal 2024, raising full-year revenue and non-GAAP earnings per share guidance [8][23] - The company anticipates continued revenue growth driven by increased AI systems demand and ongoing improvement in traditional infrastructure markets [8][39] - Management noted that while there are challenges in the inflationary commodity market, they are managing costs effectively [48] Other Important Information - The company announced a restructuring of the sale of its stake in H3C, which is expected to provide opportunities for significant share sales in the coming months [22] - HPE is in the regulatory process for the proposed acquisition of Juniper Networks, expected to close by the end of 2024 or early 2025 [21] Q&A Session Summary Question: AI system margins compared to segment averages - Management indicated that AI revenue reached $900 million, with operating profit margins holding up well despite inflationary pressures and a competitive market [48][50] Question: Context on enterprise AI orders - Management noted that enterprise demand for AI has accelerated, with significant interest from various sectors, including sovereign clouds and traditional enterprises [55][56] Question: Sequential decline in AI backlog - Management explained that the slight decline in backlog was due to strong demand and revenue conversion, with confidence in capturing future AI opportunities [70] Question: GreenLake revenue and AI growth - Management confirmed that AI was the fastest-growing element of ARR in Q2, indicating strong integration of AI across their portfolio [76]

Core Insights - Hewlett Packard Enterprise (HPE) reported revenue of $7.2 billion for the quarter ended April 2024, reflecting a year-over-year increase of 3.3% [1] - Earnings per share (EPS) for the quarter was $0.42, down from $0.52 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $6.81 billion by 5.72%, while the EPS surpassed the consensus estimate of $0.38 by 10.53% [1] Financial Performance Metrics - Revenue from Financial Services was $867 million, slightly below the estimated $872.26 million, marking a year-over-year increase of 1.1% [2] - Revenue from Corporate Investments and other segments was $252 million, exceeding the estimate of $240.27 million, but showing a significant decline of 14.9% year-over-year [2] - Hybrid Cloud revenue was reported at $1.26 billion, close to the estimated $1.27 billion [2] - Intelligent Edge revenue was $1.09 billion, slightly below the estimated $1.11 billion, representing a year-over-year decrease of 16.7% [2] - Server revenue reached $3.87 billion, surpassing the average estimate of $3.47 billion [2] - Earnings from Operations in Financial Services were $81 million, exceeding the estimate of $72.27 million [2] - Earnings from Operations in Intelligent Edge were $237 million, below the estimate of $254.06 million [2] - Corporate Investments and other segments reported a loss of $9 million, better than the estimated loss of $23.08 million [2] Stock Performance - HPE shares have returned +4.6% over the past month, outperforming the Zacks S&P 500 composite's +3.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

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Exhibit 99.1 Hewlett Packard Enterprise 1701 E. Mossy Oaks Road Spring, TX 77389-1767 hpe.com News Release Hewlett Packard Enterprise reports fiscal 2024 second quarter results AI systems revenue doubled sequentially, beating Q2 revenue guidance HOUSTON – June 4, 2024 – Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for the second quarter ended April 30, 2024. "HPE delivered very solid results in Q2, exceeding revenue and non-GAAP EPS guidance. AI systems revenue more than doubled ...