Core Insights - Hewlett Packard Enterprise (HPE) reported total revenue of $7.71 billion for the quarter ending July 2024, reflecting a 10.1% increase compared to the previous year [2][3] International Revenue Breakdown - Revenue from Europe, Middle East, and Africa (EMEA) was $2.56 billion, accounting for 33.1% of total revenue, which was a decline of 6.84% from the expected $2.74 billion [3] - Asia Pacific and Japan contributed $1.75 billion, representing 22.6% of total revenue, exceeding expectations by 4.11% [3] Future Revenue Forecasts - Analysts project HPE's total revenue for the current fiscal quarter to be $8.26 billion, indicating a 12.4% increase year-over-year [4] - For the entire year, total revenue is forecasted at $29.88 billion, a 2.6% improvement from the previous year, with EMEA expected to contribute $10.66 billion and Asia Pacific and Japan $6.52 billion [4] Market Trends and Stock Performance - HPE's reliance on international markets presents both opportunities and risks, making it essential to monitor international revenue trends for future forecasts [5] - Over the past month, HPE's stock gained 1.1%, while the S&P 500 composite increased by 3.5% [7]

Core Insights - Hewlett Packard Enterprise (HPE) reported a strong quarter with a 10% year-on-year revenue increase, earnings per share (EPS) of $0.50, and cash flow of $669 million, hitting the high end of their revenue range [4][5][24] - The company operates in four key segments: Server, Hybrid Cloud, Intelligent Edge, and Leasing, with a focus on improving IT spending and macroeconomic conditions [6][7][33] AI Business - HPE achieved $1.3 billion in AI server revenue, marking a 40% quarter-on-quarter increase, with AI now representing 30% of the Server business [9][24] - The company is focused on profitable growth in the competitive AI market, emphasizing disciplined cost and pricing strategies [9][24] - HPE has a strong history in sovereign computing, recently securing a strategic deal in Japan, and sees significant potential in enterprise AI, with 80% of enterprises currently experimenting with AI [9][10][24] Hybrid Cloud and Storage - The Hybrid Cloud segment, particularly the GreenLake platform, is seeing growth with over 30,000 customers and a projected compound annual growth rate (CAGR) of 35% to 45% over three years [33][34] - HPE is transitioning to a software-defined storage model with the Alletra MP platform, which is expected to defer more revenue over time [34] Intelligent Networking - HPE's networking business is showing signs of recovery, with a 3% sequential revenue increase and positive trends in WLAN services and SASE [37] - The company recently closed a $2.1 billion stake sale in H3C and is on track to finalize the Juniper transaction, which is expected to significantly enhance its networking capabilities and operating margins [38][50] Financial Outlook - HPE expects to generate $1.9 billion in free cash flow for the year, with a focus on managing inventory and working capital effectively [47] - The company maintains a balanced capital allocation framework, prioritizing growth investments, dividends, share buybacks, and maintaining an investment-grade credit rating [52]

Core Viewpoint - Hewlett Packard Enterprise (HPE) is positioned as an attractive investment opportunity for blue-chip investors, particularly due to its involvement in AI and strong cash flow, alongside a solid capital return strategy [1][2]. Financial Performance - HPE reported Q3 net revenue of $7.71 billion, reflecting a 10.1% increase year-over-year, driven by strong demand for AI-server products [4]. - Server sales surged by 35%, contributing to improved margins, although the Intelligent Edge segment saw a 23% decline and Hybrid Cloud experienced a 7% decline [5]. - The adjusted gross margin declined by 410 basis points, but this was less than expected, with sequential improvements anticipated as demand builds [5]. Dividend Information - HPE offers a high dividend yield of 2.95%, with an annual dividend of $0.52 and a payout ratio of 37.96%, indicating a strong capacity to maintain and potentially increase dividends over time [2][3]. - The company has demonstrated a 3-year annualized dividend growth of 0.69%, reinforcing the stability of its dividend payments [2]. Market Guidance - HPE management has raised its Q4 guidance, aligning with consensus estimates and leading analysts to revise their price targets upward, with UBS setting a new target of $19, suggesting a 25% upside potential [6]. - The overall market sentiment is mixed, with shares experiencing a decline post-earnings release but showing support at critical levels, indicating potential for a rebound [7]. Strategic Outlook - The company is expected to benefit from increased annual spending on AI business applications, projected to quadruple within three years, which may drive growth in the Intelligent Edge and Hybrid Cloud segments [5].

Financial Performance - GAAP net revenue for the three months ended July 31, 2024, was $7.71 billion, a 10.1% increase from $7.00 billion in the same period of 2023[286]. - GAAP gross profit margin decreased to 31.6% for the three months ended July 31, 2024, down from 35.8% in the same period of 2023[286]. - Non-GAAP earnings from operations for the three months ended July 31, 2024, were $771 million, representing a 10.0% margin compared to $718 million and a 10.3% margin in the same period of 2023[287]. - GAAP net earnings for Q3 2024 were $512 million, with diluted net earnings per share at $0.38, compared to $464 million and $0.35 per share in Q3 2023, representing a 10.3% increase in earnings[290]. - Non-GAAP net earnings for Q3 2024 were $661 million, with diluted net earnings per share at $0.50, compared to $639 million and $0.49 per share in Q3 2023, reflecting a 3.4% increase in earnings[290]. - Free cash flow for Q3 2024 was $669 million, down from $955 million in Q3 2023, indicating a decrease of 29.9%[291]. - Net cash provided by operating activities for Q3 2024 was $1,154 million, compared to $1,525 million in Q3 2023, a decline of 24.3%[291]. Cash Flow and Liquidity - For the nine months ended July 31, 2024, net cash provided by operating activities increased by $0.7 billion to $2.311 billion compared to $1.585 billion in the same period of fiscal 2023[264]. - Free Cash Flow (FCF) increased by $0.9 billion for the nine months ended July 31, 2024, compared to the same period in fiscal 2023, driven by higher cash provided by operations[273]. - Cash, cash equivalents, and restricted cash as of July 31, 2024, totaled $3.905 billion, down from $4.581 billion as of October 31, 2023[261]. - The company expects to meet its liquidity requirements for at least the next twelve months, supported by cash generated from operations and financing commitments related to the Juniper Networks acquisition[253]. Investment Activities - Net cash used in investing activities for the nine months ended July 31, 2024, was $1.580 billion, a decrease from $3.186 billion in the same period of 2023[264]. - The company reported an investment in property, plant, and equipment of $543 million for Q3 2024, down from $671 million in Q3 2023, a decrease of 19.1%[291]. - Net cash used in investing activities decreased by $1.6 billion for the nine months ended July 31, 2024, primarily due to lower cash utilized in financial collateral activities and reduced investments in property and equipment[271]. Debt and Financing - Total debt as of July 31, 2024, was $11.803 billion, a decrease from $12.355 billion as of October 31, 2023[261]. - The company repurchased $100 million worth of shares during the first nine months of fiscal 2024, with a remaining authorization of approximately $0.9 billion for future repurchases[257]. - Net cash used in financing activities increased by $1.2 billion for the nine months ended July 31, 2024, mainly due to lower proceeds from debt issuance[272]. Strategic Transactions - The planned acquisition of Juniper Networks is an all-cash transaction valued at approximately $14 billion, with a purchase price of $40.00 per share[259]. - The company announced plans to divest its Communications Technology Group business to HCLTech, which is subject to regulatory approvals[258]. - The company incurred acquisition-related charges in Q3 2024, driven by costs associated with the pending acquisition of Juniper Networks[299]. Operational Metrics - Days Sales Outstanding (DSO) increased to 45 days from 43 days year-over-year, while Days of Supply (DOS) rose significantly to 131 days from 87 days, indicating higher inventory levels due to strategic purchases for AI systems[266][268]. - Days Purchases Outstanding (DPO) increased to (172) days from (134) days, reflecting higher inventory purchases[269]. - The cash conversion cycle improved to 4 days from (4) days year-over-year, a positive change of 8 days[266]. Non-GAAP Measures - The company emphasizes the importance of non-GAAP measures for providing transparency and facilitating comparisons with industry peers[294]. - Non-GAAP financial measures are used as supplements to GAAP results, with reconciliations provided for investor review[304]. - The company excludes gains and losses on non-marketable equity investments from non-GAAP measures to better reflect normal business operations[305]. - The projected non-GAAP income tax rate for fiscal 2024 is set at 15%, compared to 14% for fiscal 2023, reflecting current information and assumptions[305]. - The company encourages careful review of reconciliations between non-GAAP and GAAP financial measures[304].

Core Points - Hewlett Packard Enterprise (HPE) is pursuing legal action to recover up to $4 billion in damages from the estate of the late British tech entrepreneur Mike Lynch, who recently passed away [1] - The damages sought by HPE are linked to a civil case involving fraud claims against Lynch related to Autonomy, a company he co-founded, which Lynch has denied [1] - A UK judge ruled in 2022 that HPE is a victim of fraud committed by Lynch and his co-defendant Sushovan Hussain, reinforcing HPE's responsibility to recover damages for its shareholders [3] Legal Context - HPE's legal efforts are a continuation of actions stemming from a civil case against Lynch, emphasizing the company's commitment to its shareholders [1][3] - The tragic circumstances surrounding Lynch's death and the sinking of his yacht do not alter the legal findings regarding the fraud claims against him [3]

Core Insights - Hewlett Packard Enterprise Company (HPE) reported better-than-expected results for Q3 fiscal 2024, with non-GAAP earnings of 50 cents per share, surpassing the Zacks Consensus Estimate of 46 cents and management's guidance of 43-48 cents [1] - The company's non-GAAP earnings grew 2% year over year and 19% sequentially, driven by strong sales growth and disciplined cost management [1] - HPE initiated strong guidance for Q4 and fiscal 2024, with the stock gaining 10.5% year-to-date [1] Top-Line Performance - HPE's Q3 revenues reached $7.71 billion, a 10% increase year over year and a 7% increase sequentially, driven by recovery in the enterprise division and growth in AI, hybrid cloud, and networking [2] - The revenue figure exceeded the Zacks Consensus Estimate of $7.64 billion and fell within management's guidance range of $7.4-$7.8 billion [2] - In constant currency, revenues increased 10% year over year, with an annualized revenue run rate of $1.7 billion, up 35% year over year [2] Segment-Wise Performance - The server segment saw sales soar 35% year over year and 10.7% sequentially to $4.28 billion, driven by strong demand for AI servers [3] - The Intelligent Edge division's revenues declined 23% year over year but rose 3.2% sequentially to $1.12 billion, with demand recovering and backlogs normalizing [3][4] - The hybrid cloud division's sales decreased 7% year over year but increased 3.5% sequentially to $1.3 billion, with an operating profit margin of 5.1% [4] Financial Performance - HPE's non-GAAP gross profit was $2.45 billion, down 2.6% year over year but up 2.8% sequentially, with a gross margin of 31.8% [7] - Non-GAAP operating profit increased 7.4% year over year and 12.7% sequentially to $771 million, with an operating margin of 10% [7] - The company generated operating cash flow of $1.15 billion and free cash flow of $669 million in Q3 [8] Guidance for Q4 and FY24 - HPE forecasts Q4 revenues between $8.1 billion and $8.4 billion, with non-GAAP EPS expected in the range of 52-57 cents [9] - For fiscal 2024, HPE revised revenue growth guidance to 1-3% in constant currency, with non-GAAP EPS projected between $1.92 and $1.97 [9][10] - The company expects free cash flow to be $1.9 billion in fiscal 2024 [10]

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental a ...

Hewlett Packard Enterprise Co (NYSE:HPE) stock is 7.3% lower to trade at $17.51 this morning, on track for its worst single-session decline since January. The tech stock is deep in the red even after reporting fiscal third-quarter earnings of 50 cents per share on $7.71 billion in revenue, both of which topped estimates. Instead, HPE is lower because artificial intelligence (AI) gross margins declined year-over-year, even though AI server revenue hit a new record. In response, BofA Global Research chimed in ...

Financial Data and Key Metrics Changes - Net revenue for Q3 2024 was $7.7 billion, representing a 10% year-over-year increase and at the high end of guidance [7] - Non-GAAP diluted net earnings per share rose to $0.50, $0.02 above the high end of guidance [7] - Free cash flow exceeded $660 million, with a dividend of $0.30 per share announced [7][26] - Non-GAAP gross margin was 31.8%, down 410 basis points year-over-year due to a lower mix of Intelligent Edge revenue [30] Business Line Data and Key Metrics Changes - Server segment revenue reached $4.3 billion, up 35% year-over-year and 11% sequentially, driven by AI systems and traditional servers [32] - Hybrid Cloud segment revenues were $1.3 billion, down 7% year-over-year but up 4% sequentially [36] - Intelligent Edge revenues were $1.1 billion, down 23% year-over-year but up 3% sequentially [39] - Financial Services revenue was $879 million, up 1% year-over-year [41] Market Data and Key Metrics Changes - Demand improved in North America, Asia-Pacific, Japan, and India, while Europe and the Middle East lagged [8] - AI systems revenue conversion reached $1.3 billion, a 39% increase from Q2 [12] - HPE GreenLake cloud platform saw almost 37,000 unique customers, driving annualized revenue run rate subscription growth [8] Company Strategy and Development Direction - The company is focused on its edge-to-cloud vision, emphasizing AI, hybrid cloud, and networking [8][10] - A pending acquisition of Juniper Networks is expected to enhance the company's networking capabilities and margin profile [9][23] - The introduction of HPE Private Cloud AI aims to accelerate enterprise AI adoption [19][27] Management's Comments on Operating Environment and Future Outlook - Management noted an improved demand environment and strong enterprise interest in generative AI [8][26] - The company is optimistic about the recovery in enterprise demand and the potential for AI systems to drive future growth [26][27] - Management expects to close the Juniper acquisition by late 2024 or early 2025, which will significantly impact margins [43][46] Other Important Information - The company received $2.1 billion from the partial sale of its H3C equity position [7][26] - The cash conversion cycle improved to a positive four days, a reduction of 19 days from the previous year [42] Q&A Session Summary Question: Insights on Server margins and AI revenue contribution - Management indicated that server margins were supported by the shift to Gen11 products with richer configurations and effective cost management [49][50] Question: Factors impacting gross margins - Management highlighted that the lower contribution from networking revenue and the AI server mix affected gross margins, but operational discipline is expected to improve profitability [52][54] Question: Free cash flow trends and expectations - Management explained that working capital timing and seasonality impacted Q3 free cash flow, but improvements are expected in Q4 [58][59] Question: AI backlog composition and enterprise demand projects - Management noted that the AI backlog is strong, with enterprise demand spanning various verticals, including healthcare and financial services [72][73] Question: Trends in traditional servers versus AI platforms - Management stated that there are no signs of cannibalization of traditional servers by AI platforms, as demand remains strong across different segments [68][70]

For the quarter ended July 2024, Hewlett Packard Enterprise (HPE) reported revenue of $7.71 billion, up 10.1% over the same period last year. EPS came in at $0.50, compared to $0.49 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $7.67 billion, representing a surprise of +0.56%. The company delivered an EPS surprise of +8.70%, with the consensus EPS estimate being $0.46.While investors scrutinize revenue and earnings changes year-over-year and how they compare with W ...