HPE(HPE) - 2025 Q1 - Quarterly Report

Financial Performance - For the three months ended January 31, 2025, GAAP net revenue was $7.854 billion, an increase from$6.755 billion in the same period of fiscal 2024, representing a growth of approximately 16.2%[266]. - GAAP gross profit for the same period was $2.295 billion, with a gross profit margin of 29.2$2.457 billion and 36.4% in fiscal 2024[266]. - The company reported a free cash flow of negative $877 million for the three months ended January 31, 2025, compared to negative$482 million for the same period in 2024[243]. - Free cash flow (FCF) decreased to $(877) million for the three months ended January 31, 2025, compared to$(482) million in the same period of fiscal 2024[273]. - Non-GAAP net earnings attributable to HPE exclude certain charges, including those related to equity interests and taxes, to provide a clearer view of operational performance[283]. Cash Flow and Liquidity - For the three months ended January 31, 2025, net cash used in operating activities increased by $0.5 billion compared to the same period in fiscal 2024, primarily due to unfavorable changes in other assets and liabilities[244]. - The company expects internally generated cash flows to be generally sufficient to support operating businesses and capital expenditures for at least the next twelve months[233]. - The company anticipates that funds from operations and access to capital markets will meet liquidity requirements for the foreseeable future[233]. - As of January 31, 2025, cash, cash equivalents, and restricted cash totaled$13.852 billion, while total debt was $17.877 billion[240]. - The cash conversion cycle increased to 5 days as of January 31, 2025, compared to a negative 12 days as of October 31, 2024[245]. Investments and Divestitures - The company completed the divestiture of its CTG business to HCLTech on December 1, 2024, receiving net proceeds of$210 million and recognizing a gain of $244 million[238]. - The company divested 30$2.1 billion in pre-tax consideration, which is expected to result in annualized cost savings of approximately $120 million[282]. - The company incurred a gain of$244 million from the sale of CTG on December 1, 2024, which is considered a discrete event for non-GAAP calculations[283]. - Future cash payments of approximately $159 million are expected in connection with approved restructuring plans, with$47 million to be paid through the remainder of fiscal 2025[260]. Debt and Financing Activities - The company issued $9.0 billion of senior unsecured notes and$1.5 billion of Preferred Stock in September 2024 to fund a portion of the acquisition of Juniper Networks[239]. - Net cash used in financing activities increased by $0.9 billion to$0.8 billion for the same period, primarily due to lower proceeds from debt[251]. - The company maintains a revolving credit facility and two commercial paper programs, with no changes since October 31, 2024[254]. Operational Metrics - Days of sales outstanding (DSO) increased to 40 days as of January 31, 2025, compared to 38 days as of October 31, 2024[245]. - DSO (Days Sales Outstanding) decreased due to higher early collections, while DOS (Days of Sales) increased due to higher inventory levels from strategic purchases for AI systems[246][247]. Cost Management - The company anticipates making contributions of approximately $143 million to non-U.S. pension plans for the remainder of fiscal 2025[259]. - The projected non-GAAP income tax rate for fiscal 2025 is set at 15$120 million following the H3C divestiture and related severance actions[282]. - Non-GAAP measures are used to supplement GAAP results, providing a clearer view of financial performance without the impact of non-cash expenses and discrete events[287].