HPE(US:HPE)2024-09-05 20:23Financial 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].