Hewlett Packard Enterprise
posted October-quarter financial results that were largely in line with Street estimates, driven by growing strength in its high-performance-computing and AI segment, where it is finding traction in particular with customers training large language models.
In late trading,
HP
Enterprise shares were 0.8% higher at $15.65.
For the quarter, HP Enterprise posted revenue of $7.35 billion, down 7% from a year ago. The result was right at the midpoint of the company’s forecast range of $7.2 billion to $7.5 billion, and about even with the Street consensus at $7.36 billion.
Adjusted profits were 52 cents a share, down 9% from a year ago, but at the top of the guidance range of 48 to 52 cents. The profit was two pennies above the consensus call for 50 cents among analysts tracked by
FactSet.
HP Enterprise has multiple moving parts, which fit together a little differently than analysts expected in the most recent quarter. The high- performance-computing and AI segment, which includes HP’s supercomputing business, had revenue of $1.18 billion in the quarter, up 37%, and well above Street consensus at $951 million.
CEO Antonio Neri said in an interview with Barron’s that in the October 2023 fiscal year, the segment had orders of $3.6 billion, including $600 million in just the last 10 days of the period. That incudes an order worth about $285 million from the U.K. government for what will be the country’s fastest supercomputer.
Neri noted that almost none of those orders have yet been fulfilled, as the company’s AI-related backlog of work builds up.
“Intelligent edge,” largely the company’s Aruba networking business, had revenue of $1.36 billion in the quarter, up 41%, but below the consensus call of $1.44 billion. Growth slowed slightly from 50% in each of the previous two quarters.
The company’s compute segment, which sells servers to data centers, had revenue of $2.6 billion, down 31%, and about $160 million below Street estimates. Neri noted, however, that revenue in that business was down only 1% sequentially, and that sales grew slightly in terms of units.
Storage revenue was $1.1 billion, slightly below estimates, and off 13% from a year earlier, but 3% higher sequentially.
For the full fiscal year, HP Enterprise posted revenue of $29.1 billion, up 2%, or 5.5% in constant currency. Profits on an adjusted basis came in at $2.15 a share, up 6%. Under generally accepted accounting principles the company earned $1.54 a share for the year.
The company also announced an 8% dividend increase, to 13 cents quarterly from 12 cents.
For the January quarter, HP Enterprise projects revenue of between $6.9 billion and $7.3 billion, a range whose midpoint is a bit below the Street consensus call for $7.2 billion. The adjusted profit is expected to be between 42 and 50 cents a share, compared with the Street consensus call for 44 cents.
For the October 2024 fiscal year, the company repeated a previous projection for top-line growth of between 2% and 4%, while also reiterated a forecast that adjusted profit will range from $1.82 to $2.02 a share. The company continues to expect full-year free cash flow of between $1.9 billion and $2.1 billion.
So far this year, HP Enterprise shares are down about 3%.
Write to Eric J. Savitz at eric.savitz@barrons.com
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