HPE's Q3 2023 performance underpinned by AI, HPC and Intelligent Edge

HPE’s Q3 2023 performance underpinned by AI, HPC and Intelligent Edge

18 septembre 2023

Hewlett Packard Enterprise (HPE), one of the world’s leading providers of IT and technology solutions, recently released its financial results for the third quarter of fiscal 2023. The figures highlight a solid performance, driven by sales growth in Intelligent Edge and HPE GreenLake and gross margin expansion.

In the third quarter of fiscal 2023, HPE recorded sales of $7 billion, representing a 1% increase over the same period last year. This growth is even more significant in constant currencies, reaching 3.5%. <h2>An expanding gross margin</h2> The company's gross margins also showed positive signs. The GAAP gross margin rose by 130 basis points year-on-year to 35.8%, while the non-GAAP gross margin increased by 120 basis points to 35.9%. These improvements reflect HPE's successful strategy of focusing on higher-growth, higher-margin markets. <h2>Higher net income</h2> GAAP diluted earnings per share (EPS) amounted to$ 0.35, up 13% on the same period last year. Non-GAAP diluted EPS came to $0.49, up 2%. Despite a slight sequential decline, these results are in line with the company's forecasts. <h2>A winning strategy</h2> The strategic shift in the company's portfolio to focus on higher-growth, higher-margin markets is clearly perceptible in the annual expansion of gross margins. This differentiated strategy, focused on Edge, hybrid cloud and AI, has generated solid results, even in a constantly changing business environment. <h2>Results by Sector for Q3 2023</h2> <strong>Intelligent Edge</strong>: Sales in this sector reached$ 1.4 billion, up 50% in real dollars on the same period last year, with an operating profit margin of 29.7% ;

AI and HPC: Sales in this segment reached $836 million, up 1% in real dollars on the same period last year, with an operating profit margin of 0.8%; <strong>Financial Services</strong>: Sales in this segment reached$ 873 million, up 7% in real dollars on the same period last year.

Antonio Neri, CEO of Hewlett Packard Enterprise, comments:

“HPE delivered another strong quarter in Q3, driven by outstanding performances in Intelligent Edge and HPE GreenLake.Demand improved sequentially across all key business segments, with particular strength in our HPC & AI segment as customers discover HPE’s unique capabilities to achieve unprecedented levels of performance for large-scale AI. Our strategic transition to the edge, hybrid cloud and AI delivered via our HPE GreenLake platform is working.”

Two sectors performed much less well:

Compute: this segment saw the biggest drop: 13% in real dollars compared with the same period last year, with sales of $2.6 billion; <strong>Storage</strong>: sales in this sector came to$ 1.1 billion, down 5% in real dollars on the same period last year.

Dividend and outlook

HPE’s Board of Directors has announced a cash dividend of USD 0.12 per common share, payable on October 13, 2023. For the fourth quarter of fiscal 2023, HPE expects sales of between $7.2 and$ 7.5 billion, compared with $7.87 billion in the same period of fiscal 2022.

Despite strong competition, inflation and geopolitical tensions, HPE remains optimistic and estimates that sales growth for fiscal year 2023 will be between 4% and 6% at constant exchange rates.

Jeremy Cox, Senior Vice President, Interim CFO, Corporate Controller and Chief Tax Officer of Hewlett Packard Enterprise, concludes:

“The pivot of our portfolio towards higher-growth, higher-margin markets is clearly visible in the year-on-year expansion of our gross margins. Our differentiated strategy from the edge to the cloud is generating solid results in an uneven market.”

Translated from Les performances d’HPE au T3 2023 soutenues par l’IA, l’HPC et l’Intelligent Edge