Hewlett Packard Enterprise (NYSE:HPE)
Hewlett Packard Enterprise (NYSE:HPE) reported non-GAAP earnings of 48 cents per share for the third quarter of the fiscal year 2022. This was the same as the Zacks Consensus Estimate and a penny more than the 47 cents per share it made in the same quarter last year.
The $7 billion in sales increased by 1% from the same period last year and was more than the $6.97 billion expected by analysts. The ARR (“annualised revenue run-rate”) increased to $858 million, a 22% year-over-year increase.
Demand for Hewlett Packard Enterprise (NYSE:HPE) products and services remained strong throughout the quarter, mainly propelled by the quickening pace of digital transformation and the growing popularity of remote work. The company saw a rise in profits and revenue despite supply-chain bottlenecks and severe inflation pressure.
Q3 Details
When broken down by industry vertical, the High-Performance Compute and Artificial Intelligence (“HPC & AI”) market grew by 12% in the same period to $830 million. The corporation reported a 39% increase in this division’s market share by the quarter’s end.
Sales in the Compute segment dropped by 3% from the prior year to $3 billion. Because of deliberate pricing measures taken to counteract rising input prices, the operating profit margin in this division grew by 210 basis points (bps) to 13.3%.
Strong client demand was the primary factor in the 8 percent quarterly increase in Intelligent Edge revenues to $941 million. Both Aruba Services and Intelligent Edge as a Service had double-digit revenue growth.
Total income from the financial sector decreased by 3% to $817 million. The past year’s net portfolio assets have decreased by almost 4% to around $12.6 billion.
Supply chain interruptions in Hewlett Packard Enterprise (NYSE:HPE) IP solutions were a significant factor in the storage business’ 2% year-over-year decline in revenue to $1.2 billion.
Corporate Investments & Other revenues totaled $300 million, down 9.6 percent from the previous year.
Operating Results
The company’s non-GAAP gross margin of 34.7% was stable yearly and up 50 bps sequentially. A more disciplined approach to pricing and an ongoing move in the product mix toward higher-margin software-rich solutions were the primary contributors to the year-over-year expansion in gross margin.
A total of 70 basis points were added to HP’s non-GAAP operating profit margin year over year, and an additional 120 basis points were added in a single quarter. In the third quarter of fiscal 2022, the firm maintained its cost savings from the cost optimization plan and invested in high-growth, margin-rich portfolios.
Cash Flow Statement and Balance Sheet
Third-quarter fiscal results showed Hewlett-Packard with $3.76 billion in cash and cash equivalents, up from $3.03 billion in the previous quarter.
Hewlett Packard Enterprise (NYSE:HPE) cash flow from operations was $1.3 billion in the company’s fiscal third quarter, while the company’s free cash flow was $587 million. Normal seasonality and some inventory adjustments required to keep up with rising customer demand were reflected in free cash flow.
The first nine months of fiscal 2022 saw $1.56 billion in cash flow from operations and a negative $201 million free cash flow.
In the reported quarter, Hewlett Packard Enterprise (NYSE:HPE) returned $353 million to shareholders through dividends and the buyback of shares. The corporation issued an annual cash dividend of 12 cents per share and is due to stockholders on October 7, 2022.
Guidance
Non-GAAP earnings forecast for fiscal 2022 was updated by Hewlett Packard Enterprise (NYSE:HPE). The previous range of $1.96-$2.10 per share has been replaced with a more conservative $1.96-$2.04 per share forecast by the corporation.
As a further note, HPE now expects free cash flow in the $1.7-$1.9 billion range, down from the earlier projection range of $1.8-$2 billion.
Hewlett Packard Enterprise (NYSE:HPE) anticipates non-GAAP earnings of 52 cents to 60 cents per share for the fiscal year 2022 fourth quarter.
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Author Shariq Khan 
