Thursday, 3 March 2016

Hewlett Packard Enterprise beats on profits, stock ticks up in after hours trading (HPQ)

Meg Whitman

Hewlett-Packard just reported earnings and we're looking through them now.

It reported:

  • Earnings per share of 41 cents, against expectations of 40 cents, a slight beat.
  • Revenue of 12.7 billion, that's in-line with expectations. 

Here's the relevant parts of the press release:

HPE fiscal 2016 first quarter financial performance

PALO ALTO, CA--(Marketwired - Mar 3, 2016) - Hewlett Packard Enterprise (NYSE: HPE

  • Delivers third consecutive quarter of year over year revenue growth in constant currency
  • Increases commitment to return at least 100% of FY16 free cash flow outlook to shareholders
  • First quarter net revenue of $12.7 billion, up 4% from the prior-year period on a constant currency basis and down 3% as reported
  • First quarter non-GAAP diluted net earnings per share of $0.41, at the top end of the previously provided outlook of $0.37 to $0.41 per share
  • First quarter GAAP diluted net earnings per share of $0.15, above the previously provided outlook of $0.09 to $0.13 per share
  • $1.3 billion to shareholders in the form of share repurchases and dividends
  • Maintains FY16 free cash flow guidance of $2.0 to $2.2 billion
    Q1 FY16   Q1 FY15   Y/Y
GAAP net revenue ($B)   $12.7   $13.1   (3%)
GAAP operating margin   3.0%   5.6%   (2.6 pts.)
GAAP net earnings ($B)   $0.3   $0.5   (51%)
GAAP diluted net earnings per share   $0.15   $0.30   (50%)
Non-GAAP operating margin   8.1%   8.5%   (0.4 pts.)
Non-GAAP net earnings ($B)   $0.7   $0.9   (15%)
Non-GAAP diluted net earnings per share   $0.41   $0.44*   (7%)*
Cash flow from operations ($B)

 

Fiscal 2016 first quarter segment results 

  • Enterprise Group revenue was $7.1 billion, up 1% year over year, up 7% in constant currency, with a 13.4% operating margin. Servers revenue was down 1%, up 5% in constant currency, Storage revenue was down 3%, up 3% in constant currency, Networking revenue was up 54%, up 62% in constant currency, and Technology Services revenue was down 9%, down 3% in constant currency.  
  • Enterprise Services revenue was $4.7 billion, down 6% year over year, flat in constant currency, with a 5.1% operating margin. Infrastructure Technology Outsourcing revenue was down 8%, down 2% in constant currency, and Application and Business Services revenue was down 3%, up 3% in constant currency.
  • Software revenue was $780 million, down 10% year over year, down 6% in constant currency, with a 17.4% operating margin. License revenue was down 6%, down 2% in constant currency, support revenue was down 13%, down 9% in constant currency, professional services revenue was down 7%, down 2% in constant currency, and software-as-a-service (SaaS) revenue was down 9%, down 7% in constant currency. 
  • Financial Services revenue was $776 million, down 3% year over year, up 3% in constant currency, net portfolio assets were up 4%, up 9% in constant currency, and financing volume was down 4%, up 3% in constant currency. The business delivered an operating margin of 12.9%.

Outlook

For the fiscal 2016 second quarter, Hewlett Packard Enterprise estimates non-GAAP diluted net EPS to be in the range of $0.39 to $0.43 and GAAP diluted net EPS to be in the range of $0.13 to $0.17. Fiscal 2016 second quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.26 per share, related to restructuring charges, the amortization of intangible assets, separation costs and acquisition and other related charges. 

For fiscal 2016, Hewlett Packard Enterprise estimates non-GAAP diluted net EPS to be in the range of $1.85 to $1.95 and GAAP diluted net EPS to be in the range of $0.75 to $0.85. Fiscal 2016 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.10 per share, related to restructuring charges, the amortization of intangible assets, separation costs, acquisition and other related charges and tax indemnification adjustments.   

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