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Hewlett Packard (HPE) Q1 Earnings Beat Estimates, Sales Miss
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Hewlett Packard Enterprise (HPE - Free Report) reported mixed first-quarter fiscal 2024 results, wherein the bottom line surpassed the Zacks Consensus Estimate but the top line missed the same.
Hewlett Packard reported non-GAAP earnings of 48 cents per share for the first quarter, which beat the Zacks Consensus Estimate by 6.3%. The bottom line came at the higher end of management’s guidance range of 42-50 cents per share. However, the reported figure was 23.8% lower than the year-ago quarter and down 8.3% sequentially, mainly due to lower revenues.
Revenues of $6.75 billion decreased 14% from the prior-year quarter and 8% sequentially. The top line missed the Zacks Consensus Estimate of $7.06 billion and fell short of management’s guidance range of $6.9-$7.3 billion. The annualized revenue run rate was up 41% year over year to $1.4 billion.
The top line was affected by softened demands in the network, postponement of GPU orders and lack of supply support for graphics processing units .
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
Segment-wise, revenues in the Intelligent Edge division rose 3% (up 2% at cc) year over year to $1.2 billion during the quarter but declined 15% sequentially. The decline was due to customer inventory saturation owing to past year’s purchases. The division’s operating profit margin of 29.4% expanded 1,000 basis points (bps) from the year-ago quarter and improved 230 bps sequentially.
Financial Service revenues of $873 million remained flat (declined 2% in cc) year over year. On a quarter-over-quarter basis, the division’s sales were flat. The segment’s operating margin of 8.5% expanded 130 bps year over year and improved 50 bps sequentially. Net portfolio assets of $13.2 billion inched up 0.3% year over year.
HPE restructured its business by introducing the hybrid cloud business, which comprises storage and part of the server business that accounts for HPE GreenLake as well. The hybrid cloud division’s sales declined 10% (down 10% at cc) year over year and 7% sequentially to $1.25 billion. The division reported an operating profit margin of 3.8%, which declined 200 bps from the year-ago quarter and remained flat year over year.
Hewlett Packard’s server segment sales declined 23% (down 23% at cc) year over year and 7% sequentially to $3.35 billion. The division reported an operating profit margin of 11.4%, down 430 bps from the year-ago quarter but up 130 bps from the previous quarter.
Corporate Investments & Other revenues were $238 million, down 9.5% year over year.
Operating Results
The non-GAAP gross profit decreased 8.5% to $2.45 billion. Meanwhile, the non-GAAP margin expanded 200 bps to 36.2%.
Hewlett Packard’s non-GAAP operating profit declined 15.6% to $775 million, while the non-GAAP operating margin contracted 30 bps year over year to 11.5%.
Balance Sheet and Cash Flow
Hewlett Packard ended the first quarter with $3.76 billion in cash and cash equivalents compared with $4.27 billion at the end of the previous quarter.
In the fiscal first quarter, HPE generated $64 million in cash from operating activities. However, the company ended the quarter with a negative free cash flow of $482 million.
The company returned $172 million to shareholders in the first fiscal quarter of 2024, primarily through dividends.
Second-Quarter & FY24 Guidance
Hewlett Packard initiated guidance for the second quarter and updated the outlook for fiscal 2024. The company forecasts to generate revenues between $6.6 billion and $7 billion in the fiscal second quarter. The company estimates GAAP and non-GAAP diluted net earnings per share (EPS) in the range of 20-25 cents and 36-41 cents, respectively.
For fiscal 2024, HPE has revised revenues and non-GAAP EPS guidance. HPE has revised the company’s revenue growth to 0-2% from the previous guidance of 2-4% at cc. The company has also revised its non-GAAP EPS guidance in the range of $1.82-$1.92 from the previous guidance of $1.82-$2.02. HPE also lowered the GAAP EPS forecast to $1.81-$1.91 from $1.81-$2.01 projected earlier.
For fiscal 2024, HPE now anticipates operating profit growth on a GAAP and non-GAAP basis in the range of 7-11% and 0-2%, respectively. It expects free cash flow to be $1.9 billion.
Zacks Rank and Stocks to Consider
Currently, HPE carries a Zacks Rank #3 (Hold). Shares of HPE have lost 1.8% in the past year.
The Zacks Consensus Estimate for BlackLine’s first-quarter 2024 earnings has remained unchanged at 47 cents per share for the past 90 days. Shares of BL have lost 18.4% in the past year.
The Zacks Consensus Estimate for Arista’s first-quarter 2024 earnings has been revised by 2 cents northward to $1.71 per share in the past seven days. Shares of ANET have rallied 103.2% in the past year.
The Zacks Consensus Estimate for DELL’s fourth-quarter 2024 earnings per share has been revised northward by a penny to $1.73 in the past 30 days. Shares of DELL have surged 135.6% in the past year.
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Hewlett Packard (HPE) Q1 Earnings Beat Estimates, Sales Miss
Hewlett Packard Enterprise (HPE - Free Report) reported mixed first-quarter fiscal 2024 results, wherein the bottom line surpassed the Zacks Consensus Estimate but the top line missed the same.
Hewlett Packard reported non-GAAP earnings of 48 cents per share for the first quarter, which beat the Zacks Consensus Estimate by 6.3%. The bottom line came at the higher end of management’s guidance range of 42-50 cents per share. However, the reported figure was 23.8% lower than the year-ago quarter and down 8.3% sequentially, mainly due to lower revenues.
Revenues of $6.75 billion decreased 14% from the prior-year quarter and 8% sequentially. The top line missed the Zacks Consensus Estimate of $7.06 billion and fell short of management’s guidance range of $6.9-$7.3 billion. The annualized revenue run rate was up 41% year over year to $1.4 billion.
The top line was affected by softened demands in the network, postponement of GPU orders and lack of supply support for graphics processing units .
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
Hewlett Packard Enterprise Company price-consensus-eps-surprise-chart | Hewlett Packard Enterprise Company Quote
Segment Performance
Segment-wise, revenues in the Intelligent Edge division rose 3% (up 2% at cc) year over year to $1.2 billion during the quarter but declined 15% sequentially. The decline was due to customer inventory saturation owing to past year’s purchases. The division’s operating profit margin of 29.4% expanded 1,000 basis points (bps) from the year-ago quarter and improved 230 bps sequentially.
Financial Service revenues of $873 million remained flat (declined 2% in cc) year over year. On a quarter-over-quarter basis, the division’s sales were flat. The segment’s operating margin of 8.5% expanded 130 bps year over year and improved 50 bps sequentially. Net portfolio assets of $13.2 billion inched up 0.3% year over year.
HPE restructured its business by introducing the hybrid cloud business, which comprises storage and part of the server business that accounts for HPE GreenLake as well. The hybrid cloud division’s sales declined 10% (down 10% at cc) year over year and 7% sequentially to $1.25 billion. The division reported an operating profit margin of 3.8%, which declined 200 bps from the year-ago quarter and remained flat year over year.
Hewlett Packard’s server segment sales declined 23% (down 23% at cc) year over year and 7% sequentially to $3.35 billion. The division reported an operating profit margin of 11.4%, down 430 bps from the year-ago quarter but up 130 bps from the previous quarter.
Corporate Investments & Other revenues were $238 million, down 9.5% year over year.
Operating Results
The non-GAAP gross profit decreased 8.5% to $2.45 billion. Meanwhile, the non-GAAP margin expanded 200 bps to 36.2%.
Hewlett Packard’s non-GAAP operating profit declined 15.6% to $775 million, while the non-GAAP operating margin contracted 30 bps year over year to 11.5%.
Balance Sheet and Cash Flow
Hewlett Packard ended the first quarter with $3.76 billion in cash and cash equivalents compared with $4.27 billion at the end of the previous quarter.
In the fiscal first quarter, HPE generated $64 million in cash from operating activities. However, the company ended the quarter with a negative free cash flow of $482 million.
The company returned $172 million to shareholders in the first fiscal quarter of 2024, primarily through dividends.
Second-Quarter & FY24 Guidance
Hewlett Packard initiated guidance for the second quarter and updated the outlook for fiscal 2024. The company forecasts to generate revenues between $6.6 billion and $7 billion in the fiscal second quarter. The company estimates GAAP and non-GAAP diluted net earnings per share (EPS) in the range of 20-25 cents and 36-41 cents, respectively.
For fiscal 2024, HPE has revised revenues and non-GAAP EPS guidance. HPE has revised the company’s revenue growth to 0-2% from the previous guidance of 2-4% at cc. The company has also revised its non-GAAP EPS guidance in the range of $1.82-$1.92 from the previous guidance of $1.82-$2.02. HPE also lowered the GAAP EPS forecast to $1.81-$1.91 from $1.81-$2.01 projected earlier.
For fiscal 2024, HPE now anticipates operating profit growth on a GAAP and non-GAAP basis in the range of 7-11% and 0-2%, respectively. It expects free cash flow to be $1.9 billion.
Zacks Rank and Stocks to Consider
Currently, HPE carries a Zacks Rank #3 (Hold). Shares of HPE have lost 1.8% in the past year.
Some better-ranked stocks from the broader technology sector are BlackLine (BL - Free Report) , Arista Networks (ANET - Free Report) and Dell Technologies (DELL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BlackLine’s first-quarter 2024 earnings has remained unchanged at 47 cents per share for the past 90 days. Shares of BL have lost 18.4% in the past year.
The Zacks Consensus Estimate for Arista’s first-quarter 2024 earnings has been revised by 2 cents northward to $1.71 per share in the past seven days. Shares of ANET have rallied 103.2% in the past year.
The Zacks Consensus Estimate for DELL’s fourth-quarter 2024 earnings per share has been revised northward by a penny to $1.73 in the past 30 days. Shares of DELL have surged 135.6% in the past year.