Hewlett Packard Enterprise shares rose after it did better than expected with third quarter net revenue of $8.2bn up 3% from the prior-year period and up 6% when adjusted for divestitures and currency. In segment revenue: Enterprise Group, $6.8bn (up +3% yr/yr); Software, $718m (-3%); Financial Services, $897m (+10%).
The company did miss Q4 consensus estimates with a forecasted EPS range from $0.26 to $0.30, 11 cents lower than consensus on the higher end. FY17 EPS guidance was adjusted down to $1.36 to $1.40, four cents under consensus at the high end. The guidance changes reflected the spin-merger of the Software business, which completed this quarter.
“The results of the third quarter are an encouraging sign of the progress we are making,” said CEO Meg Whitman. “With better execution we drove overall revenue growth, exceeded our EPS targets and improved our operating margins sequentially, all while completing the spin-merge of our Software business. There’s more work to do, but we are on the right track.”
Software revenue was $718 million, down 3% year over year, down 2% when adjusted for divestitures and currency, with a 24.9% operating margin. License revenue was up 2%, up 5% when adjusted for divestitures and currency, Support revenue was down 2%, down 1% when adjusted for divestitures and currency, Professional Services revenue was down 23%, down 22% when adjusted for divestitures and currency, and Software-as-a-service (SaaS) revenue was up 7%, up 7% when adjusted for divestitures and currency.