HP Enterprise shares rise 6.8% after hours following Q3 earnings that easily cleared profit expectations, matching the top-end estimates, and the company raised full-year profit guidance.
Revenues fell 7% to $7.22bn but gross margins rose 340 basis points to 33.9%, and non-GAAP EPS rose 7% to $0.45.
Revenue by segment: Hybrid IT, $5.55bn (down 9%); Intelligent Edge, $762m (down 3%); Financial Services, $888m (down 4%). Mix-shift continues towards HPE’s higher-margin value products with revenue from High-Performance Compute up 2% year over year when adjusted for currency, Composable Cloud up 28% year over year when adjusted for currency, and Hyperconverged Infrastructure showing continued momentum, up 4% year over year when adjusted for currency. HPE Nimble Storage was up 21% year over year when adjusted for currency.
“In Q3, we improved both gross and operating margins, delivered strong non-GAAP earnings, and generated a record level of year-to-date free cash flow,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “We also invested in important innovation for our customers and announced strategic acquisitions, including Cray, which we now expect to close by the end of fiscal year 2019, earlier than originally planned.”
“Our strong operational performance reflects continued disciplined execution as we deliberately shift and enhance our portfolio to provide customers with higher-value, software-defined offerings, delivered as a Service,” added Neri. “I remain confident in our ability to drive profitable growth as we execute our strategy.”
