Hewlett Packard Enterprise (HPE) shares fell -3.4% on mixed Q4 results that beat earnings estimates but missed on revenue. In Q4, Hybrid IT revenue fell short of estimates with $5.67bn versus $5.74bn with the most notable weakness in storage.
Intelligent Edge also fell short with $723mM in overall sales (consensus: $767.5m) and Aruba product reporting $620m versus the $66m consensus. It remains a cash-rich business, however: cash flow from operations totaled $1.43bn.
“We had a very successful fiscal year, marked by strong and consistent performance,” said Antonio Neri, president and CEO of HPE. “Through our disciplined execution, we improved profitability across the company and significantly exceeded our original non-GAAP earnings and cash flow outlook, while sharpening our focus, transforming our culture and delivering differentiated innovation to our customers as they accelerate their digital transformations.
“I am confident in our ability to drive sustainable, profitable growth as we continue to shift our portfolio to higher-value, software-defined solutions and execute our pivot to offering everything as a service by 2022,” Neri continued. “Our strategy to deliver an edge-to-cloud platform-as-a-service is unmatched in the industry.”
While HPE Aruba product revenue was down 7% year over year when adjusted for currency, Aruba Services revenue was up 17% year over year when adjusted for currency.
Hybrid IT revenue was $5.7 billion, with 13.8% operating margin, up 250 bps year over year. Mix-shift continues towards HPE’s higher-margin value products with revenue from Apollo up 10% year over year when adjusted for currency, Composable Cloud up 21% year over year when adjusted for currency, and Hyperconverged Infrastructure showing continued momentum, up 14% year over year when adjusted for currency. HPE Nimble Storage was up 2% year over year when adjusted for currency. HPE Pointnext operational services orders and Nimble services orders were flat year over year when adjusted for currency.
