HPE Reports Fiscal 2021 Fourth Quarter and Full-Year Results
HOUSTON, Texas, Dec. 1, 2021 – Hewlett Packard Enterprise announced financial results for fiscal year 2021 and the fourth quarter, ended October 31, 2021.
Fiscal 2021 Full-Year Financial Highlights:
• Orders: Strengthening demand through the year drives growth up 16% from the prior-year period
• Revenue: $27.8 billion, up 3% from the prior-year period
• Diluted net earnings per share (“EPS”):
• GAAP of $2.58, up $2.83 from prior-year period
• Non-GAAP of $1.96, up 27% from the prior-year period
• Cash flow from operations: $5.9 billion including $2.2 billion of cash after-tax impact from Oracle’s satisfaction of the judgment in the Itanium litigation, up $3.6 billion from the prior-year period
• Free cash flow2, 3: $1.6 billion, up $1.0 billion from the prior-year period
• Capital returns to shareholders: $838 million in the form of dividends and share repurchases
Outlook:
• First quarter Fiscal 2022: Estimates GAAP diluted net EPS to be in the range of $0.19 to $0.27and non-GAAP diluted net EPS to be in the range of $0.42 to $0.50
o Declaring Q1 dividend of $0.12 per share payable on January 7, 2022
• Fiscal 2022: Reiterates GAAP diluted net EPS to be in the range of $1.24 to $1.38 and non-GAAP diluted net EPS to be in the range of $1.96 to $2.10
• Fiscal 2022 free cash flow3: Reiterates free cash flow guidance to be in the range of $1.8 to $2.0 billion
• Committed to returning at least $500 million in share buybacks in Fiscal 2022
“HPE ended fiscal year 2021 with record demand for our edge-to-cloud portfolio, and we are well positioned to capitalize on the significant opportunity in front of us,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “In 2021, we accelerated our pivot to as a service, strengthened our core capabilities, and invested in bold innovation in high-growth segments. As our customers continue to demand greater connectivity, access to solutions that allow them to extract value from their data no matter where it lives, and a cloud-everywhere experience, HPE is poised to accelerate our market leadership and provide strong shareholder returns.”
“HPE executed with discipline and exceeded all of our key financial targets in FY21,” said Tarek Robbiati, EVP and CFO of Hewlett Packard Enterprise. “The demand environment has been incredibly strong and accelerated in the second half of the year, which gives us important momentum headed into next year. We are operating with greater focus and more agility and are well positioned to deliver against our FY22 outlook.”
Fourth Quarter Fiscal Year 2021 Results
Net revenue of $7.4 billion, up 7% sequentially and above normal sequential seasonality; up 2% from the prior-year period or flat when adjusted for currency.
Annualized revenue run-rate (ARR)1 of $796 million, up 36% from the prior-year period and total asa-Service orders were up 114% from the prior-year period. Based on strong customer demand and growth in orders, we reiterate our 2021 Securities Analyst Meeting ARR guidance of 35-45% Compounded Annual Growth Rate from fiscal year 2021 to fiscal year 2024.
GAAP gross margins of 32.9%, up 230 basis points from the prior-year period and Non-GAAP gross margins of 33.0%, up 230 basis points from the prior-year period.
GAAP diluted net EPS was $1.91, compared to $0.12 in the prior-year period and above the previously provided outlook of $0.14 to $0.22 per share, primarily due to the judgment in the Itanium litigation with Oracle.
Non-GAAP diluted net EPS was $0.52, compared to $0.41 in the prior-year period and at the high end of the previously provided outlook of $0.44 to $0.52 per share. Fourth quarter non-GAAP diluted net EPS excludes after-tax adjustments of $1.39 per diluted share primarily related to the judgment in the Itanium litigation with Oracle partially offset by transformation costs, early debt redemption costs, stock-based compensation expense and the amortization of intangible assets.
Cash flow from operations of $3.0 billion including $2.2 billion of cash after-tax impact from Oracle’s satisfaction of the judgment in the Itanium litigation, up $2.2 billion from the prior-year period.
Free cash flow2, 3 of $94 million, down $129 million from the prior-year period.
Capital returns to shareholders of $157 million in dividends and $213 million of share repurchases.
Segment Results
• Intelligent Edge revenue was $815 million, up 4% from the prior-year period or 2% when adjusted for currency, with 10.7% operating profit margin, compared to 12.3% from the prioryear period. Aruba Services revenue was up high-single digits from the prior-year period when adjusted for currency and Intelligent Edge aaS ARR was up triple-digits from the prior-year period.
• High Performance Computing & Artificial Intelligence (HPC & AI) revenue was $1.0 billion, up 1% from the prior-year period or flat when adjusted for currency, with 14.3% operating profit margin, compared to 13.0% from the prior-year period. We remain on track to achieve 8-12% CAGR outlook from FY20 to FY22.
• Compute revenue was $3.2 billion, up 1% from the prior-year period or down 1% when adjusted for currency, with 9.4% operating profit margin, compared to 6.6% from the prior-year period. Revenue was up 4% from the prior-quarter period and 4% from the prior-quarter period when adjusted for currency, and above normal sequential seasonality.
• Storage revenue was $1.3 billion, up 3% from the prior-year period or up 2% when adjusted for currency, with 13.8% operating profit margin, compared to 18.2% from the prior-year period. All flash Arrays grew 7% from the prior-year period led by Primera, up strong double-digits from the prior-year period. Notable strength in software-defined solutions, including Nimble, up 4% from the prior-year period with strong momentum in dHCI growing double-digits.
• Financial Services revenue was $858 million, up 1% from the prior-year period or flat when adjusted for currency, with 14.1% operating profit margin, compared to 7.8% from the prioryear period. Net portfolio assets were flat from the prior-year period or down 1% when adjusted for currency. The business delivered return on equity of 23.8%, up 10.9 points from the prioryear period.
Fiscal Year 2021 Full-Year Results
Net revenue of $27.8 billion, up 3% from the prior-year period or up 1% when adjusted for currency.
GAAP gross margins of 33.7%, up 230 basis points from the prior-year period and non-GAAP gross margins of 33.9%, up 220 basis points from the prior-year period.
GAAP diluted net EPS was $2.58, compared to ($0.25) in the prior-year period and above the previously provided outlook of $0.80 to $0.88 per share, primarily due to the judgment in the Itanium litigation with Oracle.
Non-GAAP diluted net EPS was $1.96, compared to $1.54 in the prior-year period and at the high end of the previously provided outlook of $1.88 to $1.96 per share. Fiscal year 2021 non-GAAP diluted net EPS excludes after-tax adjustments of $0.62 per diluted share primarily related to the judgment in the Itanium litigation with Oracle offset by transformation costs, stock-based compensation expense and the amortization of intangible assets.
Cash flow from operations of $5.9 billion including $2.2 billion of cash after-tax impact from Oracle’s satisfaction of the judgment in the Itanium litigation, up $3.6 billion from the prior-year period.
Free cash flow2, 3 of $1.6 billion, up $1.0 billion from the prior-year period.
Capital returns to shareholders of $625 million in dividends and $213 million of share repurchases.
Dividend
Board of Directors have declared a regular cash dividend of $0.12 per share on the company’s common stock. This dividend, the first in Hewlett Packard Enterprise’s fiscal year 2022, is payable on January 7, 2022, to stockholders of record as of the close of business on December 10, 2021.
Fiscal 2022 first quarter outlook:
Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.19 to $0.27 and non-GAAP diluted net EPS to be in the range of $0.42 to $0.50. Fiscal 2022 first quarter non-GAAP diluted net EPS estimates exclude after-tax adjustments of approximately $0.23 per diluted share, primarily related to transformation costs, stock-based compensation expense and the amortization of intangible assets.
Fiscal 2022 outlook:
Hewlett Packard Enterprise reiterates GAAP diluted net EPS outlook of $1.24 to $1.38 and non-GAAP diluted net EPS outlook of $1.96 to $2.10. Fiscal 2022 non-GAAP diluted net EPS estimates exclude after-tax adjustments of approximately $0.72 per diluted share, primarily related to transformation costs, stock-based compensation expense and the amortization of intangible assets.
Reiterates free cash flow3 guidance range to $1.8 to $2.0 billion.
1 Annualized Revenue Run-Rate (“ARR”) is a financial metric used to assess the growth of the Consumption Services (“CS”) offerings. ARR represents the annualized value of all recurring [net] HPE GreenLake services revenue, related financial services revenue (which includes rental income for operating leases and interest income for capital leases), and Software-as-a-Service, subscription, and other as-a-Service offerings recognized during a quarter and multiplied by four. We use ARR as a performance metric. ARR should be viewed independently of net revenue and deferred revenue and is not intended to be combined with any of these items.
2 Excludes $2,172 million of cash after-tax impact from Oracle’s satisfaction of the judgment in the Itanium litigation
3 Hewlett Packard Enterprise provides certain guidance on a non-GAAP basis, as the Company cannot predict some elements that are included in reported GAAP results. Refer to the discussion of nonGAAP financial measures below for more information.
For more information, see company press release.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise (NYSE: HPE) is the global edge-to-cloud company that helps organizations accelerate outcomes by unlocking value from all of their data, everywhere. Built on decades of reimagining the future and innovating to advance the way people live and work, HPE delivers unique, open and intelligent technology solutions as a service. With offerings spanning Cloud Services, Compute, High Performance Computing & AI, Intelligent Edge, Software, and Storage, HPE provides a consistent experience across all clouds and edges, helping customers develop new business models, engage in new ways, and increase operational performance. For more information, visit: www.hpe.com
Source: Hewlett Packard Enterprise
