HPE sees mixed results in its Q2

Overall revenue was impacted by 'unanticipated' factors

HPE's latest results were a mixed bag for the vendor as it saw overall revenue climb one per cent to $7.2bn, but certain divisions underperformed.

The enterprise infrastructure vendor reported a year-on-year decline in revenue in its hybrid IT, Intelligent Edge and financial services segments.

Hybrid IT revenue was $5.6bn, a four per cent year-on-year decrease, while Intelligent Edge turnover declined six per cent to $666m and its financial services revenue dropped two per cent to $896m.

However, HPE CEO Antonio Neri was optimistic about the results and raised its financial outlook for Q3.

"While our Q2 revenue growth was impacted by a combination of both intentional and unanticipated factors, we delivered on our some commitment to grow revenue, and we are raising our EPS outlook for the year," he told analysts on an earnings call, transcribed by Seeking Alpha.

HPE's storage revenue was up three per cent year-on-year to $942m while high performance compute revenue grew 25 per cent year on year, as did hyperconverged revenue.

"Our segmented approach and investment in high-value products and as-a-service offerings are paying off," Neri said.

"Our ability to offer all of this technology as a service is a key differentiator for HPE. We are the only company on the market that can provide a true consumption driven offerings in a hybrid cloud environment."

The vendor's winding down of its Tier 1 business- which provides low-margin commodity servers - is going according to plan, according to CFO Tarek Robbiati.

He told analysts on the same call that that business now makes up less than two per cent of the vendor's overall revenue.

Overall, CEO Neri was optimistic about HPE's performance in the quarter, acknowledging its recent partnership with Nutanix and success with its GreenLake programme.

"We grew in key businesses, including storage, high-performance compute, composable cloud, Aruba services and GreenLake orders," Neri said.

"Strength in these areas partially offset continued intentional declines in Tier 1 sales and sales into China, as well as some market and execution factors."

Neri also recognised the impact the ongoing US and China trade war has had on business but was optimistic about how HPE would weather the storm.

"From a macroeconomic perspective, we continue to see global demand driven by the need to process ever-growing amounts of data," he stated.

"However, like others in the industry, we did see some changes in market dynamics. For example, trade tensions are creating uncertainty.

"We continue to believe that an open market where everyone can innovate and participate is important for market stability and customer confidence.

"We also recently experienced an elongation in sales cycles with some customers. We will continue to monitor these and other microeconomic factors."