HPE results: 'Strong second quarter' sees vendor grow revenue and ARR

HPE GreenLake edge-to-cloud platform was a strong performer in the vendors's Q2

HPE revenue was up four per cent to $7bn in Q2 of 2023, results published by the tech giant show.

Annualised revenue run-rate (ARR) was also up by 35 per cent to $1.1bn, year on year.

Gross margins also showed a GAAP of 36 per cent, which HPE claimed was an all-time record for the company - up 360 basis points from the prior-year period and up 200 basis points sequentially.

Non-GAAP was at 36.2 per cent, which HPE also said was an all-time record, up 200 basis points from the prior-year period and sequentially.

"Building on a great start to the fiscal year, HPE grew revenue, increased the contribution of recurring revenue through the HPE GreenLake edge-to-cloud platform, and delivered exceptional profitability to generate a strong second quarter performance," said Antonio Neri, president and CEO of Hewlett Packard Enterprise.

"Our shift to a higher-margin portfolio mix led by the Intelligent Edge segment, and the strong demand for our AI offering, further strengthen the investment opportunity for our shareholders."

Tarek Robbiati, executive vice president and CFO of Hewlett Packard Enterprise also commented: "We are very pleased that the progress we are making against our strategy continues to deliver on both the top and bottom lines."

"These results demonstrate that our strategy to pivot our portfolio to higher-growth, higher-margin areas is working - and that we are operating with discipline."

Q2 fiscal 2023 segment results

The results showed that the intelligent edge revenue segment was $1.3bn for HPE, up 50 per cent from the prior-year period in actual dollars and 56 per cent in constant currency, with 26.9 per cent operating profit margin, compared to 12.6 per cent in the prior-year period.

High performance computing and artificial intelligence revenue was $840m, up 18 per cent from the prior-year period in actual dollars and 22 per cent in constant currency, with 0.2 per cent operating profit margin, compared to 5.6 per cent from the prior-year period.

HPE's financial services revenue went up four per cent to $858m.

Not all segments saw growth, however. Compute revenue was $2.8bn, down eight per cent from the prior-year period in actual dollars, and storage revenue was $1.0bn, down three per cent from the prior-year period.

Looking ahead, HPE estimates fiscal 2023 revenue growth to be in the range of 4-6 per cent in constant currency.

Fiscal 2023 non-GAAP operating profit growth is expected to be in the range of 6-7 per cent.