HPE stays ahead in fiscal Q3 2023 with muted growth

Revenue saw a 1 per cent increase from prior year period to $7bn

Hewlett Pachard Enterprise (HPE) has reported a positive third quarter with small gains in most areas of the business.

Overall revenue was up 1 per cent to $7bn, from prior-year period, and up 3.5 per cent in constant currency.

Annualised revenue run-rate (ARR) saw an increase of 48 per cent to $1.3bn. While gross margins were 35.8 per cent for GAAP - up 130 basis points from the prior year and down 20 basis points sequentially.

Non-GAAP margins were 35.9 per cent, up 120 basis points from the prior-year period and down 30 basis points sequentially.

"HPE delivered another solid quarter in Q3, powered by standout performances in the Intelligent Edge and HPE GreenLake," said Antonio Neri, president and CEO of HPE.

"Demand improved sequentially across all key business segments, with particular strength in our HPC & AI segment as customers discover HPE's unique capabilities to power unprecedented levels of performance for AI at scale."

Neri revealed earlier this year during the HPE Discover conference that the company was planning to expand their AI capabilities, while still ensuring partners would be helped along.

He continued: "Our strategic shift toward edge, hybrid cloud and AI delivered through our HPE GreenLake platform is working."

"The pivot in our portfolio toward higher-growth, higher-margin markets is clearly visible in our year-over-year expansion of gross margins," said Jeremy Cox, senior vice president, interim CFO, corporate controller and chief tax officer of HPE.

"Our differentiated edge-to-cloud strategy is fuelling strong results in an uneven market."

In a study looking at partners who have the strongest datacentre services and resale capabilities in the US, UK and Germany, HPE was found to generate the second highest level of activity in the market. The study examined over 1,800 channel partners.

Segment split

Intelligent Edge revenue was $1.4bn, up 50 per cent from the prior-year period in actual dollars and 53 per cent in constant currency, with 29.7 per cent operating profit margin, compared to 16.5 per cent in the prior-year period.

High performance computing and artificial intelligence revenue was $836m, up 1 per cent from the prior-year period in actual dollars and 3 per cent in constant currency.

However, HPE reported some slowing down in compute revenue, which was $2.6bn, down 13 per cent from the prior-year period in actual dollars and 10 per cent in constant currency.

Storage revenue was $1.1bn, also down 5 per cent from the prior-year period in actual dollars and down 2 per cent in constant currency.

Based on these results, HPE estimated that revenue in Q4 fiscal 2023 will be in the range of $7.2bn to $7.5bn, and fiscal 2023 revenue growth to be in the range of 4 per cent to 6 per cent in constant currency.

The announcement comes as HPE recently revealed its new worldwide partner and channel ecosystem leader Simon Ewington.