Hewlett Packard Enterprise posted October-quarter financial results that were largely in line with Street estimates, driven by growing strength in high-performance computing and artificial intelligence, where it is finding traction particularly with customers that train large language models.
For the quarter, HP Enterprise posted revenue of $7.35 billion, down 7% from a year ago. The result was right in the middle of the company’s forecast range of $7.2 billion to $7.5 billion, and about even with the Street consensus of $7.36 billion.
Adjusted earnings were 52 cents a share, down 9% from a year ago, but at the top of a guidance range of 48 to 52 cents. The gain was two pennies above the consensus of 50 cents among analysts tracked by FactSet
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HP Enterprise has a lot of moving parts, which fit a little differently than analysts expected in the most recent quarter. The high-performance computing and artificial intelligence division, which includes HP’s supercomputer business, had revenue of $1.18 billion in the quarter, up 37%, and well above the Street consensus of $951 million.
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CEO Antonio Neri said in an interview Barron’s that in the October 2023 fiscal year, the department had $3.6 billion in orders, including $600 million in just the last 10 days of the period. This includes an order worth approximately $285 million from the UK government for what will be done the nation’s fastest supercomputer.
Neri noted that almost none of those orders have yet been fulfilled, as the company’s AI-related backlog piles up.
The “smart edge,” largely the company’s networking business in Aruba, had revenue of $1.36 billion in the quarter, up 41%, but below consensus of $1.44 billion. Growth slowed slightly from 50% in each of the previous two quarters.
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The company’s PC division, which sells servers in data centers, had revenue of $2.6 billion, down 31%, and about $160 million below Street estimates. Neri noted, however, that revenue at that business was down only 1% sequentially, and that sales were up slightly on a unit basis.
Storage revenue was $1.1 billion, slightly below estimates, and down 13% from a year earlier, but up 3% sequentially.
For the full fiscal year, HP Enterprise posted revenue of $29.1 billion, up 2%, or 5.5% in constant currency. Adjusted earnings were $2.15 per share, up 6%. According to generally accepted accounting principles, the company earned $1.54 per share for the year.
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The company also announced an 8% dividend increase, to 13 cents per quarter from 12 cents.
For the January quarter, HP Enterprise is forecasting revenue between $6.9 billion and $7.3 billion, a range whose median is just below the Street consensus of $7.2 billion. Adjusted earnings are expected to be between 42 and 50 cents per share, compared with the Street’s consensus call for 44 cents.
For the October 2024 fiscal year, the company reiterated an earlier forecast of growth of between 2% and 4%, while also reiterating a forecast that adjusted earnings would be between $1.82 and $2.02 per share. The company continues to expect full-year free cash flow of between $1.9 billion and $2.1 billion.
So far this year, HP Enterprise shares are down about 3%.
Write to Eric J. Savitz at eric.savitz@barrons.com