Hewlett Packard Enterprise (NYSE: HPE) reported Q1 EPS of $0.44, in-line with the analyst estimate of $0.44. Revenue for the quarter came in at $6.9 billion versus the consensus estimate of $7.24 billion.

Q1 2020 Financial Highlights:

• Revenue: $6.9 billion with growth in areas of investment, including Intelligent Edge and as-a-Service offerings
• Annualized revenue run-rate (ARR): $511 million, up 19% from the prior-year period
• Gross margin: GAAP of 32.8%, up 170 basis points from the prior-year period and Non-GAAP of 33.2%, up 210 basis points from the prior-year period
• Diluted net earnings per share:
  • GAAP of $0.25, compared to $0.13 and up 92% from the prior-year period and above the previously provided outlook of $0.20 to $0.24 per share
  • Non-GAAP of $0.44, up 5% from the prior-year period and in-line with the previously provided outlook of $0.42 to $0.46 per share

“HPE’s first quarter results demonstrate continued progress against our strategic priorities to shift our company to higher-margin and more recurring revenues against a dynamic market backdrop,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “While our overall revenue declined for the quarter, primarily due to our Compute business, we grew our ARR by 19 percent and saw profitable growth in key areas of investment, including Intelligent Edge, High Performance Compute, Hyperconverged Infrastructure, Big Data Storage and Operational Services orders.”

“We delivered EPS and gross margin improvement, while making important investments for future innovation,” Neri continued. “Faced with continued macro uncertainty, I am confident we are managing our business with discipline and focus, taking the right actions, and advancing our pivot to deliver unique edge-to-cloud experiences as a service. We believe the combination will drive long-term profitable growth and strong returns on investment.”

GUIDANCE:

Hewlett Packard Enterprise sees FY2020 EPS of $1.78-$1.94, versus the consensus of $1.96.

• Hewlett Packard Enterprise maintains GAAP diluted net EPS outlook of $1.01 to $1.17 and non-GAAP diluted net EPS outlook of $1.78 to $1.94.
• Fiscal 2020 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.77 per share, primarily related to transformation costs and the amortization of intangible assets.
• Revises free cash flow1 outlook range from $1.9 to $2.1 billion to $1.6 to $1.8 billion to account for current supply chain disruption impacting short-term cash conversion cycles.

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