Hewlett Packard Enterprise Company (NYSE:HPE) Q1 2023 Earnings Call Transcript

But if you really think about our non-GAAP operating profit growth. The prior guide was at 4% to 5% growth, and now we’re guiding 5% to 6% growth, and we feel comfortable with the information we have on the macro, foreign exchange cetera, that our guide is appropriate.

Jeff Kvaal: Thank you, Samik. Next question.

Operator: Our next question will come from Kyle McNealy with Jefferies. You may now go ahead.

Kyle McNealy: Great. Thanks for the question. It was a great quarter for Intelligent Edge. Can you help us understand how we should think about a big quarter here in Q1? Is that level sustainable going forward, or was there some big deals or particular activity that you would call out that isn’t likely to repeat. Your guidance implies it decelerates from here, but — can you give us a sense for how we should model this going forward and how frequently you might see growth ahead of your mid-teens growth guidance? Thanks.

Antonio Neri: Yes. Thanks, Kyle. No, there was not a unique deal. This is the continuous momentum we have had now for a number of quarters. The book of business in this particular business segment continue to be extremely renovated. As Tarek said, we continue to gain share. And I think it’s because we have a unique value proposition, which is a cloud native offer for all aspects of connectivity. We announced now the acquisition of Athonet, which we will integrate the private 5G into the same control plane. And today, we announced the acquisition of Access Security, which is the secure access secure edge at the top. And so when we think about the book of business, the incredible pipeline we have ahead of us, the execution of the team, the easing of the supply, although in this particular business, there is a little bit more constrained on the supply compared to the other businesses.

We talk about a Rule of 40, and this was the Rule of 50 something, I guess. But the fact of the matter is that, as Tarek said, we expect to grow double-digits, right? And in the mid-20s on operating profit. This business is now humming and it’s going to be one of the most important growth engine as we go in the future. And as Tarek said, it’s also allowing us to be less reliant on the rest of the portfolio, which is very, very critical. And this comes with a high gross margin, obviously.

Tarek Robbiati: I would simply add to what Antonio said, look, the edge have broken the $1 billion revenue bar. I think now we are entering a phase with all the additions that we’re making to the portfolio. We’re entering a phase of a new watermark level. We have built at the edge with Antonio and the management team, one of the most comprehensive portfolio of the entire industry. And it is really, really winning shares even in the largest customer segments, thanks to the Edge-to-Cloud platform that Aruba has built and that powers GreenLake in everything we do.

Antonio Neri: And I hope the market will take notice of that and give us a little bit of recognition about the work we have done in this particular segment.

Jeff Kvaal: Thank you, Kyle. Next question please.

Operator: Our next question will come from Simon Leopold with Raymond James. You may now go ahead.

Simon Leopold: Thanks for taking the question. I know this is going to be a bit of a tricky one, but I want to see if you could help us understand why your view sound more optimistic than your other IT-exposed peers, whether it’s around, in particular, the Compute side of the business as a storage. I get Intelligent Edge, so I’m not really pushing there. But just the contrast in your outlook on storage and compute versus some of your peers. Can you help us understand that?