HPE’s better-than-expected Q2 earnings boosted by strong SaaS demand

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HPE delivered better-than-expected second quarter earnings on Tuesday, spurred by growth across all its product categories. The company noted strong demand for software-as-a-service in fiscal second quarter ended April 30.

Hewlett Packard Enterprise posted better-than-expected fiscal second quarter results, with net income of $482 million, or 19 cents a share, on revenue of $6.7 billion, up 11% from a year ago. Excluding charges, HPE delivered earnings of 46 cents a share. Analysts were expecting earnings of 42 cents per share on revenue of $6.62 billion.

As businesses reopen and resume normal operations, “digital transformation is at the forefront of their strategic initiatives,” HPE CEO Antonio Neri said in a statement. “Our focus has been to accelerate our strategy in order to help our customers transform their businesses, optimize their applications and data across an increasingly distributed world, and be future ready, today.”

Total “as-a-service” orders were up 41% from the prior-year period, driven by strong demand for the HPE Aruba Central SaaS platform. HPE Aruba saw triple-digits growth from the prior-year period and “is now a meaningful contributor” to HPE’s overall annualized revenue run-rate (ARR), the company said. HPE’s ARR is up 30% from the prior year period, at $678 million.

Revenue for the Compute segment, which includes enterprise servers, was just under $3 billion, up 12% year over year. This quarter was an improvement from the previous quarter, which saw a 1% drop. Intelligent Edge, which provides edge-computing systems, reported revenues of $799 million, up 17% from a year ago. The High-Performance Computing and Mission Critical Systems (HP & MCS) segment reported revenue of $685 million, up 11% from the prior-year period.

“Our disciplined execution on our strategic priorities is positively impacting both top and bottom line performance,” Neri said in a statement. “We are strengthening our core compute and storage businesses, doubling down in our growth Intelligent Edge and HPC businesses and accelerating our pivot to as-a-service, while also advancing our cloud-first innovation agenda to become the edge-to-cloud platform as-a-service choice for our customers and partners.”

The computing infrastructure company split off from the PC and printer giant HP in 2015. Since that split, the company has seen double-digit sales growth just twice — once in 2018, and this quarter. HPE said it had “better than normal sequential seasonality driven by strong demand.”


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