HPE Reports Fiscal 2022 Results with Record Q4 Performance 

• Revenue: $7.9 billion, up 7% and up 12% adjusted for currency from the prior-year period, above our sequential Q4 guidance and the second-highest quarterly revenue on record for the company on a continuing operations basis.
• ARR of $936 million, up 17% and up 25% adjusted for currency from the prior-year period and total as-a-Service orders were up 33% from the prior-year period, and up 68% in fiscal year 2022. We reiterate our 2022 SAM ARR guidance of 35%-45% Compounded Annual Growth Rate from fiscal year 2022 to fiscal year 2025.
• Gross margins remain resilient despite ongoing supply chain constraints and an inflationary environment.
  • GAAP of 32.9%, flat from the prior-year period and down 160 basis points sequentially.
    
  • Non-GAAP of 33.1%, up 10 basis points from the prior-year period and down 160 basis points sequentially.

• Diluted net EPS:
  • GAAP of ($0.23), down 112% from the prior-year period and down 174% sequentially, due primarily to the goodwill impairment charge in the current period and the prior-year period gain on the Itanium litigation judgment.
  • Non-GAAP of $0.57, up 10% from the prior-year period and up 19% sequentially. Fourth quarter non-GAAP diluted net EPS excludes after-tax adjustments of $0.80 per diluted share, primarily for goodwill impairment, transformation costs, stock-based compensation expense, and the amortization of intangible assets
• Cash flow from operations of $3.0 billion was flat from the prior-year period.
  
• Free cash flow of $2.0 billion, up $1.9 billion from the prior-year period.
  
• Capital returns to shareholders:  $282 million in the form of dividends and share repurchases.

Fourth Quarter Fiscal 2022 Segment Results

• Intelligent Edge revenue was $965 million, up 18% from the prior-year period in actual dollars and 23% when adjusted for currency, with 13.3% operating profit margin, compared to 10.9% in the prior-year period. Aruba Services revenue was up high single-digits from the prior-year period when adjusted for currency and Intelligent Edge as-a-Service ARR² was up 70% from the prior-year period.
  
• High Performance Computing & Artificial Intelligence (“HPC & AI”) revenue was $862 million, down 14% from the prior-year period in actual dollars and 11% when adjusted for currency, with 3.5% operating profit margin, compared to 14.2% from the prior-year period. HPC & AI market share is 37% and includes four of the global top-10 supercomputers and three of the top five.
  
• Compute revenue was $3.7 billion, up 16% from the prior-year period in actual dollars and 22% when adjusted for currency, with 14.7% operating profit margin, compared to 9.4% from the prior-year period.  Margin expansion was driven by product mix shift and strategic pricing actions, more than offsetting input cost increases.
• Storage revenue was $1.3 billion, up 4% from the prior-year period in actual dollars and 6% when adjusted for currency, with 15.9% operating profit margin, compared to 13.8% from the prior-year period, and up 120 basis points sequentially, with richer mix of owned-IP revenue.
  
• Financial Services revenue was $857 million, flat from the prior-year period in actual dollars and up 6% when adjusted for currency, with 11.1% operating profit margin, compared to 14.1% from the prior-year period. Net portfolio assets of approximately $12.5 billion, down 6% from the prior-year period, or up 1% when adjusted for currency. Return on equity was 18%, down 6 points from the prior-year period, and in-line with the target reiterated at 2022 SAM.

Fiscal Year 2022 Full-Year Results

• Revenue: $28.5 billion, up 3% and 5% adjusted for currency from the prior-year period, and above our initial outlook provided at 2021 SAM.
• Gross margins:
  • GAAP of 33.4%, down 30 basis points from the prior-year period.
    
  • Non-GAAP of 33.9%, flat from the prior-year period.
• Diluted net EPS:
  • GAAP was $0.66, compared to $2.58 in the prior-year period, due primarily to the goodwill impairment charge in the current period and the prior-year period gain on the Itanium litigation judgment.
    
  • Non-GAAP was $2.02, compared to $1.96 in the prior-year period. Fiscal 2022 non-GAAP diluted net EPS excludes after-tax adjustments of $1.36 per diluted share, primarily for goodwill impairment, transformation costs, stock-based compensation expense, and the amortization of intangible assets.
• Cash flow from operations: $4.6 billion, down $1.3 billion from the prior-year period due primarily to the $2.2 billion of cash after-tax impact from the Itanium litigation judgment in the prior-year period.
  
• Free cash flow: $1.8 billion, up $0.2 billion from the prior-year period.
  
• Capital returns to shareholders: $1.1 billion in the form of dividends and share repurchases, representing over 60% of HPE’s free cash flow.