Announces FY22 Outlook:
- FY22 non-GAAP operating profit growth of 10-15% and non-GAAP
diluted net earnings per share of $1.96-$2.10.
- FY22 GAAP diluted net earnings per share outlook of
$1.24-$1.38.
- Free cash flow CAGR of 15-20% to deliver cumulative free cash
flow of $6.5-$7.0 billion between FY22 and FY24.
- Expects to return at least 60% of free cash flow to
shareholders in FY22, including approximately $625 million in
dividends and at least $500 million of share repurchases.
Today, Hewlett Packard Enterprise (NYSE: HPE) hosted its virtual
Securities Analyst Meeting (“SAM”), where Antonio Neri, president
and CEO, and Tarek Robbiati, executive vice president and chief
financial officer, provided the financial outlook for fiscal year
2022 as well as details on the company’s strategy, customer trends,
and long-term growth opportunities. The webcast and presentations
can be found on the HPE Investor Relations Website:
hpe.com/investor/SAM2021.
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the full release here:
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“In 2021, HPE has significantly advanced our strategy to become
the edge-to-cloud company,” said Neri. “HPE is at the center of
compelling megatrends that are driving new customer expectations
and presenting new profitable growth opportunities. We are
accelerating our market leadership, as customers respond to our
uniquely integrated portfolio. I am proud of our progress,
confident in our position, and excited about the value we will
continue to deliver for our shareholders.”
In his remarks at SAM, Neri highlighted three distinct trends
that have gained traction as the world continues to recover and
evolve from pandemic-related impacts, including: 1) the continued
explosion of data at the edge, driven by the proliferation of
devices and things, which requires secure connectivity; 2) the
mandate for a cloud-everywhere experience that allows customers to
manage data and workloads across a distributed enterprise; and 3)
the growing need to quickly extract value from data to generate
insights and build new business models.
“Each of these market trends, as well as increased customer
demand for consuming IT as a service, represents a significant area
of addressable growth for HPE,” said Neri. “We are particularly
focused on the segments that will deliver the most profitable
growth, and we are actively investing in both organic and inorganic
innovation to ensure we capitalize on these margin-rich
opportunities.”
Neri reviewed HPE’s market leadership, innovation, and results
in each of the megatrend areas, placing particular emphasis on the
company’s momentum with the HPE GreenLake edge-to-cloud platform.
With more than 1,100 enterprise customers, HPE GreenLake is making
significant contributions to the company’s 33 percent year over
year growth in Annualized Recurring Revenue (ARR) as of Q3 2021 and
46 percent as-a-service order growth.
“I would argue that no other company is positioned as strongly
as we are to address the market opportunity before us,” said
Neri.
Financial Update
Tarek Robbiati, executive vice president and CFO, provided a
financial update including an outlook for FY22.
“We have the right edge-to-cloud strategy aligned to dominant
market trends with the right financial architecture,” said
Robbiati. “Our long-term financial model delivers 15-20% free cash
flow growth that enables balanced investments for growth with
substantial capital returns to maximize value for
shareholders.”
FY22 Outlook
HPE expects FY22 financial results to continue the momentum from
FY21. The company expects its revenue growth to be 3-4% in constant
currency and non-GAAP operating profit growth of approximately
10-15% year-over-year. This excludes costs of approximately $1.2
billion primarily related to transformation costs, stock
compensation expense and amortization of intangible assets. The
company expects non-GAAP Other Income & Expense of
approximately $20-40 million to be an expense, excluding income of
approximately $48 million primarily from non-service net periodic
benefit credits. The company expects a non-GAAP tax rate of 14%
based on current tax laws.
HPE expects non-GAAP diluted net earnings per share of
$1.96-$2.10. The company expects FY22 GAAP diluted net earnings per
share of $1.24-$1.38. The GAAP net EPS outlook includes after-tax
costs of approximately $0.72 related primarily to transformation
costs, stock-based compensation expense and amortization of
intangible assets. HPE expects FY22 free cash flow to be $1.8-$2.0
billion.
The company expects to return at least 60% of free cash flow to
shareholders in FY22. HPE expects this to include approximately
$625 million in dividends and at least $500 million in share
repurchases.
Long-Term Financial Profile
HPE provided its long-term financial model for FY22-FY24. The
company expects a compound annual revenue growth rate of 2-4%,
adjusted for currency. The prior three-year view was 1-3%. The
company expects the growth drivers to be Edge, High Performance
Compute & Artificial Intelligence, and the as-a-Service
businesses. The company expects as-a-Service ARR growth to
accelerate to 35-45% to more than $2.3 billion in FY24 revenue.
The company expects its progress on its strategic imperatives
will translate into a stronger financial architecture including
sustainable, profitable growth and increasing recurring revenue at
higher gross margins over time. The company expects compound annual
non-GAAP operating profit growth rate of 8-10% driven by
investments in key growth areas and an optimized operating model,
which will be slightly offset by Other Income and Expense. HPE
expects non-GAAP diluted net EPS to grow at a compound annual
growth rate of 7-9%.
HPE expects a free cash flow compound annual growth rate of
15-20% from the mid-point of our current FY21 outlook to deliver
cumulative free cash flow from FY22-FY24 of $6.5-$7.0 billion.
The company will balance long term revenue and free cash flow
growth with consistent returns to shareholders, including both
dividends and significant share repurchases.
Webcast details
A webcast of today’s event, along with management presentations
and other materials, are available on the Investor Relations
website at investors.hpe.com.
This press release contains only a summary of some of the
information presented at today’s event and should be read in
conjunction with the management presentations and other materials
made available on that website.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise (NYSE: HPE) is the global
edge-to-cloud company that helps organizations accelerate outcomes
by unlocking value from all of their data, everywhere. Built on
decades of reimagining the future and innovating to advance the way
people live and work, HPE delivers unique, open and intelligent
technology solutions delivered as a service – spanning Compute,
Storage, Software, Intelligent Edge, High Performance Computing and
Mission Critical Solutions – with a consistent experience across
all clouds and edges, designed to help customers develop new
business models, engage in new ways, and increase operational
performance. For more information, visit: www.hpe.com.
Use of non-GAAP financial information
To supplement Hewlett Packard Enterprise’s financial information
presented on a generally accepted accounting principles (GAAP)
basis, Hewlett Packard Enterprise provides forecasts of revenue
adjusted for currency, as well as non-GAAP operating profit growth,
non-GAAP measure of other income and expenses, non-GAAP income tax
rate, non-GAAP diluted net earnings per share, free cash flow
financial measures. Reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP financial measures,
where available, are included in the slides presented at the 2021
Securities Analyst Meeting, which will be available for a period of
one year thereafter at http://hpe.com/investor/sam2021. Hewlett
Packard Enterprise provides certain guidance on a non-GAAP basis,
as the company cannot predict some elements that are included in
reported GAAP results. Refer to the discussion of non-GAAP
financial measures below for more information. In addition, an
explanation of the ways in which Hewlett Packard Enterprise’s
management uses these non-GAAP measures to evaluate its business,
the substance behind Hewlett Packard Enterprise’s decision to use
these non-GAAP measures, the material limitations associated with
the use of these non-GAAP measures, the manner in which Hewlett
Packard Enterprise’s management compensates for those limitations,
and the substantive reasons why Hewlett Packard Enterprise’s
management believes that these non-GAAP measures provide useful
information to investors is included under “Use and economic
substance of non-GAAP financial measures used by Hewlett Packard
Enterprise” below. This additional non-GAAP financial information
is not meant to be considered in isolation or as a substitute for
revenue, operating profit growth, diluted net earnings per share,
other income and expenses, and cash flow from operations in
accordance with GAAP.
Use and economic substance of non-GAAP financial measures
used by Hewlett Packard Enterprise
Hewlett Packard Enterprise’s management uses these non-GAAP
financial measures for purposes of evaluating Hewlett Packard
Enterprise’s historical and prospective financial performance, as
well as Hewlett Packard Enterprise’s performance relative to its
competitors. Hewlett Packard Enterprise’s management also uses
these non-GAAP measures to further its own understanding of Hewlett
Packard Enterprise’s segment operating performance. Hewlett Packard
Enterprise believes that excluding the items mentioned above from
these non-GAAP financial measures allows Hewlett Packard
Enterprise’s management to better understand Hewlett Packard
Enterprise’s consolidated financial performance in relation to the
operating results of Hewlett Packard Enterprise’s segments, as
Hewlett Packard Enterprise’s management does not believe that the
excluded items are reflective of ongoing operating results.
Material limitations associated with use of non-GAAP
financial measures
These non-GAAP financial measures have limitations as analytical
tools, and these measures should not be considered in isolation or
as a substitute for analysis of Hewlett Packard Enterprise’s
results as reported under GAAP.
Compensation for limitations associated with use of non-GAAP
financial measures
Hewlett Packard Enterprise compensates for the limitations on
its use of non-GAAP financial measures by relying primarily on its
GAAP results and using non-GAAP financial measures only as
supplement. Hewlett Packard Enterprise also provides a
reconciliation of certain non-GAAP financial measures to its most
directly comparable GAAP measure in other written materials that
include these non-GAAP financial measures accompanying this news
release, and Hewlett Packard Enterprise encourages investors to
review carefully those reconciliations.
Usefulness of non-GAAP financial measures to
investors
Hewlett Packard Enterprise believes that providing forecasts of
revenue adjusted for currency, non-GAAP operating profit, non-GAAP
operating profit growth, non-GAAP measure of other income and
expenses, non-GAAP income tax rate, non-GAAP diluted net earnings
per share, free cash flow financial measures to investors in
addition to certain related GAAP measures provides investors with
greater transparency to the information used by Hewlett Packard
Enterprise’s management in its financial and operational decision
making and allows investors to see Hewlett Packard Enterprise’s
results “through the eyes” of management. Hewlett Packard
Enterprise further believes that providing this information better
enables Hewlett Packard Enterprise’s investors to understand
Hewlett Packard Enterprise’s operating performance and to evaluate
the efficacy of the methodology and information used by Hewlett
Packard Enterprise’s management to evaluate and measure such
performance. Disclosure of these non-GAAP financial measures also
facilitates comparisons of Hewlett Packard Enterprise’s operating
performance with the performance of other companies in Hewlett
Packard Enterprise’s industry that supplement their GAAP results
with non-GAAP financial measures that may be calculated in a
similar manner.
Forward-looking statements
This press release contains forward-looking statements that
involve risks, uncertainties and assumptions. If the risks or
uncertainties ever materialize or the assumptions prove incorrect,
the results of Hewlett Packard Enterprise may differ materially
from those expressed or implied by such forward-looking statements
and assumptions. All statements other than statements of historical
fact are statements that could be deemed forward-looking
statements, including but not limited to the scope and duration of
the novel coronavirus (“COVID-19”) pandemic and its impact on our
business operations, liquidity and capital resources, employees,
customers, supply chain, financial results and the world economy,
any projections of revenue, margins, expenses, effective tax rates,
the impact of the U.S. Tax Cuts and Jobs Act of 2017, net earnings,
net earnings per share, cash flows, backlog, benefit plan funding,
deferred tax assets, share repurchases, currency exchange rates or
other financial items; any projections of the amount, timing or
impact of cost savings, restructuring charges, or other
transformation actions; any statements of the plans, strategies and
objectives of management for future operations, as well as the
execution of corporate transactions or contemplated acquisitions,
transformation and restructuring plans and any resulting benefit,
cost savings or restructuring charges, revenue or profitability
improvements; any statements concerning the expected development,
performance, market share or competitive performance relating to
products or services; any statements regarding current or future
macroeconomic trends or events and the impact of those trends and
events on Hewlett Packard Enterprise and its financial performance;
any statements regarding pending investigations, claims or
disputes; any statements of expectation or belief; and any
statements or assumptions underlying any of the foregoing.
Risks, uncertainties and assumptions include the need to address
the many challenges facing Hewlett Packard Enterprise’s businesses;
the competitive pressures faced by Hewlett Packard Enterprise’s
businesses; risks associated with executing Hewlett Packard
Enterprise’s strategy; the impact of macroeconomic and geopolitical
trends and events; the need to manage third-party suppliers and the
distribution of Hewlett Packard Enterprise’s products and the
delivery of Hewlett Packard Enterprise’s services effectively; the
protection of Hewlett Packard Enterprise’s intellectual property
assets, including intellectual property licensed from third parties
and intellectual property shared with its former Parent; risks
associated with Hewlett Packard Enterprise’s international
operations (including pandemics and public health problems, such as
the outbreak of COVID-19); the development and transition of new
products and services and the enhancement of existing products and
services to meet customer needs and respond to emerging
technological trends; the execution and performance of contracts by
Hewlett Packard Enterprise and its suppliers, customers, clients
and partners, including any impact thereon resulting from events
such as the COVID-19 pandemic; the hiring and retention of key
employees; execution, integration and other risks associated with
business combination and investment transactions; and the
execution, timing and results of any transformation or
restructuring plans, including estimates and assumptions related to
the cost (including any possible disruption of Hewlett Packard
Enterprise's business) and the anticipated benefits of the
transformation and restructuring plans; the effects of the U.S. Tax
Cuts and Jobs Act and related guidance and regulations; the
resolution of pending investigations, claims and disputes; and
other risks that are described in Hewlett Packard Enterprise’s
Annual Report on Form 10-K for the fiscal year ended October 31,
2020, subsequent Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K, as applicable.
As in prior periods, the financial information set forth in this
press release, including tax-related items, reflects estimates
based on information available at this time. While Hewlett Packard
Enterprise believes these estimates to be reasonable, these amounts
could differ materially from reported amounts in the Hewlett
Packard Enterprise Annual Report on Form 10-K for the fiscal year
ended October 31, 2021. Hewlett Packard Enterprise assumes no
obligation and does not intend to update these forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20211028006013/en/
Editorial Contact: Katherine Ducker
katherine.b.ducker@hpe.com
Investor Relations Contact: Andrew Simanek, HPE
investor.relations@hpe.com
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