Q3 2024 Hewlett Packard Enterprise Co Earnings Call Transcript
Key Points
- Hewlett Packard Enterprise Co (HPE) delivered a strong Q3 performance with net revenue of $7.7 billion, up 10% year over year.
- Non-GAAP diluted net earnings per share increased to $0.50, $0.02 above the high end of guidance.
- Free cash flow exceeded $660 million, and the company will pay a dividend of $0.30 per share.
- HPE received the first payment of $2.1 billion from the sale of part of its equity position in H3C.
- The company saw significant growth in AI systems revenue, with a 39% increase from Q2, and strong customer interest in HPE GreenLake Cloud and AI offerings.
- Gross margin was down 410 basis points year over year, driven by a lower mix of Intelligent Edge revenue and a higher mix of AI server revenue.
- Operating expenses decreased approximately 7% year over year, but the company still faces pressures from rising commodity costs, particularly in SSDs.
- Revenue from the Intelligent Edge segment was down 23% year over year due to tough comparisons and slower recovery in campus switching products.
- The company noted geographic variation in demand, with Europe and the Middle East lagging behind North America, Asia Pacific, Japan, and India.
- HPE's non-GAAP operating margin was stable at 10%, but the company expects continued pressures on gross margins due to the higher mix of AI systems.
Good afternoon, and welcome to the third quarter fiscal 2024 Hewlett Packard Enterprise earnings conference call. My name is Gary, and I'll be your conference moderator for today's call. (Operator Instructions)
As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Paul Glaser, Head of Investor Relations. Please proceed.
Good afternoon. I'm Paul Glaser, Head of Investor Relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2024 third-quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer; and Marie Myers, HPE's Chief Financial Officer.
Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and slide presentation accompanying the release on our HPE Investor Relations web
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