Hewlett Packard Enterprise Company (HPE) Q3 2024 earnings summary

Executive summary

• Q3 FY24 revenue reached $7.7B, up 10–10.1% year-over-year, driven by strong Server and AI systems performance, while Intelligent Edge and Hybrid Cloud segments declined.

• Non-GAAP diluted EPS was $0.50, above guidance; GAAP diluted EPS was $0.38, up $0.03 year-over-year.

• Free cash flow for Q3 was $669M; cash flow from operations was $1.2B; cash conversion cycle improved to 4 days.

• Annualized Revenue Run-Rate (ARR) grew 35–39% year-over-year to $1.7B, reflecting growth in as-a-service and AI offerings.

• Received $2.1B from partial sale of H3C equity; pending $14B Juniper Networks acquisition expected to close late 2024 or early 2025.

Financial highlights

• Non-GAAP gross margin was 31.8%, down 410–420 bps year-over-year; GAAP gross margin was 31.6%.

• Non-GAAP operating margin was 10%; GAAP operating margin was 7.1%.

• Q3 net earnings were $512M, up 10.3% year-over-year; dividend declared at $0.13 per share.

• Returned $221M to shareholders in Q3 via dividends and share repurchases.

• Cash, cash equivalents, and restricted cash at $3.6–$3.9B as of July 31, 2024.

Outlook and guidance

• Q4 FY24 revenue expected between $8.1B–$8.4B; GAAP EPS $0.76–$0.81; non-GAAP EPS $0.52–$0.57.

• Full-year FY24 revenue growth projected at 1–3%; non-GAAP EPS $1.92–$1.97; free cash flow guidance at $1.9B.

• Juniper Networks acquisition and H3C share sale to provide strategic and financial flexibility.