Earnings Highlights and Review: Hewlett Packard's Quarterly Revenue Exceeded Expectations
Research Desk Line-up: Xplore Technologies Post Earnings Coverage
LONDON, UK / ACCESSWIRE / June 21, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Hewlett Packard Enterprise Co. (NYSE: HPE), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=HPE, following the Company's announcement of its second quarter fiscal 2017 financial results on May 31, 2017. The information technology products and services provider reported y-o-y decline in revenue and earnings. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the Diversified Computer Systems industry. Pro-TD has currently selected Xplore Technologies Corp. (NASDAQ: XPLR) for due-diligence and potential coverage as the Company reported on May 31, 2017, its financial results for Q4 FY17 and full year which ended on March 31, 2017. Register for a free membership today, and be among the early birds that get access to our report on Xplore Technologies when we publish it.
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Earnings Reviewed
For Q2 FY17, Hewlett Packard reported net revenue from continuing operations (Enterprise Group, HPE Financial Services and Software) of $7.4 billion, down 13% compared to revenue of $8.5 billion. The Company's combined net revenue of $9.9 billion includes $7.4 billion from continuing operations and $2.5 billion associated with discontinued operations (two months of Enterprise Services). Hewlett Packard's combined revenue numbers came in better than analysts' expectations of $9.64 billion.
For Q2 FY17, Hewlett Packard's gross margin of 33.8% declined 200 basis points compared to the year ago same period. The Company reported GAAP operating margin of 2.4% compared to operating margin of 5.3% in the prior year's corresponding quarter. Hewlett Packard's non-GAAP operating profit of 7.8% fell 130 basis points from Q2 FY16
Hewlett Packard's GAAP net loss from continuing operations was $0.29 per diluted share, down from GAAP earnings from continuing operations of $0.18 per diluted share in Q2 FY16. Excluding after-tax costs of $903 million and $0.54 per diluted share, respectively the Company's non-GAAP net earnings from continuing operations totaled $0.25 per diluted share, down from $0.33 in the prior-year period. Hewlett Packard's earnings results lagged Wall Street expectation for earnings of $0.35 per share.
"Despite some current headwinds, we delivered Q2 non-GAAP EPS in-line with our outlook," said Meg Whitman, President and CEO, Hewlett Packard Enterprise, "We saw strength in major components of our growth strategy, including high-performance compute, Aruba, all-flash storage, and Technology Services. While we still have much more work to do, HPE's Q2 results give me confidence that our efforts are delivering for customers and partners."
Segment Results
During Q2 FY17, Hewlett Packard's Enterprise Group revenue totaled $6.2 billion, down 13% on a y-o-y basis and declining 7% when adjusted for divestitures and currency, with an operating margin of 8.8%. The segment's Servers revenue was down 14% on a y-o-y basis to $2.99 billion, while Storage revenue fell 13% to $699 million. The Enterprise Group's networking revenue dropped 30% to $582 million, but was up 14% when adjusted for divestitures and currency, and Technology Services revenue declined 2% to $1.97 billion; however it grew 3% post adjustments made for divestitures and currency.
Hewlett Packard's Software revenue totaled $685 million for Q2 FY17, down 11% on a y-o-y basis and down 9% when adjusted for divestitures and currency, with an operating margin of 26.4%. The segment's License revenue declined 29% compared to the year ago quarter and Support revenue fell 4%, flat when adjusted for divestitures and currency. Software segment's revenue from the Professional Services unit declined 17% in Q2 FY17, while Software-as-a-service (SaaS) revenue grew 3% on a y-o-y basis, or 4% when adjusted for divestitures and currency.
For Q2 FY17, Hewlett Packard's financial services revenue rose 11% to $872 million, while net portfolio assets declined 1%, and financing volume fell 7%. The business delivered an operating margin of 8.9%.
Balance Sheet and Cash Flow
As of April 30, 2017, Hewlett Packard had cash and cash equivalents worth $8.10 billion compared to $12.99 billion as on October 31, 2016. The Company's long-term debt at the end of Q2 FY17 totaled $11.90 billion compared with $12.17 billion as on October 31, 2016. For Q2 FY17, net cash provided by operating activities totaled $636 million.
Outlook
For Q3 FY17, Hewlett Packard is expecting GAAP diluted net EPS to be in the range of ($0.02) to $0.02 and non-GAAP diluted net EPS to be in the range of $0.24 to $0.28.
For FY17, Hewlett Packard is forecasting GAAP diluted net EPS to be in the range of ($0.03) to $0.07 and non-GAAP diluted net EPS to be in the range of $1.46 to $1.56. Fiscal 2017 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.49 per diluted share.
Stock Performance
At the closing bell, on Tuesday, June 20, 2017, Hewlett Packard Enterprise's stock marginally fell 0.48%, ending the trading session at $16.64. A total volume of 13.48 million shares were traded at the end of the day. In the previous twelve months, shares of the Company have surged 14.61%. Shares of the Company have a PE ratio of 12.23 and have a dividend yield of 1.56%. The stock currently has a market cap of $27.63 billion.
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