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HPE CEO talks earnings, digital mega trends, and stopping shipments to Russia

Hewlett Packard Enterprise CEO Antonio Neri sits down with Yahoo Finance Live to discuss the computer company's Q4 earnings miss, growth outlook, and corporate responses to the Russian invasion of Ukraine.

Video Transcript

- Welcome back to Yahoo Finance Live. The market was fully embracing shares of HPE after its better than expected quarter and upbeat outlook. Let's get right to HPE's CEO Antonio Neri. Antonio, always nice to get some time with you. Thanks for hopping on the show here today. It's not often you see a big pop in shares of a tech company, such as HPE, on earnings day. Do you think the Street is finally starting to understand your pivot to software as a service?

ANTONIO NERI: Well, Brian, nice to see you. Thank you for having me today. I think it's important to see the reaction of the market against the backdrop of our results, which were very, very strong. We had a very robust customer demand in Q1 and very, very strong profitability. I think it's a testament of the quality of our strategy and the execution of our team. So as you know, our strategy is to become the edge-to-cloud platform company, and we have very strong demand across every business.

At the company level, we grew 20% year over year on bookings, which computer was up 20%, hours of service was 136%, the edge up more than 35%. And storage and data services up more than 15%. At the same time, our high performance computing and AI business was above 20%. So I think it's all coming together. But I think this quarter, we executed well despite the supply chain challenges and all the uncertainty we see out there. And what I'm excited is that we have a big backlog and tremendous amount of innovation we're going to bring here in the next few weeks, which will keep the momentum going.

- We have been talking to you every step of the way, Antonio. And I do sense that what customers were coming to you earlier in the pandemic might be something a little bit different than what they are coming to you now as people get more mobile again, return to offices happen. Walk us through that a little bit.

ANTONIO NERI: Well, we see several megatrends which the pandemic has accelerated. So obviously, the digital transformation is a journey that customers are on. And it's all on their data. But at the same time, we see the need to be connected everywhere. And the way customers now work is totally different than the pre-pandemic, so we work in a more distributed enterprise. And therefore, the connectivity is the first step. And it's also the first step to a digital transformation. It's the on ramp to the digital transformation.

And so that edge opportunities where we live and work is quite significant for our company. That's why you saw 35% growth for four consecutive quarters in the bookings. At the same time, there is still the cloud mandate everywhere. But we think about cloud as an experience for all your applications and data, wherever they live. And we provide that through hybrid experience to our customers, inclusive of the public cloud. But obviously, customers need to decide where the data gravitates and where to run those workloads, whether it's on prem, in a cloud, or at the edge in addition to the public cloud.

And that's where GreenLake plays a fundamental role in providing that unified experience. And last but not least, it's all about data. And that's why customers are spending an enormous amount of time and investments, I will say, in mining that data. We have done a lot of research which shows that the brands that they are mining the data, capturing that insight from the data faster, are the winners. And at the same time, the pandemic showed us obviously liquidity is very important.

And that's why the pivot towards a service is playing a huge role. And GreenLake has been on the forefront of that pivot. And you saw a massive growth in Q1 of 136%. Now, we are the more than 100 new logos in the quarter. We have now $6.5 billion of TCV in the balance sheet that will unwind over the next several quarters. And that, to us, is a testament that this edge-to-cloud platform we are building, that you can consume as a service is resonating as customers evolve in this new journey to transform and digitize their business.

- Antonio, a couple of days I caught up with HP CEO Enrique Lores. And he told me that his company has stopped shipments to Russia in light of its invasion of Ukraine. Have you stopped shipments? And take us inside what you're thinking about regarding that situation.

ANTONIO NERI: Well, the short answer is, yes, we stopped shipping more than 72 hours ago when the events started unfolding and accelerating obviously. We obviously are complete adherents to the global trade. But despite that, we immediately make that decision. And we stopped shipping anything into Russia. Now, that's from the business perspective. Now, from the humanitarian standpoint, obviously we are incredibly concerned. And we as a company are stepping up to help employees in the region.

We, in Ukraine, don't have full time employees. We cover that country through our vast discriminator network and via other resellers. But we have some contractors that we acquired through the several acquisitions over the last few years. And we are treating them not different than they were full time employees. So we have a crisis management team on the ground working 24/7 to make sure those contractors and their immediate families are safe and they're taking care. So that's what we're doing.

But at the same time, what I will say, Brian, what I'm really proud of is how this company always shows up. And in the last 48 hours, more than $200,000 has been raised by the employees themselves. And we also have extended the number of volunteering hours for those countries who want to help, particularly those who are contiguous to the region-- Poland, Romania, Hungary, Slovakia-- where we have in some of those countries, particularly Romania and in Poland, a large number of employees. And they all want to help.

And HP, obviously, is funding as well to help them do what they need to do. So that's what's going on. But obviously, it's an incredible concern in this humanitarian situation and this, what I call, completely unacceptable set of events. And we have to really think about through this and put the humanity at the core and business second.

- You've really changed the culture at HPE, Antonio, and are known as a purpose-driven leader. What would you need to see before you can say, hey, we're going to start shipments again into Russia?

ANTONIO NERI: Well, a complete withdrawal, obviously, of what's happening there. And then a set of agreements that ultimately help understand how this is going to be sustainable. At the same time, Brian, obviously we have to follow the global trade compliance. The sanctions have been enacted.

And obviously, we're going to be 150% aligned to that. But as a leader, as a company, the first thing you want to think about it, before you go back into the business, is solve the current conflict, which, again, it was unprovoked and completely unacceptable.

- Well, I really appreciate your transparency. And congrats on that quarter there. HPE's CEO Antonio Neri. Stay safe. We'll talk to you soon.