HPE is accelerating capitalise on the growing opportunity thrown open by the impact of the pandemic world where there is a shift to an edge-centric, cloud-enabled and data-driven world.
Speaking at the Q3 result announcement, HPE Chief Executive Officer Antonio Neri said there is more than ever a greater need for secure connectivity, faster insights from data, and a cloud experience everywhere.
“We expect these trends to continue. Digital transformation is no longer a priority, but a strategic imperative. To help our customers transform their businesses and be future-ready today, we have been focused on doubling down in key areas that are resonating strongly in the market,” said Antonio Neri.
HPE’s third-quarter revenue went up 1% year-on-year to $6.9bn but down 2% when adjusted for currency, while the vendor also saw increased demand for its services.
One of the big successes of the quarter was HPE’s growth in its Intelligent Edge segment, with revenues of $867 million, up 27% from the prior-year period or 23% when adjusted for currency, with 15.8% operating profit margin compared to 10.4% from the prior-year period.
Antonio Neri said the Intelligent Edge Business and the High-Performance Compute & Mission Critical Solutions business had “done a record number of orders”, with both segments now making up a quarter of the company’s total revenue.
“Strong customer demand for secure connectivity has generated a backlog five times greater than at the close of Q3 last year, as customers increasingly looked for solutions to collect, connect, analyse and act on data at the edge,” Antonio Neri said.
Digital transformation is no longer a priority, but a strategic imperative. “To help our customers transform their businesses and be future-ready today, we have been focused on doubling down in key areas that are resonating strongly in the market,” said HPE CEO.
Due to strong demand and execution, Intelligent Edge business and high-performance computed and mission-critical solutions businesses now make up nearly 25% of our total Company revenue. “Our Intelligent Edge business accelerated its momentum again in Q3 with 23% year-over-year revenue growth driven by a record number of new orders,” he said.
From customer demands for secure connectivity have generated a backlog five times greater than at the close of Q3 last year. As customers increasingly look for solutions to collect, connect, analyze and act on data at the Edge.
“We are leaning into this demand and continue to invest in innovated the edge. In June, we announced new AI ops, IoT, and security features for our Aruba Edge Services Platform or ESP, designed to streamline network operations, maximize IP efficiency, and more easily extend the network from the Edge to the cloud. Our Aruba ESP continues to gain traction with customers in different verticals,” said Antonio Neri.
In the Third Quarter, customers including Save a Lot, Monument Health, and Circa Resorts and Casinos, all standardized their networks on Aruba ESP. In our High-Performance Computer & Mission, Critical solutions business revenue was up 9% year-over-year, driven by a record number of new orders. We also generate our record order book, which now exceeds $2.5 billion. The exponential growth in data, along with AI and big data analytics all driving an increased need for high-performance computing and mission-critical capabilities in enterprises of all sizes.
To meet this demand, HPE bolstered our artificial intelligence capabilities with the acquisition of determined AI, our stepped-up that delivers a powerful software stack that trains AI mobiles faster at any scale using its open-source machine learning platform.
“We also continue to see an increasing number of customers accessing our high-performance computer solutions as a service through HPE GreenLake. With our HPE GreenLake cloud services for HPC, customers gained powerful, specialised, computed, and AI capabilities with a sustainable cloud experience,” said Antonio Neri.
In Q3, HP was awarded a $2 billion contract to be realized over a 10-year period with the National Security Agency to deliver high-performance computing solutions through the HP Greenlake platform.
In Q3, Antonio Neri said the company introduced unified compute operations as-a-Service throughout HP Greenlake age-to-cloud platform. This new cloud-based management service simplifies provisioning and automates the management of computer infrastructure wherever it resides.
HPE’s storage business is transforming into a cloud-native Software-Defined Data Services business through organic innovation and targeted acquisitions.
“In May, we introduced our new cloud data services available through HPE Greenlake, as well as our new HPE Letra cloud-native data infrastructure. And just this week, we closed the acquisition of Zerto, an industry leader in cloud data management and protection, and ran some way of data recovery services, which will be soon available as a service through HPE GreenLake,” said Antonio Neri.
HPE GreenLake is a high-growth data protection market with a proven scaled solution. HPE was the first to market 4 years ago in delivering announcer Service, Cloud expedience on-premises in HPE co-location or at the Edge with HPE Greenlake.
“Today, our HPE GreenLake is to cloud platform, has more than 1,100 customers. Our annualized revenue run rate this quarter was $705 million, up 33% year-over-year. Driven by strong as-a-service orbits growth, up 46% year-over-year,” said Antonio Neri.
When asked about the continuing momentum or acceleration with Intelligent Edge and the Wi-Fi 6 upgrade, HPE CEO said he is confident is that there is a unique value proposition for Aruba as it is mobile-first cloud-first, which is based on three layers.
“One is the unification of the network for whatever type of connectivity you need, which is Wi-Fi and to the point, Wi-Fi 6 is now been adopted, and we are, I think, the largest vendor shipping Wi-Fi access points, second is obviously LAN, third is WAN, and that’s why this acquisition has been incredibly well-received by our customers. And very timely because it’s integrated now in the same control plane. And going forward, we’re going to integrate more solutions like 5G and Edge computing, and that’s why this Edge-to-Cloud platform is essential,” said Antonio Neri.
Future outlook
The company has raised its non-GAAP diluted net EPS outlook to $1.88 to $1.96, up from previous expectations of $1.82 to $1.94. “Based on the strength of our Q3 performance and our confidence about our momentum in the market, we are again raising our fiscal year 2021 EPS and free cash flow outlook, and we’re also resuming stock repurchases,” said Antonio Neri.
But its fiscal fourth quarter outlook for non-GAAP diluted net EPS of $0.44 to $0.52 is below analyst expectations of an average of $0.49, Bloomberg reports, with supply challenges set to continue impacting the business.
