HPE falls short on Q1 revenue, with sales declines in compute and storage
HPE failed to meet its first quarter revenue expectations, reporting a double-digit decline in compute revenue from the year prior. Market uncertainty, supply constraints, and North America manufacturing capacity constraints all brought down sales in the first quarter.
Non-GAAP earnings came to 44 per share on revenue of $6.9 billion, down 8 percent from the prior-year period.
Analysts were expecting earnings of 44 cents per share on revenue of $7.24 billion.
"HPE's first quarter results demonstrate continued progress against our strategic priorities to shift our company to higher-margin and more recurring revenues against a dynamic market backdrop," CEO Antonio Neri said in a statement.
In spite of the overall decline in revenues, Neri pointed out that HPE grew its annualized revenue run-rate (ARR) to $511 million, up 19 percent from the prior-year period. GreenLake services orders finished the quarter with 48 percent year-over-year growth.
The company "saw profitable growth in key areas of investment, including Intelligent Edge, High Performance Compute, Hyperconverged Infrastructure, Big Data Storage and Operational Services orders," Neri said. "We delivered EPS and gross margin improvement, while making important investments for future innovation."
Compute revenue came to $3 billion, down 15 percent year-over-year.
Storage revenue was $1.3 billion, down 7 percent year-over-year. Within that segment, Hyperconverged Infrastructure was up 6 percent year-over-year, while Big Data was up 45 percent.
Financial Services revenue came to $859 million, down 6 percent. Net portfolio assets were up 2 percent, and financing volume was up 2 percent.
Meanwhile, High Performance Compute & Mission Critical Systems (HPC & MCS) revenue was $823 million, up 6 percent from the prior-year period.
Intelligent Edge returned to growth with revenue of $720 million, up 4 percent from the prior-year period. The segment saw double-digit growth in North America.
Advisory & Professional Services (A&PS) revenue was $243 million, flat year-over-year.