HPE Q2 beats expectations on strong SaaS momentum

The company says its as-a-service pivot is accelerating with consumption-based services orders rising 40% from a year ago.

HPE delivered better-than-expected second quarter earnings on Tuesday and the company says its as-a-service pivot is accelerating with consumption-based services orders rising 40% from a year ago. The enterprise software player reported second quarter net income of $482 million, or 19 cents a share, on revenue of $6.7 billion, up 11% from a year ago. Excluding charges, HPE delivered earnings of 46 cents a share.

Analysts were expecting earnings of 42 cents per share on revenue of $6.62 billion. Shares of HPE were down slightly after hours.

Elsewhere on the balance sheet, HPE said compute revenue came to $3 billion, up 12% year over year. Storage revenue was $1.1 billion, up 5% year-over-year. Within that segment, Nimble revenue was up 17% and revenue from All Flash Array Storage products were up 20%.

Meanwhile, High Performance Compute & Mission Critical Systems (HPC & MCS) revenue was $685 million, up 11% from the prior-year period. 

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The company's intelligent edge revenue came to to $799 million, up 17% from a year ago, and financial services revenue was $839 million, up 1% from a year ago. HPE said it had Q2 annualized revenue run rate of $678 million, up 30% from the same quarter last year.

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As for the outlook, HPE said it expects third quarter earnings between 38 cents and 44 cents, compared to consensus estimates for 38 cents per share. For the fiscal year, HPE now expects earnings in the range of $1.82 and $1.94 a share, up from its previous range of $1.70 and $1.88 per share. 

"Our disciplined execution on our strategic priorities is positively impacting both top and bottom line performance," said HPE chief executive Antonio Neri. "We are strengthening our core compute and storage businesses, doubling down in our growth Intelligent Edge and HPC businesses and accelerating our pivot to as-a-service, while also advancing our cloud-first innovation agenda to become the edge-to-cloud platform as-a-service choice for our customers and partners."