HPE reports mixed Q2 as hybrid IT sales decline

HPE said quarterly revenue for its hybrid IT group was $5.6 billion, down 4% year-over-year.

Hewlett Packard Enterprise (HPE) reported a mixed second quarter on Thursday as it navigates ongoing trade and tariff issues internationally. HPE chief executive Antonio Neri said trade tensions created uncertainty and a shift in market dynamics throughout its second quarter.

"We continue to believe that an open market where everyone can innovate and participate is important for market stability and customer confidence," Neri said. "We also recently experienced an elongation in sales cycles with some customers. We will continue to monitor these and other microeconomic factors."

The company's results also show a sales declines in its hybrid IT unit, with quarterly revenue for the group down 4% to $5.6 billion and compute revenue down 5%.

Overall, HPE said Q2 net income was $419 million, or 30 cents a share, on revenue of $7.2 billion. Excluding charges, HPE delivered earnings of 42 cents a share. 

Wall Street was looking for third quarter non-GAAP earnings of 37 cents a share with $7.4 billion in revenue. Shares of HPE were up more than 2% in after market trading.

Elsewhere on the balance sheet, HPE said storage revenue up 3% and  revenue from its Pointnext services was down 7%. Meanwhile, the company's intelligent edge revenue was down 6% to $666 million, and financial services revenue was $896 million, down 2%. HPE also said Aruba product revenue was down 8% while Aruba services revenue was up 16%.

In terms of outlook, analysts are expecting HPE to deliver Q3 earnings of at least 42 cents a share with revenue of $7.8 billion. HPE responded with fourth quarter non-GAAP earnings between 40 cents and 44 cents a share. For the fiscal year the company expects non-GAAP EPS to be in the range of $1.62 to $1.72 -- at the high end of analyst estimates for $1.65 a share.