HPE on Tuesday reported its third quarter financial results, slightly ahead of market expectations. The company benefited from solid growth in its as-a-service efforts, including its GreenLake services.
"While others are now publicly declaring plans to offer everything-as-a-Service, we have been focused on this for several years," CEO Antonio Neri said on a Tuesday conference call, "and have made significant organic and inorganic investments to deliver a differentiated experience for our customers."
HPE's non-GAAP earnings came to 32 per share on revenue of $6.8 billion, down 6 percent from the prior-year period.
Analysts were expecting earnings of 23 cents per share on revenue of $6.06 billion.
HPE grew its annualized revenue run-rate (ARR) to $528 million, up 11 percent from the prior-year period. GreenLake services orders finished the quarter with a record 80 percent year-over-year growth. HPE signed several of its largest ever GreenLake cloud services deals in Q3, Neri said Tuesday. That included a deal with LyondellBasell, one of the largest plastics, chemicals and refining companies in the world, which is signed a $27 million HP Greenlake contract to drive their digital transformation and environmental efficiency.
The company "gained momentum in key areas of differentiation and accelerated our as-a-service pivot with strong ARR growth and a record number of HPE GreenLake services orders," Neri said in a statement. "Navigating through the pandemic and planning for a post-COVID world have increased customers' needs for as-a-service offerings, secure connectivity, remote work capabilities and analytics to unlock insights from data that are aligned to our strategy. We see a tremendous opportunity to help our customers drive digital transformations as they continue to adapt to operate in a new world."
Neri also highlighted HPE's improved operational and supply chain execution in Q3.
Here are HPE's results by segment:
Compute revenue came to $3.4 billion, flat year-over-year. Growth in compute was driven by the reduction in backlog and customer demand in VDI (virtual desktop infrastructure) solutions, Neri said. For example, Erasmus University Medical Center in the Netherlands wanted to upgrade its VDI environment for lifecycle management needs and to prepare for future waves of COVID-19. HPE introduced a complete composable hyper-converged infrastructure solution based on HPE Synergy, along with HPE Primera to meet their needs, Neri said.
Storage revenue was $1.1 billion, down 10 percent year-over-year.
Financial Services revenue came to $811 million, down 9 percent year-over-year.
Meanwhile, High Performance Compute & Mission Critical Systems (HPC & MCS) revenue was $649 million, up 3 percent from the prior-year period. In the HPC business, COVID-related impacts continued to affect HPE customers' ability to accept delivery of products, Neri said. "We expect to return to normalized level of backlog by the end of Q4 through continued improvements in both supply chain execution and customer acceptances." Neri added that HPE saw strong sequential momentum with HPC in mission-critical systems, including a 10-year deal of $125 million with the University of Edinburgh in Scotland. The university chose HPE to power the Edinburgh International Data Facility with its HPC and AI solutions.
Intelligent Edge revenue was $684 million, down 12 percent year-over-year.
Advisory & Professional Services (A&PS) revenue was $226 million, down 7 percent year-over-year
HPE also announced a Q4 dividend of 12 cents a share, payable on Oct. 7.
For the fourth quarter, HPE estimates non-GAAP diluted net EPS to be in the range of 32 cents to 36 cents.