HPE Reports Fiscal 2016 Second Quarter Results 

PALO ALTO, Calif., May 25 -- Hewlett Packard Enterprise (NYSE: HPE) has announced financial results for its fiscal 2016 second quarter, ended April 30, 2016.

Second quarter net revenue of $12.7 billion was up 1% from the prior-year period and up 5% on a constant currency basis.

Second quarter GAAP diluted net earnings per share (EPS) was $0.18, up from $0.16 in the prior-year period, and above its previously provided outlook of $0.13 to $0.17. Second quarter non-GAAP diluted net EPS was $0.42, down from adjusted non-GAAP diluted net EPS of $0.43 in the prior-year period, and near the high end of its previously provided outlook of $0.39 to $0.43. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $411 million and $0.24 per diluted share, respectively, related to the amortization of intangible assets, restructuring charges, separation costs, tax indemnification adjustments and acquisition and other related charges.

"Today's results represent our best performance since I joined in 2011," said Meg Whitman, president and chief executive officer, Hewlett Packard Enterprise. "The businesses comprising HPE grew revenue over the prior-year period on an as reported basis for the first time in five years. We also had strong quarterly performance in every one of our business segments and generated more than $500 million in free cash flow."

Hewlett Packard Enterprise also announced plans for a tax-free spin-off and merger of its Enterprise Services business with CSC which will create a pure-play, global IT services leader and unlock a faster-growing, higher-margin and stronger free cash flow enterprise infrastructure and software business. For more information, click here.

Outlook

For the fiscal 2016 third quarter, Hewlett Packard Enterprise estimates non-GAAP diluted net EPS to be in the range of $0.42 to $0.46 and GAAP diluted net EPS to be in the range of $1.10 to $1.14. Fiscal 2016 third quarter non-GAAP diluted net EPS estimates exclude an after-tax gain on the divestiture of H3C technologies and other of approximately $1.06, and after-tax costs of approximately $0.38 per share, related to restructuring charges, the amortization of intangible assets, separation costs and acquisition and other related charges.

For fiscal 2016, Hewlett Packard Enterprise estimates non-GAAP diluted net EPS to be in the range of $1.85 to $1.95 and GAAP diluted net EPS to be in the range of $1.68 to $1.78. Fiscal 2016 non-GAAP diluted net EPS estimates exclude an after-tax gain on the divestiture of H3C technologies and other of approximately $1.06, and after-tax costs of approximately $1.23 per share, related to restructuring charges, the amortization of intangible assets, separation costs, acquisition and other related charges and tax indemnification adjustments.

Fiscal 2016 second quarter segment results

• Enterprise Group revenue was $7.0 billion, up 7% year over year, up 10% in constant currency, with an 11.7% operating margin. Servers revenue was up 7%, up 10% in constant currency, Storage revenue was up 2%, up 5% in constant currency, Networking revenue was up 57%, up 62% in constant currency, and Technology Services revenue was down 6%, down 2% in constant currency.
• Enterprise Services revenue was $4.7 billion, down 2% year over year, up 1% in constant currency, with a 6.7% operating margin. Infrastructure Technology Outsourcing revenue was down 1%, up 2% in constant currency, and Application and Business Services revenue was down 3%, flat in constant currency.
• Software revenue was $774 million, down 13% year over year, down 10% in constant currency, with a 24.8% operating margin. License revenue was down 12%, down 11% in constant currency, support revenue was down 16%, down 13% in constant currency, professional services revenue was down 3%, down 1% in constant currency, and software-as-a-service (SaaS) revenue was down 11%, down 10% in constant currency.
• Financial Services revenue was $788 million, down 2% year over year, up 1% in constant currency, net portfolio assets were up 8%, up 9% in constant currency, and financing volume was up 15%, up 19% in constant currency. The business delivered an operating margin of 9.3%.

About Hewlett Packard Enterprise

Hewlett Packard Enterprise (HPE) is an industry leading technology company that enables customers to go further, faster. With the industry's most comprehensive portfolio, spanning the cloud to the data center to workplace applications, our technology and services help customers around the world make IT more efficient, more productive and more secure.

Source: HPE