Hewlett Packard Enterprise Company (HPE) recently reported its first-quarter fiscal year 2024 earnings results, and the market reaction was not positive. The company’s shares are trading lower after revenue fell 14% year-over-year to $6.76 billion, missing the consensus estimate of $7.11 billion.
In the first quarter, HPE saw declines in several key areas, including server revenue which dropped 23% year-over-year to $3.4 billion, Hybrid Cloud revenue down 10% year-over-year to $1.2 billion, and Intelligent Edge revenue which rose 3% year-over-year to $1.2 billion. Despite these challenges, the company did see some positive momentum with its annualized revenue run-rate (ARR) increasing by 42% year-over-year to $1.4 billion.
Adjusted gross margin expanded by 200 basis points year-over-year to 36.2%, and adjusted earnings per share came in at $0.48, beating the consensus estimate of $0.45. Operating cash flow from operations was $64 million, but free cash flow was negative at $(482) million in the quarter.
Hewlett Packard Enterprise also returned $172 million to shareholders in the quarter through dividends and share repurchases. The Board of Directors declared a cash dividend per share of $0.13, payable on April 12, 2024, to stockholders of record as of March 15, 2024.
Looking ahead, for the second quarter, HPE expects adjusted earnings per share of $0.36-$0.41 versus a consensus estimate of $0.45, and revenue of $6.6 billion-$7 billion. For the full fiscal year 2024, the company projects adjusted earnings per share of $1.82-$1.92, with revenue growth expected to be flat to 2% in constant currencies. HPE estimates a free cash flow of at least $1.9 billion.
Despite these projections, HPE shares are down 6.50% at $14.24 premarket on the last check Friday. It will be interesting to see how the company navigates these challenges in the coming quarters and if they are able to turn things around.
In conclusion, Hewlett Packard Enterprise’s first-quarter earnings report may have disappointed investors, but the company’s management remains optimistic about the future. With a focus on increasing revenue and improving profitability, HPE is working towards a more stable financial future.
