Why Hewlett Packard Enterprise Shares Are Down Premarket Friday

Hewlett Packard Enterprise Company HPE shares are trading lower after the company reported first-quarter FY24 earnings results.

Revenue fell 14% Y/Y to $6.76 billion, missing the consensus of $7.11 billion.

Server revenue declined 23% Y/Y to $3.4 billion, Hybrid Cloud revenue was down 10% Y/Y to $1.2 billion, and Intelligent Edge revenue rose 3% Y/Y to $1.2 billion. Meanwhile, Financial Services revenue remained stable Y/Y at $873 million.

Annualized revenue run-rate (ARR) rose 42% Y/Y (+41% Y/Y in constant currencies) to $1.4 billion.

Adjusted gross margin expanded 200 basis points Y/Y to 36.2%. Adjusted EPS of $0.48, beating the consensus of $0.45.

“HPE drove momentum in annualized revenue run-rate and gross margins in Q1 despite challenges brought by the softening of the networking market and GPU deal timing,” said Marie Myers, executive vice president and CFO. 

Operating cash flow from operations stood at $64 million, and Free cash flow was negative at $(482) million in the quarter.

Hewlett Packard Enterprise returned $172 million to shareholders in the quarter through dividends and share repurchases.

Dividend: 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.

Outlook: For the second quarter, Hewlett Packard Enterprise sees adjusted EPS of $0.36-$0.41 vs. consensus of $0.45, revenue of $6.6 billion-$7 billion vs. $7.11 billion estimate.

For FY24, the company projects adjusted EPS of $1.82-$1.92 vs. an estimate of $1.92, with revenue growth to be flat to 2% in constant currencies. HPE estimates a free cash flow of at least $1.9 billion.

Also Read: Costly Misstep? Hewlett Packard Claims $4B Losses From Autonomy Deal: Report

Price Action: HPE shares are down 6.50% at $14.24 premarket on the last check Friday.

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