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Orders for HPE GreenLake as-a-service rose 33% last quarter and 68% for the full fiscal year.

Jeffrey Schwartz

November 30, 2022

3 Min Read
Earnings
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HPE CEO Antonio Neri credited partners with booking record orders of the company’s GreenLake hybrid edge-to-cloud infrastructure platform. According to Neri, annual recurring revenue (ARR) of $8.3 billion from HPE GreenLake has doubled during the past two years.

During HPE’s quarterly earnings call on Tuesday, Neri said as-a-service revenue of $936 million represented 17% year-over-year growth. Total revenues of $7.9 billion during the quarter that ended Oct. 29 grew 7% year-over-year. For the full fiscal year, revenues of $28.5 billion increased 3%.

HPE GreenLake as-service orders rose 33% for the quarter and 68% for the year, the company reported. Officials said the company achieved those orders despite supply-chain constraints. ARR contract value amounts to a 68% increase in bookings year-on-year.

Neri noted that the company saw a greater share of partners that booked multiple HPE GreenLake during the fourth quarter.

HPE's Antonio Neri

HPE’s Antonio Neri

“Partners booked more HP GreenLake orders during the fourth quarter than they ever did before, extending their strength of orders growth to 22 consecutive quarters,” Neri said.

For its current quarter ending Jan. 31, HPE maintained its revenue forecast in the $7.2 billion-$7.6 billion range. HPE CFO Tarej Robbuati noted that despite headwinds, the company would grow revenues by 2% in its next fiscal year.

“While the supply environment is improving, it is not quite back to pre-pandemic levels,” Robbiati said. “Our large order book contributes to our confidence in our fiscal year 23 revenue outlook of 2%-4% growth adjusted for currency.”

Among HPE’s various business units:

  • Intelligent Edge revenue of $965 million rose 18% year-over-year. Aruba Services revenue increased in the “high single-digits” year-over-year, with as a service revenue up 70%.

  • High-Performance Computing & Artificial Intelligence (HPC & AI) revenue of $862 million declined 14% year-over-year. Operating margin of 3.5% was also down from 14.2%.

  • Compute revenue of $3.7 billion rose 16% year-over-year. Operating margins grew to 14.7% from 9.4% during the prior year. HPE attributed the margin expansion growth to a product mix shift and “strategic pricing actions,” which offset cost increases.

  • Storage revenue of $1.3 billion was up 4% year-over-year, with an operating margin of 15.9% up from 13.8% year-over-year.

Rival NetApp Cuts Forecast

NetApp on Wednesday reported financial results for its second quarter that ended on Oct. 29. Revenues for the quarter met expectations, totaling $1.57 billion, an 11% year-over-year increase. But NetApp lowered its revenue forecast for the current quarter.

In the fiscal year, NetApp is forecasting revenues will grow between 2% and 4%, down from earlier projections of 6%-8%. For the quarter that ends on Jan. 31, 2023, NetApp projects revenues will fall between approximately $1.53 billion and $1.68 billion.

NetApp CEO George Kurian said the company lowered its forecast based on a more challenging sales environment.

NetApp's George Kurian

NetApp’s George Kurian

“As we moved through the quarter, we saw increased budget scrutiny, requiring higher level approvals, which resulted in smaller deal sizes, longer selling cycles, and some deals moving out of the quarter,” Kurian said during the company’s earnings call.

Kurian added: “We see no change to our underlying opportunity and are confident in our position. However, current economic realities and unprecedented [foreign exchange] headwinds will continue to impact IT spending, causing us to temper our revenue expectations for the second half.”

NetApp shares fell nearly 6% on Wednesday, while HPE rose 8.5%.

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Jeffrey Schwartz or connect with him on LinkedIn.

 

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About the Author(s)

Jeffrey Schwartz

Jeffrey Schwartz has covered the IT industry for nearly three decades, most recently as editor-in-chief of Redmond magazine and executive editor of Redmond Channel Partner. Prior to that, he held various editing and writing roles at CommunicationsWeek, InternetWeek and VARBusiness (now CRN) magazines, among other publications.

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