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While Q3 EPS of $0.49 and revenue of $7 billion (up 1% year-over-year) came in above the consensus estimates of $0.47 and $6.99B, respectively, the company’s guidance was mixed. Annualized revenue run rate (ARR) grew 48% year-over-year (in constant currency) to $1.3 billion.
“HPE delivered another solid quarter in Q3, powered by standout performances in the Intelligent Edge and HPE GreenLake. Demand improved sequentially across all key business segments, with particular strength in our HPC & AI segment as customers discover HPE’s unique capabilities to power unprecedented levels of performance for AI at scale,” said CEO Antonio Neri.
For Q4/23, the company expects EPS in the range of $0.48-$0.52, compared to the consensus of $0.49, and revenue in the range of $7.2-$7.5B, compared to the consensus of $7.49B.
For the full year, the company expects EPS of $2.11-$2.15, compared to the consensus estimate of $2.11.
Deutsche Bank analysts said the results showed that macro pressure continues.
“While we appreciate the company’s solid edge-to-cloud execution and are more convinced by its AI/HPC strategy, IT spending dynamics are likely to remain weak in the short term. As such, we see the current valuation as fair and reiterate our Hold rating,” they wrote.
Stifel analysts, on the other hand, remain Buy-rated.
“We modestly lower our forward sales estimates reflecting incremental weakness in Compute, where we are modeling y/y declines well into 1H’FY24, partially offset by stronger Intelligent Edge sales, where backlog remains above pre-pandemic levels. We believe HPE’s years-long efforts to integrate incremental margin-accretive software/services offerings across its broader portfolio will help insulate margins from pricing pressure on servers.”
Additional reporting by Senad Karaahmetovic
