Executing on enduring demand to close the year with record Q4 performance

As we wrap up the 2022 fiscal year, I’m extremely proud of our outstanding Q4 performance. HPE executed exceptionally well, recording our most profitable quarter since 2017 on a non-GAAP continuing operations basis, with our second highest quarterly revenue and record quarterly free cash flow.

HPE’s performance underscores that the strategy we introduced in 2018 to deliver sustainable long-term value for shareholders is coming to fruition. In 2019, we began our pivot to an as-a-service model, prioritizing recurring revenue through our HPE GreenLake edge-to-cloud platform. We have refocused our portfolio – and our customer value proposition – toward high-growth and higher-gross-margin solutions, and we are now seeing these strategic actions paying off.

Here are a few additional highlights from our Q4 earnings report:
 

• Total revenue increased 12%¹ y/y to $7.9 billion
  
  
• Non-GAAP operating margin rose to 11.5%², up 1.8 points y/y
  
  
• Profit, measured by non-GAAP diluted net earnings per share², was $0.57, up 10% y/y
  
  
• Free cash flow was $2 billion^{2 3}

Importantly, we saw enduring customer demand for our products across our portfolio. In Q4, orders remained steady, showing continued interest in our differentiated edge-to-cloud solutions across industries from both large enterprises and small businesses. We closed this fiscal year with a significantly larger order book than we had at the start of the year – especially impressive when we look at HPE GreenLake orders, which in the last quarter represented approximately 12% of total company bookings.

For fiscal 2022, it is clear the HPE GreenLake platform has enhanced our financial profile with more resilient recurring revenue. Our portfolio is steadily becoming richer in software and services as we continue to shift our mix to higher-growth markets and more IP-rich offerings.

Attracting customers with our portfolio differentiation

The momentum we are generating with customers for HPE GreenLake has been evident across our financial metrics. Our market-leading differentiators helped us attract more new customers to our platform during the fourth quarter than in any other quarter before, leading to twice as many new HPE GreenLake logos, compared to the year prior, to round out 2022. We’ve also found that existing HPE GreenLake customers are consuming more services, with usage increasing above original contract commitments.

As an example of how we are winning with our customers, SPAR, the European grocery giant, recently made the decision to build its own hybrid cloud on HPE GreenLake to run the company’s core business. Our platform will power SPAR’s innovation engine as the retailer pursues its ambition to create the future of grocery and retail shopping, including using data to make strategic decisions on everything from warehousing and logistics – to in-store experiences, to advance its business.

We’re also seeing success at the partner level. Partners booked more HPE GreenLake orders during the fourth quarter than ever before, extending their streak of orders growth to 22 consecutive quarters. During the fourth quarter, we also saw a greater share of partners booking multiple GreenLake deals.

Beginning to see easing of supply constraints

As we look ahead to next fiscal year, after many quarters of supply constraints in our market, we’re beginning to see improvements. Demand from the consumer sector is slowing, allowing capacity to shift to enterprise IT technologies. As a result, we have been able to reduce anticipated lead times for some products.

We are continuing to take proactive measures to mitigate supply-chain challenges, and we are working through our large order book, which has experienced no material cancellations. Though the end to this issue is not yet in sight, we expect to see greater easing of supply shortages in 2023.

Entering 2023 with momentum

This fiscal year, we performed remarkably well for our customers, our shareholders, and our HPE team members. We helped our customers use technology to accelerate their business outcomes while navigating a dynamic environment – delivering bold new innovation to help them transform and become more competitive. Our expanding market leadership demonstrates the trust that customers place in us, and the value they find in the offering that only we can deliver.

For our shareholders, by executing our strategy, we have pivoted HPE to a richer mix of software and services that is delivering recurring profitable growth.

I’m particularly proud of our HPE team members around the world who have made our strong results and transformation possible through their ingenuity and engagement. In fact, this year HPE achieved one of the highest employee engagement scores in the history of our company – up 20 points over the last five years.

With our team engaged, our strategy taking flight, and our market-leading solutions playing critical roles in our customers’ business, we enter fiscal year 2023 with incredible momentum on all fronts. I look forward to advancing our strategy and leadership even further over the next year and years to come. 

¹ Adjusted to eliminate the effects of currency. A description of HPE’s use of non-GAAP financial information is provided in the earnings presentation at https://Investors.hpe.com.

² Reconciliation of specific adjustments to GAAP results for the current and prior periods and description of HPE’s use of non-GAAP financial information are included in the earnings presentation at https://Investors.hpe.com.

³ For definition of free cash flow, please refer to the earnings presentation at https://Investors.hpe.com.

This blog contains forward-looking statements subject to risks; results could differ materially. For more cautionary language regarding forward-looking statements, refer to the earnings presentation at investors.hpe.com.