Shares of Hewlett Packard Enterprise Co (NYSE:HPE) fell 1.4% in after-hours trading on Wednesday after the company delivered a solid fiscal third-quarter beat but issued fourth-quarter guidance with midpoints that fell short of Wall Street expectations. Despite strong performance across servers and networking, and the initial boost from its Juniper Networks acquisition, investors zeroed in on the underwhelming forward outlook.
The company reported adjusted earnings per share of $0.44, exceeding estimates by $0.02, while revenue grew 19% year-over-year to $9.14 billion, far surpassing the $8.35 billion consensus. GAAP EPS was $0.21, reflecting acquisition and restructuring-related charges.
Free cash flow came in at $790 million, an increase of $121 million from the same quarter a year ago, while operating cash flow reached $1.3 billion. Annualized revenue run-rate hit $3.1 billion, up 77% year-over-year, highlighting strength in HPE’s subscription-based offerings.
“HPE delivered record-breaking revenue and improved profitability this quarter as we marked a major milestone by closing our acquisition of Juniper Networks,” said Antonio Neri, president and CEO. “Customer demand stretched broadly across our portfolio and was particularly strong in our Server and Networking segments.”
Server revenue rose 16% to $4.9 billion, while networking revenue, now including Juniper results, jumped 54% to $1.7 billion. Hybrid Cloud grew 12% to $1.5 billion, while Financial Services totaled $886 million, showing flat performance in constant currency.
The issue for the market was HPE’s fourth-quarter outlook, which underwhelmed. The company guided Q4 adjusted EPS to a range of $0.56 to $0.60, below the $0.59 consensus at the midpoint, and projected revenue between $9.7 billion to $10.1 billion, also falling slightly short of the $10.1 billion estimate at the midpoint.
“In Q3, we delivered on our commitments, generating record revenue, as well as improved sequential operating profit with major contributions from our three largest segments,” said Marie Myers, executive vice president and CFO. She noted that the Juniper deal already boosted results, with further upside expected from integration and cost synergies.
While operational performance remains robust, the disappointing midpoint guidance signaled caution heading into year-end, suggesting potential headwinds in execution or integration. That note of conservatism appeared to outweigh otherwise strong metrics in the eyes of investors.
Source :
https://www.investing.com/news/earnings/hpe-shares-slip-as-q4-guidance-disappoints-despite-revenue-beat-4222756
