February 21, 2019 – CRN, by Steven Burke
“We expect the demand environment to remain healthy and our differentiated software-defined solutions to continue to gain traction with customers driving accelerated revenue growth starting in Q2.”
With momentum growing for HPE’s data driven edge computing portfolio and high value software defined compute offerings, Hewlett Packard Enterprise (HPE) CEO Antonio Neri Thursday predicted accelerating sales growth for the remainder of the fiscal year.
“We are actually very, very confident that in Q2 and beyond our revenue will accelerate from the current levels,” said Neri in a conference call with security analysts after HPE raised earnings estimates for the current fiscal year by five cents per share.
That projected accelerated revenue growth comes on the heels of first quarter sales growth of 70 percent in hyper-converged HPE offerings; 50 percent growth in high performance compute; 20 percent growth in all flash storage arrays; and triple digit growth in edge compute server offerings.
HPE posted better than expected earnings of 42 cents per share for its first fiscal quarter ended Jan. 31, seven cents per share above the Wall Street consensus of 35 cents per share.
Sales for the quarter were $7.6 billion, which was down two percent from the year ago period of $7.67 billion, but up one percent excluding the commodity Tier 1 hyperscale server business which HPE exited at the end of 2017.
HPE raised its earnings projections for the full year by five cents per share to a range of $1.56 to $1.66 per share.
HPE shares were up 27 cents or two percent in after hours trading to $16.50. That was on top of 18 cents or one percent increase to $16.23 at the close of the market on Thursday.
“Our strategy is on point,” said Neri. “The enterprise of the future will be edge centric, cloud enabled and data driven. We are proud to be the company who can best help our customers connect all their data where ever it lives. Near term we expect the demand environment to remain healthy and our differentiated software defined solutions to continue to gain traction with customers driving accelerated revenue growth starting in Q2.”
In an interview with CRN after the results, Neri said the channel was a key part of the success in the quarter with double digit sales out growth. “Things are going really, really well and I am confident based on the line of sight that I have that this is a portfolio that customers and our partners can leverage going forward,” he said.
Neri is set to discuss the strong results with 140 of HPE’s Platinum partners in a conference call on Friday. “We’ll give a little more insight about our execution and our portfolio,” he said. “I am super pleased with our software defined infrastructure, Aruba, hyper-converged, and Synergy which is now a $1 billion run rate business for us.”
Neri said he is very encouraged by edge compute growth which is being driven by customers demanding solutions closer to where data is being created. “We see new use cases in manufacturing, transportation and healthcare,” he said. “The embedded compute in those platforms plus the cloud closer to where the data is better economics for customers in many of the use cases.”
What’s more, Neri said, average unit prices (AUP) in the hybrid IT business are up 20 percent which is being driven by artificial intelligence, big data analytics and next generation software defined infrastructure solutions.
HPE partners, for their part, said the HPE intelligent edge, high value software defined strategy is paying off in robust sales growth.
Paul Cohen, vice president of sales for New York-based PKA Technologies Inc., one of HPE’s top Platinum partners, said PKA’s HPE business is up more than 20 percent this year. “We had a great first quarter with HPE Aruba, compute and storage,” he said. “Our pipeline is very, very healthy. HPE is doing all the right things.”
Cohen credited HPE North America Channel Chief Terry Richardson and Channel Sales District Manager Brian O’Connor for driving strong field sales alignment and engagement between the HPE sales team and PKA. “That is creating opportunities for both of us,” he said. “We are seeing success working with them to go after new logos displacing the competition.”
HPE’s decision to launch a dedicated North America storage business is also helping drive tighter alignment between the HPE and PKA sales teams, said Cohen. Also having an impact in the storage market is the HPE Complete program which opens the door for HPE partners to resell offerings from companies like Qumulo, Veeam and Hedvig, said Cohen.
Cohen says Neri’s technology vision with acquistions like Nimble which has brought HPE the game changing HPE InfoSight predictive analytics storage software platform is driving sales growth. “That’s a game changer for us,” he said. “No one else has anything like that. Antonio’s vision and investments in the channel and ecosystem is definitely helping our growth.We are going to have a great year. I am really optimistic.”
Michael Lomonaco, director of marketing and communications for Grand Rapids, Michigan-based OST, another top HPE enterprise partner, said Neri’s technology vision is a big advantage for HPE and the channel. “Antonio is a visionary who has continually demonstrated an ability to meet the needs of the market and customers,” he said. “We continue to be excited and are rallying around the edge, hybrid IT, intelligent storage and software defined opportunities with HPE.”
Neri said HPE and its partners are well positioned for the future. “Our innovation is the best we have ever had,” he said. “The employee morale in the company is the best we have ever had. We have just moved to a new headquarters here (in San Jose) which is phenomenal. We are winning in the key markets that we have decided to focus on. That is giving us the confidence we can accelerate revenue.”
Written by Steven Burke, news editor for CRN.