By Dhirendra Tripathi
Investing.com – Hewlett Packard Enterprise (NYSE:HPE) stock gained 7.4% Wednesday after its focus on creating a revenue stream through subscription of services yielded positive results in the first quarter ended January.
The company also raised its annual earnings guidance to $2.03-$2.17 per share from its November outlook of $1.96-$2.10 per share. It is sticking to its forecast of 3%-4% in annual revenue.
HPE said its annualized revenue run-rate, which reflects future payments under the subscription software-as-a-service model, jumped 23% to $798 million in the period. Orders gained 20% from a year earlier, the third consecutive quarter of more than 20% growth, and allowed the company to reiterate its forecast of 35-45% compounded growth in ARR during 2021-24.
“We are also delivering a better quality of earnings demonstrated by our improved gross margin despite ongoing supply chain constraints that enabled us to deliver Q1 EPS well above our outlook range and raise our outlook for the full year,” Chief Financial Officer Tarek Robbiati said in a statement.
Sales in the Intelligent Edge division, which covers products that allow companies to gather and process data where it is generated instead of transferring it to an external storage unit, grew 11% to $901 million, exceeding Street’s expectations, Bloomberg said.
Sales at HPE’s biggest unit, Compute, rose 1% to top $3 billion. Storage division revenue fell 3% to $1.2 billion.
High Performance Computing and Artificial Intelligence booked an operating loss due to delayed customer acceptances and supply chain constraints.
Total revenue rose 2% to $7 billion, while adjusted earnings per share was up by a cent to 53 cents and beat estimates.