HPE results show demand for remote data and consumption model

Hewlett Packard Enterprise (HPE) has reported first-quarter 2021 revenue of $6.8bn, down 2% year on year. Its Intelligent Edge grew by 12% to $806m, while its High Performance Compute & Mission Critical Systems (HPC & MCS) declined by 9% to $762m.

Antonio Neri, president and CEO of HPE, said: “The global pandemic has brought a renewed focus on digital transformation as businesses are rethinking everything from remote work and collaboration to business continuity and data insight.

“As the world heads to recovery, our customers are looking for the agility and simplicity of the cloud-native world with the flexibility and control of a hybrid business model – and this is where we have a unique and differentiated value proposition.”

In the transcript of the earnings call, posted on the Seeking Alpha financial blogging site, Neri discussed how HPE was moving towards an “as-a-service” business model, where customers pay for what they use, on-demand. He said: “The HPE Ezmeral software portfolio and our HPE GreenLake managed services offerings enable a true consumption-based experience.”

Neri said the revenue run-rate for HPE’s “as-a-service” grew by 27% year on year to $649m.

He said he expected the GreenLake cloud business to grow by between 30% and 40% by 2022, driven by customers more than doubling their original capacity commitment to the service. “Our HPE GreenLake cloud services customer retention rates are above 95% and the average customer usage of our cloud services is currently running at 120% of original commitment, driven by customer expansion in their capacity utilisation,” he said.

HPE reported a 1% decline in its Compute business to $3.0bn and a 5% decline in its Storage revenue to $1.2bn. However, Neri said the company’s Primera business reported “triple-digit year-over-year” growth, which he said would soon make it bigger than its 3PAR storage business.

HPE said its software-defined products, which include Nimble, grew by 31% year on year. All Flash Array Storage products grew by 5%, driven by increased adoption of Primera All Flash.

Asked what businesses were buying as they prepared to move past Covid-19, Neri said: “We talked about this all the time, about the fact that many employees will never return to the office, and they need access to data and services in a very connected way.”

He described HPE’s Aruba as “a digital transformation engine” for customers, adding: “It is not just about access to a Wi-Fi port, it’s also the fact that it provides that edge-to-cloud connectivity for all the apps and data, wherever they live.”

Neri said the company was also seeing an acceleration in demand for access to data and analytics. “We see AI [artificial intelligence] machine learning taking hold in every segment of the market because data insights are necessary to compete in this new digital economy,” he said. “We see, obviously, the need to improve IT resiliency based on the learnings we had in 2020. We also see the need to deploy the cloud everywhere.”

With its completion of the SilverPeak acquisition, Neri said HPE was now in a strong position to differentiate itself in the SD-WAN market. He described Silver Peak as “a completely differentiated experience for SD-WAN”, adding: “In an edge-to-cloud architecture, you have to connect all your edges and all your clouds. And the only way to do it at scale is through software.

“Silver Peak brings a SaaS solution and also an on-prem solution that allows customers to connect all their edges on the cloud in a fully automated and autonomous way. And that’s a big opportunity for us.”