What To Expect From HPE’s Fiscal Third Quarter Earnings

by Trefis Team
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HP Enterprise (NYSE:HPE) is scheduled to announce its fiscal third quarter earnings on August 28. In recent quarters, the company has reported growth in its Hybrid IT product portfolio, with solid growth in storage revenues. In addition, financial services revenues as well as HPE Aruba enterprise WLAN sales have also added to top line growth in recent quarters.  The company continues to focus on enterprise hardware and customer services in order to bolster its revenues in the coming quarters. We believe that this trend will continue in Q3 FY’18 as well, with combined compute and networking revenues of around $5.5 billion. In addition, we forecast the company’s adjusted operating margin to expand 10 basis points to 8.5% for the quarter. We have created an interactive earnings preview dashboard for HPE that highlights our expectations for the quarterly earnings. You can modify drivers such as segment revenues and margin figures to see how the company’s earnings would be affected in the quarter.

Key Growth Trends

HPE has enhanced its focus on core servers, which have higher average prices and margins, rather than the custom commoditized Tier -1 server market. Furthermore, the addition of Nimble Storage to HPE’s storage portfolio last year has helped with revenue gains in this space. This trend is expected to continue through the end of the current fiscal year. Similarly, the company reported a high average price per unit for its compute products, which helped drive top line growth in its Hybrid IT segment, due to which these revenues are expected to continue to drive top line growth for HPE this year. In terms of margins, HPE launched Edgeline Converged Systems that should help it to report higher margins in the coming quarters.

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