Hewlett Packard Enterprise beats on profits, stock climbs in after hours trading

Hewlett-Packard Enterprise has released its Q1 2016 earnings, its first full quarter results since HP split into two companies.

HPE is the part of HP that sells servers, software and consulting to large enterprises.

It reported:

• Earnings per share of 41 cents, against expectations of 40 cents, a slight beat.
• Revenue of 12.7 billion, that's in-line with expectations.

Investors are pleased with HPE's cheery outlook, too.

For all of 2016, the company said it expects adjusted earnings between $1.85 and $1.95 per share. The high end is above Wall Street's expectations of $1.87 for the year.

Here's the relevant parts of the press release:

HPE fiscal 2016 first quarter financial performance

PALO ALTO, CA--(Marketwired - Mar 3, 2016) - Hewlett Packard Enterprise (NYSE: HPE)

• Delivers third consecutive quarter of year over year revenue growth in constant currency
• Increases commitment to return at least 100% of FY16 free cash flow outlook to shareholders
• First quarter net revenue of $12.7 billion, up 4% from the prior-year period on a constant currency basis and down 3% as reported
• First quarter non-GAAP diluted net earnings per share of $0.41, at the top end of the previously provided outlook of $0.37 to $0.41 per share
• First quarter GAAP diluted net earnings per share of $0.15, above the previously provided outlook of $0.09 to $0.13 per share
• $1.3 billion to shareholders in the form of share repurchases and dividends
• Maintains FY16 free cash flow guidance of $2.0 to $2.2 billion

Fiscal 2016 first quarter segment results

• Enterprise Group revenue was $7.1 billion, up 1% year over year, up 7% in constant currency, with a 13.4% operating margin. Servers revenue was down 1%, up 5% in constant currency, Storage revenue was down 3%, up 3% in constant currency, Networking revenue was up 54%, up 62% in constant currency, and Technology Services revenue was down 9%, down 3% in constant currency.
• Enterprise Services revenue was $4.7 billion, down 6% year over year, flat in constant currency, with a 5.1% operating margin. Infrastructure Technology Outsourcing revenue was down 8%, down 2% in constant currency, and Application and Business Services revenue was down 3%, up 3% in constant currency.
• Software revenue was $780 million, down 10% year over year, down 6% in constant currency, with a 17.4% operating margin. License revenue was down 6%, down 2% in constant currency, support revenue was down 13%, down 9% in constant currency, professional services revenue was down 7%, down 2% in constant currency, and software-as-a-service (SaaS) revenue was down 9%, down 7% in constant currency.
• Financial Services revenue was $776 million, down 3% year over year, up 3% in constant currency, net portfolio assets were up 4%, up 9% in constant currency, and financing volume was down 4%, up 3% in constant currency. The business delivered an operating margin of 12.9%.

Outlook

For the fiscal 2016 second quarter, Hewlett Packard Enterprise estimates non-GAAP diluted net EPS to be in the range of $0.39 to $0.43 and GAAP diluted net EPS to be in the range of $0.13 to $0.17. Fiscal 2016 second quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.26 per share, related to restructuring charges, the amortization of intangible assets, separation costs and acquisition and other related charges.

For fiscal 2016, Hewlett Packard Enterprise estimates non-GAAP diluted net EPS to be in the range of $1.85 to $1.95 and GAAP diluted net EPS to be in the range of $0.75 to $0.85. Fiscal 2016 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.10 per share, related to restructuring charges, the amortization of intangible assets, separation costs, acquisition and other related charges and tax indemnification adjustments.