Hewlett Packard Enterprise (HPE) reported stronger than expected earnings for the first quarter of 2019, despite a decline in revenues. The solid bottom-line performance and upward revision of full-year guidance triggered a stock rally and the company’s shares gained about 4% during the extended trading session Thursday.
The San Jose, California-based technology solutions provider posted adjusted earnings of $0.42 per share for the first quarter, up 31.3% from a year earlier. Reported profit was $177 million or $0.13 per share, compared to $1.44 billion or $0.89 per share in the first quarter of 2018. Earnings topped estimates.
Revenues dropped 1.6% year-on-year to $7.6 billion, in line with analysts’ forecast. However, margins benefitted from the strong performance by Hybrid IT, though the segment registered a 3% drop in revenue to $6 billion. Meanwhile, Intelligent Edge revenue moved up 5% to $686 million. At $919 million, Financial Service revenue was up 3% year-on-year.
Margins benefitted from the strong performance by Hybrid IT, though the segment registered a 3% drop in revenues to $6 billion
HPE’s CEO Antonio Neri said, “Looking forward, we are confident that HPE’s differentiated, software-defined solutions will continue to gain traction with customers looking to harness the explosion of data, driving accelerated revenue growth starting in Q2.”
Encouraged by the strong earnings growth in the January quarter, the management revised up its full-year adjusted earnings guidance to the range of $1.56 per share to $1.66 per share. The outlook for unadjusted earnings has been upgraded to $0.88-$0.98 per share. The company is currently looking for free cash flow between $1.4 billion and $1.6 billion for the year, which is in line with the previous outlook.
Also see: Hewlett Packard Enterprise Q1 2019 Earnings Conference Call Transcript
For the second quarter, the company expects adjusted earnings in the range of $0.34 per share to $0.38 and unadjusted earnings between $0.19 per share and $0.23 per share.
Shares of Hewlett Packard dropped about 11% in the past twelve months. After hitting a one-year low in the final weeks of last year, currently the stock in the recovery mode. It gained more than 4% in after-market trading Thursday, immediately after the earnings report.