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Customer base for GreenLake expanded

HPE shares Q2 numbers with details of how its as-a-service and hybrid cloud offerings sold by partners have fared

GreenLake has continued to be an area of growth for HPE, with the as-a-service offering delivered via the channel attracting more customers during the vendor’s second quarter.

HPE shared results for Q2 with revenues improving by 3% coming in at $7.2bn, with annualised revenue run-rate improving by 37% to $1.5bn. 

In terms of technology segments, server revenues of $3.9bn up by 18% were the bright spot, with intelligent edge down by 19% to $1.1bn and hybrid cloud decreasing by 8% to $1.3bn.  

Specifically on the GreenLake front, HPE has been extending the portfolio, with increased networking support, and reported a decent performance in Q2. Earlier this year, HPE added more storage functionality to GreenLake, aimed at supporting more artificial intelligence (AI) features.

Speaking to analysts, HPE CEO Antonio Neri talked of the increased demand for GreenLake and its success getting the technology into fresh accounts.

“GreenLake hybrid cloud is attracting new customers,” he said. “In the second quarter of fiscal 2024, the number of customer organisations using HPE GreenLake increased sequentially by almost 9% to 34,000.

“Our as-a-service lifetime total contract value grew to more than $15bn in Q2, with our annualised revenue run rate, or ARR, growing 39% year-over-year. Demand is increasing for our HPE GreenLake on-premise private cloud solutions.”

Customer demand

Looking ahead, the expectation is that AI will start to feature more in GreenLake and spur further demand from customers.

“Our AI orders, a healthy, intelligent edge, is set to grow sequentially beyond Q2 as expected, and AI emerged as a driver of a healthy HPE GreenLake momentum,” said Marie Myers, executive vice-president and chief financial officer at HPE. “We are seeing rapid growth in AI system revenue.

“GreenLake is a key differentiator,” she added. “We expect HPE GreenLake’s value proposition to key customers, including enterprises and sovereigns, to sharpen with the advent of AI.”

In general comments made about the Q2 numbers, Neri struck an upbeat tone, concentrating on the positives. “HPE delivered very solid results in Q2, exceeding revenue and non-GAAP EPS guidance,” he said. “AI systems revenue more than doubled from the prior quarter, driven by our strong order book and better conversion from our supply chain.”

Echoing a theme that is resonating across the industry, HPE is looking to increased adoption of AI to contribute to revenues in the second half.

“Stronger AI systems order conversion, prudent cost discipline and higher-than-expected free cash flow drove a very solid performance in Q2,” said Myers. “Because of our robust AI systems, order momentum and disciplined execution across our entire portfolio, we are raising our revenue and non-GAAP EPS guidance for the full year.

“We are driving profitable growth as we convert customer demand to revenue, particularly for HPE’s AI systems,” she added. “The long-term trends across hybrid cloud and networking also position us well for the future.”

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