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How Did HPE’s Software and Financial Services Segments Perform?

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Software sales fall 13% year-over-year

In fiscal 2Q16, the revenue from Hewlett-Packard Enterprise’s (HPE) software business fell 13% YoY (year-over-year) to $774 million. It fell 10% YoY on a constant currency basis. It had an operating profit of $192 million, or 24.8% of the revenue. In the software segment, licenses revenue fell 12% YoY. Support revenue fell 16% YoY and services revenue fell 6% YoY in fiscal 2Q16.

However, revenue rose 2% YoY in the software business when adjusted for acquisitions and divestitures. Strong sales in the security and big data businesses offset declines in IT (information technology) management. Driven by an increased focus on cost control, the operating profit margin expanded seven percentage points YoY.

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Financial services

The revenue from Hewlett-Packard Enterprise’s financial services business fell 2% YoY in fiscal 2Q16 to $788 million. It rose 1% YoY on a constant currency basis. It had an operating profit of $73 million, or 9.3%, of the revenue. In this segment, the financial volume rose 15% YoY. The net portfolio of assets rose 8% YoY to $12.7 billion in fiscal 2Q16.

Operation profit fell 130 basis points YoY as lower residual pressurized profit margins. The financing volume grew due to favorable movement in HPE’s cost of funds, which enabled the company to price competitively.

Hewlett Packard Enterprise accounts for 2.3% of the First Trust ISE Cloud Computing Index ETF (SKYY). The other top holdings in this ETF include EMC (EMC), Google (GOOG), and Facebook (FB). They account for 4.1%, 4%, and 3.9%, respectively, of SKYY.

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