HPE Partners Deliver Record GreenLake Bookings
“Partners booked more HPE GreenLake orders in the fourth quarter than they ever did before, extending their streak of orders growth to 22 consecutive quarters,” said HPE CEO Antonio Neri.
Hewlett Packard Enterprise channel partners delivered record results for the HPE GreenLake cloud service in the most recent quarter with a 70-plus percent increase in sales, higher than the HPE’s direct sales of the fast-growing pay-per-use platform, said HPE CEO Antonio Neri.
“Partners booked more HPE GreenLake orders in the fourth quarter than they ever did before, extending their streak of order growth to 22 consecutive quarters,” said Neri during a conference call with financial analysts after HPE delivered better-than-expected sales growth of 7 percent (12 percent when adjusted for currency) to $7.9 billion for its fourth fiscal quarter, ended Oct. 31. “In the fourth quarter, we also saw a greater share of partners booking multiple HPE GreenLake deals.”
The robust partner growth came with HPE attracting more new customers to the GreenLake platform during the fourth quarter than in any quarter ever before. HPE ended the fiscal year with twice as many new HPE GreenLake logo customers than in the prior fiscal year.
HPE’s Annualized Revenue Run Rate (ARR)—a key measurement of GreenLake adoption—rose 17 percent (25 percent on a constant currency basis) to $936 million, even in the midst of supply constraints that continued to limit some GreenLake installations.
“We expect an improved supply environment to accelerate our ARR growth moving forward,” said HPE Executive Vice President and Chief Financial Officer Tarek Robbiati during the call.
HPE reiterated its estimate of 35 percent to 45 percent compound annual growth for ARR from fiscal year 2022 to 2025.
Total HPE as-a-service orders were up 33 percent in the quarter compared with the year ago period. For the full fiscal year, HPE as-a-service orders were up 68 percent.
Neri said the record GreenLake partner performance came even with high comparisons from the year ago period. “This was the quarter we did the most business ever on HPE GreenLake with our partners growing in excess of 70 percent, lapping big, big numbers,” he said in an interview with CRN following the call.
Neri said the strong results are evidence that the HPE GreenLake edge-to-cloud platform is resonating with customers because of its strong market differentiation.
“All the hard choices in the transformation that we drove from IT to processes to go to market are paying off now,” Neri told CRN. “It is a confluence of multiple things that are coming together. That is giving us momentum as we enter 2023, and the partners are at the forefront of that because they are driving more business than ever before through HPE GreenLake. You can see they are growing faster than our direct business.”
Channel Partners Detail GreenLake Success
PKA Technologies, one of HPE’s top partners, is expecting a record year in the new fiscal year with GreenLake deals, said PKA Vice President of Sales Paul Cohen.
In fact, the tougher macroeconomic environment with the threat of a recession has many companies looking at migrating workloads to the HPE Greenlake pay-per-use cloud service, said Cohen.
“GreenLake is more attractive when there is a downturn in the economy because customers can move projects forward without a Capex expenditure,” he said. “We think we’re going to have a fabulous year with GreenLake in 2023. Our pipeline continues to grow. When it comes to companies spending valuable cash, they prefer to lock into a rate over three, four or five years. That allows them to budget their Opex expenditure. It’s predictable, and they are not cash strapped. They can keep their cash to be more competitive. As customers get more insecure about the economy but still need to continue growing their own business, GreenLake is the perfect solution.”
The combination of Montvale, N.J.-based PKA’s PKASolveIT managed services business and GreenLake is proving to be an unbeatable combination, said Cohen. “It’s resonating with customers,” he said.
One key to PKA’s success with GreenLake is the company’s financial accounting knowledge, which opened the door to advising clients on depreciating IT assets with the pay per use model, said Cohen. “Now we are having financial conversations with customers on how they can still depreciate their IT assets with GreenLake,” he said.
Among the high-profile PKA GreenLake wins is a pay-per-use deal with Trinchero Family Estates in Napa Valley, one of the largest family-owned vineyards in the world.
Pat O’Dell, general manager and managing partner for Clinton, N.J.-based CPP Associates, said his company is also seeing GreenLake gain momentum with a pay-per-use model that addresses inflation and supply chain issues. “HPE is firing on all cylinders with GreenLake,” he said.
CPP has recently closed GreenLake deals with two large financial institutions that evaluated public cloud and other options but selected GreenLake, said O’Dell. Key to those GreenLake wins were CPP Associates’ Infrastructure Anywhere assessment, which is aimed at determining where workloads should reside—on-premises or off-premises.
“These companies also ran their own internal assessments and found that GreenLake was the most competitive for them,” he said. “They found that GreenLake provided them with more security and control than public cloud. HPE has made GreenLake more competitive and more comprehensive with more internal controls and more security from your own internal team.”
Besides CPP’s Infrastructure Anywhere Assessments, GreenLake is also benefitting from HPE’s CloudPhysics tool which provides cost analysis between public cloud and GreenLake and sometimes recommends public cloud, said O’Dell. “That builds credibility.” He said. “The tool sometimes recommends public cloud.”
O’Dell praised Neri and HPE Executive Vice President Keith White for fully integrating GreenLake into HPE as the centerpiece of the company. “The HPE sales teams are always talking about GreenLake first and last,” he said. “What Keith and Antonio have put together a tremendous offering that is now inculcated into the DNA of the HPE sales force and the partner community.”
HPE’s channel commitment remains unmatched, said O’Dell. “What HPE is doing with GreenLake is they are focusing on the total solution and rewarding partners like CPP that offer a total solution from the whiteboard to the keyboard and everything in between,” he said.
Highlights Of HPE’s Fourth Quarter
HPE’s $7.87 billion in sales for the fourth fiscal quarter was above sequential fourth quarter guidance and represented the second-highest quarterly revenue on record for HPE on a continuing operations basis. The Zacks consensus analyst estimate for the quarter was $7.42 billion.
HPE reported non-GAAP earnings of 57 cents per share for the quarter, up 10 percent from the prior year. That was in line with the Zacks consensus of 57 cents.
HPE shares were up 33 cents, or 2 percent, in after hours trading to $15.79.
Among the highlights of the quarter were an 18 percent increase in intelligent edge sales (23 percent when adjusted for currency) to $965 million. HPE Aruba’s Annualized Revenue Run Rate was up 70 percent from the prior year period.
HPE’s Compute sales, meanwhile, were up 16 percent from the prior year period (22 percent when adjusted for currency) to $3.7 billion, near record revenue. HPE Compute posted a 14.7 percent operating profit margin, up from 9.4 percent in the year ago quarter.
What’s more, HPE Storage sales were up four percent from the year ago quarter (six percent when adjusted for currency) to $1.3 billion. The storage business reported a 15.9 percent operating margin compared with 13.8 percent in the year ago period.
Overall, HPE grew its non-GAAP operating margin to 11.5 percent, up 180 basis points year over year, one of the highest quarterly levels in HPE history.
For the full year, HPE reported sales of $28.49 billion, up 3 percent (5 percent adjusted for currency) from $27.78 billion the prior year. Non-GAAP earnings came in a $2.02, up 3 percent from the prior year.
HPE ended the fiscal year with a significantly larger bookings than it did at the start of the year.
Neri, for his part, said HPE has seen “enduring” demand in 2022 and expects that demand to be “steady” into fiscal year 2023.
“We enter fiscal year 2023 with incredible momentum on all fronts,” he said. “I look forward to advancing our strategy leadership even further in the next year.”