HPE CEO Antonio Neri: GreenLake Channel Sales Are Up 326 Percent

HPE CEO Antonio Neri says the company’s shift to the GreenLake pay-per-use model continued to pick up steam in the most recent quarter.

HPE CEO Antonio Neri: GreenLake Channel Sales Are Up 326 Percent

HPE CEO Antonio Neri says the company’s shift to the GreenLake pay-per-use model continued to pick up steam in the most recent quarter.

Hewlett Packard Enterprise CEO Antonio Neri said HPE GreenLake channel pay-per-use sales grew 326 percent year over year in the fourth fiscal quarter.

“This was the best year yet between HPE and the channel,” said Neri. “We made remarkable progress. We solidified our relationship [with partners]. The channel understands that we are and will continue to be a channel-led company.”

HPE partners’ gross margin was up a whopping 300 basis points for the fiscal year ended Oct. 31, while HPE itself closed out the year with a 270 basis point increase in gross margin compared with the prior year, said Neri.

HPE’s Channel Net Promoter Score (NPS) was up five points in the quarter to a record high, said Neri. “I’m really, really proud of that” he said of the NPS score—a closely watched indicator of partner profitability and channel loyalty. “It was a record year. Obviously, we have been very predictable. … Our Net Promoter Score is twice as big as the next competitor.”

Partners are flat out “making more money” by teaming with HPE, said Neri. “Ultimately, partners understand they can make more money with us,” he said. “In the end, they need to make money and they see Hewlett Packard Enterprise not only as a trusted partner that can grow with them but also as someone who provides them the ability to make more money. Ultimately, we are better together in front of our customers. I feel pretty good about it. It’s the best year we ever had [with the channel], and there are still way more opportunities out there.”

What were the big growth areas for fiscal year 2019?

We had a very good, strong year marked by strong discipline and execution. We did what we said we would do. We grew in the areas [where] we pivoted the portfolio with our partners. Look at our performance in HPC [high-performance compute), hyperconverged, Composable Cloud, Aruba services, Nimble. HPC is up 15 percent. Hyperconverged is up 25 percent. Our Composable Cloud is up 47 percent. Our GreenLake sales are up 39 percent, and our Aruba services are up 18 percent. Our Nimble storage is up 35 percent.

In the growth areas, we did very, very well. That translated into significant profit and EPS [earnings per share] growth. Our profits are up and our EPS is up 20 percent year over year. In the last two years, our EPS is up 88 percent. That translates into incredibly strong free cash flow. Our cash flow was up 58 percent. And our cash flow from operations was up 35 percent to a record year of $4 billion.

Can you talk about the fiscal year 2019 results specifically for the channel?

When you look at the results for partners—who we have been working with to pivot them so they stay relevant—our Composable Cloud sales with partners were up 33 percent. Our HPE GreenLake orders through the channel were up 326 percent year over year, and our pipeline is 5X [year over year]. Our transactional business is up 5 percent year over year. Our hyperconverged business is up 26 percent in terms of active partners.

We are pivoting with the channel. What I am really, really proud of is our Net Promoter Score with the channel has increased five points year over year to a record year. Obviously, we have been very predictable. We have at least a more than 2X lead versus the next competitor, which is not Dell. It is Cisco. So our Net Promoter Score is twice as big as the next competitor.

We have a strong foundation. We have credibility. We have trust with the channel. We are pivoting with the channel. And the channel made a 300 basis point improvement in gross margins with us year over year because they are pivoting to the higher-value growth areas with higher margins.

We need to continue to do this. We need to become an edge-to-cloud Platform-as-a-Service company so that we can deliver those experiences together with our channel and continue to expand profits and margins together.

How big a difference was there between fiscal year 2019 and the prior year in terms of the progress made by partners?

This was the best year yet between HPE and the channel. We made remarkable progress. We solidified our relationship [with partners]. The channel understands that we are and will continue to be a channel-led company.

The channel embraced our customer-driven innovation, which is very strong, unique and differentiated. They understand the need to pivot to as a service and they are pivoting now with us. Three hundred plus percent growth in GreenLake in just one quarter is remarkable.

Ultimately, partners understand they can make more money with us. In the end, they need to make money and they see Hewlett Packard Enterprise not only as a trusted partner that can grow with them but also as someone who provides them with the ability to make more money. Ultimately, we are better together in front of our customers. I feel pretty good about it. It’s the best year we ever had [with the channel], and there are still way more opportunities out there.

What is the call to action for partners going into fiscal year 2020?

Let’s go faster together. The customers need both of us. The customers are looking for a combination that allows them to deliver business outcomes way, way faster than before. The market is moving faster than we have ever seen it before. We need to accelerate the momentum.

My commitment to the channel is to continue to bring the innovation for them to continue to be successful delivering profitable growth.

What kind of feedback are you seeing from the call that you host after every quarter with partners?

Partners love it because I speak to them directly. The number of partners is growing all the time.