HPE CEO Antonio Neri Says GreenLake ‘On Fire’, Recurring Revenue Forecast

Hewlett Packard Enterprise CEO Antonio Neri told Wall Street analysts Thursday that GreenLake’s cloud-based pay-per-use service was “on fire” as the company increased its recurring revenue forecast.

“Customers come to us,” said Neri, speaking of GreenLake’s go-to-market dynamics. “I mean, it’s not like I have to put in a huge effort to present GreenLake. Our pipeline is just amazing. That’s why we see consistency. [GreenLake] growth every quarter. We are very optimistic about this company.

HPE is now forecasting a three-year compound annual growth rate of 35% to 45% for annualized recurring revenue (ARR), up from previous forecast of 30% to 40%.

At the same time, HPE said GreenLake is driving higher margins, with the ARR percentage of software and services expected to rise from 61 percent in fiscal 2021 to 77 percent from $ 2.3 billion in fiscal year 2021. ‘fiscal year 2024.

Neri said that HPE’s channel partners are driving the transformation of GreenLake.

“I was with our distribution partners two weeks ago, and they [told me] two things: your vision and strategy are perfectly aligned with customer needs, and GreenLake is on fire, ”said Neri, referring to his appearance at the Best of Breed conference hosted by CRN parent The Channel Company earlier this month. “And when I put it all together, it gives us confidence that we’re going to continue to build that momentum.”

HPE has added more than 200 new GreenLake enterprise customers over the past year. This brings the total number of GreenLake customers to 1,100, which represents a total lifetime contract value of over $ 5 billion.

HPE’s recurring revenue is “high quality and high margin,” said Tarek Robbiati, CFO of HPE. “HPE GreenLake is a unique offering with an edge-to-cloud platform that gives customers full control over their data through a unified cloud experience,” he said. “Beware of imitations out there! There is much more to GreenLake than a simplistic equipment rental model.

HPE also predicts accelerated growth in its as-a-service business, which includes storage, compute, and network infrastructure, at a 40-50% CAGR through FY 2024, compared to a previous forecast of 35. at 45%. This revenue as a service is now expected to reach $ 3.5 billion in fiscal year 2024, or 12% of sales.

Robbiati pointed out that unlike some competitors, HPE does not include “profit from future mergers and acquisitions” in its growth rates as a service.

For all business for fiscal 2022, HPE forecasts revenue growth of 3-4% with an increase in non-GAAP operating profit of 10-15% and free cash flow of 1 , 8 to 2 billion dollars.

HPE shares closed Thursday up 18 cents at $ 14.76. Outside of trading hours, HPE shares rose an additional four cents to $ 14.80.

“The demand is great, super strong,” Neri said. “It goes back to the megatrends I talked about earlier. The connectivity is out of the ordinary. Obviously, the cloud experience for all on-premises applications is very, very strong with GreenLake. And everything to do with knowledge of data is exploding. “

Neri said he was “happy” with the partner’s response to GreenLake. “When I showed up to the channel conference, I was actually very happy and surprised to see everyone on the channel telling me about GreenLake, GreenLake, GreenLake,” he said.

The partners, for their part, said HPE has a significant lead in the on-premise paid cloud services market with GreenLake, which is gaining momentum in the channel. In the most recent quarter, channel orders rose 152 percent.

Mike Strohl, CEO of Entisys360, No. 135 of CRN Solution Provider 500 2021 and a major partner of HPE, said he sees growing momentum around the consumption-based HPE GreenLake model.

“We’ve been working with HPE for quite some time,” Strohl said, noting that his company’s recurring revenue is growing at an astounding rate. “Everything is now a recurring revenue model for us in one form or another. Everything we do is a consumer, cloud, managed service, or multi-year subscription offering.

Strohl credited HPE with being well ahead of its competition with the GreenLake consumer model. “HPE has built a great partner program around GreenLake,” he said. “They are by far the best at building a consumption-based model for partners. They have remained true to their commitment to partners.

Paul Cohen, vice president of sales for New York-based PKA Technologies, one of HPE’s original Platinum Partners, said PKA is seeing an “exponential increase” in its GreenLake sales pipeline.

“We are making deals at a rapid pace,” Cohen said. “We are very satisfied with the support we have received from HPE in marketing and [HPE] Pointnext Services. The technologies that we can include in a GreenLake agreement make it extremely attractive to customers. “

The barrage of ransomware breaches is prompting more and more companies to embrace GreenLake’s on-premises cloud-based pay-as-you-go model, Cohen said.

“The on-premises cloud experience resonates with customers, especially in today’s world where security is such a high priority,” he said. “Keeping their most valuable asset, data, on-site is extremely important to customers. The public cloud is extremely vulnerable. Customers don’t want to put all of their eggs in one basket in the public cloud. It is just too risky. They are adopting a hybrid cloud strategy. They appreciate the operating costs, the on-premise cloud model with payment depending on what you use with GreenLake as their cloud offered to them.

The GreenLake model is a game-changing channel, providing high-margin opportunities to land and grow with additional GreenLake services and change orders, Cohen said. “GreenLake is a high-margin, recurring revenue stream for us,” he said. “It’s an extremely attractive model for HPE partners.

Neri said HPE was “years ahead” of competitors who have started to market as a service. This leadership in HPE’s pay-as-you-go market “resonates with customers,” he said.

“No customer who landed on GreenLake has gone back and said, ‘Now I have to downsize,’ he said. ‘Everyone keeps adding new capabilities.’

In fact, Neri said, a number of customers have moved from compute elasticity with GreenLake to data services and then to the edge. “That’s the power of GreenLake,” he said. “This is a real step forward towards the cloud architecture where we provide customers with an integrated experience where they can learn, try and buy and also run their [IT] environment.”

Customers are seeing reductions in both IT operating expenses and capital spending with GreenLake, Neri said. “This is all happening at the right time,” he said. “But we need to continue to fuel momentum with more innovation.”

Neri said he expects new HPE CTO Fidelma Russo, the former general manager of cloud service for VMware who joined HPE last month, to have a significant impact on the GreenLake innovation walk. . “She has a tremendous track record,” he said. “We are so optimistic [about GreenLake] that we are putting everything we can behind the platform.

HPE is moving at breakneck pace to accelerate GreenLake’s business offensive with further “coverage and compensation” changes aimed at accelerating growth as HPE prepares to deliver HPE’s full portfolio in a subscription model in as a service by the end of 2022, Neri said.

Neri said that early next year, HPE will introduce marketplaces where HPE partners can add their own service offerings for GreenLake. “This is why GreenLake is so unique because it is an open platform,” he said.

Neri said he spent almost all of his time accelerating the pivot as a serve with GreenLake. “There is an engineering component associated with that, a go-to-market component and a business model innovation. [component],” he said. “[Robbiati] leads day-to-day to ensure we meet our commitments. We both believe it will be a very good year for us with a crucial transformation in our ability to create shareholder value and maximize that value over the long term. “

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