New Hewlett Packard Enterprise CEO Antonio Neri kicked off his first quarter at the helm by blowing past Wall Street expectations with a whopping 24 percent increase in storage sales; a 27 percent increase in networking sales and an 11 percent increase in compute (server) sales.
Neri thanked HPE partners for the blockbuster quarterly sales performance with sales out through partners up year over year in every segment of the business.
"We would not have been able to deliver this performance without the channel," Neri told CRN in an interview after the company bested Wall Street earnings per share expectations by 12 cents. "Most of our business goes through the channel and the results speak for themselves. We saw great performance across every segment of the market in the channel with double digit growth."
The channel growth was particularly strong in core industry standard server market and Aruba, said Neri.
HPE shares soared 12 percent or $2 per share in after hours trading to $18.41 after the company reported first quarter non GAAP diluted net earnings per share of $0.34 per share on sales of $7.7 billion. That was well above the Wall Street consensus of $0.22 per share on sales of $7.07 billion. Overall, HPE sales for the quarter were up 11 percent from the year-ago period.
The strong results are a testament to HPE's innovation and the flat out most profitable partner program in the industry, said Neri. "Our Partner Ready program is the industry leading program for channel partners," he said. "It is stable and predictable. They know it. Think about our competitors: they keep trying over and over, they keep flipping the programs, more rebates here, less rebates there. Invest here. Move there."
Neri said the company's "channel first" model is only going to get stronger going forward. He said now is the time for partners to "double down" on HPE and drive forward with the company with game changing innovations like GreenLake consumption based computing and HPE OneSphere SaaS multicloud management platform which was made generally available this week.
Partners said they are driving double-digit sales growth from an HPE innovation renaissance with products like Nimble, SimpliVity and Synergy composable infrastructure.
"We had an awesome quarter with our HPE sales up 30 percent with across the board growth in servers, Synergy, storage, SimpliVity and Nimble," said said Rich Baldwin, chief strategy officer at Nth Generation Computing, a San Diego-based HPE enterprise partner, No 359 on the CRN SP500. "Everything is going gangbusters. I can't remember a quarter this strong in the last 10 years. It is awesome. Antonio is the right guy at the right time. He understands technology and gets the channel. I feel really good about the future."
The HPE sales were so strong during the quarter that Nth Generation is rewarding every employee with a weekend at the San Diego Coronado Island Hotel & Resort on March 9-10, said Baldwin. He said Nth Generation is seeing particularly strong sales of the Nimble all-flash storage portfolio in head-to-head battles with Pure Storage, said Baldwin.
"We couldn't be happier with the HPE results," said Baldwin. "Partners are 100 percent behind Antonio. We have known him for many, many years."
Neri, who has architected HPE's game-changing Next initiative aimed at making the company more nimble and agile, took the helm on Feb. 1. A 22-year HPE veteran who started as a customer service engineer for the company in EMEA (Europe, Middle East and Africa), Neri is credited with making massive changes that have streamlined the company's go-to-market sales model.
The Next restructuring, for example, has reduced the number of internal HPE sales plans from 400 to 25. It has also reduced the number of HPE internal sales reps that can be compensated on a deal from as many as 30 on a single deal to a maximum of three reps comped on a deal.
In addition, the Next initiative has reduced management layers from as many as seven to four.
Neri told analysts that the "simplification" of the HPE sales model is accelerating execution in the field. He said HPE Next is an "opportunity" to establish a new "culture" at the company.
"This is architecting the company from the ground up with a clean sheet approach," he said. "This is going to change the culture of the company. What I have learned is that you can push more and do more. The organization is actually very excited about what we are doing. They see an opportunity to improve the way we serve our customers."
Partners, for their part, say all the changes that Neri has driven with Next and acquisitions like SimpliVity and Nimble are paying off.
Raymond Tuchman, CEO of Experis Technology Group, a Potomac, Md., HPE partner, said he is seeing particularly robust sales growth with HPE's SimpliVity hyper-converged product. "We are going to do $1 million in SimpliVity sales in March," he said. "I think SimpliVity is going to be a rocket ship. Customers love it. It blows away Nutanix and all the other hyper-converged offerings because it has built in backup and recovery."
Tuchman said he is doing several SimpliVity presentations to customers a week and the win rate is off the charts. "We just had a presentation for a customer today and that customer is now looking at updating its infrastructure to SimpliVity," he said.
Given the strong HPE product portfolio, Tuchman expects his HPE business to be easily up 20 percent this year. "This looks like it is going to be a phenomenal year for us and HPE," he said.
Dan Sytsma, vice president and general manager of Melillo Consulting, a long-time HPE partner that is celebrating its 30th anniversary, said HPE's hybrid computing strategy with innovative products like SimpliVity, Synergy composable infrastructure and GreenLake consumption based computing are resonating with customers.
"This is the best portfolio HPE has had in many, many years," he said. "They have the right mix of what the customers are looking for. Customers are moving to hybrid IT. We are hearing less and less that customers want to go 100 percent cloud. The GreenLake utility computing model allows customers to just buy the capacity they need. HPE is at a really good juncture in the market."