Hello, and thank you for joining. I'm Pat Russo, Chair of the Board of Hewlett Packard Enterprise. We appreciate your participation in HPE's 2025 Annual Shareholder Meeting. The meeting is now called to order. Today's virtual meeting format is accessible to all of our shareholders around the world, enabling you to submit questions and vote your shares online prior to the polls closing. Alongside me today are Antonio Neri, President and Chief Executive Officer, who also serves with me as a Director, and Dave Antczak, General Counsel and Corporate Secretary. My fellow board members and several of HPE's executive officers, as well as representatives from our registered public accounting firm, Ernst & Young, are also participating in today's meeting and are available to answer questions.
I'll share some brief comments about the board's view of HPE's progress before handing over to Dave for an overview of the rules, conduct, and administrative items. Then, Antonio will provide a perspective on the company's strategy and offer insight into HPE's commitment to and plans for delivering value for shareholders. Following those updates, we'll use the remaining time to respond to questions. If you wish to submit questions during today's meeting, you may do so through the text box on your screen. We'll answer as many questions as possible, and following the meeting, we'll post responses to all questions on the website, annualmeeting.hpe.com. This year marks a significant milestone, the 10th anniversary of the company's founding as Hewlett Packard Enterprise. Since the company was created nearly a decade ago, it has driven noteworthy computing achievements, portfolio shifts, and innovation during a period of rapid technological and industry change.
The company's efforts and outcomes during that time have accelerated customer success, addressed some of the most critical societal challenges, and created shareholder value. HPE remains focused on addressing opportunities in the expanding markets of AI, hybrid cloud, and networking. During fiscal 2024, the team executed well and delivered critical innovation across its portfolio. Those efforts resulted in strong financial results. HPE exceeded expectations for revenue, earnings per share, and free cash flow for the year, creating value for our shareholders. The management team and the board believe that HPE's strategy and performance will be further enhanced when the company closes its planned acquisition of Juniper Networks, which it expects to be able to do later this fiscal year.
Once complete, the transformative acquisition will complement the successful HPE Aruba Networking business, enabling the company to provide a complete portfolio of modern, secure networking solutions that are foundational for customers pursuing the significant opportunity presented by AI. The board continues to fully support the planned acquisition of Juniper and believes the successful execution of its close will maximize long-term shareholder value. As HPE continues to deliver in the areas of greatest importance to its customers, Antonio and the leadership team have taken important steps in fiscal 2025 to better align the company's cost structure to its business mix and strategy. These measures will ensure the company continues to operate from a position of financial strength as it pursues profitable growth. The board is also very proud of the fact that HPE continues to set a high standard for doing business ethically, responsibly, and sustainably.
The company was recognized for its commitment and impact by being ranked number one for the second consecutive year in the JUST 100, a ranking of America's most just publicly traded companies. The recognition is a testament to HPE's commitment to responsible business, including prioritizing the long-term development and well-being of our team members, as well as delivering ethical and sustainable innovation for all of our stakeholders. In closing, I'd like to reiterate the board's high confidence in the ability of Antonio and the HPE leadership team to drive differentiated innovation for customers and continued value for our shareholders. On behalf of the entire board, thank you for joining us today and for your ongoing support as a shareholder of HPE. I'll now hand over to Dave Antczak. Dave.
Thanks, Pat. Welcome, everyone. This morning, I'll walk through the meeting logistics and the proposals to be voted on, and then you'll hear from Antonio, followed by a Q&A session. HPE's agents have certified that notice of the meeting was provided starting on February 12, 2025, to all shareholders of record as of the record date for the meeting, and copies of those certifications are in the possession of the Secretary. I therefore declare that legal notice of the meeting has been duly given. Now, today's meeting may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties, including those described in our Form 10-K for fiscal year 2024. In addition, the information presented at this meeting may include references to amounts that are expressed on a non-GAAP basis.
Throughout this meeting, references made to revenue growth rates, unless noted otherwise, are presented on a year-over-year basis and adjusted to exclude the impact of currency. A reconciliation of such non-GAAP amounts to GAAP and other information relating to these non-GAAP measures is available on our Investor Relations website. The company has appointed Kris Veaco of the Veaco Group to serve as our Inspector of Election for this meeting. Kris is participating in the meeting live online today and, as required by law, has taken and signed an oath as Inspector of Election. The document will be filed with the minutes of this meeting. We will conduct a question-and-answer session later in the meeting prior to the official closing of the polls. You should be able to see that on the virtual meeting portal, there's a text box where you may submit questions.
Feel free to submit questions at any time prior to the end of the Q&A session. We will answer questions that are received in connection with today's meeting. In the interest of time, we'll address unanswered questions on the website, annualmeeting.hpe.com, after the meeting. The Inspector of Election has informed us that a majority of the outstanding shares held of record entitled to vote as of the close of business on February 3, 2025, the record date for this meeting, are represented at the meeting. We therefore declare that there's a quorum present and that we may proceed with the business of the meeting. Please remember that you may vote your shares online anytime during this meeting prior to the closing of the polls. Now, this morning, we have six proposals for you to consider, which were all described in the proxy statement for today's meeting.
The first item is the election of directors. The following 12 people have been nominated to serve on the Board of Directors and will be voted upon today: Pamela Carter, Frank D'Amelio, Regina Dugan, Jean Hobby, Ray Lane, Ann Livermore, Bethany Mayer, Antonio Neri, Charles Noski, Raymond Ozzie, Gary Reiner, and Pat Russo. The biographies of the 12 directors are available in the proxy statement for today's meeting if you'd like to review them in detail. The board recommends a vote for each of them. The second item is the ratification of the appointment of Ernst & Young LLP as HPE's independent registered public accounting firm for fiscal 2025. The board recommends a vote for this proposal. At this time, I'd also like to acknowledge Marnie McKenna, representative of Ernst & Young, who's participating in today's meeting online.
The third item is approval of the increase of shares reserved under the Hewlett Packard Enterprise 2021 Stock Incentive Plan. The board recommends a vote for this proposal. The fourth item is approval of the extension of the duration of the Hewlett Packard Enterprise 2015 Employee Stock Purchase Plan. The board recommends a vote for this proposal. The fifth item is an advisory vote on HPE's executive compensation. The board recommends a vote for this proposal. The sixth and final item is a stockholder proposal entitled Transparency and Lobbying. The stockholder proponent, Mr. John Chevedden, has joined the meeting and will now briefly present the stockholder proposal. Mr. Chevedden, you will be live for five minutes to present your proposal.
Hello, this is John Chevedden. I move proposal six, Transparency and Lobbying, asking HPE to provide a report on its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations and social welfare groups. HPE does not issue a comprehensive report of its own direct lobbying. That data is scattered among federal and state regulators and is difficult to obtain. HPE shareholders only know that for its direct lobbying, HPE has spent over $35 million on federal lobbying since 2015, and there is incomplete disclosure about HPE's spending at the state level, where finding this information is nearly impossible. HPE is required to report its lobbying and already has this information, so it could easily be provided to shareholders. This proposal seeks full disclosure of dark money payments to trade associations or social welfare groups where there are no limits or disclosure requirements.
HPE shareholders face a blind spot here. For 2024, HPE reports belonging to five trade associations which receive more than $25,000 each in dues, but HPE fails to disclose its trade association payments nor the individual portions of these payments used for lobbying. HPE disclosure also leaves out many memberships and trade associations that lobby, like the Silicon Valley Tax Directors Group. HPE lists memberships in the Business Roundtable, Information Technology Industry Council, and TechNet, which together spent over $29 million on federal lobbying for 2024. How large are HPE's payments and what amounts were used for lobbying? Shareholders don't know, and that is a problem. HPE's trade association lobbying positions can contradict HPE public policy positions, resulting in values misalignment and reputation risks.
For example, HPE publicly supports addressing climate change, yet its Business Roundtable found filed an amicus brief opposing climate risk disclosure and also opposed the Inflation Reduction Act. HPE also fails to disclose its payments to 501(c)(4) social welfare organizations which lobby. The so-called Rule of Law Defense Fund is a social welfare group that helped organize the January 6 riots and is an arm of the Republican Attorneys Generals Association, which many companies unfortunately contributed to. Does HPE make contributions to dark money social welfare groups like the so-called Rule of Law Defense Fund? HPE shareholders now have no way to know. Lobbying disclosure is a safety mechanism for HPE, its reputation, and shareholders as what gets disclosed gets managed. Full disclosure of HPE's lobbying, including all third-party payments, will ensure proper oversight of HPE's lobbying, and I urge shareholders to vote for this proposal six.
Thank you, Mr. Chevedden. As described in the proxy statement, HPE opposes this proposal, and the board recommends a vote against this proposal. A summary of our board's statement and opposition to this proposal can be found in our proxy statement. Now, we will address questions during the Q&A session later in the meeting. In the meantime, I encourage shareholders to submit any questions online in the box on your screen. Now that you have heard about the six items that you've been asked to vote on, we will proceed to voting on those items. It is 11:14 A.M. Central Time, and the polls are open for voting on each of the six items. If you've not yet voted or wish to change your vote, you may do so by clicking on the voting button on your screen and following the instructions there.
Shareholders who have sent in their proxies or voted via telephone or internet and who do not want to change their vote do not need to take any further action. As you're making your voting decisions, I will turn it over to Antonio to provide some highlights over the past year at HPE, as well as an overview of our go-forward strategy. Antonio?
Thank you, Dave. Good morning, good afternoon, good evening, everyone. It is great to have the opportunity to speak with you all today. Hewlett Packard Enterprise has always been a pioneer in innovation, and today we are proud to be leading some of the world's most transformative companies and organizations into an AI-enabled future, a future that's already here. As Pat mentioned, we have transformed the company significantly since forming HPE nearly 10 years ago. Through bold innovation, strategic acquisitions, and important partnerships, we have reimagined HPE. HPE delivers differentiated technology innovation that enables enterprises to develop new business models and create new experiences that increase their operational performance. With HPE as their strategic partner, customers are redefining what's possible and capitalizing on the promise of this new era. Our strategy directly addresses the most compelling trends in the market with a differentiated portfolio of products and services.
Fiscal year 2024 provided further proof that our strategy is working. Last year, HPE exceeded our expectations for revenue, diluted net earnings per share, and free cash flow. Here are a few additional specifics. We closed the fiscal year with revenue of $30.1 billion, up 3% year-over-year. We delivered our best non-GAAP operating profit ever, generating nearly $3.2 billion for the year with a record free cash flow of $2.3 billion. Non-GAAP diluted net earnings per share of $1.99 was above our revised outlook for the full fiscal year. Annualized revenue run rate, or ARR, increased 49% year-over-year to $1.9 billion, nearly doubling since Q1 of fiscal year 2023, primarily from ongoing investments in HPE GreenLake software and services. We returned $826 million to common shareholders through dividends and share repurchases throughout the year.
Our fiscal year 2024 performance is a direct outcome of delivering superior technology and experiences to our customers. We are confident that by remaining true to our strategy and further sharpening our execution, we will continue to deliver strong value for our shareholders. We expect to accelerate shareholder value by delivering differentiated innovation across the three market building blocks of networking, hybrid cloud, and AI. Each represents a strategic focus area that is critical to our success and the success of our customers. Secure, high-quality, low-latency networking enables a connected world where data is the most valued asset. Hybrid cloud solutions enable our customers to be more agile, helping them use their IT resources more efficiently and sustainably. AI enables unprecedented innovation and productivity breakthroughs in every industry. We believe the edge where people live and work is the next big frontier.
To keep people, devices, and data and applications securely connected, customers consistently turn to HPE Aruba Networking. In fiscal year 2024, we introduced a range of new innovations across Wi-Fi access, campus, and data center switching, SD-WAN security, and AI- Ops. These new innovations offer customers best-in-class secure access with autonomous operations that power what we call the intelligent edge, enabling new business models and better customer experience. We understand that networks are the core foundation in connecting the AI-native and cloud-native worlds. That led us to our plan, acquisition of Juniper Networks. Combining these two iconic businesses will present our global customers with an AI-native modern networking foundation and the next generation of technology architecture that delivers the hybrid cloud experience that AI requires.
We remain fully committed to the Juniper acquisition, which we expect will deliver at least $450 million in gross annual run rate synergies to shareholders within three years of the deal closing. We believe this transaction is pro-competitive and will positively enhance the dynamics of the networking market to the benefit of customers and partners. We are confident we can prevail in litigation with the U.S. Department of Justice, and we expect to close the transaction before the end of fiscal year 2025. In hybrid cloud, our HPE GreenLake continues to be a key differentiator for us, attracting more than 41,000 customers to date. The acquisition of Morpheus Data in fiscal year 2024 has enabled HPE to now offer our customers differentiated hybrid cloud operations with AI-driven capabilities through the full integration of OpsRamp.
In addition, we now offer HPE VM Essentials, which provide customers with a strong alternative to VMware to simplify their virtualization environments and reduce costs by up to five times. In AI, our partnership with NVIDIA has been instrumental in advancing generative AI adoption in the enterprise. NVIDIA AI Computing by HPE is a portfolio of co-developed AI solutions and joint go-to-market integrations that enable enterprise customers to accelerate adoption of generative AI. Our flagship enterprise offering, HPE Private Cloud AI, is an integrated trunky private cloud converged system that makes it easy for enterprises of all sizes to develop and deploy generative AI applications. With three clicks and in less than 30 seconds, enterprises can deploy AI applications or an AI environment for developers to train or fine-tune AI large language models.
HPE has firmly established itself as a leader in large generative AI systems and supercomputing, where our systems consistently rank among the world's, fastest, and most energy-efficient. The supercomputers built by HPE, including El Capitan, Frontier, and Aurora, hold the top three spots on the top 500 list of the world's fastest supercomputers. At the end of fiscal year 2024, 11 of the 15 most energy-efficient supercomputers were built by HPE. Energy efficiency is critical to the future of generative AI and supercomputing due to the immense power requirements of these technologies. Efficient cooling solutions such as HPE's pioneering 100% fanless direct liquid cool system architecture are essential to mitigate the environmental impact and ensure sustainable growth. Our advanced cooling technology reduced power consumption by up to 90% compared to traditional air-cooled methods, while reducing space by up to 50%.
I want to acknowledge that our success in fiscal year 2024 was fueled by the expertise and dedication of our talented leadership team and team members around the world. Their vision and strategic thinking have been pivotal in shaping the direction and driving the performance of our company. We have a dedicated and engaged team, and I'm pleased that our team members' engagement scores remain strong at 82% in fiscal year 2024. This engagement is a catalyst for curiosity, encourages a healthy debate, and ultimately drives the innovation that is the hallmark of HPE. Customers are turning to HPE for that innovation, and in a competitive market, our innovation in human capital will continue to set us apart. With a strong foundation, an innovative spirit, and a differentiated portfolio, HPE is well positioned to help our customers unlock their boldest ambitions.
By capturing this market opportunity with operational discipline, HPE will continue to drive profitable growth and value for our shareholders. Thank you for joining us today. We appreciate your continued investment in HPE, and I will now turn it over to Dave.
Thank you, Antonio. Now, let's move on to the question-and-answer portion of this meeting. Again, please note that you may submit questions at any time prior to the end of the Q&A session. We've received a question about the Juniper transaction. This shareholder writes, "What is the impact to the company and shareholders if the Juniper transaction isn't resolved soon?" Antonio, I believe this question is for you.
Yeah, thank you, Dave. We are very disappointed in the recent decision of the Department of Justice to file a lawsuit seeking to block our proposed acquisition of Juniper Networks. We believe the DOJ analysis of the market is fundamentally flawed, and we strongly believe this transaction will positively change the dynamics in the networking market by enhancing competition. The court has set a trial date of July 9th. We're confident in our legal position that this transaction is pro-competitive and we remain firmly committed to closing the transaction. While the litigation is pending, it is business as usual as we continue to execute our long-term strategy. We believe that HPE has the right portfolio of assets to capitalize on the compelling trends I talked early on, and we'll continue to drive investment in the key technology aspects of our portfolio, which will present new profitable growth opportunities.
Together, our board and management will continue to evaluate also a wide range of options to enhance long-term shareholder value, which is also consistent with our capital allocation framework. Right now, we will continue to stay focused on the Juniper transaction, and we believe we will prevail once the litigation takes its course.
Thank you, Antonio. We've just received a shareholder question relating to governance, and I believe that question is for, actually, it relates to the company's performance. I think I'll turn that one over to you, Antonio. How do you feel the company's performance is relative to the growth of AI?
Yeah, when I think about the AI market, I think about in three unique segments. Segment one, I call it, is basically the companies that are building these large language models and now more and more focus on agentic AI approaches. Basically, they consume an enormous amount of computational power. There, we have a unique IP that allows us to participate in what I call large generative computing at scale. We have the sovereign space, where obviously it's driven by government investment to build their own sovereign AI clouds. There we have a unique heritage because we have deployed the largest supercomputers across many of these government jurisdictions. There is the enterprise market, which obviously is still early, nascent, where enterprises are now understanding more of the power of the technology to improve productivity and to develop new business models.
HPE has a unique portfolio to participate in all three segments. If we think about all the way to the Q1 results we announced a month or so ago, we booked $8.3 billion of cumulative AI orders, and we have a very large backlog, which is now in excess of $3.1 billion. We participate there with discipline because ultimately it is where we can grow in a profitable way and where we can make sure the value of our IP is also monetized through these engagements. We believe the market continues to be very strong, and we believe HPE is uniquely positioned to capitalize on the market. With the Juniper acquisition, we will have incremental intellectual property at the networking part of the stack, which ultimately will make us even more differentiated.
Thank you, Antonio. We have another live question that's come in. Pat, I believe this one is for you. What is the rationale for the proposal to increase the incentive plan shares?
I would say thanks for the question, first of all. We have, through our shareholder engagement, talked to a number of shareholders about this. The rationale is relatively simple. We live, and I think all that Antonio has said about the innovation that's required and what we're doing to be able to deliver for customers really requires that we recruit and keep terrific talent in order to be able to do that. What we've asked for, we think, is a reasonable amount of shares, not inconsistent with what we've asked for in the past, not out of the bounds of the range of reasonableness when you look at the number of shares relative to those outstanding. Frankly, it is really all about being able to have the right talent that we need to execute the strategy.
Thank you, Pat. We have time for one more question, and the one we received also relates to corporate governance. The shareholder writes, "What qualifications are required for prospective board members?
Yeah, thanks, Dave. Thanks for the question. Let me say at a macro level before I specifically respond to that. Our thinking about the HPE board and how we have evolved the board and the makeup of the board is directly linked to our strategy. We think it's really important to have people sitting around the table who have an understanding of what it is we're trying to accomplish, who can weigh in, who can engage with Antonio, who can debate, and who can be helpful. That suggests that we need skill sets that comprise general business management experience in large, complex, worldwide environments. We need folks that have some specific financial acumen and capabilities so we can execute our fiduciary responsibilities. We clearly need people with deep technology understanding so they can ask the right questions and provide advice and counsel.
Those are sort of categorically the areas that we look for. I would add that it's important that any member of the HPE board comports with the values and the ethics that we hold so dear and believe are so important. We also seek to make sure that we have people sitting around the table with different backgrounds and experiences. We have experienced and know that when you have different mindsets approaching a problem, you get a better discussion, a better debate, and a better outcome. I would say I've had a fair amount of board experience. I am really proud of the board that we have here at HPE. I think it's a terrific group of people. I think the dynamics on the board is healthy, and we have, I think, the right mix of skills and experience to support the direction of the company.
Thank you, Pat. That concludes our question-and-answer session, and thank you for your participation. For questions that we were unable to cover today, please check the website, annualmeeting.hpe.com, in the next few days, where we will be posting copies of all the questions we received along with the company's responses. We will be closing the polls shortly. If you have not already voted and wish to, please do so now. Therefore, I ask that you complete your voting at this time. The inspector of election will not accept votes submitted after the closing of the polls. Any votes submitted during the meeting today will be subject to final verification by the inspector of election. I hereby declare that it is 11:32 A.M. Central Time, and the polls are now closed for voting on the items of business. I'll now announce the preliminary results of the vote.
Please note the results to be announced are based on the preliminary tally provided by our inspector of election. All votes are subject to the final count certified by the inspector. Let's start with the votes cast for the election of directors. Kris?
Each of the 12 director nominees has received the requisite number of votes required for election.
Based on the vote, I declare that all 12 director nominees have been elected to serve on the next year to hold office until their successors are duly elected and qualified. Now for the results of the vote on the ratification of Ernst & Young as HPE's independent registered public accounting firm. Kris?
The proposal for the ratification of Ernst & Young as HPE's independent registered public accounting firm has received the affirmative vote of 97% of the shares voted.
Based on the vote, I declare that the appointment of Ernst & Young as HPE's independent registered public accounting firm has been ratified. Now for the results of the vote on approval of amendment number four to the HPE 2021 stock incentive plan. Kris?
The proposal for approval of the increase of shares reserved under the Hewlett Packard Enterprise 2021 stock incentive plan has received the affirmative vote of 70% of the shares voted.
Based on the vote, I declare that amendment to the HPE 2021 stock incentive plan has been approved. Now for the results of the vote on the approval of extension of the duration of the Hewlett Packard Enterprise 2015 employee stock purchase plan. Kris?
The proposal for approval of the extension of the duration of the Hewlett Packard Enterprise 2015 employee stock purchase plan has received the affirmative vote of 99% of the shares voted.
Based on the vote, I declare that the amendment of the HPE 2015 employee stock purchase plan has been approved. Next, the results of the advisory vote regarding executive compensation. Kris?
The proposal for approving on an advisory basis executive compensation has received the affirmative vote of 89% of the shares voted.
Based on the vote, I declare that our executive compensation on an advisory basis has been approved. Next, the results of the stockholder proposal entitled "Transparency and Lobbying.
The stockholder proposal entitled "Transparency and Lobbying" has received the affirmative vote of 21.66% of the shares voted.
Based on the preliminary results of the vote, I declare that the proposal has not been approved. Thank you, Kris. I will now turn the meeting over to Pat Russo to close.
Thanks, Dave. It's now 11:35 A.M. Central Time, and I declare that the business of today's meeting is concluded and the meeting is now adjourned. Thank you very much for joining us today. We are sincerely grateful for your interest in HPE and invite you to visit our investor relations website for additional information or for a replay of this meeting. We will file the results based on the final vote tally in the days following the meeting. Thank you.