HP’s Q3 earnings per share came in slightly higher than analyst estimates, but the Silicon Valley giant – in the second year of a five-year turnaround under CEO Meg Whitman – said it no longer expects revenue growth in FY 2014. Whitman also announced a management shake-up in its Enterprise Group. Shares dropped more than 6% in after-hours trading last night.
Overall, HP reported $27.2b revenue for the quarter, down 8% year-over-year. Revenue was down nearly across the board – ISS, BCS, storage and technology services revenue were all lower compared to the same period a year earlier – with the exception of HP’s software division.
Software revenue hit $982m, up 1% year-over-year and 4.3% over Q2. In a conference call with analysts following the earnings release, Whitman cited Vertica’s “momentum” and said the Big Data analytics database software saw “triple-digit growth” in Q3. HP does not break out Vertica’s revenue, but Wikibon conservatively estimates Q3 Vertica revenue at north of $20m, potentially as high as $30m. For all of FY 2012, Vertica revenue came in at approximately $45m.
Vertica’s significant growth spurt comes three years after its acquisition by HP. It has taken that time for HP to align its sales force, which previously had little experience selling enterprise software. Vertica is now benefiting from this alignment by being introduced to much larger deals than in past years. HP is also doing a better job marketing Vertica, particularly as part of its larger Big Data platform offering HAVEn, announced at HP Discover in June.
Analytics is also a new focus for HP’s converged infrastructure portfolio, with its AppSystem for Vertica appliance, introduced last year. HP also offers pre-configured appliances – bundles of server, storage and network hardware with analytic software – for its Autonomy data discovery software, Hadoop (based on Cloudera’s Hadoop distribution), and SAP HANA.
Based on conversations with customers (including Guess, Yammer, the DNC and Spil Games) at Vertica’s first user conference, which took place earlier this month in Boston, Vertica users are largely pleased with the technology and related support services. In order for Vertica to maintain this level of momentum, HP must continue investing in the technology itself and building out its partner ecosystem, particularly around real-time data ingestion and interactive data visualization.
Action Item: HP Vertica must focus its efforts on carrying out the three top priorities outlined by the division’s Vice President and General Manager Colin Mahony – make it easy to get data into Vertica as fast as possible, allow users to perform as many types of interactive analytics as possible, and allow administrators to deploy it on-premise or in the cloud. New and existing Vertica customers should push HP on these three issues.
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