Hewlett Packard Enterprise Company (HPE) Earnings Call Transcript & Summary

Good morning, everyone. I'm Michelle Mullineaux, the Chief Communications Officer at JUST Capital, and we're delighted to welcome you to our latest quarterly JUST call. Today, I'm pleased to introduce Antonio Neri, the President and CEO of Hewlett Packard Enterprises; and my colleague, Martin Whittaker, the CEO of JUST Capital. Hopefully, many of you caught the segments that just aired on CNBC, with Andrew Ross Sorkin. If not, stay tuned, we'll showcase it out on our recap next week. A few housekeeping notes just to get us started. If you've logged into the Intrado platform, you'll see a presentation up on your screen right now. This call is being recorded, and you'll be able to replay it later on demand. We'll also feature it on JUST Capital's website. [Operator Instructions] And with that, I'm going to hand it over to Martin. Take it away.

Thanks, Michelle. Good morning, everybody. Antonio, thank you very much for joining us.

Good morning.

We're -- it's our real privilege to be here today. Thank you for all your leadership on JUST issues. We're going to explore Hewlett Packard Enterprise's performance in detail over the course of the call. For those of you who are new to JUST, we are an independent nonprofit with a mission to build an economy that works for all Americans. And we do that by helping companies improve how they serve their various stakeholders, specifically their workers, customers, communities, the environment and, of course, their shareholders.Now Antonio, we both got back from the World Economic Forum in Davos last week, talked a little bit about that. Some of the major topics for the business community is deepening commitments, stakeholder capitalism, you couldn't walk up and down the main street without seeing banners reflecting commitments to that. These issues are obviously very important to you, central to your strategy. Could you just elaborate on, at the very highest level, why this is so crucial to Hewlett Packard Enterprises?

Well, first of all, good morning, everyone, and thank you, Martin and team for having me today. Well, for us, I mean, it's core to our purpose, to our culture. If I step back and look at our purpose, as a company to advance the way people live and work. And we do that by engineering and experience that unlock the full potential. And that is innovation. Innovation to solve some of the biggest societal problems we all live. Obviously, we live in an incredible time where the digital transformation is accelerating at the industry. But at the same time, we see also a little bit of a digital side. And ultimately, we have to think about how we harness the power of the data that we create every single day, to improve the way we live, the way we work, to improve our communities to solve some of these problems. So we know, as we think about the future and the amount of data we are generating, we see data being used in different ways, but, ultimately, we see also some landfill amount of data that's not being used to drive things like improving cure for diseases. But at the same time, we have to think about how we do that sustainably. And how we architect solutions for the future, that not only accelerate the opportunity to look at what are the businesses' outlook for the business are, but at the same time, do it in a way that improves the environment, that improves communities and, ultimately, help us solve some of these bigger problems. So it's core to our DNA.

Yes. One of the things that stands out, of course, we analyze thousands of companies, but your focus, as expressed, for example, in the Living Progress report, is central relevance of these issues to your core strategy. This is not a -- sort of an addition. You've embraced this wholeheartedly, including a very sort of -- a very leading edge embracive transparency in reporting, for the reasons why these things are important. Could you just talk a little bit about that as well?

Yes. I think we are very proud of our Living Progress report. I think it's one of the best-in-class and definitely a best practice, where we transparently disclose all things we're doing and how we're going to improve our performance and execution through some of the challenges in ESG and sustainability. And it's a place where you can get all the information you need. But to me, this is core to our fabric. It's ingrained in the fabric of the company. Let's not forget that Hewlett Packard, technically, Hewlett Packard Enterprise now, has 82 years of history. And that DNA, that culture was never lost. It's ingrained on what we do. And our people are very proud about it. And I'm personally very proud. I'm an engineer by trade. And when I think about driving innovation, I think about what are the things we can do better for our business and for the community. And it's a way to attract talent today. It's not just a conversation with shareholders and stakeholders, which is becoming way more important than ever before. I will say, when I engage shareholders, this is definitely top of priority for them, including governance, diversity, inclusion, but...

Is that right? So when you have conversations with shareholders on an ongoing basis, these things come up?

Yes. Yes, right. Just a great example, Martin, this week, 2 of our Board members went through a little of our tour, engaging some of our top shareholders. And this was the topic. This was absolutely the topic.

Do you think that would have been the case, 5 years ago?

Probably not, probably not. We -- our composition of shareholders is more long-term based value-oriented shareholders. And while they have been there with us for a long period of time, it's becoming more relevant because they want to invest in companies that have clear purpose-driven companies. And this is something that we know we can do. And we do it because it's the right thing to do. I mean, fundamentally, it's the right thing to do.

I would say anybody on the call who wants to read a great example of how a company is truly embracing stakeholder performance, I would refer them to the Living Progress reports, one of the best examples we've seen of corporate reporting in that area. And of course, Antonio, your personal journey through the company is a great example of investing in your workers and providing opportunities for upward progress.

Yes. Something I'm incredible proud. I've been now, in May, 25 years with the company. I had the pleasure or the honor to work with very bright leaders along the way who live by these values. And at the same time, I had the opportunity to work pretty much in every business in the original Hewlett Packard formation, whether it's PCs, printers or services or infrastructure. And the one thing that stuck with me, in the end, we're having this conversation, of course, [indiscernible], what is the same that you learn the most? And it's all about the people. And what they care about it. And so getting at the heart of that, inspiring them to do the right thing with an uncompromising integrity is something that we are incredible proud. So we say, we win the right way. That's the only way to win. But in the end, is where you put the priorities, how you hold people accountable to it.

It's interesting you say that because, obviously, now we're 6 years in, we've surveyed over 100,000 Americans and investing in your people is and always has been the #1 major category. And what that -- what does that look like, in terms of investing in not just compensation and training and benefits, but that whole experience and development within the company has shown through, through our survey work right from day 1.

Yes. And in the last 2 years, we have done a lot around culture. And when I became the CEO, I had 3 key priorities. Our customers and partners, how we help them navigate through this incredible opportunity, which also has incredible challenges. Biggest challenge the customer has today is the skill sets of the company, the ability to use the data, to accelerate business outcomes and to position them to compete the way in whatever market they are. Second priority was innovation for us. We are a technology company, and for us to stay at the forefront of the innovation is very, very important; customer-driven innovation with social responsibility in mind. And then, third is the culture of the company. And in the culture of the company, we put things like the topic we're talking today, about our employees. And one of the things we did, obviously, think about the employee experience. We have upgraded pretty much most of the sites around the globe, with a digital experience, with amenities that they feel proud to come and work in that. We also are upgrading the way we run the sites. A great example of this is our San Jose headquarters, which is around 100% of renewable energy. We use some cool technologies on that side that are very, very unique. But also, how we make them more sustainable in their own lives. And so in that, we increase the benefits from them, where it's increasing 401(k) matching. But one thing I'm really, really proud is extended parental leave which is -- in the United States, used to be 2 weeks. And now it's 6 months. And that's an important aspect.

We're going to touch on those things, for sure, during the call. I will point out, we were talking about the business case for this. We know from our own work at JUST Capital, at JUST 100, of course, which we're a part, pay that workers more money, pay a living wage to more of their lowest paid workers. They are way more generous philanthropically. They have more women on their board, and they have a hot 6% higher ROE. One of the things that we hear is that when times are good, when business is successful, then you can start to invest in your workers. Do you buy that given -- and therefore, the corollary, of course is, and then when things get a little tight, that investment in different stakeholders is the first to go. Do you agree with that?

Well, that may be the case in different areas of the industry, but we are consistent. When you make these positions to extend the parental leave to 6 months, you have to live with it, for the rest of time. And obviously, we thought about this very extensively, before we enacted that policy. And the bottom line, it is necessary today, not because it's just, but also because it's the only way to attract and retain talent.

Was there a strong business case for that? Or did you look at it from a...

There was a very strong business case. Obviously, we look at feedback from employees, what were their top priorities. I want this myself, I moved to the United States exactly 21 years ago now. And my wife and I, we were just married. And within a year, we had our first child. And it was tough. It was tough because we were both working. And as you can imagine, new child, no help whatsoever here in United States. We are Europeans. And it was tough to go through that journey. If we would have more time, right, we would have done things very differently. So I think about this in the context of, create an environment where people can contribute and, at the same time, fulfill their professional dreams, but do it also with family in mind. And give them the right time to focus on that. But again, it is -- you got to stay consistent throughout and live by those values.

Thank you. So often, we find it's leaders' personal journeys and experiences which affect how they think about the way they run their companies, which makes complete sense. So just shifting ahead, I do want to point out the business case, because I think it's very important. Obviously, this is a call where we have a lot of investors, financial professionals on the line. Just the latest update on our own index, again, HP is part of this, it's up now over 500 basis points in live trading since inception. We think that unpacking the business case is very important. And this is one of the reasons why there is such a massive inflow of investor interest, of course, in funds that embrace this kind of an approach. So very interested if you could, as we get into the conversation around specific areas of your performance, talk a little bit about the business case and how investors and shareholders that you've encountered think about these things. Let's just look at the stakeholder dashboard, which you can see now. So it won't be news to you, Antonio, that HPE is rated best-in-class in 2 of the 5 areas, and good in the other 3. You really are one of our leading companies. You've been featured in the JUST 100 now 3 years in a row. And you're the industry leader in computer services ahead of IBM. Dig in now, we can see here the 5 stakeholder areas. Just talk about, at a high level, how do you approach delivering both stakeholder value and shareholder value?

Well, I think, it starts with a vision of -- for your company. And then ultimately, how you go about it yourself throughout that. So we -- obviously, we see a future where connectivity, data and security are core to what customers are thinking about it. And so we think about the future look today. We are generating data, we've never thought before. And in fact, in 2 years from now, we believe the amount of data will be twice as much as the amount of data we generate anytime during my history. That has tremendous challenges and tremendous opportunities. One of the biggest challenges, storing the data, protecting the data, making sure you do that sustainably. So how we store this amount of data with the least amount of energy possible? And then how we architect the systems in a way that the intelligence and autonomous, where we don't have to have a lot of waste around it. But ultimately, how we harvest or harness the opportunity around the data to get insights. And so that's one aspect. And so we, as a company, have a clear strategy to become the edge to cloud platform as a service because the enterprise of the future, we see it as an edge centric. Edge is where we live and work, exactly think what we have today in this building, you and I having a conference call, with probably 200 people on the line, but this is a digital engagement. And we are generating a lot of data, computing a lot of data. That data is created here, not in the cloud. But ultimately, the cloud provides a unique experience to accelerate speed of outcomes. So for us, it's edge at the cloud-enabled and data-driven. And when we think about the future of computing, how we make the data the core of this transformation; and while we do that, we do it with sustainability in mind. And so we have a very unique strategy, which we call the memory driven computing, not only it will improve the performance of harvesting these sites from the data, but actually do it 10,000 better from the energy perspective. And so when we go through this process with our shareholders, we tell them about what our strategy is, and how we do it with social responsibility in mind. And so we have made bold commitments, in terms of cover, footprint reduction through less energy consumption, whether it's making sure we are supporting elements like modern slavery, stopping modern slavery, or reducing the -- what we think about the climate challenges with one of the 28 companies who signed for the 1.5 degree reduction. So this is core. I mean, in the end, goes back to who you are and how you do things.

So let me ask you about your customers just for a second. So I mean, you basically service the entire Fortune 500 and many more beyond that. How many of your customers are looking to solve their own sustainability solutions, using the services and technologies that HPE provides?

Yes. I think it's interesting to ask that question because obviously, CIOs, IT operations, they are all becoming more and more interesting on this. And the fact is that when we compete for business, whether it's through an RFP process, a request for pricing, or through a normal deal process, the requirements around sustainability and governance are being built at the core of that RFP. In fact, because of our Living Progress, as you've described before, because of our commitment and the ability to transparently measure aspects of this, we last year, we won, on a direct measure to the business, $500 million of business, which otherwise, we would not been able to compete for. So definitely, you have a shareholder aspect of this, which are becoming way more interested. And then you have customers, which are making this a condition for you to participate in their business. And then obviously, they ask you for additional sharing of best practices, how you think about it, how you do it for yourself. We are going through ourselves through a major IT transformation inside the company. We are consolidating systems, we are streamlining business processes, and we are doing that with our own technology, obviously, and trying to also address some of the aspects to it.

Would you say that the technology company, you could not compete effectively had you -- were you not a believer in…

Absolutely. I absolutely. And I think it's going to be a condition going forward.

Yes. Yes.

Absolutely. Two years ago, we could measure a couple of hundred million dollars. Now, this past year, it's over $0.5 billion. And I expect that to continue to be the case.

Okay. That's a phenomenal number. I mean that's a huge competitive advantage for you.

Yes, Absolutely. It is a competitive advantage. It has to be -- it has become a competitive advantage. And again, companies like to work with -- customers like to work with companies who understand this, and who are committed to it.

Yes. Let's just come back to your workers for a second, on the next slide. Could you talk a little bit about your journey and the impact it had on the worker policies, over the last couple of years? And what is sort of the driving force behind that? We talked a little bit about your own personal journey. And the competitive advantages conferred on HPE, as a result of that investment. How do you think about that? Perhaps, let -- with a look-forward over the next year or 2 years, how do you continue to grow and invest in your workforce as a leader?

Well, I would say I'm really proud of the work we have done with my executive team, putting our employees of the quarter, where we do all that's said. We compete and win in the market with the best innovation and the best people, supported by a culture of inclusion and diversity, and the things we talked early on. And so for me, the investment of people, where this brings new talent in, give them then the opportunity to learn new skill sets, having them having an opportunity of a clear, define work career path they want to follow on, are key to what we do in our everyday kind of engagement. Because I grew up from the call center up, I have very good understanding of our culture. And obviously, I can reach down the organization very easily. Definitely, I'm a people-oriented person as a leader. And this is generally from my executive team, too. So for us, it's continue to listen carefully what employees are most concerned about it. And then ultimately, how we address that on a sustainable, progressive way. And obviously, we can't do everything at once. So we have fixed key priorities. An example of that was as people re-enter the workforce, how we retrain them in the areas of relevance going forward. That's what we call the Career Reboot. That's a great program we put in place. The people care about giving back to the communities. We have done a tremendous amount through volunteering, and as well through our HPE Foundation, picking up the right causes, particularly in schools how we support kids, or unique causes that are relevant from the society.

Do you think companies have more of an obligation to do that kind of thing now?

I think we as a society have an obligation, not just the company. It is what makes us sustainable. Great example, Martin, is right now. So we are all obviously very concerned about the coronavirus. We have a very small population in China because we have set up a very unique model with China, with a joint venture with a Chinese partner. Most of the employees are no longer HPE employees, are Chinese employees working for this joint venture. But even though technically are not in our entity, we have reached out and we say how we can help. And my indirect procurement team right now is procuring hand sanitizers, 100,000 masks to give to those employees, even though they don't work directly for us. So this is in the end who you are.

Yes, yes. You're right, often in times of crisis, it's when the company's character is tested. What -- let's just focus on diversity, equity and inclusion, you mentioned that Antonio.

Yes.

We know from our own work HPE is one of the 32 companies out of the entire Russell 1000, that discloses data from your EEO-1 surveys. And you have grievance mechanisms for reporting discrimination and harassment. Why did you decide to disclose the data that way? And what are some of the ways in which you're measuring progress to becoming more diverse as a company?

So a couple of things. I think transparency is everything in my mind. And obviously, there is a lot of talk about this inequality and so forth. So for me, I mean, fundamentally, it is the baseline. It is where we are, and it's what we're doing to improve to meet the basic managed principle. I'm really proud of our diversity progress and inclusion. First, our Board of Directors is very diverse. In fact, 5 of the 11 Board members, if you exclude me, which is #12, are all females. And within that, we have a combination also the African-American included in that. So 5 females and 1 African-American. But I'm never satisfied; we have to do more. When I think about our population, 32% of our entire company is diverse. But I know I have way more work to do, as you go into the management levels, whether it's at the top of the company, or in the middle of the company and how we promote diversity, as we go forward. For me, I'm a great example in the sense, I was born in Argentina, my parents are Italians, I've lived pretty much everywhere in the world, I speak 4 languages, and culture really matters. And when you have a diverse company, you are a better company, because diversity of thought, diversity of thinking, diversity of beliefs, it actually is built creativity in a different point of view. Now you got to manage that and, otherwise, you don't get to an outcome. But ultimately, I value that and I know when you are more diverse, you're actually a better company. So that's why we believe in this. And the good news is that we make progress, but it's way more work to do. And I think in the next 2 to 3 years, we're going to continue to make more progress.

That's wonderful. Another area where HPE has really outstanding leadership is in parental leave. You have a very generous parental leave policy. You're 1 of only 12 companies in the entire Russell 1000 that give more than 6 months. So how did this come to be? And just talk a little bit about, again, the business case for that.

Yes. I mean, we went through the process to listen to our employees and what they value the most. And we have actually a fairly young workforce in many areas. And obviously, they all care about starting a family and having kids along the way. And for us, when we look at the business case, was a way to retain the best balance, but at the same time, when we looked at the financials, actually, it was not that significant at all, not that significant at all. And so for us, it was an incredible return on investment. And what we realized is that if you want to attract new, young talent with different skill sets that they are in the early stages of forming a family, this was actually a benefit that allowed us to do so. At the same time, our attrition rate declined dramatically also because of that. And when I think about the last 2 years, our employee engagement scores, which ultimately is a sign of health, how we are working with our employees, improved by 20 points; our employee engagement score today is 81. Two years ago, it was 61. So this is one of the key...

Do you see the business results, as a...

No. And the business result, obviously, is a combination of many things, but employee productivity, employee morale, they all have improved dramatically in the last 2 years. So for me, it was a great business investment, didn't cost us that much at all. And the fact of the matter is not all people will take 6 months. That's a fact. And financially, it was probably a negligible impact.

Yes. We talked earlier about a colleague who split the 6 months out, right?

Yes, that's right. She decided to take 3 months and then come back, work 6 months and then take another 3 months after that in different stages of whatever the child's age.

Yes. So that's like the…

It's important to people.

Yes. That's great. All right. Let's switch gears now and talk about another hugely important topic. Certainly, last week at Davos, climate was the dominant topic. This is an area where you have, again, clear leadership, explicit targets and climate goals. You see it in your reporting, you see it in your supply chain, emissions reduction goals. You see it in your product design. You're saying that you're competing now for mandate where these kinds of goals are embedded in the RFPs. What's been the most unexpected challenge, regarding to follow through on your quantitative targets and climate goals?

I think the -- we work with a very large supplier base. And we're holding them to the same standards, accountable to the same standards. And so inside a company, it's much easier and, obviously, you have control and you can measure it very easily. But with a very large supply base, we have to make sure they operate and act with the same mindset, with the same targets and then making sure to deliver against those targets. So I will say, that probably is the biggest challenge because it takes an enormous amount of effort to ensure you have the right system in place to measure things. But I will say, you think about the supply chain, where we procure minerals, that is one thing, but as we and I were talking earlier, the fact of the matter, we committed to reduce carbon emissions 30x through energy consumption in the next 5 years. We already have net 0 in many of our processes. But the reality is, how we do that with our suppliers is the key. And for me, that's what I'm holding them accountable to. So when I do reviews with them, we talk about supply, we talk about pricing, we talk about other things. But also, we talk about, tell me what do you want on these goals? And it's becoming quite interesting to see the reaction because not all competitors are doing the same thing.

Well, let's just talk about that. What advice have you received? Or would you -- have you given to other leaders last week, who really are trying to be at the vanguard of the climate issue...

Yes. Make it a priority. Make it a priority, right? So I think about it, whether it is the ability to contribute to reduce global warming and the temperature around the planet. We are 1 of the 28 companies that signed for the 1.5 degree reduction, whether it's to cut what we call greenhouse gas emissions, whether it's the use of renewable energy, whether it is to use carbon footprint credits. These are the things that all together make a huge difference. And that's why think about this charter, about resource efficiency, almost twice than the average. It's pretty significant. But we're never satisfied. When I meet with my engineering team, again, being an engineer, and I have designed many of the key platforms we have driven to market in the last 7 years. Engineers tend to focus on feature, functionality, cost. And when you go down and you walk the talk, and you ask them, okay, tell me about power consumption, tell me how much processing we can do with the same power, what type of architecture we're thinking about the future, they actually start thinking about it, but you've got to lead by example. And then eventually, over time, as you make them accountable, you measure this, it becomes a part of what should you do. And the same thing with our suppliers. So for me it's you got to make it a priority. You have to make sure you measure this and you hold them accountable is the only way to move forward.

Again, are you seeing -- on climate, in particular, let's say, resource use efficiency, is that becoming embedded in competitive situations now, where you're looking for new business and…

Yes, I think you think about these massive data centers. Today, 6% of the global energy consumption is used to power these massive data centers, the cloud, as we know it. We think about the next 5 years, without changing dramatically the way we do things, it will be 20%, 20%. So customers now, they're thinking about if I deploy the systems in my data centers, in my colors, what level of energy consumption I need to drive? A, because it's a cost, right? So we're talking about megawatts of power being used; but B, for the environment. And so we show them our systems are not only the most secure systems on the planet, but they have the most energy efficiency on the planet. And they -- you don't stop there. You show them what the road map is for the next 5, 10 years. And you start kind of driving that discussion with them. And I actually use those engagements with my customers to drive some of the ideas we bring back into the design process. And with some of them, we actually do co-innovation. We have customers that have specific applications and workloads that are very unique to them, and they said, "Can we optimize that infrastructure to do our workload and, at the same time, address some of these sustainability challenges?" And one of the things, by the way, which we don't talk about it, is the life cycle of that product. And what we call the circular economy.

Yes. Yes. I mean, it's incredible, when you think about more than tripling of the sort of percentage of global energy consumption going to powering the cloud. 20%...

20%.

It's a phenomenally large number.

Right.

And what will that do? How does that sort of affect the way we use -- we think about energy usage and the kind of technologies we need, the kind of solutions we need in order to address that, right?

Well, that's sort of -- if you think about it, it's not that hard and now without getting into those technical aspects, but everything in our life is now connected, right? So we live in a hyper-connected world. Everything computes. Whether it's big compute, small compute, everything in our lives compute something, whether it's sensors or phones or PCs, compute has been embedded everywhere. That requires the energy to power that compute. And ultimately, that is processing some aspects of data. We have lived in an architecture, which was designed 70 years ago. And we have lived in what we call the Moore's Law, which is basically pack more compute capacity in smaller and smaller footprint. The problem along the way, what we had is the energy consumption in order to pack more and more compute capacity has gone up exponentially. So these architectures are not going to scale into the future. And if you believe now we live in a mobile-first, cloud-first era, moving to what I call a data era. We need to make data the core of the architecture, and there are some amazing innovations that we are driving with our HPE labs, that will make the data record in this architecture while solving these fundamental challenges around sustainability. Great example, whether it's -- we show here typing as we talk, she's typing, but that architecture is copper, gold, which is energy waste transmitting data back and forth between the processor power, the memory power and the storage power. Because we are moving data, we are moving, what are called, electrons and electrons that require energies. What if you put the data at the core, you don't move the data. You bring the compute to the data, instead of moving data. And you do it with these new great technologies, like what we call silicon photonics or we think about things like the non-volatile systems that require no power. And in that, not only we are reducing the amount of minerals that we're going to use in the systems, whether in copper, whether in gold, but we're using more fiber and other types of materials that improve the performance 1000x and reduce the cost by 100x and would make the energy win-win for it.

And you're making me think of Bill Gates' view that we're never going to solve climate change, climate crisis, without a fundamental retooling...

Correct.

Of the physical economy.

Right. And the cloud, as we know it today, it's kind of fascinating. It's still a wall garden, it governs the wall right around the cloud, they have silos. We actually have a view that the future's totally different. We believe these walls have to come down. And we believe in ability to things to talk to each other, these aren't going through massive data centers and ultimately, remove these barriers will make the world way, way more efficient.

Great. Okay. Well, let's just switch gears for a second. Move on to touch briefly on communities. One of the things that makes your company's human rights and supply chain work stand out is you're reporting on those issues. Again, we talked about the importance of transparency and supply chain responsibility dashboard. You mentioned that some of the challenges of working with suppliers and ensuring they adhere to the standards that you want. This is obviously something that affects the entire industry. What is the motivation for disclosing all the details you have around supply chain performance? And if I could ask you just, elaborate a little bit on how you work with suppliers on this issue on human rights related issues, which is obviously very important to your commitment overall as well.

Yes. I mean, I think customers want to work with ethical companies. And we talk about winning the right way. And for me, the level of transparency is key because I can look at my customer in the eyes and say, this is what we do and how we do things, and how it's as important as the world. And so when we select our suppliers, we don't select them just because they have knowledge or because of their expertise, but also the way they do things. And I said earlier, right? So we want to make sure -- we produce products all around the globe. We serve 170 countries. We have a very global supply chain. We have 200,000 channel partners that [ cure ] products from us, every single day. So that supply chain has to be sustainable, but also the way we build these products have to be with the human rights in mind. And ultimately, we have to be able to audit that along the way. So for us, it's core to what we do. And as I said earlier, we've got to measure it, and we have to hold people accountable to it. And to me, it is core of your DNA and how we sell our products to our customers.

Have you had any major challenges along the way in implementing that?

Generally not, I think the challenge, as I said before, because it's a very complicated supply chain, is how we measure things along the way, and be able to audit. Cybersecurity is a key component, right? So obviously, people are concerned about that. But we are able to measure where the components are coming through, where we build these components, how the supply chain delivers that product through the logistics network, and ultimately, who install these products and who operates these products, so maintaining that provenance, understanding along the way and through the life cycle is key. These customers want to work with companies that can give them that peace of mind. Now we're using our own technologies built in the products. And then our supply chain to be able to this on much bigger scale and more and more efficiently.

I imagine the solutions you develop for your own company will be applicable to your customers as well. I mean, this is certainly one of things that...

That's how we sell.

Do you think being in the data business...

Exactly. I want to share an example of this is that, when we talk about cybersecurity, right? So today, in order to secure your perimeter, or to secure your application and data, there is a lot of effort that has to take place. We decided to tackle the problem at the core, at the core, so that we build security in the core of the products. And our engineers figure out, there is opportunity to develop unique chipsets in silicon that we'll build at the core of the product, using what we call fingerprint matching. So unless that fingerprint matching takes place at the core, at the root of that system, no data can be processed. And so this is what we call our silicon root of trust system, where we believe we have the most secure infrastructure on the planet. And this was developed with entities that today get a lot, like the SDI and other entities. And this is very important because ultimately, that's how challenges are driven today.

That's great. And let's just move on to, of course, very important stakeholder is your shareholders and your investors. I mean, when the rubber hits the road here, you can see your stock has doubled really since launch. It's a great story of leadership on many levels. One of the things that I heard a lot last week in Davos was this trade-off, short-term, long-term stakeholders versus shareholders, like it's some zero sum game. You can't walk and chew gum. What's your general take on that? Do you have a -- for those on the call, sort of a belief that around this idea of trading off, it's either I'm looking after my shareholders, or I'm looking after these other stakeholders? Either I'm looking to invest in the long term, or I got to do everything right in the short term? How do you think about that?

Well, obviously, we have to create value, but I have to create value for our stakeholders and shareholders are a component of that. And we think about the long-term view, not the short-term view. Think about the transformation Hewlett Packard Enterprise went through in the last 8 to 9 years. We decided that competing in what I call in the IT supermarket was not the best strategy for us, and that's why we decided to split the company. This is that printers are not the same in the cloud. And so we created 2 Fortune 50 companies. And everyone took their own path. And I will argue that it created enormous amount of shareholder value. Then we, as a company, Hewlett Packard Enterprise, decided to even narrow our focus to do fewer things better in the context of the long term. So what we see is the long term. The Long-term is, obviously, we see a work, which is hybrid application and data will leave everywhere, whether it's in your data center in the cloud, or what we call now more at the edge. We see data has a reputation, of course. We see profit pools diverging from what the past looked, what is today, which is more silicon and software. But more and more customers want to consume that infrastructure or those solutions in different way. They want to only pay for what they consume. And that's why the as-a-service model is taking a significant hold in the market and growing very rapidly on the heels of the public cloud making things simpler. But the reality, customers are not going to put all their applications data there. So our strategy has been clearly to focus on the customer needs and innovate for the long term. And when you do that, obviously, you have some challenges. You have old businesses, that are very profitable, but you have to transition them into this new reality. And so there is a period of time, you have to go through that transformation. And so we -- in the first couple of years, we stabilized Hewlett Packard Enterprise. We deliver, to your point, a tremendous amount of value. Our non-GAAP EPS grew 82%. We returned $7 billion of free cash flow to our shareholders. We returned, what I call, normalized free cash flow after the split and the spin. And we made investment innovation, both organic and inorganically because in the end, innovation has 3 legs organic innovation is the better use of our balance sheet, inorganic by bringing IP and talent, that accelerate our strategy and then through key strategic partnerships. I personally have done now 15 acquisitions that made our volume much stronger. And obviously, we have to navigate through the challenges we see today; the macroeconomic or things that happen like coronavirus or whatever geopolitical challenges we deal. But when I think about the long term, I'm incredibly optimistic because, as I said earlier, the data is exploding around us. And that data has tremendous value. And how we help customers gather insights from the data faster is the key here, and do it in an efficient way, with social responsibility in mind. And not forget the fact that this technology has put to work to solve some of the biggest societal problems. That's why we have a unique partnership with the WEC and Tech Impact 2030, whether it's advancing health care or agriculture to solve some of the challenges around food and nutrition, or whether it's solving Alzheimer and dementia, with some of the key institutes around the globe. Or some other fun things like sports events, as you and I were talking before. So it is a great time, but you can do both. You can do both at the same time, with a clear vision.

Give us a glimpse, if you will, inside the Boardroom of HPE.

I just had the Board meeting, yesterday.

You did. Excellent. Well then it's a great question. Well, how do you discuss these issues at the Board level? Are there any tensions, or is there any skepticism about where you, as a CEO, should be focusing on shareholders versus stakeholders? Like, just give us a sense of the dynamic.

Actually, I'm incredibly lucky to work with the Board I have. It's 11 incredible, smart, experienced people, that care about this. And starting with our Chairman, Pat Russo, which has so much passion for this...

Full disclosure is also on the JUST Capital Board.

Good. Okay. But Pat is a leader who really think about this and the long-term value creation. But at the same time, we have other 10 Board members that have really come from different industries, different backgrounds, who make incredible contributions in their own right. And so for me, it's not a tension at all. It's actually a pleasure to have this discussion. Because in the end, we are 150% aligned on what needs to be done. And obviously, it's something that how we make this a competitive advantage, one of the things is that, we should do more in telling the story. So thank you today for having me today here, but the market insight aspect, the communications side of this, which Jennifer and I have done in the last 1.5 years are the things the Board are pushing us. We got to tell our story more often, and in a clear way. So definitely, not an issue at all.

That's great. That's great. Well, good. Well, with that, I think we can take some questions.

Yes, this has been such an engaging conversation. We're running a little long, but if it works for you, we can go a few minutes over.

Yes.

Fantastic. So one of the first questions we have is really kind of going back to the environmental and climate issues we were speaking about earlier. And HPE's stated goal is for 50% of operational efficiency to be powered by renewable energy by 2025. So this person is curious how you're doing progress-wise towards that goal? And what are the specific steps, you're taking to get there?

So today, actually, 37% of our energy comes from renewable energy. And there are sites that are already at 100% like the headquarters. We have a very distributed footprint. Obviously, we have sites all over the world. And so what we're doing is consolidating sites, upgrading the sites to make it more fun and more digital-oriented. And while we do that, also address this energy aspect of green gas emissions and what-not. So we are now on the plan, on a journey to build 2 premier sites, one is in Texas, which is a core competency for us, where a lot of the compute kind of strategy and design takes place. And the other one is in India, Bangalore. And that site has a lot of employees inside, 10,000 employees are located there. And as we build this brand-new site, in fact, the one indeed, is going to be 1.3 million square feet, it's going to be 100% renewable energy. In India, we also built solar panels, solar kind of energy sites that are really powering a lot of the other sites, but this will be a massive opportunity for us to build a site with that in mind. So these are the things we're doing. Another is just we have fewer -- smaller footprint, it's easy to do versus having thousands of offices, which will take a longer time.

Great. Amazing work. In terms of the next question, we're going to pivot a little bit to ESG. And that question is posing that it's getting more popular in the press. But sometimes, it really appears to have little traction and action from management and senior leadership. So the question really is, how is HPE convincing decision-makers to take ESG seriously, especially those that are concerned with how ESG affects revenue and strategy?

Yes, I think I talked a little bit about this. Obviously, we are focused on the E and the S of this. S is a very important aspect of this. It's about the community engagement and the E is about how we think about environmental in general. But ultimately, we talk about the Living Progress. That's a great example as a way to communicate our priorities because ultimately, it's our priority. It's a top -- one of the top agenda items. And when I go around, when I talk to shareholders or talk to analysts, or I talk to partners, or the press, we talked about this. And ultimately, point examples. I think the best way to address this is by using stories, using clear example, use cases, where you can point, this is exactly what we did and the outcome of doing so and the value that creates. And the more we do that with our customer, the more realize they should be thinking themselves about it. And as I said earlier, more customers are becoming savvier, and they are putting this now in their process to compete for business. And in many ways, if I do this very effectively, actually, I can shape the opportunity for those customers in my favor because the other competitors potentially could not address this. So it is about making a priority, making it consistent in the way you deliver the strategy and the priorities for your company. And then ultimately, hold yourself accountable to it.

Thank you for that leadership because we do see that it creates that virtuous cycle. And we're excited by that virtuous cycle. I think we're 5 minutes over. I'm going to say it's probably time to wrap.

Okay. In that case, all it reminds me to do is thank you, Antonio...

No. Thank you, for the meeting today.

You are a true leader on stakeholder, stakeholder capitalism, you run a great company. Thanks for sharing your time and your expertise with us today. I also want to thank our partners at CNBC, NASDAQ in Toronto and say, as well, of course, all of you who joined us on the call today, thanks very much for your time. With that, have a great day.