Hewlett Packard Enterprise (HPE) posted mixed quarterly results bolstered by growth in its Intelligent Edge business that includes its SD-WAN, secure access service edge (SASE) and private 5G network operations, but negatively impacted by slowing sales of its core compute and storage products.

CEO Antonio Neri effusively praised HPE’s Intelligent Edge business as one of the main drivers of company growth during the quarter. Neri said the segment posted its second consecutive quarter of revenues in excess of $1 billion and its 11th quarter of year-over-year growth.

“Intelligent Edge had a standout quarter,” Neri said as part of his prepared remarks, according to a transcript of the vendor’s second-quarter of 2023 earnings call. “HPE Aruba networking has exceeded our expectations in revenue and margin terms, in part because customers are adding more cloud software services to recently delivered infrastructure, which will add to recurring revenue in future quarters.”

That enthusiasm is boosted by HPE’s recent Athonet purchase, which CFO Tarek Robbiati said was already “contributing to our pipeline of business.” The Athonet deal is set to impact a breadth of the vendor’s operations, including SD-WAN and private 5G.

Tom Craig, global VP and GM for HPE’s Communications Technology Group (CTG), told SDxCentral in a recent interview that Athonet’s assets will help HPE better partner with operators to take advantage of private network opportunities. He explained that the opportunity was something operators lost during the move to 4G LTE services a decade ago.

“I think that there is a massive opportunity for the telco operators and I passionately believe they should be the people that benefit and monetize the opportunity of private 5G,” Craig said. “That’s how we want to position HPE, to be a partner and work with them to build opportunity, which was the logic as to why we decided to buy Athonet.”

Neri this week added that this bolstered private 5G business will allow HPE to provide the service “as an extension of the connectivity layer with Wi-Fi, Local Area Network and SD-WAN.”

That should further help HPE’s Aruba business, which in the most recent quarter grew revenues 15% sequentially and accounted for 19% of the vendor’s total revenues in the quarter. Robbiati said that growth will continue through the second half of its fiscal year.

Aruba’s performance is also set to surge following HPE’s acquisition of Axis Security, which Neri said will allow the vendor to grow its SASE business.

“Think about it this way: for every $1 of SD-WAN, it should be $1 of SASE attached to it,” Neri said. “That's why it was fundamental for us to bolster that type of capability.”

HPE announced the Axis deal alongside its previous financial release. The deal adds Axis’s Atmos cloud-native security services edge (SSE) platform, which includes zero-trust network access (ZTNA), secure web gateway (SWG), Cloud Access Security Broker and digital experience monitoring (DEM).

The Atmos technology was already integrated with HPE’s Aruba SD-WAN prior to the acquisition announcement, with Aruba Chief Security Officer Jon Green stating that the full SASE stack availability would “happen pretty quickly.”

Robbiati also used Aruba’s growth to take a dig at rival Juniper Networks, noting Aruba squeezed out nearly twice the operating profit margin (26.9% vs. 14%) on nearly the same amount of revenue. “That speaks volumes about the performance of Aruba,” Robbiati said.

HPE’s Intelligent Edge and Aruba enthusiasm was offset by sluggish compute and storage revenues. That slowdown dragged overall revenues down 10% sequentially, though HPE did post a modest 4% year-over-year increase in revenues.

Neri tagged that slowdown to “some decline in the health of macroeconomic conditions, causing unevenness in customer demand.” He also cited “unevenness” across different geographies and verticals.

“In the last few months, sales cycles have elongated because customers are more reluctant to quickly commit to large projects or some will seek additional internal approvals at the time of the order,” Neri said. “We continue to focus on our soft processes to accelerate closing deals wherever possible.”

Robbiati further pointed to a “loss of confidence in the banking sector” in North America, an issue highlighted by the recent collapse of some regional banks.

HPE’s management warned this path would continue through the rest of its fiscal year, with revenues and earnings expected to be relatively flat.

Neri did explain that HPE has hope that the 5G market could help boost the vendor’s Server business, “but right now, it's a little bit blurry,” he stated.

“Ultimately … I believe long term there is a growth opportunity driven by the growth of data we see in the market,” Neri added. “That data needs to be processed. The world is hybrid, so the balance between the public cloud and on-prem of co-locations and now the edge continues to be there.”