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(HPE) reported strong fiscal 2019 first quarter net revenue of $7.6 billion. First quarter net revenue was up 1% from the prior-year period, excluding Tier-1 server sales.

HPE grew non-GAAP operating profit by 19% year-over-year, well above 6% to 8% guidance. And non-GAAP earnings per share by 31% to $0.42, above outlook of $0.33 to $0.37. All of these drove free cash flow growth of over $200 million year-over-year putting HPE on its way to deliver fiscal year 2019 outlook of $1.4 billion to $1.6 billion.

First quarter cash flow from operations of $382 million and free cash flow of ($190) million, was up $240 million and $222 million from the prior-year period, respectively.

“We are on track to exceed most of our fiscal year 2019 financial commitments that we laid out at our Securities Analyst Meeting in October last year. Q1 revenue grew 1% year-over-year when adjusted for the Tier one segments in line with our guidance,” said Antonio Neri, President & CEO of HPE during a investor call.

“Most importantly, we grew significantly in the high-margin value categories like high-performance compute, hyperconverged and composable infrastructure. Our continued mix shift as well as the ongoing cost management and supply chain simplification helped us significantly improve our operating leverage. We improved gross margins by 280 basis points year-over-year,” said Neri.

Intelligent Edge delivered robust growth in this strategically important segment. Revenue was $686 million, up 5% year over year, with 1.3% operating margin. HPE Aruba Product revenue was up 3% with balanced growth across wired and WLAN. HPE Aruba Services revenue was up 20%.

Hybrid IT continued to drive profit growth with revenue of $6.0 billion, down 3% year over year with 11.3% operating margin that was up 200 bps year over year. Compute revenue was down 3%. Excluding the impact from the company’s intentional exit of certain Tier-1 customer segments, Compute revenue grew 3% and HPE’s high-margin Value Compute portfolio grew 20% driven by strength in high-performance compute, hyper-converged and composable.

Storage revenue was up 3%, with particular strength in All-Flash Arrays, which grew 20%. HPE Pointnext revenue was down 6%, primarily due to the company’s intentional exit of certain geographies, and a strong book to bill of 110% indicates a strong pipeline of recurring revenue and profits.

Financial Services revenue was $919 million, up 3% year over year and up 6% when adjusted for currency, net portfolio assets were down 2% year over year and up 2% when adjusted for currency, and financing volume was down 3% year over year and flat when adjusted for currency. The business delivered an operating margin of 8.4%.

For fiscal 2019 full-year, Hewlett Packard Enterprise now estimates GAAP diluted net EPS to be in the range of $0.88 to $0.98 and the non-GAAP diluted net EPS to be in the range of $1.56 to $1.66. Fiscal 2019 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.68 per diluted share, primarily related to transformation costs, the amortization of intangible assets, and an adjustment to earnings from equity interests.

For fiscal 2019 full-year, HPE reiterates free cash flow guidance range of $1.4 to $1.6 billion, up over 35% from the prior year.

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