Loading...
01/10 18:23
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals. While there is growth in Personal Systems and optimism about AI PCs, Print revenue declined, and margins are pressured by tariffs. The cautious guidance reflects economic uncertainties, and the Q&A reveals lack of clarity on growth business sizes and tariff impacts. Shareholder returns were significant, but free cash flow was negative. Overall, these factors suggest a neutral outlook with no strong catalysts for significant stock movement.
Revenue Net revenue was up 3% nominally and 5% in constant currency year-over-year, driven by strong growth in Personal Systems, particularly in commercial and high value categories.
Operating Margin Operating margin was 7.3%, impacted by roughly 100 basis points due to unmitigated tariff and related impacts mainly in Personal Systems.
Non-GAAP Diluted Net Earnings Per Share Non-GAAP diluted net earnings per share was $0.71, reflecting a tariff and related impacts net of mitigations of approximately $0.12.
Personal Systems Revenue Growth Personal Systems revenue grew 7% nominally and 8% in constant currency year-over-year, driven by higher commercial volumes and increased average selling prices (ASPs).
Print Revenue Print revenue declined 3% in constant currency year-over-year, in line with expectations, due to supplies declines and hardware softness in North America.
Cash Flow from Operations Cash flow from operations was roughly $38 million in the quarter, with free cash flow slightly negative due to timing of payments for intentional inventory actions.
Shareholder Returns Returned close to $400 million to shareholders through both dividends and share repurchases.
Gross Margin Gross margin was 20.7%, down year-over-year due to increased tariff and commodity costs.
Commercial Revenue Growth Commercial revenue increased 9% year-over-year, driven by pricing actions and mix shift toward premium categories.
Consumer Revenue Growth Consumer revenue grew 2% year-over-year on lower volume through favorable pricing and mix shift.
Future-Ready Cost Savings Expected to achieve cumulative gross run rate savings of at least $2 billion by the end of fiscal year '25.
New Product Launches: Unveiled more than 80 new products and services at the global Amplify Conference, including the HP Workforce Experience Platform and a comprehensive AI PC portfolio.
AI PC Portfolio: Introduced a redesigned HP EliteBook and EliteDesk, and launched the HP ZGX AI Station in collaboration with NVIDIA.
Print Innovations: Launched new Laser Jet Enterprise devices designed to guard against quantum computer attacks.
Market Expansion: Expanded manufacturing footprint for PCs and printers to Vietnam, Thailand, India, Mexico, and the US, with nearly all products sold in North America expected to be built outside of China by the end of June.
Market Share Gains: Gained share in Commercial PC, particularly in premium, workstations, AI PCs, and gaming.
Operational Efficiencies: Implemented cost actions, pricing adjustments, and accelerated manufacturing transition to mitigate tariff impacts.
Future-Ready Plan: Expected to deliver at least $2 billion in gross annual run rate structural savings by the end of fiscal year '25.
Strategic Shifts: Focused on diversifying manufacturing locations to respond to geopolitical changes and enhance operational agility.
Pricing Strategy: Implemented price increases to offset cost pressures from tariffs.
Tariff Costs: Additional tariff costs could not be fully mitigated in the quarter, impacting non-GAAP operating profit by approximately 100 basis points and resulting in a $0.12 impact on non-GAAP earnings per share.
Supply Chain Challenges: The company is diversifying its manufacturing locations to respond to geopolitical changes, with nearly all products sold in North America expected to be built outside of China by the end of June.
Regulatory Issues: Shifting trade policies and increased tariffs announced in April were higher than expected, impacting operating margins and necessitating cost management and pricing actions.
Economic Factors: The PC market is expected to grow low-single-digits for the second half of the year due to macroeconomic uncertainty, affecting overall revenue growth.
Cash Flow and Capital Allocation: Free cash flow was slightly negative due to timing of payments related to inventory actions taken for tariff mitigation, impacting cash conversion cycle.
Market Demand: Weak demand in China and a slowdown in North America for Print products, with expectations of low-single-digit market decline for the Print segment in 2025.
Future of Work Strategy: HP's strategy is showing positive results with a 5% increase in revenue year-over-year, driven by strong growth in Personal Systems, particularly in commercial and high-value categories.
Manufacturing Footprint Expansion: HP has diversified its manufacturing locations, increasing production in Vietnam, Thailand, India, Mexico, and the US, with nearly all products sold in North America expected to be built outside of China by the end of June.
AI Integration: HP introduced a comprehensive AI PC portfolio and the HP Workforce Experience Platform to enhance productivity and employee satisfaction.
Future-Ready Accelerated Plan: HP expects to exceed its goal of delivering at least $2 billion in gross annual run rate structural savings by the end of fiscal year '25.
Q3 Revenue Expectations: HP expects high-single-digit revenue growth in Personal Systems for Q3, driven by commercial strength and pricing actions.
FY'25 Non-GAAP EPS Guidance: HP now expects FY'25 non-GAAP diluted net earnings per share to be in the range of $3 to $3.30.
Print Market Outlook: HP anticipates the Print market to decline low-single-digits for the calendar year, with the second half declining closer to mid-single-digits.
Free Cash Flow Expectations: HP expects free cash flow to be in the range of $2.6 billion to $3 billion for FY'25.
Dividends Returned to Shareholders: HP returned close to $400 million to shareholders through both dividends and share repurchases.
Share Repurchase Program: HP limited its repurchase to offsetting stock compensation dilution due to a temporary increase in leverage.
The earnings call indicates strong financial performance with strategic initiatives in AI and cost reduction, offsetting memory cost impacts. The PC market is expected to grow, and HP is confident in its strategies for service and subscription growth. Despite some pricing challenges, guidance remains optimistic. Overall, the sentiment is positive, with potential for stock price appreciation.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
