HP ‘Strong out of the Gate’ for First Quarter

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HP Inc. today reported results for its first quarter, including net revenue of $14.5 billion, up 14 percent versus first-quarter 2017. Net earnings were $1.9 billion, up 217 percent versus first-quarter 2017.

First-quarter earnings per share (EPS) was $1.16, up from $0.36 in the prior-year period, and above HP’s  previously provided outlook of $0.38 to $0.42.

“We’re coming out of the gate strong in Q1, with double-digit revenue and EPS growth year over year,” said Dion Weisler, president and CEO of HP Inc. “Our impressive results spanned all segments and all regions, reflecting our innovative product portfolio and global execution.”

First-quarter segment results are as follows:

  • The HP Printing group’s net revenue was up 14 percent year-over-year, with a 15.8 percent operating margin. Total hardware units were up 14 percent, with Commercial hardware units up 73 percent and Consumer hardware units up 7 percent. Supplies net revenue was up 10 percent.
  • The HP Personal Systems group’s net revenue was up 15 percent year-over-year, with a 3.6 percent operating margin. Commercial net revenue increased 16 percent and Consumer net revenue increased 13 percent. Total units were up 7 percent, with Notebooks units up 8 percent and Desktops units up 6 percent.
HP Inc.’s fiscal 2018 first quarter financial performance
Q1 FY18 Q1 FY17 Y/Y
GAAP net revenue ($B) $ 14.5 $ 12.7 14%
GAAP operating margin 6.7% 6.7% flat
GAAP net earnings ($B) $ 1.9 $ 0.6 217%
GAAP diluted net earnings per share $ 1.16 $ 0.36 222%
Non-GAAP operating margin 7.0% 7.1% (0.1)pts
Non-GAAP net earnings ($B) $ 0.8 $ 0.6 24%
Non-GAAP diluted net earnings per share $ 0.48 $ 0.38 26%
Net cash provided by operating activities ($B) $ 1.0 $ 0.8 30%
Free cash flow ($B) $ 1.0 $ 0.7 33%

Raises Full-Year Forecast

For its second quarter, HP estimates EPS to be in the range of $0.42 to $0.46.

For its full fiscal 2018 year, HP raised its estimates for EPS to be in the range of $2.53 to $2.63.

Our Take

This was an impressive first quarter for HP Inc., not only because its EPS was higher than it had expected, but  key for its Printing group, printer supplies net revenue was up 10 percent. Of course, the results also reflect HP Inc.’s acquisition of Samsung’s Printing Solutions group in November 2017, but as the chart below indicates, HP Inc.’s revenue growth trajectory has been on the upswing since fourth-quarter 2015.

HP Inc. revenue growth from fourth-quarter 2015 to fourth-quarter 2017:

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