A Closer Look at HP Inc.’s First-Quarter Results

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On February 27th in a conference call with analysts, HP Inc. executives took a closer look at HP Inc.’s results for its first quarter of 2019, with HP reported revenue of $14.7 billion, up 1 percent year-over-year (see here for more).

HP Inc. President and CEO Dion Weisler noted that the Printing group’s supplies revenue was weaker than anticipated, particularly in EMEA (Europe, Middle-East, Africa), where supplies’ revenue declined 9 percent.

Weisler noted that “All commercial customers are purchasing supplies online and while we have leading share online, it’s at a lower percentage than our share with traditional commercial resellers and in-store retailers.”

In response, HP will be lowering the level of supplies inventory in the market to be consistent with its new share assumptions.

HP Inc. CFO Steve Fieler explained: “…we expect to lower the inventory in the entire ecosystem enabled by reducing our Tier 1 channel inventory. The impact of this action will create an approximately $100 million headwind to Supplies revenue for the remainder of FY 2019, or roughly 1 percent of total Supplies revenue. We expect this impact combined with the lower go-forward Supplies share and pricing assumption to result in a Supplies revenue decline of approximately 3 percent for the year.”

HP CEO Weisler noted that HP’s Instant Ink program subscriber base continues to have impressive growth. HP has introduced the automated ink-supply program in 18 countries and continues to see strong adoption rates.

In managed print services (MPS), HP installed machines and field number “is growing double digits” and HP is expanding opportunities for its premier channel partners in both the A3 and A4 categories.

Weisler also explained that HP is seeking to introduce products that generate a larger portion of their lifetime profitability at the time of purchase. This includes not only products like HP’s pocket-size photo printer, Sprocket, but also its HP Smart Tank and HP Ink Tank printers that can print up to 8,000 color pages before more ink is required.

In office printing, HP is expanding its contractual A3 business with the introduction of document-finishing capabilities on a range of systems. According to Weisler, HP now has 9-percent A3 market share, which is up 1.1 points since last year.

3D-Printer Market

Looking at HP’s 3D-printer business, HP is  expanding both its production and prototyping installed base across the automotive, industrial, consumer and healthcare markets.

According to Weisler, millions of final production parts are now being produced each quarter on the Multi Jet Fusion platform, “and the range of applications being printed is incredible.”

As part of HP’s Multi Jet Fusion portfolio expansion, this quarter HP began ramping up shipments of its Multi Jet Fusion 300/500 3D printers targeted at the prototyping market. HP is also continuing to execute on its 3D-printing metals-printing technology with partners that include Volkswagen and GKN.

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