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Revenue Improves in HP’s Second Quarter with Growth in PC Business

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On May 29th, HP Inc. reported financial results for its second quarter, which consisted of the the three months that ended on April 30th.

In a nutshell, revenue was flat, and earnings were down significantly. However, HP’s rate of revenue decline continued to improve. For instance, revenue was down 0.8 percent year-over-year for the second quarter, versus a decline 4.4 percent year-over-year for the first quarter. Another bright spot was that HP’s commercial PC business is recovering, showing revenue and operating profit growth. But it was another story on the Printing business side, with results down.

For its second quarter, HP reported net revenue of $12.8 billion, down 0.8 percent year-over-year, and net earnings of $0.6 billion, down 42 percent year-over-year. The second quarter included a $205 million expense which included expenses related to restructuring and other charges. Non-GAAP net earnings were $0.8 billion, versus the same amount for the second quarter last year.

Printing Business Financials

Printing net revenue was $4.4 billion, down 8 percent year-over-year with a 19.0 percent operating margin, and operating profit was $829 million, down 8 percent year-over-year.

Consumer Printing net revenue was down 16 percent and Commercial Printing net revenue was down 12 percent, both year-over-year. Supplies net revenue was down 5 percent. Total hardware units were down 17 percent, with Consumer Printing units down 17 percent, and Commercial Printing units down 17 percent, all year-over-year.

HP President and CEO Enrique Lores said HP continues to see soft demand, particularly in China and some parts of Europe. He also noted that “The pricing environment remains competitive in consumer, with intensifying pressure in commercial. We continued to make progress on pricing and share gains in supplies with revenue results as expected.”   

Personal Systems Business Financials

Of note was that for the first time in eight quarters growth, HP saw growth in its PC business. Second-quarter net revenue for Personal Systems was $8.4 billion, up 3 percent year-over-year year, with a 6.0 percent operating margin, and operating profit was $508 million, up 6 percent year-over-year.

Consumer PS net revenue was down 3 percent and Commercial PS net revenue was up 6 percent, both year-over-year. Total units were up 7 percent, with Consumer PS units down 1 percent, and Commercial PS units up 12 percent, all year-over-year. 

Future Ready

Regarding HP’s Future Ready cost-saving and transformation plan, HP says it’s on track to achieve its fiscal-year 2024 goal of delivering cost savings of $1.6 billion.

Regarding the second quarter, HP’s Lores stressed that HP continues to deliver “innovative portfolio of solutions designed for the AI and hybrid era. We have a clear strategy and are well positioned to drive profitable growth across our business.”

Outlook

For its fiscal third quarter, HP estimates EPS to be in the range of $0.63 to $0.77

For its complete fiscal-year 2024, HP estimates EPS to be in the range of $2.60 to $2.90, and free cash flow in the range of $3.1 to $3.6 billion.

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