On February 27, 2025, HP Inc (HPQ, Financial) released its 8-K filing detailing its fiscal 2025 first-quarter results. HP Inc, a leader in the PC and printing markets, reported a GAAP diluted net earnings per share (EPS) of $0.59, which fell short of the analyst estimate of $0.67. However, the non-GAAP diluted net EPS was $0.74, surpassing the estimate. The company's net revenue for the quarter was $13.5 billion, exceeding the estimated $13,364.19 million.
Company Overview
HP Inc, formerly known as Hewlett-Packard, is a major player in the PC and printing industries. Since its split from Hewlett Packard Enterprise in 2015, HP has concentrated on these markets, primarily targeting the commercial sector while maintaining consumer sales. The company operates globally, with only a third of its sales originating from the United States. HP outsources its manufacturing and relies heavily on channel partners for sales and marketing.
Performance and Challenges
HP Inc's performance in the first quarter of fiscal 2025 was marked by a 2.4% increase in net revenue compared to the previous year, reaching $13.5 billion. This growth was driven by a strong commercial business in Personal Systems and momentum in key growth areas, including AI PCs. However, the company's GAAP diluted net EPS of $0.59 was below the prior year's $0.62, reflecting a 5% decline. The non-GAAP diluted net EPS also saw a decrease from $0.81 to $0.74, a 9% drop.
Financial Achievements
HP Inc's financial achievements include a significant increase in net cash provided by operating activities, which rose to $0.4 billion, a 209% increase from the previous year. The company also generated $0.1 billion in free cash flow and returned $0.4 billion to shareholders through share repurchases and dividends. These achievements highlight HP's ability to generate cash and return value to shareholders, which is crucial in the competitive hardware industry.
Key Financial Metrics
| Metric | Q1 FY25 | Q1 FY24 | Change |
|---|---|---|---|
| GAAP Net Revenue ($B) | 13.5 | 13.2 | 2.4% |
| GAAP Operating Margin | 6.3% | 7.1% | -0.8 pts |
| GAAP Net Earnings ($B) | 0.6 | 0.6 | -9% |
| Non-GAAP Operating Margin | 7.3% | 8.4% | -1.1 pts |
| Net Cash Provided by Operating Activities ($B) | 0.4 | 0.1 | 209% |
Segment Performance
In the Personal Systems segment, net revenue increased by 5% year-over-year to $9.2 billion, with a 5.5% operating margin. The Commercial PS net revenue rose by 10%, while Consumer PS net revenue declined by 7%. In the Printing segment, net revenue decreased by 2% to $4.3 billion, with a 19.0% operating margin. Consumer Printing net revenue grew by 5%, whereas Commercial Printing net revenue fell by 7%.
Analysis and Commentary
HP Inc's first-quarter results reflect a mixed performance, with revenue growth driven by strong commercial sales and strategic investments in growth areas. However, the decline in EPS indicates challenges in maintaining profitability amidst restructuring and other charges. The company's focus on cost savings and strategic investments is expected to support long-term growth.
We are pleased with our Q1 performance, achieving revenue growth for the third straight quarter and advancing our strategy to lead the future of work," said Enrique Lores, HP President and CEO.
HP Inc's outlook for the second quarter of fiscal 2025 estimates GAAP diluted net EPS to be between $0.62 and $0.72, with non-GAAP diluted net EPS ranging from $0.75 to $0.85. The company remains committed to disciplined execution and long-term investments to drive future growth.
Explore the complete 8-K earnings release (here) from HP Inc for further details.
