Federal Reserve - Federal Reserve officials indicated no imminent need to adjust monetary policy, maintaining a cautious stance after three rate cuts in late 2025 [2] - Inflation is currently trending between 2.4% and 2.7%, with the priority being to return sustainably to the 2% target [2] - Market participants expect the central bank to remain on hold until at least the June meeting, weighing risks of a "sticky" inflationary environment against a stabilizing labor market [2][8] Semiconductor Sector - U.S. Assistant Secretary for Export Enforcement confirmed that zero H200 chips have been delivered to Chinese customers to date, with strict licensing requirements stalling shipments [3] - Major Chinese tech players, including Alibaba, Tencent, and ByteDance, have orders for over 2 million units valued at approximately $14 billion, but these remain in regulatory limbo [3] HP Inc - HP Inc provided a mixed outlook during its fiscal first-quarter earnings call, highlighting a "dynamic memory environment" with rising costs [4] - The company expects volatility in DRAM and NAND supply to persist for the next 18 to 24 months, implementing aggressive cost-cutting measures and pricing actions to protect margins [4] - HP executives downplayed the impact of the February 20 Supreme Court ruling that invalidated several tariffs, stating it will continue engagement on trade issues without expecting a material hit to operations [5] - HP Inc remains confident despite trade uncertainty and expects no negative impact from the recent Supreme Court ruling regarding tariffs [8]

Financial Data and Key Metrics Changes - HP reported revenue of $14.4 billion for Q1 2026, representing a 7% year-over-year increase, driven by strong performance in Personal Systems and the impact of the Windows 11 refresh cycle [11][24] - Non-GAAP EPS was $0.81, reflecting a 9% growth compared to the prior year and was at the top of the guidance range [11][26] - Gross margin was 19.6%, influenced by a higher mix from Personal Systems and increased commodity costs, partially offset by pricing and cost reduction actions [25][26] Business Line Data and Key Metrics Changes - Personal Systems revenue increased by 11% with a 12% unit growth, benefiting from the Windows 11 refresh and AI PC adoption [26] - In the Print segment, revenue declined by 2% due to lower supplies volumes and market-driven hardware declines, with consumer revenue down 8% and commercial revenue down 3% [28] - AI PCs accounted for over 35% of total PC shipments, up from 30% in the previous quarter [12][58] Market Data and Key Metrics Changes - Revenue growth was observed across all regions, with APJ revenue up 13% in constant currency, EMEA up 5%, and Americas up 1% [24][25] - The overall PC unit Total Addressable Market (TAM) is projected to decline by double digits in calendar year 2026, reflecting industry-wide pricing actions [32][44] Company Strategy and Development Direction - HP is focusing on integrating AI into its products and services, with initiatives like AI at the Edge and the HP Digital Passport to enhance customer experiences [12][13] - The company is committed to a disciplined execution of its fiscal 2026 plan while navigating near-term challenges, emphasizing the importance of customer relationships and operational consistency [10][21] - HP is expanding its partnerships, including with Microsoft, to enhance its product offerings and customer engagement [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by rising memory costs, which are expected to remain volatile throughout fiscal 2026 and likely into fiscal 2027 [17][21] - The company is implementing various mitigation measures to address these challenges, including securing long-term agreements with suppliers and adjusting product configurations [18][19] - Management remains confident in HP's ability to navigate the current environment while focusing on long-term commitments and value creation [21][22] Other Important Information - HP plans to reschedule its Investor Day due to the ongoing CEO transition [22] - The company is committed to returning approximately 100% of its free cash flow to shareholders over time, with over $600 million returned in Q1 through dividends and share repurchases [31][55] Q&A Session Summary Question: Impact of memory costs in Q1 and guidance for the fiscal year - Management indicated that memory costs increased roughly 100% sequentially and are expected to further increase, impacting overall margins [40][41] Question: PC unit TAM decline specifics - Management expects a double-digit decline in PC unit TAM, aligning with industry forecasts, but sees opportunities for revenue growth through pricing actions and share gains [44][47] Question: Capital returns strategy amidst leverage concerns - Management remains committed to returning free cash flow to shareholders while managing leverage, with plans to repay debt as it comes due [55][56] Question: Nature of long-term agreements with suppliers - Management confirmed strong relationships with suppliers and ongoing negotiations to secure supply and pricing, with new suppliers being qualified to enhance supply chain resilience [71][75]

Financial Data and Key Metrics Changes - HP reported revenue of $14.4 billion for Q1 2026, representing a 7% year-over-year increase, driven by strong performance in Personal Systems and the impact of the Windows 11 refresh cycle [11][24] - Non-GAAP EPS was $0.81, reflecting a 9% growth compared to the prior year and was at the top of the guidance range [11][26] - Gross margin was 19.6%, influenced by a higher mix from Personal Systems and increased commodity costs, partially offset by pricing and cost reduction actions [25] Business Line Data and Key Metrics Changes - Personal Systems revenue grew by 11% with a 12% increase in units, benefiting from the Windows 11 refresh and AI PC adoption [26] - Print revenue declined by 2%, with consumer revenue down 8% and commercial revenue down 3%, although higher average selling prices (ASPs) helped offset lower volumes [28] - AI PCs accounted for over 35% of total PC shipments, up from 30% in the previous quarter [12][58] Market Data and Key Metrics Changes - Revenue growth was observed across all regions, with APJ revenue up 13% in constant currency, EMEA up 5%, and Americas up 1% [24] - The company anticipates a double-digit decline in the PC unit total addressable market (TAM) for calendar year 2026, reflecting industry-wide pricing actions [32] Company Strategy and Development Direction - HP is focusing on integrating AI into its products and services, with initiatives aimed at enhancing customer experiences and operational efficiency [12][13] - The company is committed to a "future of work" strategy, which includes expanding market share and ensuring pricing reflects the value delivered [10][12] - HP is actively managing supply chain challenges and implementing cost mitigation strategies in response to rising memory costs [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current volatile environment, emphasizing the importance of disciplined execution of mitigation plans [21][36] - The company expects to maintain its annual non-GAAP diluted EPS guidance range of $2.90-$3.20, although it may be closer to the lower end due to ongoing challenges [35][36] - Management highlighted the importance of securing supply and shaping demand to offset rising input costs [24][41] Other Important Information - HP is evaluating the impact of recent U.S. Supreme Court rulings on tariffs but does not expect significant negative effects [20] - The company plans to reschedule its Investor Day due to the ongoing CEO transition [22] Q&A Session Summary Question: Impact of memory costs on Q1 results - Management indicated that memory costs increased significantly, with a forecast of further increases impacting margins for the remainder of the year [40][41] Question: PC unit TAM decline specifics - Management expects a double-digit decline in PC unit TAM, aligning with industry forecasts, but sees opportunities for revenue growth through pricing and share gains [44][47] Question: Free cash flow generation target - Management discussed the expectation of $2.8 billion-$3 billion in free cash flow, emphasizing the importance of PS growth and cash conversion cycles [82][83] Question: Print margins and growth levers - Management highlighted strategies for maintaining print margins at the high end of their range, focusing on profitable growth and cost structure reductions [87] Question: CEO search process - The board is looking for a CEO with a proven track record in delivering shareholder value and navigating complex environments [90]

Financial Data and Key Metrics Changes - The company reported revenue of $14.4 billion for Q1 2026, representing a 7% year-over-year increase, driven by strong performance in Personal Systems and the impact of the Windows 11 refresh cycle [9][20] - Non-GAAP EPS was $0.81, reflecting a 9% growth compared to the prior year and was at the top of the guidance range [9][23] - Gross margin was 19.6%, influenced by a higher mix from Personal Systems and increased commodity costs, partially offset by pricing and cost reduction actions [21] Business Line Data and Key Metrics Changes - Personal Systems revenue grew by 11% with a 12% increase in units, benefiting from the Windows 11 refresh and AI PC adoption [23] - Consumer revenue in Personal Systems increased by 16% on a 14% unit increase, attributed to demand pull-in to avoid rising memory prices [23][24] - Print revenue declined by 2%, with consumer revenue down 8% and commercial revenue down 3%, although higher average selling prices helped offset lower volumes [25] Market Data and Key Metrics Changes - Revenue growth was observed across all regions, with APJ revenue up 13% in constant currency, EMEA growing 5%, and Americas increasing by 1% [21] - AI PCs accounted for over 35% of total PC shipments, up from 30% in the previous quarter [10] Company Strategy and Development Direction - The company is focused on integrating AI into its products and services, with initiatives aimed at enhancing customer experiences and operational efficiency [10][12] - The strategy includes expanding market share in high-value segments and ensuring pricing reflects the value delivered [7][10] - The company is committed to navigating near-term challenges while maintaining long-term growth strategies, including partnerships with technology leaders like Microsoft and OpenAI [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by rising memory costs and indicated that these costs are expected to remain volatile throughout fiscal 2026 [14][18] - The company is implementing various mitigation measures to manage these costs, including securing long-term agreements with suppliers and adjusting product configurations [15][16] - The outlook for fiscal 2026 includes expectations for revenue growth driven by pricing actions and share gains, although margins are anticipated to be below long-term ranges due to cost pressures [29][31] Other Important Information - The company plans to reschedule its Investor Day due to the ongoing CEO transition [19] - The search for a new CEO is underway, with a focus on finding a leader with experience in managing large, multi-segment businesses [5][6] Q&A Session Summary Question: Impact of memory costs on financials - Management indicated that memory costs increased roughly 100% sequentially and are expected to further increase, impacting overall margins [35][36] Question: PC unit TAM decline - The company expects the PC unit total addressable market to decline in double digits, with ongoing momentum from Windows 11 and AI PCs expected to drive revenue [39][41] Question: Guidance for full year amidst memory cost uncertainties - Management emphasized a prudent approach to guidance, factoring in stronger first-half revenue and anticipated memory cost increases [45][46] Question: Capital returns strategy - The company remains committed to returning 100% of free cash flow to shareholders, balancing this with debt repayment obligations [49] Question: Nature of long-term agreements with suppliers - Management confirmed strong relationships with suppliers and ongoing negotiations to secure both volume and pricing [67][68]

Q1 FY26 Earnings Announcement February 24, 2026 Forward-looking Statements This presentation contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions prove incorrect, they could affect the business and results of operations of HP Inc. and its consolidated subsidiaries ("HP") which may differ materially from those expressed or implied by such forward-looking statements and assumpti ...

Group 1 - The company expects its fiscal-year results to be closer to the low end of its prior guidance range [1]

Core Viewpoint - HP Inc anticipates ongoing volatility in memory chips and a significant decline in PC shipments, leading to a forecasted adjusted profit at the lower end of its previous guidance for fiscal 2026 [1][3] Group 1: Financial Performance - HP's adjusted profit for fiscal 2026 is expected to be between $2.90 and $3.20 per share, with current expectations leaning towards the lower end of this range [1] - The company's first-quarter revenue increased by 6.9% to $14.44 billion, surpassing estimates of $13.94 billion, while adjusted profit per share was 81 cents, exceeding estimates of 76 cents [6] Group 2: Market Conditions - The tech industry is facing increased costs due to a shortage of memory chips, driven by substantial AI data center expansions [2] - HP expects PC unit shipments to decline in the double digits, consistent with broader industry trends [1] Group 3: Strategic Responses - HP has implemented measures to mitigate the impact of rising memory costs, including supply chain adjustments and price increases to counteract tariffs [2] - The company is evaluating new tariff announcements but does not foresee immediate adverse effects on its business [5] Group 4: Demand Insights - Positive demand trends are noted in Europe and Asia, supported by the Windows 11 upgrade cycle, with a 16% growth in the consumer business during the first quarter [4] - AI-powered PCs accounted for over 35% of total PC shipments in the first quarter, up from 30% in the previous quarter [5]

Core Viewpoint - HP Inc. anticipates fiscal 2026 results to be at the low end of its forecasts due to U.S. trade regulations and rising memory chip costs, leading to a 3.6% decline in its shares during extended trading [1] Financial Performance - HP's first-quarter revenue increased by 6.9% to $14.44 billion, surpassing analysts' average estimate of $13.94 billion [1] - The adjusted profit per share for the quarter ended January 31 was 81 cents, exceeding estimates of 76 cents [1] - Revenue from the personal systems unit, which includes consumer and commercial PCs, grew by 11% to $10.25 billion [1] - Revenue in the printing segment fell by 2% to $4.19 billion [1] Market Outlook - HP's CFO indicated that the company expects results to be closer to the low end of its range due to increasing memory costs [1] - Preliminary data from IDC suggests a low double-digit decline in unit shipments for smartphones and personal computers in 2026 [1] - Global PC spending is projected to rise to $219.57 billion by 2027 [1] Strategic Adjustments - HP, similar to peers like Dell, has implemented supply chain adjustments and price increases to mitigate the impact of fluctuating tariffs and rising memory chip prices [1] - The company is benefiting from the growing adoption of AI-powered personal computers and the ongoing Windows 11 upgrade cycle [1]

Core Insights - HP Inc. reported a strong first quarter for fiscal 2026, with net revenue of $14.4 billion, reflecting a year-over-year increase of 6.9% [3][10] - The company experienced growth in its Personal Systems segment, particularly in AI PCs, despite facing industry-wide challenges [4][10] - Non-GAAP diluted net earnings per share (EPS) increased by 9% to $0.81, while GAAP diluted EPS decreased by 2% to $0.58 [10][12] Financial Performance - GAAP net revenue for Q1 FY26 was $14.4 billion, up from $13.5 billion in Q1 FY25, marking a 6.9% increase [1][3] - GAAP operating margin decreased to 5.3%, down from 6.3% year-over-year [1][10] - Non-GAAP net earnings rose to $0.8 billion, a 7% increase from $0.7 billion in the prior year [1][10] Segment Results - Personal Systems net revenue reached $10.3 billion, an 11% increase year-over-year, with a 5.0% operating margin [11][10] - Printing segment net revenue was $4.2 billion, down 2% year-over-year, with an 18.3% operating margin [11][10] - Consumer Printing revenue decreased by 8%, while Commercial Printing revenue fell by 3% [11][10] Cash Flow and Shareholder Returns - Net cash provided by operating activities was $0.4 billion, with free cash flow of $0.2 billion, a significant increase of 150% from the previous year [1][10] - The company returned $0.6 billion to shareholders through dividends and share repurchases [10][8] - HP's dividend payment was $0.30 per share, resulting in cash usage of $277 million [8][10] Outlook - For Q2 FY26, HP estimates GAAP diluted EPS to be in the range of $0.52 to $0.58 and non-GAAP diluted EPS to be between $0.70 and $0.76 [12][13] - The company maintains its annual guidance for FY26, projecting GAAP diluted EPS between $2.47 and $2.77 and non-GAAP diluted EPS between $2.90 and $3.20 [13][12] - HP anticipates generating free cash flow in the range of $2.8 to $3.0 billion for FY26, but expects to be at the lower end of this range due to a challenging operating environment [13][12]

Core Viewpoint - HP Inc. is under pressure as its stock has declined 17% year-to-date, trading near its 52-week low of $18.12, with significant concerns regarding memory cost inflation and the sustainability of the PC refresh cycle impacting its earnings outlook [1]. Group 1: Financial Performance - HP's fiscal Q4 2025 revenue was $14.64 billion, exceeding the consensus estimate of $14.49 billion and representing a 4% year-over-year growth [1]. - Non-GAAP EPS for Q4 2025 was $0.93, slightly above expectations of $0.92 [1]. - Personal Systems revenue grew by 8% due to increased average selling prices and a 7% increase in unit sales, while Printing revenue declined by 4% year-over-year [1]. Group 2: Earnings Guidance and Challenges - For fiscal Q1 2026, consensus estimates are a non-GAAP EPS of $0.77 and revenue of $13.925 billion [1]. - Management has indicated a 30-cent headwind to full-year earnings due to projected memory cost increases, which now account for 15% to 18% of the cost of a typical PC [1]. - The company is implementing strategies to mitigate memory cost impacts, including qualifying lower-cost suppliers and redesigning products for reduced memory configurations [1]. Group 3: Market Sentiment and Analyst Ratings - Wall Street analysts are cautious, with 10 out of 17 analysts rating the stock as a hold, 3 as a sell, and 1 as a strong sell, with an average price target of $23.21 [1]. - Major firms like Morgan Stanley and Bank of America have sell ratings with price targets set at $18 [1]. Group 4: Future Outlook - HP's Investor Day is scheduled for April 23, where management will discuss the impact of AI on the business, making the upcoming earnings results critical for setting the narrative [1]. - The demand for AI PCs (AIPCs) is expected to increase, with AIPCs representing over 30% of shipments in Q4 and projected to reach 40% to 50% in fiscal 2026 [1].