Workflow
HP Stock Falls 8% on Q2 Earnings Miss, Revenues Rise Y/Y
HPHP(US:HPQ) ZACKS·2025-05-29 15:36

Core Viewpoint - HP Inc. reported lower-than-expected earnings for Q2 fiscal 2025, leading to a 7.8% decline in share price after market hours. The company also provided a profit outlook for Q3 that fell short of expectations, indicating ongoing challenges in the personal computer market [1][10]. Financial Performance - HP's non-GAAP earnings for Q2 were 71 cents per share, missing the consensus estimate by 11.3% and declining 13% from the previous year's earnings of 82 cents [1][2]. - Revenues increased by 2.4% year-over-year to $13.2 billion, but this also missed the Zacks Consensus Estimate by 1.7% [2]. - The Personal Systems (PS) segment, which accounts for 68.2% of total revenues, generated $9 billion, reflecting a 7% increase year-over-year (8% at constant currency) [3][4]. Segment Performance - The total PC units sold increased by 6% year-over-year, with a notable 11% rise in Commercial PS shipments, while Consumer PS shipments decreased by 2% [4]. - The Printing business, making up 31.8% of net revenues, saw a 4% decline in revenues year-over-year to $4.2 billion, primarily due to weaknesses in the Commercial Printing and Supplies segments [5]. Regional Performance - HP experienced growth across all regions, with the Americas up 4.7%, EMEA growing by 1.5%, and Asia Pacific and Japan increasing by 8.8% year-over-year [6]. Operating Margins - The non-GAAP operating margin for the PS segment contracted by 150 basis points to 4.5%, while the Printing division's margin decreased by 50 basis points to 19.5%. Overall, HP's non-GAAP operating margin from continuing operations contracted by 120 basis points to 9% [7]. Cash Flow and Shareholder Returns - At the end of Q2, HP had cash and cash equivalents of $2.73 billion, down from $2.89 billion in the previous quarter. The company generated $38 million in cash from operations but reported negative free cash flow of $95 million [8]. - During the quarter, HP repurchased $100 million in shares and paid $273 million in dividends, totaling $546 million in dividends and $200 million in share buybacks for the first half of fiscal 2025 [9]. Guidance - For Q3 fiscal 2025, HP estimates non-GAAP EPS between 68 cents and 80 cents, below the Zacks Consensus Estimate of 82 cents. The company also lowered its fiscal 2025 EPS guidance to a range of $3.00 to $3.30, down from $3.06 to $3.36, with the consensus at $3.44 [10].