Financial Performance - HP reported quarterly earnings of $0.75 per share, matching the Zacks Consensus Estimate, but down from $0.83 per share a year ago [1] - Revenues for the quarter ended July 2025 were $13.93 billion, missing the Zacks Consensus Estimate by 0.19%, and up from $13.52 billion year-over-year [2] - The company has not surpassed consensus EPS or revenue estimates over the last four quarters [2][3] Stock Performance - HP shares have declined approximately 17.2% since the beginning of the year, contrasting with the S&P 500's gain of 9.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.89 on revenues of $14.1 billion, and for the current fiscal year, it is $3.09 on revenues of $54.76 billion [7] - The outlook for the Computer - Micro Computers industry is positive, ranking in the top 20% of over 250 Zacks industries, suggesting potential for better performance compared to lower-ranked industries [8] Industry Comparison - Dell Technologies, a competitor in the same industry, is expected to report quarterly earnings of $2.31 per share, reflecting a year-over-year increase of 22.2% [9] - Dell's anticipated revenues are $29.32 billion, representing a 17.2% increase from the previous year [10]

Summary of HP Inc. Conference Call Company Overview - **Company**: HP Inc. (HPQ) - **Event**: Bank of America's Global Tech Conference - **Date**: June 04, 2025 - **Key Speaker**: Enrique Louras, President and CEO Industry Insights - **Macro Environment**: The macro environment is described as mixed, with strong demand in the commercial PC sector but challenges due to tariffs and trade changes [3][4] - **Growth Expectations**: HP has moderated its growth expectations for the second half of the year, anticipating a slowdown in demand due to rising prices across multiple categories [4][5] Financial Performance - **Q2 Performance**: HP experienced solid growth but faced profit challenges due to tariff impacts, which affected earnings per share (EPS) by approximately $0.10 [11] - **Cost Mitigation**: The company expects to fully mitigate tariff-related costs by Q4 2025 [11] Tariff and Supply Chain Dynamics - **Tariff Impact**: The tariffs imposed were higher than anticipated, leading to increased costs from duties, distribution changes, and supply chain inefficiencies [9][10] - **Manufacturing Shift**: HP has accelerated its plan to move manufacturing out of China to enhance resiliency, with a complete transition for U.S. products expected by June 2025 [13][14] - **Working Capital**: The shift to multiple factories has increased inventory needs, impacting working capital and free cash flow in the short term [17][18] Product Segments - **PC Market Outlook**: The growth in the PC market is expected to be in the low single digits for units, with revenue growth driven by price increases [34] - **AI PCs Adoption**: HP anticipates that at least 25% of its shipments will be AI PCs, with strong adoption expected due to cost and performance advantages [36][38] - **Print Business**: The print segment has been less impacted by tariffs due to a more diversified manufacturing base. Price increases are also being implemented across the print industry [22][23] Subscription and Services Strategy - **Print Subscription Growth**: HP is expanding its subscription services, including a paper subscription program, which has seen steady growth with around 1 million subscribers [50][51] - **Value Proposition**: The transition to subscription models is aimed at capturing more value from customers and enhancing profitability [49][52] Margin Performance - **Print Margins**: HP has achieved strong margin performance in the print segment due to cost structure reductions and a focus on profitable printer shipments [52][53] - **Future Margin Expectations**: While maintaining a margin range of 16% to 19%, HP aims to maximize long-term profitability [56] Inventory Management - **Channel Inventory**: HP reports that channel inventory is in good shape, with no significant changes due to tariffs [58] - **Visibility Improvements**: The company has enhanced visibility across its supply chain to manage inventory effectively [60] Strategic Initiatives - **Poly Acquisition**: The acquisition of Poly is seen as a key differentiator, allowing HP to offer integrated workplace solutions [66] - **AI Integration**: HP is focusing on integrating AI across its portfolio, which is expected to drive revenue growth and improve profitability [72][73] Investor Perspective - **Free Cash Flow**: HP views the recent decline in free cash flow as temporary, with a commitment to return 100% of free cash flow to investors [71][72] - **Long-term Projections**: The company maintains a positive long-term outlook, driven by AI opportunities and expansion into new service areas [73]

Core Viewpoint - HP reported quarterly earnings of $0.71 per share, missing the Zacks Consensus Estimate of $0.80 per share, representing an earnings surprise of -11.25% [1][2] Financial Performance - The company posted revenues of $13.22 billion for the quarter ended April 2025, missing the Zacks Consensus Estimate by 1.51%, compared to year-ago revenues of $12.8 billion [2] - Over the last four quarters, HP has not surpassed consensus EPS estimates and has topped consensus revenue estimates just once [2] Stock Performance - HP shares have lost about 13.2% since the beginning of the year, while the S&P 500 has gained 0.7% [3] - The current Zacks Rank for HP is 4 (Sell), indicating expected underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.82 on revenues of $14.14 billion, and for the current fiscal year, it is $3.44 on revenues of $55.09 billion [7] - The estimate revisions trend for HP is currently unfavorable, which may change following the recent earnings report [6] Industry Context - The Computer - Micro Computers industry, to which HP belongs, is currently in the bottom 29% of the Zacks industry rankings, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact HP's stock performance [5]

Financial Data and Key Metrics Changes - The company reported a 5% increase in revenue in constant currency year over year, marking the fourth consecutive quarter of revenue growth [7][21] - Non-GAAP operating profit fell short of expectations due to additional tariff costs, impacting earnings per share by approximately $0.12 [8][21] - Operating margin was 7.3%, impacted by roughly 100 basis points due to unmitigated tariff costs [24][21] Business Line Data and Key Metrics Changes - Personal Systems revenue grew 8% in constant currency, driven by strong commercial performance, with commercial PC revenue increasing by 9% year over year [9][10] - Print revenue declined 3% in constant currency, with growth in Europe offsetting a slowdown in North America and weak demand in China [11][12] - Personal Systems operating margin was 4.5%, below guidance due to higher commodity and tariff costs [26] Market Data and Key Metrics Changes - Revenue growth was seen across all regions, with APJ growing 9%, Americas growing 5%, and EMEA growing 1% in constant currency [23] - The company expects the PC market to grow low single digits for the second half of the year, influenced by macroeconomic uncertainties [18][31] - The print market is expected to decline low single digits for the calendar year, with the second half declining closer to mid single digits [32] Company Strategy and Development Direction - The company is focusing on diversifying its manufacturing locations to mitigate geopolitical risks, with nearly all products sold in North America expected to be built outside of China by June [8][9] - The Future Ready Accelerated Plan aims to deliver at least $2 billion in gross annual run rate structural savings by the end of fiscal year 2025 [18][28] - The company is committed to leveraging AI to enhance productivity and employee satisfaction, with significant investments in AI PC portfolios and workforce solutions [13][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic geopolitical landscape and its impact on operating profit, emphasizing the need for cost management and strategic pricing actions [21][22] - The company remains confident in its ability to navigate market uncertainties and expects to fully mitigate tariff costs by Q4 [30][34] - Future growth is anticipated in both Personal Systems and Print segments, with expectations for sequential improvement in margins [31][32] Other Important Information - Cash flow from operations was approximately $38 million, with free cash flow slightly negative due to timing of payments related to inventory actions [29] - The company returned close to $400 million to shareholders through dividends and share repurchases [30] Q&A Session Summary Question: Expectations for the PC market in the second half of the year - Management noted strong demand in Q2 but adopted a more prudent outlook for the second half due to economic conditions and anticipated price increases [39][40] Question: Size and growth of growth businesses - Growth businesses are expected to grow faster than core businesses, with AIPCs projected to represent over 25% of the PC business by year-end [46][47] Question: Personal Systems margins for the full year - Margins are expected to be in the 5% to 7% range for the full year, likely in the lower half due to Q2 impacts [52][53] Question: AI PCs and their applications - The company is optimistic about AI PCs, with over 100 ISVs supporting applications that leverage their capabilities [59][60] Question: Mitigation actions for tariff impacts - The company has accelerated the shift of factories out of China and implemented price actions across its portfolio to mitigate tariff impacts [69][72]