Financial Data and Key Metrics - Revenue grew 2% YoY, marking the first revenue growth in nine quarters, driven by strong performance in Personal Systems [8] - Non-GAAP operating profit declined 7% YoY, and non-GAAP EPS was within the previously provided outlook range but below expectations [9] - Free cash flow was 0.9 billion returned to shareholders through repurchases and dividends [20] - Personal Systems revenue increased 5% YoY, with operating profit at 6.4%, in line with expectations [17] - Print revenue declined 3% YoY, with operating profit at 17.3%, below expectations due to softer demand and aggressive pricing [19] Business Line Performance - Personal Systems saw growth in high-value categories, including workstations and consumer premium, with gaming revenue growing QoQ in line with seasonality [17] - Print business faced challenges with slower market recovery, particularly in China, but saw growth in home and office segments excluding China [19] - AI PC shipments are ramping up, with positive initial reactions, and the company expects AI PCs to represent 50% of shipments by 2027 [18][44] Market Performance - Americas, EMEA, and APJ regions each grew 3% in constant currency [25] - PC market recovery was strong, particularly in commercial segments, with enterprise growing close to 5% and government between 6% and 7% [50] - Print market share increased both YoY and sequentially, with momentum in industrial graphics and supplies [29] Company Strategy and Industry Competition - The company is accelerating its Future Ready program, aiming to achieve 80% of the three-year structural cost run-rate target by the end of 2024 [9] - Investments in AI and hybrid work experiences are central to the company's strategy, with a focus on delivering new AI experiences for customers [21] - The company is leveraging AI to reduce customer call times and improve deal quotes, with further cost reductions planned in the print business [30][32] Management Commentary on Operating Environment and Future Outlook - Management expects the PC commercial momentum to continue, but the print market recovery will remain slower than expected [20] - The company is moderating its expectations for Q4 and the full year, with non-GAAP EPS expected to be in the range of 3.45 for FY 2024 [35] - The competitive pricing environment, particularly in print, is expected to persist, with Japanese competitors benefiting from a weaker yen [47] Other Important Information - The company acquired Cybercore Technologies to strengthen its security expertise and enhance offerings [14] - HP received a 10 billion, reaffirming its commitment to returning 100% of free cash flow to shareholders [61] Question: Free Cash Flow and Future Ready Program - Free cash flow is expected to remain strong, with the Future Ready program's cash outlays estimated at $300 million for FY 2024 [69] Question: Print Hardware Strategy and KPIs - The company is placing profitable hardware units to gain market share, with Instant Ink revenue and subscribers continuing to grow [72][73] Question: Personal Systems Seasonality - Q4 Personal Systems revenue is expected to increase sequentially, though consumer weakness may result in less seasonal growth than historically [75] Question: Federal Government Business - Federal government business grew between 6% and 7% in Q3, with strong momentum expected to continue in the second half [80] Question: Windows 10 End-of-Life and Refresh Cycle - The majority of the commercial PC refresh cycle is still ahead, with momentum expected to continue leading up to Windows 10 end-of-life in 2025 [83]
HP(HPQ) - 2024 Q3 - Earnings Call Transcript