HP revenue down 21% in Q2 results

HP has announced fiscal 2023 second-quarter net revenue of $12.9 billion, down 21.7% (down 18.0% in constant currency) from the prior-year period.

• The second quarter GAAP diluted net earnings per share ("EPS") of $1.07, above the previously provided outlook of $0.40 to $0.50 per share
• Second quarter non-GAAP diluted net EPS of $0.80, within the previously provided outlook of $0.73 to $0.83 per share
• Second quarter net revenue of $12.9 billion, down 21.7% from the prior-year period
• Second quarter net cash provided by operating activities of $0.6 billion, free cash flow of $0.5 billion
• The second quarter returned $0.3 billion to shareholders in the form of dividends

“Our disciplined execution and strong innovation in a tough macro environment allowed us to deliver non-GAAP EPS at the high end of our target in Q2,” said Enrique Lores, HP President and CEO. “We are well-positioned to win in our markets and drive long-term sustainable growth as we make continued progress against our Future Ready plan.”

Second quarter GAAP diluted net EPS was $1.07, up from $0.94 in the prior-year period and above the previously provided outlook of $0.40 to $0.50. Second quarter non-GAAP diluted net EPS was $0.80, down from $1.08 in the prior-year period and within the previously provided outlook of $0.73 to $0.83. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS excludes after-tax adjustments of $(269) million, or $(0.27) per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortisation of intangible assets, non-operating retirement-related credits and tax adjustments.

Asset Management

HP's net cash provided by operating activities in the second quarter of fiscal 2023 was $0.6 billion. Accounts receivable ended the quarter at $4.1 billion, up one day quarter over quarter to 29 days. Inventory ended the quarter at $7.2 billion, up five days quarter over quarter to 65 days. Accounts payable ended the quarter at $13.3 billion, up ten days quarter over quarter to 120 days.

HP generated $0.5 billion of free cash flow in the second quarter. Free cash flow includes net cash provided by operating activities of $0.6 billion adjusted for net investments in leases of $35 million and net investments in property, plant and equipment of $130 million.

HP’s dividend payment of $0.2625 per share in the second quarter resulted in cash usage of $0.3 billion. HP exited the quarter with $1.9 billion in gross cash, which includes cash, cash equivalents and restricted cash of $1.9 billion, and short-term investments of $3 million included in other current assets. Cash, cash equivalents, and restricted cash includes $17 million of restricted cash related to amounts collected and held on behalf of a third party for trade receivables previously sold.

Fiscal 2023 Second quarter segment results

• Personal Systems net revenue was $8.2 billion, down 29% year over year (down 25% in constant currency) with a 5.4% operating margin. Consumer PS net revenue was down 39%, and Commercial PS net revenue was down 24%. Total units were down 28%, with Consumer PS units down 34% and Commercial PS units down 23%.
   
• Printing net revenue was $4.7 billion, down 5% year over year (down 2% in constant currency), with a 19.0% operating margin. Consumer Printing net revenue was down 19%, and Commercial Printing net revenue was up 5%. Supplies net revenue was down 4% (down 3% in constant currency). Total hardware units were down 4% overall, with Consumer Printing units down 5% and Commercial Printing units flat.

Outlook

For the fiscal 2023 third quarter, HP estimates GAAP diluted net EPS to be in the range of $0.61 to $0.71, and non-GAAP diluted net EPS to be in the range of $0.81 to $0.91. Fiscal 2023 third quarter non-GAAP diluted net EPS estimates exclude $0.20 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortisation of intangible assets, non-operating retirement-related credits, tax adjustments and the related tax impact on these items.

For fiscal 2023, HP estimates GAAP diluted net EPS to be in the range of $2.91 to $3.11, and non-GAAP diluted net EPS to be in the range of $3.30 to $3.50. Fiscal 2023 non-GAAP diluted net EPS estimates exclude $0.39 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortisation of intangible assets, debt extinguishment costs, non-operating retirement-related credits, tax adjustments and the related tax impact on these items. For fiscal 2023, HP anticipates generating free cash flow in the range of $3.0 to $3.5 billion.

More information on HP's earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at investor.hp.com.