Palo Alto, CA (May 30, 2023) — HP (NYSE: HPQ) and its subsidiaries 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.
“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, amortization 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 1 day quarter over quarter to 29 days. Inventory ended the quarter at $7.2 billion, up 5 days quarter over quarter to 65 days. Accounts payable ended the quarter at $13.3 billion, up 10 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.
“We continue to see soft demand and aggressive pricing in the consumer print market,” Lores said on Tuesday’s earnings call. “This was offset by [a] favorable mix in our office business, including 10% revenue growth in commercial hardware and supplies performed better-than-expected driven by better demand in office.
“We delivered print operating margin of 19%,” he added. “This shows the continued benefit of our disciplined cost management as well as favorable pricing in office as we bring strong innovation to market. For example, this quarter, we launched a new line-up of laser jet printing systems designed to help businesses maximize productivity. We also continue to make progress rebalancing overall system profitability. Our HP+ and big tank printers once again represented more than 50% of our shipments in the quarter. We gained share year-over-year and sequentially in big tank and Instant Ink grew revenue and new enrollees.
“Just as we have done in personal systems, we need to improve our execution in print to gain share. We aim to do this in a thoughtful way, focused on winning in the right areas to drive profitable growth and increasing our mix of profitable customers.”
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, amortization 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, amortization 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.
HP’s FY23 Q2 earnings conference call is accessible via audio webcast.
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About HP Inc.
HP Inc. (NYSE: HPQ) is a global technology leader and creator of solutions that enable people to bring their ideas to life and connect to the things that matter most. Operating in more than 170 countries, HP delivers a wide range of innovative and sustainable devices, services and subscriptions for personal computing, printing, 3D printing, hybrid work, gaming, and more.
