Thu, May 29, 10:03 AM (25 days ago)
**HP Inc. (HPQ) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** Q1 2025 revenue was $13.22 billion, up 3.3% year-over-year (YoY) and 4.5% on a constant currency basis. This growth was driven by increased units in Commercial Personal Systems (PS) and higher services revenue, partially offset by a decline in Printing revenue and unfavorable currency impacts. - **Profit Margins:** Gross margin decreased by 2.9 percentage points to 20.7% due to higher commodity and tariff costs, mix shifts towards Personal Systems, and unfavorable currency impacts. Operating expenses as a percentage of revenue decreased primarily due to lower variable compensation. - **Earnings:** Net earnings were $406 million, down from $607 million in Q1 2024. Earnings per share (EPS) were $0.43 basic and $0.42 diluted, compared to $0.62 and $0.61, respectively, in Q1 2024. **Cash Flow and Earnings Changes:** - **Cash Flow:** Net cash provided by operating activities was $412 million, down from $702 million in Q1 2024. This decrease was primarily due to an unfavorable cash conversion cycle and lower net earnings. - **Earnings Changes:** Earnings from operations were $654 million, down from $952 million in Q1 2024. This decrease was driven by a decline in gross margin, partially offset by a decrease in operating expenses as a percentage of revenue. **Segment Performance:** - **Personal Systems:** Revenue increased by 7.1% YoY, driven by a 6.3% increase in PCs unit volume and a 1.7% increase in average selling price (ASP). Earnings from operations as a percentage of net revenue decreased by 1.5 percentage points. - **Printing:** Revenue decreased by 4.3% YoY due to declines in Supplies and Commercial Printing, as well as unfavorable currency impacts. Earnings from operations as a percentage of net revenue increased by 0.5 percentage points. **Trends and Uncertainties:** - **Macroeconomic Environment:** HP faces global macroeconomic challenges, including geopolitical conflicts, market uncertainty, volatility in exchange rates, inflationary trends, and evolving global trade dynamics. - **Transformation Update:** HP's Fiscal 2023 Plan, amended in February 2025, aims to achieve digital transformation, portfolio optimization, and operational efficiency. The plan includes structural cost savings and headcount reductions. **Future Operations Impact:** - **Cost Savings:** HP expects to continue investing some of the savings from its restructuring plans into growth areas and its workforce. - **Liquidity and Capital Resources:** HP maintains sufficient liquidity and capital resources to meet its operating cash requirements, planned capital expenditures, interest and principal payments on all borrowings, pension and post-retirement funding requirements, authorized share repurchases, and annual dividend payments.