HP INC Q4 FY2024 earnings call

• Q4 results: Revenue up 2% Y/Y, non-GAAP EPS grew 3% to $0.93. - Innovation: Showcased AI-powered capabilities at HP Imagine, expanded AI PC portfolio with HP AI Companion, launched HP Boost and enhanced workforce experience platform. - Future Ready: Accelerated future ready structural cost-saving plans, ahead of initial cost plan goals. - Strategic focus: Investing in AI-powered capabilities, leveraging portfolio for growth in commercial and solution segments, focusing on premium consumer and gaming, evolving supply chain capabilities.

In Q4, revenue was up 2% year-over-year. Personal Systems: Revenue up 2% nominally and 3% in constant currency, with commercial units and share gains driving growth, AI PC units over 15% of shipments, commercial TAM expected to grow 3x faster than consumer. Print: Revenue grew 1% Y/Y, fueled by supplies and industrial graphics, consumer grew 3% Y/Y with share gains, commercial revenue declined 1% but units increased 9%.

• FY'25: PC market expected to grow faster than FY'24 fueled by AI, print market to decline low single-digits. Revenue for Personal Systems and Print to perform in line with respective markets. EPS range for FY'25: non-GAAP $3.45-$3.75, GAAP $3.06-$3.36. Q1 EPS range: non-GAAP $0.70-$0.76, GAAP $0.57-$0.63. Free cash flow expected $3.2B-$3.6B. Dividend increased by 5% to $1.16 per share.

• Commodity cost pressure impacting operating profit. - Competitive pricing environment in print. - Geopolitical and tariff impacts on supply chain.

Q: Typically first quarter EPS is about 25% of full year, this year closer to 20%. Talk about puts and takes.

A: Q1 has seasonal volume declines, sequential increase in corporate other expense due to stock compensation timing.

Q: On Future Ready transformation, why not higher improvement in free cash flow?

A: Expect free cash flow to grow roughly in line with earnings, will continue to improve working capital, slightly higher capital expenditures in future to support growth but free cash flow expected to grow with earnings.

Q: Why not expect more share gain next year?

A: Conservative in assumptions, focus on growing share in profitable categories, commercial priority.

Q: Impact of AI PC mix expansion on ASPs and PS margins?

A: AI PCs expected to drive improvement in average selling price, current shipments and pricing support assumptions.

Q: Mitigating supply chain impacts from tariffs?

A: Strong supply chain footprint, building factories globally, will respond to final policies.

Q: Expectations for growth services next year?

A: Growth services grew mid-single digits, drivers include growing subscribers, expanding portfolio, strong second half in Workforce Solutions and hybrid systems.

Q: Commodity cost pressure lag effect?

A: Pressure expected in first half of FY'25, mitigated by repricing and cost actions in second half.

Q: Print market decline, commercial vs consumer?

A: Consumer to continue decline, contractual office and industrial to perform better, focus on contractual office for growth.

Q: Windows upgrade cycle impact on PC market?

A: Deadline in fall 2025 for Windows 10 support increase will drive enterprise refresh, expected to accelerate PC growth in 2025.