HP INC Q2 FY2025 earnings call

• Q2 Results: Delivered 5% constant currency revenue growth, strong in personal systems commercial and high-value categories; tariffs impacted non-GAAP operating profit.
• Innovation: Advanced future of work strategy with new products, AI PC portfolio, HP workforce experience platform, and security-focused printers.
• Supply Chain: Expanded manufacturing footprint, diversified locations to mitigate tariffs, and accelerated cost actions.
• Future Ready Plan: Expect to exceed $2 billion in gross annual run rate structural savings by FY 2025.

Personal Systems: Revenue up 7% nominally and 8% in constant currency, driven by higher commercial volumes and increased ASPs. Commercial revenue grew 9% year-over-year. Print: Revenue declined 3% in constant currency, in line with expectations. Grew share in developed markets, with growth in consumer subscriptions and industrial traffic.

• PC market expected to grow low single digits in second half and full year 2025.
• Print market expected to decline low single digits in 2025, with operating margin improvement in second half.
• FY 2025 non-GAAP diluted net earnings per share range $3.00-$3.30; Q3 non-GAAP diluted EPS range $0.68-$0.80.

• Impact of shifting trade policies and tariffs on operating profit.
• Macro-economic uncertainties affecting customer demand.

Q: Erik Woodring asked about PC market expectations for the second half and growth businesses.

A: Enrique Lores noted prudence in market estimation due to economic and price increase trends; Karen Parkhill added Windows 11 remains a catalyst. On growth businesses, they grow faster than core with higher margins.

Q: Michael Ng asked about PC market pull-in and growth businesses.

A: Karen Parkhill said pull-in was less than 1% of revenue growth; Enrique Lores discussed growth businesses growing faster than core with higher margins.

Q: Asiya Merchant asked about AI PCs and free cash flow.

A: Enrique Lores mentioned key AI PC applications and software adoption; Karen Parkhill explained free cash flow guide driven by earnings and working capital factors.

Q: Wamsi Mohan asked about mitigation impacts and supply chain.

A: Enrique Lores discussed supply chain shifts and cost actions; Karen Parkhill added future-ready cost savings are yielding more upside.

Q: Samik Chatterjee asked about print margin and Q3/Q4 guidance.

A: Karen Parkhill said print margins were solid due to cost discipline and grant funding; expected Q4 improvement from supply chain and pricing actions.

Q: Amit Daryanani asked about EPS guide and impact factors.

A: Enrique Lores and Karen Parkhill discussed combination of demand and tariff impacts on EPS guide.

Q: David Vogt asked about long-term impacts of manufacturing changes.

A: Enrique Lores stated expectation of finishing FY 2025 within prior ranges and continued confidence for FY 2026 and beyond.

Q: Tim Long asked about PC price elasticity and print competition.

A: Enrique Lores discussed elasticity and print pricing stability; Karen Parkhill mentioned print competitors' price increases.

Q: Alek Valero asked about PC pull-ins and Gen AI configurations.

A: Enrique Lores said pull-in impact was minimal; noted customers valuing AIPC configurations for Gen AI.