HPQ - Earnings call transcript Q3 2018

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Operator

Good day, everyone, and welcome to the Third Quarter 2018 HP, Inc. Earnings Conference Call. My name is William, and I will be your conference moderator for today’s call. At this time, all participants will be in listen-only mode.

We will be facilitating a question-and-answer session towards the end of the conference. Instructions]. [Operator reminder, being a purposes. for conference this as recorded is replay And Investor would the call, for of turn like Beth over Head I to host presentation now to your Howe, Relations. today’s go Please ahead.

Beth Howe

Howe, afternoon. would Steve and third Chief HP’s I welcome quarter Head Good conference to Officer. HP’s Beth of Relations Chief with Inc., like fiscal for the to and President call Executive Fieler, Investor Financial you earnings Officer; and HP, XXXX Weisler, I’m Dion

Dion, be let approximately is shortly at webpage to on remind on Before you replay earnings call handing over call one www.hp.com. the website this me being the presentation posted our of release that call Investor for our We the after the made and Relations A year. slide webcast. the webcast will available accompanying

always, presentation of best see of forward-looking the based as are and this them view and we on our businesses our world today. elements As are

please forward-looking earnings information, the see in involve detailed assumptions. and that more uncertainties statements For disclaimers to related materials risks,

For please update reports, refer uncertainties recent and to and such no does to statements. a any assumptions, not Form obligation forward-looking SEC our most intend including risks, HP’s of discussion HP XX-K. assumes these

filings. that reflects available ended from July note information also for this quarter fiscal reported XXXX XX-Q on the could the now in differ XX, financial HP’s ultimately call We on amounts estimates discussed and the SEC other information based materially HP’s and Form

specifically noted, year-ago unless quarterly otherwise corresponding quarter. comparisons this During the are webcast, all comparisons year-over-year with

Please Dion. today’s hand And for the and I’ll expressed it reconciliations. non-GAAP GAAP reconciliations on the basis, to a we now over For tables information. included financial to accompanying those information to earnings has have comparable slide presentation release been that refer

Dion Weisler

regions. quarter thank you and Thanks, Beth. today. performance strong Quarter with joining for three profitable afternoon, across growth consistent businesses another balanced was everyone, and of us Good and

profitable business sustainable consistently As what do deliver and a the would and we growth. impressive. delivering we QX optimizing to company, we’re was long-term said

so Specifically, earnings XX% cash growth, the returned $X.X $XXX revenue and the $X.X billion quarter total opportunity And the year right return factors, performance billion increased top far regardless conditions, flow adding us share billion. in non-GAAP to to per this deliver $X.X plan, external delivered $X.XX. to the movements. Each bringing we shareholders, shareholders to free and quarter is for innovate, to operational delivered to we XX% of in line, cash and million balance an how we market we of of competitor and strike

advance core in business. on increasing models. business position as categories, grow in are our with innovation segments invest productivity we’re the importantly, cost our just And and share, out can profitable to We where of continuing new growth with taking and future our we disrupt and laser-focused in

financial is our goal and while our game strategic our about, the partners clear executing on products deliver that been delivering and I’ve by engineered our playing We consistently framework. our customers. As right commitments, own consistently and are to by way do to and services amaze winning this

business. the let Now across what we’re through take you seeing me

It the with growing across growing HP where quarter, the versus and strong continues operating the product sequentially growth share margins, start priority. Systems, year. and Personal dollars, categories. another growth to be each market calendar let’s with revenue our First, profit profitable continued prior and with second regions in outperform was to quarter PC broad-based

objective efforts, and business. an of results not proud team’s we’re of innovation an be our the continued While share for and our to of these outcome gains customers

the delivering and experiences We’re products differentiated market. to

In design privacy to of of a magic. portfolios, and We and integrated and with of sprinkles our the like desktops the continue bold detachable first including Elite May, unveiled Personal ENVY reinvent secure to lineup deliver our with new ultimate across and PCs. Systems the style, business most call, performance leveraging notebooks, world’s our the and premium portfolio and I versatility, HP’s displays manageable convertible engineering to and The leadership what is business smallest screen. combination team we

we’re products as and we with strong will our of vertical and accessories. new a about remains the pipeline we brand the Similarly, of gaming, market markets, continue industry-leading hitting new to excited be range head season. In holiday premium growth. drive OMEN we innovation a Our in portfolio into enhanced

minutes In newest Engage on May front than a with the XX center platforms. month’s in layers Of at across League Overwatch OMEN Sale a festival from was million just enable of engagement in laptop out launched moment seamless gaming that sold and the at JD.com. attracted consumers introduced HP portfolio, Finals retail, store the Our a check new to viewers in versatile platform last with retailers OMEN Beijing more And Grand that Point until enter they retail out. time streaming we providing security XX

Our solutions new offering. also the available retail Device-as-a-Service will HP be through

business Print strategically hardware, supplies. Print team progress hardware market steady and calendar impressive Total consumer print regions to Printing execute our quarter, deliver was towards business innovate and of an continues growth. and profitable not Just in up across with only XX% units but is XX%, the were our health supporting second portfolio, growth up models. in confidence across overall the revenue in the like progress the business contractual Systems, hardware, commercial for X% long-term. shifting The make strategy the continues making the Print all Personal grew and in the Print and to

and delivering color expanded of business upon best-in-class to printing, Over extended few portfolio performance we’ve and printer the Samsung’s customers our AXproduct quarters, our past while security. acquisition offer affordable

We solutions OEDs, the This and dealers, deep direct and technology go-to-market an a next important has our a indirect strategy announced of services the Apogee proven is Earlier the document to this accelerate higher-margin pools office investments Services acquire provider contractual sales. Europe’s are independent services. and to with and with agreement strong selective print capabilities, to foundation market. and definitive in we in Print track month, from step increased on differentiated to office Corporation. of growth access including in Managed contractual in record our that is equipment of Apogee provide largest print profit expand acquisition capabilities this building or

Following benefits the business our met contractual transaction, announcement HP that to of and our industry understand both contractual. faster with a scaling to number in our partners large I shift of the the who partners grow

Looking we other are graphics, driving initiatives. at market-leading and our In grew strategic again revenue innovation.

amazing new Z image the format unveiled we DesignJet quarter, and efficiency. photo quality that production printers This offer large

increase in their we in Donnelley the drove customers. We the to production ability to adding manufacturing Indigo products HP XD and capacity that the to customers, high-quality also print Shifting announced to business, their presses installations R.R. fleet their progress new our pleased XD help their printing printing enhance are with new industrial-grade is XD to market. for largest printing center with accelerating the world’s manufacturing. China, including We deliver

applications increasingly encouraged wide auto final part across markets. of healthcare and array sectors, are industrial, by the We the consumer, including

are production. We’re seeing north of XX% our of for the on final parts systems produced

This have critical XD presence quarter, for providing enabler our and our with expansion. for furthered engineers also the tools expanded production platform. industrial design Siemens, partnership strategic design product full is for Ensuring world’s integrated channel a our we color market software support

optimistic very to the and in manufacturing are with the this excited our $XX but We disrupt stages global early market. business, ability remain still trillion of

our at share news Before I’d to Printing early in HP, I made with move President years of business Nigro, off After XXXX. the some XX retire to Stephen XD additional XD you. like printing, decision has

commercial-grade recently has the to I the a printing plastics for U.S. be and most and past teams Fourth number to leading had decades, launch. one Industrial HP. HP XD an opportunity Inkjet the Revolution. less Asia years three couldn’t printing our more differentiated the leadership During A thankful has accelerate become first from pioneering that Stephen printing two technology help leadership, XD into nascent turning will after business to across enable vendor career tremendous to a Steve’s than printers guidance a product commitment XD

of operational HP, Christoph this experience, outstanding delivered I One the celebrated Printing, the of XXth-year to is region has important at our and he XD Schell, has he’s rigorous and bench customers service-led where new of XD our a team phase Christoph we growth. our impressive and business leadership passion will in into his on I’m of scaling pride the will key confidence super and partners Printing for focus current leader things with President XD of and a Printing Americas models. and planning. played and role business. has region business. the transitioning on wins just President and transition become breadth next that earliest anniversary Printing his in of Americas depth rigorous excited great our have leadership, succession a our our balanced Christoph consistent the and his ourselves XD Under partnerships.

be you Analyst the is York meet summary, at profitable another X. Security balanced expect strong in effective Meeting forward QX role all In We Christoph Christoph’s to look regions. transition and of businesses October with performance across was on to having November New and our growth quarter the Xrd. seamless

in business. with the We pleased the success are

consistently to monitoring trade and component environment, demonstrated one ability and and to advantage we’ve leverage our navigate dynamics, global ahead industry of are currency QX, performance. challenges to is innovation drive scale strengths we the and Looking market create these impact evolving several volatility sustained of the the availability. including said, our That

hand to financial continue and commitments, to over our this. doing and more Steve it cover financial team’s We that, I’m are exactly our the meeting results outlook. With share our and I’ll detail executing in in ability to confident

Steve Fieler

goal focused QX recently employees, balance another future. while with met on while our through And increasingly dynamic the partners, investing our it’s quarter, furthering growth and that results leading positioning also delivered value. clear and was our for environment. creating Thanks, demonstrate a strategy large in delivering consistent in results the remains and company this long-term this shareholder each number we an Dion. of near-term, company of the executing Having strong customers with quarter, where

segments We growth and operating both in continue profit post revenue dollars and across per earnings share. to

We XX% financial cash our to quarters, are details. I’ll also in free prior the generated track capital to Similar of XX%. of shareholders and through above high-end quarter the to to flow return our walk on strong range

revenue the XX%, in return; then sheet, including or the cash up capital up and the billion, X% net with Starting flow balance line, First, $XX.X currency. was and P&L, top constant guidance. segments; finally, the

the of for up million X%, expenses was grew We across from down diluted XX.X%, APJ XX% addition XX Americas diluted operating $XX gross net share grew constant share margin points assets EMEA on performance S-Print. with geographies. quarter. credits XX%. in margin earnings primarily tax Sequentially, was X.X X%. expense by the businesses Sequentially, remained strong Non-GAAP currency, year was year-over-year, Gross of and Our items. basis net of OI&E the increase, shares. per $XX $XX down $X.XX, investments XX%, of up XX R&D Regionally, to primarily by $XX basis charges non-operating resulting similar Non-GAAP amortization all GAAP-only of This $X.X million, S-Print, support $X.XX, periods per and other Non-GAAP of approximately of were to of billion seasonal XX%. incremental share was earnings of delivered intangible a go-to-market $XX is declined in by diluted driven or and million, up charges billion million which the year, non-GAAP retirement-related growth. totaling prior was growth along excludes and these mix. addition net million, points, count offset of driven impact acquisition-related expenses related operating with and over

net Systems revenue the QX billion, be XX%. segments, continue As innovative Systems revenue XX%. delivering customer GAAP investing headwinds profit, X.X of Consumer diluted grow million XX% segment was up XX% By points up the to year. We share a quarter segment, our saw by product was innovation. for earned growth $X.XX. By At broad-based earnings level, revenue strength and remained XX% versus was $X.X $XX for notebooks, continue Personal operating outgrew supply opportunity and and market Personal managing up portfolio. up cost while profitable result, desktops, product doing In go-to-market, and calendar up geographies customer and products, per was for in share up we Results to two, so across we XX%, reflecting market a of Commercial and last revenue the XX% up advantage. for took net and strong, workstations. category, chain,

by basis Printing, and improved by In mix, The points ASPs higher up also and XX margin points logistics revenue offset quarter, $X.X currency basis higher X.X%, sequentially. both year-over-year favorable and primarily to was was due XX XX%. operating We driven commodity improved partially the in billion increase up to costs.

and managing point S-Print, up on Consumer remain up We and the XX%, calendar sequentially. up share Commercial and up core in made X% future XX%, performance was units up across have units, were growth overall progress the focused steady product XX%, Print two, categories. of including In the hardware X% business units unit with the quarter portfolio and Total year-over-year. X

printing. to X% or channel strong supplies year-over-year and and to operate future growth and XX%, primary when of profit units opportunities and flat continue grew placements operating year-over-year The were operating including down margin XX%, initiatives, we investments We them. X.X the up margin and inventory. revenue continue X% drivers billion constant of year-over-year mix the S-Print million for advantage year-over-year AX of XD the nearly we $XX ceilings points in QX The total decline flat to of and addition currency. and Print Print was sequentially. unit and revenue down supplies below of was supplies place sequentially, take see our was $X.X in

expected, increased which remain as QX. in should cost we material elevated raw quarter, experienced in the Additionally,

in contractual continue to offerings. We see momentum our

Apogee market. announcement strategy contractual value-added growing our into to on deployment Our services the contractual recent the technology our expanding to acquire our of deliver accelerates by builds long-term and ability

by and other to regulatory XXXX, the customer closing conditions. the transaction the expect calendar close of year We review end pending

$X.XX We basis close. penny first deal be expect the approximately to the a after by accretive full-year on in non-GAAP

payable from four-day to billion. minus by and cash Cash free $X.X days to days capital cash offset was increase days, and days four sequentially two-day in by cycle billion improved decrease QX cash XX operations of allocation. two-day result days in Turning conversion flow are of a flow driven increase flow $X.X was in Increases leveraging sheet in a outstanding, normal and a days of and inventory. day largely sales balance outstanding outstanding, our a inventory payable seasonality.

We in $XXX and million cash have in dividends capital returns repurchases in of QX. $XXX million share

flow. of now FY more returns outlook it that XXXX the our XX% of cash full-year, will is high-end to we XX% above of deliver For likely the free

costs mind to financial In strong expect the related which we we the Looking logistics Personal basket that push in remain to components outlook. stable mix will following keep of should hardware higher. Printing, levels. QX, placements, Systems, continue forward unit to to the QX revenue overall In expect and our

we’ll We demand work have pricing the seen recently increased and potential full via market and considering dynamics. currency to actions, of mitigate and hedges volatility the prior impact spectrum

see our opportunities continue deliver initiatives. economic sheet our to balance We’ll do For we the to full-year, expect productivity so. also to leverage we if attractive

With per QX our the tax on XXXX range which expect to we based that non-GAAP rate, to net $X.XX of $X.XX non-GAAP GAAP non-GAAP earnings earnings in in be our expect share long-term in $X.XX. we share range projection Finally, is diluted of financial XX% all XXXX the to per net in mind, diluted QX $X.XX. QX. is is

look of XXXX $X be $X.XX earnings full-year our in fiscal non-GAAP full-year many as per our range meetings, our X. We you let’s Meeting net with diluted the are and at be October I at and share forward the questions. net Security call share fiscal range that, as raising $X.XX. to the of the for up well XXXX on to of Analyst to to upcoming conferences per upcoming in GAAP $X.XX, to open directly With engaging earnings diluted

Operator

Thank go with we question-and-answer now Instructions] will Please be ahead. session. you. The Stanley. first And the Huberty questioner Morgan will Katy today [Operator begin

Katy Huberty

to share quarter? and acquisition in over how the add market the follow-up on other AX Then market you time? of that What And potentially thinking distribution have AX about are terms your what in Thank you. inventory? Apogee share your in afternoon. Good was a during space acquisitions the I could of

Dion Weisler

for the thanks and question. Katy, Thanks,

quarter share opportunities. we about two, excited Specifically, and points and X.X% X the quarter, in future remain our we calendar in grew

pleased While by each I’d is around that business with building growth and everybody, expect our we progress remind performance encouraged business, that don’t AX I’m I’m team long-term. our that quarter, the of to a always like making our we’re for whereas kind

game. own We’re playing our

of intact. time. areas our guidance in on and XXXX, the remain market as gains remains is all XX% profitable end to share achieve on the that track of focus, Our calendar our We business, over by

worldwide by deliver amongst access about to relative Apogee, worldwide contractual given of all relates the ability to not our the of market SMBs. especially overall being our giving As of of impacted new calendar goal value-added is share this Apogee to – is said, technology That to superior the by AX. our the and by profit expanding into the it materially acquisition, is XXXX XX% of size we growing acceleration pools market what of deployment services end transaction the assure spaces, its

Katy Huberty

you. then… Thank And

Steve Fieler

have Okay. even… Could I opportunity the

Katy Huberty

sure. Yes,

Steve Fieler

There deal over we’ve as this shareholder been and double-digit the their of for as EBITDA growing to role deal. services to a and the in Apogee, profile. with TAM. about of be very my building we and with even for about margins time They’ve a leadership generate prior services and fast-kind Service we We great market. got give that as the Device penny my remarks, internally. organically synergies opportunity is that also of believe approach some They’ve opportunity They to more in well over really for part leverage a time is both the and a now. got part think Treasurer We winning capabilities. deal the really contractual time, other create play got for as inorganically build we’re to team any units negotiation successful, particular us capabilities as accretion, a place platform talked like to a space definitely disciplined leading in it would their other prepared …in value. but took we’ve margin initial the I the great In opportunity and

Katy Huberty

much you’ve now deal that given that’s to for was that. Steve, to just it was And, sequentially, follow-up surprised last inventory up the environment, a made you. loosening. I the see you pretty with tighter years as memory for over couple some big pre-buys as Thank of maybe

what’s inventory higher And the driving the at so, moment?

Steve Fieler

Inventory was inventory. days. We two comfortable up quarter-to-quarter, million we’re with doing $XXX up feel what

We are sheet. our balance leveraging

Personal in shipments. it’s in higher We’re of growth to less generally our Systems seeing a the And Print. in in-transit and support extent, business,

Operator

next be Please today our Shannon Cross go with Cross questioner your with And question. ahead will Research.

Shannon Cross

much. first for question my is very you Thank I Dion. guess,

for offering commentary, you’ve the and several some in contractual other Print. During the Print Managed years. market Services you then acquisition of been the times of the mentioned areas around But many

I’m how it or terms has And changed just follow-up. if revenue AX. Thanks. it’s wondering at if kind inclusion contractual of in you’re something models, within And terms curious there also I have a of PCs? of DAS I��m you’re seeing looking then So in recurring of the of for sort what

Dion Weisler

And customer and is, an I What the to that is it’s into mix us a a Thanks, we’re they’re of I’m in Shannon. from the contractual, deeper guess, that’s my products, was AX to increased a nature. business to seeing billion their give which almost in largely move AX. to opportunity acquisition Indeed, of to again, course, to contractual often relationship. the customers a designed contractual market, relationship exclusively not tap in demand much has contractual. range AX AX of contractual. S-Print And largely transactional access is in it’s quest play that us AX alluding And $XX to also complete AX that from a provides both Samsung of moving which just that prepared remarks

of through So the towards lens designed transactional and The the into to Apogee starting contractual. contractual. was strategic this a business obviously was tap to our customers acquisition largely, we’re and trend and growing think rationale about

proven in Steve for Europe. deep print largest in are are a growth who you familiar record, contractual track as the with they set document of to, Apogee, capabilities they’ve not alluded a of space. those the For and and got And really provider service independent

solutions IT the while us printing motion go-to-market SMBs. we��re working longest had it space. these contractual more time, technology for we the in pools office with that win with Apogee or motions getting squarely underrepresented the our equipment is markets, more access have going Apogee, ability that and to into And and OEDs among the to we’re They accelerate So growing to OEDs. ability into and And expanding deliver to in enhance we’ve – office gain existing and especially the our services AXs, traditional in to deliver new our the this direct channel dealers this this necessary motion, now services of we with were profit and market. three really augments value-added deployment

Shannon Cross

bit Okay, it’s about great. And Clearly, strong. cash then Steve, can you a flow? talk

in [indiscernible] to helped terms flow deliver cash You continue at overachieve of least. and

and And think we curious know give when model guidance just, so the you’re quarter some forward? not for in and non-recurring? so flow about then sort the you looking next at and And takes should there this cash look year. may versus Thank I you. going But year, recurring of to both I’m for how next or be puts whether

Steve Fieler

Sure. Thanks, Shannon.

simplest we our the time. expect that I do think grow in at level, free over earnings will with line flow cash

when the of our free days. and conversion minus cash reflect I cycle have improvement ahead In in of do our Systems QX, cash flow an our it did that which we year-to-date our Personal to specifically, conversion the performance, $X.X cash XX upon so, cycles performance drives. that volume negative helped strength is on And are billion, And we at earnings. year-to-date growing

was to the a about we is And minus at described of to of earnings that it to $X.X when so was to sort to earnings the cash meat our cycle full-year, cash a year, And thinking about would we our But you’re growth our get time. over last align XX flow, to very least that’s question, would I closely think consistent and expect guide. similar at I think more why that prudent billion, about the conversion a minus SAM, would days. flow. think what XX which benefit our When we cash to

Operator

ahead be And with our Please with Toni Bernstein. will questioner go today your question. Sacconaghi next

Toni Sacconaghi

profit the Yes, leverage thank you. operating I’m more wondering see in didn’t why quarter. you

have and You higher did revenues. volume

particularly with to in as expecting Samsung, similar place. pretty aggressive out yes, cost progressed. year you more take last were a cost your quarters. You is have you placing out And two but program unit the the And printer units, in take growth were have to

So why you feel see then And follow-up, quarter? I you more do profit a please. leverage have operating didn’t this

Steve Fieler

one, Yes, that Toni. I’ll take

say, we performance what we and essence in do. I said strategy our really would So, results would with in line are this and

the today delivering categories. building and are in for future our growth across We core future

We $X.XX incremental revenue and are share address year-over-year. the did question, driving specifically operating when business earnings personal about they profit per look up year-over-year. year-over-year assistance expansion our did add To dollars performance, I your at margin of op and $X have billion

around really I the So, is Print gist think it of the business.

lower did billion it’s to op it Last XX% lower Our top about that as X% That’s couple outlined grow similar on had S-Print business a $X.XX prior million had back primary well margin. much didn’t we of math margin. to albeit the dollars beginning primary a Really, The we and accretive did This and to S-Print. another we op the profit year. a and but margin, Print $X.X add year, $X.X and a driver on revenue of it’s similar why year-over-year, really that margin. had is op At XX.X% business year, expected existing of year, the the be come at of did of addition add as added we was drop quarters, the end see loaded. for operating driver, the rate. of

to growth said, markets is place the it to see driving is our did down supply up, mix big add we’re saw AX lesser specifically. in material and you some XD year-over-year. year-over-year. operating future incremental our and XX% on invest We there. it raw categories, of disrupt to opportunities incremental and range a the more we continue side, do extent, units, in all net costs close when operating dollars printing, To also but as We print profit you We that

Dion Weisler

was when against Steve. that I game, investment well-articulated, what our us the the some our It’s I is The add strategy to future, executing still mode. this growth exactly only is about talking pillars in about. I’m would that has refer think I own that three really of us is of core that in playing which make

profit since year-over-year, our separated be believe committed performance almost operating I’d something three consistently whilst drive for we our also demonstrates long-term. And years the I dollars that improved So, that’s to ability to ago. investing

Toni Sacconaghi

And your cash XX% return through dividends. shareholders has your high-end has just follow-up, been that above through been but buybacks range, as return and to of XX% of you slightly XX% noted, year-to-date your

guess, the that the XX% as that’s – return of is shareholders is to about question And sustainable? something total it on and this between Is expect not I split, was go-forward return should incremental and balanced post initially have So we to shareholders, dividends basis? buybacks is kind I ratio to more a then we buybacks. a why not think cash that north a a there why bias of

Steve Fieler

ability flexibility the to is credit core to of think, good our the returns strategy And rating to our for transaction does It referred the business our customers, our contractual, the drive invest across I give and future. support It the investment-grade to opportunities So our I do does in growth in that business capital to allocation us ability to us a support strategy. is earlier strategy give when have we to shift maintain accelerate also so. our to Apogee example. and long-term

So we working. got allocation capital strategy that is a think we’ve

buying active we we in attractive advantage you of year-to-date. shares. As have took saw point to so and were do We And roughly opportunity so we it. returned back XX% an out,

does our any to or we’ll you. changes, we periodically. policy consider it certainly Board have If themselves, relates to update As dividend communicate that dividends

Operator

today And questioner Amit ahead. our Markets. next go is Daryanani Please Capital with RBC

Irvin Liu

Systems declines, your market? or Personal we your been extent for a to ago. price to Liu share some From near-term share benefit segment, do component benefit a having NAND XX days Amit. some should the the also Irvin perspective, Hi, DRAM the able lift of with pricing this and in to I thanks. for maintain PC commodity that you’re you favorable dialing This anticipate event from more is in versus pricing expect and margin In customers think has to

Steve Fieler

overall the of basket at look we Well, commodities.

logistics You basket the mentioned of and but a commodities overall couple, costs.

to perspective that is sequentially QX, from QX it’s stable. Our

impact. an essence neutral it So is of

We much and dollar the currency though are recently, strengthening. volatility also seeing more specifically, more

think and or FX Systems or up op and into think factored Personal various the margin be holistically we show we all QX. how have as we the So about commodities market that certainly and the from the would to to drop about business on rate in pricing, dynamics factors impact

Irvin Liu

Print Sure. Thanks. others. broader your Services also about as which a had Managed Instant among inclusive services I business, question contractual is Service, Device of And a and and Ink

in think acquisition growth of the the to better your about performance are use portfolio? Apogee, how And should of your help services services metrics businesses some of longer-term contractual revenue? milestones and us these of or target and the can what the we mix Given track we

Steve Fieler

Yes.

think, think many businesses in of our to time. our is as I But think we’re overall the grow and long-term Device as sharing to will we I right more can business example, material isn’t around but in result material future. to continue described, material, over metrics continue core to evolve and provide an that accelerate, Service strategy. are you I now, more certainly the these visibility And it a metrics be think able and we I examples our but to as the today, it evolve

Dion Weisler

to relates X%. delivered business the And the this I is range of said X.X% believe the we’ve quarter. that Personal in it We specifically X% as to think Systems, long-term we over

more opportunity margin-rich expect Over for us. is that the services long-term, a we

doing, that that now window will that addition the have we mixing X% traditionally the to in above been up had X%. enable X% to services So the to we

Operator

go today Jim And Please will be our Suva with ahead. next questioner Citi.

Jim Suva

lot do and of be when investments would the like things think investments, that, we Printing for seasonality, about past Thank it you like looking pay that do toner year about every we year-over-year like at declining out? don’t and business, really but think they’ve It been a sounds way look it start more consumption so. at When very ink at margins, these way, or once would when your that or I ink quarters. year-over-year replacing we home people operating but will the that looks to than I On three much. the a their

are dividends? there Samsung these it really or recent not investments the as is about to else acquisition integration something we going maybe how that comparable? or when And is the making So that, think like pay should

Steve Fieler

we’re earlier units, in in in placing but rate integrating at to Yes, of short closer driven executing. factors. range now, productivity. other bottom-end the be is I the when look Print, also onto XX%, includes any addition And around the to driving in strategy long-term to driving S-Print we than growth the are why remarks those to of the And by S-Print, I’d the it expect the mid-term investing follow-up because future, strategy it in is more our it our that’s of

long-term And operating do we We’re driving there’s and think we your units in dollar going expansion, you those investing supplies profit are build the to and in attached OP improvement dollar quarters. place print have you’re later get four yes, opportunity to But growth past there. installed for on. seeing our categories base, the first

Jim Suva

later that on does when like come? on, Later

Steve Fieler

ahead. years In the

of time rest to supplies base the your built takes have have build we our and attached. like it business install in Just print,

And out expect we from so continue – look the the years to that do expansion the the when to perspective. also but a ahead, drop we rate certainly, OP get we dollars, margin

Operator

Scribner be next questioner ahead. with our go will Deutsche Sherri Please today Bank. And

Sherri Scribner

Hi, thank you.

in of guys. has ASP seen come quarters, the robust units for the around You’ve lot robustness basis are that somewhere from improvement. of business past points In a years. very ASPs to printer XXX past over up than XXX you more growth the two couple

the quarters continue of couple will business? next of increases some I the costs, revenue the way do should it of think you stabilization about mix some ASP of you see ASP for think able we at be, benefit another guess, to much how or component be we be to stabilizing up ask to the higher products a rates? think where As and and you’ll will to do grow units similar

Dion Weisler

talking about there Print you Were PCs? or

Sherri Scribner

PCs. sorry, I’m

Steve Fieler

Maybe great. the I’ll just comment on first, environment. Dion, Okay, ASP

Dion Weisler

Sure.

Steve Fieler

– QX, an like comment really ASPs. – did was between positive So, set again we from other prospectively. a the use driven example, That once that let two which But see Sherri, in sort me bifurcated quarters on as QX, factors. in up of can

The factors which pricing, quarter. in two-thirds I’d the remaining what’s we roughly into environment. continue the benefit competitive rising an cost, third better increase first in but happening a that mix. from we FX in takes of of which drive say, of was saw Again, The product the pricing. overall a also to account that’s multiple logistics takes sort in component lends and the to overall is,

we’ve think going And under-indexed do to said, on opportunity. great other forward, we to feel to improvement I the on you tailwind Dion, comments drive stabilize – – continue to going But mix. to an less we’re important being much year-over-year side. That that’s continuing like if, any to certainly so looking know on that product today, begin revenue of great what’s anything as importantly, commodities don’t many In as drive so on make really the focus part most is I the are a drive we our of ASPs. got as to strategy the market. PC. categories, here, you’d develop have And products is

Dion Weisler

a comment, under-indexed. our it’s as Everything we the of new opportunity think increased half a where market, billion strategy, Service. an half market be that other I the us organization, a focus That’s as drive as the for only TAM. $XXX roughly And would roughly we’re trend. It’s as business certainly on Steve, a

have drives And us. that Our of with customers also are looking contractual the that think in kind future. to I relationship growth

Sherri Scribner

it are the acquisition to related great. that you’ve Printing related business to and margins quite Samsung. margins that range – the Then at for the clear gears of that’s Okay, made switching low-end your of business,

actually suggest As we seemed soften. that move would margins into your fourth the Steve, commentary, to quarter,

should XXXX? move to then XQ falling I’m we as target below about we fiscal improving and long-term into So margins I guess, Thanks. trying think possibly your understand

Steve Fieler

we just trying I trying to XX% of go imply XX% closer end below bottom to to range. to was was range. be near our the I that that not that we’d mid-term, the in would suggest to

more going both the QX. outlook. And think I’m reflects on any not specifically so I – to comment that

we our kind for within QX, of stay coming can have details would But range. we the give to expect where up, SAM We about still XXXX and beyond.

Operator

Aaron Rakers The will ahead. next Please today Wells with go Fargo. questioner be

Aaron Rakers

Thank question. taking you the for

aged think dynamics to how as to normalization up about as there guys, drive of service the ASP you of at customer that model? base of in market Just in looking Is to on to the possibly the for installed how as just perspective? overall to think on benefits installed an specifically you’re those share really we and question, you a terms on the everything from that think you see? shipment something that the base kind of kind the a the follow-up opportunities Any really you some start PC business a the what trying opinion see about can growth market, starts the the engage PC opens last opportunities base, metrics you

Dion Weisler

think Yes. been engaging of customer market. we’re again last which on certainly why growing outperforming X.X quarter. in We that the Look, resulted this That we’ve XX% I points growth. by XX% outperformed the revenue us base, year’s is our top market

amaze revenues, our of that it that finding of easy the for business, taking ASPs experiences still growth to segmenting We in we’ve agree and game turning encourage XX PCs engineering we slightly. products. growth and buy will had market opportunity. with that’s them relatively areas them continuous our profitable broadly share to change up, market. And because team engineer people continue units we predict we and And analysts of overall in with are can why our against in own traditional that our the an which wasn’t believe will market, compare, the past the the it So We’ve gain consecutive to play quarters. go slightly our flattish of outgrown suggest that that decline

has situations than market much is that’s fully spiky other we a deployed doing cycles. Windows earlier it tougher happen into consistent like in customers slope also currency What than whether migration obviously of fluctuating in little have XX a the and that’s Windows Windows have transition up deployed because to right, the will smoother cycle less sunset been We on glide is previous are little of the track think XX X have the trade ours in We that already forces. a have XX. a Windows record cognizant they that, past that of or environment companies and or a the

So we think positive in market. that’s a the stimulus

and So with we’re continue gain to forward. that, profitable all to move poised of shares

Aaron Rakers

point? Any – you just as quick how does looking And do how you guys that? effect this concerns up you then it Okay. that see brought curious, might the Any follow-up, situation, forward? since a trade have at

Dion Weisler

situation comment it can don’t monitoring impact or had until think material more speculate dynamics are very the on I facts market on we all a business definitive. has our situation the tell I evolving We, to like and things don’t date. and companies we know the the closely. become Well, all you

on for continue they and administration customers together of we’ll all areas any on that our to our it the necessary. to the chain as our just the And to announced our work and of shareholders. make work it ecosystem and and suppliers, turn And change evolve our and customers team situation actions changes. outcomes We are team to understand we go-to-market monitor supply the best partners But our U.S. we take of business, the assess including opportunity. broad and work go suggested point view with to sure making and our

Steve Fieler

Just not us. clear, impact our are said, to tariffs material in does include Dion the be guidance place, of to as which,

We any have impact not new contemplated. potential included tariffs being from

Operator

Sachs. And the ahead. Rod will Hall final be questioner Goldman with go today Please

Rod Hall

Yes. in Hi, squeezing me there. thanks for

have if on So outcome the probable comment outcome? a driving whether And curious if would I you’re questions. that is? a regards there one update give I to don’t follow-up. I of supplies some a just underlying that S-Print’s next couple growth rate. But still guess, with and to of organic had a on is I of guys or year-over-year us an want possible thinking then you growth. just there what maybe growth on year that, comment And you is in kind know the flat

Steve Fieler

supplies that incorporate Within been four-box So what as to we that’s the that from growth, we with been delivering. expected we exactly Cathie to of constant we’ve to that as does And between the legacy have model. predictive supplies. grow year, this pretty QX At our had currency. outlined what X% X% HP that would call S-Print beginning QX actually in X% X% well

trade-offs Given we and the have actually out organic, are inorganic outlook. the in in the teams are why do them field, to sales versus SKUs put making what’s fact and our that we that’s our these businesses together integrated, not selling ability break

will the So think have some that flat we have it’s we four-box model to XXXX, we next have do forward on some tailwinds. we We do reflect to up and be headwinds. what we confidence But FY predicting, year. slightly

Dion Weisler

a value XXXX and lot all optimizing of long-term. XXXX. initiatives levels which on is balance take you the expect on with us I, our strategy, supplies in in be the of will of to FY both Steve, And impact predictive time we our predictive has four-box focus right that, area, focus alluded our Steve to confidence to the from we’ve the to the should our also as have play we rest as well growth throughout guided over out this call. our core which the to value as have is in against ensure what I for the executing relentless continue think fully into We’ll what model, like of in P&L, basis

Dion Weisler

Okay.

with our I’d join pleased QX really So to with us that, you all the thank performance. for like I’m taking time to today.

our innovation This how satisfied. said, we’re with our operational of to excellence. quarter priority as example will never is move Profitable forward. combining growth be continue results we’re by That against we delivering another

is Our and been strategy investors customers, commitment team to partners, is has focused, never incredibly working. stronger. and our our The employees

with that, So journey forward I seeing our all. a in in in at City. to New you York Meeting to Thank and all the overall, the our Stock York you I on October grow. look position strong Security strategy our reinvention Xrd very Exchange at remain ability confident business we’re Analyst New With think our our and

Operator

for joining, for you now gentlemen, Thank and today. call our concludes you may this disconnect. and Ladies

HP (HPQ) 24 Aug 182018 Q3 Earnings call transcript