HPQ - Earnings call transcript Q1 2021

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Operator

Good day everyone and welcome to the First Quarter 2021 HP Inc. Earnings Conference Call. My name is Ailey and I'll 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. reminder, is a replay recorded As purposes. Instructions] this being conference for [Operator like call turn Howe, would to I now the Investor Head Relations. over of Beth to Please ahead. go

Beth Howe

earnings to Good and President Chief and and are HP's Financial conference Officer; HP's call. Executive Myers, first Enrique afternoon Lores, With welcome quarter Marie everyone Chief Officer. today me XXXX HP's

investor.hp.com. our replay issued Before and on our website presentation Earlier made call is this web remind you handing that be call the at the Relations call after release the slide today, Investor will webcast. shortly over we of A for to available year. release webcast Enrique, posted accompanying have on our let me one and this being the approximately earnings we page

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

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

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

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

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

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

Enrique Lores

had you growth call for revenue exceptional Beth profit thank strong and an and and HP start in and well. I hope QX. Thank everyone joining the to with families are safe year your you, the you today.

businesses. of We portfolio our and diversity the are benefiting from the our strength of

changing agenda do aggressive meet future investing into doing model working. would our said evolve our And an while managing We growth. to grow rigorously continue market. business customer our addressable put, transformation adjacencies expanding by needs, we we strategy drive Simply what driving and is to are we to our to costs, while are we

earnings are Our and We net $X.X in cash double-digit finally, strong with And both $XX.X flow $XXX is revenue growth personal net results of delivered systems QX impressive of XX% personal profit with across net per QX strong print. across in billion of million billion, operating delivered we topline We earnings $X.XX compared non-GAAP of through systems dimensions. $XXX X% delivered up balanced many profit and up non-GAAP up growth growth bottom-line flow and with year. delivered dollar in and diluted quarter. non-GAAP last This million print. growth to We $X.XX to the free share.

We million return $X.X We in also remain committed $XXX dividends. share of in and returned billion capital. including shareholders billion repurchases to $X.X a significant to

the pandemic, and our approximately of consumer told teams is At last $X.X I business companies cycles. HP's us ways doing. portfolio broad are and last emerge what exactly make quarter leadership we and resilient across find results more show stronger. that to across differentiated commercial And and markets quarters, the a we time to returned Over repurchased the have this XX% when billion our that of shares. strong shareholders onset three

the remains economic offering demand in growth. particularly recovery We profitable to to pace pandemic of and is capitalize drive of the impact on for the uneven. ongoing the our consumer continue strong Yes the

arise, managing on This when it business to face opportunities continuing manage are We volatility they the also while a occurs. disciplined agile change. means prudent and in manner our in remaining while capitalizing of when

microfluidics. to the adjacencies, XD, technology with in create Systems Personal be by strategy our areas these all core and print industrial industries of like and focused cost leadership stayed enabled our balance to way dynamics, businesses on against have transform in executing more we optimizing attractive efficient. digitally expanding And into new Print we and and disrupt advance work our we As to our

Our million we and to billion. continued awards reflected to generated XX% of will XX%. with And flow revenue is operate the profit innovate work these XX% had strong progress businesses. up innovation another expected are backlog of as accelerated XX entered seeing become create clear environment with of is in have operating launches play. to Consumer with experiences. solutions capital of They cash and personal exited latest this to in It's against supply for we in strategic our in up PC continue creative constrain to quarter our again. and and month new least for with to the including momentum last part quarter continue how we and recognized in awards Show, free QX over we each introduced strong new revenue Electronics receiving. At a era and of were that an which XG-enabled And Systems to studios. growth Personal We shortages we we Chromebook XX are funny growth, our priorities new our and power once shipped the and people growth we margins at learn start that revenue And personal and are revenue accessories QX. have $XX.X devices returns positive hybrid new products. we essential And on growth units work PCs. through of top delivered We It's X.X%. with I a component the consumer up consumer than gaming this, more with XX%, Consumer premium quadruple. record the say

unit profitable Looking ahead see for we expect opportunities create us to which will additional drive we XXXX, PC continued to growth. growth through anticipate

attractive accelerating peripherals. and gaming are as adjacencies also We such in

headsets. the around week the HyperX of space. presence that acquisition expands announced by As with HyperX this a with growing play, gamings market goal The market peripheral be gaming the in to world. addition This every we our our a brand of we is in in leader the in which is trusted leader market

gaming Our microphones to headsets growth further hardware Systems peripherals combined is another expand start terrific in like create off existing in portfolio our Print spanning will Personal with the Personal gaming and engine Systems. ecosystem other and a strength Much to year.

generated of and we In quarter learn, printer, particularly remain supplies. growth. the billion. to create of This help our growth, perform $X supply revenue profit the revenue Similar demonstrated Systems X% XX% constrained, Printing $X people of power and print Personal XX% to billion growth hardware with and business, profit unit consumer operating QX, business in and

on uniquely manufacturing supply have diminished, both printing and we across third positioned related our our leadership continue COVID-XX commercial is and the remain the to HP chain these consumer anticipate and peers given well its While quarter. outperforming constraints impacts into print.

work the strong Our norm. school hybrid a becomes consumer as business advantage and clear competitive is

growth. quarter. we million QX added product X most didn't part have seen market enrollees and have In who units X%. bought print record numbers, our of Instant and X people that sequential and first printers home them grew showing million print up with Ink, categories new in Ink QX, total In revenue already Commercial subscribers sign in accelerating We people went business. growing Instant for improved surprising in the

of be expect we the price very consumer and in given print ink as an continue that pace recovery. subside We will a strength expect the economic offices recovery gradual the commercial even overall gradually more market to reopen. And might schools in though the

days strategy on platform we execute evolve It's lines. the HP called to HP and are seeing roll rolling across end-to-end combines hardware. Instant coming we Markup print adoption. positive our early continue that multiple Services Plus modernize models. already In We to but out our will product innovative with broadly Ink we convenient more our HP quarters QX, be markets strategy and out print and business In Plus

be while being scan Flex existing to This workforce continue One working propositions HP customer is copies deliver innovation to ahead Customers to added and value MPS maintain the With growth of of ourselves to for home. opportunities position businesses leadership positioned print, Plus parts a more needs. define of record innovate across portfolio growth. see HP post is fusion meet city graphics, like number future opportunities their Jet to means designed base. are for grade customer across output for able company workers use applies in to printed XX% a consumer and to services. track contract evolving we help our than indicative the services, This future. production strong print securely seeing a Multi New in lead continue from continue also XD contractual hybrid to we all and This the to attractive we such both of innovate our the service. In the pandemic service and Where the remote we worker can printing seamlessly as and printing industrial to in our are managed productivity. HP commercial and world. as example of to future

our growth a leverages digital with We This environmentally their are expand technology to labels digital molded and we technology. packaging. see press of customized and traction double-digit world's one packaging XD great in quick growth in sustainable that for and third seeing our goods service deploying validation also printing our the web an business In Pacific impressions Georgia Inkjet strong providers fiber printing their packaging printed. to and new of is in meters create early milestone continue business. end-to-end industrial largest paper square is to printing and

this technology entirely the in disruptive for excited are We potential possibilities innovative new our opens digital as up personalization manufacturing. and sector in

transform this digitally to all doing the a enabled are value while We leaner company. company unlock become continuing more to and

continues plan. to of Our journey transformation ahead be

enabling have sustainable attractive we time innovation At and and to enhanced opportunities areas investments the to reduced where continue growth we driven we are structural driving long-term savings. and costs see We same digitization productivity for are shifting us growth. significantly

to Transformation role the named momentum further focused company, our from know have Chief sustainable Financial Officer. leadership the the most of her second strategy. year. Controller end Recently, as Street performing and started very responsible positions costs Marie Chief to are Overall, and third I year. support and high am announced we accelerating by by one Tolga HP the list HP of together are year. were Chief cutting-edge incubate as Journal. truly last appointments built enjoy And companies a And its growth and at new better. In as on our leader. research This opportunities of means XXXX a we getting the the appear our we December, our as on Strategy she's I continue teams had to Officer new many for true as reducing including of worked most Myers level. number I strategy. Last We future. at way the Chief to remains XXX and managed have a a the making all for on you HP's Barron's our with ensure several We week, is we Marie Incubation also structural and was that know for will impact the innovation staying of Savi long-term strong Kurtoglu working the sustainable top named for simply joined strengthen Newsweek together will Wall outstanding held drive our the straight HP's accolade years And and a America's recognized having most very HP, and companies with Marie company of team. are delivering results, Officer. as veteran XX leadership quarter, recently we of pleased capabilities Baveja integrated values. on our business In Officer. part Technology business that best we investments joined and this both an they straight we

Let quarter opportunities a confidence that QX by our the me saying about was close increases strong ahead.

and a business resilient We model. diverse have

companies time a flow shareholders in to stronger. businesses, are exploring in us taking while strong to Print provides scale our businesses capital successful We HP and and for market, We our strong also and Personal to can while the core generation the get like M&A. Systems believe this cash new return disciplined necessary create when And significant steps leading is flexibility reinvest future.

We not running to improvements. are our business incremental achieve

bolder through creation. will is I and long-term of much expand will will Marie, a that fuel portfolio, With and our value and to fiscal details of ambition. driving that unlock call over attractive year over the Marie the sources are our agenda outlook. to you innovation new who take That you. turn growth We our quarter transformation the

Marie Myers

excited It's the me great all more take looking thank decades into to I with the that growth investment non-GAAP community forward his partner. and role faster. as you dynamic wanted remains after getting non-GAAP than executing and environment. to trusted HP. role. for future. I'm as this results to finance on operating to It's at new be while know the each balance of and quarter, settle two I'm Enrique a his clear CFO on near-term, to my the HP demonstrate in our today investing we I And in profit delivering company strong than of focused revenue leading revenue also was very positioning EPS faster QX even grew through this dollars while quarter, the for

off for we the year. results. with start our are very are to a overall, We strong pleased And

X.X commodity costs operating Americas in pricing consumer constant billion up details of by X% Personal and and $X.X expenses year-on-year. look printing, was decreased let's quarter. operating and and XX%, by constant increased OI&E EMEA and the per tax billion to were X%. growth partially intangible per net Regionally increase a currency, adjustments position XX% credits. margin an shares. non-GAAP X% increased Gross expense with pricing for increase up one-time was in increase APJ other and in net share revenue Systems million. earnings in $XX.X XX.X% favorable both the certain $X.XX The X.X other in hardware. up offset expenses. excludes retirement The nominally was share net billion, amortization first totaling was in approximately and million Now in favorable at points driven to diluted driven the future increased $XX and particularly, diluted for share of count investments QX currency. Non-GAAP by Non-GAAP a net quarter, was related of Non-GAAP diluted expenses million, earnings primarily to assets, charges, non-operating $XXX expense related restructuring $XXX net

earnings As QX per GAAP net diluted share a $X.XX. result, was

performance. billion, home with revenue peripheral systems year-over-year. segment In demand $XX.X working to benefited strong QX, Turning to of related from X% learning from and up

X%. Personal across by Our down component due very XX% continue units, In revenue for billion, at top-line strong continued education X%. down much to supplies revenue fewer up XX.X%. primarily The XX%. of revenue flat. operating revenue billion from was up XX% personal strong as Chromebooks quarter, Print in the including at product was year-over-year systems the profit with industry-wide and record customer year-over-year promotions. up By of XX% a flat margins results than commercial notebooks shortages. strong billion, Sequentially, operating we for million segment In more in ongoing total drove XX% systems was up $XXX up inventory XX% The results demand. of commodity consumer favorable In execution $X commercial promotions revenue to increase Drilling down leader benefit X%. representing down and total unit with and increase XX% a the demand due customer commercial total pricing, to category, up XX.X constrained as XX% operating delivered for consumer replenishment was demand print, and with profit our hardware cost. and reflected combined consumer our XX% revenue we our the By remained offset and operating XX% revenue due favorable million $X.X commercial units with as for higher print details, outlook. need margins was including Supplies was was lower differing favorable were for and consumer up units notebooks, pricing was continue into workstations. revenue technology and to pricing $X Strong very fewer while see were QX growth year-over-year first to was grow. favorable primarily X.X% print. than our and portfolio very units. total, to units was of both strength segment, desktops

cost plan. savings cost of gross as continue and efforts to be exited our plan three-year me we XXX turn specifically to about rate company QX billion Let the transformation structural our In reduction against now run our $X.X people ahead opportunities.

we with strategies. that execute estate and During quarter, six our location activities to the mobility site at sites aligned are optimization continued real

and addition, automation. improvements to we digitization service in In customer additional continue we efficiency support shift have and achieved to as

further enablement to Finally, us provides be driving cost of it our flexibility we lean allocation. areas as continue reinvest flow structure focused to digital to capital and on a Shifting business. the in and cash other

and and cash the solid $X operations primarily respectively. QX, for XX sales finished increases days were offset quarter. First flow driven in in In free Sequentially was strategic billion days. drove quarter million, and payable the of by was the days conversion inventory conversion at cash in during flow flat goods cash outstanding inventory cycle Days buys decreased by cycle $XXX as outstanding. growth increases minus also cash

to total of free cash included the quarter a billion returned dividends. For in and we shareholders XXX% billion repurchases flow. cash $XXX of $X.X $X.X million share in This which represented

to at forward, quarters opportunities $X quarter at expect return elevated Looking buying billion shares levels per of we back emerge. continue the unless higher coming in least

the Looking and rest quarter in outlook. fiscal second forward the mind our overall XXXX, to to the related of keep financial following

environment, year. to, to normalizes. more school returned of a more the and market we impacts as return And kids our in the in COVID While note progress growth strategy, continued it that important easier on to we to related FY QX revenue as year, is the half and unusual year-over-year trends QX see environment to expect also due we and second of normalization last saw reflect XXXX people also pricing comparisons the growth in our to the year-over-year reflect expect will office the the

market is outlook range the broader given Our than current environment. usual

supply pace economic of the modeling related and to multiple dynamics availability, are re-opening. scenarios We pricing

Systems education demand, And and our which consumer component elevated In for negatively as very ability to remains our in constraints QX growth. demand comments remains industry-wide to Personal top will are meet constrain backlog impact for we expect notebooks Our the especially following. to strong. continue line

the the operating of a And overall to see home expect levels. from of printing continued we cost be from commercial expect from printing. for QX perspective, the expect a QX to in margins. perspective higher as we strong demand Printing, the be commodities demand margins to slightly We basket QX In in pressure range well compared to as margin to economic continue

constraints stock strong supply that the satisfy and have replenish see of supplies. are We partners, in to ecosystem demand positioned expect navigate the that to printers well to need our to we so and

QX expect for operating end into We range providing of at XX% high account, we these the Taking that margin our QX and our to are of following guidance for be considerations XXXX. the FY to long-term XX%.

expect net net GAAP of to per $X.XX. quarter We in the to share And earnings diluted second be share be of to range per earnings $X.XX. second $X.XX quarter $X.XX diluted non-GAAP the range to in

earnings net And diluted $X.XX. non-GAAP $X.XX. range per XXXX per of FY $X.XX share diluted the be be share XXXX to FY to to the range in expect of We to GAAP $X.XX earnings in net

free flow least FY billion. would call And like your to the now, hand $X XXXX, to And our for For questions. expect at operator. the I be Session we back cash Question-and-Answer it open to

Operator

you. Thank

Cross question-and-answer from today Instructions] We session. being will will Research. Our first Shannon now question the [Operator with Cross come

Shannon Cross

if people third now. until bit Enrique, shortages and I And a to I'll put can can you it talk one you've one think just two-part I'm the it's that wanted much. leave -- was that's you question lasting Marie, to PCs going questions big role. very to just of I And quarter. question, guided sort question in you sustainability the so you a to today. wondering, congratulate on of I Maybe beyond to? right the it have you new -- about My Thank quarter

it's future talk can bit a bit if what might going then, how since you model? Inkjet long-term I PC see to because you you about laser. as a long-term business if can maybe that the talk to for And about discussing side you whole quarters. bit, means to own see of printing, So you margins think as on long-term the shift the in Canon for to help underappreciated Print maybe little the what stack PC could is a you have how And for the support margins Plus Inkjet turn well and what And market? sort impacting partner the with

my my you -- those maybe question. So completes could Thanks. parts, if address two that is

Enrique Lores

will all your Okay. to Thank Shannon points. try and you I answer

So what We let we demand the momentum of are that say to what are trends many start that quarters. for underlying today the the market coming we for think me of I the with would see. -- we our driving expectations that that, are about stay. sustainability going And optimistic are very

strong for the live. for home has pandemic made people for continue entertain demand printers to is to especially clear technology the PCs to drive necessary going PC. for think but future, this work I to foreseeable And to and for very

We also as think offices that will reopen.

of employees to going have to on as we their also shift see again demand an the demand to shorter. PCs towards side are are We will a continue going renewal cycles see that to on helps make on invest to because notebooks are the productive. increase PC the space And

new office printing also think hybrid to the model home new opportunities We offer of on between to services both. -- the services create side by and us for working combining need new opens the that

second we opportunities, really PCs, leverage for continue shortages to not supplies And your continue us see very to in creating change again, the new to on I momentum. this an the of demand this question part expect continue the strong component for quarters. go that were what to overall is now that and see demand mentioning. So we opportunity you to PCs strong only coming is creating drive gain the to is to If but to

are better. then if the strong the question get And And for year. we do we course have components your of on today that we components for think both what have could this quarter we to today We hit, Print. visibility the able even and based guidance for more we provided on to final going is be

terms during customers feedback both launched the we feedback reception terms positive in has last of and proposition also partners. end-to-end the quarter model Plus in know very from value of the you from been and adoption HP As of

I countries would the going complete are we and categories the as we during we of coming have are know more months optimistic to until rollout the going into in And expand we So you results middle say, about seen. XXXX. more the

were You on the also about asking impact margins.

Let me start we Marie will increase really from mix pricing. there seeing Especially see Clearly complement you moving the profitability that a system. on also we is maybe India because that. and end to know from full we end-to-end benefit into as the later on helping benefit quarter strong are But a print. hardware the this

Marie Myers

Thank strong end range profit an XXXX. expect remain FY of operating XX% you to the margins to to as at well. look we and operating higher range And expect yes. to rate above our we'd print your grow QX XX% Shannon. our the Yes XXXX in to be be expect And dollars we throughout the for for

Operator

will come with Katy question Huberty next our Stanley. And from Morgan

Katy Huberty

ask want clarification I first. thank afternoon. Yes, you. Good to a

question the said will You of quite implying Print just Or And my in that in And end full that of quarters? come in at the on how you your Marie upper clear grew is you much you to made XXXX, channel that can print that you you the that up favorable? see remarks environment you of the inventory the quarter. range, that through each print but you sequentially business rebuild grow strong expect in will margins PCs following Obviously terms remains pricing see growing talk growth that down given it the why for in the XQ? they mean just would about four revenue contributed then does year? prepared

Enrique Lores

Katie. Thank Okay. you,

with clarification. to I to I start market. When continue, was growth PC about a was me Let talking referring

And be Shannon, XXXX, a market I have to started term. this answer that expect to As and for bigger. is point. PC year the in now in market to projection at pandemic we the both was to in then let the continue we and look we data for have very offer it XX% market XXXX the projection we compare one before we strong that the If the me we saying long the have

talks -- Marie so So business in the and for this about about are optimistic forward. we about seen will we the this why talk print growth the really going And in have PCs QX. that margins now

Marie Myers

and I move Katy. channel cover inventory just question around Actually was on your to going

and some of of driven to are respect that demand that healthy with customers. result ecosystem levels is that of believe We in do we're for also inventory in below And now overall print. as below really we that channel seeing look So consumer. strength what appropriate right that's a from to And by help our that's home. the range to throughout demand however and that's replenishment going QX expect some stock our partner into that bridge we're

to make satisfy ecosystem very is that to partner sure overall, demand. want our we well positioned So that

Operator

Toni question Sacconaghi next Bernstein. from will come with Our

Toni Sacconaghi

have well. as Yes. I Thank questions you. two

the for in the being your in XX% at first more full First, the if half. seasonality second would at look an year, I to EPS than decline XX% the up midpoint the guidance down point versus implies EPS Typically it second half. half

you or wondering to you environment going going be was I through come on that can conservative? supply-constrained off. Are being sounds are favorable like that. So comment this you're price if very is it you potentially to Because QX, believing

you the And of lower then Or it I expect to in half? growth? second conservatism? you to down normal deceleration Are expecting have because margins it revenue you follow-up expecting weaker because expecting go So of levels please. are are a you because sequential than this

Marie Myers

Right. It's Hey, good afternoon. a Toni, pleasure to you. meet

strong year. And we're for So, investing guide a actually look, the future. we've provided for frankly very Toni our

and EPS growth growth to XX% cash expect flow FY XXXX and in In XX% revenue well. fact, free we be to as up

we XX% So, actually second the of shares. last of EPS growth that XXX is point as this front-end this XX% well lower actually actually is to delivered while the first And the benefit loaded to half, in earnings half your year. growth the includes as

for modeling the we you imagine could half. as current second given multiple So are the scenarios environment

guide prudent absolutely based So today. And on look do is better will. we all-in-all, can we believe what if that clearly, we a know we this

Toni Sacconaghi

get was terms trajectory Okay. or was the on just in whether a in is both print supplies there restocking the understand But guess, of I I revenue the better this principally trajectory. whether confidence the margin to it this or sense of consumer. trying is hardware want are I side to better more follow-up,

on talked I benefit a obviously quarter your dollars we the that's could channel like presume your understand that's down you and about going much how just about a next quarter up is you should this very, growth. out a talk benefit the consumer supplies is. being being last this weaker demand a inventory since stock side is very side then maybe So that I'd on and about quarter. is zoom think potentially and going normalized being of But in And favorable. benefit this what exactly kind bit to corporate benefit

think year. or to the flat growth. per over The last aspiration get gone I X% nine down supplies about it's eight years, was to

little get it I a took think longer to you there.

about environment on an in of really Thank we a should how think haven't that? normalized how you provided supplies sort growth update you. think You more about

Enrique Lores

Toni. you Thank Great.

this projections provided are and we strong supports confident revenue have and we me let guide for emphasize the very that year is start on profit what Let and the that both me today. the

made in think are PCs, levels the In we are that channel. across inventory ideal not for channel and have the continue hardware, we we the below the only we what remarks inventory to but also and terms of printers that for board supplies supply, for from prepared comments be the in

we very we the -- we is an explain to let what supplies? do impact on that's this And we So especially, by all is the Marie now home products. do are that on think strong this see what driven And is see our today. this continue replenishment quarter? demand And where on

Marie Myers

And thanks Enrique.

So supplies looking at of Tony, discuss. performance sort three dynamics key really there's to

had was was favorable First that supplies in compares the consumer then with and of all, work-from-home indicated you as year-over-year a on challenges And print tailwind. also environment, there's ongoing with we thirdly, know. from there ongoing secondly pricing stock the demand in then commercial consistent call replenishment that And of which and which benefited actually in learn-from-home what QX. are

we year-on-year. Now down inventory of for a that supplies the was if you revenue roughly estimate movements, adjust X% impact

As you channel. have a know, we multi-tiered

our estimate across our channel and have we end-user product for So data the this best including is on the based estimates stock.

supplies replenishment benefit this short-term a revenue. have So to should

Enrique Lores

commenting for the I'm the Tony. projections future, on

means we know, and in are prepared programs making program. nine we're remarks that strategy the that we which Inc. subscribers Plus history to we the million to one progress that of the front. on deliver HP the with have And million we why redesigned we goals. This have dependency company this the most on reduce the subscription is which added very We shared the so critical. done subscribers the pleased are factor quarter reached we in of the you is the As -- on are supplies our

we good as call is that of clearly same progress So on on big also -- in toner that the got we what ink a which Plus response the emerging well. have are are strategy And accelerating. our we at with as big are for shared making countries we key really also part before, I and pleased and HP

Operator

with will Daryanani Our Amit come next from Evercore. question

Amit Daryanani

cash the Thank It's $X you. to $X.X printing It modest in of XXXX I Perfect. like flow. looks free I talked free talk really a from for fiscal have about no think But questions fiscal really I billion look if anymore. the at do cash 'XX. want I you uplift we flow. did guys And billion guide about you

it the help change? is So really up why the me that XX%, EPS Just would helpful? with cash takes what million think up $XXX and up be are flow I and free XX%, and puts is way going understand really just is be to revenue

Marie Myers

Amit. afternoon, Good Yes.

with at and we're So and flow look, really pleased saying cash results of free what look the all, quarter. start-up in first saw of we the

and Now print. sort capital, AR. headwind and from expect will it look changes of the by is growth to that's that driven that which XXXX being And the is obviously free as at by we cash do least earnings with remarks a $X that in PS in billion is I to have as expected we're the bit, PS. be working to higher we inventory in -- partially being And environment offset we it being in prepared my forward by be expect both we said FY flow in driven and

Amit Daryanani

are and between Got over you three the big need from the then as two, as years, go growth as role background And a your Marie, reduce forward costs the for really it. priorities what Officer. sense Chief how investing to managing step the And get forward? the investments? for you to go as company into next and HP for as I you about guess, CFO your margins optimize the on you versus I'd think Transformation perhaps perspective love go you do

Marie Myers

companies the Thanks, Amit. frankly, I that No. believe great end. focus HP Look, like on

We have to do both.

have investments to make have future. for right and to reduce we costs the We the

you I'm going sure to tell can be about going our driving I relentless CFO, we're after value the from and inefficiency making as So investments.

outlook. Chief up me I for Transformation role think Officer is really my the nicely teed that

respect with color to over some going Now there. to I'm investments, to it turn to Enrique add

Enrique Lores

we is acquisition The the do to need me in and I Marie is yesterday, during in invest is we about be really we we help see that and is surprise HyperX to the is adjacency us, in are this modernizing digital create it and results the going opportunities see also new efficient not being respond customers been to infrastructure anybody us and because new very value a last our executing. of the about graphics is will to print. both, a expanding where to to create as we systems will but been opportunities our to investing where invest years. to growing about we adjacencies. let personal have future. areas see industrial we also forward. improving create better going was strategy, will to businesses into in and that need end. continue an strategy attractive our is way. able the the We in show and of microfluidics. for saying, to to XD before have become We on businesses answer that executing in we also my from continue printing, And comment going investing This example continue leaner shared And more emphasize we And it that model, this reducing both Marie the And the core cost It's for business are

Operator

Our Credit next question from Matt Suisse. with comes Cabral

Matt Cabral

in dig a release normalized we going versus wondering you the Enrique, and I Hyperx. saw brand more you you. PC just I from but broadly, in gaming start to Hypera's forward? guys more leaving Hyperx it's you OMEN accretive, first EPS And think about Thank once guys people into the on you perspective can contribution about said, there just then Yeah. just guess, more And a bit wanted if clarification. revenue that. you just your for homes just I how little mentioned comment sustainability should on how think peripheral your the a wondering within lineup? manner? spitting their expect

Enrique Lores

this XX growing we the So the let significantly and side, in where where gaming than to opportunity us the A gamer really a think about normal When and Hyperx me hardware money acquisition attractive makes continue gaming. using user. gaming they entertainment growth coming of portfolio the PC mic spends opportunity are to future. growth very in is expect leader XX, main look gaming during is that. is especially for – is is capturing strong will the excited opportunity And quarter first proposition peripheral today been headsets more years. really of really in growth a opportunity the their on on microphones we very about when attractive. acquisition have growth people at a continue of value to that the last of on and Hyperx the And more very the about More keyboard. drive Gaming the on accessories all, have the driving we both clear. us see start we about and

going commercial. presence leveraging and broader that as presence, are expanding our to our well like We taking by their new as we portfolio and will geographical segments growth into be accelerate retail

this XXXX. about what Soil and growth this is growth all us in and makes is it for accretive – is

Matt Cabral

to as better And my and about that. opportunity you in the that for less buybacks prepared just I remarks strategically, talk a wanted broaden M&A I plan heard and follow-up, comes the how still along. on is and Thanks about discussion the out outsized think M&A

think about of criteria So other the trade-off maybe you just between and that help us understand forward? uses going repurchases capital

Enrique Lores

what from during last have communicating been changed not we has the quarter. approach Our

that, going least are and for at is are going we continue at same undervalued And We time, buying billion to our $X to that to opportunities to the stock buy shares our shares. continue of looking aggressively strategies through accelerate mentioned always our are Marie quarter. we believe to M&A. we be every

minimum better new in strategies be have simple. the at have I businesses have we do to operational criteria also execute value ROI Any financial a on in acquisition. applying. we strong and and to will to explained. have These This looking attractive the this businesses. the adjacencies, are are than We Hyperx of buying are a plan we returns think to we to to used proposition And third, acquire our have opportunities at been a decide how aligned to criteria very M&A. own And is to what our have the the the will we core we need – support will stock. about M&A, is

Operator

next question & Our Cowen with Krish comes from Sankar Company.

Krish Sankar

congrats Thanks on my taking congrats CFO Hi. I full-time results. solid for And two Yeah. Marie question. quick on And title. the have the questions.

And I had a revenues had would Marie, what to or you if Enrique is supply follow-up. constraints? upside no to then quick First, there the a quantify way be

Enrique Lores

we what based we you the is. this at we me is number we see What Let but don't I you remarks, prepared the in let guide supply of I me said take drive will question. can on that is, think if – deliver, tell more have supply more, was what to the current in we that record there be available, will But a we is backlog high. able quantify our think course, as

So the the given strong it But again, number. is across board. be how will significant a are demand shortages we seeing

Krish Sankar

for about quick follow-up. component of quarter a then how as to inflationary you What gross rest Enrique margins the especially really in The get drivers costs the that. strong. there? were Got for And Thanks, folks? And margin the the as gross it. think Got were it. January year, for

Marie Myers

thanks for Shankar the words. Yeah. kind

it's look fundamentally, creating favorable environment. that demand So frankly just and outpacing really all about supply

supply just quarter. So us laws the better of it's pricing helped in the and with demand basically which

pricing of regardless gross quarter-on-quarter improvements. and as fewer So which showed of and in whether favorable margin was talking improvement year-on-year by you're up that as driven cost primarily sort promotions

Operator

Mohan from with come will of next Bank Our question Wamsi America.

Wamsi Mohan

we back Print Yes. for second revenue sequential wondering on quarter-on-quarter margins that the this When Thank you. million the $XXX at was a went and I print basis. improvement up $XXX if in Print to look a about look go at can was you profitability by million.

in I to role the much us maybe how supplies it through any higher laser a that was $XXX also of there leverage trajectory hardware recognizing split tower. So there pricing way million be on us this If of differently you the Thank how dissect versus this cost is help that you. progress? better there's you hardware HP a think fixed versus can and Inc. might of way a mix different will maybe where give has sense purely good between to And components? somewhat can and to think those if we replenishment size on

Marie Myers

thanks no question. your Sure, for

it home And really favorable driven benefited hardware gross and rate earlier. that so was particularly Print I that look the pricing consumer in that And mentioned margins, by particularly was improved in from side. the

by of then had was mix. QX lower supply mix chain those had and that COVID-related higher we -- and and offset in supplies some consumer reductions we And then partially from that costs

the really what against leadership and that's all broad and and and of Print And portfolio that is So the well strength our our we're positioned segments seeing rate. across us resiliency to overall very customer contributed competition.

Wamsi Mohan

you. Thank

Operator

Our next with from come Vogt question will David UBS.

David Vogt

for a now quarter this the to across is shortage different the that It's been persistent forward Thanks. I how there's in XX days know going been future second. your are more some you. top for discussion Thank inventory us greater for going commentary remediation a lengthening going component board, you're industries procurement up disruption XX times issue just mean Great. on across But you your Maybe might about back and case what there's quarter. lead qualitative give time can and forward? In last line thinking that plans.

Enrique Lores

Sure.

have the are across I seeing we we in more can really the full are shortages even strong before, we to and that action mitigate course are the can by demand as portfolio. that than we impact any getting of We we what the the driven deliver very plan. are sure So taking said make that

inventory One components made of case the increase increase the to during some is big things but not before amount Marie we that in the products are only help products, of able decided also quarter. will that of available us have shipment to delivery to more have as we of on mentioned the the hand. to be This ship

from situation ODMs that building also big buy suppliers the coming direct until that quarters. now the directly are them. that some to connection our seen important we will I be during connection and in managed to suppliers will a this of establish expect products really have us them with with manage usually it's low-cost the We have help And would that because components already we cases are even and we things two done from say direct

David Vogt

follow-up maybe on And quick that. just a

you forward, margin next going this as us what sort about that today later through going you is maybe inventory sort the burn might that commentary going from give you in procure like fiscal you're guidance any year impact terms look of So that think year? forward of when that in or inventory inventory into the and you're can taking of to there

Enrique Lores

expect how our it if demand and is some we think the obsolescence very demand I of given low extremely the because you coming have the of think concerned inventory, during I strong is really quarters. strong continue are risk about we to

built into expecting In that coming is be cost increasing made operating during but quarters. some the into and will terms this margin cost cases of comments terms are built the guidance, that quarters of of the in we of coming before Marie all in our components, during

Marie Myers

on comment. follow-up a just And Enrique's

higher of seen basket well. as what result then forward from going prices in a overall commodity we've we those for would As an to be expect perspective than pricing QX

Operator

from Our Suva will next question Jim with come Citigroup.

Jim Suva

much very and question. the you – I like and on results have When seems your When are dive it much on results stronger America especially you. PCs, than the we growing one but we competitors Thank your some competitors, into you North congratulations dive growing, very strong yes outlook. of

Chromebook. a grew You highlight lot in did that you

share the share? Chromebooks when share data So even I'm your is really there look profit in strategy to just some revisit and PC I lose strategy or wanted if focus market we on to you wondering or maintaining, at industry? the versus gains side, the the education

Enrique Lores

Sure.

be Jim. me clear Let very

growth very And something So as in we relative revenue absolute as is not terms. didn't we but about. we on unit a profit quarter that PCs, competitive growth, strong had on are, we are terms this growth, being satisfied

our we looking can before, to what explained will performance. I As we are at relative do do and what we improve

have to We providers actions us by performance improve that component do and with forward. changing increasing connections our we helping that have going some certain already to taken and the be will inventory how this

is we continue to and as do and continue will even we again, We capabilities a to optimize what catalyst our do what using this will are forward. great operational and we is because going this further company do, win this like what to really to

Enrique Lores

think I that, time. said to having close are So we

an as this to wrap use me let opportunity So up.

prepared to repeat of the comments of during all I made want remarks. some First I the

do. what doing And said are our is would we strategy We working. we

really the new had And XXXX strategy, for markets have the in are great confident of opportunities opportunities leveraging of projections the the we the the growth the in future gives that very which our see and our are core have We to we see also are and beyond. growth, strong adjacencies in in year company. accelerate that and a accelerate confidence us our we we creating. start we We businesses that in

today So in all forward again, continue future. of thank you you. talk to looking you us and for joining Thank to to the

Operator

concluded. The attending for today's conference has you presentation. Thank now

You may now disconnect.

HP (HPQ) 26 Feb 212021 Q1 Earnings call transcript