HP’s Q1 GAAP EPS at $0.59, within guidance despite market headwinds

Overview

HP reported stable financial results for the first quarter of fiscal 2025, showing resilience in a dynamic market. The company posted $13.5bn in revenue, reflecting a 2.4% year-over-year increase. This growth was fueled by strong performance in its Commercial Personal Systems segment, offsetting declines in Consumer Systems and Printing. HP remains committed to operational efficiency and strategic investments to drive long-term growth.

CEO Enrique Lores highlighted HP’s progress: “We achieved revenue growth for the third consecutive quarter, driven by strong commercial demand and key investments in AI PCs. We are focused on disciplined execution to navigate market conditions while investing for future expansion.”

Key financial highlights for Q1 FY2025:

• Total revenue increased to $13.5bn (+2.4% YoY), supported by steady growth in commercial PC sales.
  • Personal Systems (PS) revenue was $9.2bn (+5% YoY), with a 5.5% operating margin and with total units which were down 1%. Consumer PS revenue was down 7%, reflecting softer consumer spending, while Commercial PS revenue was up 10%, benefiting from increased enterprise investments.
  • Printing revenue was $4.3bn (-2% YoY), impacted by lower commercial printing demand, with Consumer Printing revenue which was up 5% and Commercial Printing revenue which was down 7%. Total hardware units were up 5%, supported by 7% growth in Consumer Printing and stable commercial unit demand.
• Net income declined to $565m (-9% YoY), impacted by restructuring costs and market headwinds.
• GAAP diluted EPS was $0.59 (compared to $0.62 in Q1 FY2024), but within the guidance range of $0.57 – $0.63.
• Non-GAAP diluted EPS was $0.74, also within the forecasted range of $0.70 – $0.76.
• GAAP operating margin recorded a value of 6.3% (-0.8pp YoY), while Non-GAAP operating margin was 7.3% (-1.1pp YoY), due to increased investments in strategic growth initiatives.
• Net cash provided by operating activities surged to $400m (+209% YoY), while free cash flow rose to $100m (+180% YoY), two impressive increases driven by improved working capital management.
• The company returned $400m to shareholders, including $300m in dividends and $100m in share repurchases.
• Raised cost savings target to $1.9bn by end of FY2025, optimizing operations and efficiency.

For fiscal 2025, HP projects GAAP diluted EPS between $2.86 and $3.16, with non-GAAP diluted EPS ranging from $3.45 to $3.75. In Q2 2025, GAAP diluted EPS is expected between $0.62 and $0.72, while non-GAAP diluted EPS is forecasted between $0.75 and $0.85. HP also anticipates free cash flow between $3.2bn and $3.6bn for the full fiscal year. The company continues to navigate tariff-related cost increases by diversifying its supply chain and expects more than 90% of HP products sold in North America to be manufactured outside of China by year-end, reinforcing its long-term operational resilience.

After a day in which HPQ share prices fell by approximately -2% during trading hours, the publication of Q1 FY2025 results brought a new, quite significant decrease in after-hours, by over -3%. Thus, this downward trend of the last few days is maintained, both on the main American markets and in the case of HP shares, which lost over -5% in the last week. Only if we compare them to the level of the last year, we can see an appreciation of the price by almost +15% compared to the same period last year, but recent global uncertainties could soon diminish this boom.

Author: Ionuț-Adrian Lazar