HP Inc. (HPQ) reported its third-quarter financial results, showcasing a mixed bag of performance. While the company managed to exceed revenue expectations, its profits fell short of analysts’ estimates. Net revenue rose by 2.4% year-over-year (Y/Y) to $13.52 billion, outperforming the consensus of $13.38 billion. However, adjusted earnings per share (EPS) declined by 3% Y/Y to $0.83, missing the street’s expectation of $0.86.
Segment-wise, the Personal Systems segment saw a positive trend with a 5% Y/Y increase in net revenue to $9.4 billion. This segment recorded a 6.4% operating margin. Conversely, the Printing segment experienced a 3% Y/Y decrease in net revenue to $4.1 billion, despite an operating margin of 17.3%. In the Personal Systems segment, total units saw a modest 1% increase, driven by a 6% growth in Commercial PS units offsetting a 6% decline in Consumer PS units. The company’s adjusted operating margin contracted by 70 basis points (bps) Y/Y to 8.1% during the quarter.
On the cash flow front, HP reported robust performance. Operating cash flow reached $1.4 billion, reflecting a 46% Y/Y increase. Free cash flow also exhibited strong growth, coming in at $1.3 billion, representing a 50% Y/Y increase. As of the end of the quarter, the company held $2.9 billion in gross cash, including $2.8 billion in cash and equivalents.
In terms of shareholder returns, HP returned $0.9 billion to shareholders during the quarter through dividends and share repurchases. The company’s board of directors increased its share repurchase authorization to a total of $10 billion.
Looking ahead, HP provided its outlook for the fourth quarter and fiscal year 2024. For the fourth quarter, the company anticipates adjusted EPS to be in the range of $0.89 to $0.99, compared to the consensus estimate of $0.95. For fiscal year 2024, HP tightened its outlook for adjusted EPS to $3.35 to $3.45, down from the previous guidance of $3.30 to $3.60. The current consensus estimate stands at $3.45. Investors seeking exposure to HP can consider ETFs such as the 3D Printing (The) ETF (PRNT) and Affinity World Leaders Equity ETF (WLDR).
Despite the revenue beat, HPQ shares are trading down 2.16% at $34.01 premarket Thursday.
