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A month has gone by since the last earnings report for HP (HPQ). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is HP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
HP’s Q4 Earnings & Revenues Miss Estimates
HP Inc.’s third-quarter fiscal 2024 non-GAAP earnings of 93 cents per share missed the Zacks Consensus Estimate by 1.1%. The bottom line rose 3.3% year over year and came within the company’s guidance of 89-99 cents.
HPQ’s net revenues of $14.06 billion marginally missed the Zacks Consensus Estimate by 0.36%. The figure improved 1.7% from the prior-year quarter’s level of $13.8 billion. The better-than-expected top-line performance reflected benefits driven by steady progress in Personal Systems and Print.
HP’s Q4 Details
Personal Systems (PS) revenues (68.2% of net revenues) came in at $9.6 billion, which improved 2.1% from the year-ago quarter’s figure (2.6% up at cc). The growth in this division was mainly due to revenue growth from commercial unit performance and market share gains in Personal Systems.
HP’s total PC units sold were up 1% on a year-over-year basis, mainly driven by a 4% increase in Commercial PS shipments, offset by a decline of 3% in Consumer PS shipments. Revenues from the Commercial PS segment increased 5% year over year, while the Consumer PS segment sales declined 4%.
The printing business’ revenues (31.7% of net revenues) increased 0.8% year over year (up 1.5% at cc) to $4.45 billion. The Print business saw growth for the first time in the past 12 quarters, mainly driven by improvement in Consumer Printing and Supplies, partially offset by a decline in Commercial Printing.
Consumer Printing net revenues improved 3%, while Commercial Printing net revenues declined 1%. Supplies net revenues were up 2% (up 3% in constant currency) year over year. Total hardware units increased 9.5% overall.
On a reported basis, region-wise, the Americas rose 2.5% and the EMEA region witnessed growth of 2.1% in revenues. The Asia Pacific and Japan revenues grew 0.6% year over year.
Operating Results
Segment-wise, PS’ non-GAAP operating margin contracted 100 basis points (bps) to 5.7%. The decline was due to headwinds from higher commodity costs and investment in strategic initiatives.
The Printing division’s non-GAAP operating margin expanded 70 bps to 19.6%.
HP’s overall non-GAAP operating margin from continuing operations of 8.5% contracted 50 bps year over year.