HP (HPQ) Q1 2025 earnings summary

Executive summary

• Q1 FY25 net revenue reached $13.5 billion, up 2.4% year-over-year, marking the third consecutive quarter of growth, driven by Personal Systems and key strategic areas including AI PCs.

• Non-GAAP diluted EPS was $0.74 and GAAP diluted EPS was $0.59, both within guidance; net earnings were $565 million, down from $622 million a year ago.

• Strategic focus on Future of Work, AI, software, and commercial segments, with investments including the acquisition of Humane's AI assets and digital transformation initiatives.

• Continued progress in sustainability and digital equity, reaching nearly 20 million people and earning top industry rankings.

• Restructuring and cost savings initiatives remain on track, with increased workforce reductions and a raised cost savings target to $1.9 billion by FY25 end.

Financial highlights

• Net revenue: $13.5 billion, up 2.4% year-over-year; Personal Systems revenue grew 5% to $9.2 billion, Printing revenue declined 2% to $4.3 billion.

• Gross margin at 21.0%, impacted by higher commodity costs and currency headwinds; non-GAAP operating profit was $984 million (7.3% of revenue).

• Cash flow from operations was $374 million; free cash flow was $70 million, reflecting seasonality and inventory actions.

• Returned $0.4 billion to shareholders via dividends and share repurchases.

• Gross cash at quarter end was $2.9 billion; total debt at $9.7 billion.

Outlook and guidance

• FY25 non-GAAP diluted EPS expected in the range of $3.45–$3.75; GAAP EPS $2.86–$3.16, including higher restructuring costs.

• Q2 FY25 non-GAAP EPS guidance: $0.75–$0.85; GAAP EPS: $0.62–$0.72.

• FY25 free cash flow projected at $3.2–$3.6 billion, with a stronger second half expected.

• Personal Systems expected to grow faster than the market, with Print revenue to grow at least in line with the market.

• Outlook reflects added costs from U.S. tariff increases on China; over 90% of North America products expected to be built outside China by year-end.