HP (HPQ) Q3 2024 earnings summary

Executive summary

• Net revenue for Q3 2024 rose 2.4% year-over-year to $13.5 billion, marking a return to revenue growth after nine quarters, driven by Personal Systems, while Printing declined.

• GAAP diluted EPS was $0.65 (down 14% year-over-year), and non-GAAP diluted EPS was $0.83 (down 3%), both within guidance.

• Free cash flow for Q3 was $1.3 billion, with $0.9 billion returned to shareholders via dividends and share repurchases; repurchase authorization increased to $10 billion.

• The company accelerated structural cost savings under the Future Ready program and continued investments in growth businesses, AI innovation, and sustainability.

• Key growth areas included double-digit growth in hybrid systems and gaming, and expansion in workforce solutions and consumer subscriptions.

Financial highlights

• Gross margin was 21.5%, up slightly year-over-year; GAAP operating margin was 7.0%, non-GAAP operating margin was 8.1%.

• Non-GAAP operating profit was $1.1 billion, down 7% year-over-year; GAAP net earnings for Q3 were $640 million.

• Free cash flow for Q3 was $1.3 billion, up 50% year-over-year; gross cash at quarter-end was $2.9 billion.

• Dividend per share for Q3 was $0.2756, with 17.1 million shares repurchased in the quarter.

• Net cash provided by operating activities for the nine months ended July 31, 2024 was $2.1 billion.

Outlook and guidance

• Q4 2024 GAAP diluted EPS expected between $0.74 and $0.84; non-GAAP diluted EPS between $0.89 and $0.99.

• FY24 GAAP diluted EPS expected between $2.62 and $2.72; non-GAAP diluted EPS between $3.35 and $3.45.

• FY24 free cash flow anticipated in the range of $3.1 to $3.6 billion, including $300 million in restructuring outflows.

• Personal Systems and Print Q4 revenue both expected to increase sequentially low- to mid-single digits; Print margins expected near the top of the 16-19% range.

• The company expects continued demand softness, especially in China, and a competitive pricing environment.