HP Q1 Results: Strong Topline and Bottom-line Performance

Revenue - HP, personal computer and printer maker, reported a revenue of $17 billion, up 8.8% YoY. In the constant currency term, the revenue increased by 8.2%. It is higher than analysts' estimate of $16.76 billion. 

Personal Systems revenues came in at $12.2 billion, 15% higher than the year-ago quarter (up 14% in cc). Printing business revenues decreased 4% YoY (down 5% in cc) to $4.8 billion.

Earning - The company reported earnings (non-GAAP) of $1.10 per share, a jump of 20% YoY. In the year-ago period, it reported earnings of 92 cents. The current for Q1 is higher than the street estimate of $1.04 per share and management’s guided range of 99 cents to $1.05.

Unit sold - The company PC sales were down 6% YoY due to the expected supply-chain challenges. Notebooks sales declined 9% year-over-year, while desktop units increased 3%. Notebook revenues increased 14% year over year to $8.42 billion, while desktop sales grew 17% to $2.81 billion. Workstation sales jumped 40% to $534 million.

Operating margins - Overall, gross margin contracted 130 bps to 19.9%, primarily due to higher Personal Systems’ product mix as well as increased commodity and logistics costs.

Personal Systems' operating margin expanded 70 basis points to 7.8%. The printing division’s operating margin contracted 160 bps to 18.2% YoY due to increased commodity and logistics costs.  

Cash flow - At the end of Q1, HP had cash and cash equivalents of $3.4 billion, up from $4.3 billion at the end of the fourth quarter of fiscal 2021.  HP returned $1.8 billion to its shareholders in the form of stock repurchases ($1.51 billion) and cash dividends ($271 million) during the fiscal first quarter.

Guidance - HP has increased its fiscal 2022 non-GAAP earnings per share (EPS) guidance range between $4.18 and $4.38 from the $4.07 - $4.27 range forecast previously. HP estimates non-GAAP EPS between $1.02 and $1.08. 

Target price - The 16 analysts offering 12-month price forecasts for HP Inc have a median target of $36.95, with a high estimate of $50 and a low estimate of $28. HP's share price closed 0.84% lower on Tuesday at $34.07 per share.

HP Q1 Results Review:

HP has reported an excellent set of numbers both in the topline and bottom-line. It was easily able to beat the consensus estimate in the topline and bottom-line. The robust topline reflects strong demand for HP’s personal systems and printers. However, revenues were negatively impacted by continued component supply-chain constraints. The company stated that despite continued supply-chain constraints, it managed to reduce its order backlog sequentially.