01—Abstract
Summary
Summary of the 10-K filed December 9, 2021. Cited figures are marked; the original filing is the authoritative source.
HP Inc. (formerly Hewlett-Packard Company) reported fiscal 2021 net revenue of $63.49 billiona, up from $56.64 billion in fiscal 2020, with net earnings of $6.50 billion, or $5.33 per diluted share, compared with $2.84 billion in the prior year.
Earnings from operations were $5.30 billionb, and results were helped by a one-time gain of approximately $2.3 billion recorded in Interest and other, net from the Oracle litigation proceeds, which Oracle paid in October 2021 to satisfy a judgment of about $4.65 billion, shared equally with Hewlett Packard Enterprise. Net revenue growth was led by Personal Systems, where Notebooks grew strongly on work-from-home and remote-learning demand, and by Printing, where Supplies and Consumer and Commercial printing increased. The filing also cites ongoing component shortages, supply chain constraints, and COVID-19 disruptions that management expects to continue into fiscal 2022.
Capital returns were significant. HP returned $7.2 billionc to shareholders in fiscal 2021, including $6.3 billion of share repurchases and $0.9 billion of cash dividends, and it intends to repurchase at least $4.0 billion of shares in fiscal 2022. Approximately $6.4 billion remained under repurchase authorizations at year end.
Cash and cash equivalents were $4.3 billiond and total debt was $7.5 billion, up from $6.2 billion, reflecting $2.0 billion of senior notes issued in June 2021. Stockholders' deficit improved to $(1.65) billion from $(2.23) billion, and operating cash flow rose to $6.41 billion from $4.32 billion.
The filing also discloses material legal matters, including ongoing patent litigation with Philips and Caltech, securities class actions, the Forsyth age-discrimination class action, and India customs duty proceedings in which the DRI sought roughly $370 million plus penalties and interest. Management states that it believes it has adequate provisions for these matters, and that a material loss beyond amounts recognized was not reasonably possible as of October 31, 2021.
02—Key points
Key Highlights
- Net revenue rose to $63.49 billion in fiscal 2021 from $56.64 billion, with Personal Systems at $43.36 billion and Printing at $20.13 billion.
- Net earnings were $6.50 billion, or $5.33 per diluted share, versus $2.84 billion, or $2.00 per diluted share, in fiscal 2020.
- Interest and other, net included a one-time gain of about $2.3 billion from the Oracle litigation proceeds, which were shared equally with Hewlett Packard Enterprise.
- Gross margin increased 2.7 percentage points to 21.1%, driven by favorable pricing, lower promotions, and favorable foreign currency impacts.
- HP returned $7.2 billion to shareholders through $6.3 billion of share repurchases and $0.9 billion of dividends, and intends to repurchase at least $4.0 billion of shares in fiscal 2022.
- Operating cash flow was $6.41 billion, and cash and cash equivalents were $4.30 billion at October 31, 2021.
- Management expects component shortages, manufacturing disruptions, and logistics challenges to continue to affect revenues and margins in fiscal 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, HP kept $0.10.
- Revenue$63.46B100.0%
- Cost of revenue−$50.05B78.9%
- Gross profit$13.41B21.1%
- Operating costs−$8.05B12.7%
- Operating income$5.36B8.4%
- Interest, other & tax$1.18B1.9%
- Net income$6.54B10.3%
Where FY2021 revenue went
$63.46B- Cost of revenue: $50.05B, 79% of revenue
- Operating income: $5.36B, 8.4% of revenue
- R&D: $1.85B, 2.9% of revenue
- SG&A: $5.73B, 9.0% of revenue
- Other operating costs: $473.0M, 0.7% of revenue
Kept 8.4% as operating incomeOperating income $5.36B · 8.4%Other operating costs $473.0M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed December 9, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $63.46B$56.64B | +12.0% |
| Cost of Revenue | $50.05B$46.22B | +8.3% |
| Gross Profit | $13.41B$10.42B | +28.7% |
| R&D Expenses | $1.85B$1.48B | +25.1% |
| SG&A Expenses | $5.73B$4.90B | +16.9% |
| Operating Expenses | $58.10B$53.20B | +9.2% |
| Operating Income | $5.36B$3.44B | +55.7% |
| Interest Expense | $254.00M$239.00M | +6.3% |
| Net Income | $6.54B$2.81B | +132.4% |
| EPS (Basic) | $5.41$1.99 | +171.9% |
| EPS (Diluted) | $5.36$1.98 | +170.7% |
| Shares Outstanding (Basic) | 1.21B1.41B | −14.5% |
| Shares Outstanding (Diluted) | 1.22B1.42B | −14.1% |
05—Questions
Frequently Asked Questions
How did HP perform financially in fiscal 2021?
HP's net revenue increased 12.1% to $63.49 billion, earnings from operations rose to $5.30 billion from $3.46 billion, and net earnings more than doubled to $6.50 billion. Results were boosted by the one-time Oracle litigation gain of about $2.3 billion, which is recorded outside operating earnings.
What drove the revenue growth?
Personal Systems net revenue increased 11.2%, led by Notebooks, which grew on strong demand from work-from-home, remote learning and gaming. Printing net revenue increased 14.1%, driven by Supplies and by Consumer and Commercial printing, with printer ASPs up 26.2%.
How much is HP returning to shareholders?
In fiscal 2021 HP returned $7.2 billion, including $6.3 billion in share repurchases and $0.9 billion in cash dividends. HP intends to repurchase at least $4.0 billion of shares in fiscal 2022, and about $6.4 billion remained under repurchase authorizations as of October 31, 2021.
What are the main risks flagged in the filing?
The filing highlights supplier dependence and component shortages, particularly integrated circuits and panels, continued COVID-19 disruptions, intense competition and price pressure, cybersecurity threats, and exposure to international and currency risks. It also notes ongoing litigation, including patent suits from Philips and Caltech and securities and age-discrimination class actions.
06—Continue