01—Abstract
Summary
Summary of the 10-Q filed February 28, 2025. Cited figures are marked; the original filing is the authoritative source.
HP Inc. reported net revenue of $13.50 billiona for the three months ended January 31, 2025, up from $13.19 billion a year earlier, with net earnings of $565 million versus $622 million, and diluted EPS of $0.59 compared with $0.62.
Earnings from operations were $845 millionb versus $935 million, and gross profit was $2.84 billion versus $2.89 billion. The filing attributes the revenue increase to Commercial PS and disciplined pricing, partly offset by unfavorable currency impacts, and cites higher commodity costs and currency effects for the gross margin decline of 0.9 percentage points. Cash flow from operations improved to $374 million from $121 million, driven by a favorable cash conversion cycle.
Share repurchases were $100 millionc versus $500 million in the prior-year quarter, and cash dividends paid were $273 million. Total stockholders' deficit was $1.07 billion at January 31, 2025, and total debt was $9.69 billion. Management reported that the Fiscal 2023 Plan (Future Ready) was amended on February 27, 2025 to increase expected workforce reductions by 1,000 to 2,000 employees, with an additional $150 million in restructuring and other charges anticipated.
The filing also discloses that disclosure controls were not effective as of January 31, 2025 due to an unremediated material weakness in internal control over financial reporting related to IT general controls, which the company states did not result in a material misstatement. Ongoing litigation includes a Wilus/Sisvel Wi-Fi 6 patent dispute, the York County securities class action, and an Autonomy-related damages proceeding in which claimants seek $4 billiond, with no recovery recorded.
02—Key points
Key Highlights
- Net revenue rose to $13.50 billion from $13.19 billion, with Personal Systems up 4.7% to $9.22 billion and Printing down 2.4% to $4.27 billion.
- Net earnings fell to $565 million from $622 million; diluted EPS was $0.59 versus $0.62 a year earlier.
- Gross margin decreased by 0.9 percentage points, driven by higher commodity costs and unfavorable currency impacts.
- Operating cash flow was $374 million, compared with $121 million, primarily due to a favorable cash conversion cycle.
- Management concluded disclosure controls were not effective due to an unremediated material weakness in IT general controls.
- The Fiscal 2023 Plan was amended on February 27, 2025 to add 1,000 to 2,000 workforce reductions and about $150 million in additional charges.
- Approximately $9.2 billion remained under share repurchase authorizations, and the company returned $0.4 billion to shareholders in the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, HP kept $0.04.
- Revenue$13.50B100.0%
- Cost of revenue−$10.66B79.0%
- Gross profit$2.84B21.0%
- Operating costs−$2.00B14.8%
- Operating income$845.0M6.3%
- Interest, other & tax−$280.0M2.1%
- Net income$565.0M4.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed February 28, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $13.50B$13.19B | +2.4% |
| Cost of Revenue | $10.66B$10.30B | +3.6% |
| Gross Profit | $2.84B$2.89B | −1.7% |
| R&D Expenses | $397.00M$399.00M | −0.5% |
| SG&A Expenses | $1.46B$1.38B | +5.5% |
| Operating Expenses | $2.00B$1.95B | +2.2% |
| Operating Income | $845.00M$935.00M | −9.6% |
| Interest Expense | $104.00M$116.00M | −10.3% |
| Net Income | $565.00M$622.00M | −9.2% |
| EPS (Basic) | $0.60$0.63 | −4.8% |
| EPS (Diluted) | $0.59$0.62 | −4.8% |
| Shares Outstanding (Basic) | 948.00M995.00M | −4.7% |
| Shares Outstanding (Diluted) | 957.00M1.00B | −4.5% |
05—Questions
Frequently Asked Questions
How did HP's revenue and profitability perform in the first quarter of fiscal 2025?
Net revenue increased 2.4% to $13.50 billion, but net earnings declined to $565 million from $622 million. Earnings from operations fell to $845 million from $935 million, and gross margin decreased by 0.9 percentage points.
What drove the performance of HP's segments?
Personal Systems net revenue rose 4.7% to $9.22 billion, driven by Commercial PS, which grew 9.9%. Printing net revenue declined 2.4% to $4.27 billion, mainly due to Commercial Printing and unfavorable currency effects, while Supplies fell 1.3%.
What is the status of HP's material weakness and restructuring plan?
The company concluded the material weakness related to IT general controls was not remediated as of January 31, 2025, and disclosure controls were not effective. The Fiscal 2023 Plan was amended to increase expected workforce reductions and anticipates an additional $150 million in charges.
How much cash does HP have and how is it returning capital?
Cash, cash equivalents and restricted cash were $2.89 billion at January 31, 2025. During the quarter, HP paid $273 million in cash dividends and repurchased $100 million of common stock, with about $9.2 billion remaining under authorizations.
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