HP (HPQ) 29 May 242024 Q2 Earnings call transcript

Good day, everyone, and welcome to the Second Quarter 2024 HP Inc. Earnings Conference Call. My name is Eric, and I'll be your conference moderator for today's call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Orit Keinan Nahon, Head of Investor Relations. ahead. go Please

Interim and Conference everyone, HP's HP's Quarter Brown, Second and Good With welcome me Earnings HP's Tim and Call. Executive Lores, Financial today XXXX Officer. Chief afternoon, Officer; to Chief are President Enrique

to the replay remind a you let handing call year. available be on call Before shortly Enrique, webcast for after X this the is me over call and will that our website approximately

investor.hp.com. Investor earnings the slide and Relations web release at our posted We presentation page accompanying on

As presentation of based world we always, this on our and as are elements forward-looking and of are businesses today. best the see view them our

information, For risks, detailed relating and to in statements please more the uncertainties earnings materials see disclaimers assumptions. involve that forward-looking

refer Form For our intend reports, statements. a discussion HP some XX-K. to these forward-looking of and please HP's most update to including of does recent risks, no assumptions, assumes obligation SEC such not any and uncertainties

information information differ reflects that call discussed the this also the from SEC materially now We available in filings. amounts ultimately financial note HP's on reported on and based estimates could

all During the are otherwise unless specifically comparisons this year noted, ago year-over-year corresponding comparisons period. webcast, with

channel HP In to X refer references inventory. addition, to channel Tier unless noted, otherwise inventory

a information to GAAP non-GAAP For expressed release the reconciliations. those slide earnings for tables we've been that presentation to financial and information. included reconciliations has the basis, refer on comparable Please accompanying today's

to like the over call now I'd turn that, With to Enrique.

and to of actions taken first delivered we sequential and this profit operational joining build delivered pleased we key today's Orit, non-GAAP focus quarter accelerating growth continue specific and When and our the profitable for and teams am you, to year, EPS you growth areas and to a call. in The all and growth I we basis. we very drive results We on operating a year-over-year Thank momentum. deliver goals, our and non-GAAP have accomplished thank half. say fiscal started committed efficiency. drive solid core,

recovery hybrid. expectations ready including future second to results, plan, our progress year technologies cover strong starting our remainder our in innovative innovations against strategic to a progress good I with and for invest and see continue commercial PCs, our and made the We in Today, we will AI on quarter fiscal we the we are priorities, market, XXXX. of against are bringing key to emphasis

the our will I financials into to will I Then with results. a dive turn our call deeper and for outlook. over start Tim

continue to We well, navigate environment. and dynamic competitive

overall time which the revenue X% of quarter's guide. execution. for of third net growth While slightly was slowed for returned quarter. indicator good to rate the decline operating in was grew our first the Non-GAAP a down market was quarters. up fourth X EPS This non-GAAP year-over-year, of Systems midpoint also X%, our solid the is stabilization above and Personal last and profit

one QX In we terms March, AI-enabled most our in of Conference our collaboration. significant solutions was innovations, showcased XXX productivity of and quarters. Partner redefining At new Amplify over

drive top long-term countries. our largest from our partners to will help It conference, annual over and inspired event sustained partners our is of X,XXX This XX us attracting channel growth.

some share me announced. Let key of we innovations the

workstation data had we HP scientists, company improve We creation announced a our comprehensive lot than share. models AI for more the who the solutions million create AI the that using center, For to solutions workflows, most world's X.X to workstation are AI development.

AI more into make from performance, device businesses. tools. small the shared to PC, At more we optimized unlock efficient printing to share In of data and of benefits easily unveiled how will studio NVIDIA medium integrate portfolio with our series Print, and set They we pretrained to collaboration workflows strategic a running laser unveiled software new edit science will anywhere. efficiency jet largest access locally for and allow customers AI first same industry's their improved we on color time, launched AI and the our And the AI the to their and models personalized. we smarter, opportunities the deliver And more for privacy. of

key solutions up hybrid AI-enabled experience areas. providing immersive full our expanded our potential with meeting systems, teams. the also workforce Poly unlock platform, We In we their Workforce more portfolio XXX-degree digital a Solutions, of with of growth experiences. an to enabling In we introduced stepped experience in CIOs camera, Studio enhanced an room

the sales teams In opportunity. are our enabling addition, we on AI to and partners capitalize

We industry's training master and first certification AI the have class ever introduced program. role-based

the next-gen powerful copilot introduced AI up, down Doubling leaders plus PCs. Microsoft enable world's technologies harness ultra-mobile on they from at a event, powerful to most Designed on-the-go ground week available. and PC AI our we the most freelancers last momentum the

our hardware. We edge and ] also Helix been having logo being our identify beyond AI of reaction helps that most you and next-gen new new announced this category some premium of devices. showcased overwhelmingly [ the cutting as with devices select easily has positive recognized Initial

helping their We tangible value AI are already PCs. from customers unlock

example, Consulting, hours solution support created PCs. close The common has AI to productivity to is of with their have a together, the positive impact For of we challenges. on-device efficiency potential to of the assistant collaborating around IT powerful XXX,XXX example drive practitioners. Deloitte return This an to

of is value. invest even brand, HP's in the we assets of to greater our and One build it most to important continue strength

Ferrari. quarter, is younger partnership with This particularly and premium opportunity geographies, and audiences This historic new our a and Scuderia announced title customers. to brand we reach an elevate

their help spend. effectiveness HP improves marketing with them latest brand. the to And excited trusted competitive is also our work It Scuderia we advantage. innovations the of are Ferrari leveraging a drive efficiency and HP to

we stands products more We the that company than are make. just for a

earned year rating HP fifth a CDP. the a from in AAA For has row,

release and are digital Sustainable our our annual Report, outlining month, rights we will climate we goals. progress Next towards the action, equity human Impact making

and revenue driven billion. mainly both up market profitability in Let saw in strategy, $X.X recovery. what growth increasing signs Systems, X% more of each The our share our growth year-over-year, in revenue businesses PS Personal by QX. me we executed That's of now and detail year-over-year. commercial In we driving was

long-term Our PS our operating range. profit within line solidly target our and in was X%, with expectations

focus by Our to calendar driving high-value premium categories workstation. continue in show like teams share commercial PC QX in and profitable mobile their

to this we year-over-year saw and continue we grew PS grow And revenue services we was managed and quarter. in again gaming, growth high with in recovery. growth In key value services. hybrid invest areas. systems, Importantly, in signs of up strong

performance PC the cycle evolving refresh opportunity. video XX over demand second AI we growth introduction will half, the this We drove remain PCs, that we growth sequential Windows accelerate confident strong In Here, of rollout. in to a and market be long-term see expect and collaboration. anticipated and above the

opportunity of AI help the believe us We mix. and drive premium in front will higher ASPs

to solutions a industry. technologies malware proven the lead innovation well analysis such together uses we workstation a beyond solutions. software deep HP of noise and Wolf deepfakes. have comprehensive track behavior as innovating and with positioned against and commercial, and companion gesture solutions protection like security our We're portfolio learning, We hardware rich security removal integrating devices controls, strong gaming, meaningful accessory, the With capture from history with consumer, and and HP, AI and that record opportunity AI-enabled of pipeline, advance room AI AI-based to are

billion, Turning X% was to we expected. and Print. $X.X flat with Revenue year-over-year Results were down line what quarter-over-quarter. in

with of We The Europe. continue intensifying competitive some demand, commercial. in consumer in pricing see soft in environment pressure to particularly and parts remains China

gains line and progress revenue delivered with continue profit We in of on We as pricing print make supplies our guidance. expected. to share in operating results XX%, with

to have of Once brought strong the demonstrated and market. cost benefits disciplined again, innovations the we management, we mix improved

quarter-over-quarter focus in Our profitable on and in making Print and grew home in office. are remains we We regaining share share, progress.

gained Big we Tanks and share ink. Importantly, Business sequentially year-over-year in and

in subscriber Instant Ink all-in also numbers growth plants and We grew like consumer revenue in and our areas new across key We ]. saw in services. growth [

Industrial third grew of accelerate we to In we straight QX, for In the year-over-year technologies. Graphics, quarter. the and continue digital adoption

decline new reflecting also for processes, drupa offset leveraging our hardware be automation printing trade portfolio services growth full capital and the fair industry cycles elongated in XD to on adding AI QX, partially was and worldwide. We are the These now by at graphics and display in robotics. on largest by continued expanded spending. constraints impacted right The supplies. purchasing XXXX, end-to-end in

made progress Overall, in good QX, strategy. against future-ready our we

flow execute fiscal end strategy of the to to over deliver and structural on plan, X-year are XXXX. rate we billion track in year our gross and $X.X and XXX% according to annual on free remain We return time. by run capital of fiscal to shareholders our committed allocation continue cost cash our XXXX to year approximately We of savings target to expect

gross Xx remains As ratio opportunities long ROI leverage as arise. higher unless and our below

be will expect very remain second to Looking forward fiscal half demand will continue market the to that of year the and our dynamic environment and 'XX, competitive. we QX

first our well share said, expect That well print half. progress the gains together a we At stronger to the a same key time, as encouraged core AI as half, our areas. from made opportunities growth us we in to refresh by we're gives to accelerate confidence see plans are delivering businesses. anticipated PC, we we and positioned with The in gain have in growth second early our drive significant the commercial PC solid

seen in on have we'll the our to enter maintain execute we our to half. confident to and repeatedly, as will We strategy, continue plan. you focus delivering remain As are we and second continue expectations our

Tim. to turn now me Let over it

QX in disciplined and We environment. everyone. execution by you, Thank afternoon, delivered financial driven and solid dynamic financial navigating focused results while good and competitive a management

continued in QX commitments. Total further. slowed on pleased our we revenue We with our decline are financial made delivering progress toward

our all improved our margin, and and and dollars operating and profit gross EPS profit both non-GAAP margin dollars Our year-over-year non-GAAP quarter-over-quarter.

we our continuing areas market simultaneously commercial free and while we in stronger through PS key characterized achieved flow, print slightly by In market mixed balanced managing generated AI a results and addition, growth solid demand performance environment against challenges. in these cash reinvesting

currency, as Now declined both $XX.X of quarter, constant currency. APJ at quarter. a declined constant the and look X%, EMEA X%. revenue the Net the nominally in X% in In details Americas down billion increased point and China quarter, commodity let's take closer was costs and mix soft and savings, XX.X% in competitive offset margin and lower X%. the logistics year-over-year, due primarily partially pricing. by X continued. in Gross demand cost to was unfavorable APJ was impacted up

Non-GAAP Non-GAAP other and a lower operating in driven was count by investments cost of $XXX outstanding. was related were intangibles, The by earnings Non-GAAP XX.X% profit X primarily OI&E increased share to expense retirement-related year-over-year divestiture-related billion, totaling a was million, restructuring offset or earnings X% to operating in net with billion $X.XX, by interest up operating partially reductions. compensation, per driven down diluted expenses adjustments. revenue. primarily billion X%. per expense amortization increase variable approximately and higher decrease diluted $X.X excludes and Non-GAAP due expenses primarily share debt to a of continued of charges, charges, acquisition shares. nonoperating and net tax credits Non-GAAP $XXX share net diluted net or $X.XX million, $X.X other

QX share GAAP diluted per As a $X.XX. was earnings result, net

QX, a Personal let's decline ASPs Personal Systems volumes billion, Consumer Total in or constant to X% segment X% revenue continued Now offset expectations. led Systems revenue up partially by by down to was performance. up and units currency, commercial Commercial X% turn exceeding X% In driven higher weakness were China. with XX%. growth by in our returned in and $X.X up

commercial revenue head encouraged X% stronger are details, revenue exiting momentum a commercial than lower-end Systems up and positive favorable XX% year. Consumer of largely the by the down second devices. increased Drilling driven greater QX consumer increased and were revenue. the pricing, half into mix into We an of the flat towards we of as Personal representing was X%, mix seasonally by offset was shift ASPs by quarter-over-quarter,

improvements decline in as calendar including share QX premium. market drove mobile commercial high-value in share competition intensified, our workstations While categories, and we

revenue part commercial is AI We PC, launches advanced on at the launch of and deploy of series this AI in of consumer driving to AI week, focused our growth edge. will our our our we both of a remain customers expand we markets. Last enable planned profitable for next-gen the as share announced portfolio technology and that year which PCs

X.X%. of of delivered profit margins $XXX million Systems with Personal operating operating

Our lower very execution In offset by savings, commodity print managing on including improving costs savings, X.X as a Print, year-over-year driven by future-ready and market. cost we points and margin to increased pricing cost and navigate our logistics competitive our competitive diligently and reflected results continue partially investments. focus

both QX, was In driven office by and a in $X.X down by supplies. currency. home especially further declines Hardware on basis pricing XX% and driven reported volumes as primarily weak print in due lower EMEA driven attributable both down in was as X% the and in decline constant continued share yen. loss demand, aggressive down year-over-year, to billion, X% depreciation The to revenue was partially and total by well China hardware revenue of

grew the XX% by as in down supplies yesterday. demand third with Industrial offsetting units of pricing consecutive and offsetting started revenue we ink hardware units our revenue softer Graphics decreased units purchasing hardware down traditional decisions and Big with customers Drupa, driven year-over-year. which partially Total increased competitive in delayed XX% our By segment, quarter anticipation continued for service, customer the XX%. Consumer decreased Tank, decreased softness and commercial home XX%. revenue we sequentially, market share market volumes market. In believe XX%,

cost X% drove billion, subscriber All-In Instant down margin year-over-year year-over-year, currency. on disciplined X% our competitive including future-ready both constant mix and operating Plans. was Operating in and In X% down million, savings reported in revenue was $XXX The was and Consumer in offset was $X.X Ink growth by profit operating pricing. Print was hardware we revenue and XX%. This by basis and flat a margin with management, driven outlook. down Services, favorable line our Supplies

future-ready our plan. to Turning transformation

We billion. cumulative are our run cost XX% $X.X on rate of our of gross track delivering year-end fiscal 'XX of to structural 'XX goal annual year-end a goal achieve savings of

efficiencies expect our We businesses. core in by this achieve driving to

across are print with progress We cost in our pleased our reducing MPS.

We continue prior launched quarters. benefits of initiatives to the we see in

for we continue with additional our strategy plans to actions year. example, this For location optimize site

as optimize out efficiencies capabilities, approximately investments. transformation HP-specific to sales GitHub we're our capabilities improve our as to marketing, media and digital continue our as across In models in-house we our digital In tools, including initiatives, language of large and to generative such organizations. our maximize accelerating developers AI well rolling XX% Copilot service and AI implementing programmatic

are and cost market and agency translation efficiency production, we lower our Specifically, delivering through working us and content insights helping towards improve NPI costs scaling efficiencies, savings capabilities, with AI-enhanced measurement. marketing next-gen

PS, portfolio. simplifying we our are In

across simplification we consumer announced As strategy portfolios. commercial our brand our last week, and

XX and QX minus increasing increasing days, in approximately days. This Now move cash free conversion million, days flow earnings. let cash operations flow to inventory from days XX quarter. due was days me was $XXX days cash and sequentially flow X was days cycle capital million net by receivable payable cash and allocation. driven the $XXX decreased X to increasing X days The

The of reduce to take attractive The in DOI DPO The returned the In dividends. $XXX commodity impact a payable in shipments, and an strategic continue and drive in from economic was strategic purchase allow share including increase primarily buys $XXX offerings increase driven million sea shareholders, costs. cash buy increase inventory. which by near-term we to of both in strategic economic in in $XXX was to driven by buys to of due financial us value. and suppliers repurchases QX, advantage higher increase million million accounts an timing to rising approximately

our as arise. the remains free opportunities and over of below higher finished 'XX long Xx and return We target FY within to shareholders as in range less and our quarter time ROI approximately leverage gross XXX% leverage cash our expect to ratio flow

the the to keep to outlook. forward and our related half FY of in financial following second QX Looking 'XX mind FY 'XX,

'XX the As of said, seasonally half than first we be second Enrique expect half. will in the performance stronger fiscal

We continue to assumptions. on scenarios model several based multiple

our For FY narrowing non-GAAP HX 'XX, 'XX, is updated performance structure potential while see of cost range remain to focused reflected in a outcomes in our are growth our We but our outlook we businesses. which we continue improving $X.XX, to continuing range on for invest to EPS and our outlook.

FY expense, $X.X OI&E we be 'XX. billion now approximately will expect in Regarding it

FY of cash billion We QX to range flow billion for both be $X.X sequentially QX. fiscal in improving 'XX, free and in $X.X continue to to expect the

flow cash of outlook free cash restructuring our outflows. million reminder, approximately $XXX includes a As

sequentially specifically Turning revenue slightly expect to Personal Systems though we Systems, will QX, typical less Personal than a for increase by digit, high-single seasonality.

to be We end to in the management augmented target expect of cost by Systems of margins range actions. X% our disciplined Personal towards X% high QX long-term

be mix to to print the outlook. in expect driven the target Systems Print, improved continued of Personal the expect In efficiencies. revenue in consistent cost we 'XX, improvements half stabilize FY and market PC the the year, with half back of within we second For our long-term margins by solidly range, year,

by in expect digit, For revenue Print single seasonality. sequentially line we low with QX, to typical decrease

FY a We decline digit in to expect revenue to currency. continue in by supplies mid-single 'XX to low constant

the For QX rigorous to the and at QX, expect in considerations Taking the outlook our and these following cost margins be margins fiscal for high expect print XX% are management. now range, we providing by and FY range half of upper year 'XX end be the XXXX. account, we of into XX% driven to

to diluted share be quarter diluted $X.XX And of net of non-GAAP per the net to earnings range $X.XX quarter GAAP the third in to $X.XX. per share in third expect earnings to We range $X.XX. be

be in 'XX We here expect the the stop net earnings non-GAAP $X.XX $X.XX. diluted GAAP I'll of to lines to $X.XX. range range be we per of net the for open share FY so to earnings per can 'XX FY to $X.XX questions. share in your And diluted

our [Operator with Woodring first will be Instructions] And Morgan Erik questioner Stanley. today

if this the to digits. start line kind the market maybe of roughly Year-to-date, first. year, turn print at with business the year. At it, it's about you of had performing call mid-single I let's declining, the Enrique, flat talked in

the the year. to mid-single our low half supplies digits. you stabilize decline second telling will market in continue the expect You're to to But of

we the thinking competition be year, is, second still thinking follow-up. there? believe factors Are Are -- half trends. that sequentially of in underlying broader could think Print, seasonality why just year-over-year market How hardware a half changing super look for And so market of you will you yen I those to any other we my still translate you year? in the impacted the trend maybe half, we second all Print unpack have of that of and business? then about of stabilize year-over-year the to be the easier that the second of, growth than And question as should about an And Print do would then first be the kind if have compares like helpful. does any should improving as that the there

It's Erik. long a question. you, Thank

to points. your try I'll So cover all

similar were a in of is by in competition intensified happened do we you than have to see [ has space, Consumer. similar all, mentioned, where fairly an from what we terms strong see consumer we continue the As perspective? office we competition what first QX in So side, reasons of competitive seen to seeing the what ] in the in driven

this So clearly has evolved.

we When one mentioned the the is compare that confidence give some expect drivers us what market number. the which in stabilize reasons, half, think we of half to you XXXX. about had of the second and easier an in Underlying key we to this second

usage First be seeing in perspective. a stable, are per been of has office overall the is of is to all what which is from printer, that performance usage fairly a we space what a indicator always perspective especially from printer going the good

in as HP able be projections we we have more to for been shared reduce last quarter, structure And terms our cost then be our own of to to working competitive.

in the expect half, have have share some we the that cost quarters. we previous to because driving X again, the been during So actions of second gains

So changed our you mean again, that have our we doesn't should in reflected. performance, this strategy. that see And

profitable growth. It's capture to just be will units share in in way. be able way to strategy more we this continues a and profitable that Our sell

strong as was I Okay. sequentially. think sequentially. down was of XX again, if percentage really supplies -- the points -- printing operating side, a about And That's basis as margin print It print if up mix on I maybe helpful. then just performance. print And I print stay

print the weak given trend. Just hardware

that on you the margins thinking it of would it? So if is Print mean lower maybe operating the how Can And just second correct margins that's impacting were [indiscernible] I And drove for year? then of deduce one, what that your sequentially. unpack view it, supplies the way half about two, trend?

wasn't rate. Tim, investments, compensation is quarter-on-quarter a about We down take you're I'll driven a most this variable was Erik, notably perspective, X.X. Yes, additional in by From It made supplies so and margin it much was some gross maybe that that. bigger right, driver.

Margins the second half? for

the Yes, range. at said XX% end we from perspective, margins Print the sorry, in QX full upper of to second the for the I long-term in I'm and to upper as the expect in be a year for prepared half that XX% the remarks, half. of range

couple think on improvement, I management. well a you hardware, operating think about is, from we continue profit in perspective. should through sequential the of a driving as to cost expect do models one, to both market We'll dollars that share drivers a XH and see focus key and business new the

is the as in just low And a we are OP currency full these And perspective, mind, said for in forecast to provide year. but supplies before, really then digits to reiterate, keep for our range just to decline we we drive modeling again, for from mid-single purposes, dollars. constant to trying

Your with comes Sachs. Goldman Ng from next question Michael

inflections we units. Within in Personal both and Systems, saw consumer commercial

commercial the indication Do PCs. You can little slowdown that seeing on expand in more bit growth? then any a verticals you wondering on seeing an where spending there if improve? in recovery? you any recovery specific make And Are just little could that broader is unit that. this bit talked consumer spend of a you there you're was you're think IT comments are I a about

Sure.

start let few maybe afterwards. So me Tim to make a comments wants and

growth I the PC the performed even you highlight is and time highlighted consistent first better quarters, the commercial of X quarter between between was saw the than So enterprise were It in fairly and SMB. and key really think in points. Europe We North we America and business expecting. for the that

was segment segment. across this that is not was thing it So probably the key one

at Asia, base that projections half, last starting especially this weakness we aging. to and see year seen what have at refresh reflecting we that Probably are that the And look had the we factors installed as second is continue significantly been of expect deals in half, where the continue. China. driven that need this refresh. the we we we by we is see funnel also is what the in of fact some than the some the to of This when to XX drivers the bigger for we have second especially the Windows Well, we look it underlying as in we to momentum that see are opportunities has

for the Also the the And federal the as focused we this the business half, also half, business second released, budget expect and by U.S. stronger will comment we improve our during has in is discussions. was been the federal also second because to impacted first be business, the some half. of them expect

as and then and strategy about inventory differently, due of And these it components? see you P&L? increase Enrique. advance was said far could we flow component buys. buying how Excellent. more When the philosophy market purchases those around wondering, I are just would if component some rate to through just helpful your refresh on follow-up, us a strategic hear quick you was to the

I'll is one. Yes, take sure. that Tim. This

take for and certainly, we offset inventory operational standpoint and respect something our those. We do utilize changed financial an making or with continue operational and to by that of from efficient. the that on more efficient to if that buys. strategic We'll them it our that more themselves. haven't present us, we'll based our evaluate makes opportunities sense And try strategy is And philosophy kind

we as continue do forward, think look our that. I we'll underscores I that management to commitment efficient just So think inventory and to

how P&L the really in And on have our impact terms at months there and predetermined looking time. consume a a that of or not products reasonable many to ability in amount those in is the of view will

Your Evercore next with question ISI. comes from Amit Daryanani

you and non-AI PCs Amit. AI commentary the really the hasn't This PCs had for of AI about think PCs call. you PCs year. on these the I about on ASP about second these in we hearing of shipped there AI How into in the half of obviously lot chain introduced, curve about should 'XX a the should AI PCs the heading back app about mix PCs We're of And about that a been 'XX? year? thinking tailwinds supply question on adoption versus killer your the the fiscal half how the units and just and a is are AI Chen how talked think from the because we across

Sure. We think PCS the in for to going year, have the next be quantifying ago. weeks that we that announced a total But of growing how generation the This 'XX more and from January at AI both will both, that and is for If around we half. we and the first second shipments we products time. represent we will penetration announced February of generation the in that over couple coming the That's look relevant expect they 'XX. in of of XX% the we that. really, are impact be just

our average That's and sales generation of before, continue In looking will an between and we as And will fact, of how drive after we launch. at kind to X selling price at have we expect that new be they our that. years XX%. between in XX% that AI PCs, X% XX% and that discussed point we're be of believe will improvement

Bank with question Mohan next of Wamsi America. comes from Your

Enrique, on expand on in PS. could little I more wondering of signs a if the comment you recovery was commercial

would partially by I even follow-up. you Win end-of-life And there driven yet said could driven perspective How adoption a Have it refresh strength? characterize COVID traction on I you a Win have of think helpful. color you any or Any if seen be XX. perhaps, else? Or would XX much you support real anything characterize? from

Sure.

funnel QX, for starting and customers much on numbers had one that the that half. we assumptions -- the of the starting so beginning bring many to was are us. this year our in of impacting on the we be to see second And the the Wamsi, not opportunities know, we that see Windows that but large enterprise yes, the you that of are As would the to at results XX starting refresh are

to mentioned, It's clearly and starting And process, In have this of [indiscernible] to what starting systems. to strength that, during this creates X on been as commercial base we that to the previous parallel clearly, is happen the you impacting operating last always we acceleration this years, during we started also think an QX, are the has Microsoft and support the see. aging X, side. is see the the installed to

Okay.

As on a little the a touch seasonality. if you could wondering follow-up, I was bit

said NPS into single typical you grow digits, QX. below expecting think seasonality slightly I to high and revenue continuing up then you're

the that that Just Would maybe a and half, those that might Print how give and first impressive if and things cost wondering year second on versus sense ready seasonality you're just half very half. you you're margins ready would versus flowing savings future that side and understand future compare savings is PS in on across how us maybe versus margin of your here, on . And typical on pricing put half side, mix? track could on you you program. doing to perspective, your we any so say are -- there just like sort can clearly,

take the Tim, one? do seasonality want you to

digits, Yes. Wamsi, normal grow do seasonality. -- from single sequentially perspective, -- me, From below to we a as high -- you slightly QX said, QX excuse QX expect to

think historical about I think in to about the PCs. seasonality stronger I full is slightly about than if half, really think the think half, full the your if for you question you be QX could

split the stronger QX traditionally, and a QX And quarter. is QX, between

for the built in So the half guide savings, we've And how this guide terms the then, of Tim. second quarter. is for and each

it's I see other. a both driving from efficiencies. where know one more across focused some perspective, we're savings don't do those ready future the We're pronounced From in the core perspective definitely versus a of that we future-ready businesses.

rates us areas people. I note thing AI reinvest in us in growth some and demand the savings future of think challenging does ready is, help to allowing And it key that. about margin key such deliver leave a in it is as the environment. the important even I'll it at our areas to our

The next question Baruah Market. comes from Loop with Capital Ananda

a to just refresh I appreciate I in PCs sort the well, given good margins -- to with let's -- just And of I way what's AI mix? going go follow-up. you you kind like PCs guess, a the disproportionate guys Enrique amount sticking quick be going Gen taking cycle, guess, through question. then think sounds yes, Tim about, the and are as it are of to that a PCs,

not from margin past. that have Well, we Ananda, provided guidelines the the perspective, a are we changing in

PC stay to for X% the Tim and we half. mentioned this the X% in to to second expect the We be range expect business where

this is, point what the that the I and think, projection we this is at have. On --

multiple variables We is have our at but ups this this and downs, point. view

the you drain there battery into yet, power, PCs make battery? months as AI Cool. just next I'm Gen the battery with battery capacity, me. Any of the have a interested sort battery, world, that's any the battery follow-up is, if use guys, way Enrique life thoughts capability. And you becomes your just have thoughts Gen AI on it on of X start to over in And quick for

Sure.

Let me X comments. make

weeks we PCs a life next-generation in of introduced one is key the all, of First ago, that couple AI battery of actually, differentiators. the

more in enablers utilization that AI PCs, to but in are efficient models XX the battery by PC going of life our PC using we hours, the which driven how a is be one direct also based optimize we that of the from ARM of that. language over is technology that perspective, used and building is this is fact, In on because is each are the cost both fact PCs the user in

big battery ARM of only impact time PCs. on this are on optimize going what a is on utilization What applications xXX how not also will products, are have also is PC personal significant not your products what really savings, on to on and one which using to means the differentiators we consumption AI There is we own learn applications over of that. is based device a the based but using,

from JPMorgan. with Chatterjee The comes next question Samik

the a data Anything perspective not We've more demand Enrique, seen weeks. of can And of in more, that some getting see can start, out momentum in the that macro Or I do have recent of further prepared geography where year? in in your more is just if progressing I strong rest of the I outlook demand? follow-up. Any you in you share market. there? the you're from more had about what terms see terms the that overall guess, you bit you're terms in overall of things in come remarks, sort just positive trends the your looks commentary the can guess particular China market I or a recent how in you order are of that bit through downside region Are terms sort a quick of from thinking of better? things seeing

this the So not our built challenged, to in think projections quarter, for last And systems. haven't we this other continue geographies, in second economic and what plan. market a we for print great has didn't or half. that building us positive will seeing we quarter. the are progress, any example, the second for improvement very We personal great see in been an improvement In China. momentum, the this to be of India, we demand and situation then our are in for for is applies And in

Great. it. Got

enterprises to demand what mean, spend to trends a of in and back in relation you to you're On space sort sort I of that in seems are to go priority the on Poly like terms again, and their seeing starting relation office when But in and specifically, reengaging video business improve. office making think space. of their overall investments it overall, about their willingness collaboration

especially it business, continue one see limited. investment. been we This we how systems. it, systems enterprises which expect time, On overall has from the hybrid we to to true the continue you we momentum, video as side, half. call some limiting quarter-on-quarter, At And been is to said, and in same the conferencing see their was the have in second started demand

hybrid continue important the for years real a going in be all companies, come. is therefore, to brings this and employees. work, opportunity the we the think to important going for for that From We long-term growth to to this flexibility to perspective, believe And continue very be is it's that us. means that is a opportunity

Toni question with Research. from Next comes Sacconaghi Bernstein

clarifications question. a quick had couple a just I Yes. and of then

you AI further from PCs tailwind some very sound and constructive in on recovery the to Just clarify, PC.

So I'm just quarter. have Can quite first I could a is? are a that please. you this little also Again, clarify? bit surprised only you're on actually follow-up, the just you guiding below quarter, And the normal lower than QX. buybacks a seasonal $XXX And buyback, why explain million for

Sure.

me take a Let on question PCs.

is are a some conservative seasonality from We saw seasonality commercial consumer at more assumptions the a seasonality second And in the from second strength in and as also half. are same because, and know, we a we perspective projecting continue are bit that we has that the cautious the half. on and time, perspective, impact what stronger to half, we why consumer, -- half in second has are you on second in is a our in on side this the side been more the projecting we've this for QX, the demand

of the is, make most terms really not In we approach. share comment to have changed important buyback, our

we that Our of XXX% ROI continue return cash of investors while goal below investors return flow opportunities. better over should be to stays to time. we And free free and XXX% leverage our continues cash to unless X, identify to will expect flow

billion. is last market you points? share $XX levels? do to like $XX there try almost over do pre-COVID this still some could be reconcile be XX% actually I And was I pre-COVID years, be and there's I set, going the this about some the market below X units HP going just loss Or data pre-COVID think snapback are little if to it's down do bit. to printing But last you been of think why just out to same year and zoom The level level it the those a few revenues suppose think I years? think should How do billion. like billion you levels? revenue $XX about PC is And year Okay. year. overall, for the

Yes.

coming a detailed 'XX we about the conversation have are more will there. in the and what quarters projections think I

touched you print points. is office think both on I it The be. some smaller used the than and key to of on premarket,

at share. So this still the where during have we even on PCs, we pandemic and the if to has grow before an we goal impact last share, on is not been were size. continue recovering our level are to Also quarter, the

do talk and multiple we I'm So you And to what factors. forward see in looking QX, about are the projections will will there see expect give and of versus we kind Toni. years. we previous to tomorrow, 'XX 'XX,

Your comes next Citigroup. with Merchant Asiya from question

This for Citi. is ] at Cadiz Asiya [ Michael

can PC AI know and versus the lens Just PCs how of points we commercial as X second consumer they gain starting the question. consumer you've those in look given traction half. AI review on commercial in you them should comments half, good But versus some I that through at back view? the on through

Yes.

requires grow in on and evaluation though, the were the small. commercial of to over the that we next-generation customers and in the time. the a the the But stronger penetration commercial take expect half portfolio, just second Of some especially products key think impact we fairly 'XX products done consumer in be expect because just by expect to thing, time, to fairly more in we in the a but But expand 'XX. launched, we some is we half. relevant impact I -- and going from the traction be results PCs, will continue is launched, small in to second the

Cowen. with question of line comes the Our Krish from next TD Sankar

behalf of calling Krish. This on is Steven

be that distribution longer-term and normally retail revenues for also a print could guess, The do mix like today through quantify are coming Enrique, channels. on what revenues newer I percentage first revenues all-in to what of And what of might I or could from subscription-based if have the you one, your kind about also talk you the related the next willing year? the you programs? be what view are sell could operating the for you whether versus subscription-based it's And margins

We let disclose the a make business. subscription of Sure. our few specific don't comments. But qualitative numbers me

that also First subscribers revenue in of growth, all, all of space both in models. integrates subscription our net and the we to QX, see consumer services the continue

the last to [ first at the the then what ] model, printer X in the quarter, we our good keep progress subscription and we and this to have point. paper QX making During also we programs in that we all-in expanding have in include call portfolio been

to us we to a get both also offer in to as customer and enables proxy this to more customers, because grow allows customers. is, of Our can per from better because proposition business a to but value stronger, our capture profit continue you it course, value us that a to proposition value goal

think So we is a this really of accretive business. a building way more

have I of inventory question, where was question as change levels, look I similar revenues in are the terms wondering run levels levels. dollar current major we going If for Tim. as rate of follow-up dollars. to a also inventory terms and a revenue maybe levels higher sheet, on today, comparing the that is well. I were had and on, in there at structural current was inventory 'XX inventories much balance in your specifically, prepandemic And my if the fiscal to

much having mix, of a I'm subscription wondering, there all business maintain? it's is just buys? PC more or mix just Or also Is kind is to inventory element changing and bigger your model-based higher commercial you some also whether impact current strategic have to on this due the that how to [indiscernible] revenues. shift of

Yes.

time. of our related on strategic is changed over sea to and to that you subscription shipments No, impact see we inventory times. First, structural From meaningfully. choose we're taking. comment. -- what change put standpoint, we at those the ocean. the buys a that on haven't that that as And Most structural inventory doesn't will levels the has

offsetting is, continuing more items. So is we I X help of and the we what actually I are is only those some to operational other nothing said add fund our than what I partially before inventory those say would decisions would to improve thing And things. those there's make,

Thank you, Tim.

joining for you, me Let everybody, call. thank the

makes have PC, which seen solid half the saw, thing than that we what saw in in stronger first more a second relevant especially second first the being solid positive a half half a closes you is the in recovery As we And business, Commercial half. where year. about we QX the the us expect that quarter was of

our the us And confidence value growth create the we businesses and the that to gives term. call, to combination ability side of to the what on execution in the experience continue long in, progress growth we continue

you many seeing you. again, you for looking to weeks. So thank forward everybody, Thank and in of joining the coming

call. Ladies and Thank you that concludes all for today's gentlemen, joining.

now may You disconnect.