HP (HPQ) 26 Nov 242024 Q4 Earnings call transcript

Good day, everyone, and welcome to the Fourth Quarter 2024 HP Inc. Earnings Conference Call. My name is Lisa, and I'll be your conference moderator for today's call. [Operator Instructions].

As a reminder, this conference is being recorded for replay purposes.

to Investor call Relations. like Keinan-Nahon, to now of Head would turn over the Orit I

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

year. Enrique, for call website Relations posted will you be on We on me our that approximately and this and Before handing presentation investor.hp.com. let webcast replay the call after web a call the shortly X over to release slide earnings remind is a at the page available accompanying Investor our

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

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

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

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

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

to unless otherwise based to addition, channel information. quarter market channel X inventory Tier In and noted, HP references calendar refer inventory are share on references

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

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

QX Today, full today's results. we you thank and performance Thank you, Orit, joining for year call. will XXXX our and cover all

strategic the year expectations sharpening discuss how to for future lead also focus and are ahead work. will We the we of our

Let's with our QX results. start

In In we contributors quarter, gains growth revenue drove revenue year-over-year, growth. for the units Systems, demonstrated and Systems Print since consecutive both Print, fiscal steady to second share were X% up strong 'XX. Personal first Personal time was progress. commercial the For and revenue year

performed quarter. to well, We also plans line we In our would do. grew Our structural the with significantly invest growth X% growth did in future-ready to what our businesses. continuing our in EPS saving contributing cost accelerated businesses short, we said growth while to $X.XX outlook. in Non-GAAP we

of QX also exceptional experiences showcased capped breakthrough September, AI-powered our HP platforms new off in with an Imagine But year event annual innovation. and capabilities. we

equipped respond files, a partnerships experiences Our expanded AI app uses bringing even software quickly AI we or analyze are growing is our for application. help Companion, number to key life create bespoke now content tasks. to private companies, more of with PC The AI portfolio a Through generative HP customers. to with

are meeting locate collaborating capabilities documents tasks Companion automating quickly with key on based to with and Zoom can preparation, we example, on-device power For streamline decisions. that AI in-meeting relevant

These our types will of next-gen in AI powerful be workforce. experiences compute illustrate the

printers ServiceNow. developers workforce Boost, We launched and also adding enhance the Microsoft manage integrating monitor to experience solution AI we HP ability and platform, to business allows continue data from share and to GPUs scientists our and popular applications that and remotely, a

single recent provider digital a the strengthen dashboard. comprehensive customers control solutions ecosystems Our acquisition It will platform. over of of collaboration from Vyopta, management offer will their a

AI to the and continue In category, security. PC performance with lead we

data. AI-enhanced the analysis. large the run factors. The who Building It most tech launches protection notebook. business secure powerful we time, next-gen last experiences, is experts industry-leading TOPS on powerful powered introduced most our and life X applications is consumer the by quarter, delivering and XX are industry-leading sensitive We ideal business an same At of battery form offers NPU flexible for EliteBook for AI consultants performance. it to

our first whether PC. of and sketching, And Flip, also can the Wolf power the With to creators with they HP have it, Freelancers collaborating. and X-in-X they work secure with or ability Security, AI, protected. data OmniBook AI Ultra editing keep their power the design with can

are AI. AI-powered we intelligent and how It frustrations multiple The deliver printing smarter printing showed industry's we solving spreadsheet that enhances HP print, first perfect feature pages. the Print uses making is with print and perfect simplifies PC, the AI like output to table Beyond printing. over experience universal

solutions this define innovations commitment underscore work. customer-driven Our of delivering impactful future to our to quarter the

the take planet teams commitment the a inspiring. your HP, to across is I these innovate partners continue, Before moment to for acknowledge experiences, and delivering incredible I customers, want to our

unit business to turn now performance. me Let

Personal with operating strength by impacted profit. commodity For the continue this will in revenue quarter, take consecutive we up year-over-year, time. driven saw commercial. pricing on cost We continued which And costs, in to Systems was on and actions mitigate over to third X% growth pressure

here, categories. these in and to drove particularly than continue is we year-over-year, will We quarter worldwide and We gains premium. prioritize in categories, of units AI this market were high-value more believe there share PC XX% including opportunity shipments. consumer more PC our commercial

#X we maintain AI fact, position. by intend have as this published recently PC market and in to of In we the share the Canalys, Windows ecosystem,

efficiency the of our the future us and work. security new to power strength with deliver ahead, will levels AI Looking of coupled of critical portfolio the enable of to

normal performance, systems in strong areas, XX strengthen and the quarter-over-quarter, industry pronounced previous impact line Services transitions, the year-over-year, AI to Windows than commercial grew expect refresh PS upgrades be to the ramped to continue leadership. and penetration lower further more delivered to expect growth our revenue revenue And hybrid up we has gaming with of we PC see the with since In We seasonality. XXXX. in

and offset home The growth areas, performed across performance strong share home, we especially on In all industrial grew part in services environment. regain share with Revenue office. Tanks, Big and we consumer delivered to X% revenue continued our graphics, in was In categories, In in year-over-year. and to Print. gain strongly industrial in commitment share growth supplies a year-over-year. year-over-year. fueled pricing to and by gained competitive we by increase office, Turning both

intentionality. We long-term believe and to continue is sustainability and we of with core growth, a operate to purpose our sense

received QX, purchase Renew in on Companies industry for refurbished Solutions for Most team it easier HP example, customers Newsweek's list. making recognized high-performing also our World's For were hardware. Trustworthy to We our recognition

full Revenue talk Let the year-over-year was about year and flat grew me performance. now non-GAAP EPS X%.

especially year. While recovery fiscal first half, going the was into second market positive recovery the we in half slow, momentum a the had new strong with

year. grew We nearly cash We returned faster our areas, in to cash the the of commitment. annual portfolio are drove rest pleased flow total the which flow aligned generated our with of strong our our long-term guidance. approximately key free collectively with free for XXX% and our than company We with revenue shareholders, of XX% growth line

our capabilities. progress have solid invest that. Over the have we new And we in year, done our portfolio focusing integrating would future-ready to said We continued we and strategy. past AI on innovation, drive with growth

implemented improve told successfully solutions, models you shifted new continuing operational our have we subscriptions to were We business more and per customer. to offerings we as capabilities. We increasing value

using have delivery taken steps to ensure more time time we order improve customer Here, a call to reduce chain, resilient and AI. supply our

sustained plans to of year fiscal are a 'XX drive well growth. year capitalize steady opportunities Overall, positioned that and working, know are our We progress. new we on was

clear with ahead on looking future a the are work. of leading focus We

to intersection, With to HP. are the employees continued of drive an this to next proliferation lead evolve, we growth seeking what it team in have employers takes customer while fulfillment. going we AI the attractive our place, solutions powerful the of have At opportunity and professional portfolio and With work, it's expectations flexible era. believe for right

Here is how.

software. First, and innovating we new AI-powered and are investing aggressively capabilities in

on will a stack. delivering for is exciting everywhere. our an This customers AI-powered We focus shift tech cutting-edge

We collaboration. insights will provide and and automation, personalized foster them with team new experiences

and TIO, brings our TIO hardware a together experience-led a Our recently accelerate single to software resources The move will all into from more established company organization. a team. organization, technology our transactional innovation

expected growth In the and leveraging power accordingly. in commercial perform grow consumer and office. prioritizing to our better example, in Personal are faster and growing portfolio segments than are Xx transactional we for of than we office TAM capture consumer. and to are is expected commercial are segments Systems, Commercial industrial than to Print, And consumer solutions. contractual Second, TAM opportunities faster

consumer profitable premium focus capturing are gaming. Thirdly, in on maintaining we our growth and

our to For ensuring consumer of increase the cost HP plans. growth subscription to programs all-in And chain taking future measures support continuous evolve supply our automation in supply success services. improvement like in end-to-end to example, capabilities strategy continue resiliency will structure. building while on our our in work are process we and we operations, of chain

including decline than digits. year fiscal 'XX, 'XX, grow will for that to fueled single catalysts multiple expect faster the in AI. fiscal forward print we market And we low the to PC by Looking year refresh market assume

at perform to We for with expect and respective line Print both the market. Systems Personal in revenue least

especially our in significant key accelerate market growing opportunities to than have commercial the areas, where consumer. is We in growth faster

returning of long our XXX% to free and committed time flow on remain gross approximately as also cash higher opportunities ratio EBITDA. a arise leverage unless under with as investment return Xx remains We over

focus our in revenue, year enable and deliver will capabilities 'XX earnings operational strategic fiscal free We to flow. are and and cash growth non-GAAP confident us across solid EPS

turn and will I over to Karen. here it pause

good full free nearly in row. year and in non-GAAP second fiscal growth with to returned in the range. for afternoon, both strong a everyone. revenue solid EPS driving year-over-year cash full increase across the of the Enrique, our guidance delivered shareholders And as you, and a for free delivered grew Systems and Thank QX XXX% year-over-year we results We in within Personal quarter, our Print, solidly cash flow committed, flow quarter year. financial We

the revenue of in nominally Taking currency. details a at up the Net and closer constant X% look quarter. was

grew billion, savings. initiatives, in, by margin X% expenses part continued all in we strategic pricing profit operating and cost expectations. actions. $X.X growing offset of across commodity costs growing offset future-ready in with our with regions APJ with reductions, EMEA key Non-GAAP X%. in flat XX.X%, rising Americas we operating acceleration fact, cost reflect the Gross In currency and as in All and was non-GAAP line year-over-year was including investment constant cost

year-over-year the activities. currency-related OI&E short-term losses Below op of financing reduced was and line, net profit down lower non-GAAP levels with

a with earnings increase share of our $X.XX. approximately diluted non-GAAP count diluted was net shares, million Finally, of share a $X.XX, XXX year-over-year per

continue outperformed Personal ASP, in continue the and areas, adjust delivered X% growth possible strong We up in up to second turn X% and was we revenue quarter. where higher increased to commercial hybrid straight and that systems pricing to progress currency, volumes in with to key commercial increased particularly the market in as see units segment let's performance. with year-over-year, constant mitigate we for total costs. growth Systems nominally component Now X%

Commercial increased was favorable gains and share premiums. Drilling pricing revenue improved high-value with more commercial We growth, X% with up mix. unit market into details. the X% on our in

than more consumer where down with market continued X%, commercial in units offset expected. and In softness in gains down fact, X% our particularly revenue China was in as

headwinds initiatives, PS were savings. continued lower and costs commodity operating in a offset and fully margins Our not by reflecting little repricing from future-ready expected, the efforts investment higher strategic than

Print, increased Industrial Graphics our that Print X% Total currency, continued with In reflected stabilization. growth key in of in signs constant hardware, services. basis a a results on execution supplies and supplies growth in reported is areas. and focus market and driven on our in showing by revenue X% Momentum

We consumer subscriptions also saw growth in double-digit revenue.

Print purposely range only end focused China, but we margin across consumer and not the high revenue X% with future-ready X% environment, grew gains on pricing X% with savings all declined cost our above unit share XX% of across actions. gains competitive growth share except increased mix customer segment, unit of growth. while from favorable accelerated as the our year-over-year categories. long-term XX.X% Commercial, year-over-year In profitable up in operating units all with By was markets on

ahead made Looking accelerate holistically we are to cost plans at initially out. the plans, we actions. quarter of progress And we point, future-ready this are our in laid our the at the with pleased

X roughly run In fact, X-year our year have program our of gross go total rate with XX% billion plan, of savings. goal annualized driven of to on we $X.X

across and allowing reductions for print. modernized reduced these resource and have in across Systems across infrastructure commodity to the by the complexity company further next over year. further effectiveness part core we look efficiency portfolio and drive plans driven reduced forward our future-ready, X/X, Personal company, As We of and to the data completing Platforms

was $X.X range more me billion guidance the cash billion free in and let solidly capital to We within we year the at cash allocation. $X.X flow in And generated free flow and flow. set operations cash than move Now $X.X billion, for fiscal of beginning the from year. cash the

activity, of days We continue buy cash higher a to this and lower up terms strategic activity. cycle manufacturing result and as our quarter, days inventory improve improving with conversion driving payment payable down

through finished dividends Lastly, range. leverage repurchase share quarter shareholders and $X.X our and we approximately target the within returned to both billion

we of year, $X.X For flow. to billion free the to XXX% returned cash shareholders, nearly our close

FY to areas, continue next consistent the profitable year maintain leadership and including QX drive making position results drive improving market. are our 'XX steadily and investment we intend a the growth Our work. growth in reflect this strategic progress we further we of as in momentum into future And and to

increase As consumer. FY in let segments. faster start as the we we 'XX, with ahead in me digits market our Personal are experts mid-single commercial XXXX PC with aligned said, Systems, industry look Enrique than market to with In the projecting growing

Windows year, the the of anticipate AI by make 'XX. 'XX of and of At we grow our up refresh, to expect market in penetration increased in be seasonality, revenue fiscal year normal AI PC We PCs. second line FY XX% approximately will in timing XX least this PC of with stronger the our unit and to driven half shipments point, at

expected On expect our the we half given pressures, operating of on have in pressure in X% time half. stronger costs. place our but ramp the they commodity the these to to range margins, for margins to reduction will year, in to QX, we leading actions in the be year, remain lower upper to while cost put X% and second half continued pricing the And in through will offset and take

aligned Enrique experts the In the with XXXX. projecting we in in decrease low to with market as overall Print, And we to industry least market. are perform single digits said, expect at line overall

Particularly We pricing where on segments opportunity are see benefit focus office, ASPs to our expect in to share contractual the profitable share the environment the categories. we capture we and to in stabilize from our under-indexed. driving strategic gains in

continue consistent decline our XX% disciplined ready top be our long-term on low 'XX outlook. revenue a and range, we mid-single long-term XX% to QX, We with we management exercise continue operating to future to expect to in to currency expect near digits our the in plans. And FY supplies our to execute constant margin in including of as cost

Other approximately the Keep X/X we in in expense our be corporate to billion. year-over-year QX. relatively that the to Beyond segment, other expense, expect be expect we $X.XX to earnings GAAP of approximately of of flat $X this, mind stock timing $X.XX. at annual expect 'XX non-GAAP we Corporate compensation $X.XX net With due per 'XX and diluted the range to be all of share net earnings to diluted FY share FY $X.XX per in in the to our of range

$X.XX. in net non-GAAP For first $X.XX the be share per be QX, second expect in range GAAP sequential improvements range first in diluted $X.XX EPS we per expect to be earnings to $X.XX the and the of quarter earnings in of we quarter share each to to quarter. Overall, diluted stronger with half net to

with earnings. to growth between billion, $X.X 'XX FY we line cash billion in expect On deliver to free flow, $X.X with

consistent our the expect our and remain half return capital under of prior On our incentive payment. better stronger typically leverage recognizing flow there we over to is as to first long Xx, free committed approximately as shareholders our returning allocation, opportunities. timing remains earnings we second first, net typical, than aren't cash our the time lower, be to ratio gross that of and with comp given XXX% the quarter As year

ahead. and our annual our we is In by have ninth Board to future per our are separation share. also long-term we $X.XX closing, outlook and the and announce dividend our today in for our the to confidence in increase we raising annual are since excited reflects that consecutive XXXX X% pleased This

like the for it would With and hand call open questions. back the I operator to your that, to

[Operator Mohan, Instructions] questioner be today Our first Wamsi of will Bank America.

have called guiding Typically, your is of know XX% puts to to as timing out there else driving is but And you about well? a over I of I closer full follow-up. you're XX%. first that's about year. you anything there? the Can quarter takes "the of and EPS talk that's over EPS stock This delta year, there comp", the some the

In Yes. question, our typically sequentially. EPS is the Thanks for QX, down Wamsi.

declines So yes, And seasonal other And driven we that's increase volume keep in the it expense. sequential timing of corporate expect first we have QX. quarter. expense mind, the roughly compensation a in by our in the to hit of in I have stock really do quarter. in we said X/X

free Okay. which that done we But optimizations. that's really we starting you've grow these cost cost cash PCs somewhat is I income least of presumably, -- to isn't improvement lot mean guess as to follow-up Why around higher coming next already. not would most lapping of range optimization future-ready a to where especially these is well? some buybacks, operating you're as ago? see at transformation flat couple cash of down despite free charge materially plan higher your next you're in your also my closer all flow is roughly guide So at why charges on look a the from and when share expect of really restructuring for flow year, magnitude, year, years EPS restructuring going organic a the should

free intend few flow, grow question. and flow it continue the past And pleased for to to in fiscal delivered years. expect with free have cash we Thanks roughly capital as we do drive to with line improvement in this year. we continued just earnings. cash We in Yes. the We're working the

growth the earnings. to year little less flow in cash to some cost we But plans. charges. to restructuring we higher with offset we that will our grow continue. a expect of our line future-ready expenditures expect roughly But with slightly on enter We to expect third spend as free And we support capital again, plan,

year-on-year, by the we at both guide. When growth driven observation. this your And buybacks, what of operating the really also of growth first another share expecting EPS and comment supporting it's is are also look we about midpoint is but profit,

is from The Erik Woodring from next question Morgan Stanley.

this years done or now, digits. to Enrique effectively X revenue maybe, print would row I low revenue margins all guess one is be print Karen, mid-single down in in XX% you've operating for has a been Karen, in which -- you years

future? XX% question in should trying range? it outperformance correct to to my of a degree a wouldn't why And is over-earning some Or is the maybe target. I have higher? versus And the point at follow-up. just that be So XX% then has the understand there the been I'm relative why normalize

for thanks Yes, that question.

operate You've end both seen of range, we that the and to do in it at high expect year, the the full QX FY continue in and 'XX.

on profitability focused are units in share protecting subscription with customer our unprofitable reducing Big also through been profitability office. the value increasing we're to We've our categories the in our lifetime some shift business, and Tank. in gaining print. We've growth been higher We in of

guide, the just that the of in to As But range, lean range we we're conditions recent also years. we've going remain in have seen the dynamic we're we so the we going forward, where lower opportunity. find think about end cognizant market the can of to maintaining flexibility

And Erik, this is very consistent with previous conversations.

But going just units. previous in if more and flexibility may pressure some do changed we Karen a place from we the specific the As on we're to positive have see nothing this And has hardware in, see lean opportunity we case want in quarter. margin to said, have put that, conversations. opportunity, to to

Right.

of for gained early that there setting my Or about in then year, any so share that's help more line print from, XQ after bit Can just understand to don't And talking you yen which in maybe gain And for both growing the maybe a the trying in with a Enrique, you in expect expectations competitive follow-up, rising be maybe today? fair. example, market. where in Very just to year? are PCs. you next conservative in you Is us share Okay. pressures the kind why it is are me. strong

more Erik. be the conservative We latter, in the I to would want it's assumptions. say

as Of But course, to always profitable grow our goal share. to share in grow is going be say, we categories.

going areas of do growing where share especially not grow And grown year, way. have really focusing the said it see PCs, be we in is share. goal prepared to have about for our Our as continue priority. profitable in commercial opportunity we remarks, sake commercial. a It's on to share the to is we during to This in those

Daryanani, Next, a Evercore ISI. we'll take Amit question from

a Liu and Amit. Irvin on one as is well. for have I This follow-up

I next XX% shipments So AI were of to and correctly, if year. units fiscal QX heard during it expect XX% PC your to expand

As will of sort for expands, have have margins. ASPs PS AI this what PCs and for your all this mix implications

Yes.

year We improvement are seen. on that and between current now we direction from that pricing PC until changed and be a a shipments What overall going the results the and saying of now, mix an the view expect them going taking confirm AI our seen between and is X% AI That's have been that supports impact a average have XX% now. are what not current we around drive selling to the the category. to and are assumptions until PCs to we have on have XX% have have when we we impact support price. the we XX% of on

my potential positioned can impacts to to about in Got how follow-up, are you talk mitigate chain? potential it. and for for then tariffs, any your you with the just administration upcoming And supply change

let you. solution collaborate Perfect. willing the first, our with the to shareholders. are say really and best both we And for me to new administration reach Thank that customers our

changes the about different in building chain years, to last more resilient we the talking make factories done environment. If footprint of been about geopolitical be work have you in been in parts the what have a think we've able world supply to respond we of to lot X and to our

in position. in we're our companies other ago. to industry, strong X a a think much years that position we we And than are we stronger in today, were compared So

can the final the say we company. what type as will knows policies manage At what to exactly will be. be, the of is new strong this the environment. how best build hard we this we And that a plan for What point, know know tariffs are to it's I team going have to

come Our today Bernstein. next will Sacconaghi, Toni question from

outside to just My question and country of up wanted is of outside everything printer essentially is first. Inkjet cartridges, follow I imported. understanding HP on makes last the the

on HP that? a goods, did outside does sort understand So administration, may believe, to how making have we cartridges, less still the the is products respond incoming China from if essentially all exposure, you're I aside the statement tariff U.S. of you of current have which all your I Inkjet from but

tariff So how imported a you would address on global goods specifically?

Yes.

As we have said, the Toni, at this to point is are on to be. speculate going we tariffs don't what want final

respond will chain are do We final to actively our and whatever to manage the supply decisions that.

a are we production correct, outside U.S. cartridges. products U.S. Inkjet a said, broader the the most we today than of You the have produce you bit But in of small percentage as It's our

your I statement follow clarify maybe you actually could been if there could Mexico exposure has And what's on Okay. up, because just a policy that.

business the that grow, decline mean potentially the X% pressure to look keep is what next the as would Karen, margins? not we like the at Enrique single forward supplies And range? offset exposure? follow-up, that would of positive. X%, be which sounds high it your you're then And would end shift to Why Mexico year, low to margins or hardware my printing to what's but as So expecting digits,

questions, Toni. me take both Let

don't get we from Mexico, that the all, First we products them. of on specific of percentage disclose

will I question. defer So to the answer that

And have this what as on been perspective, revenue consistently do the from be is in we perspective. also the our we at to no decline is to market is year supply in continue In fiscal will change mid-single is saying market, expectation least in to well guide, 'XX, our you goal our going and see you to but terms from to that. our consistent of expect what decline are from on -- print we or the said see we what as should some said, view HP have pressure to past as digits with the low that print,

Samik come JPMorgan. question next Your will Chatterjee, from

the go one, that for first market. for shared the outlook guess can I PC you to I the if

how thinking I said haven't industry validity of enterprises terms think sort about the the surprised growth know you right much just well that sort than deprioritize a thinking they are in as in mid-single you I curious growing digit. the now playing how refreshed expectation as of that of particular, but really the about commercial of life, bit refreshing this year, of analysts, out that of sort of that outcome as sort don't likelihood have follow-up when infrastructure, been terms consensus they a Windows higher that's at. you don't in in end in sort spending towards well. of deadline we've enterprises all that given ahead that but of they're the of of confidence And they're investing that deprioritizing PCs up bucket looking overall sort part as AI that of end I a as particularly

Yes.

the and we happened of So revenue I think, has X% of unit in X%. first what have in space of seen all, commercial if at growth we look QX, growth

the quarter, for costs change. because fall just at significantly, Windows as strong is than slower growth the think transitions about of in is commercial incentive significant there the already where are in Windows will have significantly to increase, XX we 'XX when PC So support in that deadline we bigger all, a year fairly we next the a last started previous that year, think has shared opportunity the and in going a refresh way a we first And space. to therefore, fact makes company next

the assumptions that which is which On refreshed, base driving QX. we have has needs to top in installed also continue And have of aged mix going been to growth be continue to we of -- will grow, that create the seen that, an tailwind to we key But have done where of a PCs AI continues top for we have and the will to a that company. this be continue us growing business. the we goal share, prioritize that, are on the have. year, as these premium categories for we as we this been to And

expecting in Got driving the comes this. the sort are it. XQ. Wamsi's earnings, it for to typical question follow-up, going Karen, revenue different but for from understand back you this the my impacting seasonality earnings just I I well. Great. drivers when a of you, outcomes maybe What's the for to earlier are that for anything is on And mean, as quarter seasonality

If you can just clarify that.

Yes.

So total we're at in offsetting a for and print. growth year in PS with the level the likely decline quarter strength in for company revenue, year-over-year full the expecting both

the of drivers we And seasonality our should the ramp along half through we year. terms our EPS, the that margins taking more with move tied revenue of step lowest the of a half. main I pronounced we we're PS improvement that corporate PC PS move past in are with we're costs in year. through And that stronger expecting recovery and just back AI already penetration to we would on as In that throughout say, would be expect higher also quarter that the PC to we this second QX. mentioned, year as expect I the improve QX models the other lastly, say And we actions said down as

margin our drive to our profile. improvement with an along those, segments, So really growth

And comment let add on a cost. me

we As we from seen prepared shared remarks, QX. have commodity pressure in the costs in

specific that. is the to SKUs, components improvement few creates able we that quarter-on-quarter guidance. be we year this a additional in continue concentrate in for are repricing to an this that lower QX taking -- through and supporting compensate that will pressure are cost is what to but the through actions cost volumes we also qualify expect will to that that We And

question Citi. Asiya will next come The Merchant,

for accelerate said XX%, just I on grew about was growth perform it here? your did And should think that would growth services, into to think growth higher event, and at Because click next businesses growth of expectations. mid-single What are I for if the that talk double I you How you I these the some analyst we some drivers potentially digits. believe you growth share expectations the year? the think it If guys the can of growth could drivers business. for about

Yes. Thank you.

is to the that If overall growth overall also, we what a consumer talk than the grow. of us expect have are expanding to in services going probably are why that next it's But offer. them number important worth for continue we the expectations faster that which very services, portfolio the the few for are So we and to that of for expect grow about year. And we we is to will we think, they company, we that example, forward. about of continue explain subscribers

During these program. this X program, as a all-in Paper see continue offered we the a programs Service of year, adoption the We and we increase. offer to will to

room growth, a portfolio, in We half service, growth Solutions a our also in businesses especially solid and the have conference year. second Service, and expect as on their these Print we next continue a the especially Service to Device as as seen Workforce

we We half hybrid in growth have we 'XX. category, continue market a strong that second the on the But in as to it recovers, commercial to grow see market -- as systems. expect and

many of innovation across them, categories. to going we driven grow are continue bring the by we to market So -- the by driven most across and that see market opportunity also to to

redefining be from and see and an portfolio which going with we integrating forward, company. an why, the for productivity enterprise opportunity in from work, do. us, they basically going employee the is in AI And to perspective, that to drive our focus of perspective more into is more the future this customers allowing of overall increase to and is full fulfillment the this the commercial activities they This strong get

from the question We'll TD Cowen. Sankar, next take Krish

have X them. I of

is How and First of AI NPU, PC, exactly next of on a kind one, all like for content what does was silicon of content, AI cost what is the XX% a margins? Enrique, impact the to your higher I follow-up. memory? have do stuff. because silicon is it there quarter thanks it mix? have year I'm you a And And AI then CPU BOM good last the if higher PC color and definition PC curious, describe

Sure.

with about the of official PCs So XX% when rest we using, the what for an the which built-in. consistent XX%, is that is the using that to industry. IDC have definition NPU are this are be And we use talk we

a we Our above stronger, PCs defined next-generation first, really focus having AI more NPU by, of tops. powerful is a that XX more what in call are

enhanced third, the are have what the and of Second, running the which of accelerate And AI designed model software space, able NPU when models that edge. in at commercial and of that being them. in office building especially the because we own is some call productivity our into security our PCs we the to to companion, capabilities run having

ship gen AI This next started QX. PC, to just during we

in new have going So that to able how to We more they had and our seen they me that think is a they to strong the software be them it's made them coming have ask the solutions. But them been about impact this to limited, them the very years. portfolio I I going to our the of year are companies I very to going and but am what the PCs have event, is displayed Imagine significant. some in the productivity impact action. impact of is start it's very in than exciting give I developing AI in before are you have see bring, because opportunity if confident very, have, even part we

one Got other it. And quick follow-up. Very helpful.

cost at see cost commodity there effect to to part is Because what the of that when the early which you is your lag Typically, I'm is the of If mentioned NAND, expected benefit most You look going that? if QX. year. that would is true, is forecasts, you in next pressure be see? DRAM you part asking the big calendar a is of memory, decline and that commodity reason into

Yes.

fiscal see costs pressure continue half to year. first the commodity our to expect of We through from

that all did this So we repricing. to We second our mitigated in be on half the then QX year, the because work and repricing especially and are doing first calendar calendar of in of QX. QX the

specific I in -- a a X actions that, increases. X to mitigate lower as over components gets or are a the increases to the volume continue will half second some also, perspective is difference to can fiscal to qualify offering We compensated. there The and mentioned the always our time, cost our of of time single buy the in increase component. cost more impact price SKUs, do between to simplifying the we integrate And we so year. on from doing should help us But this that but work before,

us actions. take And cost working just to It I hold. pressures buys would just our we're takes on when commodity time now strategic first repricing started. that cost-down helped Krish, And and add,

Up next is Vogt, UBS. David

Enrique a on you this the that what's Kind first that market? that landscape that on 'XX? concerned such The impacted is I sound in one quarter. print. for just maybe to because going headwind has into of out like the so yen doesn't or long. And does want were to play competitive It go back been how fiscal

give then And I'll second question my time. you same at the

turns, any Future the you're in the So given next top print, the improvement strong that sort year and Print just plan, of about to return decline? around margin fixates still policy sort improvement the the leverage structural given in gross at the that back. it turn why capital the margins in thinking of really the Ready line I'll despite you've revenue And X business given thought made

I'll take second. the then first Karen one, and take will the

change. a have in seen So environment terms not print, significant we of in competitive

aggressively, and of announced not of last the of that competitors the we working has we it's quarters, taking our Future much But getting compete pressure the as products not result as so are office. strong part the Ready We gain our to a beginning continue have cost and we the the started weakness and Japanese to easier, of share, the It's aggressively during all What yen the really been plan, has X could we more year, have changed. is our the in doing environment changed as to consequence that home you competitive work we so at see said. of both in of of advantage a reduce

a just we as to has ratio capital shareholders And return maintain over us. the there, Xx. free opportunities cash to for flow still aren't long leverage Xx, approximately the and expect capital on just ROI And of our our long changed, as where XXX% term not allocation policy of priority we allocation is policy, capital returning our higher under

ratio, leverage and our ample the And for year. we optimal to peers aligned it indicate the our do credit to also aligned On that with rating us. And analysis provides every that is is level us it's with short-term this continues access evaluate liquidity. the

Goldman next is The Sachs. Ng, question Michael

just have well. X as I

Just we that next of your question a see the follow-up it if working actions. unit you cost result into reduce growth this your was regarding the unit wondering was of some year of head print. great and see on expect you to in to I as you're David's products, hear continued as price price to growth It quarter. a

I'll then the give well. as one And you second

October much deadline. refresh, Or of it's I'm that a things seen prior PC this Just hard by in the wondering, all? does at do you understood is on support? just not of kind extended widely really way have enterprises that impact XXXX cycles,

Yes.

market in also this of our the expectation is of year expectation and terms -- most industry print, decline. going is So slightly from And that analysts. to next expectation is our the

grow at going system the to units to continue Our are goal share level. if profitable is

to hard So goal. be predict point, this this how going it's responding. our But be continues to at to exactly are competitors

going do. we we reduce continue costs to our to as maintain always effort are Of course, to

and the are seen accelerate through what to have terms this the And refreshes, And then driven the this we this deadline. further is is little going why that saying half, commercial to is the this compared refresh slower. of in a refresh, a bit of expect companies previous that or we why demand an the previously second given in is especially expect we improvement 'XX And transition. PC we in XXXX, to respond by improvement

Markets. take Loop Capital question Next up, a we'll Ananda from Baruah,

I How for print market consumer a And consumer? both us you Appreciate it. with on commercial the side, the you're the to relative informing macro? ask them? can decline, are sticking guess and is, sort the the relative much anecdotally? things? are to thinking it, here. to is give sense best declines to what market is How of then declines. call sort you guess And what shift can and much see Commercial I'll of I commercial maybe how What much digital that of a other office dynamics trends? are as back

Okay.

color some Let Ananda. provide Print, me on

'XX, in expect different that in consumer continue we the we -- look to will we Print, segments at So decline. when

we to part an of this performance that seen. us, side, We for where have better market office also the because a see clearly, really about and to other And than expect Managed perform when than transactional. category. that we is areas that because from it we X will see call decline. segments, change contractual go after what will is In But have transactional no that Services see lower will So expect focus in you what the opportunity we share dynamics. is us we Print better should think office our we

growth then the to growth in that in to expect finally, we strong second and year, expect see We saw we half continue of to space. see this the industrial in to And continue 'XX.

Wells Next up is Aaron Rakers, Fargo.

to throw going out them I'm X away. of right

focus aged as shift this So I looks into start definitely AI looking Windows -- curious, data opportunity, about are of you upgrade as the that of I'm installed think be forward? going guys installed guess we we to base any you just sizing think this at as next large how focus base the Windows that our look to cycle or kind year, market about the to

PC of clear, as be would Why is if at estimate the my ASP PCs you are. benefit industry at we PC look just year? next unit digits, I And AI see second thinking question, expectations growth look if of about you we or you're that think into with top your market, more in like curious then I from shipment that mid-single just where I'm look want line how these to on not that. some growth less

Sure.

yes. of the answer part first your The definitely is is question --

has companies it's assess has lot happened is opportunity both and -- we what have and we a that at share because a we analytics about analytics Microsoft to how forward. [ that much we this opportunity that refresh, for ] to support have have We the also conversion drive. how interest analytics much the going and And us common helps of

have phenomena today. terms expect PC a this growth, And In and from support ASP that we we 'XX. we provided part above have of to we side, seen happen help revenue of similar unit have in is seen the the guide this growth year,

offerings, just the Yes, PCs. we of do in from and and benefit mix first the year next ASP expect that's growth really including AI that the enhancement given we of will premium richer quarter,

are this everyone, further at time, questions. And no there

a of other Thank everybody, I especially for calls, call. the it's later than those you, you Perfect. East bit for joining know in Coast. today's

being So for thank you here.

in a we our you And heard, company that profit. see forward, are strong operating going As the company plan optimistic opportunity expectation we have both will 'XX. that the in about very from defining to the the work. their more and in to future fulfillment get of A be -- The drive forward. is that to companies going we improvement work, and is growing going have revenue be that driving employees helping helping we very productivity use priorities exciting opportunity

you. happy So a again, U.S., thank you Thank wish you for holiday. the we of in joining today. Thanksgiving those you very for And

all your today's Once to again, conclude everyone, like for thank you We would participation. conference. that does

You now disconnect. may