As a listener to the conference call on HP's financial results ($HPQ (+0.39%) ) for the first quarter of the 2025 financial year, I was able to get a detailed overview of the company's current situation and future plans.
Enrique Lores, CEO of HP, emphasized that the first quarter was a strong start to the year, with revenue growth and a focus on long-term success. He focused on three main areas: the first quarter results, the performance of the business units and the outlook for the coming year.
HP delivered its third consecutive quarter of year-over-year revenue growth of 2%, driven primarily by the Personal Systems and the Commercial business. Earnings per share were slightly above the mid-point of the forecast range. The profit margins for Print and Personal Systems were in line with expectations. Lores emphasized that HP is pursuing its strategy of future of work is consistently pursuing its strategy of leading the future of work.
HP is increasingly investing in the commercial sector and in new AI and software functions. One example of this is the planned acquisition of assets from Humanewhich will develop HP's AI-powered platform CosmOS and a highly skilled technical team. This acquisition is expected to accelerate the development of an intelligent ecosystem across all HP devices.
The Key Growth Areas have been realigned to focus on the future of work to reflect the focus on the future of work. The areas now include AI PCs and advanced compute solutions such as workstations and retail solutions. Gaming will remain an important business area, but will no longer be managed as a key growth area as it is not directly related to the future of work linked to the future of work.
At the CES were AI-supported innovations were presented, including new models of AI PCs. These are designed to enable experts to make decisions more quickly and collaborate effectively. In the field of gaming was OMEN AI beta was introduced, a software that automatically adjusts performance. In the industrial sector new HP PageWide presses which enable high printing speed and quality.
Sales in the Personal Systems increased by 5 % compared to the previous year, with the commercial business driving growth. HP gained market share in the PC Commercial Windows market market, but lost share in the consumer segment. The company plans to improve its performance in this segment over the course of the year. Global sales of PC Commercial increased by 10 %, partly due to the introduction of AI PCs and the Windows 11 refresh cycle.
In the Print HP recorded strong growth in unit sales and market share in the Home segmentespecially for Big Tanks. In the Office segment market shares were maintained overall and in strategic areas such as A4 Value and A3 even expanded.
HP has taken measures to respond to geopolitical developments and to increase the the resilience of production production. The supply chain has been diversified globally and production capacity has been expanded in several countries. By the end of fiscal 2025, more than 90% of HP products sold in North America will be manufactured outside of China. The company plans to structural savings of 1.9 billion US dollars by the end of the 2025 financial year.
Karen Parkhill, CFO of HP, expressed her satisfaction with the first quarter results and the progress made in achieving the financial targets for the year. Revenue increased in all regions. Gross margin decreased due to higher raw material costs. Non-GAAP operating expenses increased due to investments in strategic initiatives and employees. The non-GAAP diluted earnings per share amounted to 0.74 US dollars. HP increased the target for structural savings from USD 1.6 billion to USD 1.9 billion by the end of financial year 202512. Cash flow from operating activities amounted to 375 million US dollars, the free cash flow 70 million US dollars. For the full year 2025 non-GAAP diluted earnings per share are expected to be between 3.45 and 3.75 US dollars.
Analysts asked questions on various topics, including the impact of tariffsthe growth in the Personal Systems segment and the Windows 11 refresh wave.
HP reiterated that the known impact of the China tariffs have been taken into account in the forecast. The company plans to optimize the global supply chain to minimize the impact and relocate production sites.
HP expects the market for AI PCs will continue to grow and that the company will gain market share in this area. The Windows 11 refresh wave and the increasing spread of AI PCs are seen as important growth drivers. The company plans to expand its AI capabilities further expand its AI capabilities and invest in new technologies.
Some analysts expressed concern about the seasonality and the expected increase in profit in the second half of the year. However, HP reiterated its confidence in the forecast and pointed to an improved sales and cost situation. The company plans to continue to invest in strategic growth areas invest in strategic growth areas and efficiency increase efficiency.
In summary, HP has made a strong start to 2025 and is preparing for the future of work. future of work of work. The company is investing in AI and software innovationsdiversifying its supply chain and strives for structural savings to achieve long-term growth. Despite some challenges, such as rising raw material raw material costs and geopolitical uncertaintiesHP is confident of achieving its financial targets for the year.
