HP released Q2 financial report for fiscal year 2022: revenue of $16.5 billion, net profit of $1 billion fell 19% year-on-year

In the early morning of June 1, Beijing time, Hewlett-Packard today released the company’s second-quarter financial report for the 2022 fiscal year. The report shows,HP’s second-quarter net revenue was $16.5 billion, up 3.9 percent from $15.9 billion a year earlierexcluding the impact of foreign exchange changes, an increase of 4.9% year-on-year; net profit was US$1 billion, a decrease of 19% compared with US$1.2 billion in the same period last year; non-GAAP net profit was US$1.2 billion, compared with last year. It was down 1% from $1.2 billion in the same period.

HP’s second-quarter revenue and earnings per share exceeded Wall Street analysts’ expectations, and its profit outlook for the third quarter and the full year also beat expectations, pushing its shares up nearly 1 percent after hours.

Summary of fiscal second quarter results:

In the quarter ended April 30, HP’s net income was $1 billion, down 19% from $1.2 billion a year earlier; diluted earnings per share were $0.94, compared with $0.98 a year earlier down 4%.

Excluding one-time items (not in accordance with GAAP), HP’s second-quarter adjusted net income was $1.2 billion, down 1% from $1.2 billion in the same period last year; adjusted earnings per diluted share were 1.08 USD, an increase of 16% compared with 0.93 USD in the same period last year, this performance exceeded analysts’ previous expectations. According to data provided by the Yahoo Finance website, 14 analysts had expected HP’s second-quarter earnings per share to reach $1.05 on average.

HP’s fiscal second-quarter net income and earnings per share (non-GAAP) exclude after-tax adjustments of $152 million and $0.14 per share, respectively, which are related to restructuring and other expenses, merger-related expenses, intangible Amortization of assets, non-operating retirement-related credits or expenses, and tax adjustments.

HP’s second-quarter net revenue was $16.5 billion, up 3.9% from $15.9 billion in the same period last year; excluding the impact of currency changes, HP’s second-quarter net revenue increased 4.9% compared to the same period last year %, which also exceeded analysts’ previous expectations. According to data provided by the Yahoo Finance website, 12 analysts had expected HP’s second-quarter net revenue to reach $16.17 billion on average.

HP’s second-quarter operating profit was $1.278 billion, compared with $1.362 billion a year earlier. Not in accordance with US GAAP, HP’s second-quarter operating profit was $1.444 billion, compared with $1.443 billion in the same period last year.

HP’s second-quarter operating margin was 7.8%, down 0.8 percentage points from 8.6% a year earlier. On a non-GAAP basis, HP’s second-quarter operating margin was 8.8 percent, down 0.3 percentage points from 9.1 percent a year earlier.

Second-quarter results by division:

Divided by business unit, HP Personal Systems Group’s revenue in the second quarter was $11.532 billion, an increase of 9% compared with $10.555 billion in the same period last year, and an increase of 11% year-on-year excluding the impact of exchange rate changes; Operating profit margin in the second quarter was 6.9%. Among them, the revenue of the commercial segment increased by 18% year-on-year, and the revenue of the personal consumer segment decreased by 6% year-on-year; desktop shipments increased by 11% year-on-year, notebook shipments decreased by 23% year-on-year, and total shipments decreased by 17% year-on-year. HP Personal Systems Group’s second-quarter pretax profit was $798 million, compared with $710 million a year earlier.

HP Printing Group’s second-quarter revenue was $4.963 billion, down 7 percent from $5.323 billion in the same period last year, or 6 percent excluding the impact of currency changes; operating profit margin was 17.9 percent. Among them, the net revenue of the personal consumer department decreased by 12% year-on-year, the net revenue of the commercial department decreased by 4% year-on-year, and the net revenue of materials decreased by 6% year-on-year. Shipments were down 17% year-over-year, personal hardware shipments were down 24% year-over-year, and total hardware shipments were down 23% year-over-year. HP Printing Group’s second-quarter pretax profit was $958 million, compared with $951 million a year earlier.

HP’s second-quarter corporate investment was zero, compared with $1 million in the same period last year. HP’s pretax loss on corporate investments in the fiscal second quarter was $52 million, compared with a pretax loss of $35 million a year earlier.

HP’s second-quarter other revenue was -$5 million, compared to zero in the previous quarter and -$2 million in the same period last year.

Additional Financial Information:

HP’s total costs and expenses in the fiscal second quarter were $15.212 billion, compared with $14.515 billion in the same period last year. Among them, the cost of revenue was $13.157 billion, compared with $12.437 billion in the same period last year; research and development expenses were $425 million, compared with $514 million in the same period last year; sales, general and administrative expenses were $1.464 billion, This compares to $1,483 million in the same period last year; restructuring and other expenses were $82 million, compared to $39 million in the same period last year; M&A-related expenses were $32 million, compared to $10 million in the same period last year; Amortization expense of intangible assets was $52 million, compared to $32 million in the same period last year.

Net cash provided by HP’s operating activities in the fiscal second quarter was $500 million, compared with $1.4 billion in net cash provided by operating activities in the same period last year. At the end of the fiscal second quarter, HP’s total accounts receivable was $5.4 billion, and accounts receivable turnover days were 29 days, an increase of 2 days compared to the previous quarter. At the end of the fiscal second quarter, HP’s total inventory value was $8.9 billion, and the number of days in inventory was 61, an increase of 2 days compared to the previous quarter. At the end of the fiscal second quarter, HP’s total accounts payable was $17 billion, and accounts payable days were 116 days, a decrease of 3 days compared to the previous quarter.

HP’s second-quarter free cash flow was $400 million, compared with $1.3 billion a year earlier. HP’s free cash flow for the fiscal second quarter included $500 million in net cash from operating activities, adjusted for net lease investments of $21 million and net investments in property, plant and equipment of $178 million.

HP paid a quarterly dividend of $0.25 per share in the fiscal second quarter, using $300 million of cash for the dividend. In addition, HP used $1 billion in cash to repurchase approximately 27.4 million shares of its common stock on the open market during the fiscal second quarter. As a result, HP returned 362% of free cash flow to shareholders in the fiscal second quarter. At the end of the fiscal second quarter, HP had gross cash of $4.5 billion, including cash and cash equivalents, and short-term investments of $5 million included in other current assets.

Performance Outlook:

HP expects earnings per diluted share in the third quarter of fiscal 2022 to be between $0.91 and $0.96 on a GAAP basis; non-GAAP earnings per diluted share in the fiscal third quarter are expected to be $1.03 At $1.08, its average ($1.055) beat analyst expectations. HP’s estimate of diluted earnings per share from continuing operations for the third fiscal quarter of fiscal 2022 excludes an after-tax charge of $0.12 per share, which is primarily related to restructuring and other non-GAAP Expenses, M&A-related expenses, Russia-related expenses, amortization of intangible assets, non-operating retirement-related credits or expenses, tax adjustments, and the related tax implications of these items. According to data provided by the Yahoo Finance website, 14 analysts on average expected HP’s third-quarter adjusted earnings per share to reach $1.02.

HP also expects fiscal 2022 earnings per diluted share to be between $3.79 and $3.93 under GAAP; non-GAAP earnings per diluted share are expected to be between $4.24 and $4.38 in fiscal 2022. During the period, its average ($4.31) beat analyst expectations. HP’s estimate of fiscal 2022 diluted earnings per share from continuing operations excludes an after-tax charge of $0.45 per share, primarily related to restructuring and other charges, not in accordance with GAAP , M&A-related expenses, Russia-related expenses, amortization of intangible assets, non-operating retirement-related credits or expenses, tax adjustments, and the related tax implications of these items. According to data provided by the Yahoo Finance website, 16 analysts on average expect HP’s adjusted earnings per share in fiscal 2022 to reach $4.25.

Share price changes:

On the same day, HP shares rose $0.09 in regular trading on the New York Stock Exchange to close at $38.84, or 0.23%. In subsequent trading as of 5:24 pm ET on May 31 (5:24 am Beijing time on June 1), HP shares rose again by $0.32 to $39.16, or 0.82%. In the past 52 weeks, HP’s highest price was $41.47 and its lowest price was $26.11.