HP Inc. announced fiscal 2023 third quarter net revenue of $13.2 billion, down 9.9% (down 7.4% in constant currency) from the prior-year period.
“We delivered a solid quarter of sequential growth, combining strong innovation with disciplined execution to gain profitable PC market share and achieve our non-GAAP EPS target,” said Enrique Lores, HP President and CEO. “While we expect another quarter of sequential growth in Q4, the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result. We remain confident in our ability to drive long-term growth and value creation as we focus on the things we can control and make continued progress against our Future Ready plan.”
Third quarter GAAP diluted net EPS was $0.76, down from $1.08 in the prior-year period and above the previously provided outlook of $0.61 to $0.71. Third quarter non-GAAP diluted net EPS was $0.86, down from $1.03 in the prior-year period and within the previously provided outlook of $0.81 to $0.91. Third quarter non-GAAP net earnings and non-GAAP diluted net EPS excludes after-tax adjustments of $93 million, or $0.10 per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, debt extinguishment benefit, non-operating retirement-related credits and tax adjustments.
HP’s net cash provided by operating activities in the third quarter of fiscal 2023 was $1.0 billion. Accounts receivable ended the quarter at $4.4 billion, up 1 day quarter over quarter to 30 days. Inventory ended the quarter at $7.2 billion, down 3 days quarter over quarter to 62 days. Accounts payable ended the quarter at $14.1 billion, up 3 days quarter over quarter to 123 days.
HP generated $0.9 billion of free cash flow in the third quarter. Free cash flow includes net cash provided by operating activities of $1.0 billion adjusted for net investments in leases of $31 million and net investments in property, plant and equipment of $137 million.
HP’s dividend payment of $0.2625 per share in the third quarter resulted in cash usage of $0.3 billion. HP exited the quarter with $1.7 billion in gross cash, which includes cash, cash equivalents and restricted cash of $1.7 billion, and short-term investments of $3 million included in other current assets. Cash, cash equivalents and restricted cash includes $45 million of restricted cash related to amounts collected and held on behalf of a third party for trade receivables previously sold.
Personal Systems net revenue was $8.9 billion, down 11% year over year (down 8% in constant currency) with a 6.6% operating margin. Consumer PS net revenue was down 12% and Commercial PS net revenue was down 11%. Total units were up 3% with Consumer PS units up 8% and Commercial PS units flat.
Printing net revenue was $4.3 billion, down 7% year over year (down 5% in constant currency) with an 18.6% operating margin. Consumer Printing net revenue was down 28% and Commercial Printing net revenue was down 6%. Supplies net revenue was down 2% (flat in constant currency). Total hardware units were down 19% overall, with Consumer Printing units down 20% and Commercial Printing units down 8%.
Outlook
For the fiscal 2023 fourth quarter, HP estimates GAAP diluted net EPS to be in the range of $0.65 to $0.77 and non-GAAP diluted net EPS to be in the range of $0.85 to $0.97. Fiscal 2023 fourth quarter non-GAAP diluted net EPS estimates exclude $0.20 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, non-operating retirement-related credits, tax adjustments and the related tax impact on these items.
For fiscal 2023, HP estimates GAAP diluted net EPS to be in the range of $2.95 to $3.07and non-GAAP diluted net EPS to be in the range of $3.23 to $3.35. Fiscal 2023 non-GAAP diluted net EPS estimates exclude $0.28 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, debt extinguishment benefit, non-operating retirement-related credits, tax adjustments and the related tax impact on these items. For fiscal 2023, HP anticipates generating free cash flow of approximately $3.0 billion.
About HP Inc.
HP Inc. (NYSE: HPQ) is a global technology leader and creator of solutions that enable people to bring their ideas to life and connect to the things that matter most. Operating in more than 170 countries, HP delivers a wide range of innovative and sustainable devices, services and subscriptions for personal computing, printing, 3D printing, hybrid work, gaming, and more.
