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HP Inc. and its subsidiaries ("HP") announced fiscal 2025 second quarter net revenue of $13.2 billion, up 3.3% (up 4.5% in constant currency) from the prior-year period. "In Q2, we delivered solid revenue growth, led by strong Commercial performance in Personal Systems and continued momentum behind our future of work strategy," said Enrique Lores, President and CEO, HP Inc. "While results in the quarter were impacted by a dynamic regulatory environment, we responded quickly to accelerate the expansion of our manufacturing footprint and further reduce our cost structure. These decisive actions strengthen our foundation and position us to deliver long-term sustainable growth."
"In light of the increased macroeconomic uncertainty, we have adjusted our outlook to reflect moderated demand and the net impact of trade-related costs," said Karen Parkhill, CFO, HP Inc. "We are executing targeted mitigation strategies, and assuming current conditions remain, we expect to fully offset these costs by Q4."
Second quarter GAAP diluted net EPS was $0.42, down from $0.61 in the prior-year period and below the previously provided outlook of $0.62 to $0.72. Second quarter non-GAAP diluted net EPS was $0.71, down from $0.82 in the prior-year period and below the previously provided outlook of $0.75 to $0.85. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS excludes after-tax adjustments of $272 million, or $0.29 per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, certain litigation charges, non-operating retirement-related credits, tax adjustments, and the related tax impact on these items.
Asset Management
HP's net cash provided by operating activities in the second quarter of fiscal 2025 was $38 million. Accounts receivable ended the quarter at $4.3 billion, up 2 days quarter over quarter to 30 days. Inventory ended the quarter at $8.2 billion, down 2 days quarter over quarter to 70 days. Accounts payable ended the quarter at $15.2 billion, down 9 days quarter over quarter to 130 days.
HP generated $(95) million of free cash flow in the second quarter. Free cash flow includes net cash provided by operating activities of $38 million adjusted for net investments in leases from integrated financing of $50 million and net investments in property, plant, equipment and purchased intangible of $183 million.
HP's dividend payment of $0.2894 per share in the second quarter resulted in cash usage of $273 million. HP also utilized $100 million of cash during the quarter to repurchase approximately 3.0 million shares of common stock in the open market. HP exited the quarter with $2.7 billion in gross cash, which includes cash and cash equivalents of $2.7 billion, restricted cash of $33 million and short-term investments of $3 million included in other current assets. Restricted cash is related to amounts collected and held on behalf of a third party for trade receivables previously sold.
Fiscal 2025 second quarter segment results
Personal Systems net revenue was $9.0 billion, up 7% year over year (up 8% in constant currency) with a 4.5% operating margin. Consumer PS net revenue was up 2% and Commercial PS net revenue was up 9%. Total units were up 6% with Consumer PS units down 2% and Commercial PS units up 11%.
Printing net revenue was $4.2 billion, down 4% year over year (down 3% in constant currency) with a 19.5% operating margin. Consumer Printing net revenue was down 3% and Commercial Printing net revenue was down 3%. Supplies net revenue was down 5% (down 3% in constant currency). Total hardware units were up 1%, with Consumer Printing units up 3% and Commercial Printing units down 2%.
Outlook
For the fiscal 2025 third quarter, HP estimates GAAP diluted net EPS to be in the range of $0.57 to $0.69 and non-GAAP diluted net EPS to be in the range of $0.68 to $0.80. Fiscal 2025 third quarter non-GAAP diluted net EPS estimates exclude $0.11 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, certain litigation impacts, non-operating retirement-related credits, tax adjustments, and the related tax impact on these items.
For fiscal 2025, HP estimates GAAP diluted net EPS to be in the range of $2.32 to $2.62 and non-GAAP diluted net EPS to be in the range of $3.00 to $3.30. Fiscal 2025 non-GAAP diluted net EPS estimates exclude $0.68 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, certain litigation impacts, non-operating retirement-related credits, tax adjustments, and the related tax impact on these items. For fiscal 2025, HP anticipates generating free cash flow in the range of $2.6 to $3.0 billion. HP's outlook reflects the added cost driven by the current U.S. tariffs in place, and associated mitigations.
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"In light of the increased macroeconomic uncertainty, we have adjusted our outlook to reflect moderated demand and the net impact of trade-related costs," said Karen Parkhill, CFO, HP Inc. "We are executing targeted mitigation strategies, and assuming current conditions remain, we expect to fully offset these costs by Q4."
Second quarter GAAP diluted net EPS was $0.42, down from $0.61 in the prior-year period and below the previously provided outlook of $0.62 to $0.72. Second quarter non-GAAP diluted net EPS was $0.71, down from $0.82 in the prior-year period and below the previously provided outlook of $0.75 to $0.85. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS excludes after-tax adjustments of $272 million, or $0.29 per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, certain litigation charges, non-operating retirement-related credits, tax adjustments, and the related tax impact on these items.
Asset Management
HP's net cash provided by operating activities in the second quarter of fiscal 2025 was $38 million. Accounts receivable ended the quarter at $4.3 billion, up 2 days quarter over quarter to 30 days. Inventory ended the quarter at $8.2 billion, down 2 days quarter over quarter to 70 days. Accounts payable ended the quarter at $15.2 billion, down 9 days quarter over quarter to 130 days.
HP generated $(95) million of free cash flow in the second quarter. Free cash flow includes net cash provided by operating activities of $38 million adjusted for net investments in leases from integrated financing of $50 million and net investments in property, plant, equipment and purchased intangible of $183 million.
HP's dividend payment of $0.2894 per share in the second quarter resulted in cash usage of $273 million. HP also utilized $100 million of cash during the quarter to repurchase approximately 3.0 million shares of common stock in the open market. HP exited the quarter with $2.7 billion in gross cash, which includes cash and cash equivalents of $2.7 billion, restricted cash of $33 million and short-term investments of $3 million included in other current assets. Restricted cash is related to amounts collected and held on behalf of a third party for trade receivables previously sold.
Fiscal 2025 second quarter segment results
Personal Systems net revenue was $9.0 billion, up 7% year over year (up 8% in constant currency) with a 4.5% operating margin. Consumer PS net revenue was up 2% and Commercial PS net revenue was up 9%. Total units were up 6% with Consumer PS units down 2% and Commercial PS units up 11%.
Printing net revenue was $4.2 billion, down 4% year over year (down 3% in constant currency) with a 19.5% operating margin. Consumer Printing net revenue was down 3% and Commercial Printing net revenue was down 3%. Supplies net revenue was down 5% (down 3% in constant currency). Total hardware units were up 1%, with Consumer Printing units up 3% and Commercial Printing units down 2%.
Outlook
For the fiscal 2025 third quarter, HP estimates GAAP diluted net EPS to be in the range of $0.57 to $0.69 and non-GAAP diluted net EPS to be in the range of $0.68 to $0.80. Fiscal 2025 third quarter non-GAAP diluted net EPS estimates exclude $0.11 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, certain litigation impacts, non-operating retirement-related credits, tax adjustments, and the related tax impact on these items.
For fiscal 2025, HP estimates GAAP diluted net EPS to be in the range of $2.32 to $2.62 and non-GAAP diluted net EPS to be in the range of $3.00 to $3.30. Fiscal 2025 non-GAAP diluted net EPS estimates exclude $0.68 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, certain litigation impacts, non-operating retirement-related credits, tax adjustments, and the related tax impact on these items. For fiscal 2025, HP anticipates generating free cash flow in the range of $2.6 to $3.0 billion. HP's outlook reflects the added cost driven by the current U.S. tariffs in place, and associated mitigations.
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