HP Inc. and subsidiaries reported fiscal 2023 first quarter revenue of $13.8 billion, down 18.8% from the prior-year period. Printing revenue was down 4.5% to $4.6 billion but Commercial Printing revenue was up by 2%. Industrial graphics and 3D were impacted by ‘macro headwinds,’ HP said.
Local HP partner Currie Group last year launched HP xRServices, a virtual service
“We delivered on our non-GAAP EPS target despite industry-wide headwinds, reflecting disciplined execution across our business,” said Enrique Lores, HP president and CEO. “The Future Ready plan we announced last quarter is having an immediate impact, as we continue to reduce our costs while maintaining investments in long-term growth.
“Turning to Print, current market conditions are more stable, and we see different dynamics playing out by business,” Lores (pictured) told an Earnings Call. “The consumer print market continues to see demand softness and pricing pressure. In supplies, the situation in Q1 was better than expected and we continue to see strong adoption of profit upfront and subscription models. The commercial print market is being impacted by macro uncertainty, corporate budget tightening and the uneven pace of return to office. Within commercial, office printing has seen improvement as the supply situation normalizes.
“Taking all this into account, our Q1 Print revenue was $4.6 billion. That's down 4.5% or 2% in constant currency. We delivered Print operating margin of 18.9%. Operating profit was flat year-over-year in a very tough market. This shows that our strategy is working. Disciplined cost management and favourable pricing in office had a positive impact.
“Our office hardware revenue grew 13% year-over-year or 5% sequentially, and we gained share in office quarter-over-quarter in calendar Q4. Although return to office is uneven, the pages per device remain in the range of 80% of pre-COVID expected levels. We also continued to rebalance system profitability. HP+ and Big Tank printers represented 56% of printer shipments in Q1 and we gained share sequentially in Big Tank.
“We now offer the industry's broadest line-up of tanks from the low end of the market to the world's first and only laser tank printer. We delivered double-digit revenue growth in Instant Ink, surpassing 12 million subscribers. And we drove early adoption of our Instant Ink with paper add-on.
“Industrial graphics and 3D were impacted by macro headwinds, with revenue down year-over-year. We view this as a short-term situation and we plan to continue investing in these areas to drive long-term growth and value creation. This quarter, we expanded our Jet Fusion line-up and we drove adoption of our Metal Jet solution with key customers such as John Deere and Schneider Electric.
“Across our business, sustainable impact remains at the core of our strategy and our leadership on important topics that climate change, human rights and digital equity is building trust in our brand, and it's helping us win new business. It's also driving innovation.
“Our new all-in-one line-up is a great example. It includes the world's first PC with recycled coffee grounds, which are used in the finish of the device. The enclosure is made with more than 40% post-consumer recycled plastics. The arm stand uses 75% recycled aluminium. And the stand base uses 100% reclaimed polyester. We have also reduced the product packaging, so we can ship up to 66% more units per pallet.”
HP is not expecting a significant economic recovery during fiscal year 2023.
“We continue to expect our second half performance to improve relative to the first half, driven by our cost-saving measures and as the improved channel inventory levels create a more normalized pricing environment,” Lores said. “This is consistent with the view we shared in November. The PC market in units may regress to pre-COVID levels in the short-term, but we expect it will remain at a structurally higher level with more premium and high-value mix.
“As we said last quarter, we expect the overall print market to be down low-single digits this year. This is mainly driven by the challenging macro environment and slower-than-expected return to the office. And as I said at the top of the call, we are maintaining our full-year financial outlook.
“We are operating in a tough market right now but we are taking decisive actions as part of our Future Ready plan to improve our performance, and we remain confident in our ability to deliver. By focusing on what we can control, we believe we are well positioned to navigate near-term volatility.”