HP Inc’s (HPQ) latest financial results have revealed that the firm performed better than expected during the first quarter of 2021, causing its shares to rise by seven percent shortly after publishing the figures.
During Q1, HP generated $15.6 billion in revenue, a seven percent increase on the $14.6 billion reported in Q1 2020. As a result, the firm has revised its EPS outlook upwards from $0.58-$0.64 to $0.83 per share, and investors responded positively with HP’s shares rising seven percent from $27.45 to $29.44 shortly after the announcement.
In an earnings call with analysts and investors, Enrique Lores, President and CEO of HP, said: “It was an exceptional start to the year with strong revenue, profit, and EPS growth. The strength of our portfolio and diversity of our business is driving our performance and positioning HP well for the future. Simply put, we are doing what we said we would do – and our strategy is working.”
HP’s Q1 2021 financial results
HP’s revenue is reported under two main divisions: Personal Systems and Printing. Personal systems comprises revenue earned from the company’s Notebooks, Desktops, and Workstations divisions, while its Printing segment includes revenue gained from its Supplies, Consumer Hardware, and Commercial Hardware divisions.
Making up the majority of HP’s revenue during Q1 2021 at $10.6 billion, the Personal Systems segment saw a seven percent increase in revenue over Q1 2020, when it posted $9.9 billion. The firm’s notebooks performed best within the segment, reporting $7.4 billion in revenue, a 23 percent increase on the $6 billion raised in Q4 2019.
HP’s Printing division also showed a seven percent increase in revenue during the period, rising from $4.7 billion in Q1 2020 to $5 billion. This represents a significant sequential recovery in revenue on the decline of three percent in Q4 2020, and the 20 percent drop in Q3.
| Net revenue | Q1 2021 | Q1 2020 | % Change |
| Notebooks | $7.4bn | $6bn | 23% |
| Desktops | $2.4bn | $2.9bn | -18% |
| Workstations | $0.4bn | $0.6bn | -36% |
| Other | $0.5bn | $0.4bn | 13% |
| Personal Systems | $10.6bn | $9.9bn | 7% |
| Supplies | $3.1bn | $3bn | 3% |
| Commercial | $1bn | $1.1bn | -11% |
| Consumer | $0.9bn | $6bn | 55% |
| Printing | $5bn | $4.7bn | 7% |
HP’s 3D printing activities during Q1 2021
Although HP doesn’t specifically report on its 3D printing financials, Lores did dedicate some time on the earnings call to discuss the firm’s graphics and additive manufacturing businesses.
“We have stayed focused on executing against our strategy to advance our leadership in Personal Systems and Print by optimizing our core and expanding into attractive adjacencies, and disrupt industries with our technology to create new businesses in areas like 3D, industrial print, and microfluidics, and transform the way we work to be more digitally enabled and cost-efficient,” he said.
“In 3D printing and industrial graphics, we continue to innovate across the portfolio to position ourselves for future growth. Our customers continue to use Multi Jet Fusion for production-grade output and we are seeing more than 30 percent growth in the number of 3d printed parts across our customer base.
In Q4 2020, HP’s 3D printing revenue was boosted by the sale of a HP Multi Jet Fusion (MJF) 5210 to the 3DPRINTUK service bureau, alongside revealing its new Universal Build Manager in partnership with software firm Dyndrite and the development of new materials for its MJF 3D printing technology with specialty chemicals company Evonik.
Lores also noted there has been “strong early traction” in HP’s new molded fiber business during the quarter, which leverages the company’s 3D printing technology to create an end-to-end service for quick customized and environmentally sustainable packaging.
He concluded: “We are excited for the disruptive potential in these sectors where our innovative technology opens up entirely new possibilities in personalization and digital manufacturing.”
HP’s outlook for fiscal 2021
As part of its three-year cost-reduction target and restructuring program, HP closed 30 sites and increased its virtual service interactions by 300 percent over the second half of last year. In its full-year 2020 financial report, the company stated it intended to continue reducing its discretionary spending where possible.
In Q1 2021, the firm returned $1.6 billion to its shareholders in the form of share repurchases and dividends, and exited the quarter with $4.2 billion in gross cash. Looking ahead to Q2, HP is estimating an EPS outlook of between $0.82-$0.88, and for the 2021 fiscal year foresees an EPS between $2.98-$3.08. The company aims to generate at least $4 billion in free cash flow throughout fiscal 2021.
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Featured image shows HP’s Jet Fusion 5210 is designed for high volume production. Image via Weerg.
