Four key partner takeaways from HP's Q2 results

We've sifted through HP's latest financial results, so you don't have to

HP has posted its sixth consecutive quarter of double-digit growth in its Q2, with revenues up 13 per cent year on year to $14bn (€12.3bn).

During the three months to 30 April, operating profits were also up to $964m, an increase of 15 per cent.

We take a look at some of the key takeaways from the vendor's Q2 numbers.

HP exceeded Wall Street expectations

HP's Q2 results saw net earnings per share soar by 49.2 per cent to 65 cents a share. Adjusted for special items, net earnings grew about 16 per cent to $800m, or 48 cents a share.

Wall Street previously forecast revenues of $13.57bn and earnings of $753.5m, or 45 cents a share, according to Thomson Reuters.

Commenting on his company beating the market's expectations, HP CEO Dion Weisler (pictured) said in an earnings call transcribed by Seeking Alpha: "We delivered another quarter of double-digit year-over-year revenue and profit growth, strong EPS and impressive free cashflow and performed well across segments and regions. Our sharp focus on innovation, combined with operational excellence and driving profitable growth, is paying off."

Breaking down performance regionally, EMEA posted the highest growth at 21 per cent, in comparison with 13 per cent growth in APAC and Japan, and seven per cent in the Americas.

Strong PC sales despite component price rise

IDC named HP as the top PC maker last month, with 22.7 per cent of the market, ahead of Lenovo and Dell.

HP's Q2 results confirm that personal computing systems remain the California-based vendor's top segment, accounting for 37 per cent of net revenues.

By unit, personal systems revenue grew by 14 per cent in the second quarter year on year.

"In the first calendar quarter, we outgrew the PC market by 4.6 points," Weisler said.

"While we are proud of these results, share gain continues to be an outcome, not an objective. Profitable growth continues to be our focus.

"In Personal Systems this quarter, we made progress in areas such as retail point-of-sale and device-as-a-service, where we saw strong double-digit growth."

The firm's success comes despite the concerns over rising component prices flagged in its first quarter.

At the time, CFO Catherine Lesjak acknowledged that the trend had pushed HP to "mitigate via pricing" in order to adapt.

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Four key partner takeaways from HP's Q2 results

We've sifted through HP's latest financial results, so you don't have to

More job cuts on the cards

In the same week as it posted strong results, HP also announced that its CFO Cathie Lesjak will step down, to be replaced by current HP head of corporate finance Steve Fieler on 1 July.

Lesjak, who is seen as a steady pair of hands by investors, will become HP's interim chief operating officer until her retirement in 2019.

In addition to board shuffling, HP also revealed more about its ongoing efforts to financially restructure to cut costs.

In an SEC filing on Tuesday, HP said it expects "one to two per cent" of the company's employees will "exit the company by the end of fiscal 2019".

With a global headcount of 49,000, it means that HP could be looking at additional job cuts of up to 980.

That's on top of an anticipated 3,000 to 4,000 job cuts which HP originally announced in 2017.

Commenting on the amended restructuring plan, Lesjak told analysts on a conference call: "We expect restructuring costs to increase by $150m to $200m, including both labour and non-labour-related action. We still expect to complete the plan by the end of fiscal 2019, including these incremental actions.

"We forecast the total gross annual run-rate savings before reinvestments to increase by at least $75m over the higher end of the previously communicated range beginning in fiscal 2020."

HP looks to invest big in 3D printing

Printing revenue was up 11 per cent year on year, driven by its commercial business. Supplies revenue in the second quarter was up eight per cent. HP's printing unit got a boost from the acquisition of Samsung's printing arm last year.

However, Weisler highlighted 3D printing as the area where he sees HP's future growth opportunities, as part of its strategy to "invest in innovation".

"As you know, the 3D printing business is a huge opportunity for us and one where we aim to disrupt the $12 trillion global manufacturing market," he said.

"The growth trajectory and momentum behind this business continues. We are seeing an increase in customers placing repeat orders, upgrading their systems for higher-volume manufacturing and scaling with double-digit unit installations."