Despite overall revenue growth, HP’s core Printing division faces challenges with declining sales and margins.
HP Inc. reported mixed results for its fiscal 2024 third quarter, with particular weaknesses in its Printing segment, traditionally a key profit driver. Overall revenue rose by 2.4% to $13.5 billion (€12.4 billion), largely driven by a 5% increase in Personal Systems revenue, which reached $9 billion (€8.3 billion). However, the Printing segment struggled, with revenue falling 3% to $4.5 billion (€4.1 billion). This decline was accompanied by a slight contraction in the segment’s operating margin to 18.2%, down from 18.4% a year ago.
The drop in Printing revenue was exacerbated by a 4% decline in supplies sales, a critical component of HP’s recurring revenue. Commercial hardware units within the segment also saw a 3% decrease, although consumer hardware experienced a 2% uptick. The weakness in Printing raises concerns about the sustainability of this revenue stream, especially as supplies typically provide a stable source of income.
HP generated $1.4 billion (€1.3 billion) in operating cash flow and $1.3 billion (€1.2 billion) in free cash flow, returning $0.9 billion (€0.83 billion) to shareholders during the quarter. Despite the positive cash flow, the challenges in the Printing segment may hinder future profitability, casting a shadow over HP’s ability to maintain its growth trajectory.
The company remains cautiously optimistic about the remainder of the fiscal year, yet the declining performance of its core Printing business suggests potential hurdles ahead.
