Declining print sales and falling cash flow eclipse gains in commercial PC segment.
HP Inc has cut its full-year earnings guidance after posting disappointing second-quarter results, weighed down by falling printer sales, rising costs, and weakening free cash flow.
The company reported revenue of $13.2 billion (€12.2 billion), up 3.3% year-on-year, boosted by growth in commercial personal systems.
The printing segment saw revenue fall 4.3% to $4.18 billion (€3.8 billion). Supplies sales dropped 5%, while both consumer and commercial print hardware revenues declined 3%. Nonetheless, print operating margins improved to 19.5%, helped by cost control and pricing strategies.
Conversely, personal systems revenue grew 7.1%, led by 9% growth in commercial PCs as companies refreshed fleets during the Windows 11 upgrade cycle. New AI-enhanced models and workstation sales contributed to the segment’s performance, though margins fell to 4.5% due to higher tariffs and component costs.
“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.”
HP acknowledged efforts to “rebalance its supply chain and manufacturing footprint”, a veiled reference to reducing reliance on China amid US trade tensions. Tariffs on print products from China range from 20–45%, impacting profitability.
