HP $HPQ reported fiscal second-quarter revenue of $14.4 billion, up 9% year-over-year, and adjusted earnings per share of $0.86, up 21% from a year earlier, as demand for AI-capable personal computers drove strong growth in its Personal Systems segment.
Against the SiliconANGLE-cited consensus expectation of $0.71 in adjusted EPS on $14.07 billion in revenue, the results were a clear beat on both lines. HP's own non-GAAP forecast had called for $0.70 to $0.76 per share, a range the company cleared. On a GAAP basis, however, diluted EPS of $0.49 fell short of the prior $0.52 to $0.58 guidance range, with $365 million in restructuring and other charges serving as the main drag.
The Personal Systems segment, which includes HP's PC business, posted revenue of $10.2 billion, up 13% year-over-year, with commercial PC revenue rising 14% and consumer PC revenue rising 10%, the company said. Despite the strong revenue performance, overall PC unit volumes declined 7%, a divergence pointing to higher average selling prices as the primary driver of growth rather than any expansion in units sold. The Printing segment reported revenue of $4.2 billion, flat year-over-year, with an operating margin of 18.3%, down from 19.2% a year earlier.
The share of AI-capable machines in HP's PC mix climbed to 44% last quarter from above 35% the quarter before, Reuters reported. Looking ahead, HP anticipates that proportion reaching the 60%-to-70% range within the next fiscal year and topping 70% by fiscal 2028.
HP is contending with rising memory costs as a shortage of memory chips — driven by data center demand — pushes up component prices, according to Reuters. CFO Karen Parkhill described a multi-pronged response to the cost pressure, telling investors that product reconfigurations, cheaper component sourcing and a focus on higher-margin units were among the steps HP took — alongside price adjustments tied to rising commodity costs — with the goal of limiting memory-related margin erosion. HP expects memory chip scarcity to push operating margins to a low point in the fourth quarter, with improvement anticipated into fiscal 2027.
"During the second quarter, we continued executing our future of work strategy through intelligent devices, edge AI and connected experiences while navigating rising commodity costs," interim CEO Bruce Broussard said in a statement.
On the full-year outlook, HP pulled in its adjusted EPS range to $2.90 to $3.10 by cutting the top end by $0.10, the company said. Separately, The Wall Street Journal noted that HP's GAAP per-share profit guidance fell to a range of $2.15 to $2.45, a meaningful step down from the $2.47 to $2.77 the company had previously projected. HP projects full-year free cash flow of $2.8 billion to $3.0 billion.
For the fiscal third quarter, HP guided for adjusted EPS of $0.61 to $0.71. HP stock rose as much as 15% in extended trading following the results.