HP reported strong revenue and profit growth in the first quarter, with net revenue up 7% to $US15.6bn from the prior-year period, driven by demand for notebook computers and consumer printers. “Our Printing business generated revenue of $5 billion and operating profit of $1 billion.” Commercial printer sales remained flat.
HP Inc. and its subsidiaries announced fiscal 2021 first quarter (three-months to 31 January 2021) net revenue of $15.6 billion, up 7.0% from the prior-year period. HP's net cash provided by operating activities in the first quarter of fiscal 2021 was $1.0 billion. Accounts receivable ended the quarter at $5.3 billion. HP generated $0.9 billion of free cash flow in the first quarter.
Fiscal 2021 first quarter segment results
Personal Systems net revenue was $10.6 billion, up 7% year over year (up 6% in constant currency) with a 7.1% operating margin. Consumer net revenue increased 34% and Commercial net revenue decreased 6%. Total units were up 15% with Notebooks units up 33% and Desktops units down 23%.
Printing net revenue was $5.0 billion, up 7% year over year (up 7% in constant currency) with a 19.8% operating margin. Total hardware units were up 16% with Consumer hardware units up 18% and Commercial hardware units flat. Consumer net revenue increased 55% and Commercial net revenue decreased 11%. Supplies net revenue was up 3% (up 4% in constant currency).
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| "Our Q1 results are impressive": HP CEO Enrique Lores |
“HP had an exceptional start to the year with strong revenue and profit growth in Q1,” said HP CEO Enrique Lores in an earnings call. “We are benefiting from the strength of our portfolio and the diversity of our businesses. Our Q1 results are impressive across many dimensions.
“Looking ahead, we expect to see continued PC unit growth through 2021, which we anticipate will create additional opportunities for us to drive profitable growth. We are also accelerating in attractive adjacencies such as gaming and peripherals. And with every market in which we play our goal is to be a leader in this space. This week we announced the acquisition of HyperX, the market leader in gaming headsets. The addition of HyperX expands our presence in the growing peripherals market with a brand that is trusted by gamers around the world. Our existing strength in gaming hardware combined with HyperX portfolio spanning gaming headsets, microphones and other peripherals will further expand our ecosystem and create another growth engine in Personal Systems.
“Much like Personal Systems, Print is off to a terrific start to the year. This quarter demonstrated the power of Print to help people learn, create and perform with 7% revenue growth, 16% unit growth and 32% profit growth. In Q1, our Printing business generated revenue of $5 billion and operating profit of $1 billion. Similar to the Personal Systems business, we remain supply constraint, particularly in consumer printer hardware and supplies. While the COVID-19 related impacts on our manufacturing and supply chain have diminished we anticipate these constraints to continue into the third quarter. HP is outperforming its printing peers and remains uniquely well-positioned given our leadership across both consumer and commercial print. Our strong consumer business is a clear competitive advantage as hybrid work and schools becomes the norm.
“We have seen that people who didn't have home printers wend and bought them and people sign up for Instant Ink in record numbers accelerating and already growing part of our business. In Instant Ink, we added 1 million new subscribers, surpassing 9 million enrolees in the first quarter. Commercial print improved in Q1 with most product categories showing sequential revenue growth. In Q4 total print market unit grew 6%. We continue to expect a gradual recovery in the overall commercial print market, though the pace might be uneven given the varied Ink pace of economic recovery. And we expect that the strength in consumer will gradually subside as more schools and offices reopen. We continue to execute on our strategy to modernize print and evolve our print business models.
“In Q1 we roll out our end-to-end platform strategy called HP+ that combined convenient Instant Ink and HP's mark-up services with innovative hardware. It's early days, but we are already seeing positive adoption. In the coming quarters, we will be rolling HP+ out more broadly across multiple markets on proud clients. New value propositions like HP+ are indicative of the opportunities ahead as we continue to innovate to meet evolving customer needs. This also applies to our contractual business such as managed print services, where we see attractive opportunities to deliver services designed for the hybrid workforce of the future. One example is our HP Flexworker Service. This service can be added to a company existing NPS contract to help remote workers maintain their productivity.
“This means being able to seamlessly print, scan and copy securely all while working from home. With leadership in both consumer and commercial and our strong track record of innovation HP's position to define and lead the future of printing in a post pandemic world. In 3D printing and industrial graphics, we continue to innovate across the portfolio to position ourselves for future growth. Customers continue to use Multi Jet Fusion for production grade output and we are seeing more than 30% growth in the number of 3D printed parts across our customer base. We are also seeing strong early traction in our new molded fibre business that leverages our 3D printing technology to create an M2M service for a quick customized and environmentally sustainable packaging.
“In Industrial printing we continue to see growth in digital labels and packaging with double-digit growth in impressions and square meters printed. Georgia-Pacific, one of the world's largest packaging and paper good providers is deploying the third inkjet web press to expand their digital printing business. This is a great milestone and validation of our technology. We are excited for the disruptive potential in this sector as our innovative technology opens up entirely new possibilities in personalization and digital manufacturing. We are doing all these while continuing to transform the company to unlock value and become a leaner, more digitally enabled company. Our transformation journey continues to be ahead of plan. We have significantly reduced structural cost and driven productivity savings.
“At the same time we are enabling enhanced digitization and we are shifting investments to attractive growth areas, where we see opportunities for us to continue driving innovation and long-term sustainable growth. We are focused on both reducing structural cost and accelerating investments for the future. Recently, we announced several new appointments to further strengthened HP's innovation capabilities and support its long-term growth strategy. Savi Baveja joined as our Chief Strategy & Incubation Officer and Tolga Kurtoglu has joined HP as Chief Technology Officer. In these roles they will drive cutting-edge research and incubate new business opportunities working together with the leadership team.
“And last week we named Marie Myers as our Chief Financial Officer. Marie is a veteran of HP having held a number of leadership positions at the company including as our Controller and most recently, as our Chief Transformation Officer. Marie and I have worked together for many years and she's a truly outstanding leader. I know you will all enjoy getting to know her better. Overall, I am very pleased with the way we have started the year. We build on our momentum from the end of 2020 and our teams are performing at a very high level. And on top of delivering strong results we are also staying true to HP's values. Last quarter, HP was recognized by Newsweek as America's Most Responsible Company for the second straight year and we appear on The Barrons list of 100 most sustainable companies for the third straight year.”
Full Earnings Presenation here.
