HP 2025 Q2 Earnings Misses Targets as Net Income Drops 33%

HP (HPQ) reported its fiscal 2025 Q2 earnings on May 28th, 2025. Despite revenue surpassing expectations with a 3.3% increase to $13.22 billion, HP's earnings per share (EPS) and net income fell short of forecasts. The EPS of $0.71 missed the anticipated $0.81, while net income declined 33.1% to $406 million. The company revised its full-year guidance downward due to ongoing tariff pressures and moderated PC market growth, affecting its operational outlook.

Revenue
HP's total revenue for fiscal 2025 Q2 rose by 3.3% to $13.22 billion, with substantial contributions from its Personal Systems segment. The Commercial PS division generated $6.79 billion, while the Consumer PS brought in $2.24 billion. The Printing segment saw revenue of $4.18 billion, with Supplies accounting for $2.73 billion. Commercial Printing contributed $1.17 billion, and Consumer Printing added $289 million. Corporate Investments and Other segments accounted for a combined $15 million, aligning with the reported net revenue figure.

Earnings/Net Income
HP's EPS decreased by 30.6% to $0.43 in 2025 Q2, compared to $0.62 in 2024 Q2. The net income also declined to $406 million, representing a 33.1% drop from $607 million in the previous year. The decline in EPS reflects the impact of tariff costs and operational challenges.

Post-Earnings Price Action Review
The strategy of purchasing HPQ shares following a revenue beat and holding for 30 days demonstrated moderate returns, though accompanied by notable volatility and risk. This approach yielded a compound annual growth rate (CAGR) of 11.80%, lagging behind the benchmark by 11.99 percentage points. The maximum drawdown was -47.93%, and the Sharpe ratio stood at 0.36. These metrics suggest that while the strategy provided some gains, it posed significant risk, underscoring the necessity for vigilant risk management in such a fluctuating market environment.

CEO Commentary
Enrique Lores, President and Chief Executive Officer, highlighted HP's solid topline growth, driven by the Personal Systems Commercial business, despite challenges from tariff costs impacting non-GAAP operating profit. He emphasized a 5% year-over-year revenue increase and the success of their Future of Work strategy. Lores stressed the need for agility in response to geopolitical changes and noted the expansion of manufacturing outside China. He maintained an optimistic outlook, focusing on long-term sustainable growth.

Guidance
HP projects its fiscal 2025 non-GAAP diluted net earnings per share to range from $3 to $3.30, while GAAP diluted EPS is expected to be between $2.32 and $2.62. For Q3, HP anticipates non-GAAP diluted EPS to fall between $0.68 and $0.80, with high-single-digit sequential revenue growth in Personal Systems. The company aims to improve Personal Systems margins to the lower half of the 5% to 7% range and maintain Print operating margins within the 16% to 19% range.

Additional News
In recent corporate developments, HP has announced a strategic partnership with Reincubate to deliver personalized, NPU-based, on-device AI capabilities, enhancing its product offerings in the AI space. Additionally, HP has joined forces with the Lewis Hamilton Foundation's Mission 44 to drive STEM skills and future work readiness for young people, aligning with its commitment to social impact and educational initiatives. Furthermore, the company declared a dividend, maintaining its commitment to returning capital to shareholders despite the challenging economic environment influenced by tariff impacts and supply chain adjustments.