A significant uptick in revenue from the sale of personal computers demonstrates that both HP Inc. (HPQ, Financial) and the PC business are still on the rise, despite the comparatively faster growth of mobile computing.
The PC market “is $200 billion bigger than it was before the pandemic because of way people are working, playing,” HP Chief Executive Enrique Lores told MarketWatch in an interview on Monday. “We see this hybrid world for the foreseeable future.” As proof, he referenced double-digit revenue expansion in gaming, peripherals, workforce solutions, consumer subscriptions and industrial graphics and 3-D.
The results bear out that assessment. The Palo Alto, California-based company announced on Monday that fiscal first quarter 2022 net revenue was $17 billion, up 8.8% (or 8.2% in constant currency) from the prior-year period.
First quarter GAAP diluted net earnings per share was 99 cents, up from 83 cents in the prior-year period and above the previously provided outlook of 92 cents to 98 cents. First quarter non-GAAP diluted net earnings per share was $1.10, up from 92 cents in the prior-year period and above the previously provided outlook of 99 cents to $1.05. First quarter non-GAAP net earnings and non-GAAP diluted net earnings per share excludes after-tax adjustments of $117 million, or 11 cents per diluted share, related to restructuring, acquisition-related charges, amortization of intangible assets, non-operating retirement-related (credits)/charges and tax adjustments.
“We once again delivered strong top and bottom-line results with record revenue driven by strong demand and our leadership in hybrid,” said Lores in a statement. “Our Q1 performance was particularly strong across our key growth areas that collectively grew double digits including gaming, peripherals, workforce solutions, consumer subscriptions, and industrial graphics and 3D. Our performance reflects progress against our strategy to build a stronger HP.”
While making his media rounds, Lores told CNBC’s Jim Cramer on Monday that HP would be keeping its stock buyback program because it had proven a good corporate spend despite shares being up 18% over the past year.
“We continue to believe the value of our shares is undervalued, and therefore that buying HP shares is a good investment for investors,” Cramer said in his “Mad Money” interview after the company reported better-than-expected results for its fiscal 2022 first quarter, which ended Jan. 31.
The technology company's net cash provided by operating activities in the first quarter of fiscal 2022 was $1.7 billion. Accounts receivable ended the quarter at $5.2 billion, down three days quarter over quarter to 27 days. Inventory ended the quarter at $9.0 billion, up six days quarter over quarter to 59 days. Accounts payable ended the quarter at $18.1 billion, up 11 days quarter over quarter to 119 days.
HP generated $1.4 billion of free cash flow in the first quarter. Free cash flow includes net cash provided by operating activities of $1.7 billion adjusted for net investments in leases of $20 million and net investments in property, plant and equipment of $273 million.
For full fiscal 2022, HP is updating its estimate of GAAP diluted net earnings per share to be in the range of $3.87 to $4.07 and raising its previous estimate of non-GAAP diluted net earnings per share to be in the range of $4.18 to $4.38. Fiscal 2022 non-GAAP diluted net earnigns per share estimates exclude 31 cents per diluted share primarily related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items. For fiscal 2022, HP anticipates generating free cash flow of at least $4.5 billion.
