Q3 2024 HP Inc Earnings Call

August 28, 2024

[inaudible]

Desiree: Good day, everyone, and welcome to the third quarter of 2024 H.B.

Desiree: Inc.

Desiree: Earnings conference call. My name is Desiree, and I'll be your conference moderator for today's call. At this time, all participants will be in listen-only mode. We will be facilitating a question and answer session towards the end of the conference. Surely you need assistance during the call. Please signal a conference specialist by pressing the star key followed by zero.

Desiree: Good day everyone and welcome to the third quarter 2024 HB Inc. Ernest Conference call. My name is Desiree and I will be your conference moderator for today's call. At this time, all participants will be in listen or remove.

Desiree: We will be facilitating a question and answer session towards the end of the conference.

Desiree: Truly need assistance during the call, please signal a conference specialist by pressing the star key followed by zero. As or mind, this conference is being recorded for weekly purposes.

Desiree: As a reminder, this conference is being recorded for weekly purposes.

Orit Keinan Mahan: I would now like to turn the call over to Orit Keinan Mahan, Head of Investor Relations. Please go ahead.

Speaker Change: I would now like to turn the call over to Orit Keinan Mohan, head of investor relations. Please go ahead.

Orit Keinan Mahan: Good afternoon, everyone, and welcome to H.B.'s third quarter of 2024 earnings conference call. We meet today are Enrique Lores, H.B.'s President and Chief Executive Officer. Karen Parkhill, H.B.'s Chief Financial Officer, and Tim Brown, who was the interim Chief Financial Officer.

Speaker Change: Good afternoon, everyone, and welcome to HP's 3rd quarter 2024 earnings conference call.

Speaker Change: With me today are Enrique Lores, HP's President and Chief Executive Officer, Karen Parkhill, HP's Chief Financial Officer, and Team Brown, who is the Interim Chief Financial Officer.

Orit Keinan Mahan: Before handing the call over to Enrique, let me remind you that this call is a webcast, and a replay would be available on our website shortly after the call for approximately one year. We posted the earnings release and accompanying slide presentation on our Investor Relations webpage at investor.hb.com. As always, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today. For more detailed information, please see disclaimers in the earnings materials relating to forward-looking statements that involve risks, uncertainties, and assumptions. For discussion of some of these risks, uncertainties, and assumptions, please refer to H.B.'s SEC report, including our most recent Form 10-K.

Speaker Change: Before handing the call over to Enrique, let me remind you that this call is a webcast, and a replay would be available on our website shortly after the call for approximately one year.

Speaker Change: We posted the earnings release and accompanying slide presentation on our investor relations webpage at investor.hp.com As always, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today.

Speaker Change: For more detailed information, please see these claimers in the earnings materials relating to forward-looking statements that involve risks, uncertainties and assumptions.

Speaker Change: For a discussion of some of this risks on certainties and assumptions, please refer to HP's SEC report, including our most recent form 10K. HBS assumes no obligation and does not intend to update any such forward-looking statements.

Orit Keinan Mahan: H.B. assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available now and could differ materially from the amounts ultimately reported in H.B.'s SEC filings. During this webcast, unless otherwise specifically noted, all comparisons are over your comparisons with the corresponding year-ago period. In addition, unless otherwise noted, references to H.B. channel inventory refers to tier one channel inventory. For financial information that has been expressed on a non-GAAP basis, we've included recommendations to the comparable GAAP information.

Speaker Change: We also note that the financial information discussed on this call reflects estimate based on information available now and could differ materially from the amount ultimately reported in HP's SEC filings.

Speaker Change: During this webcast, I'll let otherwise specifically note it, all comparisons are your rear comparisons with the corresponding e-rogo period.

Speaker Change: In addition, unless otherwise noted, references to HP Channel Inventory refer to Tier 1 Channel Inventory. For financial information that has been expressed on a non-gab basis, we've included reconceliations to the Gombarable Gab information.

Desiree: Good day everyone and welcome to the third quarter of 2024 H.B. Inc, earnings conference call. My name is Desiree and I will be your conference moderator for today's call.

Orit Keinan Mahan: Please refer to the tables and slide presentation accompanying today's earnings release for those recommendations.

Desiree: At this time, all participants will be in listen only mode. We will be facilitating a question and answer session towards the end of the conference. Should you need assistance during the call, please signal a conference specialist by pressing the star key followed by zero. As a reminder, this conference is being recorded for weekly purposes.

Speaker Change: Please refer to the tables and slide presentation accompanying today's earning release for those reconciliation.

Orit Keinan Mahan: With that, I'd like to turn the call over to Enrique. Thank you, Enrique, and thank you all for joining in today's call.

Speaker Change: With that, I'd now like to turn the call over to Enrique.

Enrique Lores: Turn me start by welcoming our new CFO, Curl and Parkhill, who joined H.B. Earlier this month. Her expertise and background are a great addition to our leadership team, and we are delighted to have her on board. And a big thank you to Tim Brown for stepping in as Inter in CFO over the last three quarters.

Enrique: Thank you, Orit, and thank you all for joining today's call. Let me start by welcoming our new CFO, Kirlen Parheim, who joined HP earlier this month.

Orit Keinan Mahon: I would now like to turn the call over to Orit Keinan Mahon, head of investor relations. Please go ahead.

Speaker Change: Her expertise and background are a great addition toward leadership team and we are delighted to have her onboard.

Orit Keinan Mahon: Good afternoon everyone and welcome to H.B. 's third quarter of 2024 earnings conference call. With me today are Enrique Loris, H.B. 's president and chief executive officer, Karen Parkhill, H.B. 's chief financial officer and Tim Brown, who was the interim chief financial officer. Before handing the call over to Enrique, let me remind you that this call is a webcast and a replay would be available on our website shortly after the call for approximately one year.

Speaker Change: And a big thank you to Tim Brown for stepping in as Interim CFO over the last three quarters.

Enrique Lores: Today, I will cover our third quarter results. A few of the new innovative experiences we have introduced. How we are tracking against our strategic priorities and our expectations for Q4.

Speaker Change: Today, I will cover our third quarter results. A few of the new innovative experiences we have introduced. How we are tracking against our strategic priorities and our expectations for Q4.

Enrique Lores: Karen will provide additional details on our financials and outlook. Starting with our results, let me first focus on revenue. I am pleased to share we are building solid momentum. The company returned to revenue growth for the first time in nine quarters, up two percent year over year. This was driven by strong performance in personal systems and our key growth areas. Commercial PC recovery was strong, in line with our expectations and a signal of ongoing market stabilization. That said, the recovery of the print market was lower than expected, which impacted print revenue. Non-GAAP operating profit was down 7 percent, and non-GAAP EPS was within our previously provided outlook range but below our expectations.

Speaker Change: Karen will provide additional details on our financials and outlook.

Orit Keinan Mahon: We posted the earnings release and accompanying slide presentation on our investor relations webpage at investor.hb.com. As always, elements of this presentation are forward looking and are based on our best view of the world and our businesses as we see them today. For more detailed information, please see disclaimers in the earnings materials relating to forward looking statements that involve risks, uncertainties and assumptions. For discussion of some of these risks, uncertainties and assumptions, please refer to H.B.

Karen: Starting with our results, let me first focus on revenue.

Karen: I am pleased to share we are building solid momentum. The company returned to revenue growth for the first time in 9 quarters, up 2% year over year.

Karen: This was driven by strong performance in personal systems and our key growth area.

Orit Keinan Mahon: 's SEC report, including our most recent form 10K. H.B, assumes no obligation and does not intend to update any such forward looking statements. We also note that the financial information discussed on this call reflects estimates based on information available now and could differ materially from the amounts ultimately reported in H.B. 's SEC filings. During this webcast, unless otherwise specifically noted, all comparisons are over your comparisons with the corresponding year ago period.

Karen: Commercial PC Recovery was strong in line with our expectations and a signal of ongoing market stabilization.

Karen: That said, the recovery of the brain market was lower than expected, which impacted brain revenue.

Karen: Nungap operating profit was down 7% and Nungap EPS was within our previously provided outlook range, but below our expectations.

Enrique Lores: We have been taking decisive actions to address this. We see an immediate opportunity to drive additional structural cost savings in Q4 as part of our Future Ready program. We are accelerating our plan, breaking our exit goal for Fiscal Year 24. We expect to reach 80 percent of the three-year structural cost fund rate target by the end of year. We will also keep executing our plan to strengthen momentum and drive long-term profitable growth. This includes investment in support of our growth businesses. And these combined efforts will help us win in the market, drive profitable growth, and build a stronger HP.

Karen: We have been taking this ice if actions to address this.

Karen: We see an immediate opportunity to drive additional structural cost savings in Q4 as part of our future ready program.

Orit Keinan Mahon: In addition, unless otherwise noted, references to H.B. 's channel inventory refer to tier 1 channel inventory. For financial information that has been expressed on a non-GAP basis, we've included recommendations to the comparable GAP information. Please refer to the tables and slide presentation accompanying today's earnings release for those recommendations.

Karen: We're accelerating our plan, breaking our exit goal for fiscal year 24. We expect to reach 80% of the three years structural cost-friendly target by the end of this year.

Orit Keinan Mahon: With that, and I'd like to turn the call over to Enrique. Thank you, Enrique, and thank you all for joining today's call.

Karen: We will also keep executing our plan to strengthen momentum and drive longer profitable drills.

Karen: This includes investments in support of our growth businesses.

Enrique Lores: Turn me start by welcoming our new CFO, Carolyn Parkhill, who joined H.B, earlier this month. Her expertise and background are a great addition to our leadership team and we are delighted to have her on board. And a big thank you to Tim Brown for stepping in as Inter in CFO over the last three quarters.

Karen: And this combined efforts will help us win in the market, drive profitable growth and build a stronger HP.

Enrique Lores: Turning to new innovations, Q3 was another strong quarter. We continue to deliver in the leading experiences by putting our customers at the center of everything we do. In the AI PC category, we are charging ahead. Our next team, AI PCs, are empowering everyone from knowledge workers to data scientists to unlock the power of AI. In May, we launched our first generation using the latest Qualcomm processor. As the world's thinnest next-gen AI PCs, with the longest battery life, they are made for mobility. And in July, we introduced a new premium model powered by the latest AMD processor.

Karen: Turning to new innovations Q3 was another strong quarter.

Speaker Change: We continue to deliver in their city living experiences by putting our customers at the center of everything we do.

Speaker Change: In the AI PC category, we are charging ahead. Our next game AI PCs are empowering everyone from knowledge workers to data scientists to unlock the power of AI.

Enrique Lores: Karen will provide additional details on our financials and outlook. Starting with our results, let me first focus on revenue. I am pleased to share we are building solid momentum.

Speaker Change: In May, we launched our first generation using the latest Qualcomm processor.

Speaker Change: As the world's fitness next to an AI PC, with the longest battery life, they are made for mobility.

Enrique Lores: The company returned to revenue growth for the first time in nine quarters, up 2% year over year. This was driven by strong performance in personal systems and our key growth areas. Commercial PC recovery was strong in line with our expectations and a signal of ongoing market stabilization. That said, the recovery of the print market was slower than expected, which impacted print revenue. Non-gap operating profit was down 7% and non-gap EPS was within our previously provided outlook range but below our expectations.

Speaker Change: And in July, we introduced a new premium model powered by the latest AMD processor.

Enrique Lores: It is the most powerful AI PC in the industry, with up to 55 TOPS of MPU performance. It delivers personalized experiences like real-time translation, personal communication coaching, and quick professional video creation. And to help protect against AI-assisted cyber attacks, the new Abelibok Ultra includes the industry-leading protections and capabilities of HP Wolf Security.

Speaker Change: It is the most powerful AIPC in the industry. We have to 55 stops of MPU performance.

Speaker Change: It delivers personalized experiences by real-time translation, personal communication coaching and quick professional video creation.

Speaker Change: and to help protect against AI assisted cyber attacks, the new Oblivock Ultra includes the industry leading protections and capabilities of HP Wolf Security.

Enrique Lores: We are doing even more to raise the bar for data scientists and AI developers. Our HP AI Studio is the world's most comprehensive workstation solution for AI development. In Q3, we made it even stronger by being the first and only to build Gen AI trust into our solution. This means the developers can more effectively detect, correct, and monitor inaccurate outputs from AI models, making it faster and safer for companies to deploy AI-powered applications.

Speaker Change: We are doing even more to raise the bar for data scientists and AI developers.

Enrique Lores: We have been taking decisive actions to address this. We see an immediate opportunity to drive additional structural cost savings in Q4 as part of our future ready program. We are accelerating our plan, breaking our exit goal for fiscal year 24. We expect to reach 80% of the three-year structural cost fund rate target by the end of this year. We will also keep executing our plan to strengthen momentum and drive long-term profitable growth. This includes investment in support of our growth businesses.

Speaker Change: Our HP AI Studio is a world's most comprehensive workstation solution for AI development.

Speaker Change: In QC, we made it even stronger by being the first and only to build DNA-I trust into our solution.

Speaker Change: These means developers can more effectively detect, correct and monitor and accurate outputs from AI models, making it faster and safer for companies to deploy AI powered applications.

Enrique Lores: In workforce solutions, our preparatory workforce experience platform is exceeding our expectations. Customers are now leveraging our AI capabilities to manage over 250,000 devices and growing. We also recently added several managed devices, wins, and deployments, including larger companies like Eton. Our continued partnership with this global Intelligent Power Management Company will help support the righty journey in serving more than 90,000 employees around the world.

Speaker Change: In work for solutions, our proprietary workforce experience platform is exceeding our expectations.

Enrique Lores: And these combined efforts will help us win in the market, drive profitable growth and build a stronger HP, turning to new innovations Q3 was another strong quarter. We continue to deliver industrial Eden experiences by putting our customers at the center of everything we do. In the AI PC category, we are charging ahead. Our next team, AI PCs, are empowering everyone from knowledge workers to data scientists to unlock the power of AI.

Speaker Change: Customers are now leveraging our AAK abilities to manage over 250,000 devices and growing. We also recently added several managed devices, winds and deployments, including larger companies like Ethan.

Speaker Change: Our continued partnership with this global intelligence power management company will help support the right to journey in serving more than 90,000 employees around the world.

Enrique Lores: We set a new standard for industrial printing at Drupal, introducing advanced digital presses and intelligent automation solutions. This included autonomous mobile robots that save up to two hours of production a day per press. We also enhanced our print OS platform, giving customers the ability to monitor their entire production floor from JAPS mission to delivery. We were honored to take home more Best of awards than any other exhibitor at the show.

Speaker Change: We said a new standard for industrial printing at Drupan, introducing advanced digital process and intelligent automation solutions.

Enrique Lores: In May, we launched our first generation using the latest Qualcomm processor. As the world's thinnest next-gen AI PCs, with the longest battery life, they are made for mobility. And in July, we introduced a new premium model powered by the latest AMD processor. It is the most powerful AI PC in the industry, with up to 55 tops of NPU performance. It delivers personalized experiences like real-time translation, personal communication coaching and quick professional video creation.

Speaker Change: This included autonomous mobile robots that save up to two hours of production at a purpose.

Speaker Change: We also enhanced our print OS platform.

Speaker Change: Giving customers the ability to monitor the entire production floor from jobs mission to delivery. We were honored to take home more best of awards than any other exhibitor at the show.

Enrique Lores: We also announced a new partnership with Canva. Their 185 million model users can now similarly design and create online and print locally. We also secured major deals with print and digital industry leaders, like Aradonally, all four labels, and simplest.

Speaker Change: We also announced a new partnership with Keinba

Speaker Change: There are 185 million modellys users, can now similarly design and create online and print locally

Enrique Lores: And to help protect against AI-assisted cyber attacks, the new Oblivok Ultra includes the industry leading protections and capabilities of HP wolf security. We are doing the more to raise the bar for data scientists and AI developers. Our HP AI studio is the world's most comprehensive workstation solution for AI development. In Q3, we made it even stronger by being the first and only to build Gen AI trust into our solution. This means developers can more effectively detect correct and monitor and accurate outputs from AI models, making it faster and safer for companies to deploy AI-powered applications.

Speaker Change: We also secured major deals with print and digital industry leaders, like Arard Donnelly, all four labels and simple.

Enrique Lores: We are excited about what's ahead.

Enrique Lores: In September, we will host our second annual HP Imagine event. Here, we will unveil even more new experiences that help our customers drive growth and professional fulfillment.

Speaker Change: We are excited about what's ahead. In September, we will host our second annual HP Imagine event.

Speaker Change: Here we will unveil even more new experiences that help our customers drive growth and professional fulfillment.

Enrique Lores: In Q3, we further invested in our long-term success. We acquired Cyber Core Technologies, a leading provider of secure supply chain management and cyber solutions for the U.S. Federal government. The addition of Cyber Core to the HP family will help further strengthen our security expertise and enhance our offerings.

Speaker Change: In Q3, we further invested in our long term success.

Speaker Change: We acquire cyber core technologies, a leading provider of secure supply, in management and a solution for the U.S. Federal Government.

Speaker Change: The addition of cyber core to the H.E. family will help further thanks our security expertise and enhance our office.

Enrique Lores: In workforce solutions, our proprietary workforce experience platform is exceeding our expectations. Customers are now leveraging our AI capabilities to manage over 250,000 devices and growing. We also recently added several managed devices, wins and deployments, including larger companies like Eton. Our continued partnership with this global Intelligent Power Management Company will help support the righty journey in serving more than 90,000 employees around the world.

Enrique Lores: And just yesterday, we announced we have received a 50 million dollar award from the U.S. Department of Commerce. This funding from the Chips and Science Act will help modernize and expand our microfluidics Stemic Conductor Fab in Carvalis, Oregon. It will also help us further explore the potential of our microfluidics technology in new areas such as life sciences.

Speaker Change: And just yesterday we announced we have received a $50 million award from the U.S. Department of Commerce.

Speaker Change: This funding from the Chiefs and Science Act will help modernize and expand our microfluidics STEMI conductors fat in Corvallis, Oregon.

Speaker Change: It will also help us further explore the potential of our microfluidic technology in new areas such as life science.

Enrique Lores: In Q3, we released our annual Sustainable Impact Report, highlighting the important progress we have made. In 2023, our initiatives help us reach a 27% reduction in value chain in greenhouse gas emissions. We continue to roll out easily recyclable packaging created from recycled content. In 2023, we reached a 62% reduction in single-use plastic packaging. And our digital equity efforts have reached 45 million people since 2021. We know there is always more that can be done, but we are proud of our progress.

Speaker Change: In Q3, we released our annual Sustainable Impact Report, highlighting the important progress we have made.

Enrique Lores: We set a new standard for industrial printing at Drupal, introducing advanced digital presses and intelligent automation solutions. This included autonomous mobile robots that save up to two hours of production a day per press. We also enhanced our print OS platform, giving customers the ability to monitor their entire production floor from JAPS mission to delivery. We were honored to take home more best of awards than any other exhibitor at the show.

Speaker Change: In 2020, our initiatives help us reach a 27% reduction in value chain during house gas emissions.

Speaker Change: We continue to roll out easily recyclable packaging created from recycled content.

Speaker Change: In 2023, we've reached a 62% reduction in single-use plastic packaging.

Speaker Change: and our digital equity efforts have reached 45 million people to in 2021.

Enrique Lores: We also announced a new partnership with Canva. Their 185 million model users can now seamlessly design and create online and print locally. We also secured major deals with print and digital industry leaders, like Aradonally, all four labels and simples.

Speaker Change: We know there is always more that can be done, but we are proud of our progress. And we are honoured to be ranked first in our industry on time magazines, walls, most sustainable companies list.

Enrique Lores: And we are honored to be ranked first in our industry on Time Magazine's World's Most Sustainable Companies list.

Enrique Lores: Now, let me share more details on the performance of each of our businesses in the third quarter. In personal systems, revenue was up 5% year over year; the second consecutive quarter of year over year growth. Operating profit was 6.4% in line with our expectations. Globally, our PC share was flat year over year, but up 1.3 points quarter over quarter. This was driven by growth in high value categories, including work stations and consumer premium. We continue to see strong progress in key growth areas. We revenue up year over year in personal systems services and in hybrid systems, driven by strong demand for video collaboration.

Speaker Change: Now, let me share more details on the performance of each of our businesses in the third quarter.

Enrique Lores: We are excited about what's ahead.

Speaker Change: In personal systems, revenue was up 5% year over year, the second consecutive quarter of year over year growth.

Enrique Lores: In September, we will host our second annual HP Imagine event. Here, we will unveil even more new experiences that help our customers drive growth and professional fulfillment. In Q3, we further invested in our long-term success. We acquired cyber core technologies, a leading provider of secure supply chain management and cyber solutions for the U.S, federal government. The addition of cyber core to the HP family will help further strengthen our security expertise and enhance our offerings.

Speaker Change: Operating Profit was 6.4% in line with our expectations.

Speaker Change: Globally, our PC share was flat year over year, but at 1.3 points, quarter over quarter.

Speaker Change: This was driven by girls in high value categories including work stations and consumer premium.

Speaker Change: We continue to see storm progress in key growth areas. We've revenue up year over year in personal system services and in hybrid systems, driven by storm demand for video collaboration.

Enrique Lores: And we grew gaming revenue quarter over quarter in line with normal seasonality. We remain very excited about the AI PC's opportunity. Shipments of ramping and initial reactions are overwhelmingly positive. We have a strong portfolio with an unprecedented level of HP in general. Our growing ecosystem of developers and AI software providers is a huge competitive advantage. Forbes Secular HP wants the AI PC crown, and they are right. Our focus is on delivering new AI experiences for our customers. Overall, our AI PC expectations across shipments, higher ESPs, and premium mix remains on track with our expectations for the second half.

Enrique Lores: And just yesterday, we announced we have received a 50 million dollar award from the U.S. Department of Commerce. Rakers, this funding from the Chips and Science Act will help modernize and expand our micro-fluidics, Stemic Conductor Fab in Carvalis, Oregon. It will also help us further explore the potential of our micro-fluidics technology in new areas such as life sciences.

Speaker Change: and we grew gaming revenue quarter over quarter in line with normal sustainability.

Speaker Change: We remain very excited about the AI-PC's opportunity.

Speaker Change: Shipments are ramping and initial reactions are overwhelmingly positive.

Speaker Change: We have a storm for folio, we have an unprecedented level of HP in genelian.

Speaker Change: Our growing ecosystem of developers and AI software providers are a huge competitive advantage.

Enrique Lores: In Q3, we released our annual Sustainable Impact Report, highlighting the important progress we have made. In 2023, our initiatives help us reach a 27% reduction in value chain in greenhouse gas emissions. We continue to roll out easily recyclable packaging created from recycled content. In 2023, we've reached a 62% reduction in single-use plastic packaging. And our digital equity efforts have reached 45 million people since 2021. We know there is always more that can be done, but we are proud of our progress. And we are honored to be ranked first in our industry on time magazines, world's most sustainable companies list.

Speaker Change: Forbes declared HP wants the AIPC crown and they are right. Our focus is on delivering new AI experiences for our customers.

Speaker Change: Overall, our AITC expectations, accrocibments, higher ARSPs and premium meets, three mains on track, with our expectations for the second half.

Enrique Lores: Shifting to print, net revenue was down 3% year over year. We delivered print operating profit of 17.3%, which was below our expectations. We saw a softer demand, unfavorable geomix, and a more aggressive pricing environment. Even in this type of challenging environment, I expect us to do better. And as I said earlier, we're taking actions to accelerate our structural cost savings for this year. We have made progress on gaining profitable share with growth year-over-year and quarter-over-quarter in home and in office when excluding China. We gained share in our strategic areas, especially in big tanks, A3 and A4 values.

Speaker Change: shifting to print, net revenue was down 3% year over year. We delivered print operating profit of 17.3% which was below our expectations.

Speaker Change: We saw a softer demand, unfavorable geo-mix, and a more aggressive pricing environment.

Speaker Change: Even in this type of challenge in environment, I expect us to do better. And as I said earlier, we're taking actions to accelerate our structural cost savings for this year.

Enrique Lores: Now, let me share more details on the performance of each of our businesses in the third quarter. In personal systems, revenue was up 5% year over year, the second consecutive quarter of year over year growth. Operating profit was 6.4% in line with our expectations. Globally, our PC share was flat year over year, but up 1.3 points quarter over quarter. This was driven by growth in high-value categories, including work stations and consumer premium.

Speaker Change: We have made progress on gaining profit of our share with growth year over year and quarter over quarter in home.

Speaker Change: and the office when excluding China.

Speaker Change: We came to share in our strategic areas, especially in Big Tanks, A3 and A4 value.

Enrique Lores: Key growth areas in print continue to make progress. Consumer services revenue and subscribers through year-over-year. Industrial graphics did as well, and we have strong momentum coming out of Drupal. And supplies continue to perform as expected.

Speaker Change: Key girls' areas in print continue to make progress, consumer services revenue unsubscribe us through year over year.

Speaker Change: In Darcy or Graphics, they as well, and we have strong momentum coming out of the open.

Enrique Lores: Overall, we generated strong free cash flow of $1.3 billion in the quarter and returned $0.9 billion to shareholders. We remain committed to our capital allocation strategy. Our board of directors are just increased the total share report of authorization to $10 billion. These deliver strong and sustained capital return to our shareholder.

Enrique Lores: We continue to see some progress in key growth areas. We revenue up year over year in personal systems services and in hybrid systems, driven by strong demand for video collaboration. And we grew gaming revenue quarter over quarter in line with normal seasonality. We remain very excited about the AI PC's opportunity. Shipments of ramping and initial reactions are overwhelmingly positive. We have a strong portfolio with an unprecedented level of HP in general.

Speaker Change: and Supplies continue to perform as expected.

Speaker Change: Overall, we generated strong free cash flow of 1.3 billion dollars in the quarter, and returned $29 billion to shareholder.

Speaker Change: We remain committed to our capital allocation strategy.

Speaker Change: Our Board of Directors are just increased the total share report is of a recession to $10 billion.

Speaker Change: These are firms, our commitment to deliver strong and sustained capital return to our shareholder.

Enrique Lores: Our growing ecosystem of developers and AI software providers are a huge competitive advantage. Forbes declared HP wants the AI PC crown and they are right. Our focus is on delivering new AI experiences for our customers. Overall, our AI PC expectations across shipments, higher ESPs and premium mix remains on track with our expectations for the second half.

Speaker Change: Looking forward to Q4, we expect the demand environment will remain dynamic, and that our markets will continue to be competitive.

Speaker Change: We expect the PC commercial momentum to continue and our key grows areas to make progress.

Speaker Change: At the same time, the competitive price in environment will remain in Q4, and the print market recovery will continue to be slower.

Enrique Lores: As a result, we decided to moderate our expectations for Q4 and the full year. We will maintain investments and progress in high value and key growth areas and accelerate our cost reduction plans.

Speaker Change: As a result, we decided to moderate our expectations for Q4 and the full year.

Enrique Lores: Shifting to print, net revenue was down 3% year over year. We delivered print operating profit of 17.3%, which was below our expectations. We saw a softer demand, unfavorable geomix, and a more aggressive pricing environment. Even in this type of challenging environment, I expect us to do better. And as I said earlier, we're taking actions to accelerate our structural cost savings for this year. We have made progress on gaining profitable share with growth year over year and quarter over quarter in home and in office when excluding China.

Speaker Change: We will maintain investments and progress in high value and key growth areas, and accelerate our cost reduction plans.

Enrique Lores: We are confident in our strategy and well-equipped to drive meaningful progress as we round out this Q24. Across our entire portfolio, leverage in AI and enabling high-speed work experiences will remain central to create solutions that deliver growth and fulfillment for all HP customers.

Speaker Change: We are confident in our strategy and well equipped to drive meaningful progress as we round out this calendar 24.

Speaker Change: Accross our entire portfolio, leverage in AI and enabling high-read work experiences will remain central to create solutions that deliver growth and fulfillment for all HP customers.

Karen Parkhill: I will pause here and turn it over to Karen. Thank you, Enrique, for the warm welcome. I'm thrilled to join HP, and I'm eager to meet you, our analysts and investors, in the month ahead. Though I've been here just a few weeks, I'm incredibly impressed by the innovation all around me. HP is an iconic company, and I'm excited to work with Enrique and our leadership team to create an even stronger future ahead. David, building upon our market-leading portfolio, attractive growth businesses, and culture keenly focused on delivering value for our shareholders.

Speaker Change: I will close here and turn it over to Kein.

Kein: Thank you Enrique for the warm welcome. I'm thrilled to join HP and I'm eager to meet you our analysts and investors in the month ahead.

Enrique Lores: We gained share in our strategic areas, especially in big tanks, A3 and A4 values. Key growth areas in print continue to make progress. Consumer services revenue and subscribers through year over year. Industrial graphics did as well, and we have strong momentum coming out of Drupal and supplies continue to perform as expected.

Kein: Though I've been here just a few weeks, I'm incredibly impressed by the innovation all around me.

Kein: H.P. is an iconic company and I'm excited to work with Enrique and our leadership team to create an even stronger future ahead.

Kein: Building upon our market-leading portfolio, attractive growth businesses, and culture keenly focused on delivering value for our shareholders.

Karen Parkhill: Now onto the quarter. Starting high level, we are building on the progress we made in the first half, and as Enrique said, are pleased with our return to revenue growth for the first time in nine quarters. Solid performance and personal systems, which grew for the second quarter in a row, and in our key growth areas, drove our Q3 revenue growth, and double-bidget sequential growth, and personal systems drove strong free cash flow in the quarter. We also returned nearly $870 million to our shareholders through repurchases and dividends, and remained focused on returning approximately 100% of our free cash flow this fiscal year.

Enrique Lores: Overall, we generated strong free cash flow of $1.3 billion in the quarter and returned $0.9 billion to shareholder. We remain committed to our capital allocation strategy. Our board of directors are just increased the total share report of authorization to $10 billion. These deliver strong and sustained capital return to our shareholder.

Kein: Now, on to the quarter.

Kein: Starting high level, we are building on the progress we made in the first half. And as Enrique said, our pleased with our return to revenue growth for the first time in nine quarters.

Enrique: Solid Performance and Personal Systems, which grew for the second quarter in a row, an

Enrique: and double digits sequential growth and personal systems drove strong free cash flow in the quarter.

Enrique: We also returned nearly $870 million to our shareholders through repurchases and dividends. And remain focused on returning approximately 100% of our free cash flow this fiscal year.

Enrique Lores: Looking forward to Q4, we expect the demand environment will remain dynamic and that our markets will continue to be competitive. We expect the PC commercial momentum to continue and our key growth areas to make progress. At the same time, the competitive pricing environment will remain in Q4 and the print market recovery will continue to be slower. As a result, we decided to moderate our expectations for Q4 and the full year. We will maintain investments and progress in high value and key growth and accelerate our cost reduction plans.

Karen Parkhill: Looking across the company, the print market was softer than we expected at the beginning of the quarter, and both print and PS saw a dynamic pricing environment that puts some pressure on our margins, as did our focus on continuing to invest for long-term sustainable growth. As a result, and as Enrique mentioned, we are accelerating our future-ready plan and intend to deliver savings sooner than expected. As a reminder, our plan incorporated our goal to deliver gross annualized structural cost savings of $1.6 billion by the end of fiscal year 25, with approximately 70% or $1.1 billion achieved by the time we exit the fiscal year.

Enrique: Looking across the company, the print market was softer than we expected at the beginning of the quarter. And both print and PS saw dynamic pricing environment that put some pressure on our margins.

Enrique: As did our focus on continuing to invest for long-term sustainable growth.

Enrique: As a result, and as Enrique mentioned, we are accelerating our future ready plan and intend to deliver saving sooner than expected.

Speaker Change: As a reminder, our planning incorporated our goal to deliver gross annualized structural cost savings of 1.6 billion by the end of fiscal year 25. With approximately 70% or 1.1 billion achieved by the time we exit the fiscal year.

Enrique Lores: We are confident in our strategy and well-equipped to drive meaningful progress as we round out fiscal year 24. Across our entire portfolio, leverage in AI and enabling hybrid work experiences will remain central to create solutions that deliver growth and fulfillment for all HP customers.

Karen Parkhill: Given our focus to mitigate near-term market challenges, and just as importantly, maintain investments to drive longer-term growth, we have accelerated our efforts and now expect our cumulative savings target exiting the fiscal year to be approximately $1.3 billion, or 80% of the planned target.

Speaker Change: Given our focus to mitigate near-term market challenges, and just as importantly, maintain investments to drive longer-term growth.

Speaker Change: We have accelerated our efforts and now expect our cumulative savings target exiting the fiscal year to be approximately 1.3 billion or 80% of the planned target.

Karen Parkhill: Now, let's take a closer look at the details of the quarter. Net revenue was up 2% nominally and up 3% in constant currency. In constant currency, revenue increased in all regions, with Americas, AMIA, and APJ each growing 3%. Gross margin at 21.5% in the quarter was up slightly year over year. Our cost-saving efforts offset both competitive pricing in the face of rising commodity costs and a mixed shift given the strong PS performance. Non-GAAP operating expenses were up year over year, from continued investment in key initiatives and our people. And of course, we continued to drive cost reductions, including the future-ready cost savings.

Karen Parkhill: I will pause here and turn it over to Karen. Thank you Enrique for the warm welcome. I'm thrilled to join HP and I'm eager to meet you, our analysts and investors in the month ahead. Though I've been here just a few weeks, I'm incredibly impressed by the innovation all around me. HP is an iconic company and I'm excited to work with Enrique and our leadership team to create an even stronger future ahead. David, Building upon our market-leading portfolio, attractive growth businesses, and culture keenly focused on delivering value for our shareholders.

Speaker Change: Now, let's take a closer look at the details of the corridor.

Speaker Change: Net revenue was up 2% normally, and up 3% in constant currency.

Speaker Change: In constant currency revenue increased in all regions, with America's Amia and APJ, each growing 3%.

Speaker Change: Gross margin at 21.5% in the quarter was up slightly year-over-year.

Speaker Change: Our cost saving efforts offset those competitive pricing in the face of rising commodity costs, and a mixed shift given the strong PS performance.

Speaker Change: Non-Gap operating expenses were up year over year, from continued investment in key initiatives and our people.

Karen Parkhill: Now onto the quarter. Starting high level, we are building on the progress we made in the first half, and as Enrique said, are pleased with our return to revenue growth for the first time in nine quarters. Solid performance and personal systems, which grew for the second quarter in a row, and in our key growth areas, drove our Q3 revenue growth, and double-digit sequential growth and personal systems drove strong free cash flow in the quarter.

Speaker Change: And of course, we continue to drive cost reductions, including the future ready cost savings.

Karen Parkhill: All in, non-GAAP operating profit was $1.1 billion, down 7% year over year. Below the out-profit line, non-GAAP net OINE was down year over year, benefiting from less short-term financing activity and lower interest expense from the debt tender we completed last year. Finally, with a diluted share count of roughly 1 billion shares, our non-GAAP diluted net earnings per share was 83 cents, a year-over-year decrease of 3 cents, and GAAP diluted net earnings per share was 65 cents.

Speaker Change: All in non-gap operating profit was 1.1 billion, down 7% year over year.

Speaker Change: Below the out-profit line, non-gaped net OINA was down year over year, benefiting from less short-term financing activity and lower interest expense from the debt tender we completed last year.

Karen Parkhill: We also returned nearly $870 million to our shareholders through repurchases and dividends, and remained focused on returning approximately 100% of our free cash flow this fiscal year. Looking across the company, the print market was softer than we expected at the beginning of the quarter, and both print and PS saw a dynamic pricing environment that puts some pressure on our margins, as did our focus on continuing to invest for long-term sustainable growth.

Speaker Change: Finally, with a diluted share count of roughly 1 billion shares, our non-gap diluted net earnings per share was 83 cents. A year over here, due to a decrease of 3 cents.

Karen Parkhill: Now let's turn to segment performance. Personal systems revenue was up 5%, both nominally and in constant currency, with higher commercial volumes and increased ASPs as we worked to adjust pricing where possible to mitigate increased commodity costs. Total units were up 1% year over year, with strengths and commercial, and sequentially revenue was up 11% and units were up 14% with season strength and overall share gains. Of note, hybrid systems revenue grew in the double digits year over year, including strong growth in video collaboration. Drilling more into the details, consumer revenue was down 1% with units down 6%, and commercial revenue was up 8% on 6% unit growth.

Speaker Change: and Gap the Looted Net earnings per share with 65 cents.

Speaker Change: Now, let's turn to segment performance.

Speaker Change: Personal Systems Revenue was up 5%, both nominally and in constant currency, with higher commercial volumes and increased ASPs, as we worked to adjust pricing where possible to mitigate increased commodity costs.

Karen Parkhill: As a result, and as Enrique mentioned, we are accelerating our future ready plan and intend to deliver savings sooner than expected. As a reminder, our plan incorporated our goal to deliver gross annualized structural cost savings of 1.6 billion by the end of fiscal year 25, with approximately 70% or 1.1 billion achieved by the time we exit the fiscal year. Given our focus to mitigate near-term market challenges, and just as importantly, maintain investments to drive longer-term growth, we have accelerated our efforts and now expect our cumulative savings target exiting the fiscal year to be approximately 1.3 billion or 80% of the planned target.

Speaker Change: Tol Units were up 1% year over year with strength and commercial.

Speaker Change: And sequentially, revenue was up 11% and units were up 14% with seasonal strengths and overall share gains.

Speaker Change: of note, hybrid systems revenue grew in the double digits year over year, including strong growth and video collaboration.

Speaker Change: Drilling more into the details, consumer revenue was down 1%, with units down 6%. And commercial revenue was up 8% on 6% unit growth.

Karen Parkhill: Improved pricing and consumer, along with favorable commercial mix and a shift to premium, consistent with our strategy, drove higher overall ASPs. In fact, we continued to see commercial representing greater than 70% of personal systems revenue. And while calendar Q2 market share was flat year over year, we gained share sequentially, driving improvements in high-value categories. And of course, we remain focused on driving profitable revenue and share growth in both our consumer and commercial markets. Personal systems operating margin of 6.4% was down slightly year over year. We had higher commodity costs and purposely continued our strategic investment, offset in part by future ready savings.

Speaker Change: Improved pricing and consumer, along with favorable commercial mix and a shift to premium, consistent with our strategy, drove higher overall ASPs.

Karen Parkhill: Now, let's take a closer look at the details of the quarter. Net revenue was up 2% nominally and up 3% in constant currency. In constant currency revenue increased in all regions, with Americas, Amia, and APJ each growing 3%. Gross margin at 21.5% in the quarter was up slightly year over year. Our cost-saving efforts offset both competitive pricing in the face of rising commodity costs, and a mixed shift given the strong PS performance.

Speaker Change: In fact, we continue to see commercial representing greater than 70% of personal systems revenue.

Speaker Change: And while calendar Q2 Market Chair was flat year over year, we gained shares sequentially, driving improvements in high value categories.

Speaker Change: And of course, we remain focused on driving profitable revenue and share growth in both our consumer and commercial markets.

Speaker Change: Personal Systems Operating Margin of 6.4% was down slightly year over year.

Karen Parkhill: Non-gap operating expenses were up year over year, from continued investment in key initiatives and our people. And of course, we continued to drive cost reductions, including the future ready cost savings. All in, non-gap operating profit was 1.1 billion, down 7% year over year. Below the out-profit line, non-gap net OINE was down year over year, benefiting from less short-term financing activity and lower interest expense from the debt tender we completed last year.

Speaker Change: We had higher commodity costs, and purposely continued our strategic investment, offset and part by future ready savings.

Karen Parkhill: In print, our results reflected the slower pace of market recovery and an incrementally aggressive pricing environment, as our Japanese competitors continued to benefit from the weaker yen. Overall, the market came in below expectations, particularly in China. Total print revenue was down 3% on a reported basis and 2% in constant currency. And while hardware units declined 2% year over year, total print market share increased both year over year and sequentially. And momentum and industrial graphics continued, with supplies and services driving the 4th straight quarter of year-over-year revenue growth. By customer segment, commercial revenue decreased 5% with units down 4%.

Speaker Change: In print, our results reflected the slower pace of market recovery and an incrementally aggressive pricing environment. As our Japanese competitors continue to benefit from the weaker yen.

Speaker Change: Overall, the market came in below expectations, particularly in China.

Speaker Change: Total Front Revenue was down 3% on a reported basis and 2% in constant currency.

Karen Parkhill: Finally, with a diluted share count of roughly 1 billion shares, our non-gap diluted net earnings per share was 83 cents, a year over year decrease of 3 cents, and gap diluted net earnings per share was 65 cents.

Speaker Change: And while hardware units decline 2% year over year, total print market share increased, both year over year and sequentially.

Speaker Change: and Momentum and Industrial Graphics continued, with supplies and services driving the four-strait quarter of year-over-year revenue growth.

Karen Parkhill: Now let's turn to segment performance. Personal systems revenue was up 5% both nominally and in constant currency, with higher commercial volumes and increased ASPs as we worked to adjust pricing where possible to mitigate increased commodity costs. Total units were up 1% year over year, with strengths and commercial, and sequentially revenue was up 11% and units were up 14% with seasonal strengths and overall share gains.

Speaker Change: By customer segment, commercial revenue decreased 5% with units down 4%. And as mentioned, we felt the impact of market declines, most notably in China, and competitive pricing.

Karen Parkhill: And, as mentioned, we felt the impact of market declines, most notably in China and competitive pricing. Consumer revenue returned to growth, increasing 2% on flat units with favorable mix of setting pricing. Of note, hardware units grew 5% sequentially, driven by strength and consumer. And supplies revenue was down 2% nominally and 1% in constant currency, in line with our outlook. Print operating margin of 17.3% was down year over year. With headwinds from pricing and increased investments, not fully offset by savings from our Future Ready action.

Speaker Change: Consumer Revenue Return to Gross, increasing 2% on flat units with favorable mix offsetting pricing.

Speaker Change: Of note, hardware units grew 5% sequentially, driven by strengths and consumer, and supplies revenue was down 2% normally and 1% in constant currency, in line with our outlook.

Karen Parkhill: Of note, hybrid systems revenue grew in the double digits year over year, including strong growth and video collaboration. Drilling more into the details, consumer revenue was down 1% with units down 6% and commercial revenue was up 8% on 6% unit growth. Improved pricing and consumer, along with favorable commercial mix and a shift to premium, consistent with our strategy, drove higher overall ASPs. In fact, we continued to see commercial representing greater than 70% of personal systems revenue.

Speaker Change: print operating margin of 17.3% with down year over year, with headwinds from pricing and increased investments, not fully offset by saving from our future ready actions.

Karen Parkhill: On our future-ready transformation plan, we continue to drive greater effectiveness and efficiency across the company. For example, we're using generative AI capabilities to reduce customer call times and work for solutions. And in our commercial organization, our move to more end-to-end processes is enabling much faster deal quotes for contractual customers and allowing customers to more easily buy and renew on HP.

Speaker Change: On our future ready transformation plan, we continue to drive greater effectiveness and efficiency across the company.

Speaker Change: For example, we're using generative AI capabilities to reduce customer call times and work for solutions.

Speaker Change: And in our commercial organization, our move to more end-to-end processes is enabling much faster deal quotes for contractual customers and allowing customers to more easily buy and renew on HP.com.

Karen Parkhill: And while calendar Q2 market share was flat year over year, we gained share sequentially, driving improvements and high value categories. And of course, we remained focused on driving profitable revenue and share growth in both our consumer and commercial markets. Personal systems operating margin of 6.4% was down slightly year over year. We had higher commodity costs and purposely continued our strategic investment offset in part by future ready savings.

Karen Parkhill: There is more to come as we accelerate and complete this program, particularly in print, where we are driving further reductions across the core, including business consolidation, supply chain optimization, and reductions in platforms. Now let me move to cash flow and capital allocation. We generated more than $1.4 billion in cash from operations and $1.3 billion in free cash flow. We continue to improve our cash conversion cycle this quarter, driving inventory days down with seasonally higher volumes and personal systems. Offset in part by an increase in strategic buys as we focus on reducing the near-term impact of rising commodity costs.

Speaker Change: There is more to come as we accelerate and complete this program, particularly in print, where we are driving further reductions across the core, including business consolidation, supply chain optimization and reductions in platforms.

Speaker Change: Now let me move the cash flow and capital allocation.

Speaker Change: We generated more than $1.4 billion in cash from operations, and $1.3 billion in free cash flow.

Karen Parkhill: In print, our results reflected the slower pace of market recovery and an incrementally aggressive pricing environment, as our Japanese competitors continued to benefit from the weaker yen. Overall, the market came in below expectations, particularly in China. Total print revenue was down 3% on a reported basis and 2% in constant currency. And while hardware units declined 2% year over year, total print market share increased both year over year and sequentially. And momentum and industrial graphics continued with supplies and services driving the 4th straight quarter of year over year revenue growth.

Speaker Change: We continue to improve our cash conversion cycle this quarter, driving inventory days down with seasonally higher volumes in personal systems.

Speaker Change: Offset and Parts by an increase in strategic rise, as we focus on reducing the near-term impact of rising commodity costs.

Karen Parkhill: Lastly, we returned close to $870 million to shareholders through both share repurchase and dividends and finished the quarter within our target leverage range. Just as a reminder, unless higher ROI opportunities arise, and as long as our gross leverage ratio remains below two times, we expect to return approximately 100% of our free cash flow to our shareholders over time.

Speaker Change: Lastly, we returned close to $870 million to shareholders, through both share, repurchase, and dividends, and finish the quarter within our target leverage range.

Speaker Change: Just as a reminder, in less higher ROI opportunities arise, and as long as our gross leverage ratio remains below two times, we expect to return approximately a hundred percent of our free cash flow to our shareholders over time.

Karen Parkhill: By customer segment, commercial revenue decreased 5% with units down 4%. And as mentioned, we felt the impact of market declines, most notably in China and competitive pricing. Consumer revenue returned to growth, increasing 2% on flat units with favorable mix offsetting pricing. Of note, hardware units grew 5% sequentially driven by strength and consumer, and supplies revenue was down 2% nominally and 1% in constant currency in line with our outlook. Print operating margin of 17.3% was down year over year, with headwinds from pricing and increased investments, not fully offset by savings from our future ready action.

Karen Parkhill: Looking forward to the fourth quarter and our fiscal year end, we will continue to navigate a dynamic environment and have therefore modeled multiple scenarios based on several assumptions. In personal systems, we expect Q4 revenue to increase sequentially low to mid-single digits. We are expecting continued strength and commercial, but given the lingering softness in the consumer market, we are expecting less seasonal growth than we have seen historically. We anticipate personal systems operating margin to remain in the upper half of our long-term target range of five to seven percent in Q4. As we work to offset increased commodity costs through pricing and discipline cost management while continuing to invest in strategic priorities.

Speaker Change: Looking forward to the fourth quarter and our fiscal year end, we will continue to navigate a dynamic environment, and, if therefore, modeled multiple scenarios based on several assumptions.

Speaker Change: In personal systems, we expect Q4 revenue to increase sequentially low to mid-single digits.

Speaker Change: We are expecting continued strengthen commercial, but given a lingering softness in the consumer market, we are expecting less seasonal growth than we have seen historically.

Speaker Change: We anticipate personal systems operating margin to remain in the upper half of our long-term target range of 5% to 7% and Q4.

Speaker Change: As we work to offset increased commodity costs through pricing and discipline cost management, while continuing to invest in strategic priorities.

Karen Parkhill: On our Future Ready transformation plan, we continue to drive greater effectiveness and efficiency across the company. For example, we're using generative AI capabilities to reduce customer call times and workforce solutions. And in our commercial organization, our move to more end-to-end processes is enabling much faster deal quotes for contractual customers and allowing customers to more easily buy and renew on HP.

Karen Parkhill: In print, we see improving trends in the market, but the pace of recovery is lower than we expected, with continued competitive pricing pressure. For Q4, we expect print revenue to increase low to mid-single digits sequentially, driven by typical seasonal strength, as well as strong momentum in our industrial business coming out of Drupa. We expect supplies revenue in FY24 to decline low single digits, and we anticipate Q4 print margins to be near the top of our 16 to 19 percent range, given seasonal strength and acceleration of future ready cost savings.

Speaker Change: In print, we see improving trends in the market, but the pace of recovery is lower than we expected with continued competitive pricing pressure.

Speaker Change: For Q4, we expect print revenue to increase load of mid-single digits sequentially, driven by typical seasonal strengths.

Speaker Change: as well as strong momentum in our industrial business coming out of Drupas.

Karen Parkhill: There is more to come as we accelerate and complete this program, particularly in print where we are driving further reductions across the core, including business consolidation, supply chain optimization, and reductions in platforms. Now let me move to cash flow and capital allocation. We generated more than $1.4 billion in cash from operations and $1.3 billion in free cash flow. We continue to improve our cash conversion cycle this quarter, driving inventory days down with seasonally higher volumes and personal systems, offset in part by an increase in strategic buys as we focus on reducing the near-term impact of rising commodity costs.

Speaker Change: We expect supplies revenue in FY24 to decline low-single digits.

Speaker Change: and we anticipate QFprint margins to be near the top of our 16 to 19% range, given seasonal strengths and acceleration of future ready cost savings.

Karen Parkhill: Taking all of these considerations into account, we are moderating our guide for Q4 and fiscal year 2024. and we are narrowing our non-GAAP EPS outlook range to 10 cents, which is reflected in our updated outlook. We expect fourth quarter non-GAAP diluted net earnings per share to be in the range of 89 cents to 99 cents, and fourth quarter GAAP diluted net earnings per share to be in the range of 74 cents to 84 cents. For the full year, we now expect non-GAAP diluted net earnings per share to be in the range of $3.35 to $3.45.

Speaker Change: Taking all of these considerations into account, we are moderating our guide for Q4 and fiscal year 2024.

Karen Parkhill: Lastly, we returned close to $870 million to shareholders through both share repurchase and dividends and finished the quarter within our target leverage range. Just as a reminder, unless higher ROI opportunities arise and as long as our gross leverage ratio remains below two times, we expect to return approximately 100% of our free cash flow to our shareholders over time.

Speaker Change: And we are narrowing our non-gap EPS outlook range to 10 cents, which is reflected in our updated outlook.

Speaker Change: We expect fourth quarter non-gap diluted net earnings per share to be in the range of 89 cents to 99 cents.

Speaker Change: and fourth quarter gap diluted net earnings per share to be in the range of 74 cents to 84 cents.

Speaker Change: For the full year, we now expect non-gap-deluted net earnings per share to be in the range of $3.35 to $3.45.

Karen Parkhill: An FY24 gap deluded net earnings per share to be in the range of $2.62 to $2.72. Lastly, we continue to expect free cash flow to be in the range of $3.1 to $3.6 billion for FY24. As a reminder, our free cash flow outlook includes approximately $300 million of restructuring cash outflows.

Speaker Change: An FY24 gap diluted net earnings per share to be in a range of $2.62 to $2.72.

Speaker Change: Lastly, we continue to expect free cash flow to be in the range of 3.1 to 3.6 billion for FY24.

Speaker Change: As a reminder, our free cash flow outlook includes approximately 300 million of restructuring cash outflows.

Karen Parkhill: At this point, we want to open the lines for your questions, but before we do, I want to express my gratitude to my HP colleagues for their help in making my onboarding as smooth as possible. And in particular, I want to thank Tim Brown for his leadership in the interim and has continued to help these past few weeks with me. Tim is also on the call with Enrique and me to help answer your questions.

Speaker Change: At this point, we want to open the lines for your questions.

Speaker Change: But before we do, I want to express my gratitude to my HP colleagues for their help in making my onboarding as smooth as possible.

Speaker Change: And in particular, I want to thank Tim Brown for his leadership in the interim, and his continued help these past few weeks with me.

Speaker Change: Tim is also on the call with Enrique and me to help answer your questions.

Karen Parkhill: Thank you.

Desiree: We will now begin the question and answer session. To ask a question, you may press far than one on your touchstone phone. If you're using a speaker phone, please pick up your handset before pressing the keys.

Speaker Change: Thank you. We will now begin the question and answer session.

Speaker Change: To ask a question, you may press far, then one on your touchstone zone.

Karen Parkhill: In print, we see improving trends in the market, but the pace of recovery is lower than we expected with continued competitive pricing pressure. For Q4, we expect print revenue to increase low to mid-single digits sequentially, driven by typical seasonal strengths, as well as strong momentum in our industrial business coming out of Drupal. We expect supplies revenue in FY24 to decline low single digits, and we anticipate Q4 print margins to be near the top of our 16 to 19 percent range, given seasonal strength and acceleration of future ready cost savings.

Desiree: To withdraw your question, please press star one again. We also ask that you please limit yourself to one question in a single follow-up.

Speaker Change: If you are using a speaker phone, please pick up your handset before pressing the keys.

Speaker Change: [inaudible]

Desiree: And our first questioner today will be David Vogue with UBS.

Karen Parkhill: Your line is open. Yes, I, this is Andrew for David. I wanted to ask about the print margins in fiscal 24. Can you disaggregate some of the pressure you saw in this quarter? What was that? What were the primary drivers? What were the bigger drivers? And why do you expect that to reverse next quarter? Is it entirely on the cost cuts from the future ready plan, or are there other drivers that you're expecting to improve margins in Q4? Thanks.

Speaker Change: And our first customer today will be David Boat, the UBS. Your line is open.

Speaker Change: Yes, I, this is Andrew for David, one of the ask about the print margins in fiscal 24. Can you disaggregate some of the pressure you saw in this corner? What were the primary drivers, what were the bigger drivers?

Speaker Change: and why do you expect that to reverse next quarter? Is it entirely on the cost cuts from the future ready plan or are the other drivers that you're expecting to improve margins in Q4?

Karen Parkhill: Taking all of these considerations into account, we are moderating our guide for Q4 and fiscal year 2024, and we are narrowing our non-gap EPS Outlook range to 10 cents, which is reflected in our updated outlook. We expect fourth quarter non-gap deluded net earnings per share, to be in the range of 89 cents to 99 cents, and fourth quarter gap deluded net earnings per share, to be in the range of 74 cents to 84 cents.

Karen Parkhill: Thanks for your question, Andrew. You know, our Q3 print margin was below our expectations, although I would note that supplies did come in as expected in the quarter. So our margin was impacted by more aggressive pricing, as we talked about, as well as the challenging market environment, particularly in China. And that was driving unfavorable geographic mix. And against that environment, we took the opportunity to place hardware units that are profitable long term, but diluted to the current overall margin rates. And despite the headwinds, we also maintained our investment in the key growth areas that are going to generate long-term value.

Speaker Change: Thanks for your question, Andrew. You know, our Q3 print margin was below our expectations. Although I would note that supplies did come in as expected in the quarter.

Speaker Change: So, our margin was impacted by more aggressive pricing as we talked about, as well as the challenging market environment, particularly in China, and that was driving unfavorable geographic mix.

Karen Parkhill: For the full year, we now expect non-gap deluded net earnings per share, to be in the range of $3.35 to $3.45. An FY24 gap deluded net earnings per share, to be in the range of $2.62 to $2.72. Lastly, we continue to expect free cash flow to be in the range of $3.1 to $3.6 billion for FY24. As a reminder, our free cash flow outlook includes approximately $300 million of restructuring cash outflows.

Speaker Change: And against that environment, we took the opportunity to place hardware units that are profitable long-term, but diluted to the current overall margin rates.

Speaker Change: And despite the headwinds, we also maintained our investment in the key growth areas that are going to generate long-term value.

Karen Parkhill: And then, you know, as we look ahead to Q4, we expect to be seasonally stronger on revenue. We're also, as we talked about, taking more aggressive actions to drive that margin improvement. You know, we said we're accelerating our future ready plan. We're driving further reductions across the core. That includes business consolidation, reduction in platforms, and supply chain optimization.

Speaker Change: And then as we look ahead the Q4, we expect to be seasonally stronger on revenue. We're also as we talked about taking more aggressive actions to drive that margin improvement.

Speaker Change: You know, we said we're accelerating our future ready plan.

Speaker Change: We're driving further reductions across the core that includes business consolidation, reduction in platforms and supply chain optimization. And with all of this taken together, we're confident in our ability to deliver the print margins near the top end of our 16 to 19 percent target range.

Karen Parkhill: And with all of this taken together, we're confident in our ability to deliver the print margins near the top end of our 16 to 19 percent target range.

Enrique Lores: Thanks. Our next question comes from the line of Samik Chatterjee with J.D. Morgan. Your line is open. Hi, thanks for taking my question. And I have a couple if I can just start with A.I.P.s, which you refer to in terms of the momentum you're seeing with the customers and the launches that you've done. If you can share how you're seeing that flow through when you look at the segments between consumer p.s. and commercial, what are you seeing in terms of activity there? Where do you expect it will make a more material impact in the coming quarters?

Karen Parkhill: And in particular, I want to thank Tim Brown for his leadership in the interim, and has continued to help these past few weeks with me. Tim is also on the call with Enrique and me to help answer your questions. Thank you.

Speaker Change: Thanks.

semi-chaparji: Our next question comes from the line of semi-chaparji with J.D. Morgan. Here Lans open.

semi-chaparji: Hi, thanks for taking my question and I have a couple of seconds to start with, maybe AIP and Cs which you refer to in terms of T.

Desiree: We will now begin the question and answer session. To ask a question, you may press far than one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys.

Speaker Change: Momentum you're seeing with the customers and the launches that you've done.

Speaker Change: If you can share how you're seeing that flow through

Desiree: To withdraw your question, please press star one again. We also ask that you please limit yourself to one question and a single follow-up.

Speaker Change: and you look at the segments between consumer Pearson.

Speaker Change: Comod who, what are you seeing in terms of that?

Enrique Lores: And how do you sort of see that feeling into maybe a bit of the recovery on the consumer p.s. side as well? Any thoughts on that would be appreciated, and I would follow up. Thank you.

Speaker Change: with the air radio.

Victor: Victor back to the clue.

Speaker Change: Michael.

Andrew: And our first questioner today will be David Boat with UBS. Your line is open. Yes, I, this is Andrew for David. I wanted to ask about the Prid margins in fiscal 24. Can you disaggregate some of the pressure you saw in this quarter? What was the primary drivers? What were the bigger drivers? And why do you expect that to reverse next quarter? Is it entirely on the cost cuts from the future ready plan or the other drivers that you're expecting to improve margins in Q4? Thanks.

Speaker Change: More material impact in the

Speaker Change: Coming, Quotos and...

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Speaker Change: See that flying into maybe.

Speaker Change: [inaudible]

Speaker Change: the Recovery on the Conjure.

Enrique Lores: Sure. Thank you. Let me take the question. So first of all, when we talk about consumer P.S. if we use the IDC description, we had said that we expected sales to be around 10% during the second half. And we think we're going to be slightly above that number. So they are performing well.

Speaker Change: and the Merviers side as well.

Speaker Change: [inaudible]

Speaker Change: and then we'll follow up. Thank you.

Speaker Change: Sure, thank you. Let me take a question. So first of all, when we talk about consumer AIPC, if we use the IDC description, we had said that we expected sale to be around 10% in the second half and we think we're going to be slightly above that number. So they are performing well.

Enrique Lores: But where we really are also focused in what we call next generation A.I.P.s that we have just started to launch. We announced our first products with Qualcomm and with AMD only a few weeks ago. And shipments are starting to a beginning now. So we haven't seen a significant impact from those yet. The reaction has been positive. The experiences that we're able to generate are very compelling. We had an event with many of our software providers a few weeks ago in New York when we were able to display that. So the reaction is positive. But their impact on our results has been very, very small yet in terms of adoption.

Speaker Change: We really are also focused in what we call next generation AIPC, that we have just started to launch. We announced our first product with Qualcomm and with AMD only a few weeks ago. And shipments are starting to begin now, so we haven't seen a significant impact from those yet.

Karen Parkhill: Thanks for your question, Andrew. You know, our Q3 print margin was below our expectations. Although I would note that supplies did come in as expected in the quarter. So our margin was impacted by more aggressive pricing as we talked about as well as the challenging market environment, particularly in China. And that was driving unfavorable geographic mix. And against that environment, we took the opportunity to place hardware units that are profitable long-term, but diluted to the current overall margin rates.

Speaker Change: The reaction has been positive, the experiences that we are able to generate are very compelling. We have an event with many of our software providers a few weeks ago in New York when we were able to display that. So the reaction is positive, but the impact on our results has been very, very small.

Karen Parkhill: And despite the headwinds, we also maintained our investment in the key growth areas that are going to generate long-term value. And then, you know, as we look ahead to Q4, we expect to be seasonally stronger on revenue. We're also, as we talked about, taking more aggressive actions to drive that margin improvement. You know, we said we're accelerating our future ready plan. We're driving further reductions across the core. That includes business consolidation, reduction in platforms, and supply chain optimization. And with all of this taken together, we're confident in our ability to deliver the print margins near the top end of our 16 to 19 percent target range. Thanks.

Enrique Lores: We think that in the very short term, adoption in consumer will be faster because adoption in commercial is always limited by the evaluation process that many of our customers have to go through. And those evaluation processes are only starting. So it's going to take some time until they have an impact in our results. And in terms of the projections that we have for the future, we maintain the projections that we have been sharing over the last quarters. We expect next generation A.I.P.s to represent around 50% of shipments in 2027, three years after launch. And they drive an average selling price increase between 5% and 10%.

Speaker Change: In terms of adoption, we've seen that in the very short term, adoption in consumer will be faster.

Speaker Change: Because adoption in commercial is always limited by the evaluation process that many of our customers have to go through And those evaluation process has already started, so it's going to take some time until they have an impact in our results

Speaker Change: An example of the projections that we have for the future, we maintain the projections that we have been sharing over the last quarters. We expect next generation AIPC to represent around 50% of shipments in 2027, 3 years after launch.

Enrique Lores: This has been the projections we have been sharing before, and we are confident that we will continue; we will deliver on those in the future.

Speaker Change: And they drive an Aboriginal impression, cleaves between 5 and 10%. This has been the projections we have been sharing before, and we are confident that we will continue. We will deliver on those in the future.

Samik Chatterjee: Our next question comes from the line of Samik Chatterjee with J.D. Morgan. Your line is open. Hi, thanks for taking my question. And I have a couple if I can just start with maybe AIPC's which you refer to in terms of the momentum you're seeing with the customers and the launches that you've done. If you can share how you're seeing that flow through when you look at the segments between consumer PS and commercial, what are you seeing in terms of activity there where you expect it will make a more material impact in the coming quarters and how do you sort of see that feeling into maybe a bit of the recovery on the consumer PS side as well. Any thoughts on that would be appreciated and I will follow up. Thank you.

Enrique Lores: Thanks for that.

Enrique Lores: And if you may follow up, I can just ask you in the print business and understand these sort of headwinds and comparative landscape that you're calling out. But how should we think about what's the sort of what are you seeing in terms of market share play out particularly as the compared landscape sounds like it's tougher. Would you sort of look at it from our market share perspective and see the Japanese competitors are more competitive, and you're giving up some share in certain segments. Or do you think it's more just the underlying market that's a challenge you're ready to market share.

Speaker Change: Thank you for that and if for my follow I can just ask you in the print business. I understand the sort of headwinds and the comparative landscape that you're calling out, but how should we think about what's the sort of what are you seeing in terms of market share, play out particularly as the comparative landscapes.

Speaker Change: Sounds like it's a tough word.

Speaker Change: Would you sort of look at it from our market, should we expect you to see the Japanese comeback?

Speaker Change: I will compare them and you're giving up some sharing, certain segments or news.

Enrique Lores: Let me take this opportunity to share a bit more about what we're seeing on the print market and then how do we project is going forward. As we said in the prepare remarks, clearly the pre market was challenge, and we didn't see the recovery that we were expecting. But within that, we saw some signs of positive change. For example, we saw positive growth on the home space. The decline in the office category was lower than the declines we had seen in previous quarters. And as Karen said before, we have seen supplies performing as expected, and specially usage is a good predictor of what is going to be happening in the future.

Speaker Change: I think it's more just the online market that's it.

Speaker Change: Challenge Your Rated Through Markets Hands Again. Let me take this opportunity to share a bit more about what we have seen on the print market and then how do we project this going forward.

Enrique Lores: Sure, thank you. Let me take the question. So first of all, when we talk about consumer AI, if we use the IDC description, we had said that we expected sales to be around 10% during the second half and we think we're going to be slightly above that number. So they are performing well where we really are also focused in what we call next generation AIPC that we have just started to launch.

Speaker Change: And we said in the prepare of remarks, clearly the pre-market was challenged and we didn't see the recovery that we were expecting, but with in that we saw some signs of positive change.

Speaker Change: For example, we saw a positive growth on the home space.

Speaker Change: The decline in the office category was lower than the declines we had seen in previous quarters And as Karen said before, we have seen supplies for four been as expected And specially usage is a good predictor of what is going to be happening in the future

Enrique Lores: We announced our first products with Qualcomm and with AMD only a few weeks ago and shipments are starting to a beginning now. So we haven't seen a significant impact from those yet. The reaction has been positive. The experiences that we're able to generate are very compelling. We had an event with many of our software providers a few weeks ago in New York when we were able to display that. So the reaction is positive, but the impact on our results has been very, very small yet in terms of adoption within that in the very short term, adoption in consumer will be faster because adoption in commercial is always limited by the evaluation process that many of our customers have to go through and those evaluation processes are only starting.

Enrique Lores: This is why we think that the lower recovery is temporary, and we expected to see changing going forward. The majority of it was in the office space, and this is really what drove it from a demand perspective. From a pricing perspective, what we have seen is a continuation of what we have shared before. Many of our competitors are taking advantage of the weekend, and this is allowing them to be more cost more aggressive from a price perspective. We have been working to reduce the construction of our products to be able to place profitable units. And this is what we did this quarter.

Speaker Change: This is why we think that the lower recovery is temporary and we expect it to see the change in going forward. The majority of it was in the office space and this is really what drove it from a demand perspective.

Speaker Change: From a present perspective, would we have seen in the continuation of what we have shared before?

Speaker Change: Many forward competitors are taking advantage of the week-end and this is allowing them to be more cost more aggressive from a price perspective.

Speaker Change: We have been working to reduce the cost of our products to be able to place profitable units And this is what we did this quarter we placed

Enrique Lores: We place units, we hold our share, we grew share in the home space. And as we continue to drive costs, we will continue. If we see the opportunity, we will continue to place profitable units, which continues to be our goal.

Enrique Lores: So it's going to take some time until they have an impact in our results. And in terms of the projections that we have for the future, we maintain the projections that we have been sharing over the last quarters. We expect next generation AIPC to represent around 50% of shipments in 2027, three years after launch. And they drive an average selling price increase between 5% and 10%.

Speaker Change: Junits, we hold our share, we grew share in the home space And as we continue to drive course, we will continue If we see the opportunity, we will continue to place Profitable Unit Which continues to be our goal

Enrique Lores: This has been the projections we have been sharing before and we are confident that we will continue, we will deliver on those in the future.

Erik Woodring: Next question comes from the line of Erik Woodring with Morgan Stanley. Your line is open. Hey guys, thanks so much for taking my questions. I have two as well.

Speaker Change: [inaudible]

Speaker Change: Next question comes from the line of Eric Wood Ring with Morgan Stanley, your line is open.

Enrique Lores: Maybe Enrique, for you, you know, something that you didn't necessarily elude to in-depth in your prepared remarks on the PC side was the kind of commercial flat enterprise recovery that we've been talking about for a few quarters. So can you maybe one just help us understand as you look at commercial, excuse me, consumer versus SMB versus large enterprises, kind of how you would characterize PC demand across each of those end markets. And you know, second to that, how does that influence your view that whether there is or is not a large commercial refresh cycle still in front of us or if that behind us would just love to know where you think we are in that phase.

Speaker Change: Hey guys, thanks so much for taking my questions, I have to as well. Maybe in Ricky for you, you know, something that you didn't necessarily allude to in depths in your prepared remarks on the PC side was the kind of commercial, flat enterprise recovery that we've been talking about for a few quarters. So, can you maybe one just help us understand as you look at commercial, excuse me, consumer versus SMB versus large enterprises, kind of how you would characterize PC demand across each of those end markets, and, you know, second to that, how does that influence your view that whether there is or is not a large commercial refresh cycle still in front of us or at that behind us, we just love to know where you think we are.

Enrique Lores: Thanks for that and if you may follow up, I can just ask you in the print business and understand these sort of headwinds and comparative landscape that you're calling out. But how should we think about what's the sort of what are you seeing in terms of market share play out particularly as the compared landscape sounds like it's tougher. Would you sort of look at it from a market share perspective and see the Japanese competitors are more competitive and you're giving up some share in certain segments or do you think it's more just the underlying market.

Enrique Lores: That's a challenge you're ready to market share. Let me take this opportunity to share a bit more about what we're seeing on the print market and then how do we project is going forward. As we said in the prepare remarks, clearly the pre market was challenge and we didn't see the recovery that we were expecting, but within that we saw some signs of positive change. For example, we saw positive growth on the home space, the decline in the office category was lower than the declines we had seen in previous quarter.

Enrique Lores: And then I have a follow-up. Thank you. Sure, so let me go there. So we, I think what the market evolution on our results confirm is that we have seen a recovery of the PC market. And this recovery is mostly driven by the commercial side of the business, trying to provide some more specifics on about your question. We saw market for enterprise growing close to 5 percent, government between 6 and 7 percent, SMB 3 percent, and education 1 percent. So we saw significant growth on the commercial space, especially in enterprise. And this is really supported by the trends that we had discussed before.

Speaker Change: Madam, in that phase, and then I will follow up. Thank you.

Speaker Change: So let me go there. So we, I think what the market evolution and our research confirmed is that we have seen our recovery of the PC market. And this recovery is mostly driven by the commercial side of the business.

Speaker Change: Trying to provide some more specifics on about your question. We saw a market for enterprise growing close to 5%.

Enrique Lores: And as Karen said before, we have seen supplies performing as expected and spatially usage is a good predictor of what is going to be happening in the future. This is why we think that the lower recovery is temporary and we expect it to see changing going forward. The majority of it was in the office space and this is really what drove it from a demand perspective. From a pricing perspective, what we have seen is a continuation of what we have shared before.

Speaker Change: Government between 6 and 7% SMB-3% An education 1% So we saw

Speaker Change: Significant Gros

Speaker Change: On the commercial space, special in enterprise.

Enrique Lores: The install base has been aging, and the companies are seeing the need to refresh that. Windows 11 is starting to have an impact, and especially since Microsoft announced when they will start supporting Windows 10. And it's not only we have seen in sales; we continue to see that in the final of new opportunities that we see that continues to grow, and it is much stronger this year than it was last year. So we think that the reference is still ahead of us. We have only started to see that, and we continue to believe that this opportunity is coming.

Speaker Change: and this is really supported by the trends that we had discussed before.

Speaker Change: The install base has been aging and the companies are seeing the needs to refresh that.

Speaker Change: Windows 11 is starting to have an impact.

Enrique Lores: Many of our competitors are taking advantage of the weekend and this is allowing them to be more cost more aggressive from a price perspective. We have been working to reduce the construction of our products to be able to place profitable units and this is what we did this quarter. Here we place units, we hold our share, we grew share in the home space and as we continue to drive costs we will continue.

Speaker Change: and specially since Microsoft announced that when they will start supporting Windows 10 and is not only we have seen in sales, we continue to see that in the final of new opportunities that we see that continues to grow and it's...

Speaker Change: is much stronger this year than it was last year. So we've seen that the research is still ahead of us. We have only started to see that and we continue to believe that this opportunity is coming.

Enrique Lores: Thank you. That was really helpful in Rike.

Enrique Lores: If we see the opportunity, we will continue to place profitable units which continues to be our goal.

Karen Parkhill: Maybe, Karen. First, nice to meet you. Looking forward to working together. You know, it's great that you guys are accelerating some of these cost savings initiatives this year. If I just look here today, revenue through the first three quarters, revenue is down about $400 million year over year; OpEx is up about $300 million year over year. So can you just help me understand how much of these cost savings, as we look forward, you want to flow through to the bottom line versus it seems you are more prone maybe to make investments for longer term growth.

Speaker Change: Thank you, that was really helpful, Enrique, maybe Karen, if first nice to meet you looking forward to working together. It's great that you guys are accelerating some of these cost savings initiatives.

Erik Woodring: Next question comes from the line of Erik Woodring with Morgan Stanley. Your line is open. Hey guys, thanks so much for taking my questions. I have two as well. Maybe Enrique, for you, you know, something that you didn't necessarily allude to in-depth in your prepared remarks on the PC side was the kind of commercial flash enterprise recovery that we've been talking about for a few quarters. So, can you maybe one just help us understand as you look at commercial, excuse me, consumer versus SMB versus large enterprises, kind of how you would characterize PC demand across each of those end markets.

Speaker Change: This year, if I just look here today, revenue through the first three quarters, revenue is down about $400 million over year, OpX is up about $300 million over year. So can you just help me understand how much of these cost savings, as we look forward, you want to flow through to the bottom line, versus it seems you are more prone, maybe, to make investments for longer term growth? Can you just help me understand how with this new view on your cost savings, how you expect to balance that drop through versus reinvestment?

Erik Woodring: And, you know, second to that, how does that influence your view that whether there is or is not a large commercial refresh cycle still in front of us or if that behind us would just love to know where you think we are in that phase. And then I have a follow-up. Thank you. Let me go there.

Karen Parkhill: Can you just help me understand how, with this new view on your cost savings, you expect to balance that drop through versus reinvestment? Thank you. Yeah, thanks for the question, Eric. And I look forward to meeting you in person, too. In terms of flow through, our savings are flowing through and reflected really in our ability to deliver the margins within or above our target ranges for both PS and print, despite the fact that we've got this challenging macro backdrop. You know, just a reminder, our savings are reflected in both OpEx and COGS. And we are reinvesting.

Speaker Change: Thanks for the question, Eric, and I look forward to meeting you in person, too.

Speaker Change: In terms of flow through, you know, our savings are flowing through and reflected really in our ability to deliver the margins.

Speaker Change: Within our above-art target ranges for both PS and print, despite the fact that we've got this challenging macro backdrop.

Enrique Lores: So, I think what the market evolution on our results confirm is that we have seen a recovery of the PC market. And this recovery is mostly driven by the commercial side of the business. Trying to provide some more specifics about your question. We saw markets for enterprise growing close to five percent, government between six and seven percent, SMB three percent, and education one percent. So, we saw significant growth on the commercial space, especially in enterprise.

Speaker Change: You know, just a reminder, our savings are reflected in both OPEX and Cogs.

Karen Parkhill: And so, as we reinvest, we're seeing a bit of a geography shift in our P&L, with some higher growth profit offset by higher operating expenses because much of our investments are going to be in the OpEx area. You know, we've talked about the fact that we're focused on driving these savings so that we can both offset our headwinds and continue to invest in our important growth drivers for the future, and you can expect that to continue. Thanks so much.

Speaker Change: and we are reinvesting. And so as we reinvest, we're seeing a bit of a geography shift in our P&L with some higher growth profit offset by higher operating expenses because much of our investments are going to be in the perfect area.

Speaker Change: We've talked about the fact that we're focused on driving these savings so that we can both offset our headwinds and continue to invest in our important growth drivers for the future and you can expect that to continue.

Enrique Lores: And this really is supported by the trends that we had discussed before. The install base has been aging, and the companies are seeing the need to refresh at. Windows 11 is starting to have an impact, and especially since Microsoft announced when they will start supporting Windows 10. And it's not only we have seen in sales, we continue to see that in the funnel of new opportunities that we see that continues to grow, and it is much stronger this year than it was last year. So, we think that the reference is still ahead of us. We have only started to see that, and we continue to believe that this opportunity is coming. Thank you. That was really helpful in RIKI.

Tony Sakanagi: Next question comes from the line of Tony Sakanagi with Bernstein. Your line is open. Yes, thank you. Hello, Enrique, and welcome, Karen. I have two questions as well. First, just for the whole year, I think one of your objectives was to grow revenue for the full year.

Speaker Change: Thank you so much.

Speaker Change: Next question comes from the line of Tony Sakanagi with Bernstein. Your line is open.

Tony Sakanagi: Yes, thank you. Hello and Rick and welcome Karen.

Tony Sakanagi: I have two questions as well. For this full year I think one of your objectives was to grow revenue for the full year. You still expect that to be the case.

Karen Parkhill: You still expect that to be the case, and if I could just follow up on the last question, if I look at what your guidance is implying for this year, you know, revenues are close to flat and operating profit dollars are expected to be close to flat, despite, you know, reaching 1.3 billion in run rate savings.

Speaker Change: If I could just follow up on the last question, if I look at what your guidance is applying for this year, you know, revenues are close to flat and operating profit dollars.

Erik Woodring: Maybe Karen, first nice to meet you looking forward to working together. It's great that you guys are accelerating some of these cost savings initiatives this year. If I just look here today, through the first three quarters, revenue is down about $400 million year over year. OptX is up about $300 million year over year.

Speaker Change: Arts got to be post-the-class despite reaching 1.3 billion in run rates, savings. So, it will be thinking...

Karen Parkhill: So, could we be thinking of future ready is really just providing air cover to make investment, rather than structurally changing your profit profile? Because certainly the 2024 results don't really seem to suggest that there's any expected overall improvement in operating profits despite the cost cutting, and I have a follow up. Thanks for your question, Tony. You know, as we, as we look ahead in Q4, we are expecting some seasonal growth ahead. Personal systems, we expect to increase sequentially low to mid single digits and, you know, we said given given the lingering softness and consumer, we're expecting some less seasonal growth and we've had historically.

Speaker Change: of Future Ready is really just.

Speaker Change: Providing air cover to make investments rather than structurally changing your profit profile because certainly the 2024 results.

Karen Parkhill: Can you just help me understand how much of these cost savings, as we look forward, you want to flow through to the bottom line, versus it seems you are more prone to make investments for longer-term growth. Can you just help me understand how with this new view on your cost savings, how you expect to balance that drop through versus reinvestment? Thank you. Thanks for the question, Eric, and I look forward to meeting you in person too.

Speaker Change: Don't really seem to suggest that there's any expected overall improvement in operating process despite the cost cutting and I have a follow-up face.

Speaker Change: Now, thanks for your question, Tony.

Speaker Change: You know, as we look ahead in Q4, we are expecting some seasonal growth ahead. Personal systems, we expect to increase the quenchily load amid single digits.

Karen Parkhill: In terms of flow through, our savings are flowing through and reflected really in our ability to deliver the margins within or above our target ranges for both PS and print, despite the fact that we've got this challenging macro backdrop. Just a reminder, our savings are reflected in both OptX and COGS, and we are reinvesting. As we reinvest, we're seeing a bit of a geography shift in our P&O with some higher-grows profit offset by higher operating expenses, because much of our investments are going to be in the OptX area.

Speaker Change: and we said given the lingering softness and consumer, we're expecting some less season of growth than we've had historically. And for print, obviously we've got improving trends in the market, but the pace is slower than we initially expected, and we've got some continued pricing pressure.

Karen Parkhill: And for print, obviously we've got improving trends in the market, but the pace is slower than we initially expected, and we've got some continued pricing pressure. So we expect print revenue to increase low to mid single digit, and that's driven by typical seasonal strength along with, you know, some seasonality coming out of industrial with Rupa. And obviously we expect supplies to increase sequentially in line with last year. You know, I would say on the future ready, we are focused on, you know, driving savings to offset our headwinds and ensure that we can maintain our investments.

Speaker Change: So we expect print revenue to increase load amid single digit, and that's driven by typical seasonal strength along with some seasonality coming out of industrial with Rupa. And obviously we expect supplies to increase the quenchily in line with last year.

Karen Parkhill: You know, we've talked about the fact that we're focused on driving these savings so that we can both offset our headwinds and continue to invest in our important growth drivers for the future and you can expect that to continue. Thanks so much.

Speaker Change: You know, I would say on the future ready.

Speaker Change: We are focused on, you know, driving savings to offset our headwinds and ensure that we can maintain our investments.

Karen Parkhill: And what you saw this quarter was us having some headwinds hit us, taking some action that's going to help us more in the quarter ahead than it did in this quarter, and purposely continuing our investment because we're focused on the longer term. I think what is important also, we look at year-to-date operating profit growth for the different businesses versus the plan that we had at the beginning of the year. We have seen operating profit growth in personal systems, and these are combination of both the future ready savings and the progress that we have seen in the market.

Speaker Change: What you saw this quarter was as having some headwind hit us, taking some action that's going to help us more in the quarter ahead than it did in this quarter, and purposely continuing our investment because we're focused on the longer term.

Karen Parkhill: Welcome, Karen.

Tony: I have two questions as well. First, just for the full year, I think one of your objectives was to grow revenues for the full year. You still expect that to be the case and if I could just follow up on the last question, if I look at what your guidance is implying for.

Speaker Change: I've seen Tony World, but it's important also, we will look at

Speaker Change: Here today, operating profit growth for the different businesses, the plan that we had at the beginning of the year.

Speaker Change: We have seen operating profit growth in personal systems and these are combination of both.

Karen Parkhill: We have not seen operating profit growth in print, and we, this was, this is not what we were expecting at the beginning of the year, but this is a major change that we have seen. And the major driver for that is the smaller market that we see, especially in office, and the more aggressiveness that we see, especially driven by the weakness engine.

Speaker Change: The Future Ready Savings and the Progress that we have seen in the market

Karen Parkhill: The year revenues are close to flat and operating profit dollars are expected to be close to flat despite reaching 1.3 billion in run rate savings. So, could we be thinking of future ready is really just providing air cover to make investments rather than structurally changing your profit profile because certainly the 2024 results don't really seem to suggest that there's any expected overall improvement and operating profit despite the cost cutting and I have a follow up.

Speaker Change: We have not seen Operating Profit Girls in Prince.

Speaker Change: And we, this was, this is not what we were expecting at the beginning of the year. But this is a major change that we have seen.

Speaker Change: And the major drivers for that is the smaller market that we see, especially nothees and the more aggressiveness that we see, especially driven by the weakness engine.

Karen Parkhill: We've seen both scenes at temporary; see, we don't see these as structural changes, but definitely they are impacting our performance in 2020. Thank you for that.

Speaker Change: We've seen both scenes at Emperor's, if we don't see this as structural changes, but definitely they are impacting our performance in 2024.

Tony Sakanagi: And just to follow up, Karen, I would imagine that capital allocation is probably one of the biggest decisions that you need to think about as a new CFO. I saw the increase in authorization to 10 billion. I think last time HB increased the authorization in February 2020 was actually the 15 billion. Age should we read anything into that. And Karen, as a new CFO.

Speaker Change: Thank you for that, and just to follow up, Karen, I would imagine that capital allocation is probably one of the biggest decisions that you need to think about.

Speaker Change: As the news, the F.O. I saw the increase in authorization to 10 billion. I think last time HB increased the authorization in February 2020 was actually the 15 billion age of we read anything into that and parent as the new F.O.

Karen Parkhill: Thanks for your question, Tony. You know, as we as we look ahead in Q4, we are expecting some seasonal growth ahead personal systems. We expect to increase sequentially low to mid single digits and and you know we said given given the lingering softness and consumer we're expecting some less seasonal growth and we've had historically. And for print, obviously we've got improving trends in the market but the pace is slower than we initially expected and we've got some continued pricing pressure.

Karen Parkhill: So what do you have a firm opinion yet on what capital return should be on an ongoing basis and whether 100% is really the right thing for the business up in the next three to five years. Thanks for the question, Tony. First of all, I would say don't read anything into the new authorization. We did have a 15 billion authorization that we are near expiration, and please that the board increase the authorization to 10 billion at this stage, and it shows our commitment to continuing to return, you know, roughly 100% of our free cash flow to our shareholders.

Speaker Change: and White.

Speaker Change: Do you have a firm opinion yet on...

Speaker Change: on what capital return should be on, and ongoing basis, and whether 100% is really the right thing for the business, up in the next three to five years.

Speaker Change: Yeah, thanks for the questions, Tony. First of all, I would say don't read anything into the new authorization.

Karen Parkhill: So we expect print revenue to increase low to mid single digit and that's driven by typical seasonal strengths along with you know some seasonality coming out of industrial with Rupa. And obviously we expect supplies to increase sequentially in line with last year. You know I would say on the future ready we are focused on you know driving savings to offset our headwinds and ensure that we can maintain our investments and what you saw this quarter was us having some headwinds hit us taking some action that's going to help us more in the quarter ahead than it did in this quarter.

Speaker Change: We did have a 15 billion authorization that we are near expiration and pleased that the board increased the authorization to 10 billion at this stage and it shows our commitment to continuing to return roughly 100% of our free casso to our shareholders.

Karen Parkhill: I think that is the right commitment for our shareholders at this stage. We're not changing any of that commitment longer term. We are still committed to that capital allocation policy of returning 100%. And of course we said in less higher ROI opportunities arise, and as long as our gross leverage remains below two times. But what you've seen is that is really returning, you know, roughly 100%, and we're committed to that this year too. Let me emphasize that 20 nobody should be anything on the number 10 billion. It is close to a third of our market cap, which is a very big number, and this is going to take us several years to get there.

Speaker Change: I think that is the right commitment for our shareholders at this stage.

Speaker Change: We're not changing any of that commitment, longer term, we are still committed to that capital allocation policy of returning a hundred percent.

Speaker Change: and of course we said in left-higher ROI opportunities arise and as long as our gross leverage remains below two times. But what you've seen is that it's really returning roughly a hundred percent and we're committed to that this year too.

Karen Parkhill: And purposely continuing our investment because we're focused on the longer term. I think Tony what is important also we look at here to date operating profit growth for the different businesses versus the plan that we had at the beginning of the year. We have seen operating profit growth in personal systems and these are combination of both the future ready savings and the progress that we have seen in the market. We have not seen operating profit growth in print and we this was this is not what we were expecting at the beginning of the year.

Speaker Change: Let me emphasize that Chinese nobody should read anything on the number 10 billion is close to a third of our market cap, it's a very big number and this is going to take us several years to get there. So, no, nothing important behind the number except our commitment to continue to do it.

Karen Parkhill: So no, nothing important behind the number except our commitment to continue to do it. Thank you.

Ramsey Mohan: Next question comes from the line of Ramsey Mohan with Bank of America. Your line is open. Thank you so much. Two for me as well. First, if we just look over the last three quarters, and it's kind of been asked in different ways, but I just thought I would ask it a little differently here. If you look at the last three quarters, you've shown revenue overall company level revenue acceleration. But in the same time frame, you also see an EPS group deceleration and decline the flat reported quarter.

whamphymohan: Next question comes from the line of whamphymohan with Bank of America. Your line is open.

Karen Parkhill: But this is a major change that we have seen and the major drivers for that is the smaller market that we see special enough is and the more aggressiveness that we see specially driven by the weakness engine. We think both things are temporary see we don't see this as structural changes but definitely they are impacting our performance in Tony Tony.

whamphymohan: Thank you so much.

whamphymohan: Two for me as well. First, if we just look over the last three quarters and it's kind of a nice different ways but I just thought I'd ask it a little differently here. If you look at the last three quarters, you'll shown revenue overall company level, revenue acceleration.

Karen Parkhill: Thank you for that.

Speaker Change: But in the same time frame, you've also seen EBS group deceleration and declined the last bullet quarter

Karen Parkhill: Are you hitting some type of inflection where the cost savings impact is no longer able to offset arguably where you'll be operating in terms of, you know, maybe unsustainably high print margins. This year and as we carry the talk process in the next year, does it really mean that, you know, given some of the efforts that Karen alluded to in terms of acceleration of cost savings into this year. That that there was incremental flow to into next year and can we see revenue and EPS growth would be in sync or is there something more structural that kind of causing this dislocation and I will follow.

Tony: And just to follow up, Karen, I would imagine that capital allocation is probably one of the biggest decisions that you need to think about as a new CFO. I saw the increase in authorization to 10 billion. I think last time HB increased the authorization in February 2020 was actually the 15 billion.

Speaker Change: Are you hitting some type of inflection where the cost savings impact is no longer able to offset?

Speaker Change: Arguably, where you'll be operating in terms of

Speaker Change: You know, maybe on sustainability high print margins.

Speaker Change: This year, and as we carry the talk process into next year, does it really mean that, you know, given some of the efforts that Keinan alluded to in terms of acceleration of cost savings.

Karen Parkhill: Age should we read anything into that and Karen as a new CFO. So what do you have a firm opinion yet on what capital return should be on an ongoing basis and whether 100% is really the right thing for the business up in the next three to five years. Thanks for the question, Tony. First of all, I would say don't read anything into the new authorization. We did have a 15 billion authorization that we are near expiration and please that the board increase the authorization to 10 billion at this stage.

Speaker Change: into this year that that there was incremental flow to into an next year and can we see revenue and EBS growth would be in sync or is there something more structural that kind of causing this dislocation than I will follow?

Enrique Lores: Yeah, we wouldn't think there is anything structural. I think it's more of the result of what we see from a competitive perspective. And I will go back to some of the data I was sharing with Tony before year to date. I'll go in operating profit. We are not seeing that growth in print, and this is really driven by the toughness that we see on the office space and the aggressive pricing that we see because of the weakness of them on the positive side. We have seen the home business recovery, and probably more important than that is the fact that supplies and I was supply business is performing as we were expecting.

Speaker Change: Yeah, we, with the thing that is anything structural, the thing is more...

Speaker Change: The result of what we see from our convective perspectives.

Speaker Change: And I will go back to some of the data I was sharing with Tony before, year to day.

Karen Parkhill: And it shows our commitment to continuing to return roughly 100% of our free cash flow to our shareholders. I think that is the right commitment for our shareholders at this stage. We're not changing any of that commitment longer term. We are still committed to that capital allocation policy of returning 100%. And of course, we said and left higher ROI opportunities arise and as long as our gross leverage remains below two times.

Speaker Change: Peep, Peep, Peep, Peep, Peep are growing operating profit. We are not seeing that growth in print, and this is really driven by the darkness that we see on the office space, and the aggressive pricing that we see because of the weakness of Yem.

Speaker Change: On the positive side, we have seen the home illness recovery and probably more important than that is the fact that supply and I was supply business is performing as we were expecting.

Enrique Lores: So really no changes in supplies, and always supplies is a good indicator of what we. We expect to see in the print side going forward because it talks about the usage that our customers are using and how really our devices and the printers are being utilized. If you look at the guide and the viewpoint of the guide, we expect it to grow this year. So, from that perspective, we expect growth. But yes, it's slightly lower than we're expecting because of the competitive environment that we're facing, especially in print.

Karen Parkhill: But what you've seen is that is really returning roughly 100% and we're committed to that this year too. Let me emphasize that 20 nobody should read anything on the number 10 billion is close to a third of our market cap is a very big number and this is going to take us several years to to get there. So no, nothing important behind the number except our commitment to continue to do it. Thank you.

Speaker Change: So really no changes in supplies and always supplies is our good indicator of what we...

Speaker Change: Expect to see in the print side going forward because talks about the usage that our customers are using and how really our devices and the printers are being utilized.

Speaker Change: If you look at the guide and the bit point of the guide, we expect IPS to grow this year. So from that perspective, we expect growth, but yet, it's slightly lower than we were expecting because of the competitive environment that we're facing, especially in print.

Ramsey Mohan: Next question comes from the line of Ramsey Mohan with Bank of America. Your line is open. Thank you so much. Two for me as well. First, if we just look over the last three quarters and it's kind of been asked in different ways, but I just thought I asked it a little differently here. If you look at the last three quarters, you've shown revenue overall company level revenue acceleration, but in the same time frame, you also see an EPS group deceleration and decline the last reported quarter.

Karen Parkhill: Okay, thanks, Enrique. Thank you for working with you. I guess if I could just follow up on this on the free cash flow, when you look at sort of the lower coming into the lower end of the EPS range, your free cash flow range has been unchanged. You also called out some acceleration of the Future Ready program. So should we take that there's no incremental cash impact because of future ready program in this clear, and should we think also that despite that wider range, we're more likely to come in at the lower end of that free cash flow range as well.

Speaker Change: Okay, thanks, Enrique, Enrique, in the form of working with you, I guess if I could just follow up on this on the free cash flow.

Speaker Change: When you look at sort of the more coming into the more end of the EPS range, your freak after the range is being unchanged. You also called out some acceleration of the future ready program.

Speaker Change: So should we take that there's no incremental cash impact because of future ready program in this system here and should we think also that despite that wider range We don't know more likely to command that the more end of that free cash flow age as well or there are other person takes that wood

Ramsey Mohan: Are you hitting some type of inflection where the cost savings impact is no longer able to offset arguably where you'll be operating in terms of, you know, maybe unsustainably high print margins. And this year and as we carry the top process in the next year, does it really mean that, you know, given some of the efforts that Karen alluded to in terms of acceleration of cost savings into this year. That that there was incremental flow to into next year. And can we see revenue and EPS growth would be in sync or is there something more structural that kind of causing this dislocation number hollow.

Karen Parkhill: Or are there other puts and takes that would maybe drive it higher than that. Thank you. Thanks, Ramsay. You know, I would just start with we're pleased with our free cash flow this quarter. It did come in better than expected. And it really reflects the strength of the sequential growth in P.S. that drives working capital improvements. Remember that our P.S. Cash conversion cycle is negative. And so we're going to continue to expect projected sequential P.S. revenue improvement, and you can expect that to contribute to Q4 free cash flow as well. So, you know, our outlook remains unchanged to deliver 3.1 to 3.6.

Speaker Change: Maybe drive it higher than us, thank you.

Speaker Change: Thanks, Wanzi. You know, I would just start with, we're pleased with our free cash flow this quarter. It did come in better than expected, and it really reflects the strength of this sequential growth in PS that drives working capital improvement.

Speaker Change: Remember that our P.S. Cash conversion cycle is negative, and so we're going to continue to expect projected sequential P.S. revenue improvement, and you can expect that to contribute to Q4 free cash flow as well.

Speaker Change: So, you know, our outlook remains unchanged to deliver 3.1 to 3.6 for the full year. We're confident in our ability to deliver the remainder that we've gotten, Q4. And, you know, keep in mind that our free cash flow is stronger in the back half, and so we just expect that strength to continue.

Karen Parkhill: For the full year, we're confident in our ability to deliver the remainder that we've gotten Q4. And, you know, keep in mind that our free cash flow is stronger in the back half. And so we just expect that strength to continue. I think it's also important to put in context the change of overall guide for the year. We're talking about five cents, which represents 60, 70 million dollars. So you put that in the context of the cash flow guide. You will see that the impact of the small change that we are driving is really small.

Speaker Change: I think it's also important to put in context the change of overall guide for the year. We're talking about five cents, which represents $60,70 million. So you put that in the context of the cash flow guide. You will see that the impact of those small change that we are driving is really small.

Enrique Lores: We have seen the home business recovery and probably more important than that is the fact that supplies and I was supply business is performing as we were expecting. So really no changes in supplies and always supplies is a good indicator of what we. We expect to see in the print side going forward because it talks about the usage that our customers are using and how really our devices and the printers are being utilized.

Karen Parkhill: It's just related to the future ready. I don't know if this is part of your question, but the cash outweighs for future ready expect to be roughly the same as we've been saying, over up 300 million dollars. Okay, great. Thank you so much.

Speaker Change: It's just related to the future ready, I don't know if this is part of your question, I'll be back.

Speaker Change: The cash outlays for future ready, expect to be roughly the same as we've been saying. It'll rub 300 million up.

Michael Ng: Next question comes from the line of Michael in with Goldman Sachs. Your line is open. Hey, good afternoon. Thank you very much for the question.

Speaker Change: Bows.

Speaker Change: Okay, great, thank you so much.

Speaker Change: [inaudible]

Michael in: Next question comes from the line of Michael in with Goldman Sachs. Your line is open.

Enrique Lores: If you look at the guide and the viewpoint of the guide, we expect TPS to grow this year. So from that perspective, we expect growth, but yes, it's slightly lower than we're expecting because of the competitive environment that we're facing, especially in print. Okay, thanks, Enrique. Thank you for working with you. I guess if I could just follow up on this on the free cash flow, when you look at sort of the lower, coming into the lower end of the EPS range, your free cash flow range has been unchanged.

Enrique Lores: I was just wondering if you could expand around some of the comments you made around placing more hardware, print, potentially at the expense of margin. Can you talk a little bit more about the strategy there, and then maybe you can just update us on some of the print API? What's the current percentage of revenue that profit upfront and what are some of the latest figures on the instant ink or other plans like all in a hardware subscription today. Thank you.

Michael in: Hey, good afternoon. Thank you very much for the question. I was just wondering if you could expand around some of the comments you made around, placing more hardware, print, potentially at the expensive margin.

Speaker Change: I'm going to talk a little bit more about the strategy there and then maybe you can just update us on some of the, you know, print API's.

Speaker Change: You know, what's the current percentage of revenue that's profit out front and you know what are some of the latest figures on the instant ink or other plans like all and hardware subscription select. Thank you.

Enrique Lores: You also called out some acceleration of the future ready program. So should we take that there's no incremental cash impact because of future ready program in this fiscal year and should we think also that despite that wider range, we're more likely to come in at the lower end of that free cash flow range as well, or are there other puts and takes that would maybe drive it higher than that. Thank you.

Enrique Lores: So when, let's see, first of all, our strategy has not changed and it continued to be placed profitable units. And as we had said before, we were expecting to be able to be more aggressive in the second half as we were driving a cost of cost reductions at the hardware level, and this is what we did. And this is why, at the overall print level, we grew market share this quarter and especially in the home space and also in a three and in a four value. So this is what drove our ability to to place more units and to gain some share even if the environment was more competitive than what we were expecting.

Speaker Change: Yeah, thank you.

Speaker Change: Uh, we're in no.

Speaker Change: First of all, our strategy has not changed, and it continued to be placed profitable units. And as I have said before, we were expecting to be able to be more aggressive in the second half, as we were driving.

Enrique Lores: Thanks, Ramsay. You know, I would just start with we're pleased with our free cash flow this quarter. It did come in better than expected. And it really reflects the strength of the sequential growth in P.S, that drives working capital improvements. Remember that our P.S, cash conversion cycle is negative. And so we're going to continue to expect projected sequential P.S, revenue improvement. And you can expect that to contribute to Q4 free cash flow as well.

Speaker Change: Hey, co-staglet, co-seductions at the Harvard level and this is what we did.

Speaker Change: and this is why at the World Pre-In-Level, we grew market share this quarter and specially in the home space and also in a three and in a four-value. So this is what drove our ability to...

Speaker Change: To play more units and to gain some share, even if the environment was more competitive than what we were expecting.

Enrique Lores: We continue to make good progress in driving the big news model changes that we have been sharing before. In stunning revenue continues to grow, net subscribers continue to grow, the number of subscribers in the all-in program continues to grow, so we continue to make very good progress on that front. And also we continue to be in the 50% range of profit and front units, similar to what we have shared before, so good performance in that level, and nothing relevant, we share in those areas.

Enrique Lores: So, you know, our outlook remains unchanged to deliver 3.1 to 3.6 for the full year. We're confident in our ability to deliver the remainder that we've gotten Q4. And keep in mind that our free cash flow is stronger in the back half. And so we just expect that strength to continue. I think it's also important to put in context the change of overall guide for the year. We're talking about five cents, which to present 60, 70 million dollars.

Speaker Change: We continue to make good progress in driving the business model changes that we had been sharing before

Speaker Change: Insanning, revenue continues to grow, net subscribers continue to grow, the number of subscribers in the program continues to grow, so we continue to make.

Speaker Change: Very good progress on that front and also we continue to be in the 50% range of profit and front units, similar to what we have shared before. So, good performance in that level and nothing relevant to share in the industry.

Enrique Lores: If you put that in the context of the cash flow guide, you will see that the impact of the small change that we are driving is really small. It's just related to the future ready. I don't know if this is part of your question, but the cash outweighs for future ready expect to be roughly the same as we've been saying over up 300 million dollars.

Enrique Lores: Great, thanks, and if I could just follow up on the personal systems revenue, seasonality, upload them from mid to quenchally. You know, appreciate there are some lingering headwinds in consumer. Is something getting worse to quenchally, and some of that consumer weakness concentrated in certain regions or industry verticals? Thank you. Now I think it is a consequence of the softness that we see, and this really is when we compare to previous quarters. We think that the Q4 is going to be a stronger quarter than Q3 from a consumer-PC perspective, but we think that the growth is going to be lower than what we have seen previous years, given that we expect to see this softness in consumer, nothing else behind that is assumption.

Speaker Change #100: Great thanks. And if I could just follow up on the...

Karen Parkhill: Okay, great.

Speaker Change #101: Personal Systems, Revenue, Seasality, Upload of Mid.

Karen Parkhill: Thank you so much.

Speaker Change #101: to eventually appreciate there some lingering headwinds in consumer.

Speaker Change #102: is something getting worse to punchly and some of that consumer weakness concentrated in certain revisions or in the free verticals. Thank you.

Michael Ng: Next question comes from the line of Michael in with Goldman Sachs. Your line is open. Hey, good afternoon. Thank you very much for the question. I was just wondering if you could expand around some of the comments made around placing more hardware, print, potentially at the expense of margin. Can you talk a little bit more about the strategy there and then maybe you can just update us on some of the print API. What's the current percentage of revenue that profit out front and what are some of the latest figures on the instant ink or other plans like all in a hardware subscription today. Thank you. Yeah, thank you.

Speaker Change #103: Now, I think it's a consequence of this, ofness that we see, and this really is when we compare to previous quarters, we think that...

Speaker Change #104: Q4 is going to be a stronger quarter than Q3, from a consumer PC perspective, but within that the growth is going to be lowered and what we have seen previously, given that we expect to see the softness in consumer, nothing else behind that that is the disassumption.

Desiree: Thank you, Enrique. Thank you.

Desiree: Next question comes from the line of Amit Daryanani with Evercore ISI; your line is open. Hi, thank you for the question. This is UrbanLewon for Omit, but I have one in a follow-up. So, on the personal systems side, can you just give us a sense on how durable your recent pricing increases are? Understandably, some of this was commodity driven, but in the event that we see some of these commodity prices stabilize, how do you think about your ability to maintain your ASPs? I would say we are still in the process of addressing our prices have.

Speaker Change #104: Thank you, Enrique. Thank you.

Speaker Change #105: Next question comes from the line of Amit Darianani with Evercore ISI, their line is open.

Speaker Change #105: Hi, thank you for the question, this is Erwin Loo on for Omit. I have one in a follow-up, so on the personal system side, can you just give us a sense on how durable your recent price increases are?

Enrique Lores: So when let's see, first of all, our strategy has not changed and it continued to be placed profitable units. And as I said before, we were expecting to be able to be more aggressive in the second half as we were driving a cost of cost reductions at the hardware level and this is what we did. And this is why at the overall print level, we grew market share this quarter and specially in the home space and also in a three and in a four value.

Speaker Change #106: Understandably, some of this was commodity driven, but in the event that we see some of these commodity prices stabilize, how do you think about your ability to maintain your ASPs?

Enrique Lores: As I have shared in previous calls, we cannot adjust prices immediately because there are contracts that have been signed or dealed that have been done. So it takes us sometimes to adjust, and also this quarter, given the competitive environment that we are seeing, probably we are not able to adjust them as much as we wanted. But you should expect that we will continue to do that in the coming quarters.

Speaker Change #107: I would say we are still in the process of addressing our prices hat, I have shared the previous close

Speaker Change #108: We cannot adjust prices immediately because there are contracts that have been fine or deals that have been done So it takes us sometimes to adjust

Enrique Lores: So this is what drove our ability to to place more units and to gain some share, even if the environment was more competitive than what we were expecting. We continue to make good progress in driving the business model changes that we have been sharing before. In stunning revenue continues to grow, net subscribers continue to grow, the number of subscribers in the all-in program continues to grow so we continue to make very good progress on that front and also we continue to be in the 50% range of profit and front units, similar to what we have shared before. So, good performance in that level and nothing relevant we share in those areas.

Speaker Change #109: Announce for the ills.

Speaker Change #109: This quarter given the competitive environment that we are seeing, probably we are not able to adjust them as much as we wanted, but you should expect us that we will continue to do that in the coming quarters. If we look at the PC business...

Enrique Lores: If we look at the PC business from a historical perspective, we are always able to adjust prices, but it takes some time until we fully adjust them based on all the drivers that I mentioned before. Got it, and thank you.

Speaker Change #109: From historical perspective, we are always able to adjust prices, but it takes some time until we fully adjust them, it's an only driver's attention before.

Enrique Lores: For my second question, I was hoping you can provide us an update on what you are seeing in the federal government customer vertical, like during the first half of the year. Budget discussions did weigh on your business a little bit. But with that sort of in the rear view mirror, how has your federal business trended and how should we think about budget flush dynamics through the balance of the year? Yeah, I mentioned that slightly before when I talk about government. The federal government is part of that. And it was actually the segment where we saw the strongest growth in this quarter.

Speaker Change #110: God, and thank you for my second question. I was hoping you can provide us in update on what you're seeing in the federal government customer vertical, during the first half of the year budget discussions did weigh on your business a little bit, but with that sort of in the rear view mirror.

Enrique Lores: Great, thanks. And if I could just follow up on the personal systems, revenue, seasonality, upload, and submit sequentially, appreciate there are some lingering headwinds and consumer is something getting worse sequentially and some of that consumer weakness concentrated in certain regions or industry verticals. Thank you. No, I think it is a consequence of the softness that we see and this really is when we compare to previous quarters we think that the Q4 is going to be a stronger quarter than Q3 from a consumer PC perspective, but we think that the growth is going to be lower than what we have seen previous years, given that we expect to see the softness in consumers, nothing else behind that, that is, that is a function. Thank you, Enrique.

Amit Daryanani: Thank you.

Speaker Change #111: How has your federal business trended and how should we think about Project Plus Dynamics through the balance of the year?

Speaker Change #112: Yeah, I mentioned that it's like, before when I talk about government

Speaker Change #113: A federal government is part of that.

Enrique Lores: It grew between 6% and 7%. And we think that this is going to continue in the second half. It will be a source of growth in the commercial space. And for example, we sign a deal; we have been signing deals with many of the large businesses. We signed one with NASA that we are especially proud of because it was a big replacement and a great mix of both stations and notebooks. So very good deals and very good funnel in this space. Thanks for the color.

Speaker Change #114: And it was actually the segment where we saw the strongest growth in this quarter, it grew between 6 and 7%.

Speaker Change #114: and we think that this is going to continue in the second half. It will be a source of growth in the commercial in the commercial space.

Speaker Change #114: And for example, we sign a deal. We have been signing deals with many of the large businesses. We signed one with NASA that we are specially proud of because it was a big replacement and a great mix of both work stations and notebooks. Very good deals and very good fun in this space.

Desiree: Thank you.

Enrique Lores: Next question comes from the line of Amit Daryanani with Evercore ISI. Your line is open. Hi, thank you for the question. This is Urban Louis on for Omit. I have one in a follow-up. So, on the personal systems side, can you just give us a sense on how durable your recent price increases are? Understandably, some of this was commodity driven, but in the event that we see some of these commodity prices stabilized, how do you think about your ability to maintain your ASPs?

Desiree: And our last question comes from the line of Krish Sankar with TV call-ins. Your line is open. Hi, thanks so much for taking my questions.

Speaker Change #115: Thanks for the color. Thank you.

Speaker Change #116: And our last question comes from the line of Christian Soncar with TV Colors. Your line is open.

Desiree: This is Steven calling on behalf of Krish. And we gave a first question to you regarding personal systems and the commercial refresh cycle with the Windows 10 end of life, scheduled to occur in about a year from now, full quarters. I was wondering, just based on historic patterns, whenever certainly when they were in the end of life, any thoughts on how the refresh cycle might look from a quarterly basis to expect a fairly steady purchases from now until next year, or just sort of a struggle ramp up towards that deadline. And also related, do you think, I guess that the grand volumes of themselves in a week, customers might be waiting for that in conjunction with the replacement?

Speaker Change #116: Hi, I think for so much for taking my questions and this is Steven calling on behalf of Chris.

Speaker Change #116: and Enrique, a first question for you regarding personal systems.

Speaker Change #117: and the controversial Orit Research Cycle with the Women's Tenant of Life.

Speaker Change #118: of Schedule Tade to current about a year from now on, a couple quarters. I was wondering, just based on his story patterns, one of the certain women who were living at the end of life.

Enrique Lores: I would say we are still in the process of addressing our prices have. As I have shared in previous calls, we cannot adjust prices immediately because there are contracts that have been signed or deal that have been done, so it takes us sometimes to adjust. And also this quarter, given the competitive environment that we are seeing, probably we are not able to adjust them as much as we wanted, but you should expect that we will continue to do that in the coming quarters.

Speaker Change #119: Any thoughts on how the blue flash cycle might look in from a quarterly basis view spec. So we study purchases from now until the next year, or usual sort of a strong roadmap towards that deadline. And also related to do you think?

Speaker Change #120: I guess that the rare volumes of the themselves near the interleague is customers might be waiting for that in conjunction with the replacements.

Enrique Lores: If we look at the PC business from a historical perspective, we are always able to adjust prices, but it takes some time until we fully adjust them, based on all the drivers that I mentioned before. Got it, and thank you.

Enrique Lores: Let me go through both. First of all, the majority of the refresh is still ahead of us. If we compare to previous cycles, the hospital is started in a slightly slower way, but we are clearly picking up momentum. And when we look at the funnel of opportunities that we have, and the growth of the funnel compared to where we were a few quarters ago, it is definitely growing and definitely supporting the opportunity that we see. And in terms of customers waiting for the Intel refresh, this is not something that we are seeing the opposite. We are starting to see good momentum in commercial as the results in quarter reflect and as the projections that we have shared or Q4 and for the coming quarters.

Speaker Change #121: Let me go through both. The first of all, the majority of the research is still ahead of us.

Speaker Change #122: If we compare to previous cycles, it has probably started in a slightly slower way.

Amit Daryanani: For my second question, I was hoping you can provide us an update on what you are seeing in the federal government customer vertical, like during the first half of the year, budget discussions did weigh on your business a little bit, but with that sort of in the rear view mirror, how has your federal business trended and how should we think about budget flush dynamics to the balance of the year? Yeah, I mentioned that slightly before, when I talk about government, federal government is part of that, and it was actually the segment where we saw the strongest growth in this quarter.

Speaker Change #122: But we clearly pick in a momentum and when we look at the funnel of opportunities that we have and the growth of the funnel compared to where we were a few quarters ago is definitely growing independently supporting the opportunity that we see.

Speaker Change #122: An intensive customer's waiting for the interreference, this is not something that we are seeing. The opposite we are starting to see, good moment to me in commercial ads. The results is quarter-reflect and the projections that we have shared for Q4 and for the coming quarters.

Amit Daryanani: It grew between 6 and 7 percent, and we think that this is going to continue in the second half. It will be a source of growth in the commercial space, and for example, we signed a deal, we have been signed in deals with many of the large businesses, we signed one with NASA, that we are especially proud of because it was a big replacement and a great mix of both stations and notebooks, so very good deals and very good funnel in this space. Thanks for the color. Thank you.

Enrique Lores: Ladies and gentlemen, that concludes the question-and-answer session.

Enrique Lores: I would like to turn the call back over to Enrique Loris for any closing remarks. So let me just start by close by saying thank you to all for having joined today. A big welcome to Karen to the business and to the team. A big thank you to the team for the great work that he has done over the last quarters and going back to the business. I think you three confirm the momentum that we have. We are pleased to see the company growing again after nine quarters. So I think that a great change. And we also know that the competitive environment continues to be difficult, especially in print, especially in office, and that we are accelerating our course actions to compensate for that.

Speaker Change #123: Ladies and gentlemen, that brings me to the question and answer session.

Speaker Change #123: I would like to turn the call back over to Enrique Lores for any closing remarks.

Enrique Lores: So, let me just start by close by saying thank you to all for having joined today. A big welcome to Karen to the business and to the team. A big thank you to team for the...

Speaker Change #125: Great word that he has done over the last quarters and going back to the business. I think you three confirmed the momentum that we have. We are pleased to see.

Speaker Change #125: The company growing again after nine quarters, so I think that I great

Krish Sankar: And our last question comes from the line of Krish Sankar with TV call-ins.

Speaker Change #126: Change, and we also know that the competitive environment continues to be difficult, especially in print, especially in office, and that we are accelerating our course actions to compensate for that, but we remain very confident in the long-term opportunity that the company has.

Steven: Your line is open. Hi, thanks so much for taking my questions. This is Steven calling on behalf of Krish. In the area of first question through regarding personal systems and the commercial or refresh cycle, with the women's ten end of life scheduled to occur in about a year from now, about four quarters, I was wondering, just based on historic patterns, whenever certainly women were in that set end of life, any thoughts on how the refresh cycle might look in from a quarterly basis to expect a fairly steady purchase is from now until next year, or is your sort of a strong ramp up towards that deadline. And also related, do you think, I guess the ramp volumes of themselves in a week, if customers might be waiting for that in conjunction with the replacement?

Enrique Lores: But we remain very confident in the long-term opportunity that the company has, especially integrating AI into our portfolio and redefining the future of work. This is what the company's focus is, and this is where we are really investing to continue to have profitable growth in the future. But thank you, everybody, and looking forward to see all of you in the coming weeks. Thank you.

Speaker Change #126: Presently integrating AI into our portfolio and redefining the future of work. This is what the company's focus and this is where we are really investing to continue to have profitable growth in the future.

Speaker Change #127: But thank you everybody and looking forward to seeing all of you in the coming weeks. Thank you.

Desiree: This concludes this conference call. You may now.

Speaker Change #128: This concludes the these conference calls you may now disconnect.

Enrique Lores: Sure, let me go through both. Professor, the majority of the refresh is still ahead of us. If we compare to previous cycles, the hospital is started in a slightly slower way, but we are clearly picking up momentum. And when we look at the funnel of opportunities that we have, and the growth of the funnel compared to where we were a few quarters ago, is definitely growing and definitely supporting the opportunity that we see.

Enrique Lores: And in terms of customer's waiting for the inter-refresh, this is not something that we have seen. The opposite, we are starting to see good momentum in commercial as the result is quarter-refresh, and the projections that we have shared are Q4 and for the coming quarters.

Enrique Lores: Ladies and gentlemen, that concludes the question and answer session.

Enrique Lores: I would like to turn the call back over to Enrique Loris for any closing remarks.

Enrique Lores: So let me just start by close by saying thank you to all for having joined today. A big welcome to Karen, to the business and to the team. A big thank you to team for the great work that he has done over the last quarters. And going back to the business, I think you three confirmed the momentum that we have. We are pleased to see the company growing again after nine quarters.

Enrique Lores: So I think that a great change. And we also know that the competitive environment continues to be difficult, especially in print, especially in office, and that we are accelerating our course actions to compensate for that. But we remain very confident in the long term opportunity that the company has, especially integrating AI into our portfolio and redefining the future of work. This is what the company's focus and this is where we are really investing to continue to have profitable growth in the future. But thank you everybody and looking forward to seeing all of you in the coming weeks. Thank you.

Desiree: This concludes this conference call.

Desiree: You may now.

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