HP Inc (NYSE:HPQ) Q3 2016 Earnings Conference Call - Preliminary Transcript

Aug 24, 2016 • 05:00 pm ET


HP Inc (NYSE:HPQ) Q3 2016 Earnings Conference Call - Preliminary Transcript


Loading Event

Loading Transcript

Dion Weisler

of this year. We are on track to implement more than $1 billion of savings, providing us opportunity to invest back into our businesses to drive long-term success.

In Q3, our revenue trajectory improved, down less than 1% year-over-year in constant currency, driven by strength in Personal Systems, offset by expected declines in Printing. As we previously said, we believed overall revenue declines would moderate in the second half of the year, and that is exactly what is happening. The PC market improved slightly more than forecasted, and we were well positioned with an innovative product line-up and healthy channel inventory level.

We capitalized on market opportunities and gained share at the expense of our competitors, especially in the high-end premium category. Innovation in our portfolio is serving us well. We are building on a rich heritage and delivering experiences that amaze our customers and partners. Our products and solutions contain the magic that differentiates HP from the competition. This past quarter, our Printing and Personal Systems teams delivered awe-inspiring innovation.

The Spectre 13 that we announced in April, rolled out in countries around the world, continues to elicit acclaim and praise, fuelling our push into premium devices. Likewise, the Omen gaming platform is built for greatness, or as those in the gaming world would like to say, domination. Our new Omen laptops and desktops all launched to rave reviews and strong consumer demand based on their performance and engineering power. On the commercial go-to-market side, customers are increasingly shifting from transactional to contractual buying, wanting everything as a service.

At the end of June, we unveiled our new PC-as-a-service business model that is gaining interest from companies around the world. Importantly, these premium gaming and service initiatives are all profit accretive. Moving to Printing highlights, HP's presence at drupa was unprecedented. Our graphics business sold a record 130 Indigo presses. Our large-format and digital printers, including PageWide technology are accelerating the industry transformation from analog print to digital, opening new categories of packaging, print production, and specialized ink innovation.

During the quarter, we also unveiled the world's smallest all-in-one inkjet printer, hoping to reinvent the printing experience for a mobile and socially-connected consumer. And early in May, we announced the world's first production-ready 3D printing system. We continue to work with our ecosystem of manufacturers, co-development, and strategic partners like Nike, BMW, Autodesk, Jabil, Johnson & Johnson, Shapeways, Siemens, and others, and have now placed a number of demo units. Our partners are pleased and enthusiastically engaged in putting our technology to work, printing sample parts for automotive, consumer goods, medical, and other applications. Most recently, BMW announced plans to use 3D printing for their new Rolls-Royce Dawn.

Our materials partners, Evonik, announced plans for a series of custom powder materials on our open platform that will further 3D printing as a viable form of manufacturing for many businesses. Now turning to the segment-specific performance. Personal Systems executed very well with revenue growth, share gains, and improved profitability. We