- Third quarter net revenue of $27.6 billion, up 1% from the prior-year period and up 1% on a constant currency basis
- Third quarter non-GAAP diluted net earnings per share of $0.89, up 3% from the prior-year period, versus the previously provided outlook of $0.86 to $0.90 per share
- Third quarter GAAP diluted net earnings per share of $0.52, down 27% from the prior-year period, versus the previously provided outlook of $0.59 to $0.63 per share
- Third quarter cash flow from operations of $3.6 billion, up 36% from the prior-year period
- Returned $881 million to shareholders in the form of share repurchases and dividends in the third quarter
- Operating company net cash of $4.9 billion, a sequential improvement of $2.2 billion
HP fiscal 2014 third quarter financial performance
Q3 Q3 FY14 FY13 Y/Y GAAP net revenue ($B) $ 27.6 $ 27.2 1% GAAP operating margin 5.3% 6.8% (1.5 pts.) GAAP net earnings ($B) $ 1.0 $ 1.4 (29%) GAAP diluted net earnings per share $ 0.52 $ 0.71 (27%) Non-GAAP operating margin 8.5% 8.4% 0.1 pts. Non-GAAP net earnings ($B) $ 1.70 $ 1.68 1% Non-GAAP diluted net earnings per share $ 0.89 $ 0.86 3% Cash flow from operations ($B) $ 3.6 $ 2.7 36%
Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.
HP today announced financial results for its fiscal 2014 third quarter ended July 31, 2014.
Third quarter net revenue of $27.6 billion was up 1% from the prior-year period and up 1% on a constant currency basis.
Third quarter GAAP diluted net earnings per share (EPS) was $0.52, down from $0.71 in the prior-year period and below its previously provided outlook of $0.59 to $0.63. Third quarter non-GAAP diluted net EPS was $0.89, up from $0.86 in the prior-year period and within its previously provided outlook of $0.86 to $0.90. Third quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $713 million and $0.37 per diluted share, respectively, related to restructuring charges, the amortization of intangible assets and acquisition-related charges.
"Overall, I'm very pleased with the progress we've made," said Meg Whitman, chairman, president and chief executive officer, HP. "When I look at the way the business is performing, the pipeline of innovation and the daily feedback that I receive from our customers and partners, my confidence in the turnaround grows stronger."
Outlook
For the fiscal 2014 fourth quarter, HP estimates non-GAAP diluted net EPS to be in the range of $1.03 to $1.07 and GAAP diluted net EPS to be in the range of $0.83 to $0.87. Fiscal 2014 fourth quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to restructuring charges and the amortization of intangible assets.
For fiscal 2014, HP estimates non-GAAP diluted net EPS to be in the range of $3.70 to $3.74 and GAAP diluted net EPS to be in the range of $2.75 to $2.79. Fiscal 2014 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.95 per share, related primarily to restructuring charges and the amortization of intangible assets.
Asset management
HP generated $3.6 billion in cash flow from operations in the third quarter, up 36% from the prior-year period. Inventory ended the quarter at $6.2 billion, down 1 day year over year to 27 days. Accounts receivable ended the quarter at $14.2 billion, down 1 day year over year to 46 days. Accounts payable ended the quarter at $15.1 billion, up 8 days year over year to 65 days. HP's dividend payment of $0.16 per share in the third quarter resulted in cash usage of $299 million. HP also utilized $582 million of cash during the quarter to repurchase approximately 17.5 million shares of common stock in the open market. HP exited the quarter with $14.8 billion in gross cash.
Fiscal 2014 third quarter segment results
- Personal Systems revenue was up 12% year over year with a 4.0% operating margin. Commercial revenue increased 14% and Consumer revenue increased 8%. Total units were up 13% with Desktops units up 9% and Notebooks units up 18%.
- Printing revenue was down 4% year over year with an 18.4% operating margin. Total hardware units were down 5% with Commercial hardware units down 2% and Consumer hardware units down 6%. Supplies revenue was down 5%.
- Enterprise Group revenue was up 2% year over year with a 14.0% operating margin. Industry Standard Servers revenue was up 9%, Storage revenue was down 4%, Business Critical Systems revenue was down 18%, Networking revenue was up 4% and Technology Services revenue was down 3%.
- Enterprise Services revenue was down 6% year over year with a 4.1% operating margin. Application and Business Services revenue was down 4% and Infrastructure Technology Outsourcing revenue declined 8%.
- Software revenue was down 5% year over year with a 21.2% operating margin. License revenue was down 16%, support revenue was flat, professional services revenue was down 3% and software-as-a-service (SaaS) revenue was up 8%.
- HP Financial Services revenue was down 3% year over year with a 1% increase in net portfolio assets and a 14% increase in financing volume. The business delivered an operating margin of 9.2%.