HP is focused on growing its AI PC, advanced compute solutions, hybrid systems, workforce solutions, consumer subscriptions, industrial graphics and its 3D and personalization businesses collectively at a rate faster than its core business with accretive margins in the longer term.

HP is on track to achieve its overall program savings from the Future Ready Plan. The company has enhanced digital capabilities in Workforce Solutions and continued to leverage AI to positively impact products, solutions and operations.

HP continues to provide digital printing solutions for industrial graphics segments and applications including commercial publishing, labels, packaging, and textiles.

HP identified a material weakness in internal control over financial reporting resulting from undue reliance on information generated from certain software solutions affecting various financial statement line items as well as net revenue without effectively designed information technology IT general controls specifically around user access and change management and job schedule monitoring IT operations.

HP is focused on simplifying its operating model and reducing structural costs through headcount reductions and other productivity measures. The company expects to continue to invest some of the savings into its growth areas and its people.

HP is increasing its forecast accuracy across its business to drive reduction in its cost of sales and operating expenses. The company also continued to reduce its structural cost through headcount reductions and are on track to achieve its overall headcount reduction goal.

HP's business and financial performance depend significantly on worldwide economic conditions. The company faces global macroeconomic challenges such as ongoing geopolitical conflicts, uncertainty in the markets, volatility in exchange rates, inflationary trends and evolving dynamics in the global trade environment.

New, substantial tariffs have been imposed on imports to the United States from China and HP has taken actions to mitigate the effects of these tariffs. Should these or other proposed or incremental tariffs be implemented and sustained for an extended period of time, they may have a significant adverse impact to HP's results of operations and cash flows.

HP has from time to time been named in civil litigation, or been the subject of government investigations, involving supplies authentication protocols used in certain HP printers in multiple geographies. The core allegations in these proceedings claim misleading or inadequate consumer notifications and permissions pertaining to the use of Dynamic Security.

In Personal Systems, HP faces challenges with a competitive pricing environment, variability in commodity costs, and demand softness in certain geographic regions.

In Printing, HP faces challenges from changing customer behaviors as well as competitors with a favorable foreign currency environment and non-original supplies (which includes imitation, refill, or remanufactured alternatives).

Our primary competitors are exerting competitive pressure in targeted areas and are entering new markets, our emerging competitors are introducing new technologies and business models, and our alliance partners in some businesses are increasingly becoming our competitors in others.

To address challenges, HP continues to work on improving operations and adapting business models, with a particular focus on enhancing end-to-end processes, analytics, efficiencies and simplification of product portfolio.

The increase in DOS (Days of Supply in inventory) is primarily due to strategic buys in Personal Systems, purchases of finished goods to mitigate potential tariff impacts and higher in-transit shipments.

Gross margin decreased to 21.0% from 21.9% year-over-year, primarily driven by products gross margin due to higher commodity costs and unfavorable currency impacts, partially offset by disciplined cost management including Future Ready transformation savings.

R&D expense for the three months ended January 31, 2025 primarily relates to investments in innovation and people and remained flat.

Since announcing our Fiscal 2023 Plan, we have enhanced our digital capabilities in Workforce Solutions and continued to leverage AI to positively impact our products, solutions and operations.

In Personal Systems, HP's long-term strategic focus is on enhanced innovation in multi-operating systems, multi-architecture, customer segments and other key attributes.

During the three months ended January 31, 2025, HP returned $0.4 billion to the shareholders in the form of cash dividends of $0.3 billion and share repurchases of $0.1 billion. As of January 31, 2025, HP had approximately $9.2 billion remaining under the share repurchase authorizations approved by HP's Board of Directors.

We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital and targeted capital structure.

The increase in DOS (Days of Supply in inventory) is primarily due to strategic buys in Personal Systems, purchases of finished goods to mitigate potential tariff impacts and higher in-transit shipments.

HP maintains a $5.0 billion 5-year sustainability-linked senior unsecured committed revolving credit facility, which HP entered into on August 1, 2024. Commitment fees, interest rates and other terms of borrowing under the revolving credit facility vary based on HP's external credit ratings and certain sustainability metrics.

HP allocated an amount equal to the net proceeds to finance or refinance, in whole or in part, environmentally and socially responsible eligible projects in the following eight areas: renewable energy; green buildings; energy efficiency; clean transportation; pollution prevention and control; eco-efficient and/or circular economy products, production technologies and processes; environmentally sustainable management of living natural resources and land use; and socioeconomic advancement and empowerment.

HP is also conducting environmental investigations or remediation at several current or former operating sites and former disposal sites pursuant to administrative orders or consent agreements with environmental agencies.

As a result, our net revenue growth has been impacted, and we expect it will continue to be impacted, by fluctuations in foreign currency exchange rates.

We face global macroeconomic challenges such as ongoing geopolitical conflicts (including the military conflict in Ukraine, continued instability in the Middle East, and tensions in the Taiwan Strait and South China Sea).

In February 2025, new, substantial tariffs have been imposed on imports to the United States from China and we have taken actions to mitigate the effects of these tariffs.