HP Inc. misses target, reporting Q2 results of $11.59B in revenue, down 11% YoY; personal systems sales dropped 10% YoY; guidance cut
Context & Ripple Effects
This quarter extends a pattern the coverage has documented for over a year: HP missed targets in May 2015 with $25.5B in revenue, down 7% YoY, and the post-split company keeps posting double-digit declines — including Q2 FY2023 revenue down 22% YoY and an August 2023 quarter down 10%. What makes this report different is the guidance cut on top of the miss.
Personal Systems falling 10% YoY means the PC business — the larger half of HP Inc.'s revenue base — is contracting nearly as fast as the total, so there is no offsetting segment absorbing the damage.
First-order effects
- HP Inc.'s cut guidance resets investor expectations for the rest of the fiscal year, and with Personal Systems down 10% YoY the company's largest revenue line is shrinking alongside the total.
Second-order effects
- Sustained PC volume declines pressure component suppliers and channel partners who sized their businesses around HP's shipment forecasts, and push HP toward price competition to defend share against rivals facing the same demand curve.
Third-order effects
- If the decline cadence seen across these quarters holds, HP's path depends on extracting more revenue per installed device rather than counting on unit growth — a structural shift for a hardware vendor whose model was built on replacement cycles.
The trend: PC-centric hardware vendors are settling into a structurally smaller market where each quarter's miss compounds, forcing the business model toward monetizing the installed base instead of unit growth.