管理層發言
Hello. Good day, everyone, and welcome to the Third Quarter 2024 HP Inc. Earnings Conference Call. My name is Desiree, and I will be your conference moderator for today's call. At this time, all participants will be on listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Orit Keinan-Nahon, Head of Investor Relations. Please go ahead.
Good afternoon, everyone, and welcome to HP's Third Quarter 2024 Earnings Conference Call. With me today are Enrique Lores, HP's President and Chief Executive Officer; Karen Parkhill, HP's Chief Financial Officer; and Tim Brown, who is 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 will 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.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. For more detailed information, please see disclaimers in the earnings materials relating to forward-looking statements that involve risks, uncertainties, and assumptions. For a discussion of some of these risks, uncertainties, and assumptions, please refer to HP's SEC reports, including our most recent Form 10-K. HP 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 HP's SEC filings. During this webcast, unless otherwise specifically noted, all comparisons are year-over-year comparisons with the corresponding year-ago period. 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-GAAP basis, we've included reconciliations to the comparable GAAP information. Please refer to the tables and slide presentation accompanying today's earnings release for those reconciliations. With that, I'd now like to turn the call over to Enrique.
Thank you, Orit, and thank you all for joining today's call. Let me start by welcoming our new CFO, Karen Parkhill, who joined HP earlier this month. Her expertise and background are a great addition to our leadership team, and we are delighted to have her on board. A big thank you to Tim Brown for stepping in as Interim CFO over the last three quarters. 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. 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 2% year-over-year. This was driven by strong performance in Personal Systems in 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-GAAP operating profit was down 7%, and non-GAAP EPS was within our previously provided outlook range but below our expectations. 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, raising our exit goal for fiscal year 2024. We expect to reach 80% of the three-year structural cost run-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 investments 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.
Turning to new innovations, Q3 was another strong quarter. We continue to deliver industry-leading experiences by putting our customers at the center of everything we do. In the AI PC category, we are charging ahead. Our next-gen 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. 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, and to help protect against AI-assisted cyber-attacks, the new OmniBook Ultra includes the industry-leading protections and capabilities of HP Wolf Security.
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 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. 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 Eaton. Our continued partnership with this global intelligent power management company will help support their IT journey in serving more than 90,000 employees around the world.
We set a new standard for industrial printing at DRUPA, 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 job submission to delivery. We were honored to take home more best-of awards than any other exhibitor at the show. We also announced a new partnership with Canva. Their 185 million monthly users can now similarly design and create online and print locally. We also secured major deals with print and digital industry leaders like RR Donnelly, All4Labels, and SYNTHES. We are excited about what's ahead. 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 Cybercore Technologies, a leading provider of secure supply-chain management and cyber solutions for the US Federal Government. The addition of Cybercore to the HP family will help further strengthen our security expertise and enhance our offerings. And just yesterday, we announced we have received a $50 million award from the US Department of Commerce. This funding from the CHIPS and Science Act will help modernize and expand our microfluidics semiconductor fab in Corvallis, Oregon. It will also help us further explore the potential of our microfluidics technology in new areas such as life sciences. In Q3, we released our Annual Sustainable Impact Report, highlighting the important progress we have made. In 2023, our initiatives helped us reach a 27% reduction in value-chain 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 Magazine's World's Most Sustainable Companies list. 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 workstations and consumer premium. We continue to see strong progress in key growth areas with 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 PCs opportunity. Shipments are ramping, and initial reactions are overwhelmingly positive. We have a strong portfolio with an unprecedented level of HP engineering. Our growing ecosystem of developers and AI software providers is a huge competitive advantage. Forbes declared HP owns 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 ASPs, and premium mix remains on track with our expectations for the second half. 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 softer demand, unfavorable geographic mix, 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 are 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 a big thanks to A3 and A4 value. Key growth areas in print continue to make progress. Consumer services revenue and subscribers grew year-over-year. Industrial graphics did as well, and we have strong momentum coming out of DRUPA. And supplies continued to perform as expected. 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 urged us to increase the total share repurchase authorization to $10 billion. This reaffirms our commitment to deliver strong and sustained capital returns to our shareholders.
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 areas and accelerate our cost-reduction plans. We are confident in our strategy and well-equipped to drive meaningful progress as we round out fiscal year 2024. Across our entire portfolio, leveraging AI and enabling hybrid work experiences will remain central to creating solutions that deliver growth and fulfillment for all HP customers. 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 months 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. Building upon our market-leading portfolio, attractive growth businesses, and a culture keenly focused on delivering value for our shareholders. Now, on to the quarter. Starting high level, we are building on the progress we made in the first half. And as Enrique said, we are pleased with our return to revenue growth for the first time in nine quarters. Solid performance in 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 in Personal Systems drove strong free-cash flow in the quarter.
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. 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 put 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 2025, 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.
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, EMEA, 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 mix-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 continue to drive cost reductions, including the Future Ready cost-savings. All-in non-GAAP operating profit was $1.1 billion, down 7% year-over-year. Below the operating profit line, non-GAAP net OI&E 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 $0.83, a year-over-year decrease of $0.03, and GAAP diluted net earnings per share was $0.65. 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 strength in commercial. And sequentially, revenue was up 11% and units were up 14% with seasonal 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. Improved pricing in consumer, along with a favorable commercial mix and a shift to premium consistent with our strategy drove higher overall ASPs.
In fact, we continue 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. 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 in industrial graphics continued with supplies and services driving the fourth straight quarter of year-over-year revenue growth. 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 a favorable mix offsetting pricing. Of note, hardware units grew 5% sequentially, driven by strength in 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 actions. 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 in 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.com. 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 allocations. We generated more than $1.4 billion in cash from operations and $1.3 billion in free cash flow. We continued to improve our cash conversion cycle this quarter, driving inventory days down with seasonally higher volumes in Personal Systems, offset in part by an increase in strategic buys as we focused on reducing the near-term impact of rising commodity costs. 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. 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 in 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 5% to 7% in Q4. As we work to offset increased commodity costs through pricing and disciplined cost management while continuing to invest in strategic priorities.
In print, we see improving trends in the market, but the pace of recovery is slower 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 DRUPA. We expect supplies revenue in FY 2024 to decline low-single digits. And we anticipate Q4 print margins to be near the top of our 16% to 19% range, given seasonal strength and acceleration of Future Ready cost-savings. 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 $0.01, which is reflected in our updated outlook. We expect fourth-quarter non-GAAP diluted net earnings per share to be in the range of $0.89 to $0.99 and fourth-quarter GAAP-diluted net earnings per share to be in the range of $0.74 to $0.84.
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. And FY 2024 GAAP-diluted 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 billion to $3.6 billion for FY 2024. As a reminder, our free cash flow outlook includes approximately $300 million of restructuring cash outflows. 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 his continued help these past few weeks with me. Tim is also on the call with Enrique and me to help answer your questions.
分析師問答
And our first questioner today will be David Vogt with UBS. Your line is open.
Yes, hi. This is Andrew for David. I wanted to ask about the print margins in fiscal 2024. Can you disaggregate some of the pressure you saw in this quarter? What were the primary 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.
Thanks for your question, Andrew. 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 a challenging market environment, particularly in China. That was driving unfavorable geographic mix. And against that environment, we took the opportunity to place hardware units that are profitable long-term but dilutive 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. And then 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. 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% target range.
Hi, thanks for taking my question. I have a couple, if I can just start with maybe AI PCs, which you referred 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 do you expect it will make a more material impact in the coming quarters? And how do you sort of see that feeding into maybe a bit of the recovery on the consumer PS side as well? Any thoughts on that would be appreciated. And I have a follow-up. Thank you.
Thank you for the question. Regarding consumer AI PCs, we previously indicated that we expected sales to be around 10% in the second half, and we believe we will exceed that number. They are performing well. We are also focusing on next-generation AI PCs, which we just began launching with Qualcomm and AMD a few weeks ago, and shipments are starting now. So far, we haven't seen a significant impact from these products, but the initial reaction has been positive and the experiences we are generating are very compelling. We recently held an event in New York with several of our software partners to showcase this, and the response was encouraging, although the overall impact on our results has been minimal at this time. In terms of adoption, we anticipate that consumer adoption will occur more quickly because commercial adoption is often slowed down by lengthy evaluation processes that our customers must go through, and those processes are just beginning. It will take some time for this to reflect in our results. Looking to the future, we maintain our previous projections. We expect next-generation AI PCs to account for about 50% of shipments by 2027, three years post-launch, and these are expected to drive an average selling price increase of between 5% and 10%. We are confident in our ability to meet these projections moving forward.
Got it, got it. Thanks for that. And if for my follow-up, I can just ask you on the print business. I understand the sort of headwinds and the competitive 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 competitive landscape sounds like it's tougher? Would you sort of look at it from a market-share perspective and say 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 here relative to market share? Thank you.
Let me take this opportunity to share more about what we are seeing in the print market and how we project this going forward. As we mentioned in the prepared remarks, the print market faced challenges and we did not see the recovery we were anticipating. However, we did observe some signs of positive change. For instance, we experienced growth in the home segment, and the decline in the office category was less severe than in previous quarters. As Karen mentioned earlier, supplies have been performing as expected, and usage is a reliable indicator of future trends. This leads us to believe that the slower recovery is temporary, and we expect to see improvements. The majority of the challenges stemmed from the office space, which drove the demand perspective. From a pricing standpoint, we have noticed a continuation of our earlier observations. Many competitors are leveraging the weak yen, allowing them to adopt a more aggressive pricing strategy. We have been focused on reducing our cost structure to ensure we can place profitable units, and we achieved that this quarter. We placed units, maintained our share, and gained share in the home segment. As we continue to manage costs, we will seek opportunities to place profitable units, which remains our objective.
Thank you for taking my questions. I have two as well. Enrique, in your prepared remarks, you didn't go into detail about the anticipated recovery in the commercial or enterprise sector that we've been discussing for the past few quarters. Could you help us understand how you would characterize PC demand across the consumer, SMB, and large enterprise markets? Additionally, how does this impact your perspective on whether we're still facing a significant commercial refresh cycle ahead or if it's already occurred? I'd love to know your thoughts on our current position in that regard. I have a follow-up as well. Thank you.
Sure. Let me address that. I believe the evolution of the market and our results indicate that the PC market is experiencing a recovery, primarily driven by the commercial sector. To provide more specifics, we observed enterprise market growth of nearly 5%, government growth between 6% and 7%, SMB growth at 3%, and education growing by 1%. There has been notable growth in the commercial sector, particularly in enterprise. This is supported by trends we've previously discussed. The installed base is aging, leading companies to realize the necessity of refreshing their equipment. The impact of Windows 11 is becoming evident, especially after Microsoft's announcement regarding the end of support for Windows 10. This growth in sales is also reflected in the increasing funnel of new opportunities, which is much stronger this year than last. We believe the refresh is still forthcoming; we have only begun to see it, and we remain confident that this opportunity lies ahead.
Yeah, thanks for the question, Erik, 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. Just a reminder, our savings are reflected in both OpEx and COGS. 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 gross profit offset by higher operating expenses because much of our investments are going to be in the OpEx area. And 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.
Yes. Thank you. Hello, Enrique, and welcome, Karen. 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. Do 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, 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, should we be thinking of Future Ready as 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 in operating profit despite the cost cutting? And I have a follow-up, please.
Yes. Thanks for your question, Toni. And as we look ahead in Q4, we are expecting some seasonal growth ahead. In Personal Systems, we expect to increase sequentially low to mid-single digits. And we said given the lingering softness in consumer, we're expecting some less seasonal 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. So, we expect print revenue to increase low to mid-single digits, and that's driven by typical seasonal strength along with some seasonality coming out of industrial with DRUPA. And obviously, we expect supplies to increase sequentially in line with last year. I would say on the Future Ready, we are focused on 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 and purposely continuing our investment because we're focused on the longer-term.
I think it's important to note that year-to-date operating profit growth for our various businesses compared to our initial plan for the year shows growth in Personal Systems, attributed to both savings and market progress. However, we have not seen operating profit growth in the print segment, which was unexpected at the start of the year. This shift can be largely attributed to the smaller market we are observing, particularly in office settings, along with increased competition, influenced by the weak yen. We believe that both factors are temporary, so we do not see them as structural changes, but they are certainly affecting our performance in 2024.
Yes. Thanks for the questions, Toni. 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 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 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 unless 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 roughly 100%, and we're committed to that this year too.
Let me emphasize that, Toni, nobody should read anything into 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.
Yes, thank you so much. Two for me as well. First, if you just look over the last three quarters, and it's kind of been asked in different ways, but I just thought I'd 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 timeframe, you've also seen EPS growth deceleration and decline this last reported quarter. But are you hitting some type of inflection where the cost-savings impact is no longer able to offset arguably where you've been operating in terms of maybe unsustainably high print margins this year? And as we carry the thought process into next year, does it really mean that given some of the efforts that Karen alluded to in terms of acceleration of cost-savings into this year, that there was incremental flow-through into next year? And can we see revenue and EPS growth be in sync, or is there something more structural that's kind of causing this dislocation? And I have a follow-up.
Yes, we don't think there is anything structural. I think it's more the result of what we see from a competitive perspective. And I will go back to some of the data I was sharing with Toni before. Year-to-date, Print PCs are growing operating profit. We are not seeing that growth in print, and this is really driven by the softness that we see on the office space and the aggressive pricing that we see because of the weakness of yen. On the positive side, we have seen the home business recovering, and probably more important than that is the fact that supplies and our supplies business is performing as we were expecting. So really no changes in supplies. And always supplies is a good indicator of what we would 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 midpoint of the guide, we expect EPS to grow this year. So from that perspective, we expect growth. But yes, it's slightly lower than we were expecting because of the competitive environment that we are facing, especially in print.
Thanks, Wamsi. 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 PS that drives working capital improvements. And remember that our PS cash conversion cycle is negative. And so, we're going to continue to expect projected sequential PS revenue improvement, and you can expect that to contribute to Q4 free-cash flow as well. So, our outlook remains unchanged to deliver $3.1 billion to $3.6 billion for the full year; we're confident in our ability to deliver the remainder that we've got in 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 are talking about $0.05, which represents $60 million, $70 million. 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.
Yes. Just related to the Future Ready, I don't know if this is part of your question, but the cash outlays for Future Ready expect to be roughly the same as we've been saying about $300 million.
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 at print, potentially at the expense of margins. And could you talk a little bit more about the strategy there? And then maybe you can just update us on some of the print KPIs what's the current percentage of revenue that's 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.
Yes, thank you. Our strategy remains unchanged, focused on placing profitable units. As previously mentioned, we anticipated being more aggressive in the second half due to cost reductions at the hardware level, and we achieved that. This contributed to our market share growth this quarter, particularly in the home segment as well as in A3 and A4 value categories. Our ability to place more units and gain share persisted despite a more competitive environment than expected. We are making substantial progress with the business model changes we've discussed. Instant Ink revenue is rising, along with net subscribers and the number of subscribers in the all-in program. We are also maintaining about a 50% profit margin on front units, similar to what we have shared before. Overall, we are pleased with our performance in these areas.
Great. Thanks. And if I could just follow up on the Personal Systems revenue seasonality up low to mid-sequentially. I appreciate there are some lingering headwinds in Consumer. Is something getting worse sequentially? And is some of that consumer weakness concentrated in certain regions or industry verticals? Thank you.
No, I think it's a consequence of the softness that we see. And this really is when we compare to previous quarters, we think that 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 had seen in previous years, given that we expect to see this softness in consumer, nothing else behind that this assumption.
Hi, thank you for the question. This is Irvin Liu on for Amit. I have one and 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 stabilize, how do you think about your ability to maintain your ASPs?
I would say we are still in the process of adjusting our prices up, as I have shared in previous calls, we cannot adjust prices immediately because there are contracts that have been signed or deals that have been done. So it takes us some time 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 us that we will continue to do that in the coming quarters. 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. Yes, I mentioned earlier that the Federal Government is a key area for us. This segment experienced the strongest growth this quarter, increasing by 6% to 7%, and we anticipate that this trend will continue in the second half of the year, contributing to growth in the commercial sector.
For instance, we signed a noteworthy deal with NASA, which we are particularly proud of as it involved a significant replacement and a solid mix of workstations and notebooks. We are seeing very promising deals and a strong pipeline in this space. I want to begin by expressing my gratitude to everyone who joined us today. A warm welcome to Karen as she joins the business and the team. I appreciate the team's exceptional work over the past quarters. Looking at the business, I believe Q3 demonstrates the momentum we've established. It's encouraging to see the company experiencing growth after nine quarters, which is a significant improvement. We acknowledge that the competitive landscape remains challenging, particularly in print and office sectors, and we are ramping up our cost-reduction efforts to address this. However, we maintain strong confidence in the company's long-term prospects, especially with the integration of AI into our offerings and the redefinition of the future of work.
Our focus and investments are primarily directed towards achieving sustainable profitability in the future. Thank you once again, and I look forward to connecting with all of you in the upcoming weeks.
This concludes today's conference call. You may now disconnect.