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PRINTINGEnrique LoresPresident, Imaging andPrinting Business
Securities AnalystMeeting 2017
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Forward-looking statements
Today’s presentations contain forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP Inc. and
its consolidated subsidiaries (“HP”) may differ materially from those expressed or implied by such forward-looking statements and assumptions.
All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of net revenue, margins, expenses, effective tax
rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or
impact of cost savings or restructuring and other charges; any statements of the plans, strategies and objectives of management for future operations, including the execution of restructuring plans and any resulting
cost savings, net revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any
statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or
disputes; any statements of expectation or belief, including with respect to the timing and expected benefits of acquisitions and other business combinations and investment transactions; and any statements of
assumptions underlying any of the foregoing.
Risks, uncertainties and assumptions include the need to address the many challenges facing HP’s businesses; the competitive pressures faced by HP’s businesses; risks associated with executing HP’s strategy; the
impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of HP’s products and the delivery of HP’s services effectively; the protection of HP’s
intellectual property assets, including intellectual property licensed from third parties; risks associated with HP’s international operations; the development and transition of new products and services and the
enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by HP and its suppliers, customers, clients and
partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the results of the restructuring plans, including estimates and
assumptions related to the cost (including any possible disruption of HP’s business) and the anticipated benefits of the restructuring plans; the resolution of pending investigations, claims and disputes; and other risks
that are described in HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2016 and HP’s other filings with the Securities and Exchange Commission.
As in prior periods, the financial information set forth in today’s presentations, including any tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be
reasonable, these amounts could differ materially from reported amounts in HP’s Annual Reports on Form 10-K for the fiscal years ending October 31, 2017 and October 31, 2018. HP assumes no obligation and does
not intend to update these forward-looking statements. HP’s Investor Relations website at http://www.hp.com/investor/home contains a significant amount of information about HP, including financial and other
information for investors. HP encourages investors to visit its website from time to time, as information is updated and new information is posted.
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Use of non-GAAP financial information
HP has included non-GAAP financial measures in today’s presentations to supplement HP’s consolidated financial statements presented on a GAAP basis. Definitions of these non-GAAP financial measures and
reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included elsewhere in today’s presentations.
HP’s management uses net revenue on a constant currency basis, non-GAAP total operating expense, non-GAAP operating profit, non-GAAP tax rate, non-GAAP net earnings, and non-GAAP diluted net earnings per
share to evaluate and forecast HP’s performance before gains, losses or other charges that are considered by HP’s management to be outside of HP’s core business segment operating results. Gross cash, net cash
(debt), and free cash flow are liquidity measures that provide useful information to management about the amount of cash available for investment in HP’s businesses, funding acquisitions, repurchasing stock and
other purposes. Net cash (debt) provides useful information to management about the state of HP’s consolidated balance sheet.
These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of HP’s results as reported under GAAP. For
example, items such as amortization of intangible assets, though not directly affecting HP’s cash position, represent the loss in value of intangible assets over time. The expense associated with this change in value is
not included in non-GAAP operating profit, non-GAAP tax rate, non-GAAP net earnings, and non-GAAP diluted net earnings per share and therefore does not reflect the full economic effect of the change in value of
those intangible assets. In addition, items such as restructuring and other charges, acquisition-related charges, non-operating retirement-related credits/(charges), defined benefit plan settlement charges, tax
indemnifications, and net valuation allowance, separation taxes and adjustments that are excluded from non-GAAP operating expense, non-GAAP operating profit, non-GAAP tax rate, non-GAAP net earnings and
non-GAAP diluted net earnings per share can have a material impact on the equivalent GAAP earnings financial measures and cash flow. HP may not be able to immediately liquidate the short-term and long-term
investments included in gross cash, which may limit the usefulness of gross cash as a liquidity measure. In addition, free cash flow, which includes net capital expenditures, does not represent the total increase or
decrease in cash for the period. The non-GAAP financial information that we provide also may differ from the non-GAAP information provided by other companies.
We compensate for the limitations on our use of these non-GAAP financial measures by relying primarily on our GAAP financial statements and using non-GAAP financial measures only supplementally. We also
provide robust and detailed reconciliations of each non-GAAP financial measure to the most directly comparable GAAP measure, and we encourage investors to review those reconciliations carefully.
We believe that providing these non-GAAP financial measures in addition to the related GAAP measures provides investors with greater transparency to the information used by HP’s management in its financial and
operational decision-making and allows investors to see HP’s results “through the eyes” of management. We further believe that providing this information better enables investors to understand HP’s operating
performance and financial condition and to evaluate the efficacy of the methodology and information used by HP’s management to evaluate and measure such performance and financial condition.
HP’s Investor Relations website at http://www.hp.com/investor/home contains a significant amount of information about HP, including financial and other information for investors. HP encourages investors to visit its
website from time to time, as information is updated and new information is posted.
(1) Adjusted for change in supplies sales model and in constant currency; (2) Forecast for FY17; (3) CC = constant currency; adjusted to eliminate the effects of foreign exchange fluctuations; (4) Ink, laser, and graphics units.
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
DELIVERINGRESULTS
EXECUTING AWINNING STRATEGY
PIVOTING TOPROFITABLE GROWTH
Reignite the home
Disrupt the office
Transform graphics>$500MFY17 cost savings2
~1%CC revenue growth FY17 YTD1,3
Stabilized supplies Q3 FY171
~4%HW unit growth FY17 YTD4
ESTABLISHED SOLID FOUNDATION FOR
ACHIEVED
SUPPLIES SALESMODEL CHANGE
Channel Inventory
Channel Discounts
Linearity
SUPPLIES STABILIZATIONAHEAD OF PLAN
4 BOX IN LINE WITH EXPECTATIONS OR BETTER
PricingUsageInstalled
baseShare
✔+ ✔+✔✔
= Outperformed expectation✔+= In line with expectation✔
Q116 Q216 Q316 Q416 Q117 Q217 Q317
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
TOTAL PRINT SUPPLIES REVENUE, Y/Y (CC)1,2
(1) CC = constant currency; adjusted to eliminate the effects of foreign exchange fluctuations; (2) Adjusted for change in supplies sales model.
WE BELIEVE IN
CONSUMERSSHARE THEIR FEELINGS
PROFESSIONALSCOMMUNICATE THEIR IDEAS
BRANDSCONNECT WITH THEIR CUSTOMERS
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
MEGATRENDS SHAPING THE
MOBILITY &COLLABORATION
LIFESTYLE &WORKSTYLE
SECURITY & ENVIRONMENT
AS A SERVICE
PERSONALIZATION
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
104
54
2018
20
215
2019
103
20
51
215
52
20
2016
40
217
2017
42
102
39
20
Graphics2,3
Home2,5
Office4,5
Media
2020
217
38
104
55
213
43
101
49
20
TOTAL PRINT TAM BY CATEGORY ($B) 2017-20 CAGR1
-3.5%
-0.2%
0.4%
0.7%
2.9%Digital vs. analog growth62-3X
A3 TAM7~$55B
Mobile page growth6+10%
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Note: Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. The organizational change resulted in transfer of a portion of LaserJet printers from Office to Home within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-if basis which resulted in reclassification of revenues between the Commercial and Consumer business units of Printing. Commercial Hardware consists of Office Printing Solutions, Graphics Solutions and 3D Printing, excluding supplies; Consumer Hardware includes Home Printing Solutions, excluding supplies. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share.
(1) 2017-20 data are projections based on currently available data and estimates; (2) Home and Graphics include segment-relevant services; (3) Includes textiles; (4) Includes office services such as services portion of Managed Print Services, hardware support, doc process outsourcing, doc consulting and scanning; also includes software such as security management, device management, capture, mobile and pull print; (5) Includes ink/laser hardware and supplies for Office or Home as relevant; Office includes scanners; (6)2017 to 2020, Digital/analog CAGR compares TAM growth, Mobile CAGR based on total pages; (7) A3 TAM refers to estimate for 2017; Source: HP internal.
LARGE MARKET WITH POCKETS OF
Reignite the homeGrow profitable office share
Disrupt copier market Transform graphics industries Lead 3D printing
BRAND AND GTMCOVERAGE
TECHNOLOGY AND INNOVATION
LEADING COSTSTRUCTURE AND QUALITY
PEOPLE ANDKNOW HOW
BIG DATA AND ANALYTICS
CORE FUTUREGROWTH
STRATEGY TO
SUPPLIES GROWTH
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
STORYTELLING TO BUILD STRONG EMOTIONAL
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
PRINTYOU
PRINTJOY
PRINTSECURELY
PRINTSUSTAINABLY
PRINTANYWHERE
GIVE US POWER TO OPTIMIZE OPPORTUNITIES
GEOGRAPHIC-BASEDPROGRAMS1
PROFITOPTIMIZATION
STORE-LEVELEXECUTION1
Profitability by customer1
Ideal
High print volume
Actual
Low print volume
SUPPLIES
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
(1) Charts are illustrative and directional.
100%
FY16FY15 FY18FY17
Unit ValueIndex
100 105 117 120
FY23 FY25FY17FY15 FY21FY19
~40%~25%~15%
SUPPLIES
IMPROVED FUNDAMENTALS SUPPORT
FY18 4-BOXDRIVER TRENDS1
HP PRINTREVENUE MIX1
INK / LASER UNIT MIXBY LIFETIME GM$1,2
PricingUsageInstalled
baseShare
Usage per unit
Home
Office
Graphics
= Directional trend
=
=Mix
quality
=
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Contractual
Transactional
(1) Data are projections based on currently available data and estimates; (2) Based on mix of unit shipments, shows value relative to FY15. Source: HP internal.
100%
FY16FY15 FY18FY17
Unit ValueIndex
100 105 117 120
FY23 FY25FY17FY15 FY21FY19
~40%~25%~15%
SUPPLIES
IMPROVED FUNDAMENTALS SUPPORT
FY18 4-BOXDRIVER TRENDS1
HP PRINTREVENUE MIX1
INK / LASER UNIT MIXBY LIFETIME GM$1,2
PricingUsageInstalled
baseShare
Usage per unit
Home
Office
Graphics
= Directional trend
=
=Mix
quality
=
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Contractual
Transactional
(1) Data are projections based on currently available data and estimates; (2) Based on mix of unit shipments, shows value relative to FY15. Source: HP internal.
FY18 4-BOXDRIVER
TRENDS1
100%
FY16FY15 FY18FY17
Unit ValueIndex
100 105 117 120
FY23 FY25FY17FY15 FY21FY19
~40%~25%~15%
SUPPLIES
IMPROVED FUNDAMENTALS SUPPORT
FY18 4-BOXDRIVER TRENDS1
HP PRINTREVENUE MIX1
INK / LASER UNIT MIXBY LIFETIME GM$1,2
PricingUsageInstalled
baseShare
Usage per unit
Home
Office
Graphics
= Directional trend
=
=Mix
quality
=
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Contractual
Transactional
(1) Data are projections based on currently available data and estimates; (2) Based on mix of unit shipments, shows value relative to FY15. Source: HP internal.
INK / LASERUNIT MIX
BY LIFETIMEGM$1,2
-8 pts
+6 pts Increase in mix fortop bands FY15-18
Decrease in mix for bottom band FY15-18
100%
FY16FY15 FY18FY17
Unit ValueIndex
100 105 117 120
FY23 FY25FY17FY15 FY21FY19
~40%~25%~15%
SUPPLIES
IMPROVED FUNDAMENTALS SUPPORT
FY18 4-BOXDRIVER TRENDS1
HP PRINTREVENUE MIX1
INK / LASER UNIT MIXBY LIFETIME GM$1,2
PricingUsageInstalled
baseShare
Usage per unit
Home
Office
Graphics
= Directional trend
=
=Mix
quality
=
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Contractual
Transactional
(1) Data are projections based on currently available data and estimates; (2) Based on mix of unit shipments, shows value relative to FY15. Source: HP internal.
HP PRINTREVENUE MIX1
CORE
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
DESIGN AND EXPERIENCEINNOVATION
CREATE NEWEXPERIENCES
REINVENT SERVICE AND BUSINESS MODELS
REIGNITE
>25%Y/Y growth in total enrollees2
New geographiesNew plans
New service models
+8 ptsY/Y HP Ink Tank1 share3
in Emerging Markets
Differentiated productPowerful brand
Targeted marketing
INNOVATING BUSINESS MODELS TOCORE
INSTANT INK IN DEVELOPED MARKETS INK TANK1 IN EMERGING MARKETS
(1) Refers to Continuous Ink Supply System (CISS) product category; (2) Forecast for FY17; (3) CQ2 2017 vs. CQ2 2016.Source: HP internal estimates; IDC Worldwide Quarterly HCPT for Ink and Laser.
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
FINDINGNEW CUSTOMERS
CREATINGNEW PRINTS
GROWINGTHE CATEGORY
CORE
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
SPROCKET IS BUILDING THE NEXT GENERATION OF
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
DIFFERENTIATEWITH SECURITY
INNOVATE FOREVOLVING WORKPLACE
CAPTURECOPIER PAGES
INTEGRATE AND LEVERAGE SAMSUNG PRINTER CAPABILITIES
CORE/GROWTH
DISRUPT
SECURETHE DEVICE
SECURETHE DATA
SECURETHE DOCUMENT
Sure start (BIOS protection)
Whitelisting
Run-time intrusion detection
Encrypted hard drives
Encrypted communications
Access control
HP Roam Mobile Print Solution
Counterfeit and fraud deterrent
✓✓✓
Security monitoring and management
✓✓✓
✓✓✓✓
Endpoint Security (Microsoft SCCM)
✓ Connection Inspector
WORLD’S MOST
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
(1) HP’s most advanced embedded security features are available on HP Enterprise-class devices with FutureSmart firmware 3.7 or above and is based on HP review of 2016 published embedded security features of competitive in-class printers.Only HP offers a combination of security features for integrity checking down to the BIOS with self-healing capabilities. For a list of compatible products, visit: http://h20195.www2.hp.com/V2/GetDocument.aspx?docname=4AA6-1178ENW.For more information, visit: www.hp.com/go/printersecurityclaims.
CORE/GROWTH
JONATHAN BANKS
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.21
POISED TO GROW IN AGROWTH
EXECUTIONON TRACK
EXPANDINGPORTFOLIO
DIFFERENTIATEDOFFERING
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
(1) A3 TAM refers to estimate for 2017 Source: HP internal
SAMSUNG PRINTER ACQUISITION
STRATEGIC RATIONALE INTEGRATION APPROACH• Portfolio simplification
• Discipline in unit placement andsupplies management
• Technology leverage: A3 and HP Roam
• Accelerate copier disruption
• Strengthen laser leadership
• Invest in IP and technology
ON TRACK TO CLOSE IN CALENDAR Q4 2017
GROWTH
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
INDUSTRIES TO DIGITAL
GROWTH
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
(1) Print Service Provider.
DISRUPT APPLICATIONS WITH BREAKTHROUGH TECHNOLOGY
REINVENT PSP1
OPERATIONSPARTNER WITH
BRANDS
PACKAGINGDESIGN AND TECHNICAL
PRODUCTION
SIGNAGE AND DECORATION
GENERALCOMMERCIAL AND
PUBLISHING
LABELS TEXTILES
ACCELERATE IN CURRENT MARKETS
EXPANDTO NEW MARKETS
DISRUPT APPLICATIONS WITHGROWTH
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
WELL-POSITIONED TO LEAD GROWTH
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Only digital press manufacturer to offer complete portfolio for pre/post-print
Only digital technology compliant with highest food packaging standards
Our customers are global packaging market leaders
HP DIGITAL PRINTING IS CHANGING HOW WEGROWTH
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
THEM
THEM
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
2016 2017 2018+
PROGRESSING ON
© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.
Supplies stabilization
Build the foundation
Profitable growth
THANK YOU
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