HP Inc at Citi’s 2025 Global TMT Conference: AI and Strategic Growth

On Wednesday, 03 September 2025, HP Inc (NYSE:HPQ) participated in Citi’s 2025 Global Technology, Media and Telecommunications Conference. The company discussed its strategic focus on AI-driven growth, challenges in the print market, and efforts to navigate tariff-related impacts. HP Inc. is aiming to balance innovation with financial returns, promising to return 100% of free cash flow to investors, contingent on maintaining leverage below 2%.

Key Takeaways

• HP Inc. expects the PC market to grow mid-single digits through 2025 and into 2026, driven by AI PC adoption and Windows 11 transition.
• The print market faces secular challenges, but HP is expanding subscription services to maintain margins.
• HP has successfully transitioned 25% of its PC mix to AI PCs, ahead of schedule.
• The company is committed to returning 100% of free cash flow to investors, assuming leverage stays below 2%.
• HP Inc. is diversifying its supply chain by moving manufacturing outside China.

Financial Results

• PC market growth is forecasted at mid-single digits through 2025 and 2026.
• Print market is expected to slightly decline in the coming years.
• Revenue growth in the PC segment is outpacing unit growth, driven by premium AI PCs and peripherals.
• HP aims to return 100% of free cash flow to investors, provided leverage remains below 2%.

Operational Updates

• HP Inc. has moved manufacturing from China to Southeast Asia, Mexico, and the U.S.
• The company is accelerating its cost reduction plan to meet more aggressive targets.
• HP has approximately 13 million subscribers to its subscription services and is expanding offerings with the "all in" program.
• A new video collaboration system with Google has been announced.

Future Outlook

• Focus on profitable growth in both PC and print markets.
• Innovation in AI for PCs and print offerings is a priority.
• Commitment to integrating PC, print, and peripheral solutions for the future of work.
• Expectation of increased commodity costs, particularly in memory, in the latter half of the year.

Q&A Highlights

• Transition to Windows 11 is slightly over 50% complete, supporting continued PC growth.
• AI PCs are set to constitute 25% of HP’s PC mix by year-end, ahead of schedule.
• Stronger AI PC adoption is observed in enterprises compared to SMBs.
• HP has increased inventories to counteract rising commodity costs.
• Enterprises prioritize AI and PC investments over refreshing print installations.

In conclusion, HP Inc. is navigating a complex market landscape with a focus on AI and strategic growth. For more details, please refer to the full transcript below.

Full transcript - Citi’s 2025 Global Technology, Media and Telecommunications Conference:

Unidentified speaker, Citi: Welcome, HP Inc. We have Enrique Lores here. Welcome to the all the investors to Citi’s Global TMT day one. It’s already been a busy morning. Almost feels like the afternoon.

I do have, you know, some disclosures to read on behalf of HP, so just bear with me. Today’s discussion includes forward looking statements, involves risks, uncertainties and assumptions, which are further described in HP’s SEC filings, including Form 10 ks and 10 Q. HP Inc. Assumes no obligation and does not intend to update any such forward looking statements. For more information, please visit HP’s IR webpage @investor.hp.com.

With that, welcome, Enrique. So you guys just reported, it was just last week. So we are asking all our companies a little bit about end demand. As you sit here in calendar third quarter, what has changed from perspective across your various end markets, let’s say, to the start of the year when there was just so much uncertainty, there were tariffs? Just how would you characterize how the markets have performed relative to your own earlier expectations, let’s say, six months ago?

Enrique Lores, HP Inc.: Perfect. First of all, thank you for having me here. As we said in the call, demand overall performed in a very similar way to what we were expecting. We have continued to see growth in the PC market. And we have seen overall print performing as we were expecting.

In the case of PCs, probably the biggest difference is that the consumer market was stronger than what we had anticipated. And this was reflected both in the market size, but also in our results. And in the case of print, again, overall also was as expected, but the office market was softer than what we had anticipated. So two small changes, but overall similar performance than what we expected at the beginning of the year.

Unidentified speaker, Citi: Okay. And then as you look you guys at your typical analyst event do share some long term targets, both for PCs as well as footprint. Given where we are in the cycle in terms of PC refresh, just help us understand where we are. Can you talk about the puts and takes towards that kind of growth expectations that you have for both PCs and print individually?

Enrique Lores, HP Inc.: Yes. We will have our Investor Day at the early twenty twenty six. But then we will provide again some guidance for the coming years. What we have shared at this point is we expect PCs to grow to continue to grow mid single digit through 2025 and to also grow in 2026. And we expect the print market to slightly decline in 2025 and to perform in a similar way in 2026.

These are at this point the two trends that we have shared. And again, we will be providing a much more updated view in a few months when we have our Investor Day.

Unidentified speaker, Citi: Okay. And then let’s just dig into PCs, because that’s been an interesting one. We’ve talked about AI PCs, clearly HP was being one of the market share leaders. When it comes to PCs, you guys see a lot of that and obviously you guys are also global. So just trends that you’re seeing in PCs like is it really just the end of life that’s driving refresh or are there other factors that are in place to kind of talk about the PC growth that you’re talking about, both mid single digits kind of this year and even into next year?

Enrique Lores, HP Inc.: I think there are multiple factors that are driving growth of PCs. One is, if we look backward in the last five years, there was a big increase of sales during COVID and we are starting to of the we’re starting to see the refresh of these units happening now. On top of that, we are going through the transition from Windows 10 to Windows 11. And this drives traditionally has driven an increase of demand and we are seeing it this year. And on top of that, we see the transition to AIPCs.

And so let me talk a bit about each of them. In the case of Windows 11, the transition this time is going slightly slower than we have seen previous transitions, but it’s happening. Our estimate is that we are slightly above 50% of transition having been completed, which means this is going to continue to help us to grow in for the rest of 2025 and at least early twenty twenty six. So that’s how we see this happening. In the case of AIPC, we see demand continue to grow.

Our goal was to have 25% of our mix being AIPCs by the end of this year. We have done it one quarter ahead of plan. So the transition is going slightly faster than we were expecting. And we think this is going to continue through 2026. So both have both changes are helping positively and we think they are going to have an impact not only this year, but also at least in 2026.

Unidentified speaker, Citi: Okay. And then just to remind investors when you talk about AIPCs or actually first just the PC segment growth, mid single digits, is that units? Is it revenues? Is there an add on because AI PCs drive higher ASPs? Revenue should be more than units.

Enrique Lores, HP Inc.: Thank you. So yes, we when we talk about growth, we always talk about units. So thank you for asking. Revenue growth is higher than unit growth, both because we see more growth in premium categories as AIPCs and also the growth of other elements that are driven by PCs like peripherals or like services also help to have faster growth on revenues and units. That’s an important comment.

Thank you.

Unidentified speaker, Citi: Okay. And then just we had CDW just before you and obviously they are more in commercial SMBs, education, public, which includes state and local. Just are you seeing any differences or anything you can comment on, on PC refresh or even AI PC adoption across the various verticals?

Enrique Lores, HP Inc.: Sure. I think several things. One is we saw overall in North America and CDW is mostly a North America comment. So to be aligned with them, we have seen strong growth across all commercial segments, government, enterprise and SMB. Probably the only exception has been education, where the market has been softer than previous years.

That’s probably the biggest change. In terms of adoption and the transition to Windows 11, we are seeing faster adoption in the enterprise than in SMB. And this is something that additionally happens. So it’s not new, it’s how these transitions happen, which means there is more opportunity in SMB in the coming quarters than what we have seen until now. But again, this is aligned to the models that we have.

Unidentified speaker, Citi: Okay. And then what about from a geo perspective, geographic perspective? Is there any change or any differences you observe in AI PC adoption or Windows refresh across different geographies?

Enrique Lores, HP Inc.: Not major differences. Performance in Europe has been very strong as well. Probably the only difference, which is not new, is the relative weakness that we see in China, given where the overall economy is. This quarter, we have seen more positive impact of some of the consumer demand activities that the government has put in place that have been significant investments in subsidies for consumer products that have driven demand. But when we look at the economy, we continue to see significant weakness that we don’t see this significantly changing in All the coming

Unidentified speaker, Citi: right. And then just a little bit on how you’re thinking about pricing as it relates to not just commodity components, but also tariff related. Just remind investors how you’re looking at those tariff related costs both in terms of migrate the actual cost, but also in terms of migrating your supply chain to become and logistics related to that? How are looking at pricing for your PC products as a function of tariff direct and indirect costs?

Enrique Lores, HP Inc.: Maybe then let me explain some of the changes that we’re doing because of the changes in tariffs and then I will talk about pricing. During the last three quarters, we have significantly accelerated the changes that we have done in our supply chain. We started this process two, three years ago after COVID to build a more resilient supply chain. And what we have done is to accelerate this change. Our goal was to produce all products for North America out from China by the end of the year.

We accelerated that and we are done. So by during Q2 during our Q3, we completed the transition And we have moved manufacturing from China to Southeast Asia to Mexico and a bit to The U. S. This gives us now a much more flexible supply chain than what we had before. We had the ability to move and to build product in many other areas of the world and optimize to mitigate the impact of the new trade situation.

In terms of cost, of course, this creates an increase of cost that first, we are mitigating by looking for opportunities to reduce cost of products or cost of structure. We have accelerated our structural cost reduction plan and we are going to deliver on the more aggressive goal. And of course, in some cases also we increased prices to compensate for that. We did this in Q2. We also did it in Q3.

And this will have more impact over the months, because it takes time to for us to change prices and for these prices to have an impact.

Unidentified speaker, Citi: Okay. And then PC is a fairly competitive market. How do these price increases impact the way you’re thinking about margins obviously positive, but how are you thinking about the share gains? Is this an opportunity? If you raise prices, I believe Dell has not, Lenovo has, like how do you think about market share despite for Yes.

The price

Enrique Lores, HP Inc.: So two things, one is our strategy has not changed and we continue to be focused on profitable growth. Our goal is not to grow share for the sake of gaining share, is to drive profit and to drive growth. And what we see in the market is fairly consistent. Then usually in the PC space, when cost increases, prices change, whether it is a higher lease price or whether it is lower discounts, all companies move. And our expectation is that the market will be moving in this direction.

Because there are many ways to control pricing is not only what you Yes. Do in this

Unidentified speaker, Citi: I’m going to just see if the audience has any specific questions. I have a whole list here. This is meant to be an open fireside. So if you do have a question, please raise your hand so we can bring the mic to you. We can continue.

The AI PCs is interesting. I mean, people want to know where are the use cases that you’re seeing that’s driving the need for an actual AI PC. I mean, talk about Copilot, but Copilot runs a lot in the cloud as well. So I know you guys have talked about being more efficient with tokenization, being reduced battery power, increased privacy, increased security if you do AI on the PC on the edge So just walk us through perhaps the use cases that you’re seeing that’s really driving adoption of AI built into the devices itself.

Enrique Lores, HP Inc.: I think there are two different type of use cases. One is, let’s call it new applications, like what you mentioned, Copilot or Copilot Plus or some of the applications we have developed like AI Companion that led customers to inference in locally. And by doing inference in locally, it is cheaper, as you said, it is more secure and also is faster. So that’s one set of applications. The other set of use cases is driven by the same applications you use in your current PC, but that take advantage of the new capabilities that PCs have.

In the call last week, I mentioned some examples. For example, CrowdStrike is now using the NPU capabilities to scan the memory in the PC locally faster, looking for virus, looking for anomalies. That’s capability that they can do only in an AIPC that will bring significant advantage. Adobe and Zoom are developing their applications to take advantage of both the MPU and the GPU capabilities in AIPCs. So they can run some inferencing locally, which in the case of Adobe, for example, will reduce their cost.

In the case of Zoom, it helps them to do some of the work that they were doing in the cloud. They can do it locally and they can do it with higher quality. And this is going to be a big driver of demand. So it’s not only what new things you can do, it’s more and more the same software applications you have been doing you have been using traditionally now will run faster, better or at lower cost because you’ve seen AIPCs. And this is our key message to our customers.

If you’re an enterprise or an SMB, you expect the life of your PC to be three or four years. And if you’re buying a PC now, you want to make sure that the PC will support the new capabilities that software will bring in the coming years. So you should be building an AI PC, you should be buying an AI PC, not a traditional PC.

Unidentified speaker, Citi: Right. Do enterprises or SMBs need to change things on the back end as well? So it’s not just the edge itself, but are you seeing investments that they need to do to enable these applications that you’re talking about to do things faster It or it doesn’t require

Enrique Lores, HP Inc.: doesn’t require changes.

Unidentified speaker, Citi: Okay. It’s independent because I know there is obviously investments going on there as well. Okay. All right. Just help us understand, you’ve talked about AIPCs carrying higher ASPs, obviously, but at the same time they carry higher BOM, because there is more there’s obviously an NPU in there as well now.

So how does that how do you guys think about your margin trajectory and the targets that you have for margins as it relates to as you start to see more AIPC adoption?

Enrique Lores, HP Inc.: We have not shared the specifics on margins on AIPCs. What we have offered is that we should be looking at the AIPCs as premium PCs. And in the same way, everything that you said for AIPCs is true for premium PCs. They have more expensive processors. They have more memory.

They have a better connectivity. This drives cost up, but also this drives price up and create better margins. This is our expectation with AIPCs.

Unidentified speaker, Citi: Okay. Is there something that’s unique to the way HP is driving AIPC adoption that could drive sustainably higher market share than you’ve had in the past?

Enrique Lores, HP Inc.: Well, in AIPCs today, have higher share than what we have in the traditional categories. And there are many things that we are doing differently. I would highlight three. One is the work with software companies. This is something I think fairly unique that we have been doing for some time that is now helping to drive adoption.

Second is today, we have the AIPCs with the fastest and the strongest performance. So we are the only company that have 55 TPUs AIPCs, which is a strong differentiator. And third is security. Security has been for a long time a key HP differentiator. In the case of AIPC is even more critical and we are going to continue to invest on that front to make our AIPCs more secure than anybody else’s in the industry.

Unidentified speaker, Citi: Okay. Anything on the chip side of things, because I know there’s a lot more chip suppliers now are planning to enter the PC. Traditionally, it’s always been Intel and of course, had AMD. Now we have whether it’s Qualcomm, I know NVIDIA has talked about some presence there as well, not just in the supercomputer, but more in the mass adoption side of things. So just maybe help us understand, how does the changing chip landscape impact your offerings or the SKUs or is it going to be more of them?

Is it going to be more concentrated?

Enrique Lores, HP Inc.: JOSE This is a very positive change for us. In a world where there are multiple microprocessor vendors, we have an opportunity to have a more differentiated offering and also to have a much stronger ability to negotiate that what we had when there is one software vendor and one processor that was a situation five, ten, fifteen years ago. So that’s a positive change. I would say the market is very dynamic. And we have seen AMD having a very strong offering in the AI space, probably in the x86 side, they have the strongest offering today.

And we have seen Qualcomm introducing ARM technology with very strong AI capabilities. And in both cases, we are leveraging those investments and creating a portfolio of products to drive and to support this new technology. In the case of Qualcomm, you’re going to see us introducing a very complete portfolio of products in the coming months that we think will be attractive both for SMBs and for consumer. And with both AMD and Intel, we have a very complete lineup on both commercial and consumer products.

Unidentified speaker, Citi: Okay. And then HP has always also been really good on the commodity side of things in terms of purchasing ahead. Obviously, you guys have a big business. So just any outlook on some of the commodity components as we look into the back half of this year?

Enrique Lores, HP Inc.: Yeah. We this year, we have seen an increase of commodity costs compared to where we were in 2024. And we think year on year, this is going to continue in the second half. We think especially in the case of Memories, both driven by the transition to new generations and also by just pure cost increases. We expect to see cost increases.

To mitigate those, we do strategic wise. We have increased our inventories to make sure we mitigate the transition. But we see and we expect this cost to increase in the second half. And what happens usually in this space is this is reflected in price. So when we talk about pricing increases, it’s not only driven by tariffs, it’s also driven by UNIDENTIFIED commodity cost

Unidentified speaker, Citi: Yeah. And just if you can remind investors as it relates to tariffs, I know PCs imported into The U. S. Right now qualify under Section two thirty two tariff exemption. Any change to that relative to I know you guys update your slides at the in the earnings call as to the impact SERVRANCKX:] of tariffs?

Enrique Lores, HP Inc.: We I mean, what we do is we forecast based on what is what has been already decided.

Unidentified speaker, Citi: And

Enrique Lores, HP Inc.: this is why we are very clear on what are the assumptions that we’re using. As you know, the February investigation is still open. We don’t have a clear date on when it’s going to be defined. When it will be defined, we will see how do we need to adjust our plans. I think the key thing is during the last quarters, we have shown that we know how to respond.

We have now much more flexible supply chain that we had before. We can continue to reduce our cost and we will. And eventually, if in some cases, need to use prices to pricing to compensate, we will. But we need to wait until the decision is the final decision is made.

Unidentified speaker, Citi: UNIDENTIFIED Any impact from pull forwards, like are people just buying ahead or that you think people are just like, no, we’re buying what we need and sort of looking for making sure our capabilities are in place for the next until the next refresh cycle?

Enrique Lores, HP Inc.: JEAN We haven’t seen a big impact on pull forwards. In Q2, we estimated was less than 1% globally. We didn’t provide an estimate in Q2 because in Q3 because it was very small. So we are not seeing that in a material way.

Unidentified speaker, Citi: And that’s just a function of the way you’re looking SERVRANCKX:] at your orders that are coming in and it’s tracking in line. Is there something else that gives you confidence that, yes, this is not really pull forward. This is kind of business as usual.

Enrique Lores, HP Inc.: We look at all sorts of things. We look at orders. We look at inventories in the channel. We look at sell out. We look at funnel, how the funnel is evolving.

I mean, it’s hard to triangulate because we can look at multiple variables. And when we look at them, don’t see a big move forward.

Unidentified speaker, Citi: All right.

Enrique Lores, HP Inc.: And also, if you think about demand is not only driven by what happens in The U. S, tariffs are not impacting the rest of the world, we have continued to see some demand there. So that also helps to triangulate.

Unidentified speaker, Citi: All right. I’m going to jump to print. I know you love print more than PC But help us understand, print, there is obviously secular challenges there. You’ve talked about some declines there in 2025 and maybe continuing into 2026. So has but at the same time, I think you talked about print volumes.

I mean, hasn’t dramatically changed. Just kind of walk us through the puts and takes to your print outlook. Why is the target that you’ve provided for ’25 and potentially for ’26 the right number? Like what’s what are the drivers behind there?

Enrique Lores, HP Inc.: Yeah. When if you think about print, the driver the fundamental driver of the print business is usage. Our customers using printers and how many pages are being printed. So when we saw the softness in the office space, of course, we immediately go to monitor what is happening on pages. Are the number of pages printed declining, growing?

Are they behaving as we were expecting? And we have a lot of telemetry because many printers report back to us what is the usage, how many liters of ink have been used or kilograms of toner and how many pages have been printed. And when we look at telemetry, what we see is that performance or usage is going as we were expecting. So no deviations versus plan. What has happened, we think, is that customers, especially enterprises, are prioritizing other investments versus refreshing their print installed base.

They’re investing in AI. They’re investing in PCs. And print is not one of the top priorities now in terms of investment. And this is why we shared, we think this is a temporary effect, because at some point, these printers will have to be replaced. But when we look at usage, no deviation versus the plan that we had and versus the models that we had.

Unidentified speaker, Citi: Okay. And that usage is more a function more tied up in with your supplies?

Enrique Lores, HP Inc.: Exactly. Yeah,

Unidentified speaker, Citi: which is a higher margin portion of your Print business anyway.

Enrique Lores, HP Inc.: Exactly. Exactly.

Unidentified speaker, Citi: Okay. And that is why HP’s print margins are amazing. So can you talk a little bit about the sustainability of those print margins? Is it page volumes? Or are you doing something else that suggests that sustainability?

And maybe also talk a little bit about the competitive landscape. I mean, you’ve had Xerox, WireLexmark now trying to get more into the office, into the A4s, as you call it, Prince side

Enrique Lores, HP Inc.: of things? So

Unidentified speaker, Citi: many different things in your question. So UNIDENTIFIED We can start with Supplies first.

Enrique Lores, HP Inc.: Let me start with Supplies. The Supplies business is performing as we were expecting. We have said it will decline mid single digits and this is what we see happening. There are multiple variables that drive that. One side on the negative side, installed base is shrinking.

There are less active printers now than there were a few years ago. And usage is also slowly declining. On the other side, we have been able to grow our market share of the installed base. So the share of HP original supplies has been growing and also pricing has been increasing. So one, some trends are compensated by the others.

Overall, the supplies business is performing as we were expecting, not only this year, but now for many years, we have been able to really model that business and execute based on our plans. In terms of the competitive environment, many of the complete competitors are Japanese companies. They have had a strong advantage during the last few quarters because of the currency rate between the yen and the dollar. This is something that at some point we’ll have to change, but we have clearly seen that benefit in many of them. And in the particular case of the office space, we think that the fact that the market was smaller has also increased the aggressiveness of some of our competitors and has driven pricing in the office space down and more aggressive than what we had modeled or what we had expected before.

You also asked about Xerox and Lexmark. We think this is clearly not a surprise. We have been saying that this market will be consolidating and this is another move in that perspective. We are in a very strong position both in A3 and A4. So we are very confident in our ability to continue to compete.

And we are going to do that by continue to bring innovation and also by continuing to drive our cost structure down as we have been doing during the last years.

Unidentified speaker, Citi: Yeah. And then when it relates to innovation, people talk about AI, AI PCs, just how does AI come into the print? Or maybe there’s other innovations that we’re not looking at because we’re so focused on AI?

Enrique Lores, HP Inc.: I think AI is going to be also very significant in the print space. We announced a few weeks a few months ago something we called a perfect print, which is the ability for the printers to understand what customers want to print, even if they get the wrong instructions. And I’m going to use an example that I think will make it more real and probably something very relevant to this room. I’m sure many of us have printed spreadsheets and we made a mistake choosing the part of the spreadsheet we wanted to print. We send it to the printer, we got it back and we get we got something different that we were expecting.

With AI, we can interpret the instructions that are sent to the printer. The printer will be able to say, this customer is telling me to print this, but I think in reality, this is what wanted to be printed. The printer will be telling you, are you sure this is what you want? Or did you want this different part of the spreadsheet? Probably you will say, yes.

Printer, you’re right, this is what I want. And that will happen. So that’s an innovation that AI is going to be allowing in the print space. And I use a spreadsheet case, but there are many other cases where this ability to really understand what the customer wants versus what the customer sends is going to be a big innovation and a big differentiator in the printing space.

Unidentified speaker, Citi: Okay. I’m going see if there’s any questions here in the audience. All right. Just subscription, that’s been a big driver for you. I subscribe to HP Inc, so I don’t have to keep running to

Enrique Lores, HP Inc.: the Thank you.

Unidentified speaker, Citi: Staples to refresh it because my kids do print quite a bit for their schoolwork. Just any updates there on your subscription, where you are in terms of your installed base as a percentage of subscribers? I think you do provide some of those metrics typically at your analyst event.

Enrique Lores, HP Inc.: Yes. And so I think the latest number we have said is we have around 13,000,000 subscribers. So it’s a significant part of the installed base today. The big change is probably that we have been expanding the portfolio of offerings we have. We started by selling ink.

We have expanded to paper one years point ago, two years ago. And about a year ago, probably slightly less than that, we started to offer the full printer as a subscription. We call it the all in program. So you don’t need to in the previous model, you had to buy a printer and then you subscribed for supplies. Now you get all in from the first from the beginning, which means you get the printer, you get the supplies and you get also support.

You get a care pack included in the service. And this new model is growing very nicely, and we are going to continue to expand to other parts of the portfolio. And we are going to combine these to the other big trend that we see in consumer, which is the shift from the traditional printer and cartridge model to the big tank model, where you buy the printer and the supplies all integrated. We started to offer the all in model for big tank a few months ago, and you’re going to see us expanding that in the future, because we think it’s better for customers and also it’s better for us for HP.

Unidentified speaker, Citi: Is it higher margins? Is that why you’re trying to move into more of that of the printing? I mean, is IP that you guys own?

Enrique Lores, HP Inc.: It’s both IP is we offer a better service to customers. And therefore we are able to retain value because we don’t when we the key value proposition because behind the subscription programs is not cost, it’s convenience. You don’t need to go and buy cartridges, you don’t need to go and buy paper, the printer is always working. Customers are willing to pay for that convenience.

Unidentified speaker, Citi: Okay. Right. Just tariffs, it’s slightly different, because I guess print doesn’t fall under Section two thirty two investigation. So as it relates to Print, obviously, you have had some tariff increases, price increases, you kind of roll that forward in the form of price increases. Like what’s been the impact to your end customers?

Enrique Lores, HP Inc.: Yes. In fact, in Q3, the impact of tariffs was higher in print than in PCs, because PCs were impacted by only by the China tariffs, were not impacted by the reciprocal tariffs that impacted print.

Unidentified speaker, Citi: And

Enrique Lores, HP Inc.: our response was similar. So we have also moved manufacturing out from China not to have to pay the China tariffs that are higher. And then we have driven cost actions cost reductions. And also in some cases, as you said, we have increased prices both during Q3 and at the end of Q3, beginning of Q4. We will see some impact on tariffs in Q4 and is built into the guide.

But the impact of the price increases will be more relevant. So it will over time compensate. Compensate.

Unidentified speaker, Citi: Okay. Just a little bit on the Poly acquisition now and that kind of falls into your peripherals or PC add ons. It’s been a few years now, like just walk us through how things have shaped out in the peripheral space relative to your expectations? Where are we now with video conferencing, adoption in rooms, especially given macro, unemployment rates, etcetera, how are thinking about that?

Enrique Lores, HP Inc.: Yes. So first of all, it’s a very important part of our portfolio. When we look at the strategy of the company going forward, we see the what we call the future of work as the key opportunity. And the fact that we have PCs, printers, headsets, video conferencing systems, and we can build and we’re building a full system around that is a big differentiator for us in the market. So it’s really, really important from a strategy perspective.

Also when we think about AI, I was talking about AI for printers, AIs for PCs. There is clearly an opportunity to differentiate our headsets, differentiate our video conferencing rooms with AI. And during the next years, you’re going to see us driving that. Also, there is the experience you were asking about video conferencing rooms. The experience in that all of us have today connecting to a video conferencing setting is up is clearly an opportunity for improvement that we are driving and connecting HPPCs with HP conferencing rooms and really simplifying the experience is going to be one of the key one of our key differentiators.

Compared to where the business was in 2020, 2021 where it is today, Clearly, the market has been impacted by the post COVID transition. But going forward, the penetration of video conferencing rooms continues to be small. Our opportunity to integrate better with our portfolio is there. So it’s going to be a big area of investment for us. And maybe to close, this quarter we announced a new video collaboration system that we work with Google.

It’s a three d experience, fully immersive that I invite everybody to see because it’s really differentiated. And you are in a video conferencing room, but you believe you are you would be able to touch and to see the other person given how high quality the system is.

Unidentified speaker, Citi: Okay. I’m going to wrap it up here Enrique. Just last few words for investors like what are they under appreciating or maybe missing out on as it relates to investing in HBQ?

Enrique Lores, HP Inc.: I think maybe three key messages. One is, we have clearly demonstrated that we know how to operate in this fluid environment. We declare what our objectives were about tariffs a few quarters ago and we have executed of them. And this is clearly seen in our results. Second, the opportunity to continue to grow by driving innovation around AI, focus on the future of work is going to be a big differentiator for us in the company.

And third, our capital, which we haven’t talked, our capital approach to capital is very investor friendly. Our goal is to return 100% of free cash flow if our leverage stays below 2%. And unless there are other best or better opportunities with M and A, This is what we have been driving the last years, and this is what we will continue to do.

Unidentified speaker, Citi: All right. Well, with that, I would like to thank Enrique from Good luck with all the rest of your meetings.

Enrique Lores, HP Inc.: Thank you. Good to see you. Thank you.

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