Name: HP Inc. (NYSE:HPQ) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

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HP Inc., consolidated income statement

US$ in millions

12 months ended:	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Net revenue	58,472)	52,056)	48,238)	103,355)	111,454)	112,298)
Cost of revenue	(47,803)	(42,478)	(39,240)	(78,596)	(84,839)	(86,380)
Gross profit	10,669)	9,578)	8,998)	24,759)	26,615)	25,918)
Research and development	(1,404)	(1,190)	(1,209)	(3,502)	(3,447)	(3,135)
Selling, general and administrative	(4,859)	(4,376)	(3,833)	(12,185)	(13,353)	(13,267)
Restructuring and other charges	(132)	(362)	(205)	(1,017)	(1,619)	(990)
Acquisition-related charges	(123)	(125)	(7)	(90)	(11)	(22)
Amortization of intangible assets	(80)	(1)	(16)	(931)	(1,000)	(1,373)
Separation costs	—)	—)	—)	(1,259)	—)	—)
Defined benefit plan settlement charges	(7)	(5)	(179)	(168)	—)	—)
Impairment of data center assets	—)	—)	—)	(136)	—)	—)
Earnings from operations	4,064)	3,519)	3,549)	5,471)	7,185)	7,131)
Interest expense on borrowings	(312)	(309)	(273)	(327)	(344)	(426)
Loss on extinguishment of debt	(126)	—)	—)	—)	—)	—)
Tax indemnifications	(662)	47)	472)	—)	—)	—)
Other, net	49)	19)	13)	(412)	(284)	(195)
Interest and other, net	(1,051)	(243)	212)	(739)	(628)	(621)
Earnings from continuing operations before taxes	3,013)	3,276)	3,761)	4,732)	6,557)	6,510)
(Provision for) benefit from taxes	2,314)	(750)	(1,095)	(178)	(1,544)	(1,397)
Net earnings from continuing operations	5,327)	2,526)	2,666)	4,554)	5,013)	5,113)
Net loss from discontinued operations	—)	—)	(170)	—)	—)	—)
Net earnings	5,327)	2,526)	2,496)	4,554)	5,013)	5,113)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

The financial performance between 2013 and 2018 is characterized by a significant structural shift in the scale of operations occurring between the 2015 and 2016 fiscal years. This transition resulted in a substantial reduction in both top-line revenue and the overall cost structure, followed by a period of gradual recovery and stabilization.

Revenue and Gross Profit Trends: Net revenue remained relatively stable between 2013 and 2014, before experiencing a precipitous decline of approximately 53% in 2016, falling from 103,355 million US$ in 2015 to 48,238 million US$. Following this contraction, a recovery trend is observed, with revenue increasing to 58,472 million US$ by 2018. Gross profit margins also shifted; the margin decreased from approximately 23.9% in 2014 and 2015 to approximately 18.3% by 2018, indicating a higher relative cost of revenue in the post-2016 operating environment.
Operational Expenditure Analysis: Operating expenses were scaled down significantly in alignment with the revenue contraction. Selling, general and administrative expenses dropped from 12,185 million US$ in 2015 to 3,833 million US$ in 2016. Research and development spending followed a similar pattern, decreasing from 3,502 million US$ in 2015 to 1,209 million US$ in 2016. While these expenses began to rise again from 2017 through 2018, they remained well below pre-2016 levels.
Operating Earnings and Profitability: Earnings from operations peaked in 2014 at 7,185 million US$ and entered a period of decline, reaching a trough of 3,519 million US$ in 2017. A modest recovery is noted in 2018, with operating earnings rising to 4,064 million US$. This suggests that while the company regained some operational momentum, it has not returned to the absolute operating profit levels seen prior to 2015.
Net Income and Non-Operating Impacts: Net earnings exhibited significant volatility, particularly in 2018. Despite operating earnings being lower than 2013-2015 levels, net earnings in 2018 reached a period high of 5,327 million US$. This spike is primarily attributed to a substantial tax benefit of 2,314 million US$, contrasting with the tax provisions recorded in previous years. In the absence of this tax benefit, net earnings would have been significantly lower, reflecting the reduced scale of the current business model compared to the 2013-2015 period.

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