HP Inc. stock research
FY2023 Q3
HP (HPQ) Gross Margin — Quarter Ended Jul 31, 2023
Revenue increased from the prior quarter but decreased from the same quarter last year. Gross profit was slightly lower than both prior and year-ago figures, while cost of revenue rose relative to the prior quarter and fell relative to the year-ago quarter, resulting in a gross margin that weakened sequentially but improved year over year.
Gross margin takeaway
Quarter ended Jul 31, 2023 · FY2023 Q3
Revenue increased from the prior quarter but decreased from the same quarter last year. Gross profit was slightly lower than both prior and year-ago figures, while cost of revenue rose relative to the prior quarter and fell relative to the year-ago quarter, resulting in a gross margin that weakened sequentially but improved year over year.
- The movement in cost of revenue relative to revenue was the most observable factor: cost of revenue increased proportionally more than revenue from the prior quarter, compressing gross margin, while compared to the prior year, cost of revenue declined more sharply than revenue, expanding gross margin.
- Compared to the immediately preceding quarter, gross margin was lower, as cost of revenue grew at a faster pace than revenue. Compared to the same quarter one year earlier, gross margin was higher, driven by a larger decline in cost of revenue relative to the decline in revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
21.4%
Gross profit
$2.8B
Revenue
$13.2B
Cost of revenue
$10.4B
Quarter-over-quarter change
-1.2 pts
Year-over-year change
+1.7 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Jan 31, 2023 | $13.8B | $2.8B | $11.0B | 20.2% |
| Apr 30, 2023 | $12.9B | $2.9B | $10.0B | 22.6% |
| Jul 31, 2023 | $13.2B | $2.8B | $10.4B | 21.4% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Apr 30, 2023
-1.2 pts
Year-over-year change
Jul 31, 2022
+1.7 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The movement in cost of revenue relative to revenue was the most observable factor: cost of revenue increased proportionally more than revenue from the prior quarter, compressing gross margin, while compared to the prior year, cost of revenue declined more sharply than revenue, expanding gross margin.
Compared to the immediately preceding quarter, gross margin was lower, as cost of revenue grew at a faster pace than revenue. Compared to the same quarter one year earlier, gross margin was higher, driven by a larger decline in cost of revenue relative to the decline in revenue.
Monitor the ratio of cost of revenue to revenue in upcoming quarters to assess whether the sequential margin weakening continues or reverses.