HP 2015 Annual Report Download - page 75

Table of Contents
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
HP Financial Services

HPFS net revenue decreased by 8.1% (decreased 1.5% on a constant currency basis) in fiscal 2015 due primarily to unfavorable currency impacts led by
weakness in the euro and lower asset management activity in customer buyouts.
HPFS earnings from operations as a percentage of net revenue decreased by 0.2 percentage points in fiscal 2015 due primarily to decrease in gross margin
while operating expense as a percentage of net revenue was flat in fiscal 2015 as compared to fiscal 2014. The decrease in gross margin was due to
unfavorable currency impacts, lower margins in customer buyouts, and lower portfolio margin due to competitive pricing, the effects of which were partially
offset by higher margins from asset recovery services. Operating expenses as a percentage of net revenue was flat as a result of lower SG&A expenses due
primarily to lower field selling costs the effects of which were offset by size of the revenue decline.
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HPFS net revenue decreased by 3.6% (decreased 3.3% on a constant currency basis) in fiscal 2014 due primarily to lower portfolio revenue from lower
average portfolio assets and lower asset management activity, primarily in customer buyouts.
HPFS earnings from operations as a percentage of net revenue increased by 0.1 percentage points in fiscal 2014. The increase was due primarily to an
increase in gross margin, partially offset by an increase in operating expenses as a percentage of net revenue. The increase in gross margin was the result of a
higher portfolio margin, primarily from lower bad debt expense and a lower cost of funds and improved margins in remarketing sales. The increase in
operating expenses as a percentage of net revenue was due primarily to higher go-to-market investments.
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New financing volume, which represent the amount of financing provided to customers for equipment and related software and services, including
intercompany activity, increased 1.2% in fiscal 2015 and 14.7% in fiscal 2014, respectively. The increase in both fiscal 2015 and 2014 was driven by higher
financing associated with product sales and related services offerings. The increase in fiscal 2015 was partially offset by unfavorable currency impacts led by
weakness in the euro.
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     
   
Net revenue $ 3,216 $ 3,498 $ 3,629
Earnings from operations $ 349 $ 389 $ 399
Earnings from operations as a % of net revenue 10.9% 11.1% 11.0%
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     
   
Total financing volume $ 6,504 $ 6,425 $ 5,603
Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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