Happy to have HP Inc.'s President and CEO, Enrique Lores, join us today. Just as a reminder, we do have Pigeonhole Technology, so if you'd like to ask a question, you can submit it via Pigeonhole. I will pick it up on here and do my best to ask that. Enrique gets the award for most effort to get here. He arrived at the hotel at 2:30 A.M. last night because HP reported earnings in California yesterday after the market closed. Mm-hmm. Enrique flew here, so we're indebted and grateful for your effort. Thank you. Yeah. Thank you for having me here. So, maybe we can just start with a little recap of your fiscal Q2, which you reported last night. Maybe I'll just turn it over to you in terms of highlights that you wanna speak to. Sure. We, as you said, we reported yesterday, and we defined the quarter as solid. We grew operating profit, we grew earnings per share, non-GAAP, both of course. But probably the most important thing was that we saw a recovery of demand, especially in the PC space, especially in commercial PCs. The PC business grew for the first time in eight quarters, and it was really driven by the performance and the progress that we saw in the commercial side. The print business performed as we were expecting. We continued to see soft demand on the hardware side. Supplies were in line with our expectations. From a free cash flow perspective, we delivered on our numbers, and we continued to execute our plan to return the free cash flow to shareholders. We returned close to $400 million, and no change as with the plan. Solid quarter, and especially on the commercial PC side, lots of progress. Also it was a quarter where we did a lot of innovation. We introduced a lot of innovation driven by AI, especially in the PC space, but also in other parts of the company that we think puts us in a strong position in... for the coming quarters. Right. And just to punctuate that, so I think normal seasonal growth in commercial PCs is down about 7%. We're down 4%, so better than that, clearly. And you guided for PCs to be stronger than normal seasonal in the second half. Maybe you can talk a little bit about why you have that confidence in the second half. You know, I think if anything, PCs were maybe a little disappointing in the first quarter. And so, you know, I guess you could say, well, was Q2 just a catch up for Q1? And how do we really know the recovery is happening? So what are the things that you can point to that make you confident about continued momentum in PCs? Yes, I think there are two things. One is, from a seasonality perspective, the second half in the consumer space is always stronger than the first half, just because of back to school and the holiday season. So this always drives on the consumer side, which is where we still see softer demand, we see the stronger seasonality on the second half. In the commercial side, beyond the performance that we saw this quarter, we saw also some more qualitative drivers that give us confidence about the performance of the business in the second half. One of them is the size of the funnel, the size of the deals that we see in the enterprise space. This is something that we monitor regularly, of course, and when we look at the funnel we have now versus the funnel that we had a year ago, same period, is significantly larger. Second big driver is, we know, during Q2, Microsoft started to publish pricing and specific timings of Windows 11, and we have started to see some of these deals driven by the Windows 11 refresh, which is also an important sign, something we were expecting to happen, that we have seen starting to happen now. And this is more a specific comment for the U.S., sales to the federal business in the first half were impacted by all the budget restrictions that many organizations went through. Some of these budgets have been released. We expect that there will be now an acceleration of deals in the federal space in the second half that will also help the commercial space. So there are not only the performance improvements we have seen, but also there are qualitative drivers that sustain the demand that we expect to see in the second half. You reaffirmed your free cash flow guidance, and you narrowed your EPS range. Mm-hmm. -for the year. You know, one, one question that we got, so I'll ask to you, was: You, your other income guidance is actually more favorable. So it was $0.7 billion, now it's $0.6 billion in terms of, other income or expense in your case. Mm-hmm. That, you know, that's about $0.09, but you didn't change your EPS guidance. So, are you being conservative? You know, all else equal, you know, why, why was that kind of not bumped along in terms of the EPS outlook? Yes. As we said in the call, we continue to operate under multiple scenarios because we have seen an improvement of demand, especially on commercial, but we continue to see multiple potential scenarios in terms of consumer and other factors. And we thought it was just better to keep the guide that we have had, because, yes, there are some pluses, but there are also some other minuses, so it was better just to keep the number that we had before. And just on the demand environment, you, you highlighted China as being an area of weakness. Can you discuss, like, what is happening there? Do you feel it's just general malaise, both on the, you know, in the economy per se? Do you think it's something HP specific? And can you dimension at all how important China is to your business? Yeah. We have never shared the size of China, but if you look at the size of the PC business overall, it is the second largest PC market, so this will give you an idea of it is a relevant market for us. And we really see market driven. For several quarters, we have been growing share. We did in this quarter, but we don't see this as the key driver. Both on the consumer side and the commercial side, demand is very soft, is declining. I was in Beijing four or five weeks ago, and this is something you can experience when you talk to the team, when you talk to partners. Overall, there is a significant concern about the economy of the country, in the country. They have problems with real estate, problems with unemployment of young people, and we think this is really impacting the willingness to invest and the, and the overall, situation there. We have operated for many years with significant restrictions on who, how can we sell, how can we not sell. Things have not changed, so it's not a new factor, but clearly economy is, is a key thing that has, that has changed. Enrique, you've talked about essentially returning all of your free cash flow to shareholders in the form of dividends and buybacks. Mm-hmm. The buybacks were $500 million in the first quarter, but they were only $100 million in the second quarter. Why, why was that? Well, we always operate with within the same framework of returning 100% of free cash flow over time. We never made a commitment on a specific quarter what we will do. If our leverage ratio stays below two, and if we don't find any other opportunities, and this continues to be the plan for the year. We don't look at it quarter by quarter, it is an over time plan, and an investor should expect that during this year we will be returning 100% of free cash flow. But was there anything in the quarter, either the share price or I don't think you triggered above your leverage ratio. So, I'm just curious, like, why that wouldn't be, like, necessarily, and you're not matching it to free cash flow, because free cash flow in first and second quarter weren't that different. Yeah. So I'm just wondering, like, you know, why did someone forget to push the button, or you know, like, why is that the case? I don't think there is really nothing relevant to share. It's not like someone forgot. Again, look at it from a long-term perspective, and we will execute the plan we have said. You have a big Future Ready plan- Mm-hmm. -which involves a lot of cost takeout. Where do investors see that? Because OpEx was up 5% year-over-year in the quarter. You know, revenues were flat to fractionally down. So OpEx is actually outgrowing- Mm-hmm. Revenue, despite the fact that you have really significant cost cutting. So can you explain that, you know, sort of that apparent discrepancy, and where, you know, what's your framework for what percentage of the Future Ready savings actually impact the bottom line versus being reinvested? And is that something we really see in operating margin, in gross margin, as opposed to OpEx? And how do investors think? Yeah, let me, maybe it's worth spending a minute understanding the framework we have for cost. And the thing is, it's very simple. If the value of a company is 100 and operating profit is 10, the cost that we need to work is $90 billion, if this were 90. And this is how we define the goals and how we manage the Future Ready plan, going after those $90 million. Also, if we find opportunities to improve the gross margin, but at the same time to invest in what we think are growth opportunities, we think this is good for the company for the long term. And this is how we have been managing the plan, and how we will continue to manage the plan. Where can you see the savings? Clearly, in the operating margins of both businesses. Both of them are probably at the highest level they have been. If you look at the gross margin level for both PS and Print, they have significantly improved over the last years, even if demand has been soft, which is much harder to, much harder to do, and this is clearly a consequence of all the core work that we have been doing. Look at how demand has dropped and the fact that we have been able to improve gross margin. This is a strong signal of, of the progress that we, that we're making. In terms of framework that we use, we, we have shared before, we have five growth, what we call growth areas. By investing in those, we think they will be bringing growth to the company. And now with the opportunity that we see in AI and especially in AI PCs, we have been also increasing our investment in that category, because this is an opportunity that we think we can lead, and an opportunity that is gonna create a lot of value for shareholders. Right. And is there... I mean, if we think about the margin improvement, is it because you've taken out cost, or do you feel the products have become sort of more value-add and richer, and therefore you're capturing higher price or more margin as a result of that? Or is it the cost reductions are leading to, you know, effectively a lower bill of materials, et cetera? The thing is, both. We have been doing a lot of cost across any area of the company, from supply chain, simplification of portfolio, operational expenses, across everything, we have been driving costs down. But also, one of the drivers of the business has been to shift our mix to more premium categories, that in some cases also requires more investment and also have better gross margins. So it's a, it's a combination of both elements. But there has been a lot of effort on cost. We committed to reduce our structural run rate by $1.6 billion by the end of next year, and we are gonna be making our goal. Is there a percentage that we should think in this plan and future plans of those cost savings that should be reflected in improved margin over time? We don't have a specific number, but if you think what we have done during the last three years, for both businesses, we have improved our operating margins. So three years ago, for PS, we were, I think, it was from 3.5-5.5, we increased to 5-7, and in Print, we also went from 18-19. So this is where you see these improvements. You talked about—we talked about the improvement in PCs in the second half, but you also feel a bit more confident in your ability to gain share in Print in the second half. Mm-hmm. I'm wondering why you see that and what changes second half relative to first half in terms of your belief in in- Yeah ... improving in Print on a relative basis? Yeah. First of all, is the main reason why we have been losing share in Print is because how aggressive some of our competitors have been able to be because of currency. And when we saw that currency was not changing a couple of quarters ago, we started a specific effort to reduce our cost on the printers, on the Print side, to be able to be more aggressive. This is something we said a quarter ago we were going to do. We have been working on that, and now we're in a position to, to be able to do that. That will allow us to grow profit, sorry, to grow share in a profitable way, because our goal of profitable growth is, is very critical for us. So now we are in a position to, to be able to do that. You can see that we have started to see that, especially on the office side, where quarter-over-quarter, we have started to grow share, and we expect that this will continue in the second half. So you see the incremental cost cuts, but the yen has continued to remain unfavorable- Mm-hmm ... for you, like, it's worse than it was two quarters ago. So it almost feels like a moving target. So do you feel you can get... And so I appreciate the fact that, you know, you set about taking cost out, but it almost feels like the goalposts have moved further, you know, in terms of being more challenging. Clearly, the competitive environment has not become easier, but based on the projections that we have today and the cost actions that we have taken, we think we can grow share, and this is why we shared it yesterday. Right. I think I asked you this question or a variant of this last night on the earnings call- Uh-huh ... but just for the benefit of the group. You know, if I go back to, like, pre-COVID levels, revenues were about $58 billion. This year, last year, $53-$54 billion. To your point, operating profit dollars are higher- Mm-hmm ... and operating margins are much higher. But how do we interpret that? I mean, do we interpret that as you're willing to trade off growth for profitability? Do we interpret that as you're kind of in a lull, and you should naturally be going back to $58 billion or more? How do we... Because I think at first blush, you could say, "Well, look, if I'm a shareholder, I actually prefer the fact that you have more operating profit dollars than if you had the same revenue and less operating profit dollars." But how should investors think about that, and what does that level say about what's either happened over the last four or five years or what we think should happen over the next two or three years? As always, there is not only one answer to the question. There are always multiple factors. If I start from where do we see the company going in the long term, we think that what we share with and at our investor day last year of growing between 2% and 4% revenue continues to be our plan, and we think that demand is being impacted in the short term, but we are maintaining the goal that we have there. So that's the first thing, thinking about the long term. When we look backwards, there are multiple factors. One is some markets have become smaller. Other markets, in other markets, we have lost share because we declare that we wanted to lose unprofitable share, and this was a big change that we started in Print, some years ago. Also, supplies have been declining in the last 5 years, and they are relevant in the, in the company. So there are multiple factors that explain what has happened in the past, but when we look back, forward, we see the opportunity to continue to grow and to grow the company between 2% and 4%. And Enrique, if I stick with that 2%-4% longer term target, I think at your analyst day in October, you know, you had talked about sort of Print TAM around 1% growth- Mm-hmm ... in total, and a PSG TAM around 4% and, and so you would hold or slightly gain share. But if, if I just decouple the, the Print side, you've, you've guided to low- to mid-single-digit declines in supplies for Print. Mm-hmm. So that's 65% of your revenues this quarter, right? So if 65% of your revenues are going down three or four, that means hardware at 35% of your revenues in order to grow one has to grow like- Mm-hmm ... six, seven. You know, hardware's been declining double digits. Is it really … how does that math work? You also asked me this question in the analyst meeting. So So I think that- Clearly, I'm hard work. It's good. Our assumptions have not drastically changed. So if we look at the print business, we, as you said, we expect supplies to decline low- to mid-single digits, no change, and our models continue to support that. On the hardware side, we are gonna be growing our business in the higher [PS and Print] segments, like Big Ink and Big Toner, where customers buy the printer and supplies and this becomes more... and this helps from that perspective. Also, we are growing our services business in print, where we have made very good progress in the last year, really shifting our model and building the subscription model and extending it to other categories. We see opportunities to grow share in the office space, where compared to the overall print business, we are underrepresented, and especially graphics continue to be a growth opportunity. So there are multiple drivers that make us believe that we will be able to do that. At the same time, at the company level, we are probably now more optimistic on the growth of PCs than we were before, and we haven't redone or republished our long-term plans, but just looking at the impact that AI is going to have on the PC category, we see a more positive impact than we were before. So we continue to see this growth of 2%-4% as a right goal for the company. Right. And so speaking of PCs- Mm-hmm ... and just, you know, your, your optimism this quarter and potentially longer term, if we, if we just level set, so PC units were, depending on the source, 250-260 in 2018. Mm-hmm. It went up to, like, 350 in 2021. They were 260 last year, so kind of a round trip. How do you think about industry units for 2024, and how do you think about, like, medium- to longer-term unit growth rate? And then we can talk a little bit about AI and stuff, but just- Sure ... just on the surface, if you think about PC unit growth in the context of those historical numbers. Yeah, we think that our estimate for this year has not changed, is that it's going to be small growth in units between, let's say, low single digits. And our estimate is very similar to what most of the industry analysts are publishing, so no big deviations there. Probably is more relevant that when we look at what categories in PCs are growing, we see more growth in premium categories, which, from a revenue perspective, is really helping to drive higher revenue growth than unit growth. And we expect that this trend will continue going forward. We think that the growth without the impact of AI, which we can talk later, is gonna be in the low mid-single digits for PCs going forward, very similar to what we shared in our industry event about a year ago. Okay. Yeah. This is for PCs, for the PC market. Then, if we add accessories or services, of course, the growth will be higher. Right. Maybe just, what are you seeing in terms of competitive pricing dynamics today, and how do we think about that in the context of, you know, DRAM prices have gone up? So, I think on a sequential basis, there was some improvement in consumer pricing, and commercial pricing was maybe down, but year-over-year, I think pricing was down in both. Mm-hmm. So, what are the prevailing pricing dynamics, and how do we think about that in the context of component pricing? Yeah. In the model that we have for the second half of PCs, we expect pricing to be flattish. Again, there are ups and downs. You mentioned commercial mix will be—commercial will be growing, which will be driving prices up. We will be repricing for memory every time we will be able to, so this will also help to increase prices up. We expect to see more pressure on the consumer side, as we were talking before. Also, education, we think is gonna be bigger, so this will also be driving average pricing down. Multiple factors up and down. Our expectation is that pricing will be flattish for the second half versus what we sell now. Just when you say flattish in the second half, is that relative to a year ago or relative to- To- ... second quarter? Quarter-on-quarter or half-on-half. Right. So stable, essentially. Yeah. You mentioned that on the... I don't know if you said education. You didn't say the word Chromebooks, but Chromebooks were kind of the leading edge of the strength in the pandemic in 2000. So we're now at the like four-year anniversary of that. Mm-hmm. Have you seen refreshes in Chromebooks beginning, or maybe you saw them, you know, earlier than the last couple of quarters? And is, is that some, you know, any kind of indicator for, you know, whether you start to see kind of the, the echo of this kind of boom and slowdown cycle? Yeah. So we, we have started to see a pickup of demand of education, and this, especially in the U.S., is a Chromebook opportunity. But as we have said before, and, and we expect this to continue, next year, we are starting to see very big deals in many countries driven by education. There is a very public deal, for example, in Japan, that will start happening in 2024, in 2025 and 2025, 2026, that are many, many millions of units. But as we have said before, the overall Chromebook business is really not material at the company level, not from a revenue perspective, not from a profit perspective. So yes, we are going to see a pickup, but it's not something that will really be impacting our results in a significant way. Many millions sounds pretty good, though, here. It's a very good number. A million here, a million there, can- Yeah you know, can help. We are going after these deals because we think it's good, but it's not like- Right a huge impact on the company. Right. Yes, of course, they help. And you alluded to this before, but what are you hearing from corporates around end of life Windows 10 end of life refresh? And is the strength you think you're beginning to see or you are beginning to see on the commercial side, is this COVID replacements? Is this replacements because of Windows 10 end of life? What do you think is the predominant driver of or is likely to continue to be the predominant driver of commercial strength? So far, I would say, has been more the aging of the install base, so I think you call it COVID replacement. But we are starting to see Windows 11 refresh deals. And anyway, it's hard to distinguish, because when there is one, we do the refresh. So it's kind of both. But we have started to see deals where companies are really starting the conversation from the need to reduce their support costs if they stay on the old system, and the willingness to move to Windows 11. Separately, if we look at market share dynamics, for many, many years, until the last three or four years, you know, the big three or the big five PC players were gaining share. Mm-hmm. That changed a bit in the pandemic when those players didn't collectively gain share, and we're still sort of seeing that. Now, what, why is that, and what are we likely to see over the next five years? You know, I think the, I think the big five are, I don't know, 65% of the market now, or... Mm-hmm. You know, there's one other big player, so the big six are, you know, 70%+ of the market now. Yeah. Why has that dynamic changed, and is that temporary or structural? I think the key driver was the fact that during the pandemic, the competitive dynamics changed and was more a supply-driven environment than a demand-driven environment. I think for the big players, demand-driven environments kind of help us more than supply-driven environments, and I think this is the major driver. Another driver that we need to see how it evolves is the fact that the three players are really much more focused now on more premium categories and volume categories, and the metrics you were sharing are more unit-driven than value-driven. I think this is temporary. I think this is going to change. But at the same time, our goal is not to grow share for the sake of gaining share. Our goal is to grow share, profitable share, which drives us more towards premium categories, to services, to accessories, and this is how we are defining the plan for the company. So it's taken me almost 30 minutes to really start talking about AI, which, you know- Yeah -probably is, um- A record ...shame on me as a tech analyst. But so you talked a little bit, you have in the past, and you talked a little bit more last night about the AI PC opportunity. And you talked about, I'll paraphrase and you know, maybe 10% of the units this year would be AI. You get a 5%-10%- Mm-hmm Jump on that. Within three years, might be 60% of the units that are AI PCs. Is the benefit to a PC OEM like HP going to be principally in the higher realization of price, or do you actually think the availability of AI PCs will accelerate or change replacement cycles? I think it's going to be both. I think that clearly average selling prices are going to increase, as you just said, but also as customers will see the benefits that the AI PCs will bring, and applications will be supporting both, so will be supporting those. There is going to be an acceleration of sales. For example, with AI PCs, you are able to—you will be able to do in your PC many of the activities that today you need to do in the cloud. And this from a speed/latency perspective, from a data protection perspective, is a much better... And from a cost perspective, is a much better model. On top of that, with the new models, and this is something that we only started to share a couple of weeks ago, something we have done is the PCs now have a model that optimizes the performance of the PC for the specific user. The PC learns how Toni will be using, how you will be using your PC, and will be able to optimize power consumption, CPU consumption. So it will really be a PC that is performing optimally for you. And especially for commercial PCs, there's going to be an increase in security. So as customers will start getting familiar with this new functionality and new value, we think this is going to accelerate the replacement cycle. If you think you know, three years out when you said, you know, could be 60% of PCs- Mm-hmm How does that differ between commercial and consumer, and why? ...We think it's going to be very similar. We think the adoption will start in consumer, because especially large corporations need to go through a process of testing, making sure the PCs will work in their environments, and this evaluation takes time, but over time, we see penetration in both, in both segments. And how does the consumer become aware of that? Is it gonna be channel partners? Is it gonna be advertising? How does, you know, is it gonna be, you know, people walking in the stores, consumers walking in the stores and being upsold on it? But how does the consumer gain awareness of this incremental functionality, and is proven? And how do they, you know, and do you expect them to get it, or do you feel like it's gonna be a 5G event where there's so much talk about it? We all got 5G phones, and my 5G experience has actually gone down from my 4G experience. But you know, I was doing it because the carriers were pushing it, and it ostensibly had all these benefits, but it hasn't really been the case. So I'm just wondering if consumers are on the front end, you know, they're clearly creative people, people who use AI intensively will want an AI PC, but that's not the majority of people, certainly not today. So how do consumers become aware and actually make the leap to buy an AI PC, and how much of that branding comes from you or from, you know, NVIDIA, and where does that message get delivered? I think there are going to be multiple things. One is there is going to be a big push from all the vendors, including Microsoft, the silicon providers, to explain the value that AI PCs are going to bring. Also, as applications will start supporting those, they will highlight that these new functionalities will only be supported by AI PCs. And also in the retail shops, there will be training events and communication events to explain that. Something that... This is both common for both consumer and commercial. Something we have seen is we need to do a big effort on training and communication in the coming months. So, for example, in the commercial space, our resellers and our own sales teams will be able to explain the benefits. So you will see a lot of work from us, and I'm sure from some of our competitors in the same direction. Right. So if I- It's something... Sorry, sorry to interrupt. No, please. It's something that has not been done in the PC space for a long time. Internally, we have defined this as a category creation moment, because we realize that it's a category that needs to be created, that requires much more effort than what we have done in many years in this, in this space. So if ASPs go up 5%-10% and 60% of the units move in three years, it's 3-6 points of price over three years. So that's 1-2 points accretion from price- Mm-hmm. If I just run your math through. And then there's a belief that there will be, you know, potentially some accelerated replacements that will happen. Are there opportunities for HP to be a channel for AI services or products? Like, why wouldn't you get paid for preloading Copilot or other stuff? Let me move the conversation a bit higher, because I think it's where you're going. I think we are about to see one of the biggest changes in terms of industry structure that we have seen in a long time, and this is going to have implications at all levels. It is going to have implications at the semiconductor level. We introduced, for the first time, in a relevant way, ARM PCs a couple of weeks ago, and they have very strong performance. On the semiconductor side, there are going to be significant changes, but also at the operating level, at the operating system level and the application level, the role of operating systems and applications is going to change. When today you open your PC, you get into the operating system, and you have access to multiple applications. When you think about the future, you will not have so many applications open. You will have a prompt that will ask you: What do you want to do? And you will tell your PC: I want to create an application. I want to send an email to Toni and tell him how thankful I am for having been in his presentation, and by the way, the analysis of market blah, blah, blah is different. This is how you will interact with your PC. It's not by going to an application, opening certain applications, and creating models, and this is going to be very disruptive. How all this will translate into what business models will be created, what opportunities to participate in where, is going to be different, and a lot of work is being done in this space. I think it is a point in time where we are gonna see a lot of changes happening in the industry in the next 3-5 years. But doesn't... I mean, it's interesting that you said this was a category creation moment- Mm-hmm ... and that there's gonna be disruption. Could this not be, like, a huge opportunity for... And, and maybe it's not, for PC OEMs to say, "Hey, we, we are the channel vehicle- Mm-hmm —for those new products and services," right? I mean, we all know Apple gets paid $20 billion a year to be the default search engine. Mm-hmm. Apple is interviewing, you know, LLMs to be on its- Mm -platform. Is there an analogy or opportunity here for PC vendors, or is it because, you know, Apple is Apple, and they control 50% of customers, and they have a unique OS, and you either get Apple or you don't? Whereas in PCs, if HP tries to charge me too much, I'll go to Lenovo. If Lenovo tries to charge me too much, I'll go to Dell, and that all just the industry structure doesn't allow for that. So how, how do we, because it, it's such a striking difference in terms of what Apple has been able to do as an access vehicle relative to what PC vendors have been able to do. And I suppose I'm just thinking aloud here, that it's because Apple is a unique operating system, and therefore, you know, you're either on or you're not, and in PCs there's much more choice. But again, if the big three or big five are gonna have 75% of the share, is there an opportunity going forward, and how do we think about that? Yeah. So probably my answer was too long to say yes, but it's not only at the operating system level, it's not only at the language model level, it's also at the silicon level. Because the more options you have, the more opportunities you have to negotiate and change models. Right. Well, that's, that's probably the most obvious and most immediate. Yeah. And the rest is sort of TBD, depending on how... Okay. Maybe we can talk a little bit about printing. Mm-hmm. How has the pandemic changed printing, if at all? Actually, later, So you thought I was gonna ask a really long-winded question? Yes, You read through the copy, and you were kind of counting on that? It just surprised me. And only never been this curved before. Yes. That's just a laugh of acknowledgment there. So in two different ways. One is... Actually, I'll, I'll go segment by segment, which I think is, it will be the best way to understand. On the office space, clearly the amount of pages that is being printed is lower than before the pandemic, and this is really driven by what we call hybrid work. There are less people in the office every day, and this has driven the amount of pages down. And I use pages as approach because depending on what happens with pages, happens eventually with, with devices. Before the pandemic, our estimates was that we were expecting to see an 80%... a 20% reduction of printing. And actually, we were looking at the numbers this way, and this week, and this is more or less where we are. The amount of pages is 80% lower than the pandemic, but as I said, I think it was yesterday on the call, the number has been fairly stable. Before the pandemic, the number of pages per printer was kind of going down. Since the pandemic, it dropped to 80% and has been stable, which means, probably as more people is slowly coming back, is maintaining the number of pages printed. But we are at about 80% of where we were. On the home side, during the pandemic, we saw a spike of, of pages printed, and since then, the number of pages has been declining, which was, which is what was happening before. But we continue to be above the level where we expected to be. So that's from, from the home side, what has been a, a positive impact from a pages perspective. And then on the, on the industrial side, the business has been impacted during the last two or three years by a reduction of capital investments. But during the last 12 months, we started to see it recovering, and we think that especially the second half, after the big event that is happening these days in, in Germany, we think that demand is, is going to come. And from a pages perspective, we have seen, especially on the more industrial side, labels, packaging, very strong, very strong growth. That's how the three segments have- Right evolved. Now we'll read first. Yeah. And Enrique, you talked, I think a couple calls ago about hardware units and revenues declining and how that could have a downstream impact on your supplies growth. And, you know, hardware has now been down like nine quarters, and I think units have been down like double digits for four quarters. Those are, like, pretty- Mm-hmm ... pretty strong headwinds. So, you know, what—how do we think about that translation, both near term and long term, to, you know, if, if your, if your unit placement, hardware unit placement is below trend for a little while, like, why wouldn't supplies go below your long-term trend forecast for a little while? What, how do we think about the forces there? Sure. I think the forces have not changed, and when we look at the projections that we have, we continue to see supplies declining low- to mid-single digits, so we haven't got from that band. At the end, there are four or five major variables that drive the supplies business going forward. One is install base, which we expect to continue to decline. Second is usage, that for both home and office, we expect to decline. And then on the positive side is what do we do with share of supplies and what happens with pricing of consumables, which during last years have been positive forces, and we expect them to continue to be positive forces. And when we look at the combination of both, we see a positive trend. On the install base, and this is something new, and we are trying to estimate what will be the impact, because so far is, it's only starting to... We are starting to see the impact. Something we are starting to notice is, hardware sales have been declining. Also, the life of printers is being extended, and we are trying to quantify exactly how much is this. It's not yet a big factor in the model, but we think it's also a natural effect that long-term for supplies is actually positive. So it's something that we need to see in the coming months, 'cause we need to look at trends to really understand what is the impact. But it's another force that is starting to have an impact. Right. Maybe you can, maybe you can just share some of your HP+ or subscription metrics. I don't think you provided an exact update on the call last night. Mm-hmm. But how should investors think about the percentage of supplies that supplies revenue? Mm-hmm. -that are on some kind of recurring subscription? And, what would be appropriate metrics there? Yes. I think we started what we call the business model change. I think it was five years ago now, or almost five years ago now, and we have been making very good progress, both in terms of... If you remember, the change had three major elements. One is shift to HP+ models that have a positive impact on supply share. Growing the Big Ink and big toner categories that have also a positive impact, especially in emerging countries, and then the shift to subscriptions. And we have been making progress in all elements. One metric we have shared is the combination of HP+, plus Big Ink and plus toner and big toner is about 50% of our shipments, so it's at a very good level. We have been growing the number of subscribers and the amount of subscriptions that we offer, and we have now more than 13 million subscribers, so which is also a fairly solid number. In the case of subscriptions, now we have three programs. We have one for consumables, for ink and toner. We have one for paper, so where you can get paper, and a few months ago, a couple of months ago, we launched the All-In, where you also have the printer. Really, we expect them to continue to grow in the coming months. And the 50% of shipments, Enrique, that's obviously shipments, like, currently- Mm-hmm ... not as a percentage of the installed base. Exactly. That's more likely to be on a, on, like, an inkjet device, a home device, than on a corporate device. Yes. So, is there... Can you help to mention, like, what percentage of supplies revenue might be levered to subscription or ink and big tank? It's obviously gonna be less than 50%, but is it, like, 5%, or is it, like, 25%? Is there, is there any metric that you've shared or can share? I think the only metric close to this that we have shared is penetration of Instant Ink in shipments is above 25% in the countries where the program has been there for the longest. So I think it's the only one that we have shared that will give you a proxy in this space. Okay. Maybe to wrap up, we can just talk a little more broadly. Just, you know, first about acquisitions. You have, for many years, talked about consolidation in the industry. Maybe you can speak to whether, A, it's playing out as you see, B, how HP thinks about acquisitions. I know the, you say that we're gonna return all of our cash unless we find- Mm-hmm, mm-hmm ... better value-creating opportunity. But, but what, maybe you can operationalize, like, what would be the kinds of things that you would look for? Market adjacency, consolidation opportunities within existing markets, et cetera. So A, has the consolidation played out in the way that you thought? And B, when you think about acquisitions, what are the things that would be intriguing for HP? Sure. Let me start with B, and then I will go to A. M&A continues to be part of our strategy. It has been for the last years, and it will continue to be. We have said that we are gonna prioritize opportunities that will help us support our growth businesses. We think that we will be creating more value as if we use our capital this way. This is what we have done in the past, and what we have done in the last three, four years is a good proxy for what we could be doing in the next three, four years. We bought Poly, we bought Apogee, we bought HyperX. These are the type of acquisitions that we think will help us to accelerate our plans. And always, we are very rigorous looking at the strategy. Is the acquisition supporting the strategies that we have explained? Is it? Do we think we have a strong operational plan to make it happen, and do we see good financial returns? We have a very strong filters that we have applied to everything that we have done in the past. And again, it's always in support of the growth strategies. In terms of consolidation, we continue to think that it's going to happen. There has been some movements from some of our Japanese competitors in the last 12 months that support that. They have not been full mergers, but they have been looking at combining their R&D activities, combining their manufacturing activities, combining both. While they are keeping their brands, they are integrating their back ends, actually in a fairly similar way to what we have been doing with Canon for a long time, but now we are starting to see these movements happening... And I will, as I have said many times, and if I use different words, doesn't mean that our approach has changed, is just I'm using different words now, but our approach is the same. We think that at this point, it's not in our plans. I will never say never, that we will drive a consolidation acquisition, but our priority is more focused on the growth areas, the growth businesses where we see an opportunity. And now, especially with AI, this can really help us to accelerate some of the conversations we were having on PCs or on peripherals that we think will be more, more attractive. Right. My last question is: What are the one or two things that you're most excited about, and the one or two things you're, you worry keep you up at night? Hmm. I think on the excitement side is the combination, how AI is going to be transforming our business. We have been talking a lot about the AI PC, but as you said, this is opening a lot of opportunities for disruption in our category, that we want to be in the leading edge, and that we need to really aggressively go after. And the first instantiation is what we are doing in AI PCs, but we see many opportunities to transform and to improve the rest of our businesses with AI. So this is clearly a very exciting thing. And second is all the opportunities we have to not offer just products, but really complete experience that we offer to our customers. And this is how many of our growth businesses have been defined. It's about capturing more value per customers, offering them more value, of course. And when we think about opportunities in gaming or in hybrid experiences, all of them are really designed to see how we do that, either transactionally or even better, as a subscription and as a service. And this is how our business has been, has been built. In terms of concerns, it's probably the volatility that we still see in the world. It's difficult for us to control, but we clearly live in a complicated world from a geopolitical perspective, from an economic perspective. And things change very fast, and we need to make sure we change fast, and we are ready to respond to whatever changes can happen. We haven't talked today, but for example, from a supply chain perspective, we realized during COVID that we need to build a more resilient model. We are working on that, shifting where we have our factories and building a stronger model. We are also seeing. We were talking about the challenges in China, but we see opportunities to grow in many other countries where our presence has been smaller. So we are shifting also to respond to that. And responding fast to the changes in the world is both an opportunity, but also an area of concern or an area of to really watch carefully. Great. Well, thank you very much for your time. Oh, thank you. I've got an AI PC. I was gonna say.