HP Inc. — Fiscal 2026 Third Quarter Earnings Summary

Financial Performance

• GAAP net revenue reached $15.7 billion, a 12.5% increase year-over-year (10.9% in constant currency) compared to $13.9 billion in Q3 FY25.
• GAAP diluted net EPS was $0.71, down 11.3% year-over-year from $0.80, inclusive of an $0.11 favorable impact from tariff refunds.
• Non-GAAP diluted net EPS was $0.83, up 10.7% year-over-year from $0.75, inclusive of an $0.11 favorable impact from tariff refunds.
• GAAP operating margin was 5.7%, an increase of 0.6 percentage points from 5.1% in the prior year period.
• Non-GAAP operating margin was 6.5%, a decrease of 0.6 percentage points from 7.1% in the prior year period.
• GAAP net earnings were $0.66 billion, down 13% from $0.76 billion in the prior year period.
• Non-GAAP net earnings were $0.77 billion, up 8% from $0.71 billion in the prior year period.
• Net cash provided by operating activities was $1.74 billion, up 4% from $1.66 billion in the prior year period.
• Free cash flow was $1.57 billion, up 7% from $1.47 billion in the prior year period.
• Accounts receivable ended the quarter at $7.2 billion (41 days), inventory at $10.3 billion (73 days), and accounts payable at $21.4 billion (151 days).
• Gross cash exited the quarter at $4.2 billion.

Guidance and Future Outlook

• Raised fiscal 2026 GAAP diluted net EPS guidance to a range of $2.52 to $2.62 (previously lower), inclusive of a $0.19 favorable impact from estimated tariff refunds.
• Raised fiscal 2026 non-GAAP diluted net EPS guidance to a range of $3.19 to $3.29 (previously lower), excluding $0.67 per share related to restructuring, acquisition/divestiture charges, amortization, and other items.
• Raised fiscal 2026 free cash flow guidance to a range of $3.0 to $3.2 billion.
• Provided Q4 FY26 GAAP diluted net EPS guidance of $0.74 to $0.84 and non-GAAP diluted net EPS guidance of $0.69 to $0.79, both inclusive of an $0.08 favorable impact from estimated tariff refunds.
• Q4 FY26 non-GAAP diluted net EPS excludes $0.05 per share related to restructuring, litigation, acquisition/divestiture charges, amortization, and other items.

Business Segments and Product Lines

• Personal Systems net revenue was $11.8 billion, up 18% year-over-year (17% in constant currency), with a 4.6% operating margin.
• Commercial Personal Systems revenue increased 22% year-over-year, while Consumer Personal Systems revenue increased 10%.
• Total Personal Systems units decreased 16% year-over-year (Consumer units down 19%, Commercial units down 14%).
• Printing net revenue was $3.9 billion, down 2% year-over-year (4% in constant currency), with an 18.1% operating margin.
• Supplies net revenue was $2.5 billion, down 3% year-over-year (4% in constant currency).
• Commercial Printing revenue decreased 1% year-over-year, while Consumer Printing revenue decreased 2%.
• Total Printing hardware units decreased 7% year-over-year (Consumer units down 9%, Commercial units down 2%).
• The company reported increased sales and market share in premium products and new customer acquisition driven by innovations in WXP, Print, workstations, and AI PCs.

Market and Competitive Landscape

• Management noted improvements in memory supply and higher fulfillment rates resulting from strategies to address environmental constraints.
• The company positions itself as a trusted edge platform to lead as AI evolves, focusing on improving AI economics, security, latency, and governance for customers.
• The company is navigating a challenging cost environment while investing for long-term profitable growth.

Risks and Challenges

• Forward-looking statements involve risks including macroeconomic and geopolitical trends, global trade policies, and the impact of military conflicts in Ukraine, the Middle East, and tensions in the Taiwan Strait and South China Sea.
• Risks include supply constraints, component shortages, manufacturing disruptions, logistics challenges, and reliance on third-party suppliers regarding memory and storage costs.
• Potential risks involve competitive pressures, IP infringement claims, cybersecurity risks, data protection breaches, and the ability to accurately forecast inventory, demand, and pricing.
• The fiscal 2026 plan includes workforce reductions to drive productivity, which carries risks of business disruption and execution challenges.

Management Commentary and Tone

• Bruce Broussard, Interim CEO, stated the company increased total sales and share in premium products and is building a strong foundation as a trusted edge platform.
• Karen Parkhill, CFO, described the quarter as strong with record revenue and EPS above the top of the guidance range, citing the ability to navigate a challenging cost environment.
• Management expressed confidence in mitigating near-term cost pressures while continuing to invest for long-term profitable growth.

Other Key Points

• Returned $0.6 billion to shareholders in Q3 FY26 via share repurchases and dividends.
• Paid cash dividends of $0.30 per share, utilizing $274 million in cash.
• Repurchased approximately 12.2 million shares of common stock for $300 million in the open market.
• HP realigned business unit financial reporting effective Q1 FY26 to transition the Print-as-a-Service business from Corporate Investments to Printing.
• GAAP and non-GAAP results included favorable impacts from tariff refunds ($0.11 per share in Q3 FY26).
• Non-GAAP results exclude restructuring charges, acquisition/divestiture charges, amortization of intangible assets, certain litigation charges, non-operating retirement-related credits, and tax adjustments.