HP Inc. (HPQ) Earnings & Analysis

Latest quarter

HP reported Q3 FY2026 revenue of $15.7 billion, up 12.5% from $13.9 billion a year earlier. Revenue exceeded the consensus of $14.8 billion, while adjusted EPS of $0.83, as the consensus counts it, exceeded the consensus of $0.75.

HP reported diluted EPS of $0.71, down 11.3% from $0.80 in Q3 FY2025. The filing says higher commodity costs, an unfavorable mix shift toward Personal Systems, pricing actions, favorable currency effects and tariff refunds affected the quarter’s results. Gross margin was 18.8%, down 1.7 percentage points from 20.5%, while operating margin was 5.69%, up 0.6 percentage points from 5.14%.

Personal Systems revenue was $11.8 billion and increased 18.0%, according to HP. The filing attributes the segment’s growth principally to higher average selling prices following pricing actions, favorable currency and mix shifts, partly offset by lower PC unit volume. HP said Printing revenue declined 2.2% as supplies, Commercial Printing and Consumer Printing revenue decreased. HP reported free cash flow of $1.5 billion, up 7.05% from $1.4 billion a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Interim Chief Executive Officer Bruce Broussard said Personal Systems delivered its 10th consecutive quarter of revenue growth, with commercial and consumer demand contributing to the segment’s 18% revenue increase. He said HP’s AI PC portfolio remained on track to represent 50.0% of shipment mix by the end of FY2026, while the company pursued growth in advanced compute solutions and Workforce Solutions.

Chief Financial Officer Karen Parkhill said Personal Systems revenue benefited from higher-value unit placement, pricing to address commodity costs and services expansion, even as volume declined. She said commercial represented over 70% of Personal Systems revenue, and that HP’s attached businesses—peripherals, collaboration products, services and Workforce Experience Platform offerings—accounted for one-third of segment gross profit. Parkhill said Print revenue declined amid lower supplies and hardware volumes, while HP focused on pricing discipline, tank-printer placements and industrial printing.

Parkhill said higher commodity costs and a larger Personal Systems mix reduced gross margin, while tariff refunds, pricing and growth in key areas partly offset those pressures. She said HP expects memory and storage costs to continue rising and expects Personal Systems margin in Q4 to be below the Q3 level before sequentially improving in FY2027.

Analysts asked about Q4 PC demand, supply availability, the lag in pricing actions and the outlook for margins. Parkhill said HP has the supply needed to meet customer demand and that channel inventory remained within its demand outlook. She said the company had secured supply, qualified new suppliers, reshaped demand and configurations, taken targeted cost actions and repriced with discipline; she added that product redesign, platform optimization and long-term contract revisions take time to affect results.

Ketan Patel, head of Personal Systems, said AI PCs represented 46% of mix in the quarter and that HP expects them to reach 60.0% to 70.0% of mix in 2027. Parkhill said HP would not quantify the separate contributions of product mix and pricing to revenue growth, and that it was too early to provide FY2027 guidance.

Guidance

HP raised its FY2026 outlook for GAAP diluted EPS to $2.52–$2.62 and for non-GAAP diluted EPS to $3.19–$3.29; both ranges include a $0.19 favorable impact from estimated tariff refunds. The company also raised its FY2026 free-cash-flow outlook to $3.0 billion–$3.2 billion. HP did not provide FY2027 guidance, and Parkhill said the company plans to provide that outlook on its Q4 call.