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    HPQ
    Earnings call· Apr 2026(Q2 FY26)

    HP Q2 FY26 earnings call HPQ

    May 27, 2026 Source

    Executive summary

    HP Inc. Q2 FY26 — Strong Personal Systems Growth and AI PC Momentum

    HP delivered solid Q2 FY26 results, driven by robust Personal Systems performance and strategic advancements in AI at the edge. The company navigated a complex operating environment by executing mitigation strategies against rising input costs, which enabled EPS to exceed expectations. Management remains focused on innovation and disciplined execution to capitalize on the hybrid AI opportunity and drive long-term shareholder value.

    Highlights

    5

    • Revenue grew 9% year-over-year (6% constant currency), marking the eighth consecutive quarter of top-line growth.

    • Personal Systems revenue grew 13% year-over-year, with strong growth in both Commercial (up 14%) and Consumer (up 10%).

    • AI PC shipment mix increased from over 35% to 44% in the quarter, with double-digit revenue growth in AI PCs, Advanced Compute Solutions, and Workforce Solutions.

    • Non-GAAP diluted net earnings per share was $0.86, up over 20% year-over-year, exceeding guidance.

    • Generated over $900 million in cash from operations and roughly $800 million in free cash flow, above expectations.

    Concerns

    4

    • Memory and storage costs increased sequentially in Q2 and are expected to continue increasing in Q3 and Q4 FY26.

    • Print revenue was flat year-over-year in a competitive market, with Consumer revenue declining 10% due to lower traditional printer volume.

    • Personal Systems operating margin is expected to be below the long-term range for the remainder of the year due to rising input costs and decreasing benefit from lower-cost inventory.

    • Print operating margins are expected near the lower end of the long-term range in Q3 due to seasonality, hardware unit placement, and input cost pressures.

    Guidance & targets

    15
    CategoryTargetConfidence
    Full-year FY26 Diluted Net EPS (non-GAAP)
    $2.90 to $3.10
    high materiality
    High
    Q3 FY26 Diluted Net EPS (non-GAAP)
    $0.61 to $0.71
    high materiality
    High
    Full-year FY26 Free Cash Flow
    $2.8 billion to $3 billion
    high materiality
    High
    Full-year FY26 Personal Systems Revenue Growth
    revenue growth
    medium materiality
    Medium
    Full-year FY26 Personal Systems Operating Margin
    below our long-term range
    high materiality
    High
    Q3 FY26 Personal Systems Revenue Performance
    below seasonal
    medium materiality
    High
    Full-year FY26 Print Hardware Market Decline
    low single-digit decline
    medium materiality
    High
    Full-year FY26 Supplies Revenue Growth (constant currency)
    down low single digit
    medium materiality
    High
    Q3 FY26 Print Revenue
    generally in line with normal seasonality
    medium materiality
    High
    Q3 FY26 Print Operating Margin
    near the lower end of our long-term range
    medium materiality
    High
    Full-year FY26 Print Operating Margin
    solidly in the range
    medium materiality
    High
    Full-year FY26 Other Income & Expense (OI&E)
    approximately $500 million
    medium materiality
    High
    Full-year FY26 Corporate Other Expense
    slightly under $1 billion
    medium materiality
    High
    AI PC Shipment Mix
    60% to 70%
    high materiality
    High
    AI PC Shipment Mix
    above 70%
    high materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Personal Systems
    Strong growth in both Commercial and Consumer. Operating margins above expectations due to accelerated mitigation actions. Operating profit growth of 30% year-over-year.
    AI PC shipment mix: 44%AI PC shipment mix (prior quarter): >35%
    		—13%—5.2% operating margin
    Personal Systems - Commercial
    Strong growth driven by repricing actions and favorable mix. Showed above seasonal sequential performance with some demand pull-in.
    		—14%——
    Personal Systems - Consumer
    Strong growth driven by repricing actions and favorable mix.
    		—10%——
    Print
    Hardware volume declines offset by favorable pricing and currency. Operating margin down year-over-year due to higher trade-related costs and promotional investment.
    		flat year-over-yearflat—18.3% operating margin
    Print - Consumer
    Due to lower traditional printer volume in a competitive pricing environment. Gained share in tank printers.
    Tank printers unit growth: double-digit
    		—declined 10%——
    Print - Commercial
    Higher ASPs helped offset lower volumes. Saw continued improvement in the office market and gained share sequentially across all A4 office categories.
    		—flat year-over-year——
    Print - Industrial Graphics
    Momentum in hardware, supplies, and services.
    		—11th straight quarter of revenue growth——
    Print - 3D Printing
    Fifth straight quarter of double-digit growth.
    		—double-digit growth——
    Print - Supplies
    Pricing and share gains offset headwinds from installed base and usage.
    		flat year-over-year in constant currencyflat (constant currency)——

    Operational metrics

    15
    Revenue growth (constant currency)
    6%YoY
    Q2 FY26

    Reported revenue grew 9% YoY.

    Gross margin
    20.9%up year-over-year
    Q2 FY26
    Operating expenses as % of revenue
    flatyear-over-year
    Q2 FY26

    Continued investment in innovation, product promotion, and people, offset by disciplined cost management.

    Operating margin
    7.5%up 20 basis points year-over-year
    Q2 FY26
    Diluted share count
    approximately 925 million
    Q2 FY26
    Net earnings per share (non-GAAP)
    $0.86up over 20% year-over-year
    Q2 FY26
    Personal Systems operating profit growth
    30%year-over-year
    Q2 FY26
    Capital returned to shareholders
    nearly $400 million
    Q2 FY26

    Through dividends and share repurchase.

    Target leverage ratio
    under 2x
    ongoing

    Commitment to return approximately 100% of free cash flow to shareholders as long as gross leverage remains under 2x.

    Gross annualized run rate savings
    approximately $1 billion
    by end of FY28

    On track to generate from AI-enabled transformation and cost-saving efforts.

    Windows 11 installed base remaining
    roughly 30%
    Q2 FY26

    Percentage of installed base still on Windows 10.

    Workforce Experience Platform (WXP) devices managed
    over 5.2 million
    Q2 FY26

    Across 180 countries.

    Commercial PS revenue pull-forward
    roughly 2% to 3%
    Q2 FY26

    Estimated impact on Q2 revenue.

    PC unit TAM decline
    high teens
    H2 CY26

    Aligned with industry experts.

    Print office market decline
    less decline
    last 3 quarters

    Indicating improvement.

    Industry KPIs

    9
    MetricValueDetails
    Capital return FCFnearly $400 millionUSD
    Unit shipments ASP44%%
    Gross margin drivers20.9%%
    Market share commentarygained share
    Services peripheral attachdouble-digit revenue growth%
    Long term supply agreementssecured
    Component supply constraintsconstrained
    Installed base refresh runway30%%
    Revenue mix by end market segmentAPJ up 18%, EMEA up 6%, Americas flat%

    Product announcements

    6
    ProductTypeDetails
    Next-generation AI PClaunch
    Z workstations and AI stationslaunch
    LaserJet serieslaunch
    HP Multi Jet Fusion 1200launch
    HP IQlaunch
    Workforce Experience Platform (WXP)update

    Risks & headwinds

    5
    Rising Memory and Storage CostsQ3 and Q4 FY26

    increased sequentially

    Mitigation: Strong supplier relationships, long-term agreements, operationalized planning model, strategic inventory, pricing discipline, sourcing optimization, platform cost reduction, company-wide productivity actions.

    Broader Inflationary PressuresH2 FY26

    broader inflationary pressures

    Mitigation: Leverage operational capabilities and discipline strengthened in Q2.

    Competitive Print MarketQ2 FY26 and ongoing

    competitive market

    Mitigation: Focus on pricing discipline, placement of profitable units, gaining share in Big Tank printers, expanding subscriptions, and industrial growth.

    Government Tariff Refund ProcessCurrent

    not processing refunds

    Mitigation: Monitoring the process and will apply for refunds when able.

    CPU Supply Constraints (Small Core)Since beginning of FY26

    small core specifically having constraints

    Mitigation: Working to secure required supply, managing price increases, leveraging silicon diversity and multiple CPU suppliers.

    Q&A highlights

    7

    Asked about the sustainability of PS margins given rising memory costs, and whether future offsets would come from cost reductions or price increases.

    Management expects PS margins to be below the long-term range for the rest of the year, with Q4 being a low point, followed by sequential improvement into FY27. They continue to drive cost reductions and leverage supply chain scale, silicon diversity, and demand shaping.

    “But that said, we are actively executing our mitigation actions. And if those actions prove more effective or the environment improves, there could be some upside. I would note, though, that based on what we're seeing today, we would expect Q4 to be a low point, followed by sequential improvement into next fiscal year.”

    asked by Samik Chatterjee · answered by Karen Parkhill

    2 min read6 chapters

    Detailed Narrative

    01

    CEO Search and Leadership Transition

    The Board has engaged an external search firm and established a committee to find a new CEO, focusing on candidates with a proven track record of creating long-term value, operating effectively in complex environments, and possessing global, multisegment business experience. The process is active, but no specific timeline for selection was provided. Interim CEO Bruce Broussard expressed appreciation for the opportunity to lead during this important time for the company.

    02

    Hybrid AI Strategy and Edge Computing

    HP is positioning itself as a trusted intelligent edge provider, connecting devices, workflows, and context for AI workloads. The company believes the future of AI is hybrid, with edge computing playing an increasingly important role due to rising cloud costs, latency, privacy, and security concerns. This strategy involves enabling customers to build AI at the edge using smaller, open-source, and proprietary models with more capable hardware and secure software layers.

    03

    Innovation Across Portfolio

    HP unveiled a wave of innovation at its HP Imagine event, including next-generation AI PCs with expanded local AI capabilities and an ecosystem of over 150 software partners. New Z workstations and AI stations were introduced for demanding AI and compute workloads. In print, a new LaserJet series with AI-enabled workflows and the Multi Jet Fusion 1200 for industrial 3D printing were launched. HP IQ, a new intelligence layer, coordinates integrated experiences across products, featuring HP NearSense for seamless device connectivity.

    04

    Workforce Experience Platform (WXP) Enhancements

    HP enhanced its Workforce Experience Platform (WXP) with AI-driven tools for proactive management of personal endpoints and shared spaces. WXP currently manages over 5.2 million devices across 180 countries. These enhancements aim to simplify IT management, security, and optimization in connected, distributed work environments, reflecting HP's commitment to creating more connected experiences across its portfolio.

    05

    Mitigation Strategies for Input Costs

    HP successfully executed a 4-pillar plan to mitigate rising memory and storage costs, which significantly impacted Q2 operating profit. This included leveraging strong supplier relationships and long-term agreements for supply, operationalizing a planning model for supply/demand alignment, utilizing strategic inventory, and maintaining pricing discipline while optimizing sourcing and productivity. These actions strengthened the company's ability to navigate future headwinds.

    06

    Cost Savings and Transformation Initiatives

    HP is advancing its AI-enabled transformation by modernizing software development, consolidating platforms, and using AI to boost developer productivity. The company remains on track to generate approximately $1 billion in gross annualized run rate savings by the end of fiscal year 2028. A voluntary early retirement plan was announced in the quarter, contributing to Q2 restructuring charges, as part of ongoing cost-saving efforts to offset macro headwinds🌐 and fuel strategic investments.

    AI-generated summary of the company’s earnings call. Not investment advice.