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HPQ
Earnings call · Jul 2026 (Q3 FY26)

HP Q3 FY26 earnings call HPQ

Aug 26, 2026 Source

Executive summary

HP Inc. Q3 FY26 — Record Revenue Driven by Personal Systems Growth and AI PC Momentum

HP delivered record Q3 FY26 revenue, driven by strong Personal Systems growth and increasing AI PC adoption, while Print faced competitive pressures. The company is actively managing rising commodity costs through mitigation plans and expects Personal Systems margins to trough in Q4 FY26 before recovering in FY27, positioning for continued growth in the AI era. The interim CEO outlined strategic priorities to strengthen the company for its next leader.

Highlights

5

  • Delivered record third quarter revenue of $15.7 billion, an increase of 13% year-over-year.

  • Achieved tenth consecutive quarter of Personal Systems revenue growth, up 18% year-over-year.

  • AI PC portfolio continued to grow and is still expected to be 50% of shipment mix by the end of FY26.

  • Generated over $1.7 billion in cash from operations and roughly $1.6 billion in free cash flow in Q3.

  • Increased outlook for diluted net EPS to $3.19-$3.29 and free cash flow to $3.0B-$3.2B for FY26.

Concerns

5

  • Print revenue was down 2% year-over-year (4% in constant currency) in a competitive market.

  • Personal Systems operating margin of 4.6% was below the long-term range due to higher commodity costs and variable compensation.

  • PC unit Total Addressable Market (TAM) is projected to decline high teens year-over-year for the second half of calendar year 2026.

  • Memory and storage costs are expected to increase further as a percentage of the bill of materials in Q4 FY26.

  • Print operating margin (excluding tariff refunds) was at the low end of the long-term range due to input cost pressures.

Guidance & targets

CategoryTargetConfidence
Diluted net EPS
$3.19 to $3.29
high materiality
High
Diluted net EPS
$0.69 to $0.79
medium materiality
High
Free cash flow
$3.0 billion to $3.2 billion
high materiality
High
PC unit TAM
decline high teens year-over-year
medium materiality
High
Memory and storage costs
increase further as a percentage of the bill of materials
medium materiality
High
Personal Systems operating margin
below Q3 levels
high materiality
High
Personal Systems operating margin
sequentially improve
high materiality
High
Personal Systems operating margin
back into our long-term range as quickly as possible
high materiality
High
Print hardware market
mid-single-digit decline
medium materiality
High
Print revenue
in line with historical seasonality
medium materiality
High
Print operating margin (ex-tariff refunds)
lower half of our long-term range
medium materiality
High
Input costs
continue to rise but at a slower rate than we have experienced in fiscal '26
high materiality
High
Print supplies revenue
decline low to mid-single digits in constant currency
medium materiality
High
Print supplies revenue
declining low single digit in constant currency
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Personal Systems
Record third quarter revenue and tenth consecutive quarter of growth. Driven by higher-value unit placements, repricing for higher commodity costs, and services expansion. Gained share in premium PC categories. Operating margin was below long-term range due to higher commodity costs and variable compensation.
AI PC mix: 46% of shipmentsCommercial revenue growth: 22%Consumer revenue growth: 10%Commercial revenue: >70% of PS revenuePremium PC share gain: 2.6 pointsWorkstation share gain: 1.8 points
$11.8 billion18%double-digit sequential growth4.6%
Print
Impacted by lower supplies and hardware volumes in a competitive market. Focus on pricing discipline and profitable unit placement. Strong growth in industrial print and 3D. Softness in office market in North America and China. Operating margin was up ~1 point year-over-year, reflecting favorable tariff refunds; excluding tariffs, it was at the low end of the long-term range.
Revenue decline (constant currency): 4%Tank printer unit growth: 42%Tank printer share gain: 4 pointsIndustrial Printing revenue growth: 12th straight quarter of growthSupplies revenue decline (constant currency): 4%Commercial revenue decline: 1%
down 2%-2%—18.1%

HPQ operating KPIs by quarter

HPQ operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q1 FY26 Apr 2026 Q2 FY26This call Jul 2026 Q3 FY26Change vs prior quarter
AI PC share of shipments Personal Systems
35%+ This quarter, AI PC is accounted for over 35% and of our PC shipments, up from 30% in the prior quarter and 25% a quarter before. Source transcript
44% This includes continued momentum in AI PCs, which increased from more than 35% to 44% of our shipment mix in the quarter, as well as continued strength in Advanced Compute Solutions and Workforce Solutions. Source transcript
46% It contributed 46% of our mix, in line with our 40% to 50% forecast for FY '26. Source transcript
+2 pt

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Precise Printexpansion
HP CGX Furylaunch
Omni book Ultra teamlaunch
Omni desk mini desktoplaunch
HP Neo AI companionmilestone
WXP platform (integration with HP Poly lens)update

Deals & partnerships

RRD Strategic agreement to accelerate AI and industrial automation in print production. $100 million 3-year

Partnership with one of the world's leading print service providers, reflecting a shared vision for AI and industrial automation.

Risks & headwinds

Competitive market in Print Q3 FY26, ongoing

Print revenue down 2% YoY (4% in constant currency).

Mitigation:Focus on pricing discipline, placement of profitable units, gaining share in tank printers, and investing in industrial applications.

Higher commodity costs (memory and storage) Q3 FY26, Q4 FY26, FY27 (slower rate)

Personal Systems operating margin of 4.6% (below long-term range); expected to increase further as % of bill of materials in Q4 FY26.

Mitigation:4-pillar mitigation plan (secure supply, shape demand, targeted cost reductions, disciplined pricing), product redesign, platform optimization, long-term contract revisions, focus on premium mix and attach offerings.

PC unit TAM decline H2 CY26

High teens year-over-year for H2 CY26.

Mitigation:Focus on year-over-year revenue growth through pricing actions, share gains in premium categories, attach of higher-margin offerings, and increased penetration of AI PCs.

Softness in office market (North America and China) Q3 FY26

Commercial Print revenue down 1%.

Mitigation:Focus on placing profitable units in an aggressive pricing environment.

Headwinds in the Middle East Q3 FY26

Supplies revenue down 4% in constant currency, impacted in part by this.

Mitigation:General focus on protecting operating profit in Print.

What to watch in Q4 FY26

Personal Systems operating margin recovery

FY27
Current 4.6% (Q3 FY26), expected to be below Q3 levels in Q4 FY26
Target Sequential improvement, back into long-term range as quickly as possible

Why it matters

PS margins are below long-term range due to commodity costs; recovery is key for overall profitability.

As we signaled last quarter, we expect our Q4 margin to be below Q3 levels, and then to sequentially improve as we look ahead into FY '27.

Q&A highlights

Could you detail PS assumptions for Q4, particularly sub-seasonal revenue but YoY growth? Will this trend persist into FY27?

Q4 outlook reflects industry's high-teens PC unit decline in H2 CY26. HP expects YoY revenue growth in Q4, driven by a richer mix of higher-value categories (premium, commercial/consumer, AI PC, workstations, attach offerings) and pricing, offsetting lower units. FY27 guidance is premature and will be provided on the Q4 call.

“Our comments on revenue growth relate to Q4. It's too early for us to be giving FY '27 guidance. We'll be doing that on our Q4 call.”

asked by Amit Daryanani · answered by Karen Parkhill

2 min read 5 chapters

Detailed narrative

AI Strategy and Edge Computing

HP is advancing its AI strategy by focusing on hybrid AI, operating both in the cloud and at the edge, to improve security, latency, and data governance. The company is building platforms to extend data center-class AI capabilities to the edge, enabling GPU sharing through HP Z Boost and integrating with WXP software. New products like HP CGX Fury and Omni book Ultra team powered by NVIDIA RTX Spark are designed for local AI model building and running, addressing customer demand for local AI they can own.

Innovation in Print and Software

HP expanded its AI-powered Precise Print to over 150 countries, reducing paper usage by up to 38% and ink consumption by up to 47%. The HP Neo AI companion for industrial print operations received a 2026 European Digital Press Association Award, highlighting intelligent, data-driven production systems. The WXP platform, now integrated with HP Poly lens and collaboration capabilities, helps CIOs track and manage fleets of connected devices and applications, improving workforce experiences and lowering costs.

Operational Efficiency and Mitigation

HP is building an enhanced operating model to become more connected, AI-enabled, and data-driven, aiming for improved productivity and customer experiences. The company continues to execute its 4-pillar plan to mitigate rising input costs, including securing supply, shaping demand, targeted cost reductions, and disciplined pricing actions. These efforts are ramping up and have enabled HP to deliver operating rates in line with expectations, excluding the favorable impact of tariff refunds received in the quarter.

CEO Search and Strategic Priorities

Bruce Broussard, HP's Interim Chief Executive Officer, provided an update on the ongoing CEO search, stating it is progressing well. He outlined four key observations for HP's future: advancing operating infrastructure, making devices AI-leading, accelerating evolution to integrated solutions, and providing greater strategic clarity and capital allocation discipline. These actions are being taken to strengthen the company and improve execution, building momentum for the next CEO.

Market Dynamics and Future Outlook

HP expects continued investment in hardware and solutions for AI workloads, with AI PCs projected to reach 50% of shipment mix by the end of FY26, and 60-70% in FY27. While the PC unit TAM is expected to decline high teens in H2 CY26, HP anticipates year-over-year revenue growth in Personal Systems driven by pricing, premium categories, and AI PC penetration. Print faces a competitive market, with focus on tank printers, industrial applications, and AI-enabled innovation in office solutions.

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