Key financial results
- Revenue: HP delivered record third quarter revenue of $15.7 billion, representing an increase of 13% year-over-year or 11% in constant currency.
This quarter, we delivered $15.7 billion in revenue. A record Q3 for HP.
- EPS: Net earnings per share reached $0.83, growing 11% year-over-year and including $0.11 related to tariff refunds.
Our net earnings per share at $0.83 grew 11% and includes $0.11 related to tariff refunds.
- Gross margin: Gross margin was 18.8%, down year-over-year due to higher commodity costs and an increased mix from Personal Systems.
Our gross margin at 18.8% was down year-over-year as expected driven by higher commodity costs and increased mix from Personal Systems.
- Operating margin: Operating margin was 6.5%, which was in line with expectations when excluding the benefit of tariff refunds.
All in, our operating margin was 6.5%. And when excluding the benefit of tariff refunds, this was in line with our expectations.
- Cash flow: Free cash flow for the quarter was roughly $1.6 billion, supported by Personal Systems performance and working capital management.
We generated over $1.7 billion in cash from operations and roughly $1.6 billion in free cash flow in Q3 on the strength of Personal Systems performance.
Business segment results
- Personal Systems: Personal Systems revenue reached a record $11.8 billion, up 18% year-over-year driven by solid growth across both commercial and consumer segments.
In Personal Systems, we achieved our tenth consecutive quarter of revenue growth, up 18% year-over-year
- Personal Systems: Personal Systems operating margin was 4.6%, below the long-term range and down year-over-year due to higher commodity costs and variable compensation.
PS operating margin of 4.6% and was below our long-term range as expected and down year-over-year from higher commodity costs and variable compensation
- Personal Systems: Commercial Personal Systems revenue increased 22% while consumer revenue grew 10%.
we also delivered double-digit revenue growth in both commercial, up 22% and Consumer, up 10%
- Print: Print revenue was down 2% year-over-year, or 4% in constant currency, on lower supplies and hardware volumes.
Turning to Print. As expected, revenue was down 2% or 4% in constant currency on lower supplies and hardware volumes
- Print: Print operating margin was 18.1%, up roughly 1 point year-over-year reflecting the favorable impact of tariff refunds and pricing actions.
All in, print operating margin was 18.1%. The up roughly 1 point year-over-year, reflecting the favorable impact of tariff refunds and pricing actions.
- Print: Consumer print revenue declined 2% with lower traditional printer volume offset in part by higher ASPs.
By customer segment, Consumer revenue declined 2% with lower traditional printer volume, offset in part by higher ASPs.
- Print: Commercial print revenue was down 1%, driven by lower volume and unfavorable mix, with softness in the office market in North America and China.
In commercial, revenue was down 1%, driven by lower volume and unfavorable mix. We saw particular softness in the office market in North America and China
- Print: Supplies revenue was down 4% in constant currency, impacted in part by headwinds in the Middle East.
supplies revenue was down 4% in constant currency, impacted in part by headwinds in the Middle East.
- Print: Tank printer units grew 42% and gained share both year-over-year and sequentially.
delivering 42% unit growth in this important profit upfront category and gaining share both year-over-year and sequentially.
Capital allocation
- Debt: HP paid down slightly more than $500 million in debt maturities due in the quarter.
as planned, we paid down slightly more than $500 million in debt maturities due in the quarter.
- Shareholder returns: The company returned nearly $600 million to shareholders in the quarter through dividends and share repurchases, and over $1.5 billion year-to-date.
Through both dividends and share repurchase, we returned nearly $600 million to shareholders in the quarter and over $1.5 billion year-to-date
- Leverage: HP ended the quarter within its target leverage range.
and we ended the quarter within our target leverage range.
Industry trends and dynamics
- Cost environment: Management noted that the external supply and cost environment remains complex with rising input costs.
Let me now focus on the external supply and cost environment, which remains complex.
- PC TAM: Industry experts project the PC unit TAM to decline in the high teens year-over-year for the second half of the calendar year.
we remain aligned with industry experts projecting the PC unit TAM to decline high teens year-over-year for the second half of the calendar year.
- Print TAM: The print hardware market is expected to see a mid-single-digit decline in the second half of the calendar year.
our outlook is aligned with industry expectations for a mid-single-digit decline in the hardware market in the second half of the calendar year.
Competitive landscape
- Personal Systems: HP gained share in premium PC categories and returned to share leadership in the Americas.
- Print: Print operations continue to navigate an aggressive pricing environment while gaining 4 points of share in the tank printer market.
We said we would double down on bigger tank market, and we did, gaining another 4 points of share this quarter.
Macroeconomic environment
- Macro pressures: The company experienced geopolitical pressures, currency factors, and inflationary cost environments affecting bill of materials.
Our teams will continue to manage memory storage and geopolitical pressures through pricing, sourcing, supply chain actions, productivity and portfolio choices.
Growth opportunities and strategies
- Key growth areas: Key growth areas collectively grew 46% year-over-year, outpacing the core business.
accelerating our key growth areas, which collectively grew 46% year-over-year and faster than our core.
- AI PCs: AI PC shipments reached 46% of the mix in the quarter and are expected to represent 50% of the shipment mix by the end of the fiscal year.
continued to grow and is still expected to be 50% of our shipment mix by the end of this fiscal year.
- Industrial print: Industrial Printing delivered its 12th straight quarter of revenue growth.
Industrial Printing delivered its 12th straight quarter of revenue growth
Financial guidance and outlook
- Q4 EPS: For the fourth quarter, diluted net earnings per share are expected to be in the range of $0.69 to $0.79.
For Q4 specifically, we expect diluted net earnings per share to be in the range of $0.69 to $0.79
- Free cash flow: The full-year free cash flow outlook was increased to a range of $3 billion to $3.2 billion.
we are also increasing our outlook for free cash flow to be in the range of $3 billion to $3.2 billion for the fiscal year.
Q3 FY2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $15.7 billion | 13% |
| Non-GAAP diluted net EPS | $0.83 | 11% |
| Personal Systems revenue | $11.8 billion | 18% |
| Print revenue | $2 billion | -2% |
| Operating margin | 6.5% | Not stated |
| Free cash flow | $1.6 billion | Not stated |
How management sounded
Balanced (+25 on our -100 to +100 scale). Management highlighted record revenue and EPS above expectations, though ongoing cost pressures and commodity headwinds kept the overall tone measured. Management sounded more upbeat than on 6% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Progression of memory and storage cost increases and their impact on Personal Systems operating margins.
- Adoption rates of AI PCs and edge AI workloads among enterprise customers.
- Timing and realization of price increases across various sales channels.
Earlier calls
- Q2 FY2026 (May 27, 2026), tone Balanced: HP reported 9% revenue growth and EPS above guidance, driven by strong Personal Systems performance and disciplined execution against commodity cost pressures.
