HP Inc. 2026 Q3 Earnings Call

Please go ahead. Good afternoon, everyone, and welcome to HP's third quarter 2026 earnings conference call.

With me today are Bruce Broussard, HP's Interim Chief Executive Officer, and Karen Parkhill, HP's Chief Financial Officer. Before handing the call over to Bruce, let me remind you that this call is a webcast, and replay will be available on our website shortly after the call for approximately one year. We posted the earnings release and accompanying slide presentation on our investor relations webpage at investor.hp.com. As always, elements of this presentation are forward-looking and are based on our best view of the world and our business as we see them today. For more detailed information, please see disclaimers in the earnings materials relating to forward-looking statements that involve risks, uncertainties, and assumptions. For a discussion of some of these risks, uncertainties, and assumptions, please refer to HP's SEC reports, including our most recent Form 10-K.

HP assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available now and could differ materially from the amounts ultimately reported in HP's SEC filings. During this webcast, unless otherwise specifically noted, all comparisons are year-over-year comparisons with the corresponding year-ago period. References to HP's channel inventory refer to tier 1 channel inventory, and market share references are based on calendar quarter information. In addition, unless otherwise specified, all financial measures discussed today are non-GAAP, and EPS refers to non-GAAP diluted net earnings per share. Please refer to the tables in today's earnings release and the accompanying slide presentation on our website for the reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. With that, I will now turn the call over to Bruce.

Thank you, Alok, and thanks everyone for joining us today. I'm pleased to share that we delivered record third quarter revenue and continue to exceed expectations on EPS. We're also laying a strong foundation for the AI era and are building momentum. Our strategic execution, robust commodity mitigation plan, and relentless commitment to innovation are helping us advance our business and enable our customers to successfully navigate this most significant technology shift. Today, I'll share our third quarter highlights, discuss the innovations we are bringing to market, and touch on how we are managing the current environment. Before I do, I know some of you are interested in an update on the CEO search.

I am sure you can appreciate that I am unable to share details or a timeline, but the search is proceeding well, and we continue to make good progress on finding the right next leader for HP. In the meantime, having spent the past several months leading the company day to day, I have developed deeper perspective on HP. Four observations stand out. First, we need to continue advancing our operating infrastructure to become better connected, AI enabled, and data driven, improving productivity while delivering better experiences for our customers, partners, and employees. Second, we will continue advancing our devices to be AI leading by bringing more computing to the edge where context is created. This will enable more intelligent devices that anticipate needs and proactively solve problems.

Third, we need to accelerate our evolution towards integrated solutions across our broad portfolio of devices, creating differentiated offerings that deliver greater value to our customers while expanding recurring revenue opportunities. Lastly, we provide greater strategic clarity around where we choose to play and allocate capital, resources, and capabilities against those priorities with focus and discipline. HP has tremendous assets. One of the most iconic brands in technology, a strong global footprint, sophisticated supply chain, deep commercial relationships, and a talented team. There are meaningful opportunities to make HP stronger, more cohesive, and more effective. We are taking action now to strengthen the foundation, sharpen our priorities, and improve execution, so that when our next CEO steps in, they can build on that momentum and lead HP into its next chapter of growth and value creation. Let me get to our results.

This quarter, we delivered $15.7 billion in revenue, a record Q3 for HP. This represents an increase of 13% and our ninth consecutive quarter of top-line growth, driven by another strong quarter in Personal Systems, while Print results were in line with our expectations. We executed on our commitments and accelerated our key growth areas, which collectively grew 46% year-over-year and faster than our core. We continue to take share in high-value segments while managing commodity headwinds with our mitigation playbook, enabling us to deliver EPS above our expectations, even when excluding a tariff refund benefit, while also delivering strong free cash flow. In short, we did what we said we would do. In Personal Systems, we achieved our 10th consecutive quarter of revenue growth, up 18% year-over-year, driven by solid growth across both commercial and consumer segments.

We are particularly pleased with the continued strength of our AI PC portfolio, which continued to grow and is still expected to be 50% of our shipment mix by the end of this fiscal year. At the same time, consistent with our strategy, we delivered double-digit revenue expansion in our key growth areas, including advanced compute solutions and workforce solutions. We also continue to capture share in high-value categories, including premium PC, returning us to share leadership in the Americas. Overall, these results show customers continue to invest in the hardware and solutions they need to run AI or work habits. Turning to Print. Revenue was down 2% year-over-year in what continues to be a competitive market. We remain focused on pricing discipline and the placement of profitable units.

We said we would double down on big tank markets, and we did, gaining another 4 points of share this quarter. Industrial printing delivered its 12th straight quarter of revenue growth as customers continued to leverage our award-winning hardware portfolio to drive their digital workflows and grow their businesses. Across both segments, we are balancing near-term execution with long-term investment and shifting our portfolio towards high-value and more profitable categories. Turning to innovation. This quarter, we unveiled advancements designed to help our customers thrive in the AI era. We believe the future of AI is hybrid. That means AI will operate both in the cloud and increasingly at the edge. For customers already seeing the cost of cloud-based AI add up, the economics alone makes edge AI compelling. It can also improve security, latency, and strengthen data governance.

To make edge AI a reality, we are working with customers and ecosystem partners to build platforms that extend data center-class AI capabilities to the edge. By enabling GPU sharing through HP Z Boost and integrating it with our WXP software layer, security, and device features, we are making traditional cloud AI capabilities available locally. Building advanced AI locally has too often meant specialized infrastructure, large budgets, and complex setups. We are changing that. With our HP Z8 Fury, we bring data center-class AI to the desk side so teams can build and run frontier scale models and always-on agents locally. The response since we first showed this direction at Computex has been clear. Customers want local AI they can own. Over the next month, we will extend this momentum into more of the form factors people already carry. With the memory and power those on-device models actually need.

A leading automotive company is using HP solutions to bring visual AI and inferencing directly to its manufacturing line, helping improve quality inspections, performance, and economics. We see the same potential in many other sectors that require on-site compute performance, strong security, and the most cost-effective ways to manage increasingly complex AI models. This creates significant opportunities in areas like retail, public sector, and healthcare. We are also advancing what PCs can do as edge devices. In the agentic era, PCs are becoming partners that understand your needs and help meet them. So we are reimagining what a personal computer can do with our new OmniBook Ultra 16, powered by Nvidia RTX Spark. It brings the compute needed to build and run sophisticated AI models and personal agents to a thin, mainstream mobile PC. Our OmniDesk mini desktop combines full-sized performance with a compact design and built-in AI capabilities.

In Print, we are already delivering tangible customer value with AI. In June, we expanded our flagship AI-powered print experience, Precise Print, to more than 150 countries. By intelligently removing unnecessary web content before printing, Precise Print helps customers reduce paper usage by up to 38% and ink consumption up to 47%. Our HP Nio AI companion brings agentic AI to industrial print operations and is gaining momentum. Nio was awarded the 2026 European Digital Press Association Award for Best Software Agent in the Print Industry AI category. This underscores our commitment to intelligent, data-driven production ecosystems with built-in remote remediation capabilities, and importantly, solving uptime problems for our printer service customers. In Q3, we also signed a three-year, $100 million strategic agreement with RRD, one of the world's leading print service providers. This reflects our shared vision to accelerate AI and industrial automation in print production.

Succeeding at the edge also requires intelligent ways to manage the technology portfolio. Work moves across PCs, meeting rooms, collaboration tools, printers, and other endpoints. Our WXP platform helps CIOs track and manage fleets of connected devices and applications. This quarter, we integrated HP Poly Lens and collaboration capabilities into WXP, giving IT teams greater visibility across PCs, printers, and collaboration devices. By bringing together insights that were previously isolated across different environments, organizations and channel partners can turn data into actionable intelligence, improve workforce experiences, lower costs, and establish a governance layer. WXP was named a leader in the 2026 Gartner Magic Quadrant for Digital Employee Experience Management Tools. We believe the future of computing will be increasingly intelligent and integrated, with devices anticipating user needs, executing tasks seamlessly, and connecting traditionally separate cloud and desktop environments.