HP Earnings Beat, Outlook Raised
HP earnings beat and full-year guidance was raised, prompting traders to weigh tariff-refund gains against memory-cost margin pressure.
KEY TAKEAWAYS
- Reported Q3 net revenue of $15.7 billion and beat forecasts.
- Raised FY26 GAAP EPS to $2.52-$2.62 and free cash flow to $3.0-$3.2 billion.
- Investors flagged margin pressure from higher memory-chip costs despite tariff-refund uplift.
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HP Inc. (NYSE: HPQ) reported on Aug. 26, 2026, that third-quarter revenue and profit exceeded forecasts, prompting the company to raise its full-year earnings per share (EPS) and free-cash-flow guidance. The results reflected tariff refunds and higher prices on premium AI-powered personal computers, though investors noted margin pressure and rising memory costs.
Results and Guidance
For the three months ended July 31, 2026, HP reported net revenue of $15.7 billion, up 12.5% year over year and 10.9% in constant currency. GAAP net earnings were $661 million, with GAAP diluted EPS of $0.71 and non-GAAP diluted EPS of $0.83. Both EPS figures included a $0.11 per-share benefit from U.S. tariff refunds. The company said GAAP EPS declined 11.3% year over year partly due to one-time tax and litigation benefits in the prior-year period.
HP raised its fiscal 2026 guidance to GAAP diluted EPS of $2.52 to $2.62, non-GAAP diluted EPS of $3.19 to $3.29, and free cash flow of $3.0 billion to $3.2 billion. The full-year outlook incorporates an estimated $0.19 per-share benefit from tariff refunds.
PC Pricing and Margins
Personal Systems net revenue rose 18.0% to $11.8 billion, driven by higher prices on premium and AI-capable PCs despite weaker unit volumes. Secondary reports indicated a roughly 16% decline in total PC shipments, with commercial units up about 22% and consumer units up about 10%, reflecting a shift toward higher-priced configurations.
Printing revenue declined 2.0% to $3.9 billion. Supplies revenue and total hardware units fell about 3.0% and 7.0%, respectively. The Printing segment posted an operating margin of 18.1%, while consolidated GAAP operating margin increased to 5.7% from 5.1% a year earlier. Higher memory-chip costs were cited as a headwind that tariff refunds and price gains helped offset.
Cash Flow and Returns
HP generated $1.7 billion in net cash from operating activities and $1.6 billion in free cash flow during the quarter. The company returned approximately $600 million to shareholders, including $274 million in dividends (a $0.30 per-share payout) and about $300 million in share repurchases, buying roughly 12.2 million shares.
The company ended the quarter with $4.2 billion in gross cash, consisting of $4.2 billion in cash and cash equivalents and $3 million in short-term investments. HP said the stronger cash position supports its raised free-cash-flow outlook and ongoing capital returns.
