HP operates on a fiscal year that ends on 31 October, and its Financial Quarters end January, April, July and October.
HP inc. has released its fiscal 2026 third quarter financial performance. When reviewing the same quarter – 2026 vs 2025, top line results, on generally accepted accounting practices, indicate:
- Revenue has increased by 12.5%, to $15.7bn (10.9% in constant currency)
- Operating margin has increased by 0.6%
Bruce Broussard, Interim CEO, HP Inc. commented:
“In the third quarter we increased both total sales and share in premium products and continued to attract new customers with innovations in WXP, Print, workstations and AI PCs. Our ongoing strategy to address environmental constraints led to meaningful improvements in memory supply and higher fulfillment rates. The strong foundation we are building as a trusted edge platform positions us well to lead as AI evolves and allows us to help customers improve their AI economics, security, latency and governance.”
Cash Flow Focus
HP’s net cash provided by operating activities in the third quarter of fiscal 2026 was US$1.7 billion. Accounts receivable ended the quarter at US$7.2 billion, up 3 days quarter over quarter to 41 days. Accounts payable ended the quarter at $21.4 billion, flat quarter over quarter at 151 days.
HP generated US$1.57 billion of free cash flow in its third quarter of fiscal 2026, up 7% when compared to the same period in 2025, attributed partly to investments in property and leveraged financing.
Karen Parkhill, CFO, HP Inc. commented:
“We delivered another strong quarter, with record third quarter revenue, EPS above the top of our guidance range, and are raising our guidance for FY26. With three solid quarters behind us, we’ve demonstrated our ability to navigate through a challenging cost environment and are building on that momentum to further mitigate near-term cost pressures while continuing to invest for long-term profitable growth.”
No change: Personal Systems Up, Printing Down
HP’s trajectory for its two major categories continues as per the previous quarter – Personal Systems delivering double digit revenue growth, despite unit volume declining, but Print revenue continues to decline, albeit single figure size.
- Personal Systems net revenue was US$11.8 billion, up 18% year over year with a 4.6% operating margin.
- Consumer Personal Systems net revenue was up 10% and Commercial Personal Systems net revenue was up 22%. Total units were down 16% with Consumer Personal Systems units down 19% and Commercial Personal Systems units down 14%.
- Printing net revenue was $3.9 billion, down 2% year over year (down 4% in constant currency) with an 18.1% operating margin.
- Consumer Printing net revenue was down 2% and Commercial Printing net revenue was down 1%.
- Supplies net revenue was down 3% (down 4% in constant currency). Total hardware units were down 7%, with Consumer Printing units down 9% and Commercial Printing units down 2%.
Current Thoughts
It is never a good idea to look at Quarterly data in isolation, or to consider the merits of a company’s performance on a quarter alone. However, here are some key observations:
- HP sold fewer PC units than the previous quarter a year ago, but the revenue grew, so the company is generating considerably more revenue from less devices. Reasons are numerous such as higher prices and AI PC’s commanding far bigger price points. During the earning’s call briefing, HP admitted that AI PC’s accounted for 46% of all PC shipments in the quarter, and the ratio proportion is expected to increase in future quarters.
- Memory and Storage costs are squeezing margins as Personal Systems operating margin fell from 5.4% in 2025 to 4.6% in the same quarter in 2026, despite gains made in revenue. Increased pricing is not completely offsetting costly components’ price rises. The costs of selling are simply rising.
- Print remains a major profit generator for HP. Look at that operating margin: 18.1%, pretty much the envy of most Print Vendor companies. Now if HP could halt the decline of Printing….
