HP Q3 Earnings Call Highlights

HP Inc. NYSE: HPQ reported record fiscal third-quarter revenue and raised its full-year earnings and free-cash-flow outlook, as growth in its Personal Systems business offset continued pressure in printing markets and rising component costs. Revenue for the quarter totaled $15.7 billion, up 13% year over year, marking the company’s ninth consecutive quarter of top-line growth. Non-GAAP diluted earnings per share rose 11% to $0.83, including a $0.11 benefit from tariff refunds. Chief Financial Officer Karen Parkhill said earnings excluding the tariff benefit still exceeded the top end of HP’s prior guidance range. “For the third consecutive quarter, we delivered better than expected top-line growth and EPS at the top or above our guidance range,” Parkhill said. Personal Systems revenue rose 18% to a record $11.8 billion in the fiscal third quarter. Commercial revenue increased 22%, while consumer revenue grew 10%. Commercial customers accounted for more than 70% of Personal Systems revenue during the quarter. HP said its strategy of prioritizing higher-value placements, pricing actions, services expansion and premium categories more than offset lower unit volume. The company reported double-digit growth in AI PCs, advanced compute solutions, hybrid systems and workforce solutions. Personal Systems operating margin was 4.6%, below the company’s long-term range, due to higher commodity costs and variable compensation. HP said repricing and other cost-reduction measures partly offset those pressures. Interim Chief Executive Officer Bruce Broussard said HP expects AI PCs to account for 50% of its shipment mix by the end of fiscal 2026. Personal Systems President Ketan Patel said AI PCs represented 46% of shipments in the third quarter and that HP expects the mix to reach 60% to 70% in fiscal 2027 and more than 70% in fiscal 2028. Patel said customers are increasingly considering more capable devices as AI workloads move closer to users and away from solely cloud-based computing. He cited considerations including token costs, security, privacy, latency and enterprise management of AI agents. HP gained 2.6 percentage points of share in premium PC categories, according to Patel. The company gained 1.8 percentage points of workstation share. Peripherals, collaboration offerings and services such as the Workforce Experience Platform contributed about one-third of Personal Systems gross profit. Print revenue declined 2% from a year earlier, or 4% in constant currency, as lower hardware and supplies volumes outweighed contributions from...