HP Raises Fiscal 2026 Outlook After Record Third-Quarter Sales
The company lifted full-year non-GAAP EPS to $3.19–$3.29 and free cash flow to $3.0–$3.2 billion after $15.7 billion of third-quarter net revenue.
HP Inc. (HPQ) reported fiscal 2026 third-quarter net revenue of $15.7 billion, up 12.5% from a year earlier, and raised its full-year earnings and cash-flow outlook after a record third-quarter sales total.
Year-over-year growth had been 6.9% in the first quarter and 9.0% in the second. The company increased both total sales and share in premium products and continued to attract new customers with innovations in Windows XP, Print, workstations, and AI PCs. Interim Chief Executive Officer Bruce Broussard said an ongoing strategy to address environmental constraints led to meaningful improvements in memory supply and higher fulfillment rates.
GAAP diluted net earnings per share were $0.71, down 11.3% from $0.80 a year earlier, after a 16.7% year-over-year increase in the second quarter. The decline was due in part to one-time tax and litigation benefits in the prior-year period. Non-GAAP diluted net EPS were $0.83, up 10.7% from $0.75 a year earlier, after a 21.1% year-over-year increase in the second quarter. Both GAAP and non-GAAP diluted net EPS included a $0.11 favorable impact from tariff refunds. GAAP diluted EPS was above the previously provided outlook of $0.47 to $0.63; non-GAAP diluted EPS was above the previously provided outlook of $0.61 to $0.71. Chief Financial Officer Karen Parkhill said EPS was above the top of the guidance range.
GAAP operating margin expanded 0.6 points year over year to 5.7%, reversing a 0.7-point year-over-year compression to 4.2% in the second quarter. Non-GAAP operating margin compressed 0.6 points year over year to 6.5%.
Personal Systems net revenue was $11.8 billion, up 18% year over year, with a 4.6% operating margin. Commercial Personal Systems net revenue was up 22% and Consumer Personal Systems net revenue was up 10%. 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, with an 18.1% operating margin. Supplies net revenue was down 3% and total hardware units were down 7%.
Net cash provided by operating activities was $1.7 billion. Free cash flow was $1.6 billion, up 7% from $1.47 billion a year earlier, after $0.8 billion in the second quarter. The company returned $0.6 billion to shareholders in share repurchases and dividends, including $300 million to repurchase approximately 12.2 million shares and $274 million of cash usage on a $0.30-a-share dividend. Gross cash was $4.2 billion. Inventory ended the quarter at $10.3 billion, flat quarter over quarter at 73 days. Accounts receivable were $7.2 billion, up 3 days quarter over quarter to 41 days.
For the fiscal 2026 fourth quarter, HP estimates GAAP diluted net EPS of $0.74 to $0.84 and non-GAAP diluted net EPS of $0.69 to $0.79, with both including an $0.08 favorable impact from estimated tariff refunds. Fourth-quarter non-GAAP diluted net EPS estimates exclude $(0.05) per diluted share, primarily related to restructuring and other charges, certain litigation (benefits) charges, net, acquisition and divestiture charges, amortization of intangible assets, non-operating retirement-related credits, tax adjustments, and the related tax impact on these items.
For fiscal 2026, HP is raising its estimate of GAAP diluted net EPS to $2.52 to $2.62 and non-GAAP diluted net EPS to $3.19 to $3.29, with both including a $0.19 favorable impact from estimated tariff refunds. The company is also raising its estimate of free cash flow to $3.0 to $3.2 billion. Fiscal 2026 non-GAAP diluted net EPS estimates exclude $0.67 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, non-operating retirement-related credits, certain litigation (benefits) charges, net, tax adjustments, and the related tax impact on these items. Parkhill said that with three solid quarters behind the company, it has demonstrated its ability to navigate a challenging cost environment and is building on that momentum to further mitigate near-term cost pressures while continuing to invest for long-term profitable growth.