HP Inc.
08/27/2026 | Press release | Distributed by Public on 08/27/2026 04:04
Quarterly Report for Quarter Ending July 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
HP INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The discussion of financial condition and results of our operations that follows provides information that will assist the reader in understanding our Condensed Consolidated Financial Statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our Condensed Consolidated Financial Statements. This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document.
OVERVIEW
HP delivers innovative and AI-powered devices, software, services, and subscriptions that drive business growth and professional fulfillment. We have three reportable segments: Personal Systems, Printing, and Corporate Investments. The Personal Systems segment offers commercial and consumer desktops, notebooks and workstations (including HP's portfolio of AI PCs and workstations), thin clients, retail POS systems, displays, hybrid systems, software, solutions including endpoint security, and services. The Printing segment provides consumer and commercial printer hardware, supplies, solutions and services. Corporate Investments include certain business incubation and investment projects.
•In Personal Systems, our long-term strategic focus is on:
◦profitable growth through innovation, market segmentation and simplification of our portfolio;
◦enhanced innovation in multi-operating systems, multi-architecture, customer segments and other key attributes;
◦investing in endpoint services and solutions. We are focused on services, including Device-as-a-Service, as the market shifts to subscription-based solutions, and accelerating in attractive adjacencies such as hybrid systems; and
◦driving innovation to enable productivity and collaboration, with AI PCs and workstations playing a critical role in the transformation of how people live and work.
•In Printing, our long-term strategic focus is on:
◦offering innovative, intelligent printing experiences and subscription-based solutions designed to securely serve consumer and SMB customers through our Instant Ink Services and HP All-In Plan, as well as large enterprises through our Managed Print Services solutions;
◦providing digital printing solutions for industrial graphics segments and applications including commercial publishing, labels, packaging, and textiles; and
◦expanding our footprint in 3D printing across digital manufacturing and strategic applications.
We are focused on driving further growth, recurring revenue and investment in strategic areas and believe we are well positioned to lead the future of work with our competitive product lineup and enhanced portfolio of hybrid systems, remote-computing solutions, and intelligent print solutions. We are driving innovation by accelerating the delivery of AI across our product portfolio and focusing on growth opportunities in commercial, solutions, and premium consumer and gaming markets. We have consolidated all our software resources under the Technology and Innovation Organization to evolve from a transactional hardware company to a more experience-led organization, further strengthening our ability to capture these opportunities.
We continue to experience challenges that are representative of the trends and uncertainties that may affect our industry, generally, and our business and financial results, specifically, and we expect these challenges to continue in the short-term. One set of challenges relates to the current macroeconomic environment and the adverse impact on demand for certain of our products. A second set of challenges relates to changes in the competitive landscape. Our primary competitors are exerting competitive pressure in targeted areas and are entering new markets, our emerging competitors are introducing new
technologies and business models, and our alliance partners in some businesses are increasingly becoming our competitors in others. A third set of challenges relates to business model changes and our go-to-market execution in an evolving distribution and reseller landscape, with increasing online and omnichannel presence. Specific challenges we face at the segment level are set forth below.
•In Personal Systems, we face challenges with a competitive pricing environment, increasing commodity costs, particularly in memory and storage costs, and the uncertainty of the market's ability to absorb price increases.
•In Printing, we face challenges from changing customer behaviors as well as competitors with a favorable foreign currency environment and non-original supplies (which includes imitation, refill, or remanufactured alternatives). We also obtain many Printing components from single source suppliers due to technology, availability, price, quality, or other considerations.
To address these challenges, we continue to pursue innovation with a view towards developing new products and services aligned with generating market demand and meeting the needs of our customers and partners. In addition, we continue to work on improving our operations and adapting our business models, with a particular focus on enhancing our end-to-end processes, analytics, efficiencies and simplification of our product portfolio. We also continue to work on optimizing our sales coverage models, aligning our sales incentives with our strategic goals, improving channel execution and inventory, production and backlog management, strengthening our capabilities in our areas of strategic focus, effective cost management, strengthening our pricing strategy, and developing and capitalizing on market opportunities.
Macroeconomic Environment
Our business and financial performance depend significantly on worldwide economic conditions. We face global macroeconomic challenges such as ongoing geopolitical conflicts, uncertainty in the markets, volatility in exchange rates, inflationary trends and evolving dynamics in the global trade environment. We also experience seasonality in the sale of our products and services which may be affected by general economic conditions.
Since April 2025, new, substantial tariffs have been imposed on imports to the United States. On February 20, 2026, the U.S. Supreme Court held that tariffs imposed under the IEEPA were not authorized by statute which removed the obligation for and collection of related tariffs. As of July 31, 2026, we have applied for the recovery of approximately $0.3 billion of previously paid IEEPA tariffs. We have received $127 million of refunds during the three and nine months ended July 31, 2026, and $91 million subsequent to the reporting period. Refunds are recognized as a reduction of Products cost of net revenue when received. We are continuing to assess the recoverability of additional IEEPA tariffs previously paid, as well as the effects of any additional tariffs or trade actions that may be imposed.
During the nine months ended July 31, 2026, we experienced higher inflationary pressure in memory and storage costs and supply constraints in our Personal Systems business, which we anticipate will continue. We continue to evaluate and implement mitigating actions, including potential supply chain resiliency movements and cost and pricing measures, as the trade and supply environments evolve.
New or sustained changes to tariffs and commodity costs could result in increased supply chain challenges, cost volatility, and consumer and economic uncertainty which may have a significant adverse impact to our results of operations and cash flows to the extent our efforts do not fully mitigate these effects.
We are also exposed to fluctuations in foreign currency exchange rates. We have a large global presence, with more than 65% of our net revenue from outside the United States. As a result, our financial results can be impacted by fluctuations in foreign currency exchange rates. For a further discussion of trends, uncertainties and other factors that could impact our operating results, see the section entitled "Risk Factors" in Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
Transformation Update
On November 25, 2025, we announced our Fiscal 2026 Plan intended to drive customer satisfaction, product innovation, and productivity primarily through artificial intelligence adoption and enablement that HP expects will be implemented through fiscal 2028. During the nine months ended July 31, 2026, we took actions to integrate AI into our channel partner experience and scale additional AI agents in our supply chain operations and expect to continue to accelerate and scale these initiatives. We additionally took actions to reduce headcount through the EER program of which a significant portion will get executed during fiscal year 2026.
See "Risk Factors-Strategic and Operational Risks-We may not achieve some or all of the expected benefits of our restructuring and other plans and such plans may adversely affect our business" in Item 1A of Part I in our Annual Report on
Form 10-K for the fiscal year ended October 31, 2025. For more information on our Fiscal 2026 Plan, see Note 3, "Restructuring and Other Charges," to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
ACCOUNTING PRONOUNCEMENTS
For a summary of recent accounting pronouncements applicable to our Condensed Consolidated Financial Statements see Note 1, "Basis of Presentation", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
CRITICAL ACCOUNTING ESTIMATES
MD&A is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities. Management believes that there have been no significant changes during the nine months ended July 31, 2026 to the items that we disclosed as our critical accounting estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
RESULTS OF OPERATIONS
Revenue from our international operations has historically represented, and we expect will continue to represent, a majority of our overall net revenue. As a result, our net revenue growth has been impacted, and we expect it will continue to be impacted, by fluctuations in foreign currency exchange rates. In order to provide a framework for assessing performance excluding the impact of foreign currency fluctuations, we supplement the year-over-year percentage change in net revenue with the year-over-year percentage change in net revenue on a constant currency basis, which excludes the effect of foreign currency exchange fluctuations calculated by translating current period revenues using monthly exchange rates from the comparative period and excluding any hedging impact recognized in the current period, and without adjusting for any repricing or demand impacts from changes in foreign currency exchange rates. This information is provided so that net revenue can be viewed with and without the effect of fluctuations in foreign currency exchange rates, which is consistent with how management evaluates our net revenue results and trends, as management does not believe that the excluded items are reflective of ongoing operating results. The constant currency measures are provided in addition to, and not as a substitute for, the year-over-year percentage change in net revenue on a GAAP basis. Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of this measure for comparative purposes.
Results of operations in dollars and as a percentage of net revenue were as follows:
| Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Dollars | % of Net Revenue | Dollars | % of Net Revenue | Dollars | % of Net Revenue | Dollars | % of Net Revenue | ||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
| Products | $ | 14,825 | 94.6 | % | $ | 13,114 | 94.1 | % | $ | 41,986 | 94.3 | % | $ | 38,232 | 94.0 | % | |||||||||||||||||||||||||||||||
| Services | 852 | 5.4 | % | 818 | 5.9 | % | 2,537 | 5.7 | % | 2,424 | 6.0 | % | |||||||||||||||||||||||||||||||||||
| Total net revenue | 15,677 | 100.0 | % | 13,932 | 100.0 | % | 44,523 | 100.0 | % | 40,656 | 100.0 | % | |||||||||||||||||||||||||||||||||||
| Cost of net revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
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Products(1)
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12,256 | 82.7 | % | 10,599 | 80.8 | % | 34,312 | 81.7 | % | 30,800 | 80.6 | % | |||||||||||||||||||||||||||||||||||
|
Services(2)
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476 | 55.9 | % | 482 | 58.9 | % | 1,415 | 55.8 | % | 1,426 | 58.8 | % | |||||||||||||||||||||||||||||||||||
| Total cost of net revenue | 12,732 | 81.2 | % | 11,081 | 79.5 | % | 35,727 | 80.2 | % | 32,226 | 79.3 | % | |||||||||||||||||||||||||||||||||||
| Gross Margin | 2,945 | 18.8 | % | 2,851 | 20.5 | % | 8,796 | 19.8 | % | 8,430 | 20.7 | % | |||||||||||||||||||||||||||||||||||
| Research and development | 389 | 2.5 | % | 406 | 2.9 | % | 1,213 | 2.7 | % | 1,204 | 3.0 | % | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 1,537 | 9.8 | % | 1,452 | 10.4 | % | 4,555 | 10.2 | % | 4,391 | 10.8 | % | |||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 48 | 0.3 | % | 110 | 0.9 | % | 539 | 1.3 | % | 302 | 0.7 | % | |||||||||||||||||||||||||||||||||||
| Acquisition and divestiture charges | 4 | - | % | 8 | 0.1 | % | 6 | - | % | 31 | 0.1 | % | |||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 75 | 0.5 | % | 159 | 1.1 | % | 220 | 0.5 | % | 287 | 0.7 | % | |||||||||||||||||||||||||||||||||||
| Total operating expenses | 2,053 | 13.1 | % | 2,135 | 15.4 | % | 6,533 | 14.7 | % | 6,215 | 15.3 | % | |||||||||||||||||||||||||||||||||||
| Earnings from operations | 892 | 5.7 | % | 716 | 5.1 | % | 2,263 | 5.1 | % | 2,215 | 5.4 | % | |||||||||||||||||||||||||||||||||||
| Interest and other, net | (94) | (0.6) | % | (92) | (0.6) | % | (301) | (0.7) | % | (381) | (0.9) | % | |||||||||||||||||||||||||||||||||||
| Earnings before taxes | 798 | 5.1 | % | 624 | 4.5 | % | 1,962 | 4.4 | % | 1,834 | 4.5 | % | |||||||||||||||||||||||||||||||||||
| (Provision for) benefit from taxes | (137) | (0.9) | % | 139 | 1.0 | % | (306) | (0.7) | % | (100) | (0.2) | % | |||||||||||||||||||||||||||||||||||
| Net earnings | $ | 661 | 4.2 | % | $ | 763 | 5.5 | % | $ | 1,656 | 3.7 | % | $ | 1,734 | 4.3 | % | |||||||||||||||||||||||||||||||
(1) Products cost of net revenue as a percentage of net revenue is calculated as a percentage of product net revenue.
(2) Services cost of net revenue as a percentage of net revenue is calculated as a percentage of services net revenue.
Net Revenue
Products net revenue includes revenue from the sale of hardware, supplies, subscriptions and software licenses. Services net revenue includes revenue from our service offerings and support on hardware devices.
For the three months ended July 31, 2026, net revenue increased 12.5% (increased 10.9% on a constant currency basis) as compared to the prior-year period. Net revenue from international operations increased 16.8% to $10.4 billion, while U.S. net revenue increased 5.1% to $5.3 billion. The increase in net revenue was primarily driven by products net revenue due to pricing actions to mitigate higher commodity costs in Personal Systems and favorable currency impacts, partially offset by demand softness in Printing. Services net revenue increased due to support services on hardware devices.
For the nine months ended July 31, 2026, total net revenue increased 9.5% (increased 7.5% on a constant currency basis) as compared to the prior-year period. Net revenue from international operations increased 13.7% to $30.1 billion, while U.S. net revenue increased 1.6% to $14.4 billion. The increase in net revenue was primarily driven by products net revenue due to pricing actions to mitigate higher commodity costs in Personal Systems, partially offset by demand softness and competitive pressures in Printing. Services net revenue increased due to support services on hardware devices.
A detailed discussion of the factors contributing to the changes in segment net revenue is included in "Segment Information" below.
Gross Margin
For the three months ended July 31, 2026, gross margin decreased 1.7 percentage points primarily driven by higher commodity costs and unfavorable mix shifts towards Personal Systems, partially offset by pricing actions including favorable currency impacts, and IEEPA tariff refunds. Services gross margin increased due to favorable mix shifts.
For the nine months ended July 31, 2026, gross margin decreased 0.9 percentage points primarily driven by products gross margin due to higher commodity costs and unfavorable mix shifts towards Personal Systems, partially offset by pricing actions including favorable currency impacts, and IEEPA tariff refunds. Services gross margin increased due to favorable mix shifts.
A detailed discussion of the factors contributing to the changes in segment gross margins is included under "Segment Information" below.
Operating Expenses
Research and Development ("R&D")
R&D expense decreased 4.2% for the three months ended July 31, 2026, primarily driven by favorable net R&D partner funding, partially offset by higher variable compensation.
R&D expense increased 0.7% for the nine months ended July 31, 2026 primarily driven by higher variable compensation.
Selling, General and Administrative ("SG&A")
SG&A expense increased 5.9% and 3.7% for the three and nine months ended July 31, 2026 primarily driven by higher variable compensation, partially offset by disciplined cost management.
Restructuring and Other Charges
Restructuring and other charges decreased $62 million for the three months ended July 31, 2026 driven by severance activity under the Fiscal 2023 Plan in the prior period.
Restructuring and other charges increased $237 million for the nine months ended July 31, 2026 primarily driven by the EER program under the Fiscal 2026 Plan.
For more information, see Note 3, "Restructuring and other charges", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
Acquisition and Divestiture Charges
Acquisition and divestiture charges for the three and nine months ended July 31, 2026 decreased by $4 million and $25 million, respectively, primarily due to lower acquisition and integration activities.
Amortization of Intangible Assets
Amortization of intangible assets decreased $84 million and $67 million for the three and nine months ended July 31, 2026, respectively, primarily driven by higher impairment charges of $69 million and $37 million, respectively, in the prior periods.
Interest and Other, Net
Interest and other, net expense remained flat for the three months ended July 31, 2026 primarily due to a gain from a single litigation matter that does not relate to HP's ongoing business operations recorded in the prior period, offset by lower interest expense on debt and factoring costs in the current period.
Interest and other, net expense decreased $80 million for the nine months ended July 31, 2026 primarily due to lower interest expense on debt and factoring costs in the current period, partially offset by a gain from a single litigation matter that does not relate to HP's ongoing business operations recorded in the prior period.
Provision for Taxes
Our effective tax rate was 17.2% for the three months ended July 31, 2026 and 15.6% for the nine months ended July 31, 2026. The difference between the U.S. federal statutory tax rate of 21% and our effective tax rate for the three months ended July 31, 2026 was primarily due to decreases in unrecognized tax benefits. For the nine months ended July 31, 2026, the difference was primarily due to decreases in unrecognized tax benefits and audit settlements in various jurisdictions.
Segment Information
A description of the products and services for each segment and the business unit realignment in the first quarter of fiscal year 2026 can be found in Note 2, "Segment Information" to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
Personal Systems
| Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||
| Net revenue | $ | 11,767 | $ | 9,931 | 18.5 | % | $ | 32,231 | $ | 28,179 | 14.4 | % | |||||||||||||||||||||||
| Earnings from operations | $ | 537 | $ | 541 | (0.7) | % | $ | 1,578 | $ | 1,457 | 8.3 | % | |||||||||||||||||||||||
| Earnings from operations as a % of net revenue | 4.6 | % | 5.4 | % | 4.9 | % | 5.2 | % | |||||||||||||||||||||||||||
The components of net revenue and the weighted net revenue change by business unit were as follows:
| Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
| Net Revenue |
Weighted Net Revenue Change(1)
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Net Revenue |
Weighted Net Revenue Change(1)
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| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Dollars in millions | Percentage Points | Dollars in millions | Percentage Points | ||||||||||||||||||||||||||||||||
| Commercial PS | $ | 8,579 | $ | 7,036 | 15.5 | $ | 23,575 | $ | 20,467 | 11.0 | |||||||||||||||||||||||||
| Consumer PS | 3,188 | 2,895 | 3.0 | 8,656 | 7,712 | 3.4 | |||||||||||||||||||||||||||||
| Total Personal Systems | $ | 11,767 | $ | 9,931 | 18.5 | $ | 32,231 | $ | 28,179 | 14.4 | |||||||||||||||||||||||||
(1)Weighted Net Revenue Change Percentage Points measures contribution of each business unit towards overall segment revenue growth. It is calculated by dividing the change in revenue of each business unit from the prior-year period by total segment revenue for the prior-year period.
Three months ended July 31, 2026 compared with three months ended July 31, 2025
Personal Systems net revenue increased 18.5% (increased 16.7% on a constant currency basis) for the three months ended July 31, 2026. The net revenue increase was primarily due to a 40.8% increase in ASPs, partially offset by a 15.8% decrease in PCs unit volume driven by a focus on higher value units in an increasing commodity cost environment. The increase in ASPs is primarily due to pricing actions to mitigate higher commodity costs, favorable currency impacts and mix shifts.
Commercial PS net revenue increased 21.9% primarily due to a 41.1% increase in ASPs, partially offset by a 13.6% decrease in units. The increase in ASPs is primarily due to pricing actions, favorable currency impacts and mix shifts towards premium.
Consumer PS net revenue increased 10.1% primarily due to a 37.1% increase in ASPs, partially offset by a 19.4% decrease in units. The increase in ASPs was primarily due to pricing actions and favorable currency impacts partially offset by unfavorable mix shifts.
Personal Systems earnings from operations as a percentage of net revenue decreased by 0.8 percentage points driven by a decrease in gross margin, partially offset by a decrease in operating expenses as a percentage of revenue. Gross margin decreased primarily due to higher commodity costs, partially offset by pricing actions, IEEPA tariff refunds and favorable currency impacts. Operating expenses as a percentage of revenue decreased primarily driven by disciplined cost management and favorable net R&D partner funding, partially offset by higher variable compensation.
Nine months ended July 31, 2026 compared with nine months ended July 31, 2025
Personal Systems net revenue increased 14.4% (increased 12.1% on a constant currency basis) for the nine months ended July 31, 2026. The net revenue increase was primarily due to a 19.8% increase in ASPs, partially offset by a 4.2% decrease in PC unit volume. The decrease in PC unit volume was driven by an increasing commodity cost environment, partially offset by the Windows-based PC operating system refresh. The increase in ASPs is primarily due to pricing actions to mitigate higher commodity costs, as well as favorable currency impacts. Consequently, the cost environment drove an increase in ASPs and decrease in PC unit volume in both Commercial and Consumer PS.
Commercial PS net revenue increased 15.2% primarily due to a 20.2% increase in ASPs, partially offset by a 3.7% decrease in PC unit volume.
Consumer PS net revenue increased 12.2% primarily due to a 18.4% increase in ASPs, partially offset by a 5.0% decrease in PC unit volume.
Personal Systems earnings from operations as a percentage of net revenue decreased by 0.3 percentage points driven by a decrease in gross margin, partially offset by a decrease in operating expenses as a percentage of revenue. Gross margin decreased primarily due to higher commodity costs, partially offset by pricing actions including favorable currency impacts. Operating expenses as a percentage of revenue decreased due to disciplined cost management, partially offset by higher variable compensation.
Printing
| Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||||||||
| Net revenue | $ | 3,912 | $ | 4,002 | (2.2) | % | $ | 12,294 | $ | 12,479 | (1.5) | % | |||||||||||||||||||||||
| Earnings from operations | $ | 709 | $ | 681 | 4.1 | % | $ | 2,241 | $ | 2,286 | (2.0) | % | |||||||||||||||||||||||
| Earnings from operations as a % of net revenue | 18.1 | % | 17.0 | % | 18.2 | % | 18.3 | % | |||||||||||||||||||||||||||
The components of net revenue and the weighted net revenue change by business unit were as follows:
| Three months ended July 31 | Nine months ended July 31 | ||||||||||||||||||||||||||||||||||
| Net Revenue |
Weighted Net Revenue Change(1)
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Net Revenue |
Weighted Net Revenue Change(1)
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| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Dollars in millions | Percentage Points | Dollars in millions | Percentage Points | ||||||||||||||||||||||||||||||||
| Supplies | $ | 2,536 | $ | 2,609 | (1.8) | $ | 8,089 | $ | 8,166 | (0.6) | |||||||||||||||||||||||||
| Commercial Printing | 1,101 | 1,113 | (0.3) | 3,374 | 3,424 | (0.4) | |||||||||||||||||||||||||||||
| Consumer Printing | 275 | 280 | (0.1) | 831 | 889 | (0.5) | |||||||||||||||||||||||||||||
| Total Printing | $ | 3,912 | $ | 4,002 | (2.2) | $ | 12,294 | $ | 12,479 | (1.5) | |||||||||||||||||||||||||
(1)Weighted Net Revenue Change Percentage Points measures contribution of each business unit towards overall segment revenue growth. It is calculated by dividing the change in revenue of each business unit from the prior-year period by total segment revenue for the prior-year period.
Three months ended July 31, 2026 compared with three months ended July 31, 2025
Printing net revenue decreased 2.2% (decreased 3.6% on a constant currency basis) for the three months ended July 31, 2026. The decrease in net revenue across Supplies, Commercial and Consumer Printing was partially offset by favorable currency impacts. Net revenue for Supplies decreased 2.8%, primarily due to a decline in installed base and usage, partially offset by pricing actions and favorable currency impacts. Printer units decreased by 6.8% primarily due to demand softness, particularly in China, as well as competitive pressures, while ASPs increased by 5.8%. The increase in ASPs was primarily driven by favorable mix shifts towards Commercial, pricing actions and currency impacts.
Net revenue for Commercial Printing decreased 1.1%, due to a 2.4% decrease in printer unit volume and a 1.7% decrease in ASPs. The decrease in ASPs was primarily driven by unfavorable mix shifts, partially offset by favorable pricing actions and currency impacts.
Net revenue for Consumer Printing decreased 1.8% primarily due to a 9.1% decrease in printer unit volume, partially offset by a 16.5% increase in ASPs. The increase in ASPs was primarily driven by favorable mix shifts towards Big Tank and currency impacts.
Printing earnings from operations as a percentage of net revenue increased by 1.1 percentage points driven by an increase in gross margin as a percentage of revenue, partially offset by an increase in operating expenses as a percentage of revenue. The increase in gross margin is primarily due to IEEPA tariff refunds and pricing actions, partially offset by unfavorable mix shifts. Operating expenses as a percentage of revenue increased primarily due to higher variable compensation.
Nine months ended July 31, 2026 compared with nine months ended July 31, 2025
Printing net revenue decreased 1.5% (decreased 2.9% on a constant currency basis) for the nine months ended July 31, 2026. The decrease in net revenue across Supplies, Commercial and Consumer Printing was partially offset by favorable currency impacts. Net revenue for Supplies decreased, primarily due to a decline in installed base and usage, partially offset by pricing actions and favorable currency impacts. Printer unit volume decreased 6.6% driven by demand softness and competitive pressures, while hardware ASPs increased 3.9%. The increase in ASPs was primarily driven by favorable pricing actions, mix shifts and currency impacts.
Net revenue for Commercial Printing decreased by 1.5%, primarily due to a 4.5% decrease in printer unit volume, partially offset by a 0.6% increase in ASPs. The increase in ASPs was primarily driven by pricing actions, partially offset by unfavorable mix shifts.
Net revenue for Consumer Printing decreased 6.5%, primarily due to a 7.8% decrease in printer unit volume, partially offset by a 7.6% increase in ASPs. The increase in ASPs was primarily driven by favorable mix shifts towards Big Tank and currency impacts, partially offset by competitive pricing.
Printing earnings from operations as a percentage of net revenue decreased 0.1 percentage points driven by an increase in operating expenses as a percentage of revenue, partially offset by an increase in gross margin. Operating expenses as a percentage of revenue increased primarily driven by higher variable compensation. Gross margin increased primarily due to IEEPA tariff refunds and pricing actions, partially offset by unfavorable mix shifts.
Corporate Investments
The loss from operations in Corporate Investments for the three and nine months ended July 31, 2026 was primarily due to expenses associated with our incubation projects and investments in digital enablement.
LIQUIDITY AND CAPITAL RESOURCES
We use cash generated by operations as our primary source of liquidity. We believe that current cash, cash flow from operating activities, new borrowings, available commercial paper authorization and the credit facility will be sufficient to meet HP's operating cash requirements, planned capital expenditures, interest and principal payments on all borrowings, pension and post-retirement funding requirements, authorized share repurchases and annual dividend payments for the foreseeable future. Additionally, if suitable acquisition opportunities arise, the Company may obtain all or a portion of the required financing through additional borrowings. While our access to capital markets may be constrained and our cost of borrowing may increase under certain business, market and economic conditions, our access to a variety of funding sources to meet our liquidity needs is designed to facilitate continued access to capital resources under all such conditions. Our liquidity is subject to various risks including the risks identified in the section entitled "Risk Factors" in Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025 and the market risks identified in the section entitled "Quantitative and Qualitative Disclosures about Market Risk" in Item 3 of Part I of this report.
Amounts held outside of the U.S. are generally utilized to support non-U.S. liquidity needs and may from time to time be distributed to the U.S. Repatriations of amounts held outside the U.S. generally will not be taxable from a U.S. federal tax perspective but may be subject to state income or foreign withholding tax upon repatriation. As we evaluate the future cash needs of our operations, we may revise the amount of foreign earnings considered to be permanently reinvested in our foreign subsidiaries and how to utilize such funds, including reducing our gross debt level, or other uses.
Liquidity
Our cash, cash equivalents and restricted cash and total debt were as follows:
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| In millions | |||||||||||
| Cash and cash equivalents | $ | 4,169 | $ | 3,690 | |||||||
| Restricted cash | $ | - | $ | 15 | |||||||
| Total debt | $ | 9,160 | $ | 9,666 | |||||||
Our key cash flow metrics were as follows:
| Nine months ended July 31 | |||||||||||
| 2026 | 2025 | ||||||||||
| In millions | |||||||||||
| Net cash provided by operating activities | $ | 3,044 | $ | 2,073 | |||||||
| Net cash used in investing activities | (465) | (1,113) | |||||||||
| Net cash used in financing activities | (2,123) | (1,339) | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 456 | $ | (379) | |||||||
Operating Activities
Compared to the corresponding period in fiscal year 2025, net cash provided by operating activities increased $1.0 billion for the nine months ended July 31, 2026, primarily due to favorable changes in working capital, partially offset by changes in receivables from contract manufacturers.
Key Working Capital Metrics
Management utilizes current cash conversion cycle information to manage our working capital level. Our working capital metrics and cash conversion cycle impacts were as follows:
| As of | |||||||||||||||||
| July 31, 2026 | July 31, 2025 | Y/Y Change | |||||||||||||||
| Days of sales outstanding in accounts receivable ("DSO") | 41 | 33 | 8 | ||||||||||||||
|
Days of inventory outstanding ("DIO")
|
73 | 68 | 5 | ||||||||||||||
| Days of purchases outstanding in accounts payable ("DPO") | (151) | (138) | (13) | ||||||||||||||
| Cash conversion cycle | (37) | (37) | - | ||||||||||||||
July 31, 2026 as compared to July 31, 2025
The cash conversion cycle is the sum of DSO and DIO less DPO. Items which may cause the cash conversion cycle in a particular period to differ from historical trends include, but are not limited to, changes in business mix, changes in payment terms and timing, timing and extent of receivables factoring, seasonal trends and the timing of revenue recognition and inventory purchases within the period.
DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for credit losses, by a 90-day average net revenue. The increase in DSO was primarily due to lower factoring, partially offset by favorable revenue linearity.
DIO measures the average number of days from procurement to sale of our product. DIO is calculated by dividing ending inventory by a 90-day average cost of goods sold. The increase in DIO was primarily due to higher commodity costs, partially offset by inventory optimization.
DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average cost of goods sold. The increase in DPO was primarily due to higher commodity costs, partially offset by working capital management activities.
Investing Activities
Compared to the corresponding period in fiscal year 2025, net cash used in investing activities decreased by $0.6 billion for the nine months ended July 31, 2026, primarily due to a $0.4 billion favorable net decrease in collateral posted for derivative instruments, lower payments in connection with business acquisitions of $0.1 billion, and lower investment in property, plant, equipment and purchased intangible of $0.1 billion.
Financing Activities
Compared to the corresponding period in fiscal year 2025, net cash used in financing activities increased by $0.8 billion for the nine months ended July 31, 2026, primarily due to a $0.4 billion increase in net debt repayments and $0.4 billion increase in share repurchases.
Share Repurchases and Dividends
During the nine months ended July 31, 2026, HP returned $1.5 billion to shareholders in the form of cash dividends of $0.8 billion and share repurchases of $0.7 billion. As of July 31, 2026, HP had approximately $7.7 billion remaining under the share repurchase authorization approved by HP's Board of Directors.
For more information on our share repurchases, see Note 9, "Stockholders' Deficit", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
Capital Resources
Debt Levels
| As of | |||||||||||
| July 31, 2026 | October 31, 2025 | ||||||||||
| Dollars in millions | |||||||||||
| Short-term debt | $ | 1,292 | $ | 845 | |||||||
| Long-term debt | $ | 7,868 | $ | 8,821 | |||||||
| Weighted-average interest rate | 4.8 | % | 4.6 | % | |||||||
We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital and targeted capital structure.
Our weighted-average interest rate reflects the effective rate on our borrowings prevailing during the period and reflects the effect of interest rate swaps. For more information on our interest rate swaps, see Note 7, "Financial Instruments", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
As of July 31, 2026, we maintained a $5.0 billion sustainability-linked senior unsecured committed revolving credit facility which will be available until August 1, 2029. Funds borrowed under the revolving credit facility may be used for general corporate purposes.
Available Borrowing Resources
As of July 31, 2026, we had available borrowing resources of $0.9 billion from uncommitted lines of credit in addition to funds available under the revolving credit facility.
In February 2024, we filed an automatically effective shelf registration statement with the SEC, which enables us to offer for sale, at any time and from time to time, in one or more offerings, an unspecified amount of debt securities, common stock, preferred stock, depository shares and warrants.
For more information on our borrowings, see Note 8, "Borrowings", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
Credit Ratings
Our credit risk is evaluated by major independent rating agencies based upon publicly available information as well as information they obtain during our ongoing discussions. While we currently do not have any rating downgrade triggers that would accelerate the maturity of a material amount of our debt, a downgrade from our current credit rating may increase the cost of borrowing under our credit facility, reduce market capacity for our commercial paper, require the posting of additional collateral under some of our derivative contracts and may have a negative impact on our liquidity and capital position and our contractual business going forward, depending on the extent of such downgrade. We can access alternative sources of funding, including drawdowns under our credit facility, if necessary, to offset potential reductions in the market capacity for our commercial paper.
CONTRACTUAL AND OTHER OBLIGATIONS
Unconditional Purchase Obligation
Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on HP and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Unconditional purchase obligations exclude agreements that are cancellable without penalty. The Company's purchase obligations under variable price provisions approximate market prices at the time of purchase and are estimated using current period pricing. Actual future variable price purchase commitments may significantly vary depending on market prices and product mix at the time of purchase. The Company's unconditional purchase obligations are primarily related to inventory and service support. As of July 31, 2026, the Company had outstanding purchase commitments of $2.1 billion. The majority of these commitments are due within five years. For more information, see Note 13, "Commitments," to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
Retirement and Post-Retirement Benefit Plan Contributions
As of July 31, 2026, we anticipate making contributions for the remainder of fiscal year 2026 of approximately $9 million to our non-U.S. pension plans and $7 million to cover benefit payments to U.S. non-qualified pension plan participants, and $1 million to cover benefit claims for our post-retirement benefit plans. Our policy is to fund our pension plans so that we meet the minimum contribution required by local government, funding and taxing authorities. During the nine months ended July 31, 2026, HP contributed $60 million to its non-U.S. pension plans, paid $20 million to cover benefit payments to U.S. non-qualified plan participants and paid $5 million to cover benefit claims under HP's post-retirement benefit plans. For more information on our retirement and post-retirement benefit plans, see Note 4, "Retirement and Post-Retirement Benefit Plans", to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
Cost Savings Plan
As a result of our approved restructuring plans, we expect to make future cash payments of approximately $0.2 billion. For more information on our restructuring activities that are part of our cost improvements, see Note 3, "Restructuring and Other Charges", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
Uncertain Tax Positions
As of July 31, 2026, we had approximately $640 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions. We are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters. Payments of these liabilities would result from settlements with taxing authorities. For more information on our uncertain tax positions, see Note 4, "Taxes on Earnings", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
Off-Balance Sheet Arrangements
As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
HP utilizes certain third-party arrangements in the normal course of business as part of HP's cash and liquidity management and also to provide liquidity to certain partners to facilitate their working capital requirements. For more information on our third-party short-term financing arrangements, see Note 5, "Supplementary Financial Information", to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.
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