HP reported double-digit fiscal third-quarter 2026 revenue growth and higher non-GAAP earnings as strength in Personal Systems, improved product availability and continued demand for premium computing devices supported the business.
Total revenue increased 12.5% year-over-year to $15.7 billion.
On a constant-currency basis, revenue increased 10.9%, indicating that most of the reported growth reflected underlying business expansion rather than favorable currency movements.
The quarter also produced an improvement in operating profitability.
GAAP operating margin increased to 5.7% from 5.1% in the prior-year period, representing an improvement of approximately 60 basis points.
GAAP net earnings, however, declined 13% to approximately $660 million.
GAAP diluted earnings per share fell 11% to $0.71.
The divergence between higher revenue and operating margin and lower GAAP net income reflected items affecting reported earnings below the operating line, while tariff refunds provided a significant favorable contribution to both reported and adjusted EPS.
On a non-GAAP basis, HP generated approximately $770 million of net earnings, an increase of 8% year-over-year.
Non-GAAP diluted EPS increased 11% to $0.83.
Both GAAP and non-GAAP EPS included approximately $0.11 per share of favorable impact from tariff refunds.
That means the refunds represented a meaningful portion of quarterly earnings and should be considered when comparing the period with HP’s underlying recurring operating performance.
Excluding the approximately $0.11 benefit, GAAP EPS would have been roughly $0.60 and non-GAAP EPS approximately $0.72.
Even with that distinction, HP delivered strong revenue growth and improved operating margins during the quarter.
The strongest growth came from Personal Systems, which includes the company’s commercial and consumer PCs, workstations and related products.
Management highlighted increased sales and market share in premium products as customers continued investing in higher-performance devices.
HP is also increasingly positioning artificial intelligence as a driver of its Personal Systems strategy.
The company has expanded its portfolio of AI PCs designed to run more AI workloads directly on devices.
These systems incorporate newer processors and dedicated AI capabilities that can support tasks locally rather than requiring every workload to be processed through cloud infrastructure.
For enterprise customers, the emergence of AI PCs could create another reason to upgrade existing hardware fleets.
Companies evaluating AI-enabled productivity applications may require devices with greater computing capacity, memory and specialized processors.
HP is seeking to capture that replacement cycle through its commercial PC portfolio while also expanding AI capabilities across premium consumer devices.
Workstations represent another area where AI-related computing demand could provide opportunities.
Engineers, designers, developers and other professional users frequently require substantially more processing and graphics performance than typical office workloads.
As AI becomes integrated into design, engineering, media and data-analysis applications, demand for higher-performance workstations could increase.
HP’s broader workplace portfolio allows the company to address those customers across PCs, peripherals and other computing products.
Management also highlighted progress addressing memory-supply constraints.
The company said its efforts resulted in improved supply and higher fulfillment rates during the quarter.
Improved component availability is important because supply shortages can prevent PC manufacturers from meeting customer demand even when orders remain healthy.
Higher fulfillment rates allow HP to convert more of its existing demand into recognized revenue while reducing delays for customers.
Supply availability also becomes more important as AI PCs increase hardware requirements.
Many AI-enabled workloads require larger amounts of memory and more advanced components than traditional computing applications.
Ensuring adequate component supply can therefore become an important competitive factor as manufacturers scale newer generations of devices.
The combination of improved supply and stronger premium-product demand contributed to HP’s double-digit overall revenue growth.
Premium devices can also support better economics than entry-level systems because customers are generally willing to pay more for performance, design and specialized capabilities.
Growth in that part of the portfolio can therefore contribute to revenue even if overall unit growth is more moderate.
HP’s improvement in GAAP operating margin to 5.7% suggests that the company was able to capture some of that benefit while managing its broader expense base.
Cash generation remained another major strength.
Operating cash flow increased 4% year-over-year to $1.74 billion.
Free cash flow rose 7% to $1.57 billion.
The approximately $1.57 billion of quarterly free cash flow substantially exceeded reported net income, providing HP with considerable financial flexibility for shareholder returns and other capital allocation priorities.
Strong cash generation has historically been an important part of HP’s investment profile because the mature nature of the PC and printing businesses allows the company to return significant amounts of capital to shareholders.
HP continued that strategy during the third quarter.
The company returned approximately $600 million to shareholders through a combination of dividends and share repurchases.
That represented less than half of quarterly free cash flow, leaving additional internally generated capital available for debt management, investment and future shareholder distributions.
Share repurchases can also support per-share earnings by reducing the number of shares outstanding over time.
HP’s 11% growth in non-GAAP EPS exceeded the 8% increase in non-GAAP net income, with changes in the share count potentially contributing to that difference.
The company’s ability to generate more than $1.5 billion of quarterly free cash flow provides capacity to continue repurchases while maintaining its dividend.
The fiscal third-quarter performance also gave management enough confidence to raise its fiscal 2026 outlook for both earnings and free cash flow.
The higher guidance reflects stronger-than-previously-anticipated business performance as well as the financial impact of tariff refunds.
Tariffs have been an important factor for technology hardware companies because supply chains often span several countries.
Changes in tariff policies can affect component and finished-product costs, requiring companies to modify sourcing, pricing or production strategies.
In HP’s case, refunds provided an approximately $0.11-per-share benefit during the quarter.
That contribution increased both GAAP and adjusted earnings, but it does not change the broader operational trends visible in the quarter.
Revenue still increased at a double-digit rate on both a reported and constant-currency basis, operating margin improved and free cash flow grew.
The Personal Systems performance is particularly important because the global PC market has been moving through a replacement cycle following periods of weaker demand.
Businesses periodically need to refresh devices as older hardware reaches the end of its useful life or no longer supports current operating systems, security requirements and applications.
The introduction of AI-capable PCs adds another potential catalyst to that refresh cycle.
HP is attempting to position itself around both traditional replacement demand and the emerging need for devices capable of running AI applications more effectively.
Management’s comments around premium market share suggest that the company is also seeking to improve the quality of its revenue rather than focusing exclusively on unit volume.
Premium products can generate higher average selling prices and may provide more opportunities to sell related peripherals, services and workplace solutions.
That strategy aligns with HP’s broader effort to expand beyond individual hardware transactions and address more of the technology needs surrounding employees and workplaces.
The company’s improving supply position could further support those efforts during the remainder of the year.
If memory availability remains stronger, HP should be better positioned to fulfill customer orders without supply constraints limiting shipments.
At the same time, component availability and pricing remain important variables for hardware manufacturers because changes can affect both margins and product availability.
The fiscal third quarter showed that HP was able to navigate those issues while producing substantial revenue growth.
The contrast between GAAP and non-GAAP earnings remains an important part of the quarter.
GAAP net earnings declined to approximately $660 million even as adjusted net earnings increased to approximately $770 million.
GAAP EPS declined to $0.71 while adjusted EPS increased to $0.83.
However, both figures received the same approximately $0.11-per-share tariff-refund benefit.
Investors evaluating the quarter therefore need to distinguish between the temporary refund contribution, underlying operating improvements and other items that affected GAAP profitability.
Cash flow provides another perspective on the company’s performance.
Operating cash flow of $1.74 billion and free cash flow of $1.57 billion show that HP continued generating substantial cash even though GAAP net earnings declined.
The 7% increase in free cash flow also exceeded the increase in operating cash flow, reinforcing the company’s capacity for shareholder distributions.
After returning approximately $600 million through dividends and repurchases, HP retained a significant amount of the quarter’s cash generation.
That flexibility can support additional capital returns while allowing the company to invest in AI PCs, workstations, product development and other growth initiatives.
Overall, HP’s fiscal third quarter combined faster top-line growth with improved operating margins, strong cash generation and increasing momentum in Personal Systems.
Revenue increased 12.5% to $15.7 billion, or 10.9% on a constant-currency basis, while GAAP operating margin improved to 5.7%.
GAAP net income declined 13%, but non-GAAP net income increased 8% and adjusted EPS rose 11%.
Tariff refunds provided an approximately $0.11-per-share benefit to both earnings measures, making them an important factor in interpreting the quarter.
Meanwhile, operating cash flow increased to $1.74 billion and free cash flow reached $1.57 billion.
With approximately $600 million returned to shareholders and management raising its full-year EPS and free-cash-flow expectations, HP enters the remainder of fiscal 2026 with stronger revenue momentum, improving product supply and growing exposure to the emerging AI PC replacement cycle.
KEY QUOTE:
“We increased both total sales and share in premium products and continued to attract new customers.”
Bruce Broussard, Interim Chief Executive Officer of HP
