HP INC quarterly report, Q1 FY2026

HP Inc. Q1 2026 Financial Summary

Business Context and Reporting Period

This summary covers HP Inc.'s Form 10-Q for the quarterly period ended January 31, 2026. HP operates through three reportable segments: Personal Systems, Printing, and Corporate Investments. The company is a large accelerated filer with 914.6 million shares of common stock outstanding as of February 20, 2026.

Key Financial Metrics

Metric Q1 2026 Q1 2025
Total Net Revenue $14,438 million $13,504 million
Gross Profit $2,835 million $2,840 million
Gross Margin 19.6% 21.0%
Operating Earnings $759 million $845 million
Net Earnings $545 million $565 million
Diluted EPS $0.58 $0.59
Operating Cash Flow $383 million $374 million
Total Debt $9,699 million $9,666 million
Cash & Equivalents $3,154 million $3,690 million

Material Changes vs. Prior Period

  • Revenue Growth: Total net revenue increased 6.9% year-over-year (5.2% on a constant currency basis). Growth was driven by an 11.1% increase in Personal Systems revenue, partially offset by a 2.2% decline in Printing revenue.
  • Margin Compression: Gross margin decreased 1.4 percentage points to 19.6%, primarily due to higher commodity costs (memory and storage), unfavorable product mix shifts, and trade-related costs.
  • Restructuring Charges: Restructuring and other charges increased to $126 million from $70 million, driven by the new "Fiscal 2026 Plan" aimed at AI adoption and workforce reduction.
  • Segment Performance:
    • Personal Systems: Revenue rose 11.1% due to a 12.1% increase in PC unit volume, driven by the Windows OS refresh and anticipated memory cost increases.
    • Printing: Revenue fell 2.2% due to declines in Supplies, Commercial, and Consumer Printing units, attributed to demand softness and competitive pressures.

Guidance, Outlook, and Risks

  • Fiscal 2026 Plan: HP announced a restructuring plan approved on November 25, 2025, targeting a global headcount reduction of 4,000 to 6,000 employees. The company expects pre-tax charges of approximately $650 million, with $400 million related to labor costs.
  • AI Strategy: Management is focusing on AI adoption to drive productivity and innovation, integrating AI into channel partner experiences and supply chain operations.
  • Capital Allocation: HP returned $0.6 billion to shareholders in Q1 2026 ($0.3 billion in share repurchases and $0.3 billion in dividends). Approximately $8.1 billion remains under the share repurchase authorization.
  • Risks and Contingencies:
    • Macroeconomic Factors: Ongoing geopolitical tensions, inflation, and foreign currency volatility (65% of revenue is international) pose risks. New tariffs imposed in April 2025 were later ruled unauthorized by the U.S. Supreme Court in February 2026, though HP is assessing potential recoveries.
    • Supply Chain: Higher memory and storage costs and potential supply constraints in Personal Systems are expected to continue.
    • Litigation: Significant ongoing matters include the India Directorate of Revenue Intelligence customs dispute (approx. $370 million demand) and the York County securities class action (settlement approved in February 2026).

Investor Verification Checklist

  • Verify the execution timeline and cost savings realization of the Fiscal 2026 Plan (4,000-6,000 headcount reduction).
  • Monitor commodity cost trends (specifically memory and storage) and their impact on Personal Systems gross margins.
  • Assess the impact of the U.S. Supreme Court tariff ruling on HP's ability to recover previously paid tariffs.
  • Review the status of the India customs dispute and potential cash flow impacts from additional deposits or settlements.
  • Track Printing segment demand recovery, particularly in the Supplies and Commercial Printing business units.