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.