HP NYSE: HPQ reported stronger second-quarter fiscal 2026 results, with management citing growth in Personal Systems, momentum in AI PCs and disciplined cost mitigation in a challenging component-cost environment.
Interim Chief Executive Officer Bruce Broussard said revenue rose 9% year over year, marking HP’s eighth consecutive quarter of top-line growth. Chief Financial Officer Karen Parkhill said revenue growth was 6% in constant currency, with Asia-Pacific and Japan up 18%, EMEA up 6% and the Americas flat on a constant-currency basis. Parkhill attributed strength in Asia and Europe partly to the Windows 11 refresh cycle.
The company reported non-GAAP diluted net earnings per share of $0.86, up more than 20% from the year-ago period and above its guidance range. Gross margin was 20.9%, up year over year, while operating margin was 7.5%, up 20 basis points.
Personal Systems Leads Growth
HP’s Personal Systems segment posted 13% revenue growth, with both commercial and consumer sales rising by double digits. Parkhill said consumer revenue increased 10% and commercial revenue rose 14%, helped by repricing actions, favorable mix and continued services expansion. Personal Systems operating profit grew 30% year over year, with operating margin of 5.2%.
Broussard said AI PCs increased from more than 35% of HP’s shipment mix in the prior quarter to 44% in the second quarter. Parkhill said HP expects AI PCs to continue becoming a larger portion of shipments, reaching 60% to 70% next fiscal year and more than 70% by fiscal 2028.
During the question-and-answer session, Parkhill said some commercial Personal Systems demand was pulled forward ahead of rising commodity prices, estimating the effect at roughly 2% to 3% of revenue. Looking ahead, she said HP expects below-seasonal Personal Systems revenue performance in the third quarter as a result of that pull-forward and higher input costs.
Ketan Patel, president of Personal Systems, said HP sees continued demand support from the Windows 11 refresh, noting that roughly 30% of the installed base remains to be refreshed. He also pointed to customer interest in shifting AI workloads to the edge, citing latency, privacy, sovereignty and cost considerations.
Print Revenue Flat as Company Focuses on Pricing and Profitable Units
Print revenue was flat year over year, which management said was in line with expectations. Parkhill said hardware volume declines were offset by favorable pricing and currency. Print operating margin was 18.3%, down year over year as higher trade-related costs and promotional investment, especially in Smart Tanks, were partly offset by pricing.
Within Print, consumer revenue declined 10% due to lower traditional printer volume in a competitive pricing environment. However, HP reported double-digit unit growth in Tank printers and share gains both year over year and sequentially. Commercial Print revenue was flat, with higher average selling prices offsetting lower volumes. Supplies revenue was flat in constant currency, with pricing and share gains offsetting pressure from the installed base and usage trends.
Parkhill said HP continues to expect supplies revenue to decline low single digits in constant currency for the fiscal year and low to mid-single digits over the long term. She said channel inventories remain “in line and healthy.”
AI and Edge Computing Remain Central to Strategy
Broussard used the call to emphasize HP’s strategy around the “future of work” and AI at the edge. He said customers are becoming more thoughtful about where AI workloads run, with cloud costs, latency, privacy and security driving demand for more AI processing closer to users and devices.
At its HP Imagine event, the company introduced new AI PCs, Z Workstations and AI Stations designed to support AI development and inference workloads. Broussard also highlighted an expanded software ecosystem of more than 150 companies and named examples including GoodNotes, which he said is using the neural processing unit for local audio transcription and summarization, and AI Producer, which he said can turn AI PCs into production studios.
In Print, Broussard said HP launched a new LaserJet series with AI-enabled document workflows, quantum-resistant security and up to 50% faster document handling. He also cited the HP Multi Jet Fusion 1200, a compact industrial 3D printing system, and HP IQ, an intelligence layer intended to coordinate experiences across HP products.
Cost Pressures Persist, but HP Raises EPS Outlook
Management repeatedly pointed to rising memory and storage costs as a key headwind. Broussard said those costs increased sequentially in the second quarter and are expected to rise further in the third and fourth quarters. He also cited broader inflationary pressures, including oil prices and downstream effects.
Parkhill said HP took actions in the quarter to lower memory costs by accelerating product reconfiguration, qualifying lower-cost components, using lower-cost inventory and shaping demand toward higher-margin units. The company also repriced products to address commodity increases.
Despite ongoing cost pressure, HP raised its fiscal 2026 non-GAAP diluted EPS outlook to a range of $2.90 to $3.10. For the third quarter, the company expects non-GAAP diluted EPS of $0.61 to $0.71. HP also expects annual free cash flow to be solidly within a range of $2.8 billion to $3 billion.
Parkhill said Personal Systems margins are expected to remain below the company’s long-term range for the rest of the year, with the fourth quarter expected to be a low point before sequential improvement into the next fiscal year. For Print, she said third-quarter margins are expected near the lower end of the long-term range, but full-year margins are expected to remain solidly within the range.
Cash Flow, Capital Returns and CEO Search
HP generated more than $900 million in cash from operations and roughly $800 million in free cash flow during the quarter. Parkhill said the company returned nearly $400 million to shareholders through dividends and share repurchases and ended the quarter within its target leverage ratio.
The company reiterated its commitment to returning approximately 100% of free cash flow to shareholders over time, as long as gross leverage remains under two times and there are no better return opportunities.
Broussard also addressed HP’s CEO search, saying the board has established a search committee and engaged an external search firm. He said the company is seeking a leader with a record of creating long-term value, the ability to operate in a complex environment and global, multi-segment business experience. Broussard said HP is not providing a timeline but that the board is actively evaluating candidates.
About HP NYSE: HPQ
HP Inc is an American multinational information technology company that designs, manufactures and sells personal computing devices, printers and related supplies and services. Its product portfolio spans consumer and commercial notebooks and desktops, workstations, displays and accessories, as well as an extensive line of printing hardware that includes home, office and production printers. HP also provides consumables such as ink and toner, managed print services, device deployment and lifecycle support, and software for device and print management.
Founded from the original Hewlett‑Packard Company, HP Inc became a separately traded public company in 2015 following a corporate split that created Hewlett Packard Enterprise to focus on enterprise hardware and services.
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