HP INC

HP Inc. is a global technology leader operating in more than 170 countries, delivering devices, services, and subscriptions for personal computing, printing, 3D printing, hybrid work, gaming, and other related technologies. The company believes artificial intelligence is playing a critical role in the transformation of how people live and work, and customers are beginning to recognize the benefits in security, speed, and cost. HP's high-performing product portfolio includes its new line of AI PCs and workstations built with the computing power to enable local AI processing, as well as intelligent print features incorporated into its home, office, and graphics solutions.

The markets for each of HP's key business segments are characterized by strong competition among major corporations with long-established positions and a large number of new and rapidly growing firms. In Personal Systems, primary competitors include Acer Inc., Apple Inc., ASUSTeK Computer Inc., Dell Inc., Huawei Technologies Co., Ltd., Lenovo Group Limited, Logitech International S.A., Microsoft Corporation, Samsung Electronics Co., Ltd., and Toshiba Corporation. In Printing, primary competitors include Brother Industries, Ltd., Canon Inc., Pantum International Limited, Seiko Epson Corporation, The Ricoh Company Ltd., and Xerox Corporation Ltd. HP's stated competitive advantages include its broad product portfolio, innovation and research and development capabilities including security features, brand, procurement leverage, ability to cross-sell, extensive service and support offerings, and the execution of a broad-based distribution strategy.

HP generates revenue through the sale of products and services across three reportable segments: Personal Systems, Printing, and Corporate Investments. Products net revenue includes revenue from the sale of hardware, supplies, subscriptions, and software licenses, while Services net revenue includes revenue from service offerings and support on hardware devices. The majority of overall revenue is made through channel resellers, though the mix of direct versus channel sales differs by business and geographic market. HP utilizes outsourced manufacturers around the world to manufacture HP-designed products to generate cost efficiencies, reduce time to market, and maintain flexibility in its supply chain and manufacturing processes.

The Personal Systems segment offers commercial and consumer desktops, notebooks, and workstations (including HP's portfolio of AI PCs and workstations), thin clients, retail point-of-sale systems, displays, hybrid systems, software, solutions including endpoint security, and services. It groups its global business capabilities into Commercial PS, consisting of endpoint computing devices and hybrid systems for enterprise, public sector, and SMB customers, and Consumer PS, consisting of devices, accessories, and services designed for consumer usage focusing on gaming, learning, and working remotely. For fiscal year 2025, Personal Systems net revenue was $38.532 billion ¹ and earnings from operations were $2.054 billion ².

The Printing segment provides consumer and commercial printer hardware, supplies, services, and solutions, and is also focused on Graphics and 3D Printing and Personalization in commercial and industrial markets. Its business units are Commercial Printing (office printing solutions, graphics solutions, and 3D printing and personalization, excluding supplies), Consumer Printing (home printing solutions, excluding supplies), and Supplies (ink and laser cartridges, media, industrial graphics supplies, and 3D printing and personalization supplies). For fiscal year 2025, Printing net revenue was $16.702 billion ³ and earnings from operations were $3.118 billion ⁴. Corporate Investments includes certain business incubation projects and investments in digital enablement, and its loss from operations for fiscal year 2025 was primarily due to expenses associated with those incubation projects and investments.

In November 2022, HP announced its Future Ready Plan (the Fiscal 2023 Plan) to become a more digitally enabled company, which ran through the end of fiscal year 2025 and exceeded its overall program savings target. Approximately 9,500 ⁵ employees departed as part of the plan. In November 2025, HP announced a new plan (the Fiscal 2026 Plan) to drive customer satisfaction, product innovation, and productivity through AI adoption and enablement, expected to run for three years through the end of fiscal year 2028, with an expected reduction of approximately 4,000 to 6,000 ⁶ employees and estimated pre-tax charges of approximately $650 million ⁷. During fiscal year 2025, HP returned $1.9 billion ⁸ to shareholders in the form of cash dividends of $1.1 billion ⁹ and share repurchases of $0.8 billion ¹⁰. As of October 31, 2025, HP had approximately $8.4 billion ¹¹ remaining under share repurchase authorizations.

For fiscal year 2025, total net revenue was $55.295 billion ¹², an increase of 3.2% ¹³ compared to $53.559 billion ¹⁴ in fiscal year 2024. Net earnings were $2.529 billion ¹⁵ compared to $2.775 billion ¹⁶ in the prior year. Diluted net earnings per share were $2.65 ¹⁷ versus $2.81 ¹⁸ in fiscal year 2024. Gross margin decreased by 1.5 percentage points ¹⁹ to 20.6% ²⁰ from 22.1% ²¹ in the prior year, driven primarily by higher commodity and tariff costs, mix shifts towards Personal Systems, and unfavorable currency impacts. Net cash provided by operating activities was $3.697 billion ²².

On November 25, 2025, HP's Board of Directors approved the Fiscal 2026 Plan intended to drive customer satisfaction, product innovation, and productivity through artificial intelligence adoption and enablement that HP expects will be implemented through fiscal 2028. HP expects to reduce global headcount by approximately 4,000 to 6,000 ²³ employees. HP estimates that it will incur pre-tax charges of approximately $650 million ²⁴ relating to labor and non-labor actions. HP expects to incur approximately $400 million ²⁵ in labor costs related to workforce reductions and expects the remaining costs to relate to non-labor actions and other charges.

In Personal Systems, HP's long-term strategic focus includes profitable growth through innovation, market segmentation, and simplification of its portfolio; enhanced innovation in multi-operating systems, multi-architecture, and customer segments; investing in endpoint services and solutions including Device-as-a-Service as the market shifts to subscription-based solutions; and driving innovation to enable productivity and collaboration, with AI PCs and workstations playing a critical role. In Printing, HP's long-term strategic focus includes offering innovative, intelligent printing experiences and subscription-based solutions through Instant Ink Services and HP All-In Plan for consumer and SMB customers, as well as Managed Print Services for large enterprises; providing digital printing solutions for industrial graphics segments; and expanding its footprint in 3D printing across digital manufacturing and strategic applications.

In fiscal year 2025, gross margin decreased by 1.5 percentage points ²⁶ primarily driven by products gross margin due to higher commodity and tariff costs, mix shifts towards Personal Systems, and unfavorable currency impacts, partially offset by disciplined pricing actions and cost savings including Future Ready transformation savings. Services gross margin decreased due to unfavorable mix shifts. HP anticipates commodity cost pressure to continue, including recent inflationary trends in memory and storage costs and potential supply constraints in its Personal Systems business. 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 results of operations and cash flows to the extent efforts do not fully mitigate these effects.

HP utilizes outsourced manufacturers around the world to manufacture HP-designed products and utilizes two primary methods of fulfilling demand: building products to order and configuring products to order. HP continues to evaluate and implement further mitigating actions, including potential supply chain resiliency movements and cost and pricing measures, as the tariff environment evolves. HP is undertaking initiatives to diversify its manufacturing and supply chain footprint, though such initiatives require significant investment and time and have been and can continue to be subject to regulatory, continuity, operational, geopolitical, and other hurdles.

Research and development expense was $1.602 billion ²⁷ in fiscal year 2025, a decrease of 2.3% ²⁸ primarily due to disciplined cost savings. Investment in property, plant, equipment, and purchased intangibles, net was $897 million ²⁹ in fiscal year 2025, compared to $592 million ³⁰ in the prior year. As of October 31, 2025, HP had approximately $8.4 billion ³¹ remaining under the share repurchase authorizations approved by HP's Board of Directors. HP returned $1.9 billion ³² to shareholders in fiscal year 2025 in the form of cash dividends of $1.1 billion ³³ and share repurchases of $0.8 billion ³⁴. Cash dividends per common share were $1.16 ³⁵ in fiscal year 2025.

HP faces challenges from the current macroeconomic environment and the adverse impact on demand for certain of its products. Since April 2025, new, substantial tariffs have been imposed on imports to the United States, and during fiscal year 2025, HP experienced higher commodity and tariff costs which were not fully mitigated by pricing and other actions enacted during the period. HP also faces challenges from changes in the competitive landscape, with primary competitors exerting competitive pressure in targeted areas and entering new markets, and alliance partners in some businesses increasingly becoming competitors in others. In Printing, HP faces challenges from changing customer behaviors as well as competitors with a favorable foreign currency environment and non-original supplies.

HP is exposed to fluctuations in foreign currency exchange rates, with approximately 65% ³⁶ of its net revenue for fiscal year 2025 coming from outside the United States. The most significant foreign currencies to HP's operations for fiscal year 2025 were the Euro, Chinese yuan renminbi, Japanese yen, and British pound. HP also faces risks from the ongoing military conflict in Ukraine, continued instability in the Middle East, and tensions in the Taiwan Strait and South China Sea, as it relies on manufacturers in Taiwan to produce notebook computers and other suppliers in Asia for product assembly and manufacture, and has manufacturing operations in Israel which support its Industrial Graphics business.

HP faces material risks from its heavy dependence on third-party suppliers, including single-source suppliers like Canon for certain laser printer engines and laser toner cartridges, and Intel, AMD, and NVIDIA for processors for the majority of its PCs and workstations, where the loss of a supplier or unilateral modification of terms could adversely affect business and financial performance ³⁷. The company is exposed to significant macroeconomic and geopolitical risks given that approximately 65% ³⁸ of net revenue comes from outside the United States, and since April 2025, new substantial tariffs on imports to the United States have resulted in higher commodity and tariff costs not fully mitigated by pricing actions ³⁹. HP faces intense competition and secular challenges in Printing from decreased demand due to increased digitization, hybrid work, and competition from generic alternatives, as well as the risk that its big tank printers, while having higher initial margins, do not result in follow-on sales of high margin traditional ink cartridges and may have lower overall device lifetime profitability ⁴⁰. The company's ability to successfully execute its strategy and develop innovative products, including AI capabilities, is critical, and failure to do so could result in loss of market share and financial performance suffering ⁴¹.

Management's message emphasizes that HP is driving innovation by accelerating the delivery of AI across its product portfolio and focusing on growth opportunities in commercial, solutions, and premium consumer and gaming markets. The company has consolidated all its software resources under the Technology and Innovation Organization to evolve from a transactional hardware company to a more experience-led organization. Management highlights the Fiscal 2023 Plan, which ran through the end of fiscal year 2025 and exceeded its overall program savings target, and the newly announced Fiscal 2026 Plan expected to run for three years through the end of fiscal year 2028, with estimated pre-tax charges of approximately $650 million ⁴² and a reduction of approximately 4,000 to 6,000 ⁴³ employees. The strategic priorities emphasized are driving customer satisfaction, product innovation, and productivity through AI adoption and enablement, and investing some of the savings into growth areas and people.