HP's Q3 Net Earnings Jump 19% on Strong Product Sales

Ticker: HPQ · Form: 10-Q · Filed: 2025-08-28T00:00:00.000Z

Sentiment: mixed

Topics: Earnings, Revenue Growth, Debt Increase, Restructuring, Tech Sector, Financial Performance, Share Repurchases

Related Tickers: HPQ, DELL, LNVGY

TL;DR

**HPQ's Q3 earnings beat expectations, but the nine-month dip and rising debt mean it's a hold, not a buy, until long-term profitability is clear.**

AI Summary

HP Inc. reported a net revenue of $13.932 billion for the three months ended July 31, 2025, an increase from $13.519 billion in the same period of 2024. Products revenue rose to $13.114 billion from $12.750 billion, while services revenue increased to $818 million from $769 million. Net earnings for the quarter significantly improved to $763 million, up from $640 million in the prior year. However, for the nine months ended July 31, 2025, net earnings decreased to $1.734 billion from $1.869 billion in 2024, despite total net revenue increasing to $40.656 billion from $39.504 billion. Operating expenses increased to $2.135 billion for the quarter, primarily due to higher restructuring and other charges of $110 million, up from $46 million. The company's cash, cash equivalents, and restricted cash decreased to $2.874 billion as of July 31, 2025, from $3.253 billion as of October 31, 2024. Long-term debt increased to $8.782 billion from $8.263 billion, while total stockholders' deficit improved to $(901) million from $(1,323) million.

Why It Matters

HP's improved quarterly net earnings and revenue growth signal resilience in a competitive tech market, potentially boosting investor confidence and stabilizing stock performance. The increase in long-term debt, however, warrants investor scrutiny regarding future financial flexibility. For employees, the ongoing restructuring charges of $110 million suggest continued operational adjustments, which could impact job security or roles. Customers may see continued innovation, especially with the mention of AI in forward-looking statements, but also potential price adjustments to maintain margins. The broader market will watch HP's ability to sustain growth amidst macroeconomic volatility and intense competition from Dell and Lenovo.

Risk Assessment

Risk Level: medium — The company's net earnings for the nine months ended July 31, 2025, decreased to $1.734 billion from $1.869 billion in the prior year, indicating a potential long-term profitability challenge despite a strong quarter. Additionally, long-term debt increased by $519 million to $8.782 billion as of July 31, 2025, from $8.263 billion as of October 31, 2024, which could increase financial leverage and interest expenses.

Analyst Insight

Investors should monitor HP's upcoming earnings calls for detailed guidance on how the company plans to address the nine-month net earnings decline and manage its increasing long-term debt. Consider holding existing positions but deferring new investments until there's clearer evidence of sustained profitability and debt reduction strategies.

Financial Highlights

debt To Equity
N/A
revenue
$13.932 billion
operating Margin
5.14%
total Assets
N/A
total Debt
$8.782 billion
net Income
$763 million
eps
$0.80
gross Margin
20.46%
cash Position
$2.874 billion
revenue Growth
+3.06%

Revenue Breakdown

SegmentRevenueGrowth
Products$13,114 million+2.85%
Services$818 million+6.37%

Key Numbers

Key Players & Entities

FAQ

What were HP Inc.'s total net revenues for the three months ended July 31, 2025?

HP Inc.'s total net revenues for the three months ended July 31, 2025, were $13.932 billion, an increase from $13.519 billion in the same period of 2024.

How did HP Inc.'s net earnings change for the nine months ended July 31, 2025?

For the nine months ended July 31, 2025, HP Inc.'s net earnings decreased to $1.734 billion, down from $1.869 billion in the corresponding period of 2024.

What was the diluted earnings per share for HP Inc. in the third quarter of 2025?

HP Inc.'s diluted earnings per share for the three months ended July 31, 2025, was $0.80, an increase from $0.65 in the same quarter of 2024.

Did HP Inc.'s long-term debt increase or decrease as of July 31, 2025?

HP Inc.'s long-term debt increased to $8.782 billion as of July 31, 2025, from $8.263 billion as of October 31, 2024.

What were HP Inc.'s restructuring and other charges for the three months ended July 31, 2025?

For the three months ended July 31, 2025, HP Inc. reported restructuring and other charges of $110 million, which is an increase from $46 million in the same period of 2024.

How much cash did HP Inc. have at the end of the period on July 31, 2025?

As of July 31, 2025, HP Inc. had cash, cash equivalents, and restricted cash totaling $2.874 billion, a decrease from $3.253 billion at the beginning of the period.

What is the significance of the increase in HP Inc.'s long-term debt for investors?

The increase in HP Inc.'s long-term debt to $8.782 billion could signal higher financial leverage and potentially increased interest expenses, which investors should monitor for impacts on future profitability and financial stability.

What is HP Inc.'s strategy regarding structural cost savings?

HP Inc.'s Fiscal 2023 Plan includes efforts to drive structural cost savings through operational efficiency, digital transformation, and portfolio optimization, including workforce reductions and platform simplification, aiming for sustainable longer-term reductions.

What are the key risks HP Inc. faces according to its forward-looking statements?

Key risks for HP Inc. include macroeconomic and geopolitical trends, volatility in global capital markets, supply chain constraints, competitive pressures, and the impact of third-party IP infringement claims, as detailed in its forward-looking statements.

How many shares of common stock did HP Inc. have outstanding as of August 22, 2025?

As of August 22, 2025, the number of shares of HP Inc. common stock outstanding was 934,701,851 shares.

Risk Factors

Industry Context

HP Inc. operates in the highly competitive PC and printer markets. The industry is characterized by rapid technological advancements, cyclical demand, and intense price competition. Key trends include the shift towards hybrid work models, increasing demand for sustainable products, and the ongoing digital transformation impacting enterprise and consumer purchasing behaviors.

Regulatory Implications

HP Inc. is subject to various regulations, including those related to financial reporting, environmental standards, and data privacy. Increased restructuring charges could draw scrutiny regarding the efficiency of its operational strategies. Compliance with evolving global regulations is crucial to avoid penalties and maintain market access.

What Investors Should Do

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Key Dates

Glossary

Restructuring and other charges
Costs incurred by a company related to significant organizational changes, such as layoffs, facility closures, or business divestitures. (Increased significantly in the current quarter, impacting operating expenses and net earnings.)
Stockholders' Deficit
A negative stockholders' equity, meaning a company's liabilities exceed its assets. (HP Inc. has a stockholders' deficit, which improved from $(1,323) million to $(901) million, indicating a reduction in negative equity.)
Diluted EPS
Earnings per share calculated after accounting for all dilutive potential common shares, such as stock options and convertible securities. (Reflects the profitability on a per-share basis, considering all potential shares outstanding.)
Amortization of intangible assets
The systematic allocation of the cost of an intangible asset over its useful life. (Increased in the current quarter, contributing to higher operating expenses.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, HP Inc. demonstrated revenue growth in both the three-month ($13.932B vs $13.519B) and nine-month ($40.656B vs $39.504B) periods ended July 31, 2025. Quarterly net earnings saw a significant improvement ($763M vs $640M), reflected in higher diluted EPS ($0.80 vs $0.65). However, nine-month net earnings declined ($1.734B vs $1.869B), with a corresponding decrease in diluted EPS ($1.82 vs $1.88). Operating expenses increased, notably due to higher restructuring charges ($110M vs $46M), while cash position decreased and long-term debt increased.

Filing Stats: 4,713 words · 19 min read · ~16 pages · Grade level 19.8 · Accepted 2025-08-27 17:37:25

Key Financial Figures

Filing Documents

Financial Information

Part I. Financial Information UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________ FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2025 Or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4423 _________________________________________ HP INC. (Exact name of registrant as specified in its charter) Delaware 94-1081436 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.) 1501 Page Mill Road 94304 Palo Alto, California (Zip code) (Address of principal executive offices) ( 650 ) 857-1501 (Registrant's telephone number, including area code) _______________________________________ Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, par value $0.01 per share HPQ New York Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or a

Forward-Looking Statements

Forward-Looking Statements 3

Financial Information

Part I. Financial Information Item 1.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 4 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 51 Item 4.

Controls and Procedures

Controls and Procedures 51

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 52 Item 1A.

Risk Factors

Risk Factors 52 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 53 Item 3. Defaults Upon Senior Securities 53 Item 4. Mine Safety Disclosures 53 Item 5. Other Information 53 Item 6. Exhibits 53 Exhibit Index 54 Signature 56 In this report on Form 10-Q, for all periods presented, "we", "us", "our", the "company", the "Company", "HP" and "HP Inc." refer to HP Inc. (formerly Hewlett-Packard Company) and its consolidated subsidiaries. 2 Table of Contents

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I, contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions prove incorrect, they could affect the business and results of operations of HP which may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges, planned structural cost reductions and productivity initiatives; any statements of the plans, strategies and objectives of management for future operations, including, but not limited to, our business model and transformation, our sustainability goals, our go-to-market strategy, the execution of restructuring plans and any resulting cost savings (including the Fiscal 2023 Plan (as defined herein)), net revenue or profitability improvements or other financial impacts; any statements concerning the expected development, demand, performance, market share or competitive performance relating to products or services; any statements concerning potential supply constraints, component shortages, manufacturing disruptions or logistics challenges; any statements regarding current or future macroeconomic trends or events, including global trade policies, and the impact of those trends and events on HP and its financial performance; any statements regard

Financial Information

Part I. Financial Information

Financial Statements and Supplementary Data

ITEM 1. Financial Statements and Supplementary Data. Index Page Condensed Consolidated Statements of Earnings for the three and nine months ended July 3 1 , 2025 and 2024 (Unaudited) 5 Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended July 3 1 , 2025 and 2024 (Unaudited) 6 Condensed Consolidated Balance Sheets as of July 3 1 , 2025 and October 31, 2024 (Unaudited) 7 Condensed Consolidated Statements of Cash Flows for the nine months ended J uly 3 1 , 2025 and 2024 (Unaudited) 8 Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) 9 Notes to Condensed Consolidated Financial Statements (Unaudited) 11 Note 1: Basis of Presentation 11 Note 2: Segment Information 12 Note 3: Restructuring and Other Charges 14 Note 4 : Taxes on Earnings 16 Note 5 : Supplementary Financial Information 17 Note 6 : Fair Value 21 Note 7 : Financial Instruments 23 Note 8 : Borrowings 28 Note 9 : Stockholders' Deficit 30 Note 1 0 : Earnings Per Share 32 Note 1 1 : Litigation and Contingencies 32 Note 1 2 : Guarantees, Indemnifications and Warranties 36 4 Table of Contents HP INC. Condensed Consolidated Statements of Earnings (Unaudited) Three months ended July 31 Nine months ended July 31 2025 2024 2025 2024 In millions, except per share amounts Net revenue: Products $ 13,114 $ 12,750 $ 38,232 $ 37,212 Services 818 769 2,424 2,292 Total net revenue 13,932 13,519 40,656 39,504 Cost of net revenue: Products 10,599 10,164 30,800 29,359 Services 482 449 1,426 1,328 Total cost of net revenue 11,081 10,613 32,226 30,687 Gross profit 2,851 2,906 8,430 8,817 Research and development 406 413 1,204 1,248 Selling, general and administrative 1,452 1,404 4,391 4,249 Restructuring and other charges 110 46 302 180 Acquisition and divestiture charges 8 22 31 71 Amortization of intangible assets 159 81 287 242 Total operating expenses 2,135 1,966 6,215 5,990 Earnings

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