HP Inc. Q1 FY2026 earnings call

• CEO transition: Board in process of finding new CEO, focused on proven executives for complex environment. • Q1 performance: Delivered steady top line growth, $14.4B revenue up 7% YOY; Non-GAAP EPS $0.81, up 9% and top of guidance. • Strategic advancements: AI in workplace, launched HP EliteBoard G1a; Better Together experiences with HP Digital Passport and Microsoft partnership; Empowering CIOs with WXP platform and partnership with OpenAI. • Addressing memory costs: Implemented mitigation measures like securing long-term supplier agreements, lower-cost sourcing, product configuration, and pricing actions. • U.S. Supreme Court tariff ruling: Not expecting negative impact currently. • Investor Day rescheduled due to CEO transition

Personal Systems: Revenue up 11% on 12% unit growth, driven by Win 11 refresh, AI PC adoption, and strong Consumer performance; gained share in premium categories. Operating margin 5%, within guidance range but slightly below expectations. Print: Results in line with expectations, revenue down 2% on lower supplies volumes and market-driven hardware declines; Consumer revenue down 8%, Commercial revenue down 3% but higher ASPs helped offset; Consumer subscriptions grew double digit, 3D and industrial print grew mid-single digit. Operating margin 18.3%, within upper half of long-term range

• Maintains annual non-GAAP diluted EPS guidance range $2.90 - $3.20, expects closer to lower end. • Q2 non-GAAP diluted net EPS range $0.70 - $0.76, GAAP range $0.52 - $0.58. • Maintains annual free cash flow guidance $2.8B - $3B, expects closer to low end. • Personal Systems: Anticipates revenue growth through pricing, share gains, but PSOP margins below long-term range for rest of year. • Print: Expect hardware market decline low single digit in '26, but growth in Big Tanks and industrial print; print revenue in Q2 in line with normal seasonality, operating margins near top end of long-term range

• Volatile memory and storage costs, expected to remain throughout fiscal '26 and likely into '27. • Uncertainty in U.S. Supreme Court tariff ruling impact, though currently not expecting negative impact but will continue to engage. • Fluid operating environment with various factors affecting financial performance

Q: Quantify memory cost impact in Jan quarter and secure LTAs; A: Memory cost included in results, not quantifying net of mitigations; secured LTAs for supply, including new suppliers.

Q: PC unit TAM decline; A: Down double digits, in line with industry, momentum on Windows 11 and AI PCs.

Q: Guide for full year with memory cost uncertainty; A: Prudent view, considering revenue strength in first half, increased memory cost, and print margins; EPS likely lower end of range.

Q: Capital returns; A: Committed to 100% return of free cash flow, balancing leverage and stock price.

Q: Pull-in in PS segment; A: Moderate pull-in in Consumer, good demand in enterprise, driven by Win 11 and AI PC.

Q: Memory impact on PS margins; A: Expect margins below long-term range for rest of year, but long-term range still target.

Q: Memory pricing impact in quarter; A: Q1 had some increases, current prices up 100% sequentially, further increases expected.

Q: Memory negotiations with suppliers; A: Good relationships, lock pricing on rolling basis.

Q: Long-term agreements and new suppliers; A: Added new suppliers, qualifying across platforms.

Q: Pricing strategy; A: Varies by route-to-market, sensitive to demand elasticity.

Q: Free cash flow generation; A: Back-half loaded, PS growth helps.

Q: Print margins; A: Focus on profitable growth, mix, subscriptions, and cost reduction.

Q: CEO search; A: Search committee in market, looking for proven executive.

Q: Like-for-like price increase impact on demand; A: Adjusting prices, confident in Windows 11 and AI PCs driving demand.

Q: Memory headwind and EPS; A: Memory costs higher, included in outlook.

Q: Seasonality; A: PS revenue above seasonal in Q2, then moderates