record revenue but PC shipments drop 16%

HP Inc. reported fiscal third-quarter revenue of $15.7 billion, a record for the period, but HP stock fell more than 9% after hours as PC unit shipments dropped 16% year over year and the company warned that memory costs would continue to pressure margins.

In the Personal Systems segment, which covers PCs, revenue climbed 18% to $11.8 billion despite a 16% drop in total unit shipments, with consumer units off 19% and commercial units off 14%. The segment’s operating margin contracted to 4.6%, compared with 5.2% in the preceding quarter. Printing revenue fell 2% year over year to $3.9 billion.

CFO Karen Parkhill said the volume decline was expected, and that the company prioritized higher-value unit placements and raised prices to offset commodity cost inflation. Looking ahead, Parkhill told analysts that memory and storage costs are projected to grow as a larger portion of the bill of materials in the fourth quarter, according to The Wall Street Journal. A margin recovery is not expected until fiscal 2027, according to Reuters.

“Given the impact of commodity-driven price increases, we expect below seasonal revenue performance in the fourth quarter,” Parkhill said on the call, according to Reuters.

HP posted GAAP diluted earnings per share of $0.71, down from $0.80 a year earlier. On an adjusted basis, EPS was $0.83, up from $0.75 in the prior-year period. Both figures included an $0.11 per-share benefit from tariff refunds. Adjusted EPS beat the company’s own guidance range of $0.61 to $0.71.

For the fiscal fourth quarter, HP projected adjusted EPS of $0.69 to $0.79, including an estimated $0.08 per-share tariff refund benefit. For the full fiscal year, HP raised its adjusted EPS outlook to a range of $3.19 to $3.29, up from a prior range of $2.90 to $3.10, and lifted its free cash flow forecast to $3.0 billion to $3.2 billion.

Interim CEO Bruce Broussard said in a statement that the company increased sales and market share in premium products and made progress on memory supply constraints. HP returned $0.6 billion to shareholders during the quarter through dividends and share repurchases.

HP shares ended Wednesday’s regular session at $30.52, a gain of 3.4%, but tumbled to $27.70 in after-hours trading once results became public, a decline of 9.2%.