HP (HPQ) Q4 2025 Earnings Release

HP Inc. (HPQ), a major player in the PC and printer market, announced Tuesday a strategic restructuring plan that includes a workforce reduction of 4,000 to 6,000 positions, representing a potential cut of up to 10% of its global headcount. Simultaneously, the company issued a fiscal year earnings forecast that fell short of analyst expectations, sending shares tumbling 6% in after-hours trading.

Here’s how HP performed against LSEG consensus estimates:

• EPS: 93 cents adjusted vs. 92 cents expected
• Revenue: $14.64 billion vs. $14.48 billion expected

According to an official statement, HP’s revenue for the fiscal quarter ending October 31st increased by a solid 4% year-over-year. Net income also saw growth, rising to $795 million, or 84 cents per share, from $763 million, or 80 cents per share, in the same period last year.

Looking ahead, HP anticipates adjusted net earnings per share of 73 cents to 81 cents for the first quarter of fiscal 2026, slightly below the LSEG consensus estimate of 79 cents. The full fiscal year 2026 outlook projects adjusted earnings per share of $2.90 to $3.20, also trailing the LSEG consensus of $3.33.

“HP’s outlook reflects the added cost driven by the current U.S. trade-related regulations in place, and associated mitigations,” the company stated, indicating the impact of ongoing trade tensions on its financial projections.

A bright spot in the earnings report was the performance of the personal systems unit, encompassing desktop and laptop computers, which generated $10.35 billion in revenue, an 8% increase and surpassing StreetAccount’s consensus estimate of $10.15 billion. This suggests continued demand for HP’s computing products, potentially driven by hybrid work models and increasing digital consumption.

The company anticipates completing the headcount reduction by the end of fiscal 2028, with the restructuring expected to generate annualized gross run rate savings of at least $1 billion by that time. HP estimates incurring approximately $650 million in charges related to the restructuring, with $250 million of that expected in fiscal 2026. The move suggests a strategic realignment focusing on efficiency and potentially a shift towards higher-margin business areas. Analysts are keen to see how HP plans to allocate resources freed up by these cost-cutting measures.

“As we look ahead, we see a significant opportunity to embed AI into HP to accelerate product innovation, improve customer satisfaction and boost productivity,” HP CEO Enrique Lores stated during an analyst conference call. This highlights HP’s strategic focus on leveraging artificial intelligence as a key driver for future growth and competitiveness. The company’s ability to effectively integrate AI into its product offerings and business processes will be crucial to its long-term success.

The broader tech industry is increasingly exploring generative AI to optimize operations, ranging from software development acceleration to customer service automation. Increased demand for the high bandwidth memory needed to train these models is applying new pressures to supply chains and costs of PC components like RAM.

HP, which had a workforce of 58,000 as of December, previously announced a similar round of layoffs in 2022. The current job cuts echo a wider trend of workforce reductions across the technology sector, driven by factors such as inflationary pressures and rising interest rates affecting consumer spending.

“Memory costs are currently 15 to 18% of the cost of a typical PC, and while an increase was expected, its rate has accelerated in the last few weeks,” Lores noted, emphasizing the increasing cost pressures impacting PC manufacturing. The surge in DRAM pricing, fueled by demand for AI servers and high-end PCs, could put downward pressure on margins in the short term. HP’s ability to navigate these cost fluctuations will be a key factor in maintaining profitability.

The company expects a positive impact from Microsoft’s decision to end support for its Windows 10 operating system, potentially triggering new PC purchases. Lores reported that around 60% of HP’s installed base has already migrated to Windows 11, suggesting a significant portion of users remain on the older operating system and could be due for an upgrade. This migration represents a near-term catalyst for PC sales, although it is uncertain if this can make up for challenges in other parts of the business.

HP’s printing business, however, experienced a 4% decline in revenue, totaling $4.3 billion. According to CFO Karen Parkhill, the pricing environment remains competitive, and customers are delaying purchases of new printers. This suggests a potential slowdown in the printing market, possibly due to increased digitalization and reduced reliance on physical documents. HP is actively looking for ways to generate new revenues in the printing space, specifically with subscription and instant ink business models.

As of Tuesday’s market close, HP shares have declined by 25% year-to-date, contrasting with the S&P 500 index’s 15% gain over the same period. This underperformance underscores the challenges facing the company as it navigates a shifting technology landscape and strives to adapt to evolving market dynamics.