Analyst(s): Olivier Blanchard
Publication Date: August 29, 2025
HP’s latest earnings underscore continued strength in its Personal Systems business, supported by demand for AI PCs and the Windows 11 refresh cycle. Momentum in key growth areas highlights progress on HP’s strategy, even as Printing faces ongoing headwinds.
What is Covered in this Article:
- HP Inc.’s Q3 FY 2025 financial results
- Strong Personal Systems growth fueled by AI PCs and Windows 11 refresh
- Printing revenue pressures offset by disciplined margins and portfolio shifts
- Progress on cost mitigation, supply chain diversification, and cash flow delivery
- Innovation pipeline in AI PCs, Print, and sustainability initiatives
- Q4 outlook and FY 2025 guidance on EPS, margins, and free cash flow
The News: HP Inc. (NYSE: HPQ) reported its Q3 FY 2025 financial results with net revenue of $13.9 billion, up 3.1% year-over-year (YoY) and above consensus estimates of $13.74 billion. Personal Systems revenue was $9.93 billion, up 6% YoY, while Printing revenue declined 3.8% YoY to $3.99 billion. Non-GAAP operating margin was 7.1%, down from 8.2% in Q3 FY 2024. Non-GAAP net earnings were $713 million, down 15% YoY, with non-GAAP diluted EPS of $0.75, down from $0.84 in Q3 FY 2024, and slightly above the consensus estimate of $0.74.
“Looking forward, we remain confident in the strength of the PC market opportunity, and expect continued momentum from Windows 11 refresh and AI PC adoption,” CFO Karen Parkhill said. “We believe that the actions we are taking are the right ones to enable us to respond swiftly to near-term market dynamics, while continuing to invest for long-term profitable growth.
HP Q3 FY 2025 Earnings Lifted by PC Growth, Printing Remains Soft
Analyst Take: HP’s Q3 FY 2025 results highlight the company’s ability to sustain growth in a volatile environment, with Personal Systems once again offsetting softness in Printing. The quarter reflected tangible momentum in AI PCs and Windows 11 refresh, improved cash generation, and steady execution on cost mitigation measures. While margins remain under pressure from tariffs and a competitive pricing environment, HP’s strategic direction nonetheless points to resilient growth drivers in AI PCs, services, and innovation across hardware and software solutions.
AI PCs and Personal Systems Drive Outperformance
Personal Systems revenue rose 6% YoY, marking HP’s sixth straight quarter of growth.
Most notable here is that unit volume increased 5%. Perhaps most intriguing, however, is that consumer segment growth outperformed commercial segment growth: consumer units were up 8% while commercial units rose 3%. We feel that this was supported by a strong back-to-school season and continued corporate refresh activity.
Also, something to keep an eye on: The AI PC category saw double-digit sequential revenue growth and now represents over 25% of HP’s mix. (This is one quarter ahead of expectations.) In addition to the impending end of support for Windows 10, AI PC momentum is now also partly attributable to ecosystem transitions taking into account new on-device features (for example, Adobe and Zoom shifting workloads to take advantage of AI PC capabilities).
ASPs also benefited from premium product demand, delivering operating margins of 5.4% (+0.9 percentage points sequentially), consistent with HP’s long-term target range.
Together, these dynamics demonstrate that AI PCs and the overall premium mix are already reshaping HP’s Personal Systems performance.
Printing Faces Ongoing Pressures but Strategic Shifts Continue
Unfortunately, no surprises here: Printing revenue declined 3.8% YoY, with consumer printing down 8% and commercial printing down 3%. Hardware units fell 9%, highlighting soft demand in both consumer and office markets, especially in North America and Europe.
While competitive pricing and higher trade-related costs weighed on segment performance, the business managed to deliver a relatively strong 17.3% operating margin, consistent with guidance. While this still falls within the usual margin range (which tends to hover between 17% and 19%), we note that this lands near the bottom of the business unit’s cyclical fluctuations.
HP continues to prioritize higher-value segments such as Big Tank and subscriptions to improve long-term profitability, but thus far hasn’t managed to stick the landing for its ROI, TCO, and AI value propositions at scale. With near-term print demand remaining muted, HP’s margin discipline and portfolio shifts continue to maintain consistent profitability in the segment. Having said that, HP may need to revisit its messaging strategy if it wants to bring growth back to the segment.
Cost Mitigation and Supply Chain Diversification Underpin Resilience
We saw HP continue to execute on cost actions and supply chain diversification to offset tariff pressures during the quarter. Case in point: Nearly all products sold in North America are now manufactured outside China, with production ramping in Vietnam, Thailand, Mexico, and the U.S. These actions enabled HP to mitigate the majority of tariff costs in the quarter, but selective pricing increases also provided some additional cushion. Caution on the latter, as pricing increases aren’t the kind of tactic that can be repeated QoQ indefinitely.
Additionally, we note that operating expenses were managed tightly under the company’s Future Ready cost program, which remains on track to deliver $2 billion in annualized gross run-rate savings by year-end FY 2025.
Together, these measures highlight HP’s operational agility in navigating trade headwinds while preserving investment capacity for growth.
Innovation and Portfolio Expansion Reinforce Long-Term Positioning
HP advanced its innovation pipeline in Q3 FY 2025 with several new AI-driven solutions. Top of mind: The EliteBook Ultra PC received recognition as a top AI PC for its design and productivity gains, while the OmniBook 5 introduced up to 34 hours of battery life for consumer use. The company also launched HP Dimension with Google BIM, a 3D video collaboration tool, and expanded its workforce experience platform to 40 countries.
In Print, HP introduced AI tools like NEO, an industrial chatbot to improve efficiency, and Build Workspace, an AI vectorization tool reducing drafting time by 80%.
Sustainability progress remained central, with 99% of home and office devices incorporating recycled content and U.S. operations now powered by 100% renewable electricity. While the current US administration has scaled back investments and interest in sustainability programs across its partner ecosystem, it is good to see HP maintaining its leadership in these areas, especially across global markets. These initiatives strengthen HP’s positioning as a leader in the future of work, while embedding innovation, sustainability, and green ROI across the portfolio.
Guidance and Final Thoughts
For Q4 FY 2025, HP guided non-GAAP EPS between $0.87 and $0.97, broadly in line with consensus expectations of $0.91.
The Personal Systems group is expected to benefit from holiday seasonality, continued AI PC adoption, and Windows 11 refresh, with margins projected within the 5–7% target range.
Print revenue is expected to follow seasonal trends with margins returning to the top of its 17–19% range, supported by supply volumes and disciplined pricing.
Full-year free cash flow remains projected between $2.6 billion and $3.0 billion, despite added costs from trade-related regulations.
With AI PCs gaining share, premium mix strengthening, and cost actions delivering results, HP looks fairly well positioned to extend its growth momentum into FY 2026 while navigating ongoing macro and trade uncertainties.
The full details are available in HP’s Q3 FY 2025 earnings press release.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
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Author Information
Olivier Blanchard is Research Director, Intelligent Devices. He covers edge semiconductors and intelligent AI-capable devices for Futurum. In addition to having co-authored several books about digital transformation and AI with Futurum Group CEO Daniel Newman, Blanchard brings considerable experience demystifying new and emerging technologies, advising clients on how best to future-proof their organizations, and helping maximize the positive impacts of technology disruption while mitigating their potentially negative effects. Follow his extended analysis on X and LinkedIn.
