HP Q3 FY2026 Earnings: $0.11 of Tariff Refunds Inside Both EPS Prints

HP Inc. reported $15.677 billion of revenue for the quarter ended July 31, 2026 (+12.5%) while GAAP diluted EPS fell to $0.71 and non-GAAP diluted EPS rose to $0.83. Both EPS figures carry the same $0.11 favorable impact from IEEPA tariff refunds. The Form 10-Q records $127 million of refunds received in the period as a reduction of Products cost of net revenue. The public Beancount ledger below posts that refund as its own Expenses:CostOfRevenue credit so the quarter can be read with and without the one-off — the PC-and-print counterpart to the Dell Open Ledger.

The Headline Numbers​

HP's fiscal year ends October 31. Q3 FY2026 is the three months ended July 31, 2026. GAAP figures are from the August 26, 2026 Form 8-K Exhibit 99.1 and the Form 10-Q; annual history is from the FY2022–FY2025 Forms 10-K (SEC companyfacts CIK 0000047217).

The reported column is what the income statement prints. The "excluding refund" column removes the $127 million pretax CoR credit (and the release's stated $0.11 EPS impact on both GAAP and non-GAAP). Revenue does not change — the refund is not top-line. GAAP EPS still declines year over year even with the refund; non-GAAP EPS only rises because of it.

Revenue Deep Dive​

Segments (Exhibit 99.1), not separate income accounts:

Personal Systems carried the print: Commercial PS +22%, Consumer PS +10%, while total PS units were −16% — a clear mix/ASP story. Printing revenue −2% with supplies −3%.

Management signal scan (August 26, 2026 release):

• Interim CEO Bruce Broussard: "In the third quarter we increased both total sales and share in premium products and continued to attract new customers with innovations in WXP, Print, workstations and AI PCs. Our ongoing strategy to address environmental constraints led to meaningful improvements in memory supply and higher fulfillment rates."
• Supply language is about improving memory availability, not "demand exceeds supply" or "sold out."
• Themes absent from the release: demand exceeding supply, robust demand as a primary claim, industry upcycle, sustained selling-price increases as a named theme, and new-product launches "exceeding expectations." AI PCs appear as product mix, not as a sold-out ramp.

Inventory $10.322 billion and accounts receivable $7.168 billion are the balance-sheet counterparts to that fulfillment language — asserted on Assets:Current:Inventory and Assets:Current:AccountsReceivable.

The Margin Story​

Gross profit was $2,945 million. Cost of net revenue as filed was $12,732 million (products $12,256M + services $476M). Add back the tariff refund and underlying product+services cost was $12,859 million. Operating expenses were $2,053 million (R&D $389M, SG&A $1,537M, restructuring $48M, acquisition/divestiture $4M, intangible amortization $75M). Interest and other, net was an expense of $94 million. The effective tax rate was 17.2%.

Personal Systems operating margin compressed to 4.6% (−0.8 pts YoY) as commodity costs rose; Printing margin rose to 18.1% (+1.1 pts), with the 10-Q attributing part of the gross-margin help to IEEPA tariff refunds.

The One Big Question: What Does the Quarter Look Like Without the Refund?​

The Form 10-Q states:

On February 20, 2026, the U.S. Supreme Court held that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were not authorized by statute which removed the obligation for and collection of related tariffs. As of July 31, 2026, the Company has applied for the recovery of approximately $0.3 billion of previously paid IEEPA tariffs. The Company received $127 million of refunds during the three and nine months ended July 31, 2026, and $91 million subsequent to the reporting period. Refunds are recognized as a reduction of Products cost of net revenue when received.

The Exhibit 99.1 headline adds: both GAAP and non-GAAP diluted EPS "included an $0.11 favorable impact from tariff refunds."

Peer comparison against the Dell Open Ledger (hardware, same sector taxonomy): Dell's FY2027 Q2 was an AI-server demand print with rising deferred revenue; HP's Q3 is a Personal Systems unit-down / ASP-up print whose EPS needs the tariff-refund footnote to explain. Same chart of accounts, different one-off.

Tracking a Deficit Equity Hardware Company in Plain Text​

HP ended the quarter with $45,701 million of assets and a $92 million stockholders' deficit — common stock and APIC of $2,373 million against an accumulated deficit of $2,117 million and AOCI loss of $348 million. The ledger asserts those equity lines from the 10-Q rather than hiding the deficit inside Equity:Adjustments. That is how we model every company.

; FY2026Q3 Income Statement — fiscal quarter ended July 31, 2026
; Sources: 8-K exhibit 99.1 (2026-08-26); 10-Q Note on IEEPA tariff refunds.
; IEEPA tariff refunds of $127M recognized as a reduction of Products cost of net revenue;
; $0.11 of diluted EPS on both GAAP ($0.71) and non-GAAP ($0.83).
; Check: −15677 + 12859 − 127 + 389 + 1537 + 127 + 94 + 137 + 661 = 0 ✓
2026-07-31 * "HP Inc." "FY2026Q3 Income Statement"
  Income:Revenue                          -15677 MUSD
  Expenses:CostOfRevenue                   12859 MUSD  ; products+services before IEEPA refund addback
  Expenses:CostOfRevenue                    -127 MUSD  ; IEEPA tariff refunds (10-Q: reduction of Products CoR)
  Expenses:ResearchAndDevelopment            389 MUSD
  Expenses:SellingGeneralAdministrative     1537 MUSD
  Expenses:OtherNet                          127 MUSD  ; restructuring 48 + acq/div 4 + amort. intangibles 75
  Expenses:OtherNet                           94 MUSD  ; interest and other, net
  Expenses:IncomeTax                         137 MUSD
  Equity:Adjustments                         661 MUSD  ; net income offset (RE set by balance assertion)

Accounts payable of $21,383 million and inventory of $10,322 million are the working-capital signature of a PC-and-print OEM — the same shape as Dell, with a negative equity residual the balance assertions refuse to paper over.

The Multi-Year Arc​

Revenue stabilized after the FY2022 peak; equity deficit narrowed but remains negative. Q3 inventory is higher than FY2025 year-end as Personal Systems rebuilt availability — consistent with management's "higher fulfillment rates" wording, and a risk if AI-PC demand does not absorb the stock.

The Verdict: Bull vs. Bear​

Bull Case

• Personal Systems revenue +18% with Commercial +22% — premium / AI-PC mix working even as units fall.
• Free cash flow $1.6B in the quarter; $0.6B returned via buybacks and dividends.
• Printing still prints an 18.1% segment operating margin.
• Stockholders' deficit narrowed to $92M from $346M at October 31, 2025.
• FY2026 guidance raised (GAAP EPS $2.52–$2.62; non-GAAP $3.19–$3.29), including estimated tariff refunds.

Bear Case

• GAAP diluted EPS −11.3% YoY even with the $0.11 tariff refund.
• Excluding the refund, GAAP EPS is about $0.60 and non-GAAP about $0.72 — the "beat" is not all operating.
• Personal Systems margin 4.6% (−0.8 pts) under commodity-cost pressure; units −16%.
• Printing revenue still declining; supplies −3%.
• Another $91M of refunds arrived after period-end — guidance still embeds tariff-refund EPS.

Our Take: HP's Q3 is a volume-down, mix-up Personal Systems quarter whose EPS needs a footnote. Keep the $127M IEEPA refund on its own ledger line, compare operating income with and without it, and read the Dell ledger beside it — same hardware chart, different earnings quality story.