HP(HPQ) - 2025 Q3 - Quarterly Report

Forward-Looking Statements This section outlines the inherent risks and uncertainties associated with HP's forward-looking statements, which are based on current expectations - The report contains forward-looking statements based on current expectations and assumptions, which involve risks and uncertainties that could materially affect HP's business and results of operations[7] - Key risks include HP's ability to execute strategic plans, develop new products (especially AI-related), manage macroeconomic and geopolitical trends, handle supply chain issues, and navigate competitive pressures[7] Part I. Financial Information This part presents HP Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the interim periods Item 1. Financial Statements and Supplementary Data This section presents HP Inc.'s unaudited condensed consolidated financial statements for the three and nine months ended July 31, 2025 and 2024, including statements of earnings, comprehensive income, balance sheets, cash flows, and stockholders' deficit. It also includes detailed notes providing context and breakdowns for various financial accounts and activities Condensed Consolidated Statements of Earnings This statement provides a summary of HP's revenues, expenses, and net earnings for the three and nine months ended July 31, 2025 and 2024 | Metric (in millions, except per share) | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Total net revenue | $13,932 | $13,519 | $40,656 | $39,504 | | Gross profit | $2,851 | $2,906 | $8,430 | $8,817 | | Earnings from operations | $716 | $940 | $2,215 | $2,827 | | Net earnings | $763 | $640 | $1,734 | $1,869 | | Diluted Net earnings per share | $0.80 | $0.65 | $1.82 | $1.88 | - Net revenue increased by 3.1% for the three months ended July 31, 2025, and by 2.9% for the nine months ended July 31, 2025, compared to the prior-year periods[12] - Net earnings increased by 19.2% for the three months ended July 31, 2025, but decreased by 7.2% for the nine months ended July 31, 2025, compared to the prior-year periods[12] Condensed Consolidated Statements of Comprehensive Income This statement details HP's net earnings and other comprehensive income or loss components for the three and nine months ended July 31, 2025 and 2024 | Metric (in millions) | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net earnings | $763 | $640 | $1,734 | $1,869 | | Other comprehensive income (loss), net of taxes | $202 | $(83) | $(207) | $(192) | | Comprehensive income | $965 | $557 | $1,527 | $1,677 | - Other comprehensive income (loss), net of taxes, significantly improved from a loss of $(83) million in Q3 2024 to an income of $202 million in Q3 2025, primarily due to changes in unrealized components of cash flow hedges[16] Condensed Consolidated Balance Sheets This statement presents HP's financial position, including assets, liabilities, and stockholders' deficit, as of July 31, 2025, and October 31, 2024 | Metric (in millions) | As of July 31, 2025 | As of October 31, 2024 | | :------------------- | :------------------ | :--------------------- | | Total current assets | $20,574 | $20,760 | | Total assets | $39,854 | $39,909 | | Total current liabilities | $27,864 | $28,687 | | Long-term debt | $8,782 | $8,263 | | Total stockholders' deficit | $(901) | $(1,323) | - Total assets remained relatively stable, decreasing slightly from $39,909 million to $39,854 million[19] - Total stockholders' deficit improved from $(1,323) million to $(901) million, indicating a reduction in the deficit[19] Condensed Consolidated Statements of Cash Flows This statement summarizes HP's cash inflows and outflows from operating, investing, and financing activities for the nine months ended July 31, 2025 and 2024 | Metric (in millions) | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $2,073 | $2,126 | | Net cash used in investing activities | $(1,113) | $(514) | | Net cash used in financing activities | $(1,339) | $(1,966) | | Decrease in cash, cash equivalents and restricted cash | $(379) | $(354) | - Net cash provided by operating activities slightly decreased by $53 million YoY for the nine months ended July 31, 2025[22] - Net cash used in investing activities significantly increased by $599 million YoY, primarily due to higher investment in property, plant, equipment, and collateral posted for derivative instruments[22][218] Condensed Consolidated Statements of Stockholders' Deficit This statement outlines changes in HP's stockholders' deficit, including share repurchases and comprehensive income, for the nine months ended July 31, 2025 and 2024 | Metric (in millions, except shares in thousands) | Balance as of Oct 31, 2024 | Balance as of July 31, 2025 | | :--------------------------------------------- | :------------------------- | :-------------------------- | | Number of Shares | 938,989 | 938,765 | | Total Stockholders' Deficit | $(1,323) | $(901) | - The Total Stockholders' Deficit improved from $(1,323) million as of October 31, 2024, to $(901) million as of July 31, 2025[25] - Share repurchases during the nine months ended July 31, 2025, totaled $0.4 billion, compared to $1.2 billion in the prior-year period, contributing to changes in the deficit[25][122] Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to HP's unaudited condensed consolidated financial statements, offering context for reported figures Note 1: Basis of Presentation This note describes the accounting principles and new pronouncements adopted or pending adoption for HP's financial statements - HP's Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP and are unaudited, reflecting normal adjustments for interim periods[30] - HP adopted new FASB guidance on supplier finance programs in Q1 fiscal year 2024, with rollforward information to be adopted in fiscal year 2025[34] - New FASB guidance on disaggregation of expense categories, income tax disclosures, and segment disclosure requirements are pending adoption in future fiscal years[35][36][37] Note 2: Segment Information This note details HP's operating segments, including Personal Systems, Printing, and Corporate Investments, and their respective net revenues - HP operates through three reportable segments: Personal Systems, Printing, and Corporate Investments[39] - Personal Systems includes Commercial PS (desktops, notebooks, workstations, AI PCs) and Consumer PS (gaming, learning, multimedia devices)[40][43] - Printing includes Office Printing Solutions, Home Printing Solutions, Graphics Solutions, 3D Printing & Personalization, and Supplies[41][43] | Segment (in millions) | Three months ended July 31, 2025 Net Revenue | Three months ended July 31, 2024 Net Revenue | Nine months ended July 31, 2025 Net Revenue | Nine months ended July 31, 2024 Net Revenue | | :-------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Personal Systems | $9,931 | $9,369 | $28,179 | $26,604 | | Printing | $3,986 | $4,143 | $12,436 | $12,886 | | Corporate Investments | $16 | $7 | $43 | $14 | | Total segment net revenue | $13,933 | $13,519 | $40,658 | $39,504 | Note 3: Restructuring and Other Charges This note outlines the charges and accruals related to HP's Fiscal 2023 Plan, including workforce reductions and associated costs - HP's Fiscal 2023 Plan (Future Ready Plan), approved in November 2022, aims for digital transformation, portfolio optimization, and operational efficiency through fiscal 2025[49] - The plan was amended in February 2025 to increase expected workforce reductions by 1,000-2,000 employees, incurring an additional $150 million in charges[50] | Metric (in millions) | Accrued balance as of Oct 31, 2024 | Charges (9 months ended July 31, 2025) | Cash payments (9 months ended July 31, 2025) | Accrued balance as of July 31, 2025 | | :------------------- | :--------------------------------- | :------------------------------------- | :------------------------------------------- | :---------------------------------- | | Fiscal 2023 Plan | $131 | $252 | $(188) | $177 | Note 4: Taxes on Earnings This note explains HP's effective tax rates and the factors influencing income tax benefits and provisions for the reporting periods | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Effective tax rate | (22.3)% | 22.6% | 5.5% | 22.7% | - The Effective tax rate for the three and nine months ended July 31, 2025, was significantly impacted by decreases in unrecognized tax benefits[54] - HP recorded $281 million and $315 million in net income tax benefits for the three and nine months ended July 31, 2025, respectively, primarily from changes in uncertain tax positions and restructuring charges[55] Note 5: Supplementary Financial Information This note provides additional financial details, including cash, inventory, regional revenue, and supplier finance program obligations | Metric (in millions) | As of July 31, 2025 | As of October 31, 2024 | | :------------------- | :------------------ | :--------------------- | | Cash and cash equivalents | $2,871 | $3,238 |\n| Restricted cash | $3 | $15 |\n| Inventory | $8,356 | $7,720 |\n| Total net revenue by region (9 months ended July 31, 2025) |\n| Americas | $17,419 | |\n| Europe, Middle East and Africa | $13,649 | |\n| Asia-Pacific and Japan | $9,588 | | - HP's contract liabilities increased from $2.9 billion to $3.1 billion for the nine months ended July 31, 2025, driven by sales of fixed-price support and maintenance services[73][74] - Obligations outstanding under supplier finance programs increased from $7.8 billion to $8.6 billion, with $0.5 billion owed to participating financial institutions as of July 31, 2025[75] Note 6: Fair Value This note describes HP's fair value measurements for assets and liabilities, categorized by input observability levels - HP classifies assets and liabilities measured at fair value into a three-level hierarchy based on input observability: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[79][80] | Metric (in millions) | As of July 31, 2025 Total Fair Value | As of October 31, 2024 Total Fair Value | | :------------------- | :----------------------------------- | :------------------------------------ | | Total assets measured at fair value | $2,439 | $2,760 | | Total liabilities measured at fair value | $377 | $182 | - The fair value of HP's short- and long-term debt was $9.5 billion as of July 31, 2025, compared to its carrying amount of $9.6 billion[85] Note 7: Financial Instruments This note details HP's use of derivative instruments to manage financial risks and their impact on fair value and comprehensive income - HP uses derivative instruments (forward contracts, interest rate swaps, etc.) to manage foreign currency and interest rate risks, designating them as fair value hedges, cash flow hedges, or other derivatives[92] | Metric (in millions) | As of July 31, 2025 Fair Value | As of October 31, 2024 Fair Value | | :------------------- | :----------------------------- | :-------------------------------- | | Total cash equivalents | $2,171 | $2,344 | | Total available-for-sale investments | $134 | $187 | | Total derivatives assets | $134 | $229 | | Total derivatives liabilities | $377 | $182 | - HP expects to reclassify an estimated accumulated other comprehensive loss of $162 million, net of taxes, to earnings within the next twelve months from cash flow hedges[109] Note 8: Borrowings This note provides information on HP's debt structure, including short-term and long-term borrowings, interest rates, and credit facilities | Metric (in millions) | As of July 31, 2025 | As of October 31, 2024 | | :------------------- | :------------------ | :--------------------- | | Notes payable and short-term borrowings | $820 | $1,406 | | Long-term debt | $8,782 | $8,263 | | Weighted-average interest rate | 4.6% | 4.5% | - In April 2025, HP issued $1.0 billion in senior unsecured notes (5.40% due April 2030 and 6.10% due April 2035) for general corporate purposes, including repaying Global Notes due June 2025[114] - HP maintains a $6.0 billion U.S. commercial paper program and a $5.0 billion 5-year sustainability-linked senior unsecured revolving credit facility, with $1.1 billion in additional uncommitted lines of credit[117][118][120] Note 9: Stockholders' Deficit This note details changes in HP's stockholders' deficit, including share repurchases and accumulated other comprehensive loss - HP repurchased 5.5 million shares for $0.2 billion during the three months ended July 31, 2025, and 11.4 million shares for $0.4 billion during the nine months ended July 31, 2025[122] - As of July 31, 2025, HP had approximately $8.9 billion remaining under its share repurchase authorization[123] | Metric (in millions) | As of July 31, 2025 | As of July 31, 2024 | | :------------------- | :------------------ | :------------------ | | Accumulated other comprehensive loss | $(641) | $(415) | Note 10: Earnings Per Share This note presents HP's basic and diluted earnings per share calculations and weighted-average shares outstanding | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Basic Net EPS | $0.81 | $0.65 | $1.83 | $1.90 | | Diluted Net EPS | $0.80 | $0.65 | $1.82 | $1.88 | | Weighted-average shares (basic, in millions) | 947 | 979 | 948 | 986 | | Weighted-average shares (diluted, in millions) | 954 | 990 | 955 | 994 | - Diluted EPS increased by $0.15 (23.1%) for the three months ended July 31, 2025, but decreased by $0.06 (3.2%) for the nine months ended July 31, 2025, compared to the prior-year periods[127] Note 11: Litigation and Contingencies This note describes HP's involvement in various legal proceedings, claims, and investigations, including potential financial impacts - HP is involved in various lawsuits, claims, investigations, and proceedings, including IP, commercial, securities, employment, and environmental matters[128] - Key ongoing litigation includes copyright levies in Europe, India Directorate of Revenue Intelligence proceedings (seeking ~$370M plus penalties/interest), Media Content Protection LLC patent litigation, and a securities class action (York County) which recently reached a proposed settlement[129][132][135][137] - Autonomy-related legal proceedings resulted in a July 2025 ruling that the Lynch estate owed approximately 740 million pounds in damages, with HP and Hewlett Packard Enterprise sharing equally in any recovery[141] Note 12: Guarantees, Indemnifications and Warranties This note outlines HP's contractual guarantees, indemnification arrangements, and product warranty liabilities - HP issues performance guarantees and enters into contractual indemnification arrangements in the ordinary course of business, including for intellectual property infringement claims[145][147] - HP accrues estimated product warranty costs at revenue recognition, with aggregate product warranty liabilities at $462 million as of July 31, 2025[149][151] - HP and Hewlett Packard Enterprise have cross-indemnities for liabilities allocated pursuant to their separation and distribution agreement[146] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on HP's financial condition and results of operations, highlighting key performance drivers, strategic focus areas, macroeconomic challenges, and the progress of the Future Ready Plan. It also details segment-specific performance and liquidity management OVERVIEW This section provides an overview of HP's business strategy, product offerings, and the macroeconomic and competitive factors influencing its performance - HP delivers innovative and sustainable devices, services, and subscriptions across Personal Systems, Printing, and Corporate Investments segments, focusing on AI PCs, advanced compute solutions, hybrid systems, and subscription-based models[154][155] - The company faces challenges from the macroeconomic environment (geopolitical conflicts, exchange rate volatility, inflation, tariffs), competitive pressures, and evolving go-to-market strategies[157][159][161] - HP's Future Ready Plan (Fiscal 2023 Plan) is on track to achieve overall program savings through digital transformation, portfolio optimization, and operational efficiency, including headcount reductions[164][165] CRITICAL ACCOUNTING ESTIMATES This section confirms that there have been no significant changes to HP's critical accounting estimates since the last annual report - Management believes there have been no significant changes to the critical accounting estimates disclosed in the Annual Report on Form 10-K for the fiscal year ended October 31, 2024[167] ACCOUNTING PRONOUNCEMENTS This section refers to Note 1 for details on recent accounting pronouncements relevant to HP's financial statements - A summary of recent accounting pronouncements applicable to HP's Condensed Consolidated Financial Statements is provided in Note 1, 'Basis of Presentation'[168] RESULTS OF OPERATIONS This section analyzes HP's financial performance, including net revenue, gross margin, operating expenses, and tax impacts for the reporting periods Net Revenue This section analyzes HP's total net revenue, breaking it down by products and services, and discusses growth drivers and currency impacts | Metric (in millions) | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Products net revenue | $13,114 | $12,750 | $38,232 | $37,212 | | Services net revenue | $818 | $769 | $2,424 | $2,292 | | Total net revenue | $13,932 | $13,519 | $40,656 | $39,504 | - Total net revenue increased 3.1% (3.3% constant currency) for the three months and 2.9% (3.7% constant currency) for the nine months ended July 31, 2025, driven by products and services, partially offset by Printing declines and unfavorable currency[173][174] Gross Margin This section discusses the factors influencing HP's gross margin, including costs, product mix, and pricing strategies | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Gross Margin | 20.5% | 21.5% | 20.7% | 22.3% | - Gross margin decreased by 1.0 percentage point for the three months and 1.6 percentage points for the nine months ended July 31, 2025, primarily due to higher tariff/commodity costs, mix shifts towards Personal Systems, and unfavorable currency impacts, partially offset by disciplined pricing and cost savings[176][177] Operating Expenses This section details HP's operating expenses, including research and development, selling, general and administrative, and restructuring charges | Metric (in millions) | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Research and development | $406 | $413 | $1,204 | $1,248 | | Selling, general and administrative | $1,452 | $1,404 | $4,391 | $4,249 | | Restructuring and other charges | $110 | $46 | $302 | $180 | | Acquisition and divestiture charges | $8 | $22 | $31 | $71 | | Amortization of intangible assets | $159 | $81 | $287 | $242 | - Restructuring and other charges increased significantly by $64 million (three months) and $122 million (nine months) due to the February 2025 amendment of the Fiscal 2023 Plan[181] - Amortization of intangible assets increased due to impairment charges of $65 million in Print and $27 million in Corporate Investments segments[183] Interest and Other, Net This section explains the components of HP's net interest and other income or expense, including litigation gains and currency impacts | Metric (in millions) | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Interest and other, net | $(92) | $(113) | $(381) | $(410) | - Interest and other, net expense decreased by $21 million (three months) and $29 million (nine months) primarily due to a gain from a single litigation matter, partially offset by unfavorable currency impacts[184] Benefit from (Provision for) Taxes This section analyzes HP's effective tax rate and the factors contributing to its income tax benefits or provisions | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Effective tax rate | (22.3)% | 22.6% | 5.5% | 22.7% | - The Effective tax rate for the three and nine months ended July 31, 2025, was significantly lower than the prior year, primarily due to decreases in unrecognized tax benefits[185] - The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. is not anticipated to have a material impact on HP's effective tax and cash tax rates for fiscal year 2025[187] Segment Information This section provides a detailed breakdown of the financial performance for HP's Personal Systems, Printing, and Corporate Investments segments Personal Systems This section analyzes the net revenue and operating earnings for HP's Personal Systems segment, including commercial and consumer PCs | Metric (in millions) | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net revenue | $9,931 | $9,369 | $28,179 | $26,604 | | Earnings from operations | $541 | $617 | $1,457 | $1,662 | | Earnings from operations as a % of net revenue | 5.4% | 6.6% | 5.2% | 6.2% | - Personal Systems net revenue increased 6.0% (6.2% constant currency) for the three months and 5.9% (6.5% constant currency) for the nine months, driven by increased PC unit volume (Windows-based PC refresh) and higher ASPs due to disciplined pricing[191][194] - Commercial PS net revenue increased 5.4% (three months) and 7.9% (nine months) due to increased units and ASPs, while Consumer PS net revenue increased 7.5% (three months) but only 0.9% (nine months) due to portfolio rebalancing[192][195][196] Printing This section analyzes the net revenue and operating earnings for HP's Printing segment, including supplies and various printing solutions | Metric (in millions) | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net revenue | $3,986 | $4,143 | $12,436 | $12,886 | | Earnings from operations | $689 | $715 | $2,313 | $2,416 | | Earnings from operations as a % of net revenue | 17.3% | 17.3% | 18.6% | 18.7% | - Printing net revenue decreased 3.8% (3.4% constant currency) for the three months and 3.5% (2.2% constant currency) for the nine months, driven by declines in Supplies, Commercial Printing, and Consumer Printing due to demand softness and unfavorable currency[200][203] - Printer units decreased by 9.5% (three months) and 1.3% (nine months), while Supplies net revenue decreased 3.7% (three months) and 3.3% (nine months) due to installed base decline and usage[200][203] Corporate Investments This section discusses the operational loss within HP's Corporate Investments segment, primarily due to incubation projects - The loss from operations in Corporate Investments is primarily due to expenses associated with incubation projects and investments in digital enablement[207] LIQUIDITY AND CAPITAL RESOURCES This section discusses HP's financial liquidity, capital resources, and cash flow management strategies Liquidity This section outlines HP's expected sources of liquidity to meet its operational and financial obligations - HP expects current cash, operating cash flow, new borrowings, commercial paper authorization, and credit facility to meet operating cash requirements, capital expenditures, debt payments, pension funding, share repurchases, and dividends[209] | Metric (in millions) | As of July 31, 2025 | As of October 31, 2024 | | :------------------- | :------------------ | :--------------------- | | Cash and cash equivalents | $2,871 | $3,238 | | Restricted cash | $3 | $15 | | Total debt | $9,602 | $9,669 | Operating Activities This section details the net cash provided by HP's operating activities and the factors influencing its changes | Metric (in millions) | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $2,073 | $2,126 | - Net cash provided by operating activities decreased by $0.1 billion for the nine months ended July 31, 2025, primarily due to working capital impacts and lower net earnings, partially offset by changes in receivables from contract manufacturers[212] Key Working Capital Metrics This section analyzes HP's key working capital metrics, including DSO, DOS, DPO, and the cash conversion cycle | Metric | As of July 31, 2025 | As of July 31, 2024 | Y/Y Change | | :----- | :------------------ | :------------------ | :--------- | | DSO | 33 | 31 | 2 | | DOS | 68 | 67 | 1 | | DPO | (138) | (131) | (7) | | Cash conversion cycle | (37) | (33) | (4) | - The Cash conversion cycle improved by 4 days year-over-year, primarily driven by an increase in Days of Purchases Outstanding (DPO) due to higher purchasing volumes[213][217] - Days of Sales Outstanding (DSO) increased due to lower factoring, and Days of Supply (DOS) increased due to higher inventory in-transit and tariff mitigation actions[215][216] Investing Activities This section details the net cash used in HP's investing activities, including capital expenditures and business acquisitions | Metric (in millions) | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------ | :------------------------------ | | Net cash used in investing activities | $(1,113) | $(514) | - Net cash used in investing activities increased by $0.6 billion for the nine months ended July 31, 2025, primarily due to $0.3 billion in collateral posted for derivative instruments, $0.3 billion in higher investment in property, plant, equipment and purchased intangibles, and $0.1 billion in business acquisitions[218] Financing Activities This section details the net cash used in HP's financing activities, including debt repayments and share repurchases | Metric (in millions) | Nine months ended July 31, 2025 | Nine months ended July 31, 2024 | | :------------------- | :------------------------------ | :------------------------------ | | Net cash used in financing activities | $(1,339) | $(1,966) | - Net cash used in financing activities decreased by $0.6 billion for the nine months ended July 31, 2025, primarily due to a $0.9 billion decrease in share repurchases, partially offset by higher net debt repayments of $0.2 billion[219] Share Repurchases and Dividends This section summarizes HP's capital return to shareholders through share repurchases and cash dividends - During the nine months ended July 31, 2025, HP returned $1.2 billion to shareholders, comprising $0.8 billion in cash dividends and $0.4 billion in share repurchases[220] - As of July 31, 2025, HP had approximately $8.9 billion remaining under its share repurchase authorization[220] Capital Resources This section describes HP's available capital resources, including debt facilities and uncommitted lines of credit | Metric (in millions) | As of July 31, 2025 | As of October 31, 2024 | | :------------------- | :------------------ | :--------------------- | | Short-term debt | $820 | $1,406 | | Long-term debt | $8,782 | $8,263 | | Weighted-average interest rate | 4.6% | 4.5% | - HP maintains a $5.0 billion sustainability-linked senior unsecured committed revolving credit facility available until August 1, 2029[224] - As of July 31, 2025, HP had $1.1 billion in available borrowing resources from uncommitted lines of credit[225] Credit Ratings This section discusses the potential impact of credit rating changes on HP's borrowing costs and financial flexibility - A credit rating downgrade could increase borrowing costs, reduce commercial paper market capacity, and require additional collateral for derivative contracts[226] CONTRACTUAL AND OTHER OBLIGATIONS This section outlines HP's various contractual and other financial obligations, including pension contributions and uncertain tax positions Retirement and Post-Retirement Benefit Plan Contributions This section details HP's anticipated contributions to its non-U.S. and U.S. non-qualified pension plans - HP anticipates making approximately $4.0 million in contributions to non-U.S. pension plans and $10.0 million to U.S. non-qualified pension plan participants for the remainder of fiscal year 2025[227] Cost Savings Plan This section outlines HP's expected future cash payments related to its approved restructuring plans - HP expects to make future cash payments of approximately $0.2 billion related to its approved restructuring plans[228] Uncertain Tax Positions This section details HP's recorded liabilities for uncertain tax positions, including related interest and penalties - As of July 31, 2025, HP had approximately $837 million in recorded liabilities and related interest and penalties pertaining to uncertain tax positions[229] Off-Balance Sheet Arrangements This section clarifies HP's limited involvement in material off-balance sheet arrangements and its use of third-party liquidity solutions - HP has not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements[230] - HP utilizes third-party arrangements for cash and liquidity management and to provide liquidity to partners, as detailed in Note 5[231] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the disclosures about market risk from HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2024, stating that there have been no material changes since that report - HP's exposure to market risk has not materially changed since October 31, 2024[232] Item 4. Controls and Procedures This section details the evaluation of HP's disclosure controls and procedures, identifying an unremediated material weakness in internal control over financial reporting related to IT general controls, specifically user access, change management, and job schedule monitoring for certain software solutions - HP's disclosure controls and procedures were not effective as of July 31, 2025, due to an unremediated material weakness in internal control over financial reporting[233] - The material weakness stems from undue reliance on information from certain software solutions without effectively designed IT general controls (user access, change management, job schedule monitoring)[234] - Despite the material weakness, it did not result in any material misstatement of the financial statements, but there is a reasonable possibility it could have[235] Part II. Other Information This part provides additional required disclosures not covered in the financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings This section refers to Note 11, 'Litigation and Contingencies,' for detailed information on HP's legal proceedings - Information regarding legal proceedings is incorporated by reference from Note 11, 'Litigation and Contingencies,' in Item 1 of Part I[240] Item 1A. Risk Factors This section states that HP's risk factors have not materially changed since the Annual Report on Form 10-K for the fiscal year ended October 31, 2024 - There have been no material changes in HP's risk factors since the Annual Report on Form 10-K for the fiscal year ended October 31, 2024[241] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities and details the company's share repurchase activities during the three months ended July 31, 2025 - There were no unregistered sales of equity securities during the period covered by this report[242] | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs | | :------- | :-------------------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------- | | May 2025 | 5,484 | $27.35 | $8,911,940 | | June 2025| — | — | $8,911,940 | | July 2025| — | — | $8,911,940 | | Total | 5,484 | | | - HP repurchased 5.5 million shares for $0.2 billion on the open market during the three months ended July 31, 2025[244] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities - There were no defaults upon senior securities[245] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to HP Inc - Mine safety disclosures are not applicable to HP Inc[246] Item 5. Other Information This section discloses Rule 10b5-1 trading plans adopted by HP's President and CEO, Enrique Lores, and President of Imaging, Printing & Solutions, Anneliese Olson, for the sale of common stock and restricted stock units - Enrique Lores, President and CEO, adopted a Rule 10b5-1 plan on June 30, 2025, to sell up to 34,282 shares of common stock and shares underlying 364,579 restricted stock units, commencing September 29, 2025[247] - Anneliese Olson, President of Imaging, Printing & Solutions, adopted a Rule 10b5-1 plan on June 25, 2025, to sell up to 57,617 shares underlying time-based restricted stock units, commencing October 29, 2025[247] Item 6. Exhibits This section refers to the Exhibit Index for a list of exhibits filed with the report - The Exhibit Index on page 54 provides a list of exhibits filed with this report[248] Exhibit Index This section lists all exhibits filed with the report, including corporate governance documents and certifications - The Exhibit Index lists documents incorporated by reference, including Registrant's Restated Certificate of Incorporation and Amended and Restated Bylaws, and certifications from the CEO and CFO[250] Signature This section confirms the official signing of the report by HP's Chief Financial Officer - The report is signed by Karen L. Parkhill, Chief Financial Officer (Principal Financial Officer and Authorized Signatory), on August 27, 2025[254]