HP is focused on growing its AI PC, advanced compute solutions, and hybrid systems businesses faster than its core business, with accretive margins. This strategy aims to leverage innovation and accelerate the delivery of AI across its product portfolio to meet evolving customer needs and capture market opportunities.

The 'Future Ready Plan' (Fiscal 2023 Plan), amended in February 2025 and expected to run through fiscal year 2025, is on track to achieve overall program savings through digital transformation, portfolio optimization, and operational efficiency. Savings are being reinvested into growth areas and people.

HP approved an amendment to the Fiscal 2023 Plan, increasing expected gross workforce reductions by an additional 1,000 to 2,000 employees. This is anticipated to incur an additional $150 million in restructuring and other charges, primarily related to labor costs, as part of structural cost reduction efforts.

R&D expense remained flat for the three months and decreased 3.5% for the nine months ended July 31, 2025, primarily due to disciplined cost savings. However, Selling, General and Administrative (SG&A) expense increased 3.4% for the three months and 3.3% for the nine months, driven by higher variable compensation, go-to-market initiatives, and litigation costs.

Restructuring and other charges increased significantly by $64 million for the three months and $122 million for the nine months ended July 31, 2025. This increase is directly attributable to the February 2025 amendment of the Fiscal 2023 Plan, which expanded workforce reductions.

As of July 31, 2025, the previously identified material weakness in internal control over financial reporting, stemming from undue reliance on information from certain software solutions and ineffective IT general controls, was not remediated. Management is designing appropriate IT general controls to address this issue.

HP continues to face global macroeconomic challenges, including ongoing geopolitical conflicts in Ukraine, the Middle East, and the Taiwan Strait, market uncertainty, foreign currency volatility, and inflationary trends. These factors significantly impact demand and operational costs, as highlighted in the MD&A.

Since April 2025, new, substantial tariffs have been imposed on imports to the United States, leading to higher commodity and tariff costs. Management noted that these increased costs were not fully mitigated by pricing and other actions, indicating a direct negative impact on profitability.

HP is involved in several significant legal proceedings, including copyright levies in Europe, customs duty disputes in India, patent infringement claims (Media Content Protection LLC, Wilus/Sisvel for Wi-Fi 6 patents), and securities class action lawsuits. These litigations carry potential for substantial damages and operational disruption.

Personal Systems net revenue increased 6.0% for the three months and 5.9% for the nine months ended July 31, 2025. This growth was driven by a 4.9% increase in PC unit volume (3 months), boosted by the Windows-based PC operating system refresh, and a 2.5% increase in average selling prices (ASPs), reflecting strong competitive performance in this segment.

Printing net revenue decreased 3.8% for the three months and 3.5% for the nine months ended July 31, 2025. This decline was attributed to demand softness, a 9.5% decrease in printer units (3 months), and competition from non-original supplies, indicating a challenging market environment for this segment.

Consumer PS net revenue increased only 0.9% for the nine months ended July 31, 2025, despite a 2.6% increase in ASPs. This was partially offset by a 1.7% decrease in PC unit volume, a result of HP's strategic decision to rebalance its portfolio towards a more profitable mix rather than prioritizing volume in this segment.

The cash conversion cycle increased by 5 days sequentially (from -42 to -37 days) and by 4 days year-over-year (from -33 to -37 days) as of July 31, 2025. This was primarily driven by an increase in Days of Supply in Inventory (DOS) by 5 days sequentially to 68 days, attributed to higher in-transit inventory and tariff mitigation actions.

The Printing segment continues to face challenges in its supply chain, obtaining many components from single-source suppliers. This dependency exposes HP to risks related to technology, availability, price, quality, or other considerations, potentially impacting operational efficiency and product delivery.

While R&D expenses decreased 3.5% for the nine months due to disciplined cost savings, overall operating expenses as a percentage of revenue increased for Personal Systems. This indicates that while the Future Ready transformation is generating savings, other operational costs, such as variable compensation and go-to-market initiatives, are offsetting some of these efficiencies.

HP is accelerating the delivery of AI across its product portfolio and investing in AI PCs, advanced compute solutions, and hybrid systems. This strategic emphasis aims to meet evolving customer needs and respond to emerging technological trends, positioning HP for future growth.

HP is consolidating all its software resources under a new Technology and Innovation Organization. This move is intended to evolve the company from a transactional hardware company to a more experience-led organization, strengthening its ability to capture opportunities in software and services.

During the three and nine months ended July 31, 2025, HP incurred impairment charges of $27 million related to technology and patents within the Corporate Investments segment. This indicates that some prior technology-related investments or acquisitions are not performing as expected, leading to asset write-downs.

For the nine months ended July 31, 2025, HP executed $0.4 billion in share repurchases, a significant decrease compared to $1.2 billion in the prior-year period. Despite this, approximately $8.9 billion remains under the current share repurchase authorization, indicating potential for future activity.

Net cash used in investing activities increased by $0.6 billion for the nine months ended July 31, 2025, primarily due to higher investment in property, plant, equipment, and purchased intangibles by $0.3 billion. This suggests a commitment to enhancing operational infrastructure and acquiring strategic assets.

In April 2025, HP completed an offering of $1.0 billion in senior unsecured notes, with proceeds used for general corporate purposes, including the repayment of Global Notes due June 2025. This indicates active management of the capital structure to optimize debt maturity profiles and funding needs.

HP maintains a $5.0 billion 5-year sustainability-linked senior unsecured committed revolving credit facility, with terms of borrowing varying based on HP's external credit ratings and certain sustainability metrics. This demonstrates a financial commitment tied to achieving specific ESG targets, though specific targets are not detailed in this filing.

The forward-looking statements section mentions 'our sustainability goals' as part of management's plans, strategies, and objectives for future operations. However, specific details, progress, or new initiatives related to these goals are not elaborated upon within the current 10-Q filing.

HP is involved in and may become a party to proceedings related to environmental laws, including investigations and remediation at current or former operating sites and disposal sites. This indicates a continuing responsibility for environmental impact, with potential liabilities, though no new material developments are disclosed.

HP's business and financial performance are significantly affected by global macroeconomic challenges, including geopolitical conflicts, market uncertainty, and inflationary trends. These conditions contribute to demand softness in certain product categories and increase operational costs, as noted in the MD&A.

The imposition of new, substantial tariffs on imports to the United States since April 2025 has led to higher commodity and tariff costs. Additionally, with approximately 65% of net revenue from outside the U.S., fluctuations in foreign currency exchange rates continue to negatively impact financial results.

The Personal Systems segment experienced a 4.9% increase in PC unit volume for the three months ended July 31, 2025, primarily driven by the Windows-based PC operating system refresh. This trend indicates a positive market driver for the PC segment, partially offsetting broader macroeconomic challenges.