Xerox Holdings Corporation

What they do

Xerox builds and integrates services-led, software-enabled workplace solutions for enterprises, spanning print equipment, post sale supplies and services, and managed IT offerings. Following the July 1, 2025 Lexmark acquisition and the ITsavvy integration, the company reports two segments: Print and Other, and IT Solutions. It sells globally across North America, Europe, Latin America, Brazil, APAC, the Middle East, Africa, and India.

Revenue drivers

• Print and Other — Combines equipment sales with post sale revenue (supplies, service, managed print). In Q2 2026 the segment generated $1,733 million of the $1,922 million total, up 26.9% year over year but down 6.1% on a pro forma basis.
• IT Solutions — Built on the ITsavvy acquisition, offering integrated infrastructure, cloud, security, and automation to expand Xerox's share of client IT budgets. Q2 2026 revenue of $194 million declined 8.9% year over year.
• Equipment sales — Q2 2026 equipment sales of $387 million rose 15.2% in actual currency, including a 33.1-percentage-point benefit from Lexmark; excluding Lexmark, equipment sales fell 17.9%.
• Post sale revenue — The larger recurring stream at $1,346 million in Q2 2026, up 30.7% actual but down 6.8% excluding Lexmark, reflecting lower equipment service and managed print services.

Recent performance

Q2 2026 revenue was $1,922 million, up 22.0% year over year but down 6.5% on a pro forma basis. GAAP net income was $13 million, or $0.07 per diluted share, compared with a $0.87 loss per share a year earlier, and adjusted operating income was $203 million at a 10.6% adjusted operating margin, up 690 basis points. Results included a $105 million pre-tax IEEPA tariff receivable benefit, with the related $80 million of proceeds classified in financing cash flow. Operating cash flow was $37 million and free cash flow $11 million. Full-year 2025 revenue was $7.02 billion, up 12.9% actual but down 7.6% pro forma, with a net loss of $1.03 billion.

Strategy

Xerox is executing Reinvention, a multi-year program to strengthen the core business and fund expansion into higher-growth verticals beyond print. It acquired Lexmark on July 1, 2025, targeting A4 color share, entry into the APAC print market, manufacturing cost reductions, and supply chain flexibility. It also integrated ITsavvy into a new Xerox IT Solutions organization. The company reported cumulative run-rate gross cost savings of more than $500 million through year-end 2025 and raised its Lexmark gross cost synergy target by $50 million to at least $350 million. It extended its forward flow receivable sale program into Europe, the UK, France, and Portugal.

Risks

• Integration and synergy risk — The 10-K states the Lexmark acquisition may present risks if integration or anticipated synergies fail to meet expectations.
• Debt load — The 10-K discloses that Xerox incurred substantial debt to finance the Lexmark acquisition, and long-term debt stood at $4.15 billion at June 30, 2026 against $323 million of shareholder equity.
• Legacy Xerox demand decline — Q2 2026 equipment sales excluding Lexmark fell 17.9% and total installations declined in entry and mid-range color categories.
• Tariffs and input costs — The 10-Q cites ongoing tariff payments plus higher memory and oil prices as headwinds to the cost structure, and the 10-K lists tariffs as a risk that has negatively impacted financial performance.

Outlook

Management raised full-year 2026 revenue and adjusted operating income guidance and lifted the Lexmark gross cost synergy target to at least $350 million. The company points to pro forma gross margin expansion for a second consecutive quarter from integration synergies, cost discipline, and a unified operating model. Q2 2026 progress cited includes new 9 Series A3 and A4 color launches under a unified brand, sales pipelines ahead of prior year in both segments, and more than $200 million of debt reduction.