Xerox Holdings Corp (XRX): Results of Operations and Financial Condition
Xerox Holdings Corp (XRX) filed an SEC Form 8-K — Results of Operations and Financial Condition. EXHIBIT 99.1 News from Xerox Holdings Corporation Xerox Releases Second-Quarter Results Raises full-year 2026 revenue and adjusted 1 operating income guidance Financial Summary Q2 2026* • Revenue of $1.92 billion, up 22.0 percent, or 21.2 percent in constant currency 1 . On a pro
How this was made
The 30-second read
Why it matters
The filing provides concrete quarterly performance metrics and a revised 2026 outlook (revenue, adjusted operating income, free cash flow), which can drive repricing versus prior expectations. It also discloses a specific pre-tax benefit from IEEPA tariff receivables and explains its cash-flow classification, which matters for quality-of-earnings assessment.
Market read
Traders can update models immediately using the raised 2026 guidance ranges and Q2 adjusted profitability metrics, while adjusting for the disclosed IEEPA-related benefit.
What to watch
Free cash flow guidance is affected by the accounting classification of the IEEPA receivable sale proceeds; traders may need to separate operating improvement from cash-flow optics and leverage reduction pace.
Xerox Releases Second-Quarter Results Raises full-year 2026 revenue and adjusted operating income guidance
Reported revenue increased 22.0% and adjusted operating income increased $144 million, but pro forma revenue declined 6.5%, IT Solutions revenue declined 8.9%, and profitability included a $105 million pre-tax benefit from IEEPA tariff receivables.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $1,922 million | – | 22.0% AC; 21.2% CC |
| Sales revenueGAAP | $996 million | – | – |
| Services, maintenance, rentals and other revenueGAAP | $926 million | – | – |
| Gross ProfitGAAP | $688 million | – | $237 million |
| Gross MarginGAAP | 35.8% | – | 720 bps |
| Research, development and engineering expensesGAAP | $67 million | – | – |
| RD&E %GAAP | 3.5% | – | (80) bps |
| Selling, administrative and general expensesGAAP | $432 million | – | – |
| SAG %GAAP | 22.5% | – | 90 bps |
| Restructuring and related costs, netGAAP | $23 million | – | – |
| Amortization of intangible assetsGAAP | $30 million | – | – |
| DivestituresGAAP | — | – | – |
| Non-financing interest expenseGAAP | $100 million | – | – |
| Other expenses (income), netGAAP | $5 million | – | – |
| Total Costs and ExpensesGAAP | $1,891 million | – | – |
| Pre-Tax Income (Loss)GAAP | $31 million | – | $91 million |
| Pre-Tax Income (Loss) MarginGAAP | 1.6% | – | 540 bps |
| Income tax expenseGAAP | $18 million | – | – |
| Net IncomeGAAP | $13 million | – | up $119 million year-over-year |
| GAAP Diluted Income (Loss) per ShareGAAP | $0.07 | – | $0.94 |
| Gross Profit - Adjustednon-GAAP | $700 million | – | $239 million |
| Gross Margin - Adjustednon-GAAP | 36.4% | – | 710 bps |
| Operating Income - Adjustednon-GAAP | $203 million | – | $144 million |
| Operating Income Margin - Adjustednon-GAAP | 10.6% | – | 690 bps |
| Diluted Income (Loss) Per Share - Adjustednon-GAAP | $0.38 | – | $1.02 |
| Operating cash flowGAAP | $37 million | – | up $48 million year-over year |
| Free cash flownon-GAAP | $11 million | – | up $41 million year-over-year |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Print and OtherSecond quarter 2026 Print and Other profit reflects a benefit from the recognition of $105 million from IEEPA tariff receivables associated with the recent Supreme Court ruling on IEEPA tariffs. Pro Forma B/(W) YOY was (6.1)%. | $1,733 million | – | 26.9% |
| IT SolutionsPro Forma B/(W) YOY was (8.9)%. | $194 million | – | (8.9)% |
| Intersegment EliminationReflects primarily IT hardware, software solutions and services, sold by the IT Solutions segment to the Print and Other segment. | $3 million | – | NM |
2026 outlook
- RevenueApproximately $7.6 billion
- NoteAdjusted Operating Income: $555-$605 million
- NoteFree Cash Flow: Approximately $250 million
What drove it
- Revenue was up 22.0 percent, or 21.2 percent in constant currency.
- On a pro forma basis, revenue is down 6.5 percent.
- Xerox raised its Lexmark gross cost synergy target by $50 million to at least $350 million.
- Print and IT Solutions total sales pipelines remain ahead of the prior year.
- Xerox expanded the 9-Series A3 lineup and launched new A4 color devices in June under the new unified brand and logo.
Concerns
- Profitability metrics for Q2 2026 include $105 million of a pre-tax benefit from the recognition of IEEPA tariff receivables.
- The $105 million pre-tax benefit is not included in either Operating cash flow or Free cash flow for Q2 2026 because the sale of the receivables is currently accounted for within Financing cash flow.
- IT Solutions revenue declined 8.9% year-over-year.
- Pro forma total revenue declined 6.5% year-over-year.
- Non-financing interest expense was $100 million, compared with $55 million in Q2 2025.
What to watch
- Execution against the raised Lexmark gross cost synergy target of at least $350 million.
- Whether Print and IT Solutions total sales pipelines convert into revenue growth.
- Delivery against updated 2026 revenue guidance of approximately $7.6 billion.
- Delivery against updated adjusted operating income guidance of $555-$605 million.
- Processing of the IEEPA tariff receivables by the U.S. Government and the resulting reclassification of $80 million proceeds to operating cash flows.
Balance sheet and cash flow
- Operating cash flow of $37 million, up $48 million year-over year.
- Free cash flow of $11 million, up $41 million year-over-year.
- The Company sold its rights to IEEPA tariff receivables to a third party for $80 million in cash.
- Reduced total debt outstanding by more than $200 million.
- $125 million of 13.00% 2026 Senior Notes at maturity.
- $93 million of 5.50% 2028 Senior Notes.
- $6 million of 13.50% 2031 Senior Secured Notes.
Analysis
Xerox reported Q2 2026 revenue of $1,922 million, up 22.0% on an actual-currency basis and 21.2% in constant currency. The reported growth reflects the inclusion of Lexmark, while pro forma revenue declined 6.5%. Print and Other revenue increased 26.9% to $1,733 million, but IT Solutions revenue declined 8.9% to $194 million, leaving underlying demand trends uneven across the portfolio.
Profitability improved sharply in the reported comparison. GAAP gross margin was 35.8%, up 720 bps, while adjusted gross margin was 36.4%, up 710 bps. Adjusted operating income rose to $203 million from $59 million and adjusted operating margin rose to 10.6% from 3.7%. However, Q2 profitability included a $105 million pre-tax benefit from the recognition of IEEPA tariff receivables, concentrated in Print and Other profit.
GAAP net income was $13 million, or $0.07 per share, compared with a GAAP diluted loss per share of $(0.87) in Q2 2025. Adjusted net income was $55 million, or $0.38 per share, compared with adjusted diluted loss per share of $(0.64). Non-financing interest expense increased to $100 million from $55 million, which remains a material cost item despite progress on deleveraging.
Cash generation was positive but the tariff-receivable accounting is important. Operating cash flow was $37 million and free cash flow was $11 million. Xerox sold its rights to the IEEPA tariff receivables for $80 million in cash, but the proceeds are classified in financing cash flows until the receivables are processed by the U.S. Government. The company also reduced total debt outstanding by more than $200 million, including repayment of $125 million of 13.00% 2026 Senior Notes at maturity.
Management raised 2026 guidance to approximately $7.6 billion of revenue, $555-$605 million of adjusted operating income, and approximately $250 million of free cash flow. The adjusted operating income guide includes the $105 million pre-tax IEEPA tariff-receivable benefit, and the free-cash-flow guide includes an $80 million benefit from the receivable sale. The central issues for the balance of 2026 are pro forma revenue stabilization, IT Solutions performance, Lexmark synergy delivery, and cash-flow conversion excluding the timing effect of tariff-receivable proceeds.
Management, verbatim
Our second-quarter results gave us another reason for confidence. We made progress on each of our three strategic priorities: stabilizing revenue, increasing profitability, and reducing leverage. As a result, we are raising both revenue and adjusted operating income guidance, as well as our Lexmark gross synergy targets. While we have more to prove, I like how our team is showing up and executing with urgency and discipline.
Louie Pastor, chief executive officer at Xerox
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- GAAP operating income and GAAP operating margin were not provided in the supplied filing text.
- Ending cash and cash equivalents balance was not provided in the supplied filing text.
- Ending total debt balance was not provided in the supplied filing text.
- Capital expenditures were not provided in the supplied filing text.
- Share repurchases and dividends were not provided in the supplied filing text.
- Q2 2025 operating cash flow and free cash flow values were not separately provided on their own line.
- Q2 2025 GAAP net income was not fully provided in the supplied filing text.
- Gross margin, operating expense, and tax-rate guidance were not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is Xerox’s SEC Form 8-K (Item 2.02) releasing Q2 2026 results and updating full-year 2026 guidance, including commentary on Lexmark synergies and debt reduction.
Ticker impact
Xerox reported Q2 results and raised 2026 revenue and adjusted operating income guidance, alongside a Lexmark synergy target increase.
Moderately positive bias for the next trading session and into guidance digestion, with focus on whether the IEEPA tariff receivable benefit is viewed as sustainable.
The filing includes specific Q2 beats (revenue, adjusted operating income, adjusted margin) and explicit updated full-year guidance ranges, which are actionable for traders. The IEEPA benefit is disclosed with accounting treatment, reducing uncertainty about what is recurring versus one-time.
Market effects
Signals improving profitability trajectory for enterprise printing and IT services, potentially supporting sentiment toward legacy hardware-services hybrids.
Limited direct regional read-through; primarily US-listed large-cap sentiment.
Constant-currency revenue growth and leverage reduction may modestly influence global industrial/tech-adjacent value sentiment.
Counterpoint
The guidance includes a benefit tied to IEEPA tariff receivables, which may be scrutinized as non-recurring and could temper confidence in underlying operating momentum.
Key entities
- companyXerox Holdings Corporation
Reported Q2 2026 results and raised 2026 revenue and adjusted operating income guidance; disclosed IEEPA tariff receivable benefit and debt reduction.
- companyLexmark
Xerox references raised Lexmark gross cost synergy target and pro forma inclusion of Lexmark results in reported figures.
- financial_itemIEEPA tariff receivables
A disclosed pre-tax benefit from recognition of tariff receivables tied to a Supreme Court ruling, with proceeds sold to a third party and accounting treatment affecting free cash flow.
