From The Motley Fool · Motley Fool Transcribing · · 2m
Xerox Q3 2026 Earnings Report
Xerox lowers earnings guidance amid rising costs and market shifts.
In brief
Xerox lowers earnings guidance amid rising costs and market shifts. Xerox reported a 4.5% revenue decline and lowered full-year guidance for operating income and free cash flow due to input costs, equipment mix shifts, and IT solutions underperformance. Originally reported by The Motley Fool.
Q3 Revenue Decline
Total revenue fell 4.5% to $1.87 billion in constant currency.
Adjusted Operating Margin
Adjusted operating margin improved to 6.6%, a 330 basis point increase year over year.
Equipment Revenue Growth
Equipment revenue grew 3% organically, with entry equipment up 21% to $156 million.
Midrange Equipment Decline
Midrange equipment revenue declined 15.2% to $151 million due to weaker market demand.
Post-Sale Revenue Drop
Post-sale revenue declined 4.4% to $1.3 billion as service outsourcing and financing income fell.
IT Solutions Underperformance
IT Solutions revenue dropped 17.3% year over year due to product sales falling 23%.
GAAP Net Loss
GAAP net loss per share was $7.73, driven by a $959 million goodwill impairment charge.
Adjusted EPS
Adjusted EPS fell to $0.02 per share due to higher interest expense and a 70% tax rate.
Guidance Reduction
Adjusted operating income guidance lowered to $450 million to $475 million from $555 million to $605 million.
Free Cash Flow Guidance
Free cash flow guidance revised to $50 million to $100 million, down from $250 million.
Input Cost Headwinds
Input costs projected at $60 million for the full year, with memory costs rising from 2% to 10% of machine expenses.
Tariff Impact
Tariff impact expected at approximately $90 million for 2026, consistent with prior-year levels.
Lexmark Synergies
Lexmark integration expected to deliver $100 million in incremental year-over-year savings by 2027.
Debt Reduction
Debt principal reduced by $53 million through exchange of 2028 notes for 2030 notes and equity.
Dividend Suspension
Common and preferred dividends suspended to preserve $28 million in annual cash for liquidity and debt reduction.
Total Core Debt
Total core debt reduced to $2.9 billion, excluding $1.3 billion in debt for customer assets.
The short version
Xerox reported a 4.5% revenue decline and lowered full-year guidance for operating income and free cash flow due to input costs, equipment mix shifts, and IT solutions underperformance.
