Integration momentum drives Q4 results in line with guidance; adjusted(1) operating income expected to grow more than $200 million in 2026
Financial Summary
Q4 2025
- Revenue of $2.03 billion, up 25.7 percent, or 23.6 percent in constant currency(1). On a pro forma(2) basis, revenue down 9.0 percent.
- GAAP net (loss) of $(73) million, or $(0.60) per share, an increased loss of $52 million or $(0.40) per share, year-over-year, respectively.
- Adjusted(1) net (loss) of $(8) million, or $(0.10) per share, down $57 million or $(0.46) per share, year-over-year, respectively.
- Adjusted(1) operating margin of 5.0 percent, down 140 basis points year-over-year.
- Operating cash flow of $208 million, down $143 million year-over-year.
- Free cash flow(1) of $184 million, down $150 million year-over-year.
FY 2025
- Revenue of $7.02 billion, up 12.9 percent, or 12.2 percent in constant currency(1). On a pro forma(2) basis, revenue down 7.6 percent.
- GAAP net (loss) of $(1.03) billion, or $(8.25) per share, an improvement of approximately $0.3 billion or $2.50 per share, year-over-year, respectively. 2024 includes an after-tax non-cash goodwill impairment charge of $1.0 billion, or $8.17 per share.
- Adjusted(1) net (loss) of $(62) million, or $(0.60) per share, down $197 million or $1.57 per share, year-over-year, respectively.
- Adjusted(1) operating margin of 3.5 percent, down 140 basis points year-over-year.
- Operating cash flow of $224 million, down $287 million year-over-year.
- Free cash flow(1) of $133 million, down $334 million year-over-year.
* 2025 free cash flow guidance did not anticipate the accounting treatment of pre-existing intercompany balances between Xerox and Lexmark. U.S. GAAP requires it to be recorded within operating cash flow instead of being treated as part of the purchase price within investing. Because of this, following Q3 earnings we reclassified $43 million from investing cash flow to operating cash flow. This adjustment had no impact on actual cash, no impact on underlying cash generation, and no impact on Q4 free cash flow.
NORWALK, Conn.--(BUSINESS WIRE)--Xerox Holdings Corporation (NASDAQ: XRX) today announced its 2025 fourth-quarter and full-year results and guidance for 2026.
“We continue to execute with discipline in a difficult macro backdrop, including the lingering effects of government uncertainty and rising memory costs. The Lexmark integration is advancing ahead of plan, and the teams are delivering tangible synergies,” said Steve Bandrowczak, chief executive officer at Xerox. “These efforts contributed to a better‑than‑expected operating income and free cash flow performance this quarter. As demand trends begin to stabilize, we’re seeing new opportunities emerge, leading to a pipeline that is larger than it was this time last year.”
Strategic Milestones
Q4/FY 2025
- Lexmark synergy realization ahead of plan; reaffirm at least $300 million integration synergy target
- IT Solutions pro forma bookings*, billings*, and revenue grew double digits in 2025
- Announced the launch of the Xerox™ TriShield 360 Cyber Solution within IT Solutions
- Channel expansion strategy paying dividends with onboarding of 12 new U.S. dealers in 2025
- Paid down $366 million of debt, net, since the close of the Lexmark acquisition on July 1, 2025
* Inclusive of ~$24 million of intercompany transactions.
Fourth-Quarter Key Financial Results
(in millions, except per share data) | Q4 2025 |
| Q4 2024 |
| B/(W) YOY |
| Pro Forma2 B/(W) YOY |
Revenue | $2,028 |
| $1,613 |
| 25.7% AC 23.6% CC1 |
| (9.0)% AC |
Gross Profit | $579 |
| $502 |
| $77 |
| $(135) |
Gross Margin | 28.6% |
| 31.1% |
| (250) bps |
| (350) bps |
RD&E % | 3.5% |
| 2.9% |
| (60) bps |
|
|
SAG % | 21.3% |
| 23.4% |
| 210 bps |
|
|
Pre-Tax (Loss)3 | $(61) |
| $(4) |
| $(57) |
|
|
Pre-Tax (Loss) Margin3 | (3.0)% |
| (0.2)% |
| (280) bps |
|
|
Gross Profit - Adjusted1 | $594 |
| $509 |
| $85 |
| $(144) |
Gross Margin - Adjusted1 | 29.3% |
| 31.6% |
| (230) bps |
| (380) bps |
Operating Income - Adjusted1 | $102 |
| $104 |
| $(2) |
|
|
Operating Income Margin - Adjusted1 | 5.0% |
| 6.4% |
| (140) bps |
|
|
GAAP Diluted (Loss) per Share3 | $(0.60) |
| $(0.20) |
| $(0.40) |
|
|
Diluted (Loss) Per Share - Adjusted1 | $(0.10) |
| $0.36 |
| $(0.46) |
|
|
Full-Year Key Financial Results
(in millions, except per share data) | FY 2025 |
| FY 2024 |
| B/(W) YOY |
| Pro Forma2 B/(W) YOY |
Revenue | $7,022 |
| $6,221 |
| 12.9% AC 12.2% CC |
| (7.6)% AC |
Gross Profit | $1,901 |
| $1,960 |
| $(59) |
| $(314) |
Gross Margin | 27.1% |
| 31.5% |
| (440) bps |
| (140) bps |
RD&E % | 3.3% |
| 3.1% |
| (20) bps |
|
|
SAG % | 23.6% |
| 24.7% |
| 110 bps |
|
|
Pre-Tax (Loss)3 | $(488) |
| $(1,216) |
| $728 |
|
|
Pre-Tax (Loss) Margin3 | (6.9)% |
| (19.5)% |
| NM |
|
|
Gross Profit - Adjusted1 | $2,052 |
| $2,011 |
| $41 |
| $(427) |
Gross Margin - Adjusted1 | 29.2% |
| 32.3% |
| (310) bps |
| (270) bps |
Operating Income - Adjusted1 | $248 |
| $302 |
| $(54) |
|
|
Operating Income Margin - Adjusted1 | 3.5% |
| 4.9% |
| (140) bps |
|
|
GAAP Diluted (Loss) per Share3 | $(8.25) |
| $(10.75) |
| $2.50 |
|
|
Diluted (Loss) Per Share - Adjusted1 | $(0.60) |
| $0.97 |
| $(1.57) |
|
|
Fourth-Quarter Segment Results
(in millions) | Q4 2025 |
| Q4 2024 |
| B/(W) YOY |
| Pro Forma2 B/(W) YOY |
Revenue |
|
|
|
|
|
|
|
Print and Other | $1,873 |
| $1,500 |
| 24.9% |
| (9.0)% |
IT Solutions | 158 |
| 114 |
| 38.6% |
| (8.1)% |
Intersegment Elimination4 | (3) |
| (1) |
| NM |
| NM |
Total Revenue | $2,028 |
| $1,613 |
| 25.7% |
| (9.0)% |
Profit |
|
|
|
|
|
|
|
Print and Other | $109 |
| $128 |
| (14.8)% |
| (50.5)% |
IT Solutions | 9 |
| - |
| NM |
| NM |
Corporate Other 5 | (16) |
| (24) |
| (33.3)% |
| (40.7)% |
Total Profit | $102 |
| $104 |
| (1.9)% |
| (48.0)% |
Full-Year Segment Results
(in millions) | FY 2025 |
| FY 2024 |
| B/(W) YOY |
| Pro Forma2 B/(W) YOY |
Revenue |
|
|
|
|
|
|
|
Print and Other | $6,272 |
| $5,864 |
| 7.0% |
| (8.2)% |
IT Solutions | 761 |
| 358 |
| 112.6% |
| (0.8)% |
Intersegment Elimination4 | (11) |
| (1) |
| NM |
| NM |
Total Revenue | $7,022 |
| $6,221 |
| 12.9% |
| (7.6)% |
Profit |
|
|
|
|
|
|
|
Print and Other | $279 |
| $396 |
| (29.5)% |
| (40.5)% |
IT Solutions | 42 |
| - |
| NM |
| 162.5% |
Corporate Other 5 | (73) |
| (94) |
| (22.3)% |
| (25.2)% |
Total Profit | $248 |
| $302 |
| (17.9)% |
| (37.6)% |
|
| |
1. | Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures and their reconciliation to the reported GAAP measures. | |
2. | Refer to the “Pro Forma Basis” section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from October 1, 2024 through December 31, 2024 and ITsavvy's estimated results from October 1, 2024 through November 19, 2024. ITsavvy's actual results are included in Xerox's reported results beginning on November 20, 2024, the effective date of the acquisition. | |
3. | Refer to the “Non-GAAP Financial Measures - Adjusted Net Income and EPS reconciliation” section of this release for a discussion of significant items impacting full-year 2025 and 2024, as well as their related impacts on Diluted EPS. Full-year 2024 included a pre-tax non-cash goodwill impairment charge of approximately $1.1 billion (approximately $1.0 billion after-tax), or $8.17 per share. | |
4. | Reflects primarily IT hardware, software solutions and services, sold by the IT Solutions segment to the Print and Other segment. | |
5. | Corporate Other reflects certain administrative and general expenses, which primarily relate to corporate functions, and are not allocated to either of our reportable segments | |
2026 Guidance
- Revenue: Above $7.5 billion
- Adjusted 1 Operating Income: $450-$500 million
- Free cash flow1: ~ $250 million
Non-GAAP Measures
This release refers to the following non-GAAP financial measures:
- Adjusted1 EPS, which excludes the Goodwill impairment charge, a tax expense charge related to the establishment of a valuation allowance against certain deferred tax assets, Reinvention-related costs, as well as Restructuring and related costs, net, Amortization of intangible assets, non-service retirement-related costs, and other discrete adjustments from GAAP EPS, as applicable.
- Adjusted 1 operating income and margin, which exclude the EPS adjustments noted above, except the tax expense charge related to the establishment of a valuation allowance against certain deferred tax assets, as well as the remainder of Other expenses, net from pre-tax (loss) and margin.
- Constant currency (CC) revenue change, which excludes the effects of currency translation.
- Free cash flow 1, which is operating cash flow less capital expenditures.
|
| |
1 Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures and their reconciliation to the reported GAAP measures. | ||
Forward-Looking Statement
This presentation and other written or oral statements made from time to time by management contain “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and involve certain risks and uncertainties. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “would”, “could”, “can”, “should”, “targeting”, “projecting”, “driving”, “future”, “plan”, “predict”, “may” and similar expressions are intended to identify forward-looking statements. The Company’s actual results may differ significantly from the results discussed in the forward-looking statements. These statements reflect management’s current beliefs and assumptions and are subject to a number of other factors that may cause actual results to differ materially.
Such factors include but are not limited to: applicable market conditions; global macroeconomic conditions, including inflation, slower growth or recession, delays or disruptions in the global supply chain, higher interest rates, and wars and other conflicts, including the current conflict between Russia and Ukraine; our ability to succeed in a competitive environment, including by developing new products and service offerings and preserving our existing products and market share as well as repositioning our business in the face of customer preference, technological, and other change, such as evolving return-to-office and hybrid working trends; failure of our customers, vendors, and logistics partners to perform their contractual obligations to us; our ability to attract, train, and retain key personnel; execution risks around our Reinvention; the risk of breaches of our security systems due to cyber, malware, or other intentional attacks that could expose us to liability, litigation, regulatory action or damage our reputation; our ability to obtain adequate pricing for our products and services and to maintain and improve our cost structure; changes in economic and political conditions, licensing requirements, and tax laws in the United States and in the foreign countries in which we do business; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term and that civil or criminal penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contracts and applicable law; interest rates, cost of capital, and access to credit markets; risks related to our indebtedness; the imposition of new or incremental trade protection measures such as tariffs and import or export restrictions; funding requirements associated with our employee pension and retiree health benefit plans; changes in foreign currency exchange rates; the risk that we may be subject to new or heightened regulatory or operation risks as a result of our, or third parties,’ use or anticipated use of artificial intelligence technologies; the risk that our operations and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives and anti-corruption laws; the outcome of litigation and regulatory proceedings to which we may be a party; laws, regulations, international agreements and other initiatives to limit greenhouse gas emissions or relating to climate change, as well as the physical effects of climate change; our ability to successfully integrate the Lexmark business and realize the anticipated benefits thereof, including expected synergies; and other factors that are set forth from time to time in the Company’s Securities and Exchange Commission filings, including the combined Annual Report on Form 10-K of Xerox Holdings and Xerox Corporation.
These forward-looking statements speak only as of the date hereof or of the date to which they refer, and the Company assumes no obligation to update or revise any forward-looking statements as a result of new information or future events or developments, except as required by law.
Note: To receive RSS news feeds, visit https://www.news.xerox.com. For open commentary, industry perspectives and views, visit http://www.linkedin.com/company/xerox or http://www.youtube.com/XeroxCorp.
Xerox® is a trademark of Xerox in the United States and/or other countries.
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED) | ||||||||||||||||
|
| Three Months Ended December 31, |
| Year Ended December 31, | ||||||||||||
(in millions, except per-share data) |
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||||||
Revenues |
|
|
|
|
|
|
|
| ||||||||
Sales |
| $ | 1,068 |
|
| $ | 656 |
|
| $ | 3,283 |
|
| $ | 2,378 |
|
Services, maintenance, rentals and other(1) |
|
| 960 |
|
|
| 957 |
|
|
| 3,739 |
|
|
| 3,843 |
|
Total Revenues |
|
| 2,028 |
|
|
| 1,613 |
|
|
| 7,022 |
|
|
| 6,221 |
|
Costs and Expenses |
|
|
|
|
|
|
|
| ||||||||
Cost of sales |
|
| 717 |
|
|
| 445 |
|
|
| 2,367 |
|
|
| 1,562 |
|
Cost of services, maintenance, rentals and other(1) |
|
| 732 |
|
|
| 666 |
|
|
| 2,754 |
|
|
| 2,699 |
|
Research, development and engineering expenses |
|
| 71 |
|
|
| 47 |
|
|
| 230 |
|
|
| 191 |
|
Selling, administrative and general expenses |
|
| 431 |
|
|
| 377 |
|
|
| 1,654 |
|
|
| 1,537 |
|
Goodwill impairment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,058 |
|
Restructuring and related costs, net |
|
| (2 | ) |
|
| 5 |
|
|
| 66 |
|
|
| 112 |
|
Amortization of intangible assets |
|
| 33 |
|
|
| 43 |
|
|
| 83 |
|
|
| 73 |
|
Divestitures |
|
| — |
|
|
| (4 | ) |
|
| (4 | ) |
|
| 47 |
|
Other expenses, net |
|
| 107 |
|
|
| 38 |
|
|
| 360 |
|
|
| 158 |
|
Total Costs and Expenses |
|
| 2,089 |
|
|
| 1,617 |
|
|
| 7,510 |
|
|
| 7,437 |
|
Loss before Income Taxes(2) |
|
| (61 | ) |
|
| (4 | ) |
|
| (488 | ) |
|
| (1,216 | ) |
Income tax expense |
|
| 12 |
|
|
| 17 |
|
|
| 541 |
|
|
| 105 |
|
Net Loss |
|
| (73 | ) |
|
| (21 | ) |
|
| (1,029 | ) |
|
| (1,321 | ) |
Less: Preferred stock dividends, net |
|
| (3 | ) |
|
| (3 | ) |
|
| (14 | ) |
|
| (14 | ) |
Net Loss attributable to Common Shareholders |
| $ | (76 | ) |
| $ | (24 | ) |
| $ | (1,043 | ) |
| $ | (1,335 | ) |
|
|
|
|
|
|
|
|
| ||||||||
Basic Loss per Share |
| $ | (0.60 | ) |
| $ | (0.20 | ) |
| $ | (8.25 | ) |
| $ | (10.75 | ) |
Diluted Loss per Share |
| $ | (0.60 | ) |
| $ | (0.20 | ) |
| $ | (8.25 | ) |
| $ | (10.75 | ) |
|
| |
(1) | Services, maintenance, rentals and other revenues include financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $29 million and $33 million for the three months ended December 31, 2025 and 2024, respectively, and $126 million and $151 million for the year ended December 31, 2025 and 2024, respectively. Cost of services, maintenance, rentals and other include the related cost of financing of $20 million and $24 million for the three months ended December 31, 2025 and 2024, respectively, and $86 million and $106 million for the year ended December 31, 2025 and 2024, respectively. | |
(2) | Referred to as “Pre-tax loss” throughout the remainder of this document. | |
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | ||||||||||||||||
|
| Three Months Ended December 31, |
| Year Ended December 31, | ||||||||||||
(in millions) |
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||||||
Net Loss |
| $ | (73 | ) |
| $ | (21 | ) |
| $ | (1,029 | ) |
| $ | (1,321 | ) |
|
|
|
|
|
|
|
|
| ||||||||
Other Comprehensive Income (Loss), Net |
|
|
|
|
|
|
|
| ||||||||
Translation adjustments, net |
|
| 13 |
|
|
| (260 | ) |
|
| 305 |
|
|
| (120 | ) |
Unrealized (losses) gains, net |
|
| (2 | ) |
|
| 5 |
|
|
| (10 | ) |
|
| 9 |
|
Changes in defined benefit plans, net |
|
| 135 |
|
|
| 70 |
|
|
| 93 |
|
|
| 88 |
|
Other Comprehensive Income (Loss), Net |
|
| 146 |
|
|
| (185 | ) |
|
| 388 |
|
|
| (23 | ) |
|
|
|
|
|
|
|
|
| ||||||||
Comprehensive Income (Loss), Net |
| $ | 73 |
|
| $ | (206 | ) |
| $ | (641 | ) |
| $ | (1,344 | ) |
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
(in millions, except share data in thousands) |
| December 31, 2025 |
| December 31, 2024 | ||||
Assets |
|
|
|
| ||||
Cash and cash equivalents |
| $ | 512 |
|
| $ | 576 |
|
Accounts receivable (net of allowance of $73 and $69, respectively) |
|
| 1,148 |
|
|
| 796 |
|
Billed portion of finance receivables (net of allowance of $3 and $2, respectively) |
|
| 46 |
|
|
| 48 |
|
Finance receivables, net |
|
| 510 |
|
|
| 608 |
|
Inventories |
|
| 1,016 |
|
|
| 695 |
|
Other current assets |
|
| 378 |
|
|
| 212 |
|
Total current assets |
|
| 3,610 |
|
|
| 2,935 |
|
Finance receivables due after one year (net of allowance of $42 and $55, respectively) |
|
| 846 |
|
|
| 1,089 |
|
Equipment on operating leases, net |
|
| 299 |
|
|
| 245 |
|
Land, buildings and equipment, net |
|
| 390 |
|
|
| 251 |
|
Intangible assets, net |
|
| 921 |
|
|
| 236 |
|
Goodwill, net |
|
| 2,194 |
|
|
| 1,937 |
|
Deferred tax assets |
|
| 81 |
|
|
| 615 |
|
Other long-term assets |
|
| 1,479 |
|
|
| 1,057 |
|
Total Assets |
| $ | 9,820 |
|
| $ | 8,365 |
|
Liabilities and Equity |
|
|
|
| ||||
Short-term debt and current portion of long-term debt |
| $ | 231 |
|
| $ | 585 |
|
Accounts payable |
|
| 1,498 |
|
|
| 1,023 |
|
Accrued compensation and benefits costs |
|
| 235 |
|
|
| 227 |
|
Accrued expenses and other current liabilities |
|
| 1,267 |
|
|
| 784 |
|
Total current liabilities |
|
| 3,231 |
|
|
| 2,619 |
|
Long-term debt |
|
| 4,016 |
|
|
| 2,814 |
|
Pension and other benefit liabilities |
|
| 1,054 |
|
|
| 1,088 |
|
Post-retirement medical benefits |
|
| 173 |
|
|
| 154 |
|
Other long-term liabilities |
|
| 673 |
|
|
| 386 |
|
Total Liabilities |
|
| 9,147 |
|
|
| 7,061 |
|
|
|
|
|
| ||||
Noncontrolling Interests |
|
| 10 |
|
|
| 10 |
|
|
|
|
|
| ||||
Convertible Preferred Stock |
|
| 214 |
|
|
| 214 |
|
|
|
|
|
| ||||
Common stock |
|
| 128 |
|
|
| 124 |
|
Additional paid-in capital |
|
| 1,183 |
|
|
| 1,137 |
|
Retained earnings |
|
| 2,444 |
|
|
| 3,514 |
|
Accumulated other comprehensive loss |
|
| (3,311 | ) |
|
| (3,699 | ) |
Xerox Holdings shareholders’ equity |
|
| 444 |
|
|
| 1,076 |
|
Noncontrolling interests |
|
| 5 |
|
|
| 4 |
|
Total Equity |
|
| 449 |
|
|
| 1,080 |
|
Total Liabilities and Equity |
| $ | 9,820 |
|
| $ | 8,365 |
|
|
|
|
|
| ||||
Shares of Common Stock Issued and Outstanding |
|
| 128,044 |
|
|
| 124,435 |
|
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||||||||||
|
| Three Months Ended December 31, |
| Year Ended December 31, | ||||||||||||
(in millions) |
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
| ||||||||
Net Loss |
| $ | (73 | ) |
| $ | (21 | ) |
| $ | (1,029 | ) |
| $ | (1,321 | ) |
|
|
|
|
|
|
|
|
| ||||||||
Adjustments to reconcile Net loss to Net cash provided by operating activities: |
|
|
|
|
|
|
|
| ||||||||
Depreciation and amortization |
|
| 107 |
|
|
| 97 |
|
|
| 331 |
|
|
| 274 |
|
Provisions |
|
| 18 |
|
|
| 18 |
|
|
| 85 |
|
|
| 110 |
|
Inventory-related purchase accounting adjustment - noncash |
|
| — |
|
|
| — |
|
|
| 102 |
|
|
| — |
|
Effective settlement of pre-existing relationship between Lexmark and Xerox |
|
| — |
|
|
| — |
|
|
| (43 | ) |
|
| — |
|
Net gain on sales of businesses and assets |
|
| 1 |
|
|
| (5 | ) |
|
| (5 | ) |
|
| (8 | ) |
Divestitures |
|
| — |
|
|
| (4 | ) |
|
| (4 | ) |
|
| 47 |
|
Stock-based compensation |
|
| 12 |
|
|
| 14 |
|
|
| 45 |
|
|
| 52 |
|
Goodwill impairment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,058 |
|
Restructuring and asset impairment charges |
|
| (2 | ) |
|
| 7 |
|
|
| 67 |
|
|
| 87 |
|
Payments for restructurings |
|
| (28 | ) |
|
| (20 | ) |
|
| (69 | ) |
|
| (78 | ) |
Non-service retirement-related costs |
|
| 21 |
|
|
| 6 |
|
|
| 78 |
|
|
| 80 |
|
Contributions to retirement plans |
|
| (38 | ) |
|
| (31 | ) |
|
| (161 | ) |
|
| (145 | ) |
(Increase) decrease in accounts receivable and billed portion of finance receivables |
|
| (16 | ) |
|
| 53 |
|
|
| (57 | ) |
|
| 71 |
|
Decrease (increase) in inventories |
|
| 111 |
|
|
| 14 |
|
|
| (12 | ) |
|
| (122 | ) |
Increase in equipment on operating leases |
|
| (38 | ) |
|
| (29 | ) |
|
| (126 | ) |
|
| (107 | ) |
Decrease in finance receivables |
|
| 151 |
|
|
| 167 |
|
|
| 489 |
|
|
| 663 |
|
Decrease (increase) in other current and long-term assets |
|
| 17 |
|
|
| (30 | ) |
|
| 21 |
|
|
| (14 | ) |
Increase (decrease) in accounts payable |
|
| 20 |
|
|
| 95 |
|
|
| 24 |
|
|
| (48 | ) |
Decrease in accrued compensation |
|
| (14 | ) |
|
| — |
|
|
| (53 | ) |
|
| (78 | ) |
(Decrease) increase in other current and long-term liabilities |
|
| (16 | ) |
|
| 36 |
|
|
| 42 |
|
|
| (47 | ) |
Net change in income tax assets and liabilities |
|
| (3 | ) |
|
| (4 | ) |
|
| 476 |
|
|
| 40 |
|
Net change in derivative assets and liabilities |
|
| (11 | ) |
|
| 1 |
|
|
| (12 | ) |
|
| 10 |
|
Other operating, net |
|
| (11 | ) |
|
| (13 | ) |
|
| 35 |
|
|
| (13 | ) |
Net cash provided by operating activities |
|
| 208 |
|
|
| 351 |
|
|
| 224 |
|
|
| 511 |
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
| ||||||||
Cost of additions to land, buildings, equipment and software |
|
| (24 | ) |
|
| (17 | ) |
|
| (91 | ) |
|
| (44 | ) |
Proceeds from sales of businesses and assets |
|
| 23 |
|
|
| 8 |
|
|
| 79 |
|
|
| 35 |
|
Acquisitions, net of cash acquired |
|
| — |
|
|
| (161 | ) |
|
| (674 | ) |
|
| (161 | ) |
Other investing, net |
|
| (3 | ) |
|
| (2 | ) |
|
| (12 | ) |
|
| (28 | ) |
Net cash used in investing activities |
|
| (4 | ) |
|
| (172 | ) |
|
| (698 | ) |
|
| (198 | ) |
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
| ||||||||
Net (payments) proceeds on debt |
|
| (166 | ) |
|
| (78 | ) |
|
| 504 |
|
|
| (85 | ) |
Purchases of capped calls |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (23 | ) |
Dividends |
|
| (6 | ) |
|
| (34 | ) |
|
| (71 | ) |
|
| (141 | ) |
Payments to acquire treasury stock, including fees |
|
| — |
|
|
| (5 | ) |
|
| — |
|
|
| (8 | ) |
Other financing, net |
|
| (1 | ) |
|
| (5 | ) |
|
| (29 | ) |
|
| (14 | ) |
Net cash (used in) provided by financing activities |
|
| (173 | ) |
|
| (122 | ) |
|
| 404 |
|
|
| (271 | ) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
| (1 | ) |
|
| (16 | ) |
|
| 4 |
|
|
| (28 | ) |
Increase (decrease) in cash, cash equivalents and restricted cash |
|
| 30 |
|
|
| 41 |
|
|
| (66 | ) |
|
| 14 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
| 535 |
|
|
| 590 |
|
|
| 631 |
|
|
| 617 |
|
Cash, Cash Equivalents and Restricted Cash at End of Period |
| $ | 565 |
|
| $ | 631 |
|
| $ | 565 |
|
| $ | 631 |
|
Fourth Quarter 2025 Overview
Fourth quarter results continued to be impacted by macroeconomic challenges, including ongoing uncertainty related to tariffs and government funding. These headwinds weighted on transactional Print equipment sales while the recent increase in DRAM (dynamic random-access memory) prices have increased product costs and are having the greatest impact on our IT Solutions business. We anticipate a modest impact on our Print business in the first half of the year with more significant impact on pricing and availability in the second half of the year. We are taking actions to mitigate these cost pressures.
While macroeconomic headwinds continue to impact results, activity picked up following the end of the government shutdown, page volume declines moderated, and branded supplies usage was stable with revenue flat year-over-year, excluding Lexmark. We enter 2026 with a higher pipeline than this time last year, and cancellation rates and renewal rates improved in 2025, giving us confidence in improving underlying trends in 2026. In addition, actions undertaken through Reinvention, have provided Xerox with a flexible, simplified operating structure, allowing the company to more quickly adapt in an uncertain operating landscape.
Equipment sales of $485 million in the fourth quarter 2025 increased 23.4% in actual currency, or 21.1% in constant currency1, as compared to the fourth quarter 2024, and included a 35.2-percentage point benefit from the acquisition of Lexmark. Total equipment installations increased 96.4% including Lexmark, offset by legacy Xerox declines concentrated in the high-end and mid-range level equipment categories. Excluding Lexmark, equipment sales declined 11.8% in actual currency reflecting lower installations, including the exit of certain production print manufacturing operations in prior years. On a pro forma2 basis, fourth quarter 2025 revenue declined 10.4%, due to the impacts noted above, as well as backlog3 fluctuations.
Post-sale revenue of approximately $1.54 billion increased 26.5% in actual currency, or 24.3% in constant currency1, as compared to fourth quarter 2024. Fourth quarter 2025 post-sale revenue included a 30.9-percentage point benefit and a 4.5-percentage point benefit from the acquisitions of Lexmark and ITsavvy, respectively. Excluding these acquisitions, post sale revenue declined 8.9-percentage points in actual currency reflecting lower managed print services4 revenue, driven by lower outsourcing, print services, and rental revenue. Post sale revenue was also adversely affected by intentional reductions in non-strategic revenue, such as paper and financing revenue, and the effects of geographic and offering simplification. These impacts were partially offset by the benefits of currency and a modest increase in supplies revenue. On a pro forma2 basis, fourth quarter 2025 revenue decreased 8.6%, due to the impacts noted above, partially offset by the benefit of higher sales to distributors in the fourth quarter 2025.
Pre-tax (loss) of $(61) million for the fourth quarter 2025 increased by $57 million as compared to pre-tax (loss) of $(4) million in the fourth quarter 2024.
Contacts
Media Contact:
Justin Capella, Xerox, +1-203-258-6535, Justin.Capella@xerox.com
Investor Contact:
Greg Stein, Xerox, +1-203-598-9080, Greg.Stein@xerox.com
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