Core Viewpoint - The article discusses the investment position of the author in XRX shares, indicating a beneficial long position through various means such as stock ownership and derivatives [1]. Group 1 - The author expresses personal opinions regarding the investment in XRX and clarifies that they are not receiving compensation for the article, aside from Seeking Alpha [1]. - There is an emphasis on the necessity for investors to conduct their own due diligence and research before making any investment decisions [2]. - The article highlights that past performance does not guarantee future results, and no specific investment recommendations are provided [3].

Core Insights - Xerox Holdings Corporation reported $2.03 billion in revenue for the quarter ended December 2025, marking a year-over-year increase of 25.7% [1] - The earnings per share (EPS) for the same period was -$0.10, a decline from $0.36 a year ago, resulting in an EPS surprise of -168.97% against the consensus estimate of $0.15 [1] Revenue Performance - Total sales were reported at $1.07 billion, below the two-analyst average estimate of $1.14 billion, reflecting a year-over-year change of +62.8% [4] - Equipment sales for entry-level products reached $168 million, significantly exceeding the average estimate of $68.35 million, with a year-over-year increase of +180% [4] - Mid-range equipment sales were reported at $258 million, slightly above the average estimate of $257.67 million, showing a -0.8% change year-over-year [4] - High-end equipment sales totaled $52 million, below the average estimate of $58.85 million, representing a year-over-year decline of -23.5% [4] - Print and other equipment sales were reported at $485 million, surpassing the average estimate of $389.52 million, with a year-over-year increase of +24.7% [4] - IT Solutions revenue was $158 million, significantly lower than the average estimate of $365.32 million [4] - Services, maintenance, and rentals revenue was $960 million, slightly below the average estimate of $977.67 million, with a year-over-year increase of +3.9% [4] - Post-sale revenue from print and other sources was $1.39 billion, exceeding the average estimate of $1.34 billion, reflecting a year-over-year change of +22.3% [4] Stock Performance - Xerox shares have returned -1.7% over the past month, contrasting with the Zacks S&P 500 composite's +0.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $2.03 billion, an increase of approximately 26% in actual currency and 24% in constant currency, primarily due to the acquisitions of Lexmark and ITsavvy. Pro forma revenue declined by 9% [3] - For the full year, revenue reached $7.02 billion, up roughly 13% in actual currency and 12% in constant currency, but declined approximately 8% excluding acquisition benefits. Adjusted loss per share was $0.60, down $1.57 year over year [4] - Free cash flow for Q4 was $184 million, a decrease of $150 million year over year, while for the full year, it was $133 million, which was above the guidance of $107 million [3][27] Business Line Data and Key Metrics Changes - In the Print and Other segment, Q4 equipment revenue was $485 million, up 23% as reported, but down approximately 10% on a pro forma basis. Legacy Xerox equipment revenue declined 14% in constant currency [22][23] - Print post-sale revenue was $1.39 billion, up 25% as reported, but down 9% on a pro forma basis. Excluding reinvention effects, pro forma post-sale revenue declined approximately 5% [23] - IT Solutions revenue increased by 39% year-over-year, reflecting the full inclusion of ITsavvy for the entire quarter. Pro forma gross billings increased by 13% year-over-year [24] Market Data and Key Metrics Changes - The company noted that macroeconomic challenges, including tariffs and increased product costs, continued to impact performance, particularly in the print equipment sales [3][8] - The company is experiencing a firming of demand in the IT solutions sector, with more than $60 million of pipeline creation in 2025 [24] Company Strategy and Development Direction - The company is focused on three strategic priorities: executing reinvention, realizing acquisition benefits, and maintaining balance sheet strength [8] - The integration of Lexmark and ITsavvy is expected to unlock tangible commercial and operational benefits, with a unified sales organization anticipated to enhance market reach [11][12] - The company is also investing in AI capabilities to drive efficiencies and improve customer experience, including the establishment of an AI center of excellence [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving business trends despite ongoing macroeconomic headwinds, with expectations for a stronger 2026 [3][4] - The company anticipates that many cost-related headwinds will begin to ease, while new product launches and a unified IT solutions organization will provide meaningful tailwinds [8][71] - Management highlighted the importance of navigating challenges related to memory price increases and their impact on costs across various business lines [5][6] Other Important Information - The company announced a special pro rata distribution of warrants to shareholders, which is seen as a balance sheet-friendly way to reward loyalty and provide bondholders with options to participate in equity [31] - The company plans to use excess free cash flow for debt repayment, with a medium-term target of approximately 3x trailing 12 months EBITDA [28][29] Q&A Session Summary Question: Are orders returning to normal post-government shutdown? - Management indicated that they are seeing growth opportunities in government sectors and that the strategy of acquiring ITsavvy and Lexmark is working to expand their portfolio [34][36] Question: What is the impact of memory prices on the ITsavvy business? - Management clarified that memory price increases are creating uncertainty across all industries, but they are working to help clients navigate these challenges through various service models [36][39] Question: How is the company prioritizing various strategic initiatives amidst challenges? - Management emphasized that the reinvention strategy and acquisitions are progressing well, with a focus on integration and leveraging existing relationships to drive growth [44][47] Question: How does the company protect against potential challenges in IT services? - Management outlined strategies to extend asset life and shift towards software as a service to mitigate risks associated with rising costs [51][55] Question: What are the expectations for finance receivable sales in 2026? - Management expects to reduce finance receivables to about $1 billion by year-end 2026, with a larger portion anticipated in the second half of the year [61]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $2.03 billion, an increase of approximately 26% in actual currency and 24% in constant currency, primarily due to the acquisitions of Lexmark and ITsavvy. Pro forma revenue declined 9% [3][4] - For the full year, revenue was $7.02 billion, up roughly 13% in actual currency and 12% in constant currency, but excluding acquisition benefits, revenue declined approximately 8% [4] - Adjusted operating income margin for Q4 was 5%, down 140 basis points year-over-year, while free cash flow decreased to $184 million, down $150 million compared to the prior year [3][4] Business Line Data and Key Metrics Changes - In the Print and Other segment, Q4 equipment revenue was $485 million, up 23% as reported, but down approximately 10% on a pro forma basis [22] - Print post-sale revenue was $1.39 billion, up 25% as reported, but down 9% on a pro forma basis [23] - IT Solutions revenue increased 39% year-over-year, reflecting the full quarter inclusion of ITsavvy, with pro forma gross billings up 13% [24] Market Data and Key Metrics Changes - The company noted that macroeconomic challenges, including tariff impacts and increased product costs, continue to affect performance, particularly in the print equipment sales [3][5] - The company is experiencing a firming of demand in IT solutions, with over $60 million of pipeline creation in 2025 [24] Company Strategy and Development Direction - The company is focused on three strategic priorities: executing reinvention, realizing acquisition benefits, and maintaining balance sheet strength [8] - The integration of Lexmark and ITsavvy is expected to unlock commercial and operational benefits, with a unified sales organization planned for 2026 [11][12] - The company aims to achieve at least $300 million in gross cost synergies from the Lexmark acquisition and over $1 billion in profit improvement as part of its reinvention program [15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving business trends despite ongoing macro headwinds, with expectations for a stronger 2026 [3][4] - The company anticipates that many headwinds experienced in 2025 will begin to moderate, with new product launches and a fully integrated IT solutions organization expected to provide tailwinds [8][29] - Management highlighted the importance of leveraging AI capabilities to drive efficiencies and improve customer experience [10][11] Other Important Information - The company announced a special pro rata distribution of warrants to shareholders, which is seen as a balance sheet-friendly way to reward loyalty and provide bondholders with options [31] - The company ended Q4 with $565 million in cash and cash equivalents, and total debt of $4.2 billion, down $160 million sequentially [28] Q&A Session Summary Question: Are orders returning to normal post-government shutdown? - Management indicated that they are seeing growth opportunities in government sectors and that the strategy of acquiring ITsavvy and Lexmark is working to expand their portfolio [34] Question: What is the impact of rising memory prices on the ITsavvy business? - Management clarified that rising memory prices create uncertainty across all industries, but they are taking steps to help clients navigate these challenges by extending product life and moving to consumption models [36][37] Question: How does the company prioritize various initiatives amidst current challenges? - Management emphasized that the reinvention strategy and acquisitions are progressing well, with a unified management operating system in place to oversee all initiatives [45][46] Question: How is the company protecting against potential challenges in IT services? - Management outlined strategies to help clients navigate increased costs and emphasized the importance of their product portfolio in mitigating risks [52][53] Question: What are the assumptions regarding operating cash flow to free cash flow for 2026? - Management explained that higher EBITDA driven by operating income increases and lower finance receivables are key factors in the expected improvement in free cash flow [57][58] Question: What progress has been made in cross-selling to the large client base? - Management noted that leveraging existing relationships with clients allows for effective cross-selling of IT solutions, enhancing the overall value proposition [61][63]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $2.03 billion, an increase of approximately 26% in actual currency and 24% in constant currency, primarily due to the acquisitions of Lexmark and ITsavvy. Pro forma for these acquisitions, revenue declined 9% [3][4] - For the full year, revenue reached $7.02 billion, up roughly 13% in actual currency and 12% in constant currency, but excluding acquisition benefits, revenue declined approximately 8% [4] - Adjusted operating income margin for Q4 was 5%, down 140 basis points year-over-year, while free cash flow was $184 million, a decrease of $150 million compared to the prior year [3][4] - Adjusted loss per share for Q4 was $0.10, a decrease of $0.46 year-over-year, and for the full year, adjusted loss per share was $0.60, down $1.57 year-over-year [4][21] Business Line Data and Key Metrics Changes - In the Print and Other segment, Q4 equipment revenue was $485 million, up 23% as reported, but down approximately 10% on a pro forma basis [21][22] - Print post-sale revenue was $1.39 billion, up 25% as reported, but down 9% on a pro forma basis [22] - IT Solutions revenue increased 39% year-over-year, reflecting the full quarter inclusion of ITsavvy, with pro forma gross billings up 13% [23][24] Market Data and Key Metrics Changes - The company noted that macroeconomic challenges, including tariffs and increased product costs, continued to impact performance, particularly in the print equipment sales [3][5] - The company experienced a spike in DRAM prices affecting costs across various segments, particularly in IT solutions [5][6] Company Strategy and Development Direction - The company is focused on three strategic priorities: executing reinvention, realizing acquisition benefits, and maintaining balance sheet strength [7][14] - The integration of Lexmark and ITsavvy is expected to unlock operational efficiencies and enhance the product offering, particularly in the IT solutions space [10][11] - The company plans to leverage AI capabilities to drive efficiencies and improve customer experience [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving business trends despite ongoing macroeconomic headwinds [3][4] - The company anticipates a stronger pipeline entering 2026, with improved cancellation and renewal rates [4][5] - Management expects to achieve adjusted operating income in the range of $450 million to $500 million for 2026, driven by integration synergies and reinvention savings [28][29] Other Important Information - The company announced a special pro rata distribution of warrants to shareholders, which is seen as a balance sheet-friendly way to reward loyalty and provide bondholders with options [30] - The company ended Q4 with $565 million in cash and cash equivalents, and total debt of $4.2 billion, down $160 million sequentially [26] Q&A Session Summary Question: Are orders back to normal post-government shutdown? - Management indicated that there are broader opportunities due to the expanded portfolio and the strategy is working well [31] Question: Clarification on the impact of memory prices on ITsavvy and print business? - Management noted that memory prices are creating uncertainty across all industries, and they are working to help clients navigate these challenges [32][33] Question: How does the company prioritize various initiatives amidst challenges? - Management emphasized that the reinvention strategy and acquisitions are progressing well, and they are seeing positive results from integration efforts [36][37] Question: How does the company protect against potential challenges in IT services? - Management highlighted their ability to help clients navigate increased costs and emphasized the importance of their product portfolio in addressing these challenges [39][42] Question: What are the assumptions regarding operating cash flow to free cash flow for 2026? - Management explained that higher EBITDA driven by operating income increases and lower finance receivables are key factors in the cash flow forecast [44][45]

Core Insights - Xerox Holdings Corporation reported a quarterly loss of $0.1 per share, missing the Zacks Consensus Estimate of $0.15, and a significant decline from earnings of $0.36 per share a year ago, resulting in an earnings surprise of -168.97% [1] - The company generated revenues of $2.03 billion for the quarter ended December 2025, which was 2.6% below the Zacks Consensus Estimate and an increase from $1.61 billion year-over-year, but has not surpassed consensus revenue estimates in the last four quarters [2] - Xerox shares have underperformed the market, losing approximately 1.7% since the beginning of the year compared to the S&P 500's gain of 1.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $1.9 billion, and for the current fiscal year, it is $1.01 on revenues of $7.93 billion [7] - The estimate revisions trend for Xerox was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Office Supplies industry, to which Xerox belongs, is currently in the top 40% of over 250 Zacks industries, suggesting that companies in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]

Earnings Presentation Q4 2025 Results January 29, 2026 Forward-Looking Statements 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 si ...

Revenue Performance - Q4 2025 revenue reached $2.03 billion, an increase of 25.7% year-over-year, or 23.6% in constant currency[7] - Full-year 2025 revenue totaled $7.02 billion, up 12.9% year-over-year, or 12.2% in constant currency[10] - Total revenues for Q4 2025 were $2,028 million, a 25.7% increase from $1,613 million in Q4 2024[20] - Total revenue for Q4 2025 was $2.03 billion, a 25.7% increase compared to $1.61 billion in Q4 2024[35] - Total revenues for the Print and Other segment in Q4 2025 were $1,873 million, representing a 24.9% increase from $1,500 million in Q4 2024[51] - IT Solutions segment revenue grew by 112.6% year-over-year to $761 million in FY 2025[12] - IT Solutions revenue for Q4 2025 was $158 million, a 38.6% increase from $114 million in Q4 2024[107] - The company expects revenue above $7.5 billion in 2026, with adjusted operating income projected between $450 million and $500 million[28] Profitability and Losses - GAAP net loss for Q4 2025 was $(73) million, or $(0.60) per share, compared to a loss of $(21) million, or $(0.20) per share in Q4 2024[7] - Net loss for Q4 2025 was $73 million, compared to a net loss of $21 million in Q4 2024, reflecting a significant increase in losses[23] - For the full year 2025, the company experienced a net loss of $1.029 billion, or $8.25 per diluted share, compared to a net loss of $1.321 billion, or $10.75 per diluted share in 2024[78] - Adjusted net income for Q4 2025 was a loss of $8 million, or $0.10 per diluted share, while adjusted net income for Q4 2024 was $49 million, or $0.36 per diluted share[78] - Reported Pre-Tax Loss for FY 2025 was $(488) million, with an effective tax rate of (110.9)%[82] - Adjusted operating income decreased to $102 million, down $2 million from Q4 2024, primarily due to higher product costs and lower financing revenue[28] Cash Flow and Debt Management - Free cash flow for Q4 2025 was $184 million, down $150 million year-over-year[7] - Cash flows from operating activities for the year ended December 31, 2025, were $224 million, down from $511 million in 2024[25] - The company paid down $366 million of net debt since the Lexmark acquisition on July 1, 2025[8] - Free Cash Flow for FY 2026 is expected to be around $250 million, with operating cash flow estimated at ~$360 million and capital expenditures at $(110) million[91] Acquisitions and Integration - Lexmark integration is ahead of plan, with a target of at least $300 million in synergies[8] - The Lexmark acquisition was completed for approximately $768 million, including $93 million in cash and cash equivalents acquired[29] - The Print and Other segment includes the recent Lexmark acquisition, enhancing its document management and financing solutions[49] - The IT Solutions segment includes the acquisition of ITsavvy, focusing on global infrastructure technology solutions and managed IT services[124] - The company plans to include Lexmark and ITsavvy's results in its financials as if they were acquired on January 1, 2024, impacting future revenue figures[97] Operational Efficiency and Investments - Research, development, and engineering expenses rose to $71 million in Q4 2025, up from $47 million in Q4 2024, indicating increased investment in innovation[20] - The company reported a decrease in inventories to $1,016 million in 2025 from $695 million in 2024, indicating improved inventory management[24] - Long-term debt increased to $4,016 million in 2025 from $2,814 million in 2024, reflecting higher leverage[24] - Actions taken through the Reinvention initiative have provided Xerox with a flexible operating structure to adapt to market uncertainties[27] Future Outlook and Guidance - 2026 revenue guidance is projected to exceed $7.5 billion[16] - Adjusted operating income for 2025 is expected to grow more than $200 million by 2026[1] - The company anticipates a modest impact on its Print business in the first half of 2026 due to macroeconomic challenges, with more significant impacts expected in the second half[26] - Xerox entered 2026 with a higher pipeline than the previous year, with improved cancellation and renewal rates in 2025, suggesting positive underlying trends[27] Segment Performance - Equipment sales reached $485 million in Q4 2025, a 23.4% increase in actual currency, driven by a 35.2-percentage point benefit from the Lexmark acquisition[28] - Post-sale revenue was approximately $1.54 billion, up 26.5% in actual currency, including a 30.9-percentage point benefit from Lexmark[28] - The overall segment profit for Print and Other was $109 million in Q4 2025, with a segment margin of 5.8%, compared to $128 million and 8.5% in Q4 2024[51] - The company reported a total segment profit of $184 million for the year 2025, with a segment margin of 4.7%[58] Adjustments and Non-GAAP Measures - Adjusted operating income and margin measures exclude significant costs such as restructuring, amortization of intangible assets, and transaction-related costs, which are not reflective of ongoing operational performance[73] - The company plans to continue excluding non-service retirement-related costs from adjusted earnings, as these are considered legacy costs not indicative of current operational performance[69] - The company incurred $493 million in non-GAAP adjustments for FY 2025, impacting reported income tax expense[81] - The adjusted effective tax rate and other adjustments are regularly used by management to evaluate business performance and make operating decisions[70]

Core Insights - Xerox Holdings Corporation reported its fourth-quarter and full-year results for 2025, highlighting better-than-expected operating income and free cash flow performance despite macroeconomic challenges [2][26]. Financial Performance - **Fourth-Quarter Results**: Revenue reached $2,028 million, a 25.7% increase from $1,613 million in Q4 2024. Gross profit was $579 million, up from $502 million, but gross margin decreased to 28.6% from 31.1% [4][7]. - **Full-Year Results**: Total revenue for FY 2025 was $7,022 million, a 12.9% increase from $6,221 million in FY 2024. Gross profit was $1,901 million, down from $1,960 million, with a gross margin of 27.1%, down from 31.5% [4][8]. Segment Performance - **Fourth-Quarter Segment Results**: - Print and Other segment revenue was $1,873 million, a 24.9% increase year-over-year. IT Solutions segment revenue was $158 million, up 38.6% [7]. - **Full-Year Segment Results**: - Print and Other revenue increased by 7.0% to $6,272 million, while IT Solutions revenue surged 112.6% to $761 million [8]. Strategic Initiatives - The integration of Lexmark is ahead of schedule, with the company reaffirming a synergy target of at least $300 million. The IT Solutions segment saw double-digit growth in bookings, billings, and revenue [5][34]. - The company has onboarded 12 new U.S. dealers in 2025 as part of its channel expansion strategy [5]. Guidance for 2026 - Xerox expects revenue to exceed $7.5 billion, with adjusted operating income projected between $450 million and $500 million, and free cash flow around $250 million [11][32].

Core Viewpoint - Xerox Holdings Corporation has announced a pro-rata distribution of warrants to its shareholders as part of its capital structure optimization initiatives, aimed at strengthening its balance sheet and creating long-term value for shareholders [1][2]. Distribution Details - The distribution will occur on or about February 11, 2026, with holders of record of common stock receiving one warrant for every two shares held, rounded down to the nearest whole warrant [3]. - Holders of Series A Preferred Stock and Convertible Notes will receive warrants based on the same ratio, as determined by their respective governing documents [3]. Warrant Features - Each warrant will allow the holder to purchase one share of common stock at an exercise price of $8.00, with an expiration date of two years from the distribution date unless an early expiration condition is met [5]. - The warrants will be distributed at no cost to eligible holders, and the company plans to apply for trading approval for the warrants [5]. Exercise Mechanics - Holders can exercise their warrants using cash or designated Xerox debt securities, which will be specified in the warrant agreement [6][7]. - The right to exercise using designated debt securities will terminate if the average stock price meets certain conditions [7]. Additional Information - Further details regarding the warrant distribution, including key dates and exercise procedures, will be available in the warrant agreement and related investor materials on the company's website [8].