Xerox Holdings(US:XRX)2025-11-10 21:42Revenue and Growth - Total revenue for Q3 2025 was $1.96 billion, an increase of 28.3% from Q3 2024, with a 29.3-percentage point benefit from the Lexmark Acquisition and an 8.0-percentage point benefit from ITSavvy[251] - Total revenue for the nine months ended September 30, 2025, was $4.99 billion, an increase of 8.4% compared to the prior year, with a 9.7-percentage point benefit from the Lexmark Acquisition[251] - Total revenue for the nine months ended September 30, 2025 increased by 8.4% compared to the prior year, with Lexmark Acquisition contributing 9.7 percentage points [269] - Total revenue for the nine months ended September 30, 2025, was $4,994 million, an increase of 8.4% from $4,608 million in the prior year[264] - Total revenue for Q3 2025 increased by 28.3% compared to Q3 2024, benefiting from the Lexmark Acquisition (29.3 percentage points) and ITSavvy (8.0 percentage points) [269] Segment Performance - Revenues for the Print and Other segment in Q3 2025 were $1,739 million, accounting for 88% of total revenue[322] - IT Solutions segment revenues in Q3 2025 were $226 million, representing 12% of total revenue[322] - Print and Other segment revenue for the nine months ended September 30, 2025, was $4,399 million, a slight increase of 0.8% from $4,364 million in the prior year[264] - IT Solutions segment revenue increased by 147.1% to $603 million for the nine months ended September 30, 2025, compared to $244 million in the prior year[264] - IT Solutions segment revenue increased by 162.8% in Q3 2025 compared to Q3 2024, driven mainly by the acquisition of ITSavvy[346] Profitability and Loss - The net loss for Q3 2025 was $760 million, improving by $445 million compared to a net loss of $1,205 million in Q3 2024[253] - Adjusted net income for Q3 2025 was $27 million, a decrease of $7 million from $34 million in Q3 2024, primarily due to higher selling and administrative expenses[253] - Net loss for the nine months ended September 30, 2025, was $956 million, an improvement of $344 million compared to the prior year period's net loss of $1,300 million[255] - Profit for the nine months ended September 30, 2025, was $146 million, a decrease of 26.3% from $198 million in the prior year[256] - Adjusted operating income for the three months ended September 30, 2025, was $65 million, representing a margin of 3.3%, compared to $80 million and a margin of 5.2% in 2024[397] Expenses and Costs - Total segment expenses increased by 10.6% to $4,799 million for the nine months ended September 30, 2025, compared to $4,340 million in the prior year[256] - Selling, Administrative and General (SAG) expenses for Q3 2025 were $477 million, an increase of $107 million (28.9%) compared to Q3 2024[288] - Research, Development and Engineering (RD&E) expenses for Q3 2025 were $74 million, an increase of $29 million (64.4%) compared to Q3 2024[285] - Total costs and expenses amounted to $2,261 million, resulting in a loss before income taxes of $300 million, which improved to a loss of $208 million after pro forma adjustments[413] - The company incurred restructuring and related costs of $59 million for the three months ended September 30, 2025[413] Acquisition Impact - The acquisition of Lexmark was completed on July 1, 2025, and its results are included in the Print and Other segment[245] - The Lexmark Acquisition cost $675 million, net of cash acquired, contributing to cash used in investing activities of $694 million for the nine months ended September 30, 2025[257] - The company expects earnings per share accretion from the Lexmark Acquisition despite slightly higher funding costs[246] - The Lexmark Acquisition included adjustments for inventory-related purchase accounting totaling $102 million for the nine months ended September 30, 2025[397] - The company incurred approximately $77 million in restructuring and severance costs related to worldwide headcount reductions as part of the integration of legacy Xerox and Lexmark businesses[292] Cash Flow and Debt - Cash flows from operating activities for the nine months ended September 30, 2025, were a source of $16 million, a decrease of $144 million compared to the prior year[257] - Total cash, cash equivalents, and restricted cash decreased by $96 million to $535 million as of September 30, 2025, primarily due to net cash used in investing activities of $694 million[352] - Total debt as of September 30, 2025, was $4,406 million, with $2,782 million attributable to the non-financing business, reflecting an increase from $1,658 million at December 31, 2024[352] - The company has principal debt maturities totaling $4,513 million spread over the next five years[369] - Free cash flow for the nine months ended September 30, 2025, was -$51 million, a decline from $133 million in the same period of 2024, primarily due to lower operating cash flow[402] Tax and Goodwill - Effective tax rate for the nine months ended September 30, 2025 was (123.9)%, resulting in a tax expense primarily due to valuation allowance on deferred tax assets[316] - Deferred tax asset valuation allowances of $467 million were established to reflect realizability, impacting the effective tax rate significantly[394] - The company reported a goodwill impairment charge of approximately $1.0 billion for the three months ended September 30, 2024, impacting diluted EPS by $8.16[391] - The company reported a goodwill impairment of $1,058 million for the nine months ended September 30, 2025, impacting overall financial performance[397] - Goodwill impairment recorded was $1,058 million, reflecting significant adjustments in the financial statements[430]