Xerox Holdings(US:XRX)2026-01-29 11:35Revenue 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]