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]