Xerox Holdings Corporation reported a complex financial performance for the first quarter of 2026, characterised by significant revenue growth alongside a widening net loss. The company posted total revenue of $1.85 billion, representing 26.7% increase compared to the previous year, or 23.6% when adjusted for constant currency. However, on a pro forma basis—which accounts for the full impact of the Lexmark acquisition—revenue actually saw a modest decline of 3.7%. This indicates that while the acquisition has significantly bolstered the company’s scale, underlying organic growth remains a challenge.
Profitability for the quarter was weighed down by integration costs and higher interest expenses associated with the Lexmark deal. Xerox reported a GAAP net loss of $105 million, or $0.84 per share, which was a decline from the prior year’s performance. On a normalised adjusted basis, the net loss narrowed by $10 million, or 0.11 per share. Despite the bottom-line pressure, the company saw a bright spot in its operational efficiency, as adjusted operating income surged to $72 million, up from just $22 million a year ago. This resulted in an adjusted operating margin of 3.9%, a significant 240 basis point expansion driven by cost synergies and structural reductions.
“This quarter’s results demonstrated tangible progress as revenue and profit trajectory improved, adjusted operating margin expanded, and we further enhanced our liquidity,” says Xerox CEO Louie Pastor. “When I took this role, I was unequivocal that we must be clear about our priorities—stabilise revenue, increase profitability, and reduce leverage—and establish credibility by executing on them one quarter at a time.”
Cash flow remained seasonally weak, with an operating cash flow deficit of $144 million and a negative free cash flow of $165 million. Management attributed this to typical Q1 seasonality and remains confident in its liquidity position, pointing to over $400 million in cash generation expected over the remaining three quarters.
Xerox reaffirmed its full-year 2026 guidance, which includes revenue expectations exceeding $7.5 billion and adjusted operating income in the range of $450 million to $500 million, signalling that the company’s multi-year transformation strategy remains on track.
“I am genuinely optimistic about the future of this business and confident we are closer to an inflection point than the external narrative suggests. Reaffirming our 2026 guidance reflects that confidence,” adds Pastor.
