Xerox (NASDAQ:XRX) Posts Earnings Results, Beats Estimates By $0.09 EPS

Key Points

• Q1 beat but still unprofitable: Xerox reported EPS of ($0.11), beating estimates by $0.09 with revenue up ~26.7% (boosted by Lexmark) and adjusted operating margin improving to 3.9%, yet the company remains GAAP‑loss making.
• Leadership and explicit targets: New CEO Louie Pastor removed the President/COO role and set priorities to stabilize revenue, lift profitability and cut leverage, while reaffirming 2026 targets of >$7.5B revenue, $450–$500M adjusted operating income and roughly $250M free cash flow.
• High leverage and cash risk: A TPG/Angelo Gordon JV raised >$400M but pushed pro forma gross leverage to ~7x TTM EBITDA, Q1 free cash flow was a $165M use and core debt is about $3B, leaving meaningful downside if revenue or margin recovery stalls.

Xerox (NASDAQ:XRX - Get Free Report) released its quarterly earnings results on Thursday. The information technology services provider reported ($0.11) earnings per share (EPS) for the quarter, topping analysts' consensus estimates of ($0.20) by $0.09, Zacks reports. Xerox had a negative return on equity of 8.26% and a negative net margin of 14.65%.During the same quarter last year, the company earned ($0.06) EPS. The business's quarterly revenue was up 26.7% on a year-over-year basis.

Here are the key takeaways from Xerox's conference call:

• Leadership change and sharper focus: Louie Pastor is now CEO, eliminated the President/COO role to drive cost discipline, and set three clear priorities — stabilize revenue, increase profitability, and reduce leverage — emphasizing faster execution and accountability.
• Q1 showed improving operating trends: Revenue was $1.85 billion (up ~27% reported due to Lexmark; pro forma -4% organic), and adjusted operating margin reached 3.9%, up 240 bps year‑over‑year — management called this a turning point in profit trajectory.
• Guidance reaffirmed with explicit targets: Xerox reaffirmed 2026 targets of >$7.5B revenue, $450M–$500M adjusted operating income, roughly $250M free cash flow, and expects ~1.5 turns of leverage reduction by year‑end conditional on execution.
• Near‑term leverage and cash strain despite liquidity actions: The TPG/Angelo Gordon JV raised >$400M but increased near‑term debt, pro forma gross leverage is ~7x TTM EBITDA, Q1 free cash flow was a use of $165M, and core non‑finance debt remains about $3B.
• Ongoing operational headwinds: Management flagged higher memory prices, extended lead times, rising oil-related input/transport costs, and persistent mid‑range print softness, which could pressure margins and timing of revenue recovery.

Xerox Stock Performance

XRX traded up $0.68 during trading on Thursday, reaching $2.25. The company's stock had a trading volume of 60,466,722 shares, compared to its average volume of 3,007,185. Xerox has a 52-week low of $1.19 and a 52-week high of $6.80. The company's fifty day moving average price is $1.56 and its 200-day moving average price is $2.27. The company has a market capitalization of $294.26 million, a price-to-earnings ratio of -0.27 and a beta of 1.80. The company has a debt-to-equity ratio of 8.94, a quick ratio of 0.79 and a current ratio of 1.11.

Xerox Dividend Announcement

The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, April 30th. Shareholders of record on Tuesday, March 31st will be issued a $0.025 dividend. This represents a $0.10 dividend on an annualized basis and a yield of 4.4%. The ex-dividend date of this dividend is Tuesday, March 31st. Xerox's payout ratio is currently -1.22%.

Xerox News Summary

Here are the key news stories impacting Xerox this week:

• Positive Sentiment: Q1 results beat top-line and beat consensus on EPS (loss narrower than expected); revenue rose ~26.7% year-over-year to about $1.85B, signaling improving demand and better revenue trajectory. Xerox Delivers Impressive Q1 CY2026
• Positive Sentiment: Management framed the quarter as progress on priorities — stabilizing revenue, expanding adjusted operating margin and improving liquidity — which supports a constructive near-term narrative. Xerox Releases First-Quarter Results
• Positive Sentiment: New product/market push: Xerox launched “Xerox IT as a Service” targeting SMBs, a growth initiative that could help recurring revenue mix if adoption accelerates. Xerox Launches Xerox IT as a Service
• Positive Sentiment: Options flow was bullish intraday: unusually large call buying (several thousand contracts) indicates speculative interest and likely amplified the move higher through covered/market-making activity. (Market-data summary)
• Neutral Sentiment: Analyst/metrics reads highlight the underlying detail: revenue beat but the company still reported a GAAP loss per share (smaller than expected); investors should review the slide deck and call for guidance nuances. Compared to Estimates, Xerox Q1 Earnings Press Release / Slide Deck
• Negative Sentiment: Earlier unusual put buying (large spike in put volume the prior day) and the company’s high leverage (very elevated debt-to-equity) pose downside risk if revenue/margin improvement stalls. Investors should watch leverage metrics and cash flow. (Market-data summary)
• Negative Sentiment: Despite improvements, Xerox remains unprofitable on a GAAP basis with negative margins and ROE; the stock’s jump appears driven partly by short-covering/speculative flows rather than a durable earnings turnaround. Short Squeeze And Earnings

Analyst Upgrades and Downgrades

A number of research firms recently issued reports on XRX. Citigroup reissued a "neutral" rating and set a $2.50 price target (down from $3.50) on shares of Xerox in a report on Friday, January 30th. Zacks Research lowered Xerox from a "hold" rating to a "strong sell" rating in a report on Tuesday, March 3rd. Finally, Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Xerox in a report on Monday. One investment analyst has rated the stock with a Hold rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat, the stock presently has an average rating of "Sell" and a consensus target price of $2.50.

Institutional Investors Weigh In On Xerox

Institutional investors have recently added to or reduced their stakes in the business. Goldman Sachs Group Inc. lifted its position in shares of Xerox by 339.3% during the 4th quarter. Goldman Sachs Group Inc. now owns 9,294,446 shares of the information technology services provider's stock valued at $22,028,000 after acquiring an additional 7,178,915 shares during the period. Charles Schwab Investment Management Inc. lifted its position in shares of Xerox by 32.3% during the 4th quarter. Charles Schwab Investment Management Inc. now owns 3,498,232 shares of the information technology services provider's stock valued at $8,291,000 after acquiring an additional 854,119 shares during the period. Geode Capital Management LLC lifted its position in shares of Xerox by 24.4% during the 4th quarter. Geode Capital Management LLC now owns 2,915,580 shares of the information technology services provider's stock valued at $6,911,000 after acquiring an additional 571,715 shares during the period. Two Sigma Investments LP lifted its position in shares of Xerox by 43.2% during the 3rd quarter. Two Sigma Investments LP now owns 2,476,689 shares of the information technology services provider's stock valued at $9,312,000 after acquiring an additional 746,582 shares during the period. Finally, Invesco Ltd. lifted its position in shares of Xerox by 3.4% during the 2nd quarter. Invesco Ltd. now owns 1,898,380 shares of the information technology services provider's stock valued at $10,004,000 after acquiring an additional 61,723 shares during the period. Hedge funds and other institutional investors own 85.36% of the company's stock.

About Xerox

Xerox Holdings Corporation NYSE: XRX is a global provider of document management technology and services. The company designs and manufactures a broad range of multifunction printers, production printers, digital presses and related consumables. In addition to its hardware offerings, Xerox delivers software and workflow automation solutions, managed print services and cloud-based document platforms that help organizations optimize their information-intensive processes.

Founded in 1906 as The Haloid Photographic Company, Xerox pioneered xerographic imaging in the late 1940s, launching the first plain-paper copier in 1959.

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