Xerox Holdings Corp
Q3 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +0.25%.
Did XRX Beat Earnings? Q3 2025 Results
Xerox delivered a sharply mixed third quarter, posting adjusted earnings of $0.20 per share against a consensus estimate of negative $0.18, a 212.80% beat, while revenue of $1.96 billion fell 3.65% short of the $2.04 billion Wall Street had expected, triggering a notable pre-market sell-off. The headline revenue figure rose 28.3% year over year, but that growth was almost entirely attributable to the July 1 close of the $1.50 billion Lexmark acquisition; on a pro forma basis, revenue actually declined 7.8%, with equipment sales falling 16.4% as tariff uncertainty and government funding delays suppressed transactional print demand. Gross margin compressed to 22.7% from 32.4%, weighed down by a $102 million Lexmark inventory purchase accounting charge and higher tariff-related product costs. Free cash flow strengthened to $131 million from $107 million a year ago, offering some balance. Management raised Lexmark cost synergy targets by $50 million to at least $300 million but trimmed full-year free cash flow guidance to approximately $150 million from $250 million, reflecting roughly $35 million in incremental net tariff costs.
- Lexmark acquisition contributing 26.0-percentage point benefit to equipment sales growth and 30.2-percentage point benefit to post-sale revenue growth
- ITsavvy acquisition contributing 10.3-percentage point benefit to post-sale revenue growth
- Reinvention-related cost and productivity savings
- Recent pricing initiatives partially offsetting tariff and product cost increases
- IT Solutions pro forma bookings, billings, and revenue growing double digits
- Inside Sales achieving over 30% ESR growth year-to-date
“While continued macro volatility and near-term uncertainties on government funding decisions weighed on transactional print this quarter, consistent page volume trends and strong IT Solutions momentum reinforce our confidence that Reinvention will deliver durable productivity and long-term value. We are accelerating that work from a solid foundation established by the Lexmark acquisition and the expansion of our IT Solutions capabilities.”
Xerox CEO, on the earnings call
Forward Guidance & Outlook
Xerox lowered its full-year 2025 guidance: revenue growth now expected at 13% in constant currency (down from 16-17%), adjusted operating margin of approximately 3.5% (down from ~4.5%), and free cash flow of approximately $150 million (down from ~$250 million). Full-year adjusted operating income guidance reflects $100-$110 million of Lexmark-related contribution and approximately $35 million of incremental tariff-related costs net of mitigation. Full-year estimated revenue is approximately $7.04 billion in constant currency with adjusted operating income of approximately $245 million. The company expects over $1/share of accretion from the Lexmark transaction and raised its Lexmark cost synergy target to at least $300 million (up $50 million).
XRX YoY Financials
XRX Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.