The raised guidance and strong EPS beat are positive, but the pro-forma revenue decline and reliance on a one-time tariff benefit for margin expansion suggest the underlying business is still contracting. Monitor the Q3 2026 print for organic revenue stabilization and the sustainability of margin improvement excluding IEEPA benefits.
Price Chart
Executive Summary
Xerox reported Q2 2026 GAAP net income of $13M ($0.07 EPS) vs a $(106)M loss in Q2 2025, and adjusted EPS of $0.38, significantly beating consensus of $(0.18). Revenue was $1.92B, up 22% YoY but down 6.5% on a pro forma basis excluding Lexmark. The company raised full-year 2026 revenue guidance to ~$7.6B (from >$7.5B) and adjusted operating income guidance to $555-605M (from $450-500M), driven by a $105M IEEPA tariff receivable benefit and Lexmark synergies. However, on an organic pro-forma basis, revenue continues to decline, and the IT Solutions segment revenue fell 10% YoY, signaling ongoing structural headwinds in the legacy print business.
Key Financial Metrics
Key Facts
- Q2 2026 GAAP net income of $13M vs $(106)M loss in Q2 2025
- Adjusted EPS of $0.38 vs consensus $(0.18) — a 311% beat
- Revenue of $1.92B, up 22% reported but down 6.5% pro forma YoY
- Raised FY2026 revenue guidance to ~$7.6B (from >$7.5B)
- Raised FY2026 adjusted operating income guidance to $555-605M (from $450-500M)
- Adjusted operating margin expanded 690 bps to 10.6%, but includes a 660 bps benefit from IEEPA tariff receivables
- Reduced total debt by >$200M in Q2
- Lexmark gross cost synergy target raised by $50M to at least $350M
- IT Solutions revenue declined 10.0% YoY
- Operating cash flow of $37M, up from $(11)M in Q2 2025
Financial Impact
Q2 adjusted EPS of $0.38 vs consensus $(0.18; FY guidance raised by ~$100M at the midpoint for adjusted operating income
Risk Factors
- Pro-forma revenue declining 6.5% YoY signals ongoing structural decline in legacy print business
- Adjusted operating margin expansion heavily dependent on one-time $105M IEEPA tariff receivable benefit
- IT Solutions segment revenue declining 10% YoY
- High debt load of $4.2B long-term debt vs $330M equity
- Significant warrant overhang (82.5M shares) and convertible notes (19.2M shares) create dilution risk
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001770450-26-000034 |
| Document: xrx-20260730.htm | 0001770450-26-000034 |
| Document: 0001770450-26-000034-index-headers.html | 0001770450-26-000034 |
| Document: 0001770450-26-000034-index.html | 0001770450-26-000034 |
| Document: 0001770450-26-000034.txt | 0001770450-26-000034 |
| 8-K Data (Synthetic) | 0001770450-26-000034 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Jul 30, 2026 12w ago | 8-K | $3.49 $2.97 | ▼ −14.90% | ▼ −18.86% | $2.58 (−26.07%) |
Jul 2, 2026 16w ago | 8-K | $2.80 $3.49 | ▲ +24.64% | ▲ +25.06% | $2.58 (−7.86%) |
Jun 29, 2026 17w ago | 144 | $3.13 $2.73 | ▼ −12.78% | ▼ −11.75% | $2.58 (−17.57%) |
Jun 26, 2026 17w ago | 144 | $3.17 $2.58 | ▲ +18.61% | ▲ +18.33% | $2.58 (+18.61%) |
Jun 25, 2026 17w ago | 144 | $3.31 $2.61 | ▼ −21.15% | ▼ −22.41% | $2.58 (−22.05%) |
Jun 13, 2026 19w ago | Institutional Cluster | $3.42 $2.77 | ▲ +19.01% | ▲ +18.26% | $2.58 (+24.56%) |
Jun 11, 2026 19w ago | Institutional Cluster | $3.47 $2.78 | ▲ +19.88% | ▲ +21.78% | $2.58 (+25.65%) |
Mar 3, 2026 34w ago | Court Ruling | $1.76 $1.26 | ▼ −28.41% | ▼ −24.05% | $2.58 (+46.59%) |
US Market Status
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