Stamford, CT (July 30, 2026) — Xerox reported strong second‑quarter 2026 results, highlighted by substantial year‑over‑year revenue and profit growth, driven by the Lexmark acquisition, cost‑synergy execution, and a one‑time benefit from IEEPA tariff receivables.
Revenue reached $1.92 billion, up 22% (21.2% in constant currency), though on a pro forma basis—reflecting Lexmark’s prior‑year results—revenue declined 6.5%. The company posted GAAP net income of $13 million, a sharp improvement from a $106 million loss in Q2 2025. Adjusted net income rose to $55 million, and adjusted operating income surged to $203 million, up $144 million year‑over‑year.
Xerox noted that profitability metrics include a $105 million pre‑tax benefit from recognizing IEEPA tariff receivables, which materially lifted margins. As the document states, “Profitability metrics for Q2 2026 include $105 million of a pre-tax benefit from the recognition of IEEPA tariff receivables.”
“Our second-quarter results gave us another reason for confidence,” said Louie Pastor, Xerox CEO. “We made progress on each of our three strategic priorities: stabilizing revenue, increasing profitability, and reducing leverage. As a result, we are raising both revenue and adjusted operating income guidance, as well as our Lexmark gross synergy targets. While we have more to prove, I like how our team is showing up and executing with urgency and discipline.”
Gross margin expanded significantly to 35.8%, up 720 basis points, reflecting integration synergies, cost discipline, and the unified operating model following the Lexmark acquisition. Adjusted gross margin reached 36.4%. Operating cash flow improved to $37 million, and free cash flow rose to $11 million, both benefiting from stronger profitability though excluding the $80 million cash proceeds from monetizing tariff receivables, which were classified as financing cash flow.
Segment performance was mixed. The Print and Other segment generated $1.73 billion in revenue, up 26.9%, with profit rising to $220 million from $65 million. This segment benefited heavily from Lexmark’s contribution and the IEEPA tariff benefit. Equipment sales increased 15.2%, though excluding Lexmark, equipment revenue declined due to lower installations and a shift toward entry‑level products. Post‑sale revenue rose 30.7%, again largely driven by Lexmark; excluding the acquisition, post‑sale revenue fell 6.8% due to lower service revenue, managed print declines, and reduced financing revenue.
The IT Solutions segment saw revenue decline 8.9% to $194 million, reflecting lower IT product and service revenue and certain net classifications and deferrals. Segment profit fell to $7 million from $10 million.
Xerox emphasized progress on strategic priorities, including raising Lexmark synergy targets by $50 million to at least $350 million, expanding its A3 and A4 product lines under the unified brand, and reducing total debt by more than $200 million through repayments of multiple note issuances.
Pre‑tax income improved dramatically to $31 million, compared with a $60 million loss in Q2 2025. The improvement stemmed from higher revenue, gross profit expansion, cost‑reduction initiatives, and lower other expenses—particularly a $39 million gain from early debt extinguishment.
Given the strong quarter, Xerox raised full‑year 2026 guidance. The company now expects approximately $7.6 billion in revenue, $555–$605 million in adjusted operating income, and about $250 million in free cash flow. As the release notes, adjusted operating income guidance “reflects a benefit from the recognition of a $105 million pre-tax IEEPA tariff receivable.”
Overall, Q2 2026 reflects meaningful operational improvement, successful integration of Lexmark, and strengthened financial performance despite ongoing cost headwinds.
