Xerox (XRX) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Strategic direction and integration

• Recent combination with Lexmark brings proprietary A4 technology, in-house manufacturing, and Global Business Services, enabling significant cost synergies and operational efficiencies.

• The combined entity leverages complementary market strengths, with Lexmark's enterprise and Asia presence and Xerox's brand recognition, opening new growth opportunities in under-indexed regions.

• Strategy remains focused on stabilizing revenue, expanding margins, and deleveraging, with acquisitions like ITsavvy and Lexmark enhancing end-to-end product offerings.

• Integration efforts prioritize cross-selling IT solutions to a broader customer base, aiming to increase wallet share and drive growth in digital services.

• Execution and focus are emphasized to avoid distractions and ensure alignment with core financial goals.

Market outlook and growth initiatives

• Print market is declining low to mid-single digits, but opportunities exist in segments like color and in under-penetrated regions such as Asia.

• IT solutions and digital services are growing 5%-7% annually, with a goal to increase their share from 10%-15% today to 20% of total business in the midterm.

• Cross-selling to 200,000 print customers from a previous 12,000 IT base is a key growth lever.

• Demand remains strong in large enterprise and government sectors, with education and SMBs being more variable.

• Milestones include outpacing market growth, increasing gross billings, and achieving double-digit billing growth in IT solutions.

Margin expansion and cost management

• Margin expansion is targeted through higher-value IT products and $300+ million in synergy savings from the Lexmark acquisition, with $200 million already realized.

• In-house manufacturing in Mexico reduces costs and avoids tariffs, supporting gross margin improvement.

• Reinvention initiatives focus on execution, leveraging owned technology and shared services to drive profitability.

• Operating margin target is 10%+, achieved through disciplined cost actions and synergy realization.

• Free cash flow guidance is $250 million for the year, with future improvements expected as pension and capital investments decline.