Xerox (XRX) Q3 2026 earnings summary

Executive summary

• Q3 revenue was $1.868B, down 4.7% YoY; adjusted operating margin rose to 6.6% from 3.3%, while a $959M non-cash goodwill impairment drove a $1.015B GAAP net loss.

• Adjusted net income was $7M versus $27M a year earlier; adjusted operating income rose to $124M from $65M.

• Revenue declines moderated sequentially, but higher input costs, weaker market conditions and IT Solutions weakness cut FY26 profit and cash-flow guidance.

Financial highlights

• Adjusted gross margin was 29.5%, up 60 bps YoY; adjusted operating income rose 91% to $124M.

• Adjusted EPS was $0.02 versus $0.20; GAAP diluted loss per share was $7.73, including the goodwill impairment.

• Operating cash flow was $30M versus $116M; free cash flow was $7M versus $88M.

• Operating expenses fell $73M YoY on restructuring and integration savings, lower bad debt and marketing costs, and reduced bonus accrual.

Outlook and guidance

• FY26 revenue guidance remains ~$7.6B; adjusted operating income guidance is $450M-$475M, down from $555M-$605M.

• FY26 free cash flow guidance is $50M-$100M, down from $250M, reflecting lower profitability and delayed or reduced finance- and tariff-receivable proceeds.

• FY26 operating cash-flow guidance was cut to $145M-$195M from ~$340M.

• Memory and oil add a $60M headwind versus initial guidance; mix shifts, weaker markets and lower IT Solutions profit also pressure results.