Xerox (XRX) Q4 2025 earnings summary

Executive summary

• Q4 2025 revenue reached $2.03 billion, up 25.7% year-over-year, driven by Lexmark and ITsavvy acquisitions; pro forma revenue declined 9%.

• Full-year 2025 revenue was $7.02 billion, up 12.9% year-over-year, but down 7.6% pro forma; growth was driven by acquisitions and IT Solutions.

• Adjusted operating income margin for Q4 was 5%, down 140 basis points year-over-year; adjusted loss per share was $0.10, $0.46 lower year-over-year.

• Free cash flow for the year was $133 million, $334 million lower year-over-year.

• Lexmark and ITsavvy integration is ahead of plan, delivering commercial and operational benefits, with synergy realization reaffirmed at $300 million and $366 million of debt paid down since the Lexmark acquisition.

Financial highlights

• Q4 adjusted gross margin was 29.3%, down 230 basis points year-over-year due to higher tariffs and product costs.

• Q4 adjusted operating margin was 5%, down 140 basis points year-over-year; full-year adjusted operating margin was 3.5%, down from 4.9% in 2024.

• Q4 free cash flow was $184 million, down $150 million year-over-year; year-end cash was $565 million, with total debt of $4.2 billion.

• Print & Other segment revenue grew 7.0% to $6.27 billion, while IT Solutions surged 112.6% to $761 million year-over-year.

• Adjusted EBITDA margin for 2025 was 7.3%, compared to 8.9% in 2024.

Outlook and guidance

• 2026 revenue expected to exceed $7.5 billion, with adjusted operating income of $450–$500 million and free cash flow of approximately $250 million.

• Growth to be driven by a full year of Lexmark, IT Solutions, and Digital Services, offset by print headwinds and XFS portfolio decline.

• Cost synergies and reinvention savings of $250–$300 million expected in 2026.

• Tariffs expected to be a headwind in H1 and a tailwind in H2 as more A3 production shifts in-house; memory price increases may offset some benefits.