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%, but down 7.6% pro forma; growth was driven by acquisitions and IT Solutions.

• Adjusted operating margin for 2025 was 3.5%, down 140 basis points year-over-year, reflecting integration and restructuring costs.

• GAAP net loss per share for 2025 was $(8.25), including a $1.0 billion goodwill impairment; adjusted loss per share was $(0.60).

• Integration of Lexmark and ITsavvy 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 operating margin was 5.0%, down 140 basis points year-over-year; full-year adjusted operating margin was 3.5%.

• Q4 adjusted gross margin was 29.3%, down 230 basis points; full-year adjusted gross margin was 29.2%, down from 31.5% in 2024.

• Q4 operating cash flow was $208 million; free cash flow was $184 million, down $150 million year-over-year; full-year free cash flow was $133 million, down $334 million.

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

• Year-end cash was $565 million; total debt was $4.2 billion, down $160 million sequentially.

Outlook and guidance

• 2026 revenue expected to exceed $7.5 billion, with adjusted operating income guidance 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.

• Medium-term leverage target is approximately 3x trailing 12 months EBITDA.