Xerox (XRX) Q3 2026 Earnings Call: Guidance Cut, Dividends Suspended
Source Tradingkey
Key Takeaways
- Xerox reported Q3 2026 revenue of $1.87 billion, down less than 5% year over year. Adjusted operating margin rose 330 basis points to 6.6%.
- Equipment revenue grew 3%, marking Xerox’s first year-over-year organic equipment growth in more than three years. Entry and production revenue increased 21% and 14%, respectively, while midrange fell 15%.
- Management maintained full-year revenue guidance of approximately $7.6 billion but cut adjusted operating income guidance to $450 million-$475 million from $555 million-$605 million.
- Full-year free cash flow guidance was reduced to $50 million-$100 million from approximately $250 million, reflecting lower operating income, fewer finance receivable sales and delayed tariff refunds.
- The Board suspended common and preferred dividends, preserving approximately $28 million of cash annually. Xerox also announced a debt exchange that will reduce principal by about $53 million.
- Management identified higher memory and oil prices, unfavorable equipment mix, a weaker print market and IT Solutions underperformance as the main pressures on the outlook.
Key Financial Data
| Metric | Q3 2026 result | Change or context |
|---|---|---|
| Revenue | $1.87 billion | Down less than 5% reported and in constant currency |
| Adjusted gross margin | 29.5% | Up 60 basis points; included $20 million of IP licensing income |
| Adjusted operating margin | 6.6% | Up 330 basis points |
| GAAP loss per share | $7.73 | Included a $959 million noncash goodwill impairment |
| Adjusted EPS | $0.02 | Higher interest expense and a 70% adjusted tax rate offset operating improvement |
| Operating cash flow | $30 million | Down from $116 million a year earlier |
| Free cash flow | $7 million | Down $81 million year over year |
| Cash, equivalents and restricted cash | $530 million | Included $412 million of unrestricted cash |
| Total liquidity | Approximately $726 million | Unrestricted cash plus available ABL capacity, net of letters of credit |
| Total debt | $4.2 billion | Included $2.9 billion of core nonfinancing debt |
| Gross and net leverage | 5.4x / 4.7x | Improved from 5.9x / 5.1x in Q2 |
Business and Operating Performance
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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