Xerox Holdings Corporation (NASDAQ:XRX) posted a strong second-quarter earnings performance that far exceeded Wall Street expectations, although revenue came in slightly below analysts’ forecasts. Investors welcomed the results, sending the company’s shares more than 23% higher in premarket trading on Thursday.
The quarter also reflected improving profitability, continued progress integrating Lexmark and further reductions in debt.
Profitability Surges as Earnings Beat Forecasts
Xerox reported adjusted earnings of $0.38 per share for the second quarter, outperforming analysts’ expectations for a loss of $0.08 per share.
Revenue totaled $1.92 billion, narrowly missing the consensus estimate of $1.93 billion. However, reported revenue increased 22% from $1.576 billion in the same quarter last year.
On a pro forma basis, which includes estimated prior-year results from Lexmark, revenue declined 6.5%.
Adjusted operating margin expanded by 690 basis points year over year to 10.6%, supported by cost controls, integration benefits from the Lexmark acquisition and the company’s increasingly unified operating structure.
Profitability also benefited from a $105 million pre-tax gain related to IEEPA tariff receivables, which Xerox later sold for $80 million in cash.
Strategic Priorities Continue to Advance
“Our second-quarter results gave us another reason for confidence,” said Louie Pastor, chief executive officer at Xerox. “We made progress on each of our three strategic priorities: stabilizing revenue, increasing profitability, and reducing leverage.”
The company also strengthened its balance sheet during the quarter by reducing total outstanding debt by more than $200 million.
Company Raises 2026 Outlook
Following the stronger-than-expected quarter, Xerox increased its full-year 2026 financial guidance.
The company now expects revenue of approximately $7.6 billion, compared with its previous forecast of more than $7.5 billion. The updated outlook remains slightly below analysts’ consensus estimate of $7.61 billion.
Xerox also lifted its adjusted operating income guidance to a range of $555 million to $605 million, up from the previous outlook of $450 million to $500 million.
The company maintained its full-year free cash flow forecast of approximately $250 million.
In addition, Xerox increased its target for gross cost synergies from the Lexmark acquisition by $50 million, bringing the expected total to at least $350 million.