Xerox Holdings Corporation (NASDAQ:XRX) reported third-quarter 2026 earnings and revenue above analysts’ expectations on Thursday but reduced its full-year financial guidance. Shares of the company declined 19.7% following the announcement.
Adjusted earnings per share reached $0.02, compared with analysts’ expectations for a loss of $0.10 per share. Revenue totaled $1.87 billion, slightly exceeding the consensus estimate of $1.86 billion.
Despite exceeding quarterly forecasts, Xerox lowered its expectations for adjusted operating income and free cash flow for 2026.
Xerox Reduces Annual Operating Income Guidance
Xerox now expects adjusted operating income of between $450 million and $475 million for the full year, compared with its previous forecast of $555 million to $605 million.
The midpoint of the revised range is $462.5 million, down from $580 million under the earlier guidance.
The company attributed the reduction to higher-than-anticipated input costs, changes in product demand and lower expected profitability from its IT Solutions business.
Xerox also cited a shift in its product mix from mid-range equipment toward entry-level products, alongside a less favorable market outlook.
Free Cash Flow Forecast Cut to $50 Million–$100 Million
The company reduced its annual free cash flow guidance to approximately $50 million to $100 million, compared with its previous expectation of $250 million.
The revised forecast reflects the operating pressures identified by Xerox, including higher costs and changes in product mix.
The reductions in operating income and cash flow expectations accompanied third-quarter results that exceeded analysts’ earnings and revenue estimates.
Xerox Announces Debt Exchange Transaction
Separately, Xerox announced a debt exchange agreement involving approximately $174 million of senior notes scheduled to mature in 2028.
Under the proposed transaction, the existing notes will be exchanged for a combination of newly issued first-lien senior secured notes due in October 2030 and shares of Xerox common stock.
The transaction is expected to reduce the company’s total outstanding debt principal by approximately $53 million while extending the maturity of the exchanged obligations.
Xerox expects the exchange to close on or around November 13, 2026.
Chief Financial Officer Chuck Butler commented:
“Following the open market purchases earlier this year, this transaction is yet another step that we’ve taken to proactively address our upcoming maturities.”
The debt exchange forms part of Xerox’s efforts to manage its upcoming repayment obligations, alongside the previously completed open-market purchases referenced by management.