Q2 2026 Xerox Holdings Corp Earnings Call Transcript
Key Points
- Revenue increased 22% year-over-year to $1.92 billion, driven by the Lexmark acquisition.
- Adjusted operating margin improved to 10.6%, up 690 basis points year-over-year, with pro forma gross margins also expanding.
- Total debt was reduced by $223 million in Q2, and gross leverage improved from 7x to 5.9x, with net leverage falling from 6x to 5.1x.
- Full-year 2026 revenue guidance was raised by approximately $100 million, and adjusted operating income guidance was increased by $105 million.
- Lexmark integration synergy target was raised to at least $350 million, up from $300 million, with half expected to be realized in 2026.
- Pro forma revenue declined nearly 7% year-over-year, with equipment sales down 13% on a pro forma basis due to softer mid-range and OEM sales.
- IT Solutions revenue fell 9% year-over-year, with near-term pressure from a rebuilding sales force and credit profile friction.
- Free cash flow guidance remained at $250 million despite a $80 million tariff receivable, offset by higher restructuring costs and working capital drags.
- Higher memory and oil prices pose a modest risk to profit and cash outlook, with oil prices not normalizing as expected.
- GAAP tax rate remains volatile due to a valuation allowance, with pre-tax losses in the US and UK not generating tax benefits.
Welcome to the Xerox Holdings Corporation second-quarter 2026 earnings release conference call. (Operator Instructions)
At this time, I would like to turn the meeting over to Mr. Greg Stein, Senior Vice President and Head of Investor Relations.
Good morning, everyone. I am Greg Stein, Senior Vice President and Head of Investor Relations at Xerox Holdings Corporation. Welcome to the Xerox Holdings Corporation second-quarter 2026 earnings release conference call, hosted by Louie Pastor, Chief Executive Officer. He's joined by Chuck Butler, Chief Financial Officer.
At the request of Xerox Holdings Corporation, today's conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without the express permission of Xerox.
During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor and will make comments that
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