Analyst(s): Futurum Research
Publication Date: May 5, 2026
Xerox Q1 FY 2026 earnings point to better execution against near-term priorities, with management emphasizing revenue stabilization, profitability improvement, and leverage reduction. The quarter also showed stronger indicators in production print momentum and IT Solutions activity, even as supply and component costs remain a constraint.
What is Covered in This Article:
- Xerox’s Q1 FY 2026 financial results
- Lexmark integration and cost actions
- Print mix shifts toward production
- IT Solutions bookings and billing trends
- Guidance and Final Thoughts
The News: Xerox Holdings Corporation (NASDAQ: XRX) announced Q1 FY 2026 results. Revenue was $1.85 billion versus a Wall Street consensus of $1.75 billion, up 26.7% year-on-year (YoY). Segment revenue was $1.7 billion for Print and Other, up 30.8% YoY, and $156 million for IT Solutions, down 4.9% YoY. Adjusted operating income was $72 million, up from $22 million in the prior year. Adjusted operating margin came at 3.9%, up 240 basis points YoY. Adjusted net loss per share came at $0.43 per share, compared with an adjusted net loss per share of $0.06 in the prior-year quarter.
“This quarter’s results demonstrated tangible progress as revenue and profit trajectory improved, adjusted operating margin expanded, and we further enhanced our liquidity,” said Louie Pastor, chief executive officer at Xerox. “I am genuinely optimistic about the future of this business and confident we are closer to an inflection point than the external narrative suggests. Reaffirming our 2026 guidance reflects that confidence.”
Xerox Q1 FY 2026 Earnings Show Improved Revenue Trajectory
Analyst Take: Xerox used Q1 FY 2026 to set a tighter execution frame under its new CEO, with decision-making anchored to stabilizing revenue, expanding profitability, and reducing leverage. The reported revenue step-up is heavily driven by the Lexmark acquisition, so the more useful read is the improved organic trajectory and the first YoY adjusted margin lift in several quarters. Management also pointed to clearer go-to-market accountability, including expanded inside sales coverage and a simpler regional model for print. The quarter reinforced that Xerox will keep investing in IT Solutions capacity while using cost actions and integration benefits to fund the transition.
Print Mix Shift Toward Entry and Production
Management is prioritizing a “barbell” approach in print, concentrating investment in entry devices and production systems while treating mid-range as important but not the primary growth engine. Production traction showed up in operational indicators, with production installs up 31% YoY, supported in part by the Proficio launch. The company also pointed to partner validation through Toshiba Americas, adding Xerox-branded PrimeLink production printers to its portfolio, which expands routes to market without relying only on direct coverage. Print pipeline activity improved versus the prior year, which matters because Xerox needs stronger funnel conversion to counter secular print pressure. Mid-range remained soft, and management framed it as profitable but structurally challenged, which implies the mix strategy will keep tilting toward segments with clearer demand signals. The next few quarters should show whether partner-led distribution can translate production momentum into steadier post-sale revenue.
Lexmark Integration and Cost Discipline as the Profit Engine
Management reaffirmed at least $300.0 million of Lexmark integration synergies and positioned cost actions as a multi-year program rather than a one-year reset. The quarter showed improved profitability, with adjusted operating margin at 3.9% and management attributing expansion to integration benefits, transformation savings, and lower marketing spend. The company also expects $250.0 million to $300.0 million of incremental savings in FY 2026, including $150.0 million to $200.0 million from Lexmark integration, which sets a clear execution yardstick. Xerox is also pushing toward greater control of product design and manufacturing, aiming to improve quality, cost, and speed-to-market, with expected gross margin benefit later in FY 2026. That manufacturing shift can support margin durability, but it also raises execution risk if supply and component costs remain unstable. Xerox’s margin path now depends on how consistently it can convert integration progress into recurring operating improvements.
IT Solutions Momentum With Near-Term Margin Pressure
IT Solutions showed stronger activity metrics than revenue suggests, with bookings up 32% YoY and billings up 21% YoY, alongside YoY profit growth. Management emphasized that the mix is shifting toward third-party contracts and SaaS arrangements that are reported net, so gross billings and segment profit are better indicators of business health than reported revenue. The segment is also investing in technical talent and expanding service capability to pursue larger managed services contracts, which can improve revenue visibility over time. Memory lead times and higher memory prices created headwinds, affecting both customer purchasing timing and segment margin, even as Xerox largely passes costs through in IT Solutions. Management also cited a $32.0 million increase in new pipeline from cross-selling into the existing print client base, reinforcing the role of IT Solutions as a growth offset rather than a standalone business. The segment’s near-term tradeoff is clear: spend now for larger deal capacity later, while managing component-driven margin pressure.
Guidance and Final Thoughts
For FY 2026, Xerox reaffirmed revenue above $7.5 billion (consensus estimate $7.58 billion), adjusted operating income of $450.0 million to $500.0 million, and free cash flow of approximately $250.0 million. Management expects seasonality to matter, with Q1 typically a cash trough and the back half of FY 2026 driving most free cash flow, supported by improving operating income, working capital discipline, and additional finance receivable proceeds. The company also noted that Q1 results and guidance do not include potential tariff refund benefits tied to the Supreme Court ruling, and it expects more clarity during Q2 FY 2026.
The guidance assumes that tariff-related cost benefits will be slightly more than offset by higher memory prices and higher oil-linked input costs, with limited demand impact so far outside certain international markets. Execution in FY 2026 will hinge on sustaining print production momentum while keeping IT Solutions growth investment disciplined against margin and cash targets.
See the full press release on Xerox’s Q1 FY 2026 financial results on the company website.
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