Xerox’s third quarter was marked by both operational progress and acute challenges, with the market responding negatively to the results. Management highlighted improvements in print revenue trends, organic equipment sales growth, and advancements in production printing, citing the integration of Lexmark’s portfolio as a key contributor. However, CEO Louie Pastor acknowledged that rising input costs, unfavorable product mix shifts, a weaker print market, and underperformance in IT Solutions combined to outweigh these gains. Pastor was candid, stating, “Some of what we’re facing originates outside of our control…some of it is ours to fix.”
Is now the time to buy XRX? Find out in our full research report (it’s free for active Edge members).
Xerox (XRX) Q3 2026 highlights:
- Revenue $1.87 billion vs S&P analysts’ estimates of $1.86 billion (4.7% year-on-year decline, in line)
- Adjusted EPS $0.02 vs S&P analysts’ estimates of -$0.12 (significant beat)
- Revenue guidance The company reconfirmed its revenue guidance for the full year of $7.6 billion at the midpoint
- Operating margin -47.6%, down from -9.9% in the same quarter last year
- Market capitalization $194.4 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Xerox’s Q3 earnings call
- Marc Vitenzon (JPMorgan) asked about tighter supplier and distributor terms impacting IT Solutions’ free cash flow. CEO Louie Pastor pointed to slower ramp of new sellers and unique credit considerations, but maintained long-term confidence in the platform’s potential.
- Marc Vitenzon (JPMorgan) followed up on cost inflation offset strategies for 2027. CFO Chuck Butler cited $100 million in Lexmark synergies and ongoing cost programs, stressing the need to outpace headwinds through pricing and operational efficiency.
- Ananda Baruah (Loop Capital) inquired about future use of debt exchanges and structural shifts in print demand. Pastor confirmed ongoing evaluation of debt management options and acknowledged a structural shift in budgets toward AI and software, responding with a focus on service cost reduction.
- Asiya Merchant (Citigroup) asked about competitive responses to lower print volumes and the industry-wide mix shift. Pastor said competitors are also raising prices and facing similar headwinds, while Xerox’s control of its technology stack offers a degree of advantage.
- Unknown Analyst (Noble Capital Markets) sought details on Lexmark integration milestones and remaining synergy opportunities. Butler and Pastor described progress in consolidating global capability centers and standardizing processes, with further savings targeted through automation and operational optimization.
Catalysts in upcoming quarters
In the coming quarters, the StockStory team will be watching (1) the success of pricing actions and operating cost reductions in mitigating margin pressures, (2) progress in transforming the service model to enhance reliability and lower costs, and (3) the pace of IT Solutions’ sales force ramp and backlog conversion. Execution against these priorities will be critical for stabilizing performance and delivering on long-term profit improvement goals.
Xerox currently trades at $1.47, down from $2.81 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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