Xerox Holdings Q4 Earnings Report Analysis
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2d ago
0mins
Source: seekingalpha
- Earnings Performance: Xerox Holdings reported a Q4 non-GAAP EPS of -$0.10 with revenues of $2.03 billion, a 26.1% year-over-year increase; however, the adjusted net loss of $8 million reflects a significant decline of $57 million compared to the previous year, indicating a drop in profitability.
- Operating Margin Decline: The adjusted operating margin stood at 5.0%, down 140 basis points year-over-year, highlighting pressures on cost control and market competition that could impact future profitability.
- Cash Flow Challenges: Operating cash flow was $208 million, down $143 million year-over-year, while free cash flow dropped to $184 million, a decrease of $150 million, suggesting challenges in cash generation that may affect investment and expansion plans.
- Future Guidance: Xerox anticipates revenues exceeding $7.5 billion in 2026, with adjusted operating income projected between $450 million and $500 million, and free cash flow around $250 million; despite the optimistic outlook, the feasibility of achieving these targets remains a concern.
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Analyst Views on XRX
Wall Street analysts forecast XRX stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for XRX is 3.50 USD with a low forecast of 3.50 USD and a high forecast of 3.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
1 Analyst Rating
0 Buy
1 Hold
0 Sell
Hold
Current: 2.040
Low
3.50
Averages
3.50
High
3.50
Current: 2.040
Low
3.50
Averages
3.50
High
3.50
About XRX
Xerox Holdings Corporation is a workplace technology company building and integrating software and hardware for enterprises. Its segments include Print and Other and Xerox Financial Services (XFS). Its Print and Other segment includes the sale of document systems, supplies and technical services and managed services. It includes the delivery of managed services that involve a continuum of solutions and services that help its customers optimize their print and communications infrastructure, apply automation and simplification to maximize productivity, and ensure the highest levels of security. It also includes digital and information technology services and software. Its product groupings range from Entry, Mid-Range and High-End. The XFS segment provides global leasing solutions and offers leasing for direct channel customer purchases of Xerox solutions through bundled lease agreements and lease financing to end-user customers who purchase Xerox solutions through its indirect channels.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Xerox Holdings Set to Announce Q4 Earnings on January 29
- Earnings Announcement: Xerox Holdings is set to release its Q4 earnings on January 29 before market open, with an expected EPS of $0.10, reflecting a significant 72.2% year-over-year decline, indicating severe profitability challenges.
- Revenue Expectations: The anticipated revenue for Q4 is $2.05 billion, representing a 27.3% year-over-year increase, although overall performance remains impacted by macroeconomic headwinds, suggesting that Xerox's competitive position may need strengthening.
- Historical Performance Review: Over the past two years, Xerox has only beaten EPS estimates 13% of the time and revenue estimates 25% of the time, indicating considerable earnings volatility and caution for investors.
- Valuation and Market Sentiment: While Xerox's valuation is considered cheap, analysts suggest there are underlying reasons for this, and recent reports of potential debt financing could affect the company's future financial stability.
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Xerox Holdings Reports Q4 2025 Earnings with Strategic Insights
- Revenue Growth: Xerox reported Q4 revenue of $2.03 billion, a 26% year-over-year increase driven by the acquisitions of Lexmark and ITsavvy, although pro forma revenue declined by 9%, indicating integration challenges and market volatility.
- Cash Flow Performance: Free cash flow reached $184 million, with year-end cash at $565 million against total debt of $4.2 billion, while management cautiously projects $250 million in free cash flow for 2026, reflecting optimism about future financial health.
- Strategic Integration: Significant progress in integrating Lexmark and ITsavvy has led to increased bookings, billings, and backlog, with management highlighting the expected over $200 million increase in adjusted operating income for 2026 due to synergy capture.
- AI-Driven Innovation: The launch of an AI center of excellence and several internal AI offerings have streamlined processes and reduced costs per interaction, which is expected to further enhance operational efficiency and financial performance, showcasing the company's strategic focus on technological innovation.
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