Xerox Profit Reversal
Xerox Reports Strong Q2 Profit Reversal and Revenue Growth, Shares Jump 27%
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Key Points
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Xerox reduced debt by more than $200 million in the quarter, retiring $125 million of 13.00% 2026 senior notes at maturity, $93 million of 5.50% 2028 senior notes, and $6 million of 13.50% 2031 senior secured notes.
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For the first six months of 2026, Xerox reported sales of $1,916 million and total revenue of $3,768 million, with a net loss of $92 million versus $196 million a year earlier.
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In June, Xerox expanded its 9-Series A3 lineup with mid-range devices and launched new A4 color devices under its unified brand.
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Print and Other segment revenue totaled $1.733 billion in Q2, up 26.9% year over year, with segment profit of $220 million.
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The stock jumped nearly 27% after the results, aided by a short-squeeze with about 32% of the public float sold short prior to the surge.
Xerox posted second-quarter 2026 revenue of $1.92 billion, up 22% from a year ago, swinging from a $106 million net loss to a $13 million profit, according to Xerox Investor Relations. The results crushed Wall Street expectations and sent shares surging nearly 27% — helped in part by a short-squeeze, with roughly 32% of the public float held short before the jump, ScanX Trade reported.
The strong quarter was driven largely by the Lexmark acquisition and a $105 million pre-tax tariff benefit. Xerox also raised its full-year revenue outlook to about $7.6 billion and boosted its Lexmark cost-savings target to at least $350 million.
Lexmark Acquisition Powers Revenue Surge in Q2
Xerox's top-line jump to $1.92 billion was almost entirely a Lexmark story. The Print and Other segment — which includes Lexmark — brought in $1.733 billion, up 26.9% year over year, with segment profit of $220 million, according to Xerox Investor Relations. The IT Solutions segment added $194 million.
On a pro forma basis — meaning as if Lexmark had been part of Xerox all along — revenue actually fell 6.5%, Watchlist News noted. That signals ongoing pressure in core print markets even as the deal adds scale. Still, adjusted operating income climbed to $203 million, and the adjusted operating margin hit 10.6%.
Tariff Receivable Gives Profits a $105 Million Lift
A key driver of the profit turnaround was a one-time $105 million pre-tax benefit. Xerox recognized receivables tied to IEEPA tariffs — a U.S. trade policy mechanism — which boosted adjusted operating income well above what underlying operations alone would have produced, per Xerox Investor Relations.
Adjusted net income rose to $55 million, or $0.38 per share, compared to a loss a year earlier. For the first half of 2026, Xerox still carries a net loss of $92 million — though that is less than half the $196 million loss in the same period of 2025, according to The Cannata Report.
Xerox Cuts Debt by $200 Million and Raises Guidance
Xerox paid down more than $200 million in debt during the quarter. That included retiring $125 million of high-cost 13.00% senior notes due in 2026, buying back $93 million of 5.50% notes due in 2028, and paying off $6 million of 13.50% secured notes due in 2031, Watchlist News reported.
The company raised its full-year adjusted operating income target to a range of $555 million to $605 million, up from prior guidance. It also lifted its Lexmark synergy goal to at least $350 million. Operating cash flow for the quarter was $37 million and free cash flow was $11 million, per Xerox Investor Relations.
Stock Surges 27% on Short-Squeeze and Beat
Xerox shares jumped nearly 27% after the results were published — one of the stock's biggest single-day moves in years. ScanX Trade noted the company beat Wall Street estimates for both earnings and revenue. About 32% of the public float was sold short before the report, amplifying the rally into a short-squeeze.
The company also made product moves during the quarter. In June, Xerox expanded its 9-Series A3 printer lineup with mid-range devices and launched new A4 color printers under its unified brand, according to Xerox Investor Relations. The moves signal Xerox is pushing deeper into the market even as it digests the Lexmark integration.
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