Xerox Cuts 2026 Operating Income Forecast to $450–475 Million

Key Facts

Xerox reported third-quarter 2026 revenue of $1.87 billion, down 4.7% year over year and 4.5% in constant currency, and lowered its full-year forecasts for adjusted operating income and free cash flow. The announcement came on October 29, after the company released its results at 6:30 a.m. Eastern Time, ahead of the 8:00 a.m. live broadcast to discuss them. Revenue exceeded analysts’ estimate of $1.86 billion, while adjusted earnings per share came to $0.02, compared with expectations for a loss of $0.10. But the cut to full-year guidance and suspension of stock dividends overshadowed the beat, according to market coverage. The coverage said the stock fell 19.7% after the results and new guidance.

The GAAP net loss was $1.015 billion, or $7.73 per share, in the third quarter. By contrast, the company reported adjusted net income of $7 million, or $0.02 per share, and adjusted operating income of $124 million, up $59 million from the same period a year earlier. The adjusted operating margin rose to 6.6%, an increase of 330 basis points year over year. Free cash flow, however, was just $7 million, down $81 million year over year. The figures show improvement in adjusted operating income and margin alongside a large accounting loss and weak cash flow.

The loss included a non-cash goodwill impairment of $959 million before tax and $955 million after tax, equivalent to $6.87 per diluted share. The company said lower forward-looking estimates for its print unit and other activities, amid continued macroeconomic uncertainty and an extended period of higher memory prices, led it to record the impairment. By revenue category, equipment sales rose 2.6% to $393 million, while after-market revenue fell 4.5% to $1.295 billion. IT solutions revenue declined 18.9% to $180 million; the company attributed this mainly to the timing of large public-sector sales contracts in the previous year. Equipment installations rose 9%, with entry-level sales up 20.9% and high-end sales up 14.1%, while mid-range sales fell 15.2%.

Xerox cut its 2026 adjusted operating income forecast to a range of $450 million to $475 million, from a previous range of $555 million to $605 million. It also lowered its free cash flow forecast to between $50 million and $100 million, from about $250 million. The company attributed the forecast cuts to higher-than-expected input costs, a product mix shift from mid-range to entry-level, a weaker market outlook and lower-than-expected IT solutions profit. It said its free cash flow estimate was also affected by lower adjusted operating income and the delay of some financing receivables and tariff refund claims to 2027. Thus, a quarterly beat coincided with a lower annual outlook because of cost, sales and cash collection pressures.

Xerox’s board suspended dividends on its common and preferred stock, according to a summary of the earnings call published on October 29. The summary quoted the company as saying the decision was intended to preserve cash and support debt reduction. In a parallel move, Xerox announced an exchange transaction involving about $174 million of notes due in 2028, to be exchanged for new secured notes due in October 2030 and common stock. The company expected to reduce total principal debt by about $53 million and extend the maturity of $121 million of 2028 debt to 2030. Chief Financial Officer Chuck Butler said the transaction, together with open-market purchases earlier in the year, addresses more than 30% of the outstanding 2028 notes and supports liquidity and deleveraging.

Xerox shares closed at $2.79 on October 28, compared with $2.54 in the previous session, according to EL7 data; both closes preceded the results announcement the following day. The 19.7% decline reported in market coverage was associated with the results announcement and the cut to 2026 forecasts, and does not describe the October 28 session. The company had announced that its results statement would be released at 6:30 a.m. Eastern Time on October 29, ahead of the live broadcast scheduled for 8:00 a.m. The debt exchange is expected to be completed on or around November 13, 2026, according to the company’s announcement. The transaction gives creditors the option to exchange every $1,000 of 2028 note principal for $690 of new note principal and $60 worth of Xerox common stock.