Benzinga Pro data showed Xerox Holdings shares down 36.74% at $1.76 at publication on Thursday as investors reacted to reduced financial forecasts. Xerox's third-quarter 2026 adjusted earnings reached 2 cents per share, compared with analysts' consensus expectation of a 4-cent loss. Quarterly revenue decreased from $1.96 billion a year earlier to $1.87 billion, exceeding Wall Street's $1.86 billion estimate. Revenue dropped 6.5% on a pro forma basis that included Lexmark in the year-earlier comparison. Xerox's GAAP net loss increased from $760 million a year earlier to $1.02 billion.
Adjusted operating income increased from $65 million to $124 million. Adjusted operating margin rose from 3.3% to 6.6%. Print and Other revenue decreased from $1.74 billion a year earlier to $1.69 billion. IT Solutions revenue declined from $226 million to $187 million. Operating cash flow decreased from $116 million a year earlier to $30 million. Free cash flow declined from $88 million to $7 million. Xerox finished the quarter with cash and cash equivalents of $412 million, compared with $512 million at the end of 2025. Long-term debt rose from $4.02 billion at year-end to $4.06 billion.
CEO Louie Pastor said revenue fell less than 5%. Pastor said equipment revenue grew 3%, the first increase in more than three years. Production equipment revenue increased 14% as demand improved and new products supported sales. Xerox expects further market share gains from platforms scheduled for launch in 2027. Xerox estimates production printing represents an approximately $9 billion market and is pursuing faster-growing segments through new products and a Zycon partnership expanding packaging and label operations.
Xerox sees long-term IT Solutions opportunities from existing customers, relationships with Microsoft and major equipment manufacturers, and service delivery that can expand. However, slower salesforce expansion, postponed customer purchases and stricter supplier and distributor terms have hurt near-term performance. Xerox plans price increases for parts of the product portfolio starting in the first quarter of 2027 to counter higher costs. Xerox is applying stricter equipment-placement criteria, simplifying the organization and expanding global capability centers. Xerox is also consolidating distribution centers and real estate and renegotiating vendor agreements. Xerox expects Lexmark integration synergies to deliver approximately $100 million in additional savings in 2027 compared with the previous year.
Pastor described service operations as Xerox's biggest long-term opportunity to improve profit. Xerox plans to cut technician visits and service costs through connected devices, sensors, artificial intelligence and remote troubleshooting. Xerox aims to resolve 70% of service calls remotely, compared with slightly more than half currently.
Xerox ranks leverage reduction as the highest capital-allocation priority. Xerox suspended dividends on common and preferred shares, which is expected to conserve approximately $28 million a year. Xerox announced a debt exchange covering approximately $174 million of notes maturing in 2028. The exchange will move about $121 million of maturities to 2030 and lower outstanding principal by approximately $53 million. The cashless transaction aims to protect liquidity while leaving cash interest expenses approximately unchanged.
Xerox retained a full-year 2026 revenue forecast of approximately $7.6 billion, in line with Wall Street estimates. However, Xerox reduced expected adjusted operating income from $555 million to $605 million to a new range of $450 million to $475 million. Xerox lowered expected free cash flow from $250 million to a range of $50 million to $100 million. Management attributed the cuts to higher memory and oil costs, more lower-margin entry-level equipment sales, weaker print demand and disappointing IT Solutions performance. Pastor warned that these pressures would persist into 2027. Xerox plans to counter the pressures through price increases, cost cuts, service efficiencies, Lexmark integration savings and debt reduction.
Thursday's trading volume reached approximately 14.94 million shares, exceeding five times the 100-day average of 2.98 million shares. Xerox's approximately $366.37 million market capitalization at Wednesday's close places Xerox among micro-cap stocks vulnerable to large price fluctuations.
Xerox Stock Falls 36.74% Amid Reduced Financial Forecasts
BenzingaShare
Summary
Xerox stock plunged 36.74% to $1.76 as the fear and greed index swung toward panic. The company reported Q3 2026 adjusted earnings of 2 cents per share, missing expectations. Revenue dropped to $1.87 billion, and GAAP net loss widened to $1.02 billion. Xerox slashed full-year forecasts due to rising costs and weak demand. Traders are now shifting focus to altcoins to watch amid market volatility.
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