Xerox revenue jumps 27% following Lexmark deal as operating margins expand

Xerox Holdings (NASDAQ:XRX) reported total revenue of $1.85 billion for the first quarter of 2026, a 26.7% increase (23.6% in constant currency) compared to the prior year.

The surge was primarily driven by the inorganic contributions from the Lexmark acquisition, though on a pro forma basis.

After adjusting for the acquisition—revenue saw a slight decline of 3.7%, reflecting ongoing broader market shifts in traditional document technology.

Profitability metrics showed significant structural improvement despite a GAAP net loss of $105 million, or $(0.84) per share.

Adjusted operating income reached $72 million, up $50 million year-over-year, while adjusted operating margin expanded 240 basis points to 3.9%.

Management attributed this expansion to disciplined cost management and the realization of integration synergies, which remain on track to deliver at least $300 million in total savings.

The company’s "Print and Other" segment reported revenue of $1.69 billion, bolstered by a 31% year-over-year increase in production installs and a materially higher sales pipeline compared to 2025.

Meanwhile, the IT Solutions segment showed significant momentum in leading indicators, with bookings and billings growing 32% and 21%, respectively, even as reported revenue for the division stood at $156 million.

Liquidity was a key focus during the quarter, as Xerox raised $450 million through a newly formed intellectual property joint venture with TPG Angelo Gordon.

The company also utilized its cash position to repurchase $101 million in face value of its 2028 Senior Notes.

While free cash flow for the quarter was a negative $165 million—reflecting expected Q1 seasonality—Xerox reaffirmed its full-year guidance of approximately $250 million, implying significant cash generation for the remainder of the year.