Overview of Xerox's Q1 2026 Earnings#
Xerox Holdings Corporation has released its earnings report for the first quarter of 2026, showcasing a mixed financial performance. The company achieved a revenue of $1.85 billion, which is 5.71% higher than the analysts' expectations of $1.75 billion. However, its earnings per share (EPS) reported at -$0.43, which fell short of the anticipated -$0.27, marking a significant miss of 59.26%. Despite this shortfall in EPS, Xerox's stock saw a notable increase of 27.41% in premarket trading.
Key Financial Highlights#
- Revenue: $1.85 billion, reflecting a 27% increase compared to the same quarter last year.
- Earnings per Share (EPS): -$0.43, which is lower than the expected -$0.27.
- Adjusted Operating Margin: 3.9%, up 240 basis points year-over-year (YoY).
- Adjusted Gross Margin: 30.3%, an increase of 60 basis points YoY.
Impact of the Lexmark Acquisition#
The revenue growth was significantly influenced by Xerox's acquisition of Lexmark, which has contributed positively to its financial performance. This acquisition marks a shift from previous declines in revenue, indicating improvements in market conditions and strategic initiatives undertaken by the company.
Market Reaction and Future Outlook#
Following the earnings report, Xerox's stock price jumped to $2.00 from $1.57, reflecting investor optimism about the revenue beat and the Lexmark acquisition's impact. Despite a challenging year that saw a 63% decline in shares, analysts suggest that Xerox may be undervalued at its current trading level. Looking ahead, the company projects potential EPS improvements, forecasting -$0.04 for Q2 2026 and a positive $0.27 for Q3 2026. Additionally, revenue growth is expected to continue, with a 7% increase anticipated for the fiscal year 2026.