Key Highlights

  • Q3 2026 Revenue of $1.87 billion declined 4.7% year-over-year; constant currency decline of 4.5%
  • Adjusted Operating Income improved $59 million year-over-year to $124 million; adjusted Operating Margin of 6.6%, up 330 basis points
  • GAAP net loss of $1.015 billion, or $7.73 per share, including significant non-cash items
  • Dividend suspended on common and preferred shares; full-year adjusted operating income and free Cash Flow guidance lowered

Revenue Declines as Equipment Growth Offsets Services Pressure

Xerox Holdings Corporation (NASDAQ:XRX) reported Q3 2026 revenue of $1.87 billion, a decrease of 4.7% compared to the same period of 2025 (4.5% in constant currency). Despite the overall revenue decline, print equipment revenue grew during the quarter, with double-digit growth in both Entry and Production segments. The company also announced three new Production devices at PRINTING United Expo and a Partnership with Xeikon to enter the Packaging and Labels market.

CEO Louie Pastor stated that the company is seeing results in areas of focused execution, but that headwinds affecting its outlook have intensified, creating greater near-term pressure than anticipated. Management responded with cost measures to mitigate these pressures and preserve cash, including the suspension of dividends.

Adjusted Profitability Improves Despite GAAP Loss

Adjusted operating income for Q3 2026 was $124 million, up $59 million year-over-year, with an adjusted operating margin of 6.6%, a 330 basis point improvement from the prior-year period. This operational improvement reflects progress on Xerox's strategic priorities of stabilizing revenue, increasing profitability, and reducing leverage.

GAAP net loss was $1.015 billion, or $7.73 per diluted share, down $255 million or $1.72 per share from the prior-year period. Adjusted Net Income was $7 million, or $0.02 per diluted share, down $20 million or $0.18 per share year-over-year. The large difference between GAAP and adjusted results reflects significant non-cash charges included in the GAAP figures.

Cash Flow and Debt Management

Operating cash flow for Q3 2026 was $30 million, down $86 million year-over-year. Free cash flow was $7 million, a decrease of $81 million from the prior-year period. The company took steps to reduce debt during the quarter, including $8 million of non-cash debt reduction through its Warrant program, which retired 2030 convertible notes.

Xerox also announced the exchange of $174 million in 5.50% 2028 Senior Notes for $121 million of 10.25% 2030 Senior Secured Notes and $9 million in equity, as part of its ongoing effort to manage its debt Maturity profile and reduce leverage.

Dividend Suspension and Guidance Revision

In a significant Capital allocation decision, Xerox suspended its common and preferred dividends. Management cited the need to preserve cash amid intensifying near-term headwinds from higher input costs and market conditions as the rationale for the suspension. The company stated that the focus remains on reducing debt and improving profitability.

Xerox lowered its full-year 2026 adjusted operating income and free cash flow guidance, acknowledging that the headwinds are more severe than previously expected. Management indicated that cost measures are being implemented to address the pressures while maintaining focus on the company's three strategic priorities.

Xerox's third quarter reflected a company navigating a difficult operating environment, with intensifying input cost headwinds and market pressures weighing on revenue and cash flow even as adjusted operating margins improved meaningfully year-over-year. The Dividend suspension signals a clear prioritization of debt reduction and Balance Sheet management over near-term Shareholder distributions as Xerox works to stabilize its business.

Why did Xerox suspend its dividend?

Xerox suspended its common and preferred dividends to preserve cash amid intensifying headwinds from higher input costs and market pressures, while maintaining focus on debt reduction and profitability improvement.

How did Xerox's adjusted operating income perform in Q3 2026?

Adjusted operating income improved $59 million year-over-year to $124 million, with an adjusted operating margin of 6.6%, up 330 basis points, reflecting progress on the company's cost efficiency efforts.

What was Xerox's GAAP net loss in Q3 2026?

Xerox reported a GAAP net loss of $1.015 billion, or $7.73 per diluted share, in Q3 2026, which includes significant non-cash charges. On an adjusted basis, net income was $7 million, or $0.02 per diluted share.

What debt management actions did Xerox take in Q3 2026?

Xerox reduced debt through its warrant program, retiring 2030 convertible notes, and exchanged $174 million in 5.50% 2028 Senior Notes for $121 million of 10.25% 2030 Senior Secured Notes and $9 million in equity.