Xerox 2025 Q2 Earnings Sharp Net Income Drop of 688.9%

Xerox reported mixed results in its fiscal 2025 Q2 earnings, posting a significant net loss and flat revenue. The company swung to a loss of $0.87 per share, missing expectations, with net income dropping 688.9% year over year. Despite CEO optimism around the Lexmark integration and cost management, the earnings reflect ongoing challenges in the operating environment. The firm maintained its full-year guidance, factoring in acquisition and tariff-related costs.

Revenue
Xerox reported total revenue of $1.58 billion in Q2 2025, flat compared to $1.58 billion in the prior year. The company’s revenue was driven by the Services, maintenance, rentals, and other segment, which accounted for $911 million of total sales. Sales revenue stood at $665 million, contributing to the overall stability in top-line performance amid a challenging economic backdrop.

Earnings/Net Income
Xerox swung to a loss of $0.87 per share in 2025 Q2, compared to a profit of $0.12 per share in the same period last year, marking an 825.0% negative change. The company reported a net loss of $106 million, down from a net income of $18 million in 2024 Q2—a 688.9% decline. The sharp deterioration in profitability highlights the challenges the company continues to face in maintaining profitability under current conditions.

Price Action
The stock price of Xerox edged up 0.48% during the latest trading day and climbed 4.20% during the most recent full trading week. However, it has plummeted 22.57% month-to-date, reflecting investor caution ahead of the earnings release and broader market pressures.

Post Earnings Price Action Review
The post-earnings price action for XRX was notably underperforming, with a strategy of buying the stock after a revenue beat and holding for 30 days resulting in a -77.06% return. This significantly underperformed the benchmark return of 41.28%, with an excess return of -118.34% and a negative CAGR of -32.31%. The strategy exhibited a high Sharpe ratio of -0.70%, underscoring the poor risk-adjusted performance and lack of investor confidence following the earnings release.

CEO Commentary
Steve Bandrowczak, CEO of Xerox, expressed cautious optimism, noting that the second quarter demonstrated improved resiliency in financial results, driven by the company’s Reinvention strategy. Growth in IT and Digital Solutions, alongside disciplined cost management, helped maintain stability amid a volatile operating landscape. The recent completion of the Lexmark acquisition marks a key milestone in the company’s transformation, with the integration expected to enhance workflow and technology solutions. Looking ahead, the company remains focused on executing its Reinvention strategy and laying the groundwork for revenue, adjusted operating income, and free cash flow growth in 2026.

Guidance
For 2025, Xerox expects revenue to grow by 16-17% in constant currency, with an adjusted operating margin of approximately 4.5% and free cash flow of around $250 million. The guidance accounts for $30 to $35 million in tariff-related expenses, modest Lexmark-related synergies, and $50 to $75 million in one-time synergy implementation costs. Lexmark’s financial results are included from July 1, and the company is confident in its ability to mitigate the impact of tariffs over time.

Additional News
On August 6, 2025, Xerox’s CFO, Mirlanda Gecaj, acquired an undisclosed amount of shares in the company. This move underscores internal confidence in Xerox’s long-term strategy, particularly in light of the recently completed Lexmark acquisition, which is expected to drive long-term value. As the integration of Lexmark progresses, the company is focused on realizing cost synergies and expanding its workflow solutions. No dividend or buyback activity was disclosed in the three weeks leading up to the earnings report.