Xerox's Q2 2025: Contradictions in Tariff Strategies, ITsavvy Impact, and Reinvention Efforts

Price increases to offset tariffs, impact of ITsavvy on IT Solutions segment, Lexmark integration and impact on financials, reinvention strategy and execution, and impact of tariffs and trade disruptions are the key contradictions discussed in Xerox Holdings Corporation's latest 2025Q2 earnings call.



Revenue and Financial Performance:
- Xerox's revenue in Q2 2025 was around $1.58 billion, roughly flat year-over-year in actual currency and declined 1.1% in constant currency.
- The adjusted operating income margin was 3.7%, lower year-over-year by 170 basis points, and free cash flow was a use of $30 million.
- The decline was due to softer demand for print equipment, higher tariff costs, and a delay in the sale of large finance receivables.

Print Segment Performance:
- Print segment revenue, including equipment sales and print post-sale revenue, faced declines, with equipment sales down 5.6% in actual currency and 6.7% in constant currency, and print post-sale revenue down 9.5% in actual currency.
- This drop was primarily due to lower print equipment demand, especially in April and May, and higher tariff expenses.

IT Solutions Growth:
- The IT Solutions segment reported significant growth, with revenue and gross profit increasing over 150% year-over-year, driven by the inclusion of ITsavvy.
- Pro forma for ITsavvy acquisition, IT Solutions gross billings increased by 8% year-over-year, reflecting strong demand for cloud enablement services.

Lexmark Acquisition and Synergies:
- The Lexmark acquisition is expected to contribute $1 billion in revenue in 2025, with cost synergies to exceed $250 million, up from the previous estimate of $200 million.
- The integration of Lexmark is anticipated to enhance Xerox's market share in print categories and contribute to revenue stabilization and profit improvement.