Xerox’s third quarter was marked by the ongoing integration of recent acquisitions and persistent macroeconomic headwinds. While sales grew meaningfully due to the inclusion of Lexmark and ITsavvy, management acknowledged that underlying revenue, adjusting for these deals, declined as customers delayed equipment purchases. CEO Steven Bandrowczak described the quarter as disappointing, citing “continued disruption associated with tariff and government funding uncertainty,” which primarily impacted print equipment sales. Notably, the company’s strong performance in IT Solutions partially offset these pressures.

Is now the time to buy XRX? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Xerox’s Q3 Earnings Call

• Ananda Baruah (Loop Capital) asked about the impact of government and commercial delays on equipment sales. CEO Steven Bandrowczak clarified that both macroeconomic and policy uncertainties contributed, but IT Solutions was less affected.
• Ananda Baruah (Loop Capital) inquired about how much of the increased synergy savings would reach the bottom line. CFO Mirlanda Gecaj stated roughly half of the new $50 million target would be realized in 2026, benefiting both gross and operating margins.
• Maya Neuman (Morgan Stanley) asked about the escalation of tariff headwinds and the effectiveness of price increases. Gecaj confirmed the tariff impact is now expected at $35 million in 2025, and price increases are being applied judiciously due to soft demand.
• Asiya Merchant (Citi) questioned the split of government spending weakness between print and IT, and the drivers of future free cash flow. Bandrowczak highlighted that IT investments in areas like AI and cloud remained resilient, while print suffered from deferred purchases.
• Asiya Merchant (Citi) also asked about competitive dynamics. Bandrowczak asserted Xerox has held market share and described the industry-wide nature of the current pullback, rather than a company-specific issue.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) the pace at which delayed equipment purchases rebound as government and macroeconomic uncertainties ease, (2) the realization and impact of Lexmark integration synergies on margins and operational efficiency, and (3) the continued momentum and cross-selling success of the IT Solutions business. Progress in rolling out new product launches and managing tariff costs will also be critical for tracking Xerox’s execution against its stated strategy.

Xerox currently trades at $3.09, down from $3.42 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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