Xerox cuts 2026 outlook and suspends dividends
Third-quarter earnings of $0.02 a share beat expectations by $0.06, but revenue of $1.87 billion fell short of the $1.88 billion expected.
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Xerox has cut its 2026 profit and cash flow outlook and suspended its common and preferred stock dividends.
Full-year adjusted operating income is now expected at $450 million to $475 million, down from a prior range of $555 million to $605 million. Free cash flow is now expected at $50 million to $100 million, down from about $250 million. Full-year revenue is still expected at about $7.6 billion.
Chief executive Louie Pastor said headwinds affecting the outlook have intensified, creating more pressure in the near term than the company had expected. He said the cost measures and the dividend suspension are meant to preserve cash and reduce debt.
On a pro forma basis, which puts both periods on the same footing, Xerox revenue fell 3.7 per cent in the first quarter and 6.5 per cent in the second. The Lexmark acquisition added about 32 percentage points to reported growth in each period. Reported revenue therefore leans on the acquisition while the underlying business shrinks. That makes the cut to adjusted operating income and free cash flow harder to treat as a one-quarter problem. The dividend suspension puts repair of the balance sheet ahead of payouts to shareholders.
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