Xerox tumbles 20% as weak guidance overshadows Q3 beat

Xerox Holdings Corporation (XRX) saw its stock plummet 20% after releasing third-quarter earnings that surpassed analyst expectations, but the company's weak guidance for the full year sent shares tumbling further. The tech giant reported adjusted earnings per share of $0.02, a stark contrast to the expected -$0.10. Revenue also exceeded forecasts, hitting $1.87 billion, slightly higher than the consensus estimate of $1.86 billion.

However, Xerox's full-year guidance for 2026 came as a significant letdown, as the company now anticipates adjusted operating income between $450 million and $475 million, a sharp drop from the previous range of $555 million to $605 million. The company also revised its free cash flow guidance to between $50 million and $100 million, down from an earlier forecast of $250 million.

The downward revision was attributed to higher-than-expected input costs, a shift in product mix from mid-range to entry-level offerings, a weakened market outlook, and lower-than-anticipated profit from IT Solutions. Xerox CFO Chuck Butler explained the reduced outlook in a statement, noting that the company has taken steps to proactively address upcoming debt maturities, including a debt exchange transaction announced earlier in the year.