Xerox’s fourth quarter saw a negative market reaction as the company missed Wall Street’s revenue and profit expectations, despite posting 25.7% year-on-year sales growth. Management attributed the shortfall to ongoing macroeconomic headwinds, including elevated tariffs, rising product costs, and specific challenges in its IT solutions segment due to memory price increases. CEO Steven John Bandrowczak acknowledged, “Macro headwinds continued to weigh on transactional print equipment sales,” but highlighted improving sales pipelines and reduced cancellation rates as signs of stabilization. The integration of Lexmark and IT Savvy contributed to reported growth, but underlying declines persisted in legacy businesses.

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 Q4 Earnings Call

• Ananda Baruah (Loop Capital): asked if government-related order activity had normalized post-shutdown. CEO Steven John Bandrowczak responded that order activity was improving, aided by the expanded portfolio from recent acquisitions.
• Ananda Baruah (Loop Capital): requested clarification on the impact of rising memory prices across IT solutions and print. Bandrowczak explained that price and availability uncertainty required a mix of extending product life and moving clients to service-based models.
• Erik Woodring (Morgan Stanley): questioned how management prioritizes integration, reinvention, and cost control amid multiple moving parts. Bandrowczak emphasized one enterprise transformation office and a unified management system to coordinate all initiatives.
• Erik Woodring (Morgan Stanley): pressed on strategies for mitigating a potential pull-forward and second-half demand risks due to memory inflation. Bandrowczak detailed the company’s focus on helping clients extend asset life and shift towards software and service platforms.
• Asiya Merchant (Citigroup): inquired about cross-selling progress and go-to-market differences between Lexmark and legacy Xerox clients. Bandrowczak highlighted the leverage from existing client relationships and the ability to bundle broader portfolios for deeper market penetration.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will monitor (1) the pace of synergy realization from the Lexmark and IT Savvy integrations, (2) the impact of memory and tariff costs on margins and deal flow, and (3) the success of cross-selling IT solutions to Xerox’s existing client base. Progress on new product adoption and large contract wins will also be important indicators of execution.

Xerox currently trades at $2.29, down from $2.33 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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