Document technology company Xerox (NASDAQ: XRX) reported Q1 CY2026 results exceeding the market’s revenue expectations, with sales up 26.7% year on year to $1.85 billion. On the other hand, the company’s full-year revenue guidance of $7.5 billion at the midpoint came in 1% below analysts’ estimates. Its non-GAAP loss of $0.11 per share was 60% above analysts’ consensus estimates.

Is now the time to buy Xerox? Find out by accessing our full research report, it’s free.

“This quarter’s results demonstrated tangible progress as revenue and profit trajectory improved, adjusted1 operating margin expanded, and we further enhanced our liquidity,” said Louie Pastor, chief executive officer at Xerox.

Company Overview

Pioneering the modern office copier and inventing technologies like Ethernet and the laser printer, Xerox (NASDAQ: XRX) provides document management systems, printing technology, and workplace solutions to businesses of all sizes across the globe.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $7.41 billion in revenue over the past 12 months, Xerox is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. For Xerox to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, Xerox’s 1.5% annualized revenue growth over the last five years was sluggish. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Xerox’s annualized revenue growth of 5.4% over the last two years is above its five-year trend, suggesting some bright spots.

We can dig further into the company’s revenue dynamics by analyzing its most important segment, Services, Maintenance, Rental Revenue. Over the last two years, Xerox’s Services, Maintenance, Rental Revenue revenue averaged 18.7% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company’s performance.

This quarter, Xerox reported robust year-on-year revenue growth of 26.7%, and its $1.85 billion of revenue topped Wall Street estimates by 6.6%.

Looking ahead, sell-side analysts expect revenue to grow 2.1% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges.

ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.

Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.

Adjusted Operating Margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

Xerox was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 4.2% was weak for a business services business.

Looking at the trend in its profitability, Xerox’s adjusted operating margin decreased by 1.9 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Xerox’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Xerox generated an adjusted operating margin profit margin of negative 3.5%, down 5 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Xerox, its EPS declined by 19.7% annually over the last five years while its revenue grew by 1.5%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Xerox’s earnings to better understand the drivers of its performance. As we mentioned earlier, Xerox’s adjusted operating margin declined by 1.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Xerox, its two-year annual EPS declines of 57.1% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q1, Xerox reported adjusted EPS of negative $0.11, down from negative $0.06 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Xerox’s Q1 Results

It was good to see Xerox beat analysts’ revenue and EPS expectations this quarter. On the other hand, its full-year revenue guidance slightly missed. Zooming out, we think this was a solid print, and the guidance doesn't seem to be weighing on the stock at all. Shares traded up 12.9% to $1.78 immediately following the results.

Xerox may have had a good quarter, but does that mean you should invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).