Xerox’s second quarter results were met with a significant market selloff, reflecting investor concern over a sharp non-GAAP loss and declining margins despite revenue meeting expectations. Management pointed to softness in print equipment demand during April and May, which they attributed to tariff-related uncertainty and government funding delays. CEO Steven Bandrowczak noted, “The improved resiliency demonstrated in Q2 provides an affirmation of our strategic direction,” but acknowledged these external pressures, as well as higher costs, weighed on profit metrics.

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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 Q2 Earnings Call

• Ananda Baruah (Loop Capital): Asked about the factors behind demand softness in April and May and whether tariffs or broader uncertainty were to blame. President John Bruno explained that both government funding delays and tariff confusion led customers to delay purchases, with no cancellations seen.
• Ananda Baruah (Loop Capital): Sought clarification on IT Solutions growth, specifically the contribution from ITsavvy. CFO Mirlanda Gecaj clarified that the 150% segment growth was driven entirely by ITsavvy, while legacy IT Solutions revenue declined 3%.
• Maya Neuman (Morgan Stanley): Questioned whether recent demand weakness was broad-based or concentrated in specific segments. Bruno responded that pressure was most acute in government and education customers, while enterprise demand remained stable.
• Maya Neuman (Morgan Stanley): Asked about the extent and effectiveness of price increases to offset tariffs. Bruno stated that price hikes were implemented on equipment where possible, but contractual obligations limited immediate recovery in some service areas.
• Priyanka Thapa (JPMorgan): Inquired about Lexmark’s flat revenue outlook for 2026 despite targeting growth markets. Gecaj replied that Lexmark’s annuity-based model and strong A4 market position should outperform an industry expected to shrink by 3%.

Catalysts in Upcoming Quarters

Over the next few quarters, the StockStory team will be tracking (1) the pace and effectiveness of Lexmark integration, particularly the realization of cost synergies; (2) the ability to implement and maintain price increases to offset ongoing tariff-related cost pressures; and (3) continued growth in IT and digital solutions penetration within both legacy Xerox and Lexmark client bases. Execution in these areas will be critical for stabilizing revenue and restoring margin expansion.

Xerox currently trades at $4.31, down from $5.22 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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