What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-12 · 452 added, 271 removed, 553 unchanged (57% of the section changed)

10 unchanged sentences

Myriad is fully consolidated by Xerox Holdings.

At March 31, 2025 and December 31, 2024 Xerox Ventures, LLC held investments of $39 million and $40 million, respectively.

At June 30, 2025 and December 31, 2024 Xerox Ventures, LLC held investments of $39 million and $40 million, respectively.

Due to its immaterial nature, and for ease of discussion, Xerox Ventures LLC's results are included within the following discussion.

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Currency impact can be determined as the difference between actual growth rates and constant currency growth rates.

In the first quarter balanced execution, the benefits of last year’s Reinvention-related organizational changes and ongoing Reinvention initiatives resulted in an improved revenue trajectory and another quarter of double-digit declines in operating expenses, excluding one-time Reinvention costs and the impact from the recent acquisition of ITsavvy.

Sales productivity and services metrics have improved, and the ITsavvy integration and cost reduction programs are running ahead of Plan, placing us on a near-term path for revenue stabilization and growth in adjusted 1 operating income.

Equipment sales of $284 million in the first quarter 2025 declined 2.1% in actual currency, or 0.7% in constant currency 1 , as compared to the first quarter 2024, an improvement in the pace of decline compared to recent quarters.

The decline primarily reflects product mix and reductions in high-end installations, due to exit of certain production print manufacturing operations in the prior year.

Total equipment installations increased approximately 24.0% year-over-year, due primarily to growth in entry level equipment and modest growth in mid-range equipment.

Post sale revenue of $1.2 billion declined 3.2% in actual currency, or 1.2% in constant currency 1 , as compared to first quarter 2024.

First quarter 2025 post sale revenue included an 8.2-percentage point benefit from the recent acquisition of ITsavvy.

Second quarter results demonstrated an improved resilience in revenue and adjusted 1 operating income afforded by our Reinvention.

Actions taken to shift Xerox’s revenue mix toward businesses with higher underlying rates of growth and the implementation of a more flexible, simplified operating structure provided revenue stability and supported adjusted 1 operating income amid a volatile operating landscape.

Equipment sales of $336 million in the second quarter 2025 declined 5.6% in actual currency, or 6.7% in constant currency 1 , as compared to the second quarter 2024.

The decline primarily reflects lower installations, due in part to a period of soft demand in April and May amid peak tariff and trade-related uncertainty.

Excluding Reinvention-related actions, equipment sales declined 3.3%.

Total equipment installations decreased approximately 12.0% year-over-year, with declines concentrated in the high-end and entry level equipment categories.

Post-sale revenue of $1.2 billion increased 1.5% in actual currency, or 0.5% in constant currency 1 , as compared to second quarter 2024.

Second quarter 2025 post-sale revenue included a 10.6-percentage point benefit from the recent acquisition of ITsavvy.

Excluding ITsavvy, post-sale revenue declined 9.1% in actual currency.

The decline was primarily due to lower managed print services 2 revenue.

Reinvention-related actions, and lower financing revenue also contributed to the decline.

Excluding these effects, excluding growth in legacy IT Solutions’ backlog 3 , post sale revenue declined low single digits.

Pre-tax loss of $67 million for the first quarter 2025 improved by approximately $83 million as compared to a pre-tax loss of $150 million in the first quarter 2024.

Pre-tax loss margin improved 5.4% for the first quarter 2025 as compared to the first quarter 2024 and included a 0.6-percentage point benefit from the recent acquisition of ITsavvy.

Further benefiting the first quarter 2025 was the exit of certain production print manufacturing operations in the prior year period and sales of certain direct business operations in Latin America, which resulted in a net disposal loss of $54 million in the first quarter 2024, lower Restructuring and related costs, net, as well as lower Selling, administrative and general expenses associated with productivity and cost savings related to the

The organic decline was primarily due to lower managed print services 2 revenue, and to a lesser extent, delays in supplies sales associated with recently implemented tariffs.

Reinvention-related actions, including the intentional reductions in non-strategic revenue and the effects of geographic and offering simplification, contributed to the decline.

Excluding these impacts, organic post-sale revenue declined mid single digits in constant currency 1 .

Pre-tax loss of $60 million for the second quarter 2025 decreased by approximately $85 million as compared to pre-tax income of $25 million in the second quarter 2024.

Pre-tax loss margin decreased 5.4-percentage points for the second quarter 2025 as compared to the second quarter 2024 and included a 0.7-percentage point benefit from the recent acquisition of ITsavvy.

The decrease is primarily due to lower gross profit, which included the effects of product cost increases, incremental tariff-related costs and declines in financing and other fees associated with the intentional reduction of our finance receivable portfolio.

Pre-tax loss was further affected by an increase in Other expenses, net, which reflected higher non-financing interest expense in the current year quarter related to recently

Xerox 2025 Form 10-Q 46

Company's Reinvention.

These benefits were partially offset by higher Other expenses, net, primarily reflecting fees associated with the recently completed debt offering, and lower revenue and associated gross profit.

Adjusted 1 operating income of $22 million decreased by $11 million as compared to first quarter 2024, reflecting lower revenue and gross profit, as well as higher advertising expense, partially offset by productivity and cost savings related to the Company's Reinvention, lower bad debt expense and favorable currency.

completed borrowings in support of the Lexmark acquisition and the benefits of insurance proceeds related to a legal settlement in the second quarter 2024.

These impacts were partially offset by lower Selling, administrative and general expenses, primarily reflecting productivity and cost savings related to the Company's Reinvention and lower incentive compensation and benefits costs.

Adjusted 1 operating income of $59 million decreased by $26 million as compared to second quarter 2024, primarily due to lower gross profit, reflecting product cost increases, incremental tariff-related costs and declines in financing-related fees.

These impacts were partially offset by productivity and cost savings related to the Company's Reinvention, including lower incentive compensation and benefits costs.

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IT Solutions and digital services are not included in managed print services.

(3) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates.

It includes print-related devices as well as IT hardware associated with our IT Solutions offerings.

Recent Developments

Based on tariffs in place on May 1, 2025, we believe that Xerox’s current exposure to purchases subject to reciprocal tariffs in the U.S., excluding China, is less than 10% of total company cost of sales.

Following ongoing adjustments in manufacturing capacity, product purchases imported to the U.S.

and subject to all forms of China tariffs is expected to be limited to a low single digit percentage of cost of sales by the end of 2025, impacting only select equipment, parts, and supplies.

Plans are in place today to shift most China-produced goods to countries with lower tariffs.

Revenues from Print Services and Financing, which is more than 60% of total Print revenue, has minimal reliance on imported products.

In IT Solutions, tariff exposure varies by OEM partner, and we expect associated costs to be fully passed through to end users.

Based on tariffs in place on May 1, 2025, the expected reduction in operating income, net of price and supply chain mitigation measures already in place or planned, associated with incremental tariff costs, would be approximately $50 million in 2025.

If China tariffs are reduced from 145% to 60%, we expect to be able to offset the impact of tariffs through a comprehensive set of price increases, surcharges, geographic rebalancing and supply chain-related mitigation efforts, as well as incremental Reinvention-related savings.

We are working with supplier partners to minimize tariff-related cost increases and will monitor client sentiment and demand in response to price increases or surcharges used to mitigate the financial impact of future tariffs.

Pending Acquisition of Lexmark

We continue to make progress toward the closing of Lexmark International II (Lexmark) (the Lexmark Acquisition).

We received several key regulatory approvals in the past few months, including clearance of HSR in the US, anti-trust clearance in the UK and Canada and the clearance of most major EU countries’ Foreign Direct Investment regulatory processes.

Remaining approvals are expected in the second quarter 2025.

Outside of country-specific approvals, the last significant condition to close is the Ninestar shareholder vote and Chinese securities exchange approval, which is expected to take place in the coming months.

We have secured 32% of the required shareholder vote as part of the acquisition agreement and we currently expect closing to occur during the third quarter 2025.

We continue to expect adjusted 1 earnings and EPS accretion associated with the Lexmark Acquisition, despite a slightly higher than expected cost of funding and the potential for incremental tariff expenses.

Importantly, based on U.S.

tariffs currently proposed, we expect no impact from tariffs on Lexmark’s branded business within a few quarters of acquisition close.

Acquisition of Lexmark

On July 1, 2025, Xerox Corporation completed its previously announced acquisition of all of the issued and outstanding equity securities of Lexmark International II, LLC (Lexmark) from Ninestar Group Company Limited

We continue to expect adjusted 1 earnings and Earnings Per Share accretion associated with the Lexmark Acquisition, despite a slightly higher than expected cost of funding.

Based on U.S.

tariffs currently proposed, we expect no material impact from tariffs on Lexmark’s results.

Lexmark has a large manufacturing facility in Juarez, Mexico that can support all expected imports of branded product into the U.S.

market on a USMCA compliant basis.

Refer to Note 21 - Subsequent Events in the condensed consolidated financial statements for additional information regarding the acquisition of Lexmark.

During the first quarter of 2025, the Company updated its determination of reportable segments to align with a change in how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies.

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Refer to Note 1 - Basis of Presentation in the Condensed Consolidated Financial Statements for additional information regarding the valuation allowance.

Tax Law Change

On July 4, 2025, H.R.

1, the One Big Beautiful Bill Act (the Act), was signed into law.

Refer to Note 21 - Subsequent Events for additional information regarding the Act.

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(1) Refer to the “Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure.

Total revenue of $1.58 billion for second quarter 2025 decreased 0.1% from second quarter 2024, including a 8.2-percentage point benefit from the recent acquisition of ITSavvy, as well as a 1.0-percentage point favorable impact from currency.

Total revenue reflected an increase of 1.5% in Post sale revenue, including a 10.6-percentage point benefit from the recent acquisition of ITSavvy, as well as a 1.0-percentage point favorable impact from currency, and a decrease of 5.6% in Equipment sales revenue, including a 1.1-percentage point favorable impact from currency.

Total revenue of $3.03 billion for the six months ended June 30, 2025 decreased 1.5% as compared to the prior year period, including a 7.5-percentage point benefit from the recent acquisition of ITSavvy, as well as a 0.4-percentage point unfavorable impact from currency.

Total revenue for the six months ended June 30, 2025 reflected a decrease of 0.9% in Post sale revenue, including a 9.4-percentage point benefit from the recent acquisition of ITSavvy including, and a 0.6-percentage point unfavorable impact from currency, and a decrease of 4.0% in Equipment sales revenue, with no impact from currency.

Xerox 2025 Form 10-Q 47

Total revenue of $1.46 billion for the three months ended March 31, 2025 decreased 3.0% as compared to the prior year period, including a 6.6-percentage point benefit from the recent acquisition of ITSavvy, partially offset by 1.9-percentage point unfavorable impact from currency.

Total revenue reflected a decrease of 3.2% in Post sale revenue, including a 2.0-percentage point unfavorable impact from currency, and a decrease of 2.1% in Equipment sales revenue, including a 1.4-percentage point unfavorable impact from currency.

Net loss and adjusted 1 Net (loss) income were as follows:

Three Months Ended March 31,

(in millions) 2025 2024 B/(W)

Net Loss $ (90) $ (113) $ 23

Net (loss) income and adjusted 1 Net (loss) income were as follows:

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 B/(W) 2025 2024 B/(W)

Net (Loss) Income $ (106) $ 18 $ (124) $ (196) $ (95) $ (101)

Adjusted (1) Net (Loss) Income

(77) 41 (118) (81) 52 (133)

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(1) Refer to the “Non-GAAP Financial Measures” section for an explanation of the non-GAAP financial measure.

First quarter 2025 Net loss was $90 million as compared to the first quarter 2024 Net loss of $113 million.

Net loss was lower by $23 million primarily reflecting a divestiture of certain direct business operations in Latin America and the exit of certain production print manufacturing operations, both in the prior year.

The lower level of (loss) also reflects lower Restructuring and related costs, net, Selling, administrative and general expenses, and Research, development and engineering expenses (RD&E).

These positive impacts were partially offset by higher Income tax expense, lower revenues, higher Other expenses, net and lower gross profit.

First quarter 2025 adjusted 1 Net loss of $4 million increased by $15 million as compared to the prior year period, primarily reflecting lower revenue and gross profit, as well as higher Other expenses, net.

These negative impacts were partially offset by lower Selling, administrative and general expenses, Income tax expense and RD&E.

Second quarter 2025 Net (loss) was $106 million as compared to the second quarter 2024 Net Income of $18 million.

Net loss was higher by $124 million primarily reflecting lower gross profit, as well as higher Other expenses, net, and Income tax expense, all of which was partially offset by lower Selling, administrative and general expenses, Research, development and engineering expenses (RD&E), and Restructuring and related costs, net.

Second quarter 2025 adjusted 1 Net (loss) was $77 million as compared to Net Income of $41 million during the second quarter 2024.

Adjusted 1 Net (loss) was higher by $118 million primarily reflecting higher Income tax expense, as well as lower gross profit and revenues, and Other expenses, net.

These negative impacts were partially offset by lower Selling, administrative and general expenses, and RD&E.

Net (loss) for the six months ended June 30, 2025 of $196 was an increase of $101 million as compared to the prior year period Net (loss) of $95 million.

The higher level of loss primarily reflected higher Income tax expense, as well as lower gross profit and revenues, and higher Other expenses, net.

These negative impacts were partially offset by lower divestitures, as the prior year included the divestiture of certain direct business operations in Latin America, as well as lower Selling, administrative and general expenses, Restructuring and related costs, net, and RD&E.

A djusted 1 Net (loss) for the six months ended June 30, 2025 was $81 million as compared to the prior year period adjusted 1 net income of $52 million.

A djusted 1 Net (loss) was higher by $133 million primarily reflecting lower gross profit and revenue, as well as higher Income tax expense and Other expenses, net.

These negative impacts were partially offset by lower Selling, administrative and general expenses, and RD&E.

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The following is a summary of our segments - Print and Other and IT Solutions :

Three Months Ended March 31,

(in millions) 2025 2024 % Change

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 % Change 2025 2024 % Change

Print and Other $ 1,366 $ 1,494 (8.6) % $ 2,660 $ 2,922 (9.0) %

2 unchanged sentences

Intersegment Elimination (1)

Corporate Other — — NM

(3) — NM (4) — NM

Corporate Other — — NM — — NM

Total Revenue $ 1,576 $ 1,578 (0.1) % $ 3,033 $ 3,080 (1.5) %

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Intersegment Elimination (2)

(3) — NM (4) — NM

Corporate Other 16 23 (30.4) % 40 47 (14.9) %

1 unchanged sentence

Print and Other $ 65 $ 107 (39.3) % $ 106 $ 165 (35.8) %

IT Solutions 5 (1) NM

IT Solutions 10 1 NM 15 — NM

Total Segment profit 75 108 (30.6) % 121 165 (26.7) %

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Xerox 2025 Form 10-Q 48

Cash flows from operating activities during the three months ended March 31, 2025 were a use of $89 million and decreased $10 million as compared to the prior year period.

The decrease primarily related to lower net proceeds from the on-going sales of finance receivables under the finance receivables funding agreements, which were partially offset by the timing of working capital 1 , and lower finance receivable originations.

Cash provided by investing activities during the three months ended March 31, 2025 was $6 million, reflecting $19 million related to the sale of a surplus facility, $3 million related to a change in lease classification for certain vehicles, and $5 million from a divestiture, all of which was partially offset by capital expenditures of $20 million.

Cash used in financing activities during the three months ended March 31, 2025 was $159 million, reflecting net payments of approximately $72 million on secured financing arrangements, approximately $28 million for payments on secured promissory notes, and $7 million on the Term Loan B facility.

Dividend payments were $39 million, and other financing, net was $16 million, reflecting $6 million for repurchases related to stock-based compensation, $5 million related to finance leases, and $4 million for payments of financing commitment fees related to the expected acquisition of Lexmark.

Cash flows from operating activities during the six months ended June 30, 2025 were a use of $100 million and decreased $144 million as compared to the prior year period.

The decrease primarily related to lower net proceeds from the on-going sales of finance receivables under the finance receivables funding agreements, as well as lower profitability, both of which were partially offset by the timing of working capital 1 , lower finance receivable originations, the timing of payments for accrued compensation, and lower payments for restructuring.

Cash used in investing activities during the six months ended June 30, 2025 was $12 million, reflecting capital expenditures of $39 million, as well as the investment in a noncontrolling interest of $4 million, both of which were partially offset by $19 million related to the sale of a surplus facility, $5 million related to a change in lease classification for certain vehicles, and $6 million from a divestiture.

Cash provided by financing activities during the six months ended June 30, 2025 was $459 million, reflecting proceeds from the issuance of our First Lien Senior Secured Notes of $400 million (First Lien Notes), and the issuance of our Second Lien Senior Secured Notes of $500 million (Second Lien Notes), offset by deferred debt issuance costs of $23 million and discounts of $17 million.

Payments on debt reflected $102 million on the Term Loan B facility, $90 million on the 5.000% Senior Notes due in August 2025, $72 million on secured financing arrangements, and $55 million on secured promissory notes.

Dividend payments were $58 million, and other financing, net was $29 million, reflecting $15 million for payments of financing commitment fees related to the acquisition of Lexmark, $6 million for repurchases related to stock-based compensation and $7 million related to finance leases.

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(1) Working capital, net reflects Accounts receivable, Billed portion of finance receivables, Inventories and Accounts payable.

Given the evolving and fluid nature of proposed tariff policies, and the uncertain impact of future policy outcomes on macroeconomic conditions, we have not adjusted our full-year outlook.

We continue to expect Revenue to grow at low single-digits in constant currency 1 , inclusive of a full year of revenue associated with the recent ITsavvy acquisition, and adjusted 1 operating income margin is expected to be at least 5.0%.

We also continue to expect operating cash flows to be between $420 million to $470 million, and capital expenditures to be approximately $70 million in 2025.

Guidance does not include any impact from the pending acquisition of Lexmark.

Guidance further excludes potential adverse effects of tariff and trade policy, and the resultant impact on the macroeconomic outlook for the second half of the year, as tariff rates and trade policy remain fluid and unpredictable.

We currently expect minimal tariff-related impacts to our financial results in the second quarter of 2025.

Xerox's 2025 guidance now includes six months of activity associated with the recent Lexmark acquisition, which closed on July 1, 2025.

We expect Revenue to grow 16%-17% in constant currency 1 .

While profitability is expected to improve, the impacts of tariff-related expenses, net of mitigation efforts, and modest Lexmark-related synergies, will result in modestly lower margins.

We now expect operating cash flows to be approximately $345 million, which is a decrease from our previous guidance of between $420 million to $470 million.

The decrease reflects a higher level of cash tariff expenses and one-time costs associated with the implementation of synergy savings.

Additionally, we now expect capital expenditures to be approximately $95 million in 2025, an increase from our original guidance of approximately $70 million, reflecting, in part, the inclusion of Lexmark.

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Three Months Ended

March 31, % of Total Revenue

(in millions) 2025 2024 % Change CC % Change 2025 2024

June 30, Six Months Ended

June 30, % of Total Revenue

(in millions) 2025 2024 % Change CC % Change 2025 2024 % Change CC % Change 2025 2024

Equipment sales $ 336 $ 356 (5.6) % (6.7) % $ 620 $ 646 (4.0) % (4.0) % 20 % 21 %

1 unchanged sentence

Total Revenue $ 1,576 $ 1,578 (0.1) % (1.1) % $ 3,033 $ 3,080 (1.5) % (1.1) % 100 % 100 %

Reconciliation to Condensed Consolidated Statements of Loss:

Reconciliation to Condensed Consolidated Statements of (Loss) Income:

Sales $ 665 $ 611 8.8 % 8.5 % $ 1,222 $ 1,134 7.8 % 8.6 %

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Intersegment elimination (4)

(1) — NM NM — % — %

(3) — NM NM (4) — NM NM — % — %

Total Revenue (5)

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CC - See "Currency Impact" section for a description of Constant Currency.

(1) IT Products reflect IT hardware and software solutions provided by the IT Solutions segment.

(1) IT Products reflect IT hardware, software solutions and services provided by the IT Solutions segment.

Refer to Reportable Segments - IT Solutions for further information.

(2) Includes financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $33 million and $42 million for the three months ended March 31, 2025 and 2024, respectively.

(3) Services, maintenance, rentals and other revenue include IT services support of $58 million and $27 million for the three months ended March 31, 2025 and 2024, respectively, provided by our IT Solutions segment.

(4) Primarily reflects IT hardware, software solutions and hardware sold by the IT Solutions segment to the Print and Other segment.

(2) Includes financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $32 million and $38 million for the three months ended June 30, 2025 and 2024, respectively and $65 million and $80 million for the six months ended June 30, 2025 and 2024, respectively.

(3) Services, maintenance, rentals and other revenue include IT services support of $57 million and $28 million for the three months ended June 30, 2025 and 2024, respectively, and $115 million and $55 million for the six months ended June 30, 2025 and 2024, respectively.

provided by our IT Solutions segment.

(4) Primarily reflects IT hardware, software solutions and services sold by the IT Solutions segment to the Print and Other segment.

(5) Refer to Note 4 - Segment Reporting in the Condensed Consolidated Financial Statements for additional information regarding our reportable segments.

First quarter 2025 total revenue decreased 3.0% as compared to first quarter 2024, and included a 1.9-percentage point adverse impact from currency.

First quarter 2025 total revenue also included a 6.6-percentage point benefit from the recent acquisition of ITsavvy.

First quarter 2025 equipment sales revenue decreased at constant currency 1 , and included a 0.9-percentage point adverse impact from the exit of certain production print manufacturing operations in the prior year period and the effects of geographic simplification, partially offset by a reduction in backlog 3 .

First quarter 2025 Post sale revenue decreased at constant currency 1 and included an 8.2-percentage point benefit from the recent acquisition of ITsavvy.

The decrease was due to a decline in managed print services 2 revenue, driven by lower outsourcing and print service revenue, and lower supplies.

Second quarter 2025 total revenue decreased 0.1% as compared to second quarter 2024, and included a 1.0-percentage point benefit from currency.

The decrease is primarily due to lower equipment sales, reflecting, in part, the effects of Reinvention, and lower installations.

These adverse impacts were partially offset by higher post sale revenue.

Second quarter 2025 total revenue also included an 8.2-percentage point benefit from the recent acquisition of ITsavvy.

Total revenue for the six months ended June 30, 2025 decreased 1.5%, and included a 0.4-percentage point adverse impact from currency.

The decrease is due to lower equipment and post sale revenue, reflecting, in part, the effects of Reinvention, and unfavorable equipment mix, partially offset by higher installation activity.

Total revenue for the six months ended June 30, 2025 also included a 7.5-percentage point benefit from the recent acquisition of ITsavvy.

Second quarter 2025 equipment sales revenue decreased at constant currency 1 due to lower installations and included a 2.3-percentage point adverse impact from Reinvention-related actions, including the exit of certain production print manufacturing operations in the prior year period.

Xerox 2025 Form 10-Q 50

Total equipment sales revenue for the six months ended June 30, 2025 decreased at constant currency 1 , and included a 3.1-percentage point adverse impact from Reinvention-related actions including the impact from the exit of certain production print manufacturing operations in the prior year period, as well as unfavorable product mix.

The impacts were partially offset by higher installations.

Second quarter 2025 Post sale revenue increased at constant currency 1 and included an 10.6-percentage point benefit from the recent acquisition of ITsavvy.

The organic decline reflects lower managed print services 2 revenue, driven by lower outsourcing and print services, and lower supplies revenue.

Post sale revenue was also adversely affected by intentional reductions in non-strategic revenue, such as paper and financing revenue, and the effects of geographic and offering simplification.

Total post sales revenue for the six months ended June 30, 2025 decreased at constant currency 1 , and included a 9.4-percentage point benefit from the recent acquisition of ITsavvy.

The organic decline reflected lower managed print services 2 revenue, driven by lower outsourcing and print service revenue, and lower supplies.

Post sale revenue declines also reflect intentional reduction in non-strategic revenue, such as paper and financing income, and the effects of geographic and offering simplification.

These impacts were partially offset by higher IT Solutions revenue, driven by the ITsavvy acquisition, and modest growth in digital services revenue.

These impacts were partially offset by modest growth in digital services revenue.

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IT solutions and digital services are not included in managed print services.

(3) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates.

It includes print-related devices as well as IT hardware associated with our IT Solutions offerings.

Xerox 2025 Form 10-Q 46

Total revenue for the three months ended March 31, 2025 reflected the following:

Total revenue for the six months ended June 30, 2025 reflected the following:

Post sale revenue

Post sale revenue reflects revenues from managed print services 2 , supplies, paper and financing.

Post sale revenue primarily reflects revenues from managed print services 2 , supplies, paper and financing.

These revenues are associated not only with the population of devices in the field, which is affected by installs and removals, but also by the page volumes generated from the usage of such devices and the revenue per printed page.

Post sale revenue also includes revenues from IT Solutions, comprised of IT products and services, Digital services, as well as gains, commissions, and servicing revenue associated with the sale of finance receivables.

Post sale revenue decreased 3.2% as compared to the first quarter of 2024, which included a 2.0-percentage point adverse impact from currency.

First quarter 2025 total Post sale revenue included an 8.2-percentage point benefit from the recent acquisition of ITsavvy.

Post sale revenue increased 1.5% as compared to the second quarter of 2024, which included a 1.0-percentage point benefit from currency, as well as a 10.6-percentage point benefit from the recent acquisition of ITSavvy.

Post sale revenue decreased 0.9% for the six months ended June 30, 2025 as compared to the prior year period, including a 0.6-percentage point adverse impact from currency, and a 9.4-percentage point benefit from the recent acquisition of ITsavvy.

Post sale revenue reflected the following:

• Services, maintenance, rentals and other revenue includes maintenance revenue (including bundled supplies), the services portion of our IT Solutions offering, digital services revenue, rentals, financing, and other revenues.

For the three months ended March 31, 2025, these revenues decreased 8.1% as compared to first quarter of 2024, which included a 1.7-percentage point adverse impact from currency.

First quarter 2025 revenues included a 3.3-percentage point benefit from the recent acquisition of ITsavvy.

The decline in constant currency 1 was primarily due to managed print services 2 revenue which declined high-single digits as compared to first quarter 2024, reflecting lower outsourcing and print service revenue, which includes the effects of geographic and offering simplification, and lower financing revenue.

Lower financing revenue reflects a continued reduction of the average finance receivable balance in the first quarter 2025 as a result of the sales of finance receivables in recent quarters to HPS Investment Partners (HPS), and De Lage Landen Financial Services Canada Inc., and De Lage Landen Financial Services France Inc.

These impacts were partially offset by higher IT Solutions services revenue, driven by the ITsavvy acquisition, and modest growth in digital services revenue.

• Services, maintenance, rentals and other revenue includes maintenance and outsourcing revenue (including bundled supplies), the services portion of our IT Solutions offering, digital services revenue, rentals, financing, and other revenues.

For the three months ended June 30, 2025, these revenues decreased 5.8% as compared to second quarter of 2024, which included a 1.4-percentage point benefit from currency, as well as a 3.1-percentage point benefit from the recent acquisition of ITsavvy.

For the six months ended June 30, 2025 the revenues decreased 6.9% as compared to the prior year period, which included a 0.1-percentage point adverse impact from currency, as well as a 3.2-percentage point benefit from the recent acquisition of ITsavvy.

The respective decline in constant currency 1 for both the three and six months ended June 30, 2025 was primarily due to managed print services 2 revenue which declined high-single digits as compared to the respective prior year periods, reflecting lower outsourcing and print service revenue, and the effects of geographic and offering simplification, which had a 2.1-percentage point adverse impact and a 2.5-percentage point adverse impact during the three and six months ended June 30, 2025.

The decline is also due to lower financing revenue, which had a 1.9-percentage point adverse impact and a 1.2-percentage point adverse impact during the three and six months ended June 30, 2025, reflecting a continued reduction of the average finance receivable balance in the first half of 2025 as a result of the sales of finance receivables in recent quarters to HPS Investment Partners (HPS), and De Lage Landen Financial Services Canada Inc., and De Lage Landen Financial Services France Inc.

For the six months ended June 30, 2025, these impacts were partially offset by modest growth in digital services revenue.

• IT products revenue includes the sale of notebooks, network communications and other endpoint devices, desktop computers and other IT hardware.

Software product sales include deployments of cloud and security solutions, endpoint security application suites, operating systems, other applications and network management solutions.

First quarter 2025 revenues increased 123.4% as compared to first quarter 2024, and included a 1.2-percentage point benefit from currency.

First quarter 2025 revenues included a 143.8-percentage point benefit from the recent acquisition of ITsavvy.

Excluding the impact of ITsavvy, IT products revenues decreased 20.4% in actual currency as compared to first quarter 2024 due to growth in legacy IT Solutions’ backlog 3 , the timing of large product placements in the prior year, a larger mix of revenue subject to deferred revenue recognition, and lower in-period billings in certain legacy IT Solutions regions.

Xerox 2025 Form 10-Q 51

◦ For the three months ended June 30, 2025, these revenues increased 173.2% as compared to second quarter of 2024, and included no impact from currency.

Second quarter 2025 revenues included a 177.0-percentage point benefit from the recent acquisition of ITsavvy.

Excluding the impact of ITsavvy, IT products revenues decreased 3.8% in actual currency as compared to second quarter of 2024 due primarily to a larger product mix subject to net classification and revenue deferrals.

◦ For the six months ended June 30, 2025, these revenues increased 150.5% as compared to the prior year period, and included a 1.0-percentage point adverse impact from currency.

2025 revenues included a 162.0-percentage point benefit from the recent acquisition of ITsavvy.

Excluding the impact of ITsavvy, IT products revenues decreased 11.5% in actual currency as compared to the prior year period due the timing of large product placements in the prior year, a larger product mix subject to net classification and revenue deferrals.

• Supplies, paper and other sales revenue includes unbundled supplies, paper and other sales.

For the three months ended March 31, 2025, these revenues decreased 9.7% as compared to the first quarter of 2024, which included a 3.8-percentage point adverse impact from currency.

The decline in constant currency 1 primarily reflects lower paper sales as a result of the sale of our European paper business and lower supplies revenue.

For the three months ended June 30, 2025, these revenues decreased 11.6% as compared to the second quarter of 2024, which included a 0.9-percentage point adverse impact from currency.

For the six months ended June 30, 2025, these revenues decreased 10.6% as compared to the prior year period, and included a 2.2-percentage point adverse impact from currency.

The respective decline in constant currency 1 for both the three and six months ended June 30, 2025 primarily reflects lower paper sales as a result of the sale of our European paper business and lower supplies revenue.

Equipment sales revenue

Equipment sales revenue decreased 2.1% as compared to the first quarter of 2024, which included a 1.4-percentage point adverse impact from currency.

The decrease in constant currency 1 was primarily attributable to the exit of certain production print manufacturing operations in the prior year and Reinvention-related actions, including geographic simplification, partially offset by a reduction in backlog 3 .

Equipment sales revenue decreased 5.6% as compared to the second quarter of 2024, which included a 1.1-percentage point benefit from currency.

The decrease in constant currency 1 was attributable to lower installations, and Reinvention-related actions including the exit of certain production print manufacturing operations in the prior year and geographic simplification, partially offset by higher pricing.

For the six months ended June 30, 2025 Equipment sales revenue decreased 4.0%, with no impact from currency.

The decrease in constant currency 1 was primarily attributable to Reinvention-related actions, including the exit of certain production print manufacturing operations in the prior year and geographic simplification.

Revenue declines for Entry and High-End products were partially offset by growth in Mid-Range.

4 unchanged sentences

IT solutions and digital services are not included in managed print services.

(3) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates.

It includes print-related devices as well as IT hardware.

Xerox 2025 Form 10-Q 52

2 unchanged sentences

The following is a summary of key financial ratios used to assess our performance:

Three Months Ended March 31,

(in millions) 2025 2024 B/(W)

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 B/(W) 2025 2024 B/(W)

Gross Profit $ 451 $ 520 $ (69) $ 877 $ 963 $ (86)

RD&E 43 50 7 85 99 14

SAG 368 393 25 746 790 44

Equipment Gross Margin 24.0 % 34.5 % (10.5) pts.

25.8 % 32.9 % (7.1) pts.

Post sale Gross Margin 29.9 % 32.5 % (2.6) pts.

29.7 % 30.8 % (1.1) pts.

Total Gross Margin 28.6 % 33.0 % (4.4) pts.

28.9 % 31.3 % (2.4) pts.

RD&E as a % of Revenue 2.7 % 3.2 % 0.5 pts.

2.8 % 3.2 % 0.4 pts.

SAG as a % of Revenue 23.4 % 24.9 % 1.5 pts.

Pre-tax Loss $ (67) $ (150) $ 83

Pre-tax Loss Margin (4.6) % (10.0) % 5.4 pts.

24.6 % 25.6 % 1.0 pts.

Pre-tax (Loss) Income $ (60) $ 25 $ (85) $ (127) $ (125) $ (2)

Pre-tax (Loss) Income Margin (3.8) % 1.6 % (5.4) pts.

(4.2) % (4.1) % (0.1) pts.

Adjusted (1) Operating profit

2 unchanged sentences

3.7 % 5.4 % (1.7) pts.

2.7 % 3.8 % (1.1) pts.

(1) Refer to the “Non-GAAP Financial Measures” section for an explanation of the non-GAAP financial measure.

First quarter 2025 gross margin of 29.2% decreased 0.3-percentage points as compared to first quarter of 2024, which included a 0.7-percentage point adverse impact related to our recent acquisition of ITsavvy.

Excluding the impact of ITsavvy, the increase primarily reflects charges associated with the Company's Reinvention, primarily related to the exit of certain production print manufacturing operations, which had a 0.5-percentage point unfavorable impact on gross margin in the first quarter 2025 as compared to a 2.4-percentage point unfavorable impact on gross margin in the first quarter 2024, and the benefits associated with recent Reinvention-related cost and productivity actions.

These benefits were partially offset by lower revenue and gross profit, including lower page volumes, and finance receivable-related fees, product cost increases and tariff-related costs.

First quarter 2025 Equipment gross margin of 27.9% decreased by 3.1-percentage points as compared to first quarter of 2024.

The decrease reflects lower revenue and gro ss profit, and higher product and incremental tariff-related costs.

These impac ts were partially offset by lower freight costs, Reinvention-related cost and productivity actio ns, and favorable mix.

First quarter 2025 Post sale gross margin of 29.6% increased by 0.5-percentage points as compared to first quarter of 2024, primarily reflecting charges associated with the Company's Reinvention, primarily related to the exit of certain production print manufacturing operations, which had a 0.6-percentage point unfavorable impact on gross margin in the first quarter 2025 as compared to 3.0-percentage point unfavorable impact on gross margin in the first quarter 2024, as well as benefits associated with recent Reinvention-related cost and productivity actions.

These benefits were partially offset by lower revenue, including lower page volumes and finance receivable-related fees, and lower gross profit, including higher product and incremental tariff-related costs.

First quarter 2025 post sale gross margin also included a 0.9-percentage point adverse impact related to our recent acquisition of ITsavvy.

Second quarter 2025 gross margin of 28.6% decreased by 4.4-percentage points as compared to second quarter of 2024, which included a 1.0-percentage point adverse impact related to our recent acquisition of ITsavvy.

Excluding the impact of ITsavvy, the decrease primarily reflects lower gross profit, including the adverse impact related to unfavorable product mix, reflecting, in part, lower page volumes, and a 2.0-percentage point adverse impact related to tariff and product-related cost increases.

These impacts were partially offset by benefits associated with Reinvention-related cost, productivity actions and recent pricing initiatives.

Gross margin for the six months ended June 30, 2025 of 28.9% decreased by 2.4-percentage points as compared to the prior year period, which included a 0.9-percentage point adverse impact related to our recent acquisition of ITsavvy.

Excluding the impact of ITsavvy, the decrease primarily reflects lower gross profit, including the adverse impact related to unfavorable product mix, reflecting, in part, lower page volumes, and a 1.4-percentage point adverse impact related to tariff and product-related cost increases.

These impacts were partially offset by the benefits associated with Reinvention-related costs, primarily related to the exit of certain production print manufacturing operations, which had a 1.6-percentage point unfavorable impact on gross margin in the prior year period.

Second quarter 2025 equipment gross margin of 24.0% decreased by 10.5-percentage points as compared to second quarter of 2024.

The decrease reflects lower revenue and gross profit, including a 6.4-percentage point adverse impact related to tariff and product-related cost increases, and an unfavorable product mix, as well as a 1.0-percentage point adverse impact due to the exit of certain production print manufacturing operations in the prior year, and unfavorable currency.

These impacts were partially offset by recent pricing initiatives.

Equipment gross margin for the six months ended June 30, 2025 of 25.8% decreased by 7.1-percentage points as compared to the prior year period.

The decrease reflects lower revenue and gross profit, including a 3.8-percentage point adverse impact related to tariff and product-related cost increases, and an unfavorable product mix, as well as a 0.5-percentage point adverse impact due to the exit of certain production print manufacturing operations in the prior year, and unfavorable currency.

These impacts were partially offset by recent pricing initiatives, as well as lower freight costs.

Second quarter 2025 Post sale gross margin of 29.9% decreased by 2.6-percentage points as compared to second quarter of 2024, which included a 1.5-percentage point adverse impact related to our recent acquisition of ITsavvy.

Excluding the impact of ITsavvy, the decrease primarily reflects lower gross profit, including the adverse impact related to unfavorable revenue mix associated with lower financing fees and lower page volumes, and higher product and incremental tariff-related costs.

These impacts were partially offset by benefits associated with Reinvention-related cost and productivity actions and recent pricing initiatives.

Xerox 2025 Form 10-Q 53

Post sale gross margin for the six months ended June 30, 2025 of 29.7% decreased by 1.1-percentage points as compared to the prior year period, which included a 1.2-percentage point adverse impact related to our recent acquisition of ITsavvy, as well as the adverse impact related to unfavorable revenue mix associated with lower financing fees and lower page volumes, and higher product and incremental tariff-related costs.

Partially offsetting these impacts were benefits associated with Reinvention-related cost and productivity actions and recent pricing initiatives.

Research, Development and Engineering Expenses (RD&E)

Three Months Ended March 31,

(in millions) 2025 2024 Change

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 Change 2025 2024 Change

R&D $ 31 $ 38 $ (7) $ 60 $ 75 $ (15)

1 unchanged sentence

Total RD&E Expenses $ 43 $ 50 $ (7) $ 85 $ 99 $ (14)

First quarter 2025 RD&E as a percentage of revenue of 2.9% decreased 0.4-percentage points as compared to first quarter 2024, as reductions in RD&E spending outpaced revenue declines.

First quarter 2025 RD&E of $42 million decreased $7 million as compared to first quarter 2024, primarily due to productivity and cost savings related to the Company's Reinvention.

Xerox 2025 Form 10-Q 48

Second quarter 2025 RD&E as a percentage of revenue of 2.7% decreased 0.5-percentage points as compared to second quarter 2024.

RD&E as a percentage of revenue for the six months ended June 30, 2025 of 2.8% decreased by 0.4-percentage points as compared to the prior year period.

The decrease, as compared to the respective prior year periods, reflected reductions in RD&E spending that outpaced revenue declines.

RD&E of $43 million decreased $7 million as compared to second quarter 2024.

For the six months ended June 30, 2025 RD&E of $85 million decreased $14 million as compared to the prior year period.

The decrease, as compared to the respective prior year periods, primarily reflected productivity and cost savings related to the Company's Reinvention.

Selling, Administrative and General Expenses (SAG)

First quarter 2025 SAG as a percentage of revenue of 25.9% decreased by 0.5-percentage points as compared to first quarter 2024, including a 1.0-percentage point benefit from the acquisition of ITsavvy, as reductions in SAG spending outpaced revenue decline.

First quarter 2025 SAG of $378 million decreased by $19 million as compared to first quarter 2024, primarily reflecting productivity and cost savings related to the Company's Reinvention, lower bad debt expense, and favorable currency.

These benefits were partially offset by expenses related to the recent acquisition of ITsavvy, and the expected acquisition of Lexmark, other Reinvention-related investments, as well as advertising and incentive compensation expense.

The bad debt provision for the first quarter 2025 of $9 million decreased by $6 million as compared to the first quarter 2024 due primarily to a lower finance receivable balance, reflecting sales of finance receivables in recent quarters to HPS Investment Partners and DLL.

Second quarter 2025 SAG as a percentage of revenue of 23.4% decreased by 1.5-percentage points as compared to second quarter 2024, including a 1.0-percentage point benefit from the acquisition of ITsavvy, as reductions in SAG spending outpaced revenue declines.

Second quarter 2025 SAG of $368 million decreased by $25 million as compared to second quarter 2024, primarily

reflecting productivity and cost savings related to the Company's Reinvention, and lower incentive compensation and benefits costs.

These benefits were partially offset by expenses related to the recent acquisitions of ITsavvy and Lexmark, other Reinvention-related investments, as well as higher bad debt expense and unfavorable currency.

SAG as a percentage of revenue for the six months ended June 30, 2025 of 24.6% decreased by 1.0-percentage points as compared to the prior year period, including a 1.6-percentage point benefit from the acquisition of ITsavvy, as reductions in SAG spending outpaced revenue declines.

SAG for the six months ended June 30, 2025 of $746 million decreased by $44 million as compared to the prior year period, primarily reflecting productivity and cost savings related to the Company's Reinvention, lower incentive compensation expense, lower bad debt expense, and favorable currency.

These benefits were partially offset by expenses related to the recent acquisitions of ITsavvy and Lexmark, other Reinvention-related investments, and higher advertising expense.

The bad debt provision for the second quarter 2025 of $15 million increased by $5 million as compared to second quarter 2024 due primarily to a reserve release in the prior year.

The bad debt provision for six months ended June 30, 2025 of $24 million, decreased by $1 million as compared to the prior year period, due to a lower finance receivable balance, reflecting sales of finance receivables in recent quarters to HPS Investment Partners and DLL, which were partially offset by additional reserves on finance receivables.

We continue to monitor developments in future economic conditions, and as a result our reserves may need to be updated in future periods.

As of March 31, 2025, on a trailing twelve-month basis, bad debt expense was 1.7% of total receivables, as compared to approximately 1.5% for the prior year comparable period.

As of June 30, 2025, on a trailing twelve-month basis, bad debt expense was 1.9% of total receivables, as compared to approximately 1.5% for the prior year comparable period.

Refer to Note 6 - Accounts Receivable, Net and Note 7 - Finance Receivables, Net in the Condensed Consolidated Financial Statements for additional information regarding our bad debt provision.

Xerox 2025 Form 10-Q 54

Restructuring and Related Costs, Net

Restructuring and related costs, net for the first quarter 2025 resulted in a net credit of $(1) million, as compared to $39 million for the first quarter 2024.

First quarter 2025 and 2024 restructuring actions were related to Reinvention initiatives under our Reinvention and other transformation programs to reduce and realign our cost structure to the changing nature of our business, and included the following:

Restructuring and related costs, net for the second quarter 2025 was $10 million, as compared to $12 million for the second quarter 2024, and $9 million for the six months ended June 30, 2025, as compared to $51 million in the prior year period.

Charges incurred during 2025 and 2024 for restructuring actions were associated with Reinvention initiatives under the Company's Reinvention and other transformation programs to reduce and realign our cost structure to the changing nature of our business, and included the following:

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

Restructuring and severance costs

$ 11 $ 5 $ 21 $ 14

Asset impairments - leased ROU assets (1)

2 unchanged sentences

Reversals (3)

(2) — (12) (4)

Restructuring and asset impairment costs

Retention-related severance/bonuses (4)

Contractual severance costs (5)

Consulting and other costs (6)

1 unchanged sentence

$ 10 $ 12 $ 9 $ 51

_____________

(1) Primarily related to the sale, exit and abandonment of leased and owned facilities, net of any potential sublease income and recoveries.

3 unchanged sentences

(4) Includes retention-related severance and bonuses for employees expected to continue working beyond their minimum retention period before termination.

(5) Amounts primarily reflect severance and other related costs we are contractually required to pay in connection with employees transferred as part of the shared service arrangement entered into with third party providers.

(6) Represents professional support services associated with our business transformation initiatives.

First quarter 2025 actions impacted several functional areas, with approximately 30% focused on gross margins improvements, approximately 60% focused on SAG reductions, and the remainder focused on RD&E optimization.

First quarter 2024 actions mainly impacted gross margin improvements.

The Restructuring and related costs, net reserve balance for all programs as of March 31, 2025 was $102 million, of which $74 million is expected to be paid over the next twelve months.

Second quarter 2025 actions impacted several functional areas, with approximately 85% focused on gross margin improvements, and the remainder focused on SAG reductions.

Second quarter 2024 actions entirely impacted gross margin improvements.

The Restructuring and related costs, net reserve balance for all programs as of June 30, 2025 was $100 million, of which $68 million is expected to be paid over the next twelve months.

Refer to Note 10 - Restructuring Programs in the Condensed Consolidated Financial Statements for additional information regarding our restructuring programs.

Xerox 2025 Form 10-Q 49

Worldwide Employment

Worldwide employment was approximately 17,600 as of March 31, 2025, an increase of approximately 800 since December 31, 2024.

The increase was primarily due to the impact from gross hires, partially offset by impact of the Company's Reinvention, which includes the effects of workforce reduction decisions.

Worldwide employment was approximately 16,600 as of June 30, 2025, a decrease of approximately 200 since December 31, 2024.

The decrease, primarily due to the impact of the Company's Reinvention, which includes the effects of workforce reduction decisions, was partially offset by gross hires.

Xerox 2025 Form 10-Q 55

Other Expenses, Net

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

4 unchanged sentences

Commitment fee expense 4 — 22 —

Gain on early extinguishment of debt — (3)

Transaction and related costs, net — (23) — (23)

Loss (gain) on early extinguishment of debt 4 — 4 (3)

Gain on release of contingent consideration — — — (5)

2 unchanged sentences

Non-Financing Interest Expense

First quarter 2025 non-financing interest expense of $33 million was $7 million higher than first quarter 2024.

The increase is primarily due to a higher average interest rate and a lower portion of debt allocated to XFS, which reflects a reduction in the average finance receivables balance associated with the sales of finance receivables in recent quarters to HPS Investment Partners and DLL Canada and France, as well as lower originations.

When non-financing interest is combined with equipment financing interest expense, total interest expense increased by $2 million as compared to the first quarter 2024.

This reflects the impact of higher interest rates on new debt, partially offset by a lower average debt balance.

Second quarter 2025 non-financing interest expense of $55 million was $24 million higher than second quarter 2024, while for the six months ended June 30, 2025, non-financing interest expense of $88 million increased by $31 million from the prior year period.

The increase, as compared to the respective prior year periods, reflects recently completed borrowings in support of the Lexmark acquisition financing, repayment of existing borrowings, and general corporate purposes.

New borrowings include $15 million of escrow interest related to net proceeds on the $500 million in aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031, as well as additional interest associated with the $400 million in aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030.

Contributing to the increase is a lower debt level allocated to Xerox Financial Services, which reflects a continued reduction in the average finance receivables balance associated with the sales of finance receivables in recent quarters to HPS Investment Partners and De Lage Landen Financial Services Canada Inc.

and France, as well as lower originations.

When non-financing interest is combined with equipment financing interest expense, total interest expense for the second quarter 2025 of $78 million increased by $18 million as compared to the second quarter 2024, and total interest expense for the six months ended June 30, 2025 of $133 million increased by $20 million as compared to the prior year period.

The increase, as compared to the respective prior year periods, reflects the impact of higher interest rates on new debt.

Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt activity and interest expense.

Non-Service Retirement-Related Costs

First quarter 2025 non-service retirement-related costs of $18 million were $5 million lower than the first quarter 2024, primarily due to an increase in actuarial losses subject to amortization, partially offset by a decrease in settlement costs due to the absence of settlement expense in the current year.

Non-service retirement-related costs for the second quarter 2025 of $19 million were $7 million lower than second quarter 2024, and for the six months ended June 30, 2025 non-service retirement-related costs of $37 million were $12 million lower than the prior year periods.

The decrease as compared to the respective prior year periods was primarily due to the absence of settlement expense in the current year.

The decrease for the six months ended June 30, 2025 as compared to the prior year period was partially offset by higher interest costs associated with higher discount rates.

Refer to Note 15 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding service and non-service retirement-related costs.

Currency losses, net

For the three months ended March 31, 2025, currency losses, net were $11 million lower as compared to the first quarter 2024.

The reduction of losses was driven by lower currency volatility, particularly against the Egyptian pound, in addition to prior period sales of our direct business operations in Argentina, Chile & Peru.

Second quarter 2025 currency losses, net were $1 million lower than the second quarter 2024, while for the six months ended June 30, 2025, currency losses, net were $12 million lower as compared to the prior year period.

The reduction of losses for the three and six months ended June 30, 2025 as compared to the respective prior year periods was driven by lower currency volatility, particularly against the Egyptian pound, in addition to prior period sales of our direct business operations in Argentina, Chile & Peru.

Commitment fee expense

First quarter 2025 commitment fee expense primarily reflects fees associated with the recently completed private offering of $400 million in aggregate principal amount of 10.250% Senior Secured First Lien Notes and $400 million aggregate principal amount of 13.500% Senior Secured Second Lien Notes Due in 2031.

Gain on early extinguishment of debt

First quarter 2024 gain on early extinguishment of debt of $3 million reflects a $4 million gain on the repayment of Senior Notes (via tender offer) in the first quarter of 2024, partially offset by a loss of approximately $1 million on the write-off of deferred debt issuance costs.

Gain on release of contingent consideration

The gain on the release of contingent consideration of $5 million for the three months ended March 31, 2024 reflects a reserve release related to earn-out provisions which were not met, in connection with a prior acquisition.

Commitment fee expense for the three and six months ended June 30, 2025 primarily reflects fees associated with the recently completed Lexmark acquisition financing which includes:

the private offering of $400 million in aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030;

$500 million aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031;

$250 million aggregate principal amount of 13.00% Senior Notes due 2030;

and an incremental term loan borrowing of $327 million under the First Lien Term Loan Credit Agreement.

Xerox 2025 Form 10-Q 56

Pre-tax Loss Margin

First quarter 2025 pre-tax loss margin of 4.6% increased 5.4-percentage points, as compared to first quarter of 2024 pre-tax loss margin of 10.0% and included a 0.6-percentage point benefit from the recent acquisition of ITsavvy.

The improvement in the first quarter 2025 is a result of the sales of certain direct business operations in Latin America, resulting in a net disposal loss of $54 million in the first quarter 2024, as well as lower Restructuring and related costs, net, and lower Selling, administrative and general expenses associated with productivity and cost savings related to the Company's Reinvention.

These benefits were partially offset by higher Other expenses, net, primarily reflecting fees associated with the recently completed private offering of Senior Secured Notes, and lower revenue and associated gross profit.

Transaction and related costs, net

Transaction and related costs, net primarily reflect costs from third party providers for professional services associated with certain major and strategic M&A projects.

Second quarter 2024 Transaction and related costs, net reflect insurance proceeds related to a legal settlement, for the reimbursement of certain legal and other professional costs, associated with the terminated proposal to acquire HP Inc.

in early 2020.

Loss (Gain) on early extinguishment of debt

The loss on early extinguishment of debt for the three and six months ended June 30, 2025 of $4 million reflects the write-off of deferred debt issuance costs and unamortized discount, as well as other extinguishment costs related to the repayment of Senior Notes.

The (gain) on early extinguishment of debt of $3 million for the six months ended June 30, 2024 reflects a $4 million gain on the repayment of Senior Notes (via tender offer) in the first quarter of 2024, partially offset by a loss of approximately $1 million on the write-off of deferred debt issuance costs.

Gain on release of contingent consideration

The gain on the release of contingent consideration of $5 million for the three and six months ended June 30, 2024 reflects a reserve release related to earn-out provisions which were not met, in connection with a prior acquisition.

Pre-tax (Loss) Income Margin

Second quarter 2025 pre-tax (loss) margin of (3.8)% decreased 5.4-percentage points as compared to second quarter of 2024 pre-tax income margin of 1.6% and included a 0.7-percentage point benefit from the recent acquisition of ITsavvy.

The decrease as compared to the second quarter 2024 is primarily due to lower gross profit, including unfavorable product mix, product cost increases, and incremental tariff-related costs.

In addition, Other expenses, net, included higher non-financing interest expense related to recently completed debt offerings, as well as insurance proceeds related to a legal settlement in the second quarter 2024.

These impacts were partially offset by lower Selling, administrative and general expenses, as well as lower Research, development and engineering expenses, primarily reflecting productivity and cost savings related to the Company's Reinvention, and lower incentive compensation and benefits costs.

Pre-tax (loss) margin for the six months ended June 30, 2025 of (4.2)% decreased 0.1-percentage points as compared to the prior year period pre-tax (loss) margin of (4.1)% and included a 0.6-percentage point benefit from the recent acquisition of ITsavvy.

The decrease as compared to the prior year period is primarily due to lower gross profit, including unfavorable product mix and product cost increases.

In addition, Other expenses, net, included higher non-financing interest expense related to recently completed borrowings in support of the financing related to recently completed debt offerings, as well as commitment fees associated with those debt offerings and insurance proceeds related to a legal settlement in the second quarter 2024.

These impacts were partially offset by lower Selling, administrative and general expenses, lower Restructuring and related costs, net, and lower Research, development and engineering expenses, primarily reflecting productivity and cost savings related to the Company's Reinvention, as well as lower incentive compensation and benefits costs.

2024 reflected the sales of certain direct business operations in Latin America, resulting in a net disposal loss of $54 million.

Adjusted 1 Operating Margin

First quarter 2025 adjusted 1 operating income margin of 1.5% decreased by 0.7-percentage points as compared to the first quarter of 2024, which included a 0.5-percentage point benefit from the recent acquisition of ITsavvy.

The decrease also reflected lower revenue and gross profit, which included higher product costs, as well as higher advertising and incentive compensation expense.

These impacts were partially offset by productivity and cost savings related to the Company's Reinvention, lower bad debt expense and favorable currency.

Second quarter 2025 adjusted 1 operating income margin of 3.7% decreased by 1.7-percentage points as compared to second quarter of 2024, which included a 0.3-percentage point benefit from the recent acquisition of ITsavvy.

The decrease reflected lower gross margin, due to unfavorable revenue mix, product cost increases and incremental tariff-related costs.

These impacts were partially offset by productivity and cost savings related to the Company's Reinvention, lower incentive compensation and benefits costs, as well as price increases employed to offset higher tariff and product-related costs.

Adjusted 1 operating margin income for the six months ended June 30, 2025 of 2.7% decreased by 1.1-percentage points as compared to the prior year period, which included a 0.4-percentage point benefit from the recent acquisition of ITsavvy.

The decrease primarily reflected lower gross margin, due to unfavorable revenue mix, product cost increases and incremental tariff-related costs, as well as unfavorable currency.

These impacts were partially offset by productivity and cost savings related to the Company's Reinvention, lower incentive compensation and benefits costs and lower bad debt expense.

______________

(1) Refer to the Adjusted Operating Income and Margin reconciliation table in the "Non-GAAP Financial Measures" section.

First quarter 2025 effective tax rate was (34.3)%.

This rate was higher than the U.S.

federal statutory tax rate of 21.0% but resulted in a tax expense, primarily due to the establishment of a valuation allowance against certain deferred tax assets and lower tax benefits of some current year losses and expenses, partially offset by the geographical mix of earnings.

On an adjusted 1 basis, first quarter 2025 effective tax rate was 60.0%, which was higher than the U.S.

federal statutory tax rate of 21.0% primarily due to lower benefits of certain current year losses and expenses.

First quarter 2024 effective tax rate was a 24.7%, which resulted in a tax benefit.

This tax benefit is higher than the

benefit under the U.S.

federal statutory tax rate of 21% due primarily to the redetermination of certain unrecognized

tax positions, primarily offset by geographical mix of earnings, including the mix associated with charges related to

the Company's Reinvention.

On an adjusted 1 basis, first quarter 2024 effective tax rate was (22.2)%, which resulted

in a tax benefit.

Xerox 2025 Form 10-Q 57

Second quarter 2025 effective tax rate was (76.7)% and resulted in a tax expense.

On an adjusted 1 basis, the second quarter 2025 effective tax rate was 527.8%.

Both these rates were higher than the U.S.

federal statutory tax rate of 21.0% primarily due to not benefiting certain current year losses and expenses, as well as the geographical mix of earnings.

Second quarter 2024 effective tax rate was a 28.0%, which was higher than the U.S.

federal statutory tax rate of 21% due primarily to the redetermination of certain unrecognized tax positions and the geographical mix of earnings, including the mix associated with charges related to the Company's Reinvention.

On an adjusted 1 basis, second quarter 2024 effective tax rate was 25.5% which was higher than the U.S.

federal statutory tax rate of 21% primarily due to changes in our uncertain tax positions and the geographical mix of earnings.

The effective tax rate for the six months ended June 30, 2025 was (54.3)% and resulted in a tax expense.

On an adjusted 1 basis, the effective tax rate for the six months ended June 30, 2025 was 1,112.5%.

Both these rates were higher than the U.S.

federal statutory tax rate of 21.0% primarily due to the establishment of a valuation allowance in the first quarter 2025 against certain deferred tax assets as well as not benefiting certain current year losses and expenses and the geographical mix of earnings.

The effective tax rate for the six months ended June 30, 2024 was 24.0% which resulted in a tax benefit.

This tax benefit is higher than the benefit under the U.S.

federal statutory tax rate of 21% due primarily to the redetermination of certain unrecognized tax positions, partially offset by the geographical mix of earnings, including the mix associated with charges related to the Company's Reinvention.

On an adjusted 1 basis, the effective tax rate for the six months ended June 30, 2024 was 18.8%.

The difference between this rate and the U.S.

federal statutory tax rate of 21% primarily reflects tax

benefits from the redetermination of certain unrecognized tax positions offset by the geographical mix of earnings.

federal statutory tax rate of 21% primarily reflects the redetermination of certain unrecognized tax positions partially offset by the geographical mix of earnings.

The effective tax rate is based on nonrecurring events as well as recurring factors, including the taxation of foreign income.

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Net (Loss) Income

First quarter 2025 Net (Loss) was $(90) million, or $(0.75) per diluted share.

Second quarter 2025 Net (Loss) was $(106) million, or $(0.87) per diluted share.

On an adjusted 1 basis, Net (Loss) was $(77) million, or $(0.64) per diluted share.

First quarter 2024 Net (Loss) was $(113) million, or $(0.94) per diluted share.

Second quarter 2024 Net Income was $18 million, or $0.11 per diluted share.

On an adjusted 1 basis, Net Income was $41 million, or $0.29 per diluted share.

Refer to Note 19 - Loss per Share in the Condensed Consolidated Financial Statements for additional information regarding the calculation of basic and diluted loss per share.

Net (Loss) for the six months ended June 30, 2025 was $(196) million, or $(1.62) per diluted share.

On an adjusted 1 basis, Net (Loss) was $(81) million, or $(0.71) per diluted share.

Net (Loss) for the six months ended June 30, 2024 was $(95) million, or $(0.83) per diluted share.

On an adjusted 1 basis, Net Income was $52 million, or $0.35 per diluted share

Refer to Note 19 - (Loss) Earnings per Share in the Condensed Consolidated Financial Statements for additional information regarding the calculation of basic and diluted loss per share.

_____________

(1) Refer to the Adjusted Net (Loss) Income and EPS reconciliation table in the "Non-GAAP Financial Measures" section.

For the calculations of basis and diluted loss per share, refer to Note 19 - Loss per Share in the Notes to the Condensed Consolidated Financial Statements.

Other Comprehensive Income

First quarter 2025 Other Comprehensive Income, Net was $82 million and included the following:

For the calculations of basis and diluted loss per share, refer to Note 19 - (Loss) Earnings per Share in the Notes to the Condensed Consolidated Financial Statements.

Other Comprehensive (Loss) Income

Second quarter 2025 Other Comprehensive Income, Net was $169 million and included the following:

i) net translation adjustment gains of $229 million reflecting the strengthening of all of our major foreign currencies against the U.S.

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and iii) $(4) million of net unrealized (losses).

This compares to Other Comprehensive Income, Net of $3 million for the first quarter 2024, which included the following:

i) $36 million of net gains from the changes in defined benefit plans reflecting the amortization of actuarial losses, the positive impact of currency, and actuarial gains;

ii) net translation adjustment losses of $32 million reflecting the weakening of most of our major foreign currencies against the U.S.

This compares to Other Comprehensive (Loss), Net of $(14) million for the second quarter 2024, which included the following:

i) net translation adjustment losses of $(20) million reflecting the weakening of most of our major foreign currencies against the U.S.

Dollar during the quarter;

and ii) $6 million of net gains from the changes in defined benefit plans reflecting the amortization of actuarial losses, partially offset by actuarial losses.

Other Comprehensive Income, Net for the six months ended June 30, 2025 was $251 million and included the following:

i) net translation adjustment gains of $334 million reflecting the strengthening of all of our major foreign currencies against the U.S.

Dollar during the quarter;

ii) $(77) million of net (losses) from the changes in defined benefit plans primarily reflecting the negative impact of currency, partially offset by the amortization of net actuarial losses;

and iii) $(6) million of net unrealized (losses).

Refer to Note 18 - Other Comprehensive Income in the Condensed Consolidated Financial Statements for the components of Other Comprehensive Income, Note 13 - Financial Instruments in the Condensed Consolidated Financial Statements for additional information regarding unrealized gains (losses), net, and Note 15 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding net changes in our defined benefit plans.

This compares to Other Comprehensive (Loss), Net for the six months ended June 30, 2024 of $(11) million, which included the following:

i) net translation adjustment losses of $(52) million reflecting the weakening of our major foreign currencies against the U.S.

ii) $(1) million of net unrealized (losses);

and iii) $42 million of net gains from the changes in defined benefit plans primarily reflecting the amortization of actuarial losses, the positive impact of currency, partially offset by actuarial losses.

Refer to Note 18 - Other Comprehensive Income (Loss) in the Condensed Consolidated Financial Statements for the components of Other Comprehensive Income, Note 13 - Financial Instruments in the Condensed Consolidated Financial Statements for additional information regarding unrealized gains (losses), net, and Note 15 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding net changes in our defined benefit plans.

Xerox 2025 Form 10-Q 59

Reportable Segments

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Segment Review

Three Months Ended March 31,

Three Months Ended June 30,

(in millions) Print and Other IT Solutions Total Segment Intersegment Elimination (1)

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7.2 % 1.2 % 5.4 %

Six Months Ended June 30,

(in millions) Print and Other IT Solutions Total Segment Intersegment Elimination (1)

Corporate Other (2)

Revenues $ 2,660 $ 377 $ 3,037 $ (4) $ — $ 3,033

% of Total Revenue 88 % 12 % 100 %

Expenses $ 2,554 $ 362 $ 2,916 $ (4) $ 40 $ 2,952

Segment Profit $ 106 $ 15 $ 121 $ — $ (40) $ 81

Segment Margin (3)

4.0 % 4.0 % 2.7 %

Revenues $ 2,922 $ 158 $ 3,080 $ — $ — $ 3,080

% of Total Revenue 95 % 5 % 100 %

Expenses $ 2,757 $ 158 $ 2,915 $ — $ 47 $ 2,962

Segment Profit $ 165 $ — $ 165 $ — $ (47) $ 118

Segment Margin (3)

5.6 % — % 3.8 %

(1) Reflects primarily IT hardware, software solutions and services, sold by the IT Solutions segment to the Print and Other segment.

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(3) Segment margin is based on total revenue.

IT Solutions segment margin is net of Intersegment Elimination.

Xerox 2025 Form 10-Q 60

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Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 %

Change 2025 2024 %

Equipment sales $ 336 $ 356 (5.6)% $ 620 $ 646 (4.0)%

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_____________

(1) Post sale revenue includes financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $33 million and $42 million for the three months ended March 31, 2025 and 2024, respectively.

First quarter 2025 Print and Other segment revenue decreased 9.4% as compared to first quarter of 2024 and included the following:

Equipment sales revenue decreased 2.1% as compared to the first quarter of 2024, which included a 1.4-percentage point adverse impact from currency.

(1) Post sale revenue includes financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $32 million and $38 million for the three months ended June 30, 2025 and 2024, respectively and $65 million and $42 million for the six months ended June 30, 2025 and 2024, respectively.

Second quarter 2025 Print and Other segment revenue decreased 8.6% as compared to second quarter of 2024 and Print and Other segment revenue decreased 9.0% for the six months ended June 30, 2025 as compared to the prior year period.

The decrease for both the three and six months ended June 30, 2025 was primarily driven by lower Post sale revenue, as compared to their respective prior year periods.

Print and Other segment revenues included the following:

Equipment sales revenue decreased 5.6% during the second quarter 2025 as compared to second quarter of 2024, which included a 1.1-percentage point benefit from currency.

The decrease in constant currency 1 was attributable to lower installations, and Reinvention-related actions, including the exit of certain production print manufacturing operations in the prior year and geographic simplification.

Equipment sales revenue decreased 4.0% for the six months ended June 30, 2025 as compared to the prior year period, with no impact from currency.

Revenue declines for Entry and High-End products were partially offset by growth in Mid-Range.

Post sale revenue decreased 11.2% as compared to the first quarter of 2024, which included a 2.0-percentage point adverse impact from currency.

The decrease in constant currency 1 was primarily due to a decline in managed print services 2 revenue.

Managed print services 2 revenue declines reflect lower outsourcing and print service revenue, including the effects of geographic and offering simplification.

Post sale declines also reflect lower supplies and intentional reductions in non-strategic revenue, including paper and financing income.

Post sale revenue decreased 9.5% during the second quarter 2025 as compared to second quarter of 2024, which included a 1.0-percentage point benefit from currency.

The decrease in constant currency 1 was primarily due to a decline in managed print services 2 revenue, driven by lower outsourcing and print service revenue, and lower supplies revenue.

The decline in post sale revenue also reflected a 4.2-percentage point adverse impact from intentional reductions in non-strategic revenue, including paper and financing revenue, and the effects of geographic and offering simplification.

Post sale revenue decreased 10.4% for the six months ended June 30, 2025 as compared to the prior year period, which included a 0.5-percentage point adverse impact from currency.

The decrease in constant currency 1 was primarily due to a decline in managed print services 2 revenue, driven by lower outsourcing and print service revenue.

The decline in post sale revenue also reflected a 4.1-percentage point adverse impact from intentional reductions in non-strategic revenue, including paper and financing revenue, and the effects of geographic and offering simplification, as well as lower supplies revenue.

These impacts were partially offset by modest growth in digital services revenue.

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IT solutions and digital services are not included in managed print services.

(3) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates.

It includes print-related devices.

Xerox 2025 Form 10-Q 61

Detail by product group is shown below.

Three Months Ended

March 31, % of Equipment Sales

June 30, Six Months Ended

June 30, % of Equipment Sales

(in millions) 2025 2024 %

CC % Change 2025 2024 %

CC % Change 2025 2024

Entry $ 51 $ 56 (8.9)% (9.8)% $ 94 $ 101 (6.9)% (7.3)% 15% 16%

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The change at constant currency 1 reflects the decision to the exit certain production print manufacturing operations made in the prior year period and the effects of geographic simplification, as well as the following:

• Entry - The decrease for the three months ended March 31, 2025 reflects a higher mix of black-and-white installs and a higher mix of sales to indirect channel partners.

• Mid-range - The increase for the three months ended March 31, 2025 reflects growth in color installations.

Black-and-white Mid-range revenue grew compared to the first quarter 2024 despite lower installs driven by favorable product family mix.

• High-end - The decrease for the three months ended March 31, 2025 was primarily due to lower High-end color installations, and the exit certain production print manufacturing operations in the prior year period.

• Entry - The decrease for the three months ended June 30, 2025 reflects a lower installations in black-and-white.

The decrease for the six months ended June 30, 2025 reflects growth in installs with a higher mix to black-and-white devices, as well as a higher mix of sales to indirect channel partners.

• Mid-range - The decrease for the three months ended June 30, 2025 reflects declines in black-and-white installations, partially offset by a favorable product family mix.

The increase for the six months ended June 30, 2025 reflects growth in color revenues driven by higher installs, partially offset by lower black-and-white installs.

• High-end - The decrease for the three and six months ended June 30, 2025 as compared to the respective prior year periods was primarily due to lower installations, and the exit certain production print manufacturing operations in the prior year period.

_____________

(1) Refer to the “Currency Impact” section for a description of constant currency.

Xerox 2025 Form 10-Q 53

Total Installs

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Detail by product group (see Products and Offerings Definitions ) is shown below.

Installs for the three months ended March 31, 2025, as compared to the prior year period, reflect the following:

• 18% increase in entry color installs, driven by growth in A4 Color MFPs and Entry Color Printers.

Installs for the three months ended June 30, 2025, as compared to the prior year period, reflect the following:

• 4% decrease in entry color installs, driven by Entry Color Printers, partially offset by modest Entry Color MFP growth.

• 18% decrease in entry black-and-white installs, driven by declines in A4 Mono MFPs, as well as Entry Mono Printers.

• Mid-range color installs were flat driven by growth in Entry Production Color Low offset by declines in A3 Color MFPs.

• 23% decrease in mid-range black-and-white installs driven by A3 Mono MFPs, partially offset by modest growth in Light Production Digital Business.

• 16% decrease in high-end color installs primarily reflecting declines in Entry Production Color Mid, partially offset by modest growth in Xerox Color Press products and Entry Production Color High.

• 73% decrease in high-end black-and-white driven by declines in High End Cut Sheet products.

Xerox 2025 Form 10-Q 62

Installs for the six months ended June 30, 2025:

• 7% increase in entry color installs, driven by growth in A4 Color MFPs, partially offset by Entry Color Printers.

• 3% increase in entry black-and-white installs, driven by growth in A4 Mono MFPs and Entry Mono Printers.

Mid-Range (2)

• 5% increase in mid-range color installs driven by growth in A3 Color MFPs and Entry Production Color Low.

• 11% decrease in mid-range black-and-white installs driven by A3 Mono MFPs and Light Production Digital Business.

• 17% decrease in mid-range black-and-white installs driven by A3 Mono MFPs, partially offset by modest growth in Light Production Digital Business.

• 18% decrease in high-end color installs primarily reflecting declines in Entry Production Color Mid and High.

• 67% decrease in high-end black-and-white driven by declines in High End Cut Sheet products.

• 70% decrease in high-end black-and-white driven by declines in High End Cut Sheet products, partially offset by modest growth in Xerox Color Press products.

Products and Offerings Definitions

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Research, Development and Engineering Expenses (RD&E)

First quarter 2025 RD&E of $42 million decreased $7 million as compared to first quarter 2024, primarily due to productivity and cost savings related to the Company's Reinvention.

Second quarter 2025 RD&E of $43 million decreased $7 million as compared to second quarter 2024.

For the six months ended June 30, 2025 RD&E of $85 million decreased $14 million as compared to the prior year period.

The decrease, as compared to the respective prior year periods, primarily reflected productivity and cost savings related to the Company's Reinvention.

Selling, Administrative and General Expenses (SAG)

First quarter 2025 SAG of $322 million decreased by $39 million as compared to first quarter 2024, primarily reflecting productivity and cost savings related to the Company's Reinvention, lower bad debt expense, and favorable currency.

These benefits were partially offset by expenses related to the expected acquisition of Lexmark, other Reinvention-related investments, as well as higher advertising and incentive compensation expense.

Second quarter 2025 SAG of $318 million decreased by $40 million as compared to second quarter 2024, primarily reflecting productivity and cost savings related to the Company's Reinvention and lower incentive compensation and benefit costs.

These benefits were partially offset by expenses related to the recent acquisition of Lexmark, other Reinvention-related investments, as well as higher bad debt expense, and unfavorable currency.

SAG expenses for the six months ended June 30, 2025 of $640 million decreased by $79 million primarily reflecting productivity and cost savings related to the Company's Reinvention, lower bad debt expense, and lower incentive compensation and benefit costs, and lower bad debt expense.

These benefits were partially offset by expenses related to the recent acquisition of Lexmark, other Reinvention-related investments, and higher advertising expense.

Segment Margin

First quarter 2025 Print and Other segment margin of 3.2% decreased by 0.9-percentage points as compared to first quarter of 2024, primarily due to lower revenue and gross profit, impacted by higher product and incremental tariff-related costs.

These impacts were partially offset by lower Selling, administrative and general expenses (SAG) and Research, development and engineering expenses (RD&E), lower freight costs, as well as Reinvention-related cost and productivity actions.

Second quarter 2025 Print and Other segment margin of 4.8% decreased by 2.4-percentage points as compared to second quarter of 2024, primarily due to lower revenue and gross profit, impacted by unfavorable mix and higher product and incremental tariff-related costs.

These impacts were partially offset by lower SAG and RD&E expenses, reflecting Reinvention-related cost and productivity actions, and recent pricing initiatives.

Print and Other segment margin for the six months ended June 30, 2025 of 4.0% decreased by 1.6-percentage points as compared to second quarter of 2024, primarily due to lower revenue and gross profit, impacted by unfavorable mix and higher product and incremental tariff-related costs.

These impacts were partially offset by lower SAG and RD&E expenses, reflecting Reinvention-related cost and productivity actions, as well as lower freight costs.

Xerox 2025 Form 10-Q 63

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Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 %

Change 2025 2024 %

IT Products (1)

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IT Services (2)

57 28 103.6% 115 55 109.1%

Intersegment revenue (3)

3 — NM 4 — NM

Total IT Solutions $ 213 $ 84 153.6% $ 377 $ 158 138.6%

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(3) Reflects primarily IT hardware, software solutions and services sold by the IT Solutions segment to the Print and Other segment.

First quarter 2025 XFS segment revenue increased 121.6% as compared to first quarter of 2024, and reflected the following:

IT Products revenue increased 123.4% during the three months ended March 31, 2025 as compared to first quarter of 2024, primarily due to the ITsavvy acquisition, partially offset by growth in legacy IT Solutions’ backlog 1 , the timing of large product placements in the prior year, a larger mix of revenue subject to deferred revenue recognition, and lower in-period billings in certain legacy IT Solutions regions.

IT Services revenue increased 114.8% during the three months ended March 31, 2025 as compared to the first quarter of 2024, primarily due to the ITsavvy acquisition.

____________________________

(1) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates.

It includes IT hardware associated with our IT Solutions offerings.

Second quarter 2025 IT Solutions segment revenue increased 153.6% as compared to second quarter of 2024, and for the six months ended June 30, 2025 increased 138.6% as compared to the prior year period, and reflected the following:

IT Products revenue increased 173.2% during the three months ended June 30, 2025 as compared to second quarter of 2024, primarily due to the ITsavvy acquisition, partially offset by larger product mix subject to net classification and revenue deferrals.

IT Products revenue increased 150.5% during the six months ended June 30, 2025 as compared to prior year period, primarily due to the ITsavvy acquisition, partially offset by the timing of large product placements in the prior year, a larger mix of revenue subject to net classification and revenue deferrals.

IT Services revenue increased 103.6% during the three months ended June 30, 2025 as compared to the second quarter of 2024.

IT services revenue for the six months ended June 30, 2025 increased 109.1% as compared to the prior year period.

The increase in the respective prior year periods was primarily due to the ITsavvy acquisition.

Segment Expenses

Selling, Administrative and General Expenses (SAG)

First quarter 2025 SAG of $23 million increased by $11 million as compared to first quarter 2024, primarily due to the recent acquisition of ITsavvy, as well as higher incentive compensation expense.

Second quarter 2025 SAG of $25 million increased by $13 million as compared to second quarter 2024, and SAG expenses for six months ended June 30, 2025 of $48 million increased by $24 million.

The increase as compared to the respective prior year periods was primarily due to the acquisition of ITsavvy, as well as higher bad debt expense.

Segment Margin

First quarter 2025 IT Solutions segment margin of 3.1% increased 4.5-percentage points as compared to first quarter of 2024, primarily due to the ITsavvy acquisition.

Second quarter 2025 IT Solutions segment margin of 4.8% increased 3.6-percentage points as compared to second quarter of 2024, driven by ITsavvy acquisition.

Segment margin of 4.0% for the six months ended June 30, 2025 was flat as compared to the prior year period, reflecting the ITsavvy acquisition, offset by higher incentive compensation expense and bad debt expense.

Xerox 2025 Form 10-Q 64

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The following is a summary of our liquidity position:

• As of March 31, 2025 and December 31, 2024, total cash, cash equivalents and restricted cash of Xerox Holdings Corporation were $390 million and $631 million, respectively, and apart from restricted cash of $54 million and $55 million at March 31, 2025 and December 31, 2024, respectively, was readily accessible for use.

The decrease in total cash, cash equivalents and restricted cash of $241 million reflects net cash used in financing activities of $159 million, as well as net cash used in operating cash activities of $89 million, both of which were partially offset by cash provided by investing activities of $6 million.

• Total debt at March 31, 2025 was $3,298 million, of which $1,651 million is allocated to and supports the Company's finance assets.

The remaining debt of $1,647 million is attributable to the non-financing business and decreased from $1,658 million at December 31, 2024.

Debt consists of senior unsecured notes, secured promissory notes, and borrowings under a Term Loan B facility.

• On April 11, 2025, we prepaid approximately $90 million of the Senior Notes due August 2025 using proceeds from the $400 million aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030 (the First Lien Notes) issued by Xerox Corporation, with the remaining balance of approximately $298 million due on or to prior to maturity in August 2025.

Also on April 11, 2025, we repaid $95 million of aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility (the TLB Facility).

The application of the remaining proceeds from the First Lien Notes will be used for general corporate purposes.

Refer to Note 21 - Subsequent Events for additional information related to our Debt activity in second quarter 2025.

• In December 2024, in connection with the Company's pending acquisition of Lexmark International II LLC, Xerox Corporation and Xerox Holdings Corporation obtained commitments for new debt financing pursuant to (i) a commitment letter with certain Incremental Commitment Parties for approximately $357 million in senior secured incremental term loan facility (the Incremental Facility), (ii) a commitment letter with senior unsecured commitment parties to provide debt financing in the form of $250 million principal amount of senior unsecured notes, and (iii) a debt commitment letter with Jefferies Finance LLC and Jefferies LLC (collectively, Jefferies), pursuant to which Jefferies agreed to provide debt financing in the form of $250 million senior unsecured notes (the SUNs), and a committed $550 million senior unsecured term loan facility (the Jefferies Term Loan Facility).

On March 25, 2025, Xerox announced its intention to replace Jefferies' aggregate commitments for the SUNs and the Jefferies Term Loan Facility with the $400 million aggregate principal amount of 10.25% Senior Secured First Lien Notes Due in 2030 and $400 million aggregate principal amount of 13.50% Senior Secured Second Lien Notes Due in 2031 (collectively, the Notes) and such commitments were terminated following the completion of the offering of the Notes on April 11, 2025.

Xerox Corporation and Xerox Holdings Corporation intend to use the remaining proceeds from these commitments (and/or an equivalent amount of debt securities in lieu thereof), together with cash on hand and drawings under Xerox Corporation's asset-backed revolving credit facility (as needed) to fund the $1.5 billion, inclusive of net debt and other assumed liabilities, purchase price of Lexmark.

• As of March 31, 2025, there were no borrowings under the ABL Facility, and approximately $41 million of letters of credits were issued under the facility.

During the three months ended March 31, 2025, the maximum borrowings under the ABL Facility were $25 million.

• We continue to expect operating cash flows to be between $420 million to $470 million, and capital expenditures to be approximately $70 million in 2025.

• As of June 30, 2025 and December 31, 2024, total cash, cash equivalents and restricted cash of Xerox Holdings Corporation were $985 million and $631 million, respectively, and apart from restricted cash of $536 million and $55 million at June 30, 2025 and December 31, 2024, respectively, was readily accessible for use.

The increase in total cash, cash equivalents and restricted cash of $354 million primarily reflects net cash provided by in financing activities of $459 million, as well as net cash used in operating activities of $100 million, and cash provided by investing activities of $12 million.

The restricted cash of $536 million at June 30, 2025, includes the net proceeds of approximately $492 million from the issuance of $500 aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031 (the Second Lien Notes), which were released from escrow upon the consummation of the Lexmark acquisition on July 1, 2025 (the Lexmark Acquisition).

• Total debt at June 30, 2025 was $3,942 million, of which $1,635 million is allocated to and supports the Company's finance assets.

The remaining debt of $2,307 million is attributable to the non-financing business and increased from $1,658 million at December 31, 2024.

Debt at June 30, 2025 consists of senior secured and unsecured notes, secured promissory notes, and borrowings under a Term Loan B facility.

During 2025, we issued $400 million aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030 (the First Lien Notes) and the Second Lien Notes.

• During 2025, we prepaid approximately $90 million of the Senior Notes due August 2025 (2025 Notes) using proceeds from the First Lien Notes, with the remaining balance of the 2025 Notes of approximately $298 million due in August 2025.

We also repaid $95 million of aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility (the TLB Facility).

Refer to Note 12 - Debt for additional information related to our Debt activity in the first half of 2025.

• In connection with the Lexmark Acquisition, on July 1, 2025, Xerox Holdings Corporation issued $250 million aggregate principal amount of 13.00% Senior Notes due 2030 (the 2030 Notes), and Xerox Corporation made an incremental term loan borrowing of approximately $327 million (Incremental Term Loans) under its TLB Facility.

The net proceeds from the 2030 Notes and the Incremental Term Loans were used to fund the Lexmark Acquisition.

Additionally, Xerox Holdings Corporation issued $125 million aggregate principal amount of 13.00% Senior Unsecured Notes due 2026 (the 2026 Notes).

Refer to Note 21 - Subsequent Events for additional information related to our Debt activity in July 2025.

• As of June 30, 2025, the ABL facility had an available borrowing base of approximately $260, with no borrowings outstanding, and approximately $63 million of letters of credit were issued under the facility.

During the six months ended June 30, 2025, the maximum amount outstanding under the ABL Facility was $53 million.

• We now expect operating cash flows to be approximately $345 million, which is a decrease from our previous guidance of between $420 million to $470 million.

The decrease reflects a higher level of cash tariff expenses and one-time costs associated with the implementation of synergy savings.

Additionally, we now expect capital expenditures to be approximately $95 million in 2025, and increase from our original guidance of approximately $70 million, due, in part, to the inclusion of Lexmark.

We have the ability to sell finance receivables for additional liquidity.

Cash Flow Analysis

The following summarizes our cash, cash equivalents and restricted cash:

Three Months Ended

March 31, Change

Six Months Ended

June 30, Change

(in millions) 2025 2024

Net cash used in operating activities $ (89) $ (79) $ (10)

Net cash provided by (used in) investing activities 6 (17) 23

Net cash (used in) provided by financing activities (159) 261 (420)

Net cash (used in) provided by operating activities $ (100) $ 44 $ (144)

Net cash used in investing activities (12) (19) 7

Net cash provided by (used in) financing activities 459 (75) 534

Effect of exchange rate changes on cash, cash equivalents and restricted cash 7 (16) 23

(Decrease) increase in cash, cash equivalents and restricted cash (241) 155 (396)

Increase (decrease) in cash, cash equivalents and restricted cash 354 (66) 420

Cash, cash equivalents and restricted cash at beginning of period 631 617 14

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Cash Flows from Operating Activities

Net cash used in operating activities was $89 million for the three months ended March 31, 2025.

Net cash used in operating activities was $100 million for the six months ended June 30, 2025.

The $144 million decrease in operating cash from the prior year period was primarily due to the following:

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• $42 million increase from accrued compensation due to the timing of payments of lower year-end accruals.

• $23 million increase from lower payments associated with restructuring and related costs.

Cash Flows from Investing Activities

Net cash provided by investing activities was $6 million for the three months ended March 31, 2025.

Net cash used in investing activities was $12 million for the six months ended June 30, 2025.

The $7 million change from the prior year period was primarily due to higher proceeds from the sale of surplus property and assets in the U.S.

and lower noncontrolling investments, partially offset by higher capital expenditures.

Cash Flows from Financing Activities

Net cash used in financing activities was $159 million for the three months ended March 31, 2025.

The $420 million decrease cash from the prior year period was primarily due to the following:

• $439 million decrease from net debt activity.

2025 reflects payments of $72 million on secured financing arrangements, $28 million on secured promissory notes and $7 million on the Term Loan B facility.

Net cash provided by financing activities was $459 million for the six months ended June 30, 2025.

The $534 million increase in cash from the prior year period was primarily due to the following:

• $511 million increase from net debt activity.

2025 reflects net proceeds $860 million from Senior Notes issuances offset by payments of $102 million on the Term Loan B facility, $90 million on Senior Notes, $72 million on secured financing arrangements and $55 million on secured promissory notes.

The $860 million net proceeds from Senior Notes issuances includes proceeds of $900 million offset by deferred debt issuance costs of $23 million and discounts of $17 million.

2024 reflects proceeds of $500 million on Senior Notes and $400 million on Convertible Senior Notes offset by net payments of $658 million on Senior Notes, deferred debt issuance costs of $15 million from Senior Notes issuances, $178 million on secured financing arrangements and $14 million on the Term Loan B facility.

The $441 million of net payments on Senior Notes includes $83 million on Senior Notes maturing in May 2024 and $362 million for the early redemption of 2025 Senior Notes offset by early redemption premium of $4 million.

The $658 million net payments on Senior Notes include $300 million on Senior Notes maturing in May 2024 and $362 million for the early redemption of 2025 Senior Notes offset by early redemption premium of $4 million.

• $23 million increase due to no purchases of capped calls in the current year.

• $13 million increase from lower common stock dividends due to dividend reductions.

• Other financing, net includes $15 million of commitment fees related to the Lexmark Acquisition.

Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt activity.

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Our operating leases have remaining terms of up to ten years and a variety of renewal and/or termination options.

As of March 31, 2025 and December 31, 2024, total operating lease liabilities were $196 million and $188 million, respectively.

As of June 30, 2025 and December 31, 2024, total operating lease liabilities were $193 million and $188 million, respectively.

Finance Leases

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and Europe, as well as for vehicles and related infrastructure, within outsourced warehouse supply arrangements, in the U.S.

These leases have remaining maturities up to seven years.

As of March 31, 2025 and December 31, 2024, total finance lease liabilities were $14 million and $53 million, respectively.

These leases have remaining maturities up to six years.

As of June 30, 2025 and December 31, 2024, total finance lease liabilities were $11 million and $53 million, respectively.

The decrease in finance leases since December 31, 2024 is primarily related to the modification of a lease agreement entered into during the first quarter of 2025, which resulted in a change in the lease classification from financing to operating.

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The following summarizes our debt:

(in millions) March 31, 2025 December 31, 2024

(in millions) June 30, 2025 December 31, 2024

Xerox Holdings Corporation $ 1,948 $ 2,038

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The following represents our total finance assets, net associated with our lease and finance operations:

(in millions) March 31, 2025 December 31, 2024

(in millions) June 30, 2025 December 31, 2024

Total finance receivables, net (1)

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(1) Includes (i) Billed portion of finance receivables, net, (ii) Finance receivables, net and (iii) Finance receivables due after one year, net as included in our Condensed Consolidated Balance Sheets.

(2) The change from December 31, 2024 includes a decrease of $36 million due to currency.

Our lease contracts permit customers to pay for equipment over time rather than at the date of installation;

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Based on this leverage, the following represents the breakdown of total debt between financing debt and core debt:

(in millions) March 31, 2025 December 31, 2024

(in millions) June 30, 2025 December 31, 2024

Finance receivables debt (1)

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Total $ 1,948 $ 2,086 $ 4,034

_____________

(1) On April 11, 2025, Xerox repaid approximately $90 million of Xerox Holdings Corporation's 5.00% Senior Notes due August 2025.

Refer to Note 21 - Subsequent Events in the Condensed Consolidated Financial Statements for additional information regarding our debt activity.

Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt.

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Credit risk is managed through the continuous monitoring of exposures to such counterparties.

Xerox 2025 Form 10-Q 60

The current market events have not required us to materially modify or change our financial risk management strategies with respect to our exposures to interest rate and foreign currency risk.

Refer to Note 13 – Financial Instruments in the Condensed Consolidated Financial Statements for further discussion and information on our financial risk management strategies.

Xerox 2025 Form 10-Q 69

Non-GAAP Financial Measures

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Adjusted earnings will continue to include the service cost elements of our retirement costs, which are related to current employee service as well as the cost of our defined contribution plans.

Xerox 2025 Form 10-Q 61

Transaction and related costs, net :

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Accordingly, we exclude these expenses from our Adjusted Earnings Measures in order to evaluate our performance on a comparable basis.

Xerox 2025 Form 10-Q 70

Discrete, unusual or infrequent items:

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• Reinvention-related costs

• Loss (gain) on early extinguishment of debt

• Commitment fee expenses

• Gain on early extinguishment of debt

• Lexmark acquisition financing - escrow interest, net

• Deferred tax asset valuation allowance

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Adjusted Operating Income and Margin

We calculate and utilize adjusted operating income and margin measures by adjusting our reported pre-tax income (loss) and margin amounts.

We calculate and utilize adjusted operating income and margin measures by adjusting our reported pre-tax (loss) income and margin amounts.

In addition to the costs and expenses noted above as adjustments for our adjusted earnings measures, adjusted operating income and margin also exclude the remaining amounts included in Other expenses, net, which are primarily non-financing interest expense and certain other non-operating costs and expenses.

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Adjusted Net (Loss) Income and EPS reconciliation:

Three Months Ended March 31,

(in millions, except per share amounts) Net Loss Diluted EPS Net Income Diluted EPS

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(in millions, except per share amounts) Net Loss Diluted EPS Net Income Diluted EPS Net Loss Diluted EPS Net Income Diluted EPS

$ (106) $ (0.87) $ 18 $ 0.11 $ (196) $ (1.62) $ (95) $ (0.83)

Inventory-related impact - exit of certain production print manufacturing operations (2)

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Transaction and related costs, net 6 (23) 9 (23)

Loss (gain) on early extinguishment of debt 4 — 4 (3)

Commitment fee expense (3)

Gain on early extinguishment of debt — (3)

Lexmark acquisition financing - escrow interest, net (4)

Deferred tax asset valuation allowance (5)

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Income tax on adjustments (7)

(49) (7) (79) (42)

Adjusted $ (77) $ (0.64) $ 41 $ 0.29 $ (81) $ (0.71) $ 52 $ 0.35

Dividends on preferred stock used in adjusted EPS calculation (8)

$ 3 $ — $ 3 $ 7 $ 7

Weighted average shares for adjusted EPS (8)

Fully diluted shares at March 31, 2025 (8)

126 — 126 125 125

(1) Net Loss and EPS.

For the three months ended March 31, 2025 Net Loss and Diluted Loss per Share include a charge to tax expense related to the establishment of $59 million of valuation allowances, or $0.47 per share, and $14 million of after-tax financing-related charges, or $0.11 per share, related to our recently completed debt offering.

For the three months ended March 31, 2024 Net Loss and Diluted Loss per Share includes a $100 million after-tax Reinvention-related charge, or $0.81 per share, primarily related to the exit of certain production print manufacturing operations and geographic simplification.

(2) As a result of the exit of certain production print manufacturing operations, for the three months ended March 31, 2025 and 2024, reflects the inventory-related charges of approximately $7 million and $32 million, respectively, and the cancellation of related purchase contracts of approximately $0 million and $4 million, respectively.

(3) Primarily reflects fees associated with unused commitments resulting from the recently completed private offering of $400 million in aggregate principal amount of 10.25% Senior Secured First Lien Notes and $400 million aggregate principal amount of 13.5% Senior Secured Second Lien Notes Due in 2031.

Fully diluted shares at June 30, 2025 (9)

____________________________

(1) Net (Loss) Income and EPS.

For the three months ended June 30, 2025, Net (Loss) and Diluted (Loss) include $22 million ($17 million after-tax) of financing-related charges, net or $0.13 per share, related to recently completed borrowings in support of the Lexmark acquisition financing, repayment of existing borrowings, and general corporate purposes, and $28 million of tax expense, or $0.22 per share, related to interest expense that was not deductible according to tax guidelines in place as of June 30, 2025.

For the three months ended June 30, 2024, Net Income and Diluted Earnings per Share included $23 million ($17 million after-tax), or $0.14 per share, related to insurance proceeds from a legal settlement for the reimbursement of certain legal and other professional costs, associated with the terminated proposal to acquire HP Inc.

in early 2020.

For the six months ended June 30, 2025, Net (Loss) and Diluted (Loss) include a charge to tax expense related to the establishment of $59 million of valuation allowances, or $0.47 per share, financing-related charges, net of $40 million ($30 million after-tax), or $0.24 per share, related to recently completed borrowings in support of the Lexmark acquisition financing, repayment of existing borrowings, and general corporate purposes, and tax expense of $28 million, or $0.22 per share, related to interest expense that was not deductible according to tax guidelines in place as of June 30, 2025.

For the six months ended June 30, 2024, Net Income and Diluted Earnings per Share includes Reinvention-related charges of $129 million ($100 million after-tax), or $0.80 per share, primarily related to the exit of certain production print manufacturing operations and geographic simplification, and insurance proceeds of $23 million ($17 million after-tax), or $0.14 per share, related to a legal settlement for the reimbursement of certain legal and other professional costs, associated with the terminated proposal to acquire HP Inc.

in early 2020.

(2) As a result of the exit of certain production print manufacturing operations, Cost of sales and Cost of services, maintenance, rentals and other reflects inventory-related charges of $9 million and $6 million for the three months ended June 30, 2025 and 2024, respectively, and $16 million and $38 million, for the six months ended June 30, 2025 and 2024, respectively, as well as the cancellation of related purchase contracts $1 million and $2 million for the three months ended June 30, 2025 and 2024, respectively, and $1 million and $6 million for the six months ended June 30, 2025 and 2024, respectively.

(3) Primarily reflects fees related to recently completed borrowings in support of the Lexmark acquisition financing, repayment of existing borrowings, and general corporate purposes, which includes:

the private offering of $400 million in aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030 and $500 million aggregate principal amount of 13.500% Senior Secured Second Lien Notes Due in 2031;

the private offering of $250 million aggregate principal amount of 13.00% Senior Notes due 2030;

and an incremental term loan borrowing of $327 million under the First Lien Term Loan Credit Agreement.

(4) Reflects net interest expense on net proceeds received from debt issuances which were placed in escrow to fund the Lexmark Acquisition.

(5) Reflects the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability.

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(8) For those periods that include the preferred stock dividend, the average shares for the calculations of diluted EPS exclude the 7 million shares associated with Xerox Holdings Corporation's Series A Convertible preferred stock.

(8) Reflects common shares outstanding at March 31, 2025, plus potential dilutive common shares used for the calculation of adjusted diluted EPS for the first quarter 2025.

(9) Reflects common shares outstanding at June 30, 2025, plus potential dilutive common shares used for the calculation of adjusted diluted EPS for the first quarter 2025.

Excludes potentially dilutive common shares associated with our series A convertible preferred stock, as well as shares granted under stock-based compensation programs, all of which were anti-dilutive for the first quarter 2025.

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Adjusted Effective Tax Rate reconciliation:

Three Months Ended March 31,

(in millions) Pre-Tax (Loss) Income Tax Expense (Benefit) Effective

Three Months Ended June 30,

(in millions) Pre-Tax (Loss) Income Income Tax Expense Effective

Tax Rate Pre-Tax Income Income Tax Expense Effective

$ (60) $ 46 (76.7) % $ 25 $ 7 28.0 %

Non-GAAP Adjustments (2)

$ 18 $ 95 527.8 % $ 55 $ 14 25.5 %

Six Months Ended June 30,

(in millions) Pre-Tax (Loss) Income Income Tax (Benefit) Expense Effective

Tax Rate Pre-Tax (Loss) Income Income Tax (Benefit) Expense Effective

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$ 8 $ 89 1,112.5 % $ 64 $ 12 18.8 %

(1) Pre-tax loss and Income tax expense (benefit).

____________________________

(1) Pre-tax (loss) income and Income tax expense (benefit).

(2) Refer to Adjusted Net (Loss) Income and EPS reconciliation for details.

(3) The tax impact on the Adjusted Pre‐Tax (Loss) Income is calculated under the same accounting principles applied to the As Reported Pre-Tax Loss under ASC 740, which employs an annual effective tax rate method to the results.

(3) The tax impact on the Adjusted Pre‐Tax Income is calculated under the same accounting principles applied to the As Reported Pre-Tax (Loss) Income under ASC 740, which employs an annual effective tax rate method to the results.

Xerox 2025 Form 10-Q 73

Adjusted Operating Income and Margin reconciliation:

Three Months Ended March 31,

Three Months Ended June 30,

(in millions) (Loss) Profit Revenue Margin Profit Revenue Margin

$ (106) $ 1,576 $ 18 $ 1,578

Income tax expense 46 — 7 —

Pre-tax (loss) income $ (60) $ 1,576 (3.8) % $ 25 $ 1,578 1.6 %

Inventory-related impact - exit of certain production print manufacturing operations (2)

Reinvention-related costs 3 —

Restructuring and related costs, net 10 12

Amortization of intangible assets 10 10

Divestitures — (3)

Transaction and related costs, net 6 —

Other expenses, net (3)(4)

Adjusted $ 59 $ 1,576 3.7 % $ 85 $ 1,578 5.4 %

Six Months Ended June 30,

(in millions) (Loss) Profit Revenue Margin (Loss) Profit Revenue Margin

$ (196) $ 3,033 $ (95) $ 3,080

Income tax expense (benefit) 23 — (37) —

Income tax (benefit) expense 69 — (30) —

Pre-tax loss $ (127) $ 3,033 (4.2) % $ (125) $ 3,080 (4.1) %

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____________________________

(1) Net Loss.

(1) Net (Loss) income.

(2) Includes inventory-related charges of approximately $9 and $6 for the three months ended June 30, 2025 and 2024, respectively, and $16 and $38 for the six months ended June 30, 2025 and 2024 respectively, as well as charges for the cancellation of related purchase contracts of $1 and $2 for the three months ended June 30, 2025 and 2024, respectively, and $1 and $6 for the six months ended June 30, 2025 and 2024, respectively.

(3) Includes non-service retirement-related costs.

(4) Includes fees associated with the recently completed private offering of $400 million in aggregate principal amount of 10.25% Senior Secured First Lien Notes and $400 million aggregate principal amount of 13.5% Senior Secured Second Lien Notes Due in 2031.

(4) The three and six months ended June 30, 2025 includes $22 million and $43 million, respectively, of interest and financing-related charges, net, related to recently completed borrowings in support of the Lexmark acquisition financing, repayment of existing borrowings, and general corporate purposes .

The three and six months ended June 30, 2024 includes $23 million, respectively, of insurance proceeds from a legal settlement for the reimbursement of certain legal and other professional costs, associated with the terminated proposal to acquire HP Inc.

in early 2020.

Xerox 2025 Form 10-Q 74

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis