What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-07 · 963 added, 464 removed, 541 unchanged (73% of the section changed)

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Myriad is fully consolidated by Xerox Holdings.

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.

At September 30, 2025 and December 31, 2024 investments of Myriad were $42 million and $40 million, respectively.

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

Currency Impact

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

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 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

Our results include Lexmark International II, LLC (Lexmark) from July 1, 2025, the effective date of the acquisition (the Lexmark Acquisition), as well as the results of ITSavvy LLC (ITSavvy), acquired on November 20, 2024.

In order to provide a clearer comparison of our results to the prior year, we are also providing a discussion and analysis on a pro forma basis.

See the “ Pro Forma Basis ” section below for further explanation and discussion of pro forma results.

In addition, the following discussion includes references to "legacy Xerox", which reflects the financial results of Xerox, excluding the impact of the Lexmark Acquisition and ITSavvy, as applicable.

Third quarter results were impacted by macroeconomic challenges.

We experienced continued disruption associated with tariff and government funding-related uncertainty, which primarily affected transactional Print equipment revenues, and to a lesser extent, supplies revenue.

Throughout the quarter, we observed continued delays in purchasing decisions among clients, particularly those reliant on federal, state and local government funding.

General economic uncertainty also resulted in delays in purchases among our commercial client base and distributors.

However, page volume trends remain consistent, and branded supplies usage was in line with expectations, both of which indicate unchanged demand for printed pages.

Actions undertaken through Reinvention, have provided Xerox with a flexible, simplified operating structure, allowing the company to more quickly adapt in an uncertain operating landscape.

Equipment sales of $383 million in the third quarter 2025 increased 13.0% in actual currency, or 12.1% in constant currency 1 , as compared to the third quarter 2024.

Third quarter 2025 equipment sales included a 26.0-percentage point benefit from the Lexmark Acquisition.

Total equipment installations increased approximately 55.0% including Lexmark, offset by legacy Xerox declines concentrated in the high-end and entry level equipment categories.

Excluding Lexmark, equipment sales declined 13.0% in actual currency reflecting lower installations, including the exit of certain production print manufacturing operations in 2024.

On a pro forma 2 basis, third quarter 2025 revenue declined 16.3%, due to the impacts noted above, as well as backlog 3 fluctuations and timing of certain enterprise

Xerox 2025 Form 10-Q 50

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.

deals and OEM orders within Lexmark.

Lexmark's equipment sales can be more volatile on a quarter-to-quarter basis, as a higher percentage comes from large channel and OEM partners.

Post-sale revenue of approximately $1.6 billion increased 32.7% in actual currency, or 31.3% in constant currency 1 , as compared to third quarter 2024.

Third quarter 2025 post-sale revenue included a 30.2-percentage point benefit and a 10.3-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively.

Excluding these acquisitions, post sale revenue declined 7.8-percentage points in actual currency reflecting lower managed print services 4 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.

These impacts were partially offset by growth of the legacy Xerox IT Solutions business and the benefits of currency.

On a pro forma 2 basis, third quarter 2025 revenue decreased 5.5%, due to the impacts noted above, and timing of certain enterprise deals within Lexmark.

Pre-tax loss of $300 million for the third quarter 2025 decreased by $787 million as compared to pre-tax loss of $1,087 million in the third quarter 2024.

Pre-tax loss margin decreased 55.8% for the third quarter 2025 as compared to the third quarter 2024 and included a 1.4-percentage point benefit and a 4.2-percentage point adverse impact from the Lexmark Acquisition and ITSavvy, respectively.

The improvement in the third quarter 2025 is primarily due to the pre-tax non-cash goodwill impairment charge of $1.1 billion in the third quarter 2024, and benefits associated with Reinvention-related cost and productivity actions and recent pricing initiatives.

These benefits were partially offset by lower gross profit, including the adverse impact related to the Lexmark Acquisition, unfavorable revenue mix, product cost increases and incremental tariff-related costs, as well as higher Other expenses, net, which included higher non-financing interest expense related to the recently completed borrowings in support of the Lexmark Acquisition.

In addition, selling, general and administrative expenses increased due to the Lexmark Acquisition and ITSavvy.

On a pro forma 2 basis third quarter 2025 pre-tax loss decreased by $891 million as compared to the third quarter 2024, due to the impacts noted above.

Adjusted 1 operating income of $65 million decreased by $15 million as compared to third quarter 2024 primarily due to lower gross profit, which includes higher product costs and incremental tariff-related costs, as well as unfavorable revenue mix driven by lower outsourcing revenue.

These impacts were partially offset by benefits from the Lexmark Acquisition and ITSavvy, productivity and cost savings related to the Company's Reinvention, as well as recent price increases.

On a pro forma 2 basis third quarter 2025 adjusted 1 operating income decreased $87 million, due primarily to the impacts noted above.

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

(2) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

(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 printing devices as well as IT hardware.

(4) Includes revenues from Services, maintenance and rentals.

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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.

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

We continue to expect Earnings per share accretion associated with the Lexmark Acquisition, despite a slightly higher than expected cost of funding.

Based on U.S.

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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.

Refer to Note 6 - Acquisition in the condensed consolidated financial statements for additional information regarding the Lexmark Acquisition.

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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As a result of this change, prior period reportable segment results and related disclosures have been conformed to reflect the Company’s current reportable segments.

As noted above, Lexmark was acquired during third quarter 2025.

The results of Lexmark are included in the Print and Other segment.

Refer to Note 4 - Segment Reporting in the Condensed Consolidated Financial Statements for additional information regarding this change.

Xerox 2025 Form 10-Q 51

Valuation Allowance

During the first quarter 2025, a valuation allowance was recorded primarily related to certain deferred tax assets in the United States.

During the first and third quarter of 2025, valuation allowances were recorded primarily related to certain deferred tax assets in the United States.

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

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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.

Refer to Note 1 - Basis of Presentation in the Condensed Consolidated Financial Statements 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

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

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

Total revenue of $1.96 billion for third quarter 2025 increased 28.3% from third quarter 2024, including a 29.3-percentage point benefit and an 8.0-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively, as well as a 1.3-percentage point favorable impact from currency.

On a pro forma 1 basis total revenue declined 7.8%.

Total revenue reflected the following:

• an increase of 32.7% in Post sale revenue, including a 30.2-percentage point benefit and a 10.3-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively, as well as a 1.4-percentage point favorable impact from currency.

On a pro forma 1 basis post sale revenue declined 5.5%.

• an increase of 13.0% in Equipment sales revenue, including a 26.0-percentage point benefit from the Lexmark Acquisition, and a 0.9-percentage point favorable impact from currency.

On a pro forma 1 basis equipment sales revenue declined 16.3%.

Total revenue of $4.99 billion for the nine months ended September 30, 2025 increased 8.4% as compared to the prior year period, including a 9.7-percentage point benefit and a 7.7-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively, as well as a 0.2-percentage point favorable impact from currency.

On a pro forma 1 basis total revenue declined 7.2%.

Total revenue reflected the following:

• an increase of 10.2% in Post sale revenue, including a 9.9-percentage point benefit and a 3.4-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively, as well as a 0.2-percentage point favorable impact from currency.

On a pro forma 1 basis post sale revenue declined 6.8%.

• an increase of 1.8% in Equipment sales revenue, including an 8.9-percentage point benefit from the Lexmark Acquisition, and a 0.2-percentage point favorable impact from currency.

On a pro forma 1 basis equipment sales revenue declined 8.6%.

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(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

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

Three Months Ended September 30, Nine Months Ended September 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

Net Loss $ (760) $ (1,205) $ 445 $ (956) $ (1,300) $ 344

Adjusted (1) Net Income (Loss)

27 34 (7) (54) 86 (140)

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

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.

Third quarter 2025 Net (Loss) was $760 million and improved by $445 million as compared to the third quarter 2024 Net (loss) of $1,205 million.

Net (Loss) for the third quarter 2024 reflects an after-tax Goodwill impairment charge of $1,015 million ($1,058 million pre-tax).

Net (Loss) for the third quarter 2025 includes the results of ITSavvy and the Lexmark Acquisition, and primarily reflects higher income tax expense, as a result of the establishment of a valuation allowance of $478 million against certain deferred tax assets to reflect their realizability.

Third quarter 2025 Net (Loss) also reflects lower gross profit, and higher Selling, administrative and general expenses, Other expenses, net, Research, development and engineering expenses (RD&E), Amortization of intangible assets, and Restructuring and related costs, net, all of which was partially offset by higher revenues.

Third quarter 2025 adjusted 1 Net Income was $27 million as compared to Adjusted 1 Net Income of $34 million during the third quarter 2024.

Adjusted 1 Net Income was lower by $7 million primarily reflecting higher Selling, administrative and general expenses, Other expenses, net, and RD&E, all of which was partially offset by higher revenues, as well as lower Income tax expense.

Xerox 2025 Form 10-Q 52

Net (Loss) for the nine months ended September 30, 2025 of $956 million and improved $344 million as compared to the prior year period Net (Loss) of $1,300 million.

Net (Loss) for the nine months ended September 30, 2024 reflects an after-tax Goodwill impairment charge of $1,015 million ($1,058 million pre-tax).

Net (Loss) for the nine months ended September 30, 2025 includes the results of ITSavvy and the Lexmark Acquisition from July 1, 2025, and primarily reflects higher Income tax expense, as a result of the establishment of valuation allowances of $537 million against certain deferred tax assets to reflect their realizability.

The change also reflected lower gross profit, and higher Other expenses, net, Selling, administrative and general expenses, Amortization of intangible assets, and RD&E.

These negative impacts were partially offset by higher revenues, as well as lower Divestitures, as the prior year included the divestiture of certain direct business operations in Latin America, and lower Restructuring and related costs, net.

A djusted 1 Net (loss) for the nine months ended September 30, 2025 was $54 million as compared to the prior year period adjusted 1 net income of $86 million.

A djusted 1 Net (loss) was higher by $140 million primarily reflecting lower gross profit, as well as higher Other expenses, net, Income tax expense and RD&E.

These negative impacts were partially offset by higher revenues and lower Selling, administrative and general expenses.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

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

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(2) Reflects primarily costs related to the sale of IT hardware, software solutions and services by the IT Solutions segment, to the Print and Other segment.

Cash flows from operating activities during the nine months ended September 30, 2025 were a source of $16 million and decreased $144 million as compared to the prior year period.

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

Cash used in investing activities during the nine months ended September 30, 2025 was $694 million, primarily reflecting the Lexmark Acquisition of $675 million, net of cash acquired, as well as capital expenditures of $67 million, and the investment in a noncontrolling interest of $9 million, all of which were partially offset by $33 million

Xerox 2025 Form 10-Q 53

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.

related to the sales of two surplus facilities, $6 million related to a change in lease classification for certain vehicles, $9 million from divestitures, and $7 million from the sale of patents.

Cash provided by financing activities during the nine months ended September 30, 2025 was $577 million, reflecting proceeds from the issuance of our First Lien Senior Secured Notes of $400 million (First Lien Notes), the issuance of our Second Lien Senior Secured Notes of $500 million (Second Lien Notes), the issuance of $250 million of our Senior Secured Notes due July 2030 (the 2030 Notes), the issuance of our $125 million Senior Unsecured Notes due June 2026 (the 2026 Notes), $100 million from the ABL Facility and $4 million from the TLB Facility, all of which was offset by deferred debt issuance costs of $41 million and discounts of $17 million.

Payments on debt reflected $388 million on the 5.000% Senior Notes due in August 2025, $102 million on the Term Loan B facility (TLB Facility), $83 million on secured promissory notes and $72 million on secured financing arrangements.

Dividend payments were $65 million, and other financing, net was $28 million, reflecting $22 million for payments of financing commitment fees related to the Lexmark Acquisition, $6 million related to the settlement of stock-based compensation and $9 million related to finance leases, all of which was offset by $11 million for the issuance of warrants in connection with the issuance of the 2030 Notes.

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

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

Xerox's 2025 guidance includes six months of activity associated with the Lexmark Acquisition, which was effective July 1, 2025.

We expect Revenue to grow 13% 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.

While we expect profitability to improve, the impacts of tariff-related expenses of approximately $35 million, net of mitigation efforts, partially offset by Lexmark-related contributions of $100 million to $110 million, will result in modestly lower margins.

We now expect operating cash flows, excluding one-time items related to the Lexmark Acquisition of $70 million, to be approximately $245 million, which is a decrease from our previous guidance of approximately $345 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.

We continue to expect capital expenditures to be approximately $95 million in 2025, which reflects the inclusion of Lexmark.

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

Xerox 2025 Form 10-Q 49

Financial Review

Three Months Ended

June 30, Six Months Ended

June 30, % of Total Revenue

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

September 30, % of Total Revenue

(in millions) 2025 2024 % Change CC % Change Pro Forma % Change (1)

Equipment sales $ 383 $ 339 13.0 % 12.1 % (16.3) % 20 % 22 %

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Total Revenue $ 1,961 $ 1,528 28.3 % 27.0 % (7.8) % 100 % 100 %

Reconciliation to Condensed Consolidated Statements of (Loss) Income:

Reconciliation to Condensed Consolidated Statements of Loss:

Sales $ 993 $ 588 68.9 % 67.9 % (8.5) %

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Intersegment elimination (5)

(3) — NM NM (4) — NM NM — % — %

(4) — NM NM NM — % — %

Total Revenue (5)

$ 1,961 $ 1,528 28.3 % 27.0 % (7.8) % 100 % 100 %

Xerox 2025 Form 10-Q 54

Nine Months Ended

September 30, % of Total Revenue

(in millions) 2025 2024 % Change CC % Change Pro Forma % Change (1)

Equipment sales $ 1,003 $ 985 1.8 % 1.6 % (8.6) % 20 % 21 %

Post sale revenue 3,991 3,623 10.2 % 10.0 % (6.8) % 80 % 79 %

Total Revenue $ 4,994 $ 4,608 8.4 % 8.2 % (7.2) % 100 % 100 %

Reconciliation to Condensed Consolidated Statements of Loss:

Sales $ 2,215 $ 1,722 28.6 % 28.9 % (6.5) %

IT products (2)

(423) (158) 167.7 % 167.9 % (5.8) %

Supplies, paper and other sales (789) (579) 36.3 % 37.7 % (4.8) %

Equipment sales $ 1,003 $ 985 1.8 % 1.6 % (8.6) %

Services, maintenance, rentals and other (3)(4)

$ 2,779 $ 2,886 (3.7) % (4.1) % (7.8) %

IT products (2)

423 158 167.7 % 167.9 % (5.8) %

Supplies, paper and other sales 789 $ 579 36.3 % 37.7 % (4.8) %

Post sale revenue

$ 3,991 $ 3,623 10.2 % 10.0 % (6.8) %

Print and Other $ 4,399 $ 4,364 0.8 % 0.5 % (7.9) % 88 % 95 %

IT Solutions 603 244 147.1 % 147.2 % 1.3 % 12 % 5 %

Intersegment elimination (5)

(8) — NM NM NM — % — %

Total Revenue (5)

$ 4,994 $ 4,608 8.4 % 8.2 % (7.2) % 100 % 100 %

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

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

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

(2) 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 $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.

(3) Includes financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $32 million and $38 million for the three months ended September 30, 2025 and 2024, respectively and $97 million and $118 million for the nine months ended September 30, 2025 and 2024, respectively.

(4) Services, maintenance, rentals and other revenue include IT services support of $57 million and $31 million for the three months ended September 30, 2025 and 2024, respectively, and $172 million and $86 million for the nine months ended September 30, 2025 and 2024, respectively, provided by our IT Solutions segment.

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

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

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.

Third quarter 2025 total revenue increased 28.3% as compared to third quarter 2024, and included a 29.3-percentage point benefit and an 8.0-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively, as well as a 1.3-percentage point benefit from currency.

The increase in the third quarter 2025 was partially offset by lower equipment sales and post sale revenue for legacy Xerox.

Total revenue for legacy Xerox declined 9.0-percentage points in actual currency primarily due to lower installations, managed print services 1 , and supplies revenue, as well as the adverse impact from Reinvention-related actions and macroeconomic and policy-related uncertainty.

These factors were partially offset by legacy IT Solutions growth.

On a pro forma 2 basis, third quarter 2025 total revenue declined 7.8% as compared to the third quarter 2024 due to the impacts noted above, as well as backlog 3 fluctuations and the timing of certain enterprise deals within Lexmark.

Total revenue for the nine months ended September 30, 2025 increased 8.4%, as compared to the prior year period, and included a 9.7-percentage point benefit and an 7.7-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively, as well as a 0.2-percentage point benefit from currency.

The increase for the nine months ended September 30, 2025 was partially offset by lower equipment sales and post sale revenue for legacy Xerox.

Total revenue for legacy Xerox declined 9.0-percentage points in actual currency due primarily to lower installations, managed print services 1 and supplies revenue declines, as well as the adverse impact from Reinvention-related actions and macroeconomic and policy-related uncertainty.

These factors were partially offset by legacy IT Solutions growth.

On a pro forma 2 basis, total revenue for the nine months ended September 30, 2025 declined 7.2% due to the impacts noted above, as well as backlog 3 fluctuations and the timing of certain enterprise deals within Lexmark.

Xerox 2025 Form 10-Q 55

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.

Third quarter 2025 equipment sales revenue increased 12.1% at constant currency 4 and included a 26.0-percentage point benefit from the Lexmark Acquisition.

The increase at constant currency 4 reflects higher installations driven by the inclusion of Lexmark.

Excluding Lexmark, equipment sales declined 13.0-percentage points in actual currency due to lower installations and the adverse impact from Reinvention-related actions, including the exit of certain production print manufacturing operations in 2024.

On a pro forma 2 basis, third quarter 2025 equipment sales revenue declined 16.3% as compared to the third quarter 2024, due to the impacts noted above, as well as backlog 3 fluctuations and timing of certain enterprise deals within Lexmark.

Total equipment sales revenue for the nine months ended September 30, 2025 increased 1.6% at constant currency 4 and included an 8.9-percentage point benefit from the Lexmark Acquisition.

The increase at constant currency 4 reflects higher installations driven by the inclusion of Lexmark.

Excluding Lexmark, equipment sales declined 7.1-percentage points in actual currency due to lower installations and the adverse impact from Reinvention-related actions, including the exit of certain production print manufacturing operations in 2024, as well as unfavorable product mix.

On a pro forma 2 basis, equipment sales revenue for the nine months ended September 30, 2025 declined 8.6% as compared to the prior year period, due to the impacts noted above, as well as backlog 3 fluctuations and timing of certain enterprise deals within Lexmark.

Third quarter 2025 Post sale revenue increased 31.3% at constant currency 4 and included a 30.2-percentage point benefit and a 10.3-percentage point benefit from ITSavvy and the Lexmark Acquisition, respectively.

Excluding these acquisitions, post sale revenue declined 7.8-percentage points in actual currency reflecting lower managed print services 1 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 modest growth in digital services revenue.

These impacts were partially offset by growth of the legacy IT Solutions business.

On a pro forma 2 basis, third quarter 2025 post sale revenue decreased 5.5% as compared to the third quarter 2024.

Total post sales revenue for the nine months ended September 30, 2025 increased 10.0% at constant currency 4 and included a 9.9-percentage point benefit and a 3.4-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively.

Excluding these acquisitions, post sale revenue declined 3.1-percentage points in actual currency reflecting lower managed print services 1 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.

These impacts were partially offset by growth of the legacy IT Solutions business and modest growth in digital services revenue.

On a pro forma 2 basis, post sales revenue for the nine months ended September 30, 2025 decreased 6.8% as compared to the prior year period, due to the impacts noted above.

____________________________

(1) See "Currency Impact" section for a description of Constant Currency.

(1) Includes revenues from service, maintenance and rentals.

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

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

(2) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

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

(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 printing devices as well as IT hardware.

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

Post sale revenue

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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 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:

Post sale revenue for the three and nine months ended September 30, 2025 reflected the following:

• 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.

◦ For the three months ended September 30, 2025, these revenues increased 3.0% as compared to third quarter of 2024, and included an 8.7-percentage point benefit and a 3.2-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively, as well as a 1.5-percentage point benefit from currency.

On a pro forma 2 basis, third quarter 2025 revenue decreased 7.2%, due to the impacts noted above, and timing of certain enterprise contracts within Lexmark.

◦ For the nine months ended September 30, 2025 the revenues decreased 3.7% as compared to the prior year period, and included a 2.8-percentage point benefit and a 3.2-percentage point benefit from the

Xerox 2025 Form 10-Q 56

Lexmark Acquisition and ITSavvy, respectively, as well as a 0.4-percentage point benefit from currency.

On a pro forma 2 basis revenue for the nine months ended September 30, 2025 decreased 7.8% as compared to the prior year period, due to the impacts noted above, and timing of certain enterprise contracts within Lexmark.

◦ The respective decline in constant currency 3 for both the three and nine months ended September 30, 2025 reflects the benefit of these acquisitions, partially offset by declines of legacy Xerox.

Excluding the impact of the acquisitions, revenue declined 8.9% and 9.7% in actual currency as compared to the respective prior year periods, and was due primarily to managed print services 1 revenue which declined mid-single digits as compared to the respective year periods, reflecting lower outsourcing and print service revenue, and the effects of geographic and offering simplification.

The decline is also due to lower financing revenue reflecting a continued reduction in the average finance receivables balance associated with the sales of finance receivables in recent quarters with certain financing affiliates.

These negative impacts were partially offset by modest growth in digital services revenue for the three and nine months ended September 30, 2025.

• 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.

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.

◦ For the three months ended September 30, 2025, these revenues increased 200.0% as compared to third quarter of 2024, and included a 168.4-percentage point benefit from the acquisition of ITSavvy, as well as a 2.4-percentage point benefit from currency.

Excluding the impact of ITSavvy, revenue increased 31.6% in actual currency as compared to third quarter of 2024 due to growth in the legacy Xerox IT Solutions business.

On a pro forma 2 basis, third quarter 2025 revenue increased 9.8%.

◦ For the nine months ended September 30, 2025, these revenues increased 167.7% as compared to the prior year period, and included a 164.1-percentage point benefit from the acquisition of ITSavvy, as well as a 0.2-percentage point adverse impact from currency.

Excluding the impact of ITSavvy, revenue increased 3.6% in actual currency as compared to the prior year period due to growth in the legacy Xerox IT Solutions business, partially offset by the timing of large product placements in the prior year, and a larger product mix subject to net classification and revenue deferrals.

On a pro forma 2 basis revenue for the nine months ended September 30, 2025 declined 5.8% as compared to the prior year period.

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

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.

◦ For the three months ended September 30, 2025, these revenues increased 129.4% as compared to the third quarter of 2024 and included a 143.0-percentage point benefit from the Lexmark Acquisition and a 0.3-percentage point adverse impact from currency.

Excluding the impact of Lexmark, revenue declined 13.6% in actual currency as compared to third quarter of 2024 due primarily to lower supplies revenue, as well as lower paper sales as a result of the sale of our European paper business.

On a pro forma 2 basis, third quarter 2025 revenue decreased 6.7% as compared to third quarter of 2024.

◦ For the nine months ended September 30, 2025, these revenues increased 36.3% as compared to the prior year period and included a 47.9-percentage point benefit from the Lexmark Acquisition and a 1.4-percentage point adverse impact from currency.

Excluding the impact of Lexmark, revenue declined 11.6% in actual currency as compared to the prior year period due primarily to lower supplies revenue, as well as lower paper sales as a result of the sale of our European paper business.

On a pro forma 2 basis revenue for the nine months ended September 30, 2025 declined 4.8% as compared to the prior year period.

Equipment sales revenue

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.

See Segment Review - Print and Other below for additional discussion on Equipment sales revenue.

Refer to the Revenue section above for a discussion of Equipment sales revenue for the three and the nine months ended September 30, 2025.

In addition, refer the Segment Review - Print and Other discussion below for additional discussion on Equipment sales revenue.

____________________________

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

(1) Includes revenues from service, maintenance and rentals.

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

(2) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

(3) See "Currency Impact" section for a description of Constant Currency.

Xerox 2025 Form 10-Q 57

2 unchanged sentences

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

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 B/(W) Pro Forma B/(W) (1)

2025 2024 B/(W) Pro Forma B/(W) (1)

Gross Profit $ 445 $ 495 $ (50) $ (143) $ 1,322 $ 1,458 $ (136) $ (178)

11 unchanged sentences

24.5 % 25.2 % 0.7 pts.

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

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

Pre-tax (Loss) $ (300) $ (1,087) $ 787 $ 891 $ (427) $ (1,212) $ 785 $ 1,024

Pre-tax (Loss) Margin (15.3) % (71.1) % 55.8 pts.

(8.6) % (26.3) % 17.7 pts.

4 unchanged sentences

2.9 % 4.3 % (1.4) pts.

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

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

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.

(3) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Non-GAAP Financial Measures" section for an explanation of this pro forma non-GAAP financial measure.

Third quarter 2025 gross margin of 22.7% decreased by 9.7-percentage points as compared to third quarter of 2024, and included an approximate 5.2-percentage point adverse impact and a 0.5-percentage point adverse impact related to the Lexmark Acquisition and ITSavvy, respectively.

Excluding the impact of these acquisitions, gross margin declined 4.0-percentage points.

The decrease primarily reflects lower gross profit, including the adverse impact related to unfavorable revenue mix reflecting lower supplies, outsourcing and print service revenue, lower equipment sales and page volumes, as well as product cost increases and incremental tariff-related costs.

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

On a pro forma 1 basis, third quarter 2025 gross margin of 27.4% decreased by 4.6 -percentage points due to the impacts noted above.

Gross margin for the nine months ended September 30, 2025 of 26.5% decreased by 5.1-percentage points as compared to the prior year period, and included an approximate 2.1-percentage point adverse impact and a 0.7-percentage point adverse impact related to the Lexmark Acquisition and ITSavvy, respectively.

Excluding the impact of these acquisitions, gross margin declined 2.3-percentage points.

The decrease primarily reflects lower gross profit, including the adverse impact related to unfavorable product mix due to lower services, maintenance, rentals and other revenues, lower equipment sales, lower supplies and paper revenues, lower financing fees, and lower page volumes, as well as product-related cost increases and the adverse impact related to tariffs.

These impacts were partially offset by the benefits associated with Reinvention-related costs, primarily related to the exit of certain production print manufacturing operations in the prior year, as well as recent pricing incentives.

On a pro forma 1 basis, gross margin for the nine months ended September 30, 2025 of 28.6% decreased by 0.7-percentage points due to the impacts noted above.

Third quarter 2025 equipment gross margin of 26.1% decreased by 2.4-percentage points as compared to third quarter of 2024, and included a 1.9-percentage point benefit from the Lexmark Acquisition.

Excluding the impact of Lexmark, equipment gross margin declined 4.3-percentage points.

The decrease primarily reflects lower equipment sales, the adverse impact related to product cost increases and incremental tariff-related costs, partially offset by

Xerox 2025 Form 10-Q 58

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.

recent pricing initiatives.

On a pro forma 1 basis, third quarter 2025 equipment gross margin of 11.6% decreased 3.0 -percentage points.

Equipment gross margin for the nine months ended September 30, 2025 of 25.9% decreased by 5.5-percentage points as compared to the prior year period, and included a 0.7-percentage point benefit from the Lexmark Acquisition.

Excluding the impact of Lexmark, equipment gross margin declined 6.2-percentage points.

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

These impacts were partially offset by recent pricing initiatives and lower freight costs.

On a pro forma 1 basis, equipment gross margin for the nine months ended September 30, 2025 of 10.0% decreased 9.1 -percentage points.

Third quarter 2025 Post sale gross margin of 21.8% decreased by 11.7-percentage points as compared to third quarter of 2024, which included an approximate 7.0-percentage point adverse impact and a 0.7-percentage point adverse impact related to the Lexmark Acquisition and ITSavvy, respectively.

Excluding the impact of these acquisitions, post sale gross margin declined approximately 4.0-percentage points.

The decrease primarily reflects lower gross profit, including the adverse impact of unfavorable revenue mix reflecting lower supplies, outsourcing and print service revenue, and lower page volumes, as well as the adverse impact related to product cost increases and incremental tariff-related costs.

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

On a pro forma 1 basis, third quarter 2025 post sale gross margin of 31.2% decreased 5.5 -percentage points

Post sale gross margin for the nine months ended September 30, 2025 of 26.6% decreased by 5.1-percentage points as compared to the prior year period, which included an approximate 2.8-percentage point adverse impact and a 1.0-percentage point adverse impact related to the Lexmark Acquisition and ITSavvy, respectively.

Excluding the impact of these acquisitions, post sale gross margin declined approximately 1.3-percentage points.

The decrease primarily reflects lower gross profit, including the adverse impact related to unfavorable revenue mix, lower financing fees, and lower page volumes, as well as the adverse impact related to cost increases and incremental tariff-related costs.

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

On a pro forma 1 basis, post sale gross margin for the nine months ended September 30, 2025 of 33.3% increased 1.3 -percentage points.

____________________________

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

Research, Development and Engineering Expenses (RD&E)

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)

Sustaining engineering 12 12 — 25 24 1

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

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.

Third quarter 2025 RD&E as a percentage of revenue of 3.8% increased 0.9-percentage points as compared to third quarter 2024, and included a 0.9-percentage point adverse impact from the Lexmark Acquisition and a 0.3-percentage point benefit from ITSavvy.

RD&E as a percentage of revenue for the nine months ended September 30, 2025 of 3.2% increased by 0.1-percentage points as compared to the prior year period, and included a 0.4-percentage point adverse impact from the Lexmark Acquisition and a 0.1-percentage point benefit from ITSavvy.

The increase, as compared to the respective prior year periods, reflected spending that outpaced the increase in revenue.

RD&E of $74 million increased $29 million as compared to third quarter 2024.

For the nine months ended September 30, 2025 RD&E of $159 million increased $15 million as compared to the prior year period.

The increase, as compared to the respective prior year periods, was primarily due to Lexmark Acquisition, partially offset by productivity and cost savings related to the Company's Reinvention.

On a pro forma 1 basis, RD&E decreased by $3 million and $17 million for the three and nine months ended September 30, 2025, respectively, as compared to the respective prior year periods, due to the impacts noted above.

____________________________

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

Xerox 2025 Form 10-Q 59

Selling, Administrative and General Expenses (SAG)

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.

Third quarter 2025 SAG as a percentage of revenue of 24.3% increased by 0.1-percentage points as compared to third quarter 2024, including a 0.7-percentage point benefit and a 1.1-percentage point benefit from the Lexmark Acquisition and ITSavvy, respectively.

The increase in SAG spending outpaced the increase in revenue.

Third quarter 2025 SAG of $477 million increased by $107 million as compared to third quarter 2024, primarily due to expenses related to the Lexmark Acquisition and ITSavvy, including post-acquisition expenses associated with the settlement of pre-existing employment agreements, benefit-related expenses and unfavorable currency.

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

On a pro forma 1 basis, third quarter 2025 SAG increased $8 million, due to the impacts noted above.

SAG as a percentage of revenue for the nine months ended September 30, 2025 of 24.5% decreased by 0.7-percentage points as compared to the prior year period, including a 0.1-percentage point benefit from the Lexmark Acquisition and a 0.3-percentage point adverse impact from ITSavvy.

The increase in SAG spending outpaced the increase in revenue.

SAG for the nine months ended September 30, 2025 of $1,223 million increased by $63 million as compared to the prior year period, primarily due to expenses related to the Lexmark Acquisition and ITSavvy, including post-acquisition expenses associated with the settlement of pre-existing employment agreements, as well as other Reinvention-related investments, and higher expense related to sales enablement and advertising.

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

On a pro forma 1 basis, SAG decreased $41 million for the nine months ended September 30, 2025 due to the impacts noted above, as well as lower post-acquisition expenses.

The bad debt provision for the third quarter 2025 of $9 million decreased by $1 million as compared to third quarter 2024, and the bad debt provision for nine months ended September 30, 2025 of $33 million, decreased by $2 million as compared to the prior year period, due to a lower finance receivable balance, reflecting sales of finance receivables in recent quarters to various funding partners.

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 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.

As of September 30, 2025, on a trailing twelve-month basis, bad debt expense was approximately 1.4% of total receivables, as compared to approximately 1.6% for the prior year comparable period (excluding the reserve release in the third quarter 2024).

Refer to Note 7 - Accounts Receivable, Net and Note 8 - Finance Receivables, Net in the Condensed Consolidated Financial Statements for additional information regarding our bad debt provision.

____________________________

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

Xerox 2025 Form 10-Q 60

Restructuring and Related Costs, Net

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:

Restructuring and related costs, net for the third quarter 2025 was $59 million, as compared to $56 million for the third quarter 2024, and $68 million for the nine months ended September 30, 2025, as compared to $107 million in the prior year period.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 2025 2024

2 unchanged sentences

Asset impairments - leased ROU assets (2)

Net asset impairments - owned assets (1)

Asset impairments - owned assets, net (2)

(6) — (14) 24

Other contractual termination costs (3)

3 unchanged sentences

Retention-related severance/bonuses (5)

(1) — (1) (2)

Contractual severance costs (6)

3 unchanged sentences

_____________

(1) Restructuring and severance costs for the three and nine months ended September 30, 2025, include approximately $77 million for worldwide headcount reductions as a result of our efforts to integrate and consolidate certain operations of the legacy Xerox and Lexmark businesses.

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

Asset impairments of owned assets include cash proceeds resulting from asset sales of $19 million for the first quarter 2025.

Asset impairments of owned assets include cash proceeds resulting from asset sales and recoveries of $16 million and $35 million for the three and nine months ended September 30, 2025, respectively.

(3) Primarily includes additional costs incurred upon the exit from our facilities, including decommissioning costs and associated contractual termination costs.

(4) Reversals of prior charges primarily include net changes in estimated reserves from initiatives accrued for in prior periods, including Reinvention.

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

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

(6) 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.

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

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.

Third quarter 2025 primarily impacted the Print and Other segment in several functional areas, with approximately 45% focused on gross margin improvements, approximately 50% focused on SAG reductions, and the remainder focused on RD&E reductions.

Third quarter 2024 actions impacted several functional areas, with approximately 65% focused on gross margins improvements, approximately 30% focused on SAG reductions, and the remainder focused on RD&E optimization.

The Restructuring and related costs, net reserve balance for all programs as of September 30, 2025 was $157 million, of which $96 million is expected to be paid over the next twelve months.

Refer to Note 11 - Restructuring Programs in the Condensed Consolidated Financial Statements for additional information regarding our restructuring programs.

Worldwide Employment

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.

Worldwide employment was approximately 26,300 as of September 30, 2025, an increase of approximately 9,500 as compared to December 31, 2024.

The increase reflects the Lexmark Acquisition, partially offset by the impact of the Company's Reinvention, which includes the effects of workforce reduction decisions.

Xerox 2025 Form 10-Q 61

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 2025 2024

3 unchanged sentences

Currency losses, net 5 2 6 15

Commitment fee expense 4 — 22 —

Commitment fee expenses — — 22 —

Transaction and related costs, net — (15) — (38)

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Non-Financing Interest Expense

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.

Third quarter 2025 non-financing interest expense of $80 million was $49 million higher than third quarter 2024, and non-financing interest expense for the nine months ended September 30, 2025 of $168 million increased by $80 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, repayment of existing borrowings, and general corporate purposes.

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 our various funding affiliates, as well as lower originations.

When non-financing interest is combined with equipment financing interest expense, total interest expense for the third quarter 2025 of $101 million increased by $44 million as compared to the third quarter 2024, and total interest expense for the nine months ended September 30, 2025 of $234 million increased by $64 million as compared to the prior year period.

The increase, as compared to the respective prior year periods, in net debt is due to the Lexmark Acquisition and ITSavvy, as well as the impacts of higher interest rates on new debt.

Refer to Note 13 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt activity and interest expense.

Non-Service Retirement-Related Costs

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.

Non-service retirement-related costs for the third quarter 2025 of $20 million decreased by $5 million as compared to the third quarter 2024, and for the nine months ended September 30, 2025 non-service retirement-related costs of $57 million decreased $17 million as compared to 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, as well as higher returns on plan assets, both of which were partially offset by higher interest costs associated with higher discount rates.

Refer to Note 16 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding service and non-service retirement-related costs.

Currency losses, net

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

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

Third quarter 2025 currency losses, net increased $3 million as compared to the third quarter 2024, reflecting the Lexmark Acquisition and related cost of hedging.

Currency losses, net for the nine months ended September 30, 2025 decreased $9 million as compared to the prior year period, reflecting lower currency volatility, in addition to prior period sales of our direct business operations in Argentina, Chile & Peru.

Commitment fee expenses

Commitment fee expenses for the nine months ended September 30, 2025 primarily reflects fees associated with financing transactions related to the Lexmark Acquisition.

Transaction and related costs, net

2 unchanged sentences

in early 2020.

Xerox 2025 Form 10-Q 62

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.

The loss on early extinguishment of debt for the nine months ended September 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 nine months ended September 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.

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

Pre-tax (Loss) Margin

Third quarter 2025 pre-tax (loss) margin of (15.3)% improved by 55.8-percentage points as compared to third quarter of 2024 pre-tax (loss) margin of (71.1)% and included a 1.4-percentage point benefit from ITSavvy and a 4.2-percentage point adverse impact from the Lexmark Acquisition.

The improvement in the third quarter 2025 is primarily due to the pre-tax non-cash goodwill impairment charge of $1.1 billion in the third quarter 2024, as well as benefits associated with Reinvention-related cost and productivity actions and recent pricing initiatives in the third quarter 2025.

These benefits were partially offset by lower gross margin, which includes the adverse impacts related to the Lexmark Acquisition and ITSavvy, unfavorable revenue mix, the impact of product cost increases and incremental tariff-related costs, as well as higher Other expenses, net, which included higher non-financing interest expense related to the recently completed borrowings in support of the Lexmark Acquisition, repayment of existing borrowings, and general corporate purposes.

In addition, selling, general and administrative expenses increased due to the Lexmark Acquisition and ITSavvy, including post-acquisition expenses associated with the settlement of pre-existing Lexmark employment agreements, as well as benefit-related expenses.

On a pro forma 1 basis third quarter 2025 pre-tax (loss) margin improved by 41.1-percentage points mainly due to the due to the impacts noted above.

Pre-tax (loss) margin for the nine months ended September 30, 2025 of (8.6)% improved 17.7-percentage points as compared to the prior year period pre-tax (loss) margin of (26.3)% and included a 0.5-percentage point benefit from ITSavvy and a 2.1-percentage point adverse impact from the Lexmark Acquisition.

The improvement for the nine months ended September 30, 2025 is primarily due to the pre-tax non-cash goodwill impairment charge of $1.1 billion in the third quarter 2024, as well as benefits associated with Reinvention-related cost and productivity actions and recent pricing initiatives in 2025.

These benefits were partially offset by lower gross margin, which includes the adverse impacts related to the Lexmark Acquisition, unfavorable product mix, the impact of product cost increases and incremental tariff-related costs.

Other expenses, net, included higher non-financing interest expense related to recently completed borrowings in support of the Lexmark Acquisition, 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 Restructuring and related costs, net, as well as lower incentive compensation and benefits costs.

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

On a pro forma 1 basis pre-tax (loss) margin improved by 15.5-percentage points mainly due to the due to the impacts noted above.

____________________________

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

Pro forma results are estimated and assume Lexmark was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Adjusted 1 Operating Margin

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.

Third quarter 2025 adjusted 1 operating income margin of 3.3% decreased by 1.9-percentage points as compared to third quarter of 2024, which included an approximate 1.9-percentage point benefit from the Lexmark Acquisition and ITSavvy.

Excluding these acquisitions, the decrease reflects lower gross profit, due to product cost increases and incremental tariff-related costs, as well as unfavorable revenue mix driven by lower outsourcing and print service revenue, as well as lower equipment sales.

These impacts were partially offset by productivity and cost savings related to the Company's Reinvention and price increases.

On a pro forma 2 basis third quarter 2025 adjusted 1 operating margin of 3.3% decreased by 3.8-percentage points due primarily to the impacts noted above, as well as the Lexmark Acquisition and ITSavvy.

Xerox 2025 Form 10-Q 63

Adjusted 1 operating margin income for the nine months ended September 30, 2025 of 2.9% decreased by 1.4-percentage points as compared to the prior year period, which included an approximate 0.9-percentage point benefit from the Lexmark Acquisition and ITSavvy.

Excluding these acquisitions, the decrease reflects 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.

On a pro forma 2 basis adjusted 1 operating margin for the nine months ended September 30, 2025 of 4.1% decreased by 1.5-percentage points due primarily to the impacts noted above, as well as the Lexmark Acquisition and ITSavvy.

______________

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

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%.

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

Pro forma results are estimated and assume Lexmark was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Third quarter 2025 effective tax rate was (153.3)% and resulted in a tax expense, primarily due to the establishment of a valuation allowance on certain deferred tax assets, as well the inability to benefit from certain current year losses.

On an adjusted 1 basis, the third quarter 2025 effective tax rate was 235.0%, which resulted in a tax benefit.

This rate is higher than the U.S.

federal statutory tax rate of 21.0% primarily due the reversal of certain tax effects due to the change in valuation allowance position, partially offset by the inability to benefit from certain current year losses, and the geographical mix of earnings.

Third quarter 2024 effective tax rate was a (10.9)%.

This rate was lower than the U.S.

federal statutory tax rate of 21% but resulted in a tax expense, primarily due to the goodwill impairment charge, the establishment of a valuation allowance on certain deferred tax assets including not benefiting related current year losses as well as the geographical mix of earnings.

On an adjusted 1 basis, third quarter 2024 effective tax rate was 27.7% which was higher than the U.S.

federal statutory tax rate of 21% primarily due to not benefiting certain current year losses and the geographical mix of adjusted earnings, partially offset by the redetermination of certain unrecognized tax positions.

The effective tax rate for the nine months ended September 30, 2025 was (123.9)% and resulted in a tax expense, primarily due to the establishment of a valuation allowance on certain deferred tax assets, as well the inability to benefit from certain current year losses.

On an adjusted 1 basis, the effective tax rate for the nine months ended September 30, 2025 was (350.0)%.

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

federal statutory tax rate of 21.0% primarily due to the inability to benefit from certain current year losses, and the geographical mix of earnings.

The effective tax rate for the nine months ended September 30, 2024 was (7.3)%.

This rate was lower than the U.S.

On an adjusted 1 basis, the effective tax rate for the nine months ended September 30, 2024 was 22.5% which was higher than the U.S.

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

4 unchanged sentences

Net (Loss) Income

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.

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

Third quarter 2025 Net (Loss) was $(760) million, or $(6.01) per diluted share, which included a tax expense charge of $467 million, or $3.68 per diluted share, related to the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability, as well as an inventory-related purchase accounting adjustment, related to the Lexmark Acquisition, of $85 million ($102 million pre-tax) or $0.67 per diluted share.

On an adjusted 1 basis, Net Income was $27 million, or $0.20 per diluted share.

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

Third quarter 2024 Net (Loss) was $(1,205) million, or $(9.71) per diluted share, which includes an after-tax noncash goodwill impairment charge of approximately $1,015 billion (approximately $1,058 billion pre-tax), or $8.16 per diluted share.

In addition, third quarter 2024 includes a tax expense charge of $161 million, or $1.29 per diluted share, related to the establishment of a valuation allowance against certain non-U.S.

tax jurisdiction deferred tax assets to reflect their realizability.

On an adjusted 1 basis, Net Income was $34 million, or $0.25 per diluted share.

Net (Loss) for the nine months ended September 30, 2025 was $(956) million, or $(7.67) per diluted share, which included tax expense charges of $517 million, or $4.10 per diluted share, related to the establishment of a valuation allowance during the first and third quarter 2025 against certain deferred tax assets to reflect their realizability, as well as an inventory-related purchase accounting adjustment, related to the Lexmark Acquisition, of $85 million ($102 million pre-tax) or $0.67 per diluted share.

On an adjusted 1 basis, Net (Loss) was $(54) million, or $(0.50) per diluted share.

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

Net (Loss) for the nine months ended September 30, 2024 was $(1,300) million, or $(10.55) per diluted share, which includes an after-tax non-cash goodwill impairment charge of approximately $1,015 billion (approximately $1,058 billion pre-tax), or $8.16 per diluted share.

In addition, 2024 includes a tax expense charge of $161 million, or $1.29 per diluted share, related to the establishment of a valuation allowance against certain non-U.S.

tax jurisdiction deferred tax assets to reflect their realizability.

On an adjusted 1 basis, Net Income was $86 million, or $0.60 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.

Refer to Note 20 - Loss 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) Earnings per Share in the Notes to the Condensed Consolidated Financial Statements.

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

For the calculations of basic and diluted loss per share, refer to Note 20 - Loss 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.

Dollar during the quarter;

ii) $(56) 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) $(4) million of net unrealized (losses).

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.

Third quarter 2025 Other Comprehensive (Loss), Net was $(9) million and included the following:

i) net translation adjustment (losses) of $(42) million reflecting the weakening of all 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:

ii) net unrealized (losses) of $(2) million, and iii) net gains of $35 million from the changes in defined benefit plans primarily reflecting the positive impact of currency, and the amortization of net actuarial losses.

This compares to Other Comprehensive Income, Net of $173 million for the third quarter 2024, which included the following:

i) net translation adjustment gains of $192 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).

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.

ii) net unrealized gains of $5 million, and iii) net (losses) from the changes in defined benefit plans of $(24) million, reflecting the negative impact of currency, partially offset by amortization of actuarial losses, as well as actuarial gains.

Other Comprehensive Income, Net for the nine months ended September 30, 2025 was $242 million and included the following:

i) net translation adjustment gains of $292 million reflecting the strengthening of all of our major foreign currencies against the U.S.

ii) net (losses) from the changes in defined benefit plans of $(42) million primarily reflecting the negative impact of currency, partially offset by the amortization of net actuarial losses;

and iii) net unrealized (losses) of $(8) million.

This compares to Other Comprehensive Income, Net for the nine months ended September 30, 2024 of $162 million, which included the following:

i) net translation adjustment gains of $140 million reflecting the strengthening of the British Pound and the Euro against the U.S.

ii) net gains from the changes in defined benefit plans of $18 million primarily reflecting the amortization of actuarial losses, as well as actuarial gains, partially offset by the negative impact of currency, and iii) net unrealized gains of $4 million.

Refer to Note 19 - Other Comprehensive (Loss) Income in the Condensed Consolidated Financial Statements for the components of Other Comprehensive (Loss) Income, Note 14 - Financial Instruments in the Condensed Consolidated Financial Statements for additional information regarding unrealized gains (losses), net, and Note 16 - 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 65

4 unchanged sentences

Segment Review

Three Months Ended June 30,

Three Months Ended

September 30,

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

5 unchanged sentences

Segment Margin (3)

4.8 % 4.8 % 3.7 %

3.7 % 8.1 % NM 3.3 %

Revenues $ 1,442 $ 86 $ 1,528 $ — $ — $ 1,528

3 unchanged sentences

Segment Margin (3)

7.2 % 1.2 % 5.4 %

Six Months Ended June 30,

7.1 % — % NM 5.2 %

2025 Pro Forma (4)

Revenues $1,739 $226 $ 1,965 $ (4) $ — $ 1,961

% of Total Revenue 88 % 12 % 100 %

Expenses $1,675 $208 $ 1,883 $ (4) $17 $ 1,896

Segment Profit $64 $18 $ 82 $ — $ (17) $ 65

Segment Margin (3)

3.7 % 8.1 % NM 3.3 %

2024 Pro Forma (4)

Revenues $1,926 $201 $ 2,127 $ — $ — $ 2,127

% of Total Revenue 91 % 9 % 100 %

Expenses $1,753 $196 $ 1,949 $ — $26 $ 1,975

Segment Profit $173 $5 $ 178 $ — $ (26) $ 152

Segment Margin (3)

9.0 % 2.5 % NM 7.1 %

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

(2) Corporate Other reflects certain administrative and general expenses, which primarily relate to corporate functions, and are not allocated to

either of our reportable segments.

(3) Segment margin is based on total revenue.

IT Solutions segment margin is net of Intersegment Elimination.

(4) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

Xerox 2025 Form 10-Q 66

Nine Months Ended

September 30,

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

5 unchanged sentences

Segment Margin (3)

4.0 % 4.0 % 2.7 %

3.9 % 5.5 % NM 2.9 %

Revenues $ 4,364 $ 244 $ 4,608 $ — $ — $ 4,608

3 unchanged sentences

Segment Margin (3)

5.6 % — % 3.8 %

6.1 % — % NM 4.3 %

2025 Pro Forma (4)

Revenues $ 5,339 $ 603 $ 5,942 $ (8) $ — $ 5,934

% of Total Revenue 90 % 10 % 100 %

Expenses $ 5,065 $ 570 $ 5,635 $ (8) $ 64 $ 5,691

Segment Profit $ 274 $ 33 $ 307 $ — $ (64) $ 243

Segment Margin (3)

5.1 % 5.5 % NM 4.1 %

2024 Pro Forma (4)

Revenues $ 5,796 $ 595 $ 6,391 $ — $ — $ 6,391

% of Total Revenue 91 % 9 % 100 %

Expenses $ 5,372 $ 582 $ 5,954 $ — $ 80 $ 6,034

Segment Profit $ 424 $ 13 $ 437 $ — $ (80) $ 357

Segment Margin (3)

7.3 % 2.2 % NM 5.6 %

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

3 unchanged sentences

IT Solutions segment margin is net of Intersegment Elimination.

(4) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

Xerox 2025 Form 10-Q 67

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 %

Change 2025 2024 %

Change Pro Forma (1) % Change

Equipment sales $ 383 $ 339 13.0% (16.3)% $ 1,003 $ 985 1.8% (8.6)%

3 unchanged sentences

_____________

(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.

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

(2) 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 September 30, 2025 and 2024, respectively and $97 million and $118 million for the nine months ended September 30, 2025 and 2024, respectively.

Third quarter 2025 Print and Other segment revenue increased 20.6% as compared to third quarter 2024 and Print and Other segment revenue decreased 11.4% for the nine months ended September 30, 2025 as compared to the prior year period.

The increase as compared to their respective prior year periods for both the three and nine months ended September 30, 2025 was due to the Lexmark Acquisition.

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 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.

Equipment sales revenue increased 13.0% during the third quarter 2025 as compared to third quarter 2024, which included a 26.0-percentage point benefit from the Lexmark Acquisition as well as a 0.9-percentage point benefit from currency.

The increase in constant currency 1 was attributable to higher installations resulting from the Lexmark Acquisition.

Excluding the Lexmark Acquisition, equipment sales declined 13.0-percentage points in actual currency due to lower installations, and Reinvention-related actions including the exit of certain production print manufacturing operations in the prior year, partially offset by higher pricing.

On a pro forma 2 basis, third quarter 2025 revenue decreased 16.3%, due to the impacts noted above, as well as backlog 3 fluctuations and timing of certain enterprise deals at Lexmark.

Equipment sales revenue increased 1.8% for the nine months ended September 30, 2025 and included an 8.9-percentage point benefit from the Lexmark Acquisition, and a 0.2-percentage point benefit from currency.

The increase at constant currency 1 reflects higher installations driven by the inclusion of Lexmark.

Excluding Lexmark, equipment sales declined 7.1-percentage points in actual currency due to lower installations and Reinvention-related actions, including the exit of certain production print manufacturing operations, as well as unfavorable product mix, partially offset by higher pricing.

On a pro forma 2 basis, equipment sales revenue for the nine months ended September 30, 2025 decreased 8.6% as compared to the prior year period, due to the impacts noted above, as well as backlog 3 fluctuations and timing of certain enterprise deals within Lexmark.

Post sale revenue decreased 22.9% during the third quarter 2025 as compared to third quarter 2024, and included an approximately 32.5-percentage point benefit from the Lexmark Acquisition as well as a 1.5-percentage point benefit from currency.

Excluding the Lexmark Acquisition, post sale revenue declined approximately 9.6-percentage points in actual currency due primarily to a decline in managed print services 4 revenue, driven by lower outsourcing and print services revenue, 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.

On a pro forma 2 basis, third quarter 2025 post sale revenue decreased 7.7%, mainly due to the impacts noted above.

Post sale revenue decreased 14.7% for the nine months ended September 30, 2025 as compared to the prior year period, and included an approximately 9.0-percentage point benefit from the Lexmark Acquisition as well as a 0.1-percentage point benefit from currency.

The increase in constant currency 1 was due to the Lexmark Acquisition.

Excluding the Lexmark Acquisition, post sale revenue declined approximately 23.7-percentage points in actual currency due primarily to a decline in managed print services 4 revenue, driven by lower outsourcing and print services 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, as well as lower

Xerox 2025 Form 10-Q 68

supplies revenue.

On a pro forma 2 basis, post sale revenue for the nine months ended September 30, 2025 decreased 7.7%, mainly due to the impacts noted above.

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

(2) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

(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 printing devices as well as IT hardware.

(4) Includes revenues from service, maintenance and rentals.

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

Xerox 2025 Form 10-Q 61

Detail by product group is shown below.

Three Months Ended

June 30, Six Months Ended

June 30, % of Equipment Sales

September 30, % of Equipment Sales

(in millions) 2025 2024 %

CC % Change 2025 2024

Entry $ 119 $ 53 124.5% 122.8% 31% 16%

4 unchanged sentences

$ 383 $ 339 13.0% 12.1% 100% 100%

Nine Months Ended

September 30, % of Equipment Sales

(in millions) 2025 2024 %

CC % Change 2025 2024

Entry $ 213 $ 154 38.3% 37.3% 21% 16%

Mid-range 655 652 0.5% 2.0% 66% 66%

High-end 123 164 (25.0)% (25.4)% 12% 17%

Other 12 15 0 (20.0)% (20.0)% 1% 1%

Equipment sales (1)

$ 1,003 $ 985 1.8% 1.6% 100% 100%

1 unchanged sentence

(1) Refer to the Products and Offerings Definitions section.

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 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.

The change at constant currency 1 reflects the Lexmark Acquisition, 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 increase for the three and nine months ended September 30, 2025 as compared to the respective prior year periods primarily reflects the Lexmark Acquisition.

Excluding the Lexmark Acquisition, the decrease reflects lower installations in black-and-white, as well as a higher mix of sales to indirect channel partners.

• Mid-range - The decrease for the three months ended September 30, 2025 as compared to third quarter 2024 reflects declines in black-and-white installations, partially offset by the incremental installations from Lexmark and growth in color.

The increase for the nine months ended September 30, 2025 as compared to the prior year period reflects the incremental installations as a result of the Lexmark Acquisition, as well as growth in color revenues driven by higher installs, partially offset by lower black-and-white installs.

• High-end - The decrease for the three and nine months ended September 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 69

Total Installs

1 unchanged sentence

Revenue associated with equipment installations may be reflected up-front in Equipment sales or over time either through rental income or as part of our services revenues (which are both reported within our post sale revenues), depending on the terms and conditions of our agreements with customers.

Installs include activity for Xerox and non-Xerox branded products installed by XBS.

Installs include activity for Xerox and non-Xerox branded products.

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

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.

• 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.

• 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.

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

• Entry increased 67% driven primarily by the contribution of Lexmark.

Excluding the Lexmark Acquisition, installations decreased due to declines of black-and-white printers and MFPs.

Color installations were largely unchanged.

• Mid-Range increased 15% driven by the contribution of Lexmark.

Excluding the Lexmark Acquisition, installations were down primarily due to declines in black-and-white MFPs.

Color installations increased driven by Entry Production Color Low.

• High-End decreased 40% primarily reflecting declines in Entry Production Color Mid, as well as the decision to the exit certain production print manufacturing operations made in the prior year period.

Installs for the nine months ended September 30, 2025:

• Entry increased 29% driven primarily by the contribution of Lexmark.

Excluding the Lexmark Acquisition, installations decreased primarily due to declines of black-and-white MFPs and printers, partially offset by increases in both color MFPs and printers.

• Mid-Range increased 5% driven by the contribution of Lexmark.

Excluding the Lexmark Acquisition, installations decreased primarily due to declines in black-and-white A3 MFPs.

Color installations increased driven by color A3 MFPs, as well as Entry Production Color Low.

• High-End decreased 28% primarily reflecting declines in Entry Production Color Mid and black-and white High End Cut Sheet products, the decision to the exit certain production print manufacturing operations made in the prior year period.

Products and Offerings Definitions

5 unchanged sentences

Research, Development and Engineering Expenses (RD&E)

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.

Third quarter 2025 RD&E of $74 million increased $29 million as compared to third quarter 2024.

For the nine months ended September 30, 2025 RD&E of $159 million increased $15 million as compared to the prior year period.

The increase, as compared to the respective prior year periods, was primarily due to the Lexmark Acquisition, partially offset by productivity and cost savings related to the Company's Reinvention.

Selling, Administrative and General Expenses (SAG)

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

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.

Third quarter 2025 SAG of $385 million increased by $52 million as compared to third quarter 2024, primarily due to expenses related to the Lexmark Acquisition, including post-acquisition expenses associated with the settlement of pre-existing employment agreements, benefit-related expenses and unfavorable currency.

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

Xerox 2025 Form 10-Q 70

SAG expenses for the nine months ended September 30, 2025 of $1,025 million decreased by $27 million as compared to the prior year period primarily due to expenses related to the Lexmark Acquisition, including post-acquisition expenses associated with the settlement of pre-existing employment agreements, as well as other Reinvention-related investments, and higher expense related to sales enablement and advertising.

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

Segment Margin

Third quarter 2025 Print and Other segment margin of 3.7% decreased by 3.4-percentage points as compared to third quarter of 2024, primarily due to lower gross profit, impacted by higher product and incremental tariff-related costs, as well as higher SAG and RD&E expenses.

These adverse impacts were partially offset by higher revenue, primarily as a result of the Lexmark Acquisition, as well as Reinvention-related cost and productivity actions, and recent pricing initiatives.

On a pro forma 1 basis, Print and Other segment margin of 3.7% decreased by 5.3-percentage points as compared to third quarter of 2024, due to the impacts noted above, as well as the timing of certain enterprise deals at Lexmark.

Print and Other segment margin for the nine months ended September 30, 2025 of 3.9% decreased by 2.2-percentage points as compared to the prior year period, primarily due to lower gross profit, impacted by higher product and incremental tariff-related costs, and unfavorable mix, as well as higher SAG and RD&E expenses.

These impacts were partially offset by higher revenue, primarily as a result of the Lexmark Acquisition, as well as Reinvention-related cost and productivity actions, recent pricing action, and lower freight costs.

On a pro forma 1 basis, Print and Other segment margin of 5.1% decreased by 2.2-percentage points as compared to the prior year period, due to the impacts noted above, as well as the timing of certain enterprise deals at Lexmark.

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

The IT Solutions segment provides clients with global infrastructure technology solutions, with a focus on delivering business outcomes through a frictionless sales and service delivery experience.

IT Solutions’ offerings include the provision of hardware, software and associated services as well as product lifecycle, deployment and network monitoring services, and managed services.

It is comprised of our recent acquisition of ITsavvy, as well as our Canadian IT Services provider Powerland, and our legacy XBS IT solutions.

It is comprised of our acquisition of ITSavvy, as well as our Canadian IT Services provider Powerland, and our legacy XBS IT solutions.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024 %

Change 2025 2024 %

Change Pro Forma (1) % Change

IT Products (2)

3 unchanged sentences

Intersegment revenue (4)

3 — NM 4 — NM

4 — NM NM 8 — NM NM

Total IT Solutions $ 226 $ 86 162.8% 12.4% $ 603 $ 244 147.1% 1.3%

_____________

(1) IT Products reflect the sale of IT hardware and software solutions, Hardware product sales include the sale of notebooks, network communications and other endpoint devices, desktop computers and other IT hardware.

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

(2) IT Products reflect the sale of IT hardware and software solutions.

Hardware product sales include 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.

1 unchanged sentence

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

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.

Third quarter 2025 IT Solutions segment revenue increased 162.8% as compared to third quarter of 2024.

For the nine months ended September 30, 2025 IT Solutions segment revenue increased 147.1% as compared to the prior year period.

The increase for both the three and nine months ended September 30, 2025 was primarily due to ITSavvy, as compared to their respective prior year periods.

IT Solutions segment revenue included the following:

IT Products revenue increased 200.0% during the three months ended September 30, 2025 as compared to third quarter of 2024, primarily due to ITSavvy.

Excluding ITSavvy, revenue increased 31.6% due to growth in the legacy Xerox IT Solutions business.

IT Products revenue increased 167.7% during the nine months ended September 30,

Xerox 2025 Form 10-Q 71

2025 as compared to prior year period, primarily due to ITSavvy.

Excluding ITSavvy, revenue increased 3.6% due to growth in the legacy Xerox IT Solutions business, which was 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.

On a pro forma 1 basis, IT Product revenue for the three months ended September 30, 2025 increased 9.8% due to growth from both legacy Xerox and ITSavvy, while for the nine months ended September 30, 2025 IT Products revenue decreased 5.8% due to lower revenues from legacy Xerox, offset by growth from ITSavvy.

IT Services revenue increased 83.9% during the three months ended September 30, 2025 as compared to the third quarter of 2024 and for the nine months ended September 30, 2025 IT services revenue increased 100.0% as compared to the prior year period.

The increase from the prior year respective periods was due to ITSavvy.

On a pro forma 1 basis, IT service revenue for the three and nine months ended September 30, 2025 increased 28.0% and 28.8%, respectively, due to growth from ITSavvy.

Segment Expenses

Selling, Administrative and General Expenses (SAG)

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

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

2024 Segment Review

The following are our 2024 segment results, recast for comparison purposes, to reflect the changes made to segment reporting in 2025:

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

Corporate Other (2)

Revenues $ 1,428 $ 74 $ 1,502 $ — $ — $ 1,502

Expenses 1,370 75 1,445 — 24 1,469

Segment Profit 58 (1) 57 — (24) 33

Segment Margin (3)

4.1 % (1.4) % 2.2 %

Revenues $ 1,494 $ 84 $ 1,578 $ — $ — $ 1,578

Expenses 1,387 83 1,470 — 23 1,493

Segment Profit 107 1 108 — (23) 85

Segment Margin (3)

7.2 % 1.2 % 5.4 %

Revenues $ 1,442 $ 86 $ 1,528 $ — $ — $ 1,528

Expenses 1,339 86 1,425 — 23 1,448

Segment Profit 103 — 103 — (23) 80

Segment Margin (3)

7.1 % — % 5.2 %

Revenues $ 1,500 $ 114 $ 1,614 $ (1) $ — $ 1,613

Expenses 1,372 114 1,486 (1) 24 1,509

Segment Profit 128 — 128 — (24) 104

Segment Margin (3)

8.5 % — % 6.4 %

Revenues $ 5,864 $ 358 $ 6,222 $ (1) $ — $ 6,221

Expenses 5,468 358 5,826 (1) 94 5,919

Segment Profit 396 — 396 — (94) 302

Third quarter 2025 SAG of $25 million increased by $11 million as compared to third quarter 2024, and SAG expenses for nine months ended September 30, 2025 of $73 million increased by $35 million.

The increase as compared to the respective prior year periods was primarily due to ITSavvy.

Segment Margin

6.8 % — % 4.9 %

_____________

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

(2) Corporate Other reflects certain administrative and general expenses, which primarily relate to corporate functions, and are not allocated to

either of our reportable segments.

(3) Segment margin is based on total revenue.

The following are reconciliations of our segment profit to our pre-tax (loss) income for 2024:

(in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 Full Year 2024

Pre-tax (Loss) Income

Total reported segments $ 33 $ 85 $ 80 $ 104 $ 302

Inventory-related impact - exit of certain production print manufacturing operations (1)

(36) (8) — (7) (51)

Reinvention costs — — — (12) (12)

Goodwill impairment — — (1,058) — (1,058)

Restructuring and related costs, net (39) (12) (56) (5) (112)

Amortization of intangible assets (10) (10) (10) (43) (73)

Divestitures (54) 3 — 4 (47)

Transaction and related costs, net — — — (7) (7)

Other expenses, net (44) (33) (43) (38) (158)

Total Pre-tax (loss) income $ (150) $ 25 $ (1,087) $ (4) $ (1,216)

Third quarter 2025 IT Solutions segment margin of 8.1% increased 8.1-percentage points as compared to third quarter of 2024 and Segment margin of 5.5% for the nine months ended September 30, 2025 increased 5.5-percentage as compared to the prior year period.

The increase from the respective prior year periods was driven by ITSavvy, partially offset by higher SAG.

On a pro forma 1 basis, IT Solutions segment margin of 8.1% increased by 5.6-percentage points as compared to third quarter of 2024, and IT Solutions segment margin of 5.5% for the nine months ended September 30, 2025 increased by 3.3-percentage points as compared to the prior year period.

The increase as compared to the respective prior year periods was due to the impacts noted above and the timing of certain large enterprise deals.

_____________

(1) As a result of the exit of certain production print manufacturing operations, reflects the inventory-related charges of approximately $32 million in Q1-24, $6 million in Q2-24, and $7 million in Q4-24, as well as the cancellation of related purchase contracts of approximately $4 million in Q1-24, and $2 million in Q2-24.

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section for an explanation of this measure.

Xerox 2025 Form 10-Q 72

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The following is a summary of our liquidity position:

• 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.

• As of September 30, 2025 and December 31, 2024, total cash, cash equivalents and restricted cash of Xerox Holdings Corporation were $535 million and $631 million, respectively, and apart from restricted cash of $56 million and $55 million at September 30, 2025 and December 31, 2024, respectively, was readily accessible for use.

The decrease in total cash, cash equivalents and restricted cash of $96 million primarily reflects net cash used in investing activities of $694 million, which was partially offset by net cash provided by financing activities of $577 million, as well as net cash provided by operating activities of $16 million.

• Total debt at September 30, 2025 was $4,406 million, of which $1,624 million is allocated to and supports the Company's finance assets.

The remaining debt of $2,782 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.

Debt at September 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), $500 million of aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031 (the Second Lien Notes), $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 Term Loan B (the TLB Facility), and $125 million aggregate principal amount of 13.00% Senior Unsecured Notes due 2026 (the 2026 Notes).

Refer to Note 13 - Debt for additional information related to our Debt activity.

• In connection with the First Lien Notes offering, the Lexmark Acquisition and the related transactions, Xerox Corporation redeemed an aggregate principal amount of $90 of Senior Notes due August 2025 (2025 Notes) during first quarter 2025, with the balance of approximately $298 million redeemed at maturity in August 2025.

During first quarter 2025 we also repaid approximately $95 million of aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility (the TLB Facility).

During October 2025, we repaid approximately $41 million of the TLB Facility.

Refer to Note 13 - Debt for additional information related to our Debt activity.

• As of November 10, 2025 and based on our October availability calculation, we have availability of $392 before current borrowings of approximately $150 and letters of credit issued under the ABL Facility of approximately $63.

Accordingly, our net availability is approximately $179.

Certain debt covenants limit our total amount of secured debt outstanding.

As of the date of our filing, our capacity under the ABL was not limited by any debt covenants.

Our capacity to borrow under the ABL Facility may be adversely impacted by the terms of the ABL Facility and certain other agreements that govern our indebtedness.

• We now expect operating cash flows, excluding one-time items related to the Lexmark Acquisition of $70 million, to be approximately $245 million, which is a decrease from our previous guidance of $345 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.

We continue to expect capital expenditures to be approximately $95 million in 2025, which reflects the inclusion of Lexmark.

Although not committed, we believe we have the ability to sell finance receivables for additional liquidity.

Cash Flow Analysis

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

Six Months Ended

June 30, Change

Nine Months Ended

September 30, Change

(in millions) 2025 2024

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

Net cash provided by operating activities $ 16 $ 160 $ (144)

Net cash used in investing activities (694) (26) (668)

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Effect of exchange rate changes on cash, cash equivalents and restricted cash 5 (12) 17

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

Decrease in cash, cash equivalents and restricted cash (96) (27) (69)

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 $100 million for the six months ended June 30, 2025.

Net cash provided operating activities was $16 million for the nine months ended September 30, 2025.

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

• $142 million decrease in pre-tax income before provisions, divestitures, restructuring and related costs and non-service retirement-related costs.

• $303 million decrease in pre-tax income before depreciation and amortization, provisions, inventory-related purchase accounting adjustment, effective settlement of a pre-existing relationship between Lexmark and Xerox, divestitures, goodwill impairment, restructuring and related costs and non-service retirement-related costs.

• $158 million decrease from finance receivables primarily due to lower sales of finance receivables partially offset by a higher level of run-off due to lower originations.

• $59 million decrease from accounts receivable primarily due to the timing of collections.

• $169 increase from other current and long-term liabilities primarily due to the timing of payments.

• $147 million increase from accounts payable primarily due to the timing of supplier and vendor payments.

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

• $39 million increase from accrued compensation due to payments of lower year-end accruals.

• $17 million increase from lower payments associated with restructuring and related costs.

Cash Flows from Investing Activities

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.

Net cash used in investing activities was $694 million for the nine months ended September 30, 2025.

The $668 million change from the prior year period was primarily driven by the Lexmark Acquisition and higher capital expenditures offset by higher proceeds from the sale of surplus property and assets in the U.S.

and Europe and the sale of non-core business assets offset by lower noncontrolling investments

Cash Flows from Financing Activities

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.

Net cash provided by financing activities was $577 million for the nine months ended September 30, 2025.

The $726 million decrease in the use of cash from the prior year period was primarily due to the following:

• $677 million decrease from net debt activity.

2025 reflects net proceeds of $1,199 million from Senior Notes issuances, $100 million from the ABL Facility and $4 million from the TLB Facility offset by payments of $388 million on Senior Notes, $102 million on the TLB Facility, $83 million on secured promissory notes and $72 million on secured financing arrangements.

The $1,199 million net proceeds from Senior Notes issuances includes proceeds of $1,257 million offset by deferred debt issuance costs of $41 million, 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 $18 million from Senior Notes issuances, $211 million on secured financing arrangements and $21 million on the Term Loan B facility.

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.

The $658 million net payments on Senior Notes includes $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.

• $42 million decrease from lower common stock dividends due to dividend reductions.

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

• Other financing, net includes $22 million of commitment fees related to the Lexmark Acquisition.

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Additionally, we have identified embedded operating leases within certain supply chain contracts for warehouses, primarily within our domestic operations.

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

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

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

As of September 30, 2025 and December 31, 2024, total operating lease liabilities were $339 million and $188 million, respectively.

Xerox 2025 Form 10-Q 74

Finance Leases

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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.

As of September 30, 2025 and December 31, 2024, total finance lease liabilities were $9 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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Refer to Note 10 - Lessee in the Condensed Consolidated Financial Statements for additional information regarding our leases accounted for under lessee accounting.

Xerox 2025 Form 10-Q 67

Debt and Customer Financing Activities

The following summarizes our debt:

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

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

Xerox Holdings Corporation $ 2,025 $ 2,038

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_____________

(1) Represents secured debt issued by subsidiaries of Xerox Corporation as part of the securitization of Finance Receivables in prior year.

(1) As of September 30, 2025, amount reflects debt acquired as a result of the Lexmark Acquisition.

Refer to Note 6 - Acquisition for additional information regarding the Lexmark Acquisition.

(2) As of December 31, 2024 amounts reflects secured debt issued by subsidiaries of Xerox Corporation as part of the securitization of Finance Receivables in the prior year.

These securitizations were repaid during the first quarter 2025.

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

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

(in millions) September 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.

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

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

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

Finance receivables debt (1)

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(1) Finance receivables debt is the basis for our calculation of Equipment financing interest expense, which is included in Cost of services, maintenance, rentals and other in the Condensed Consolidated Statements of Loss.

Xerox 2025 Form 10-Q 75

Sales of Finance Receivables and Third Party Leasing Programs

1 unchanged sentence

Capital Market/Debt Activity

Refer to Note 12 - Debt and Note 21 - Subsequent Events in the Condensed Consolidated Financial Statements for additional information regarding our debt activity.

Xerox 2025 Form 10-Q 68

Refer to Note 13 - Debt in the Condensed Consolidated Financial Statements for additional information regarding our debt activity.

Liquidity and Financial Flexibility

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Our principal debt maturities are spread over the next five years as follows:

(in millions) Xerox Holdings Corporation Xerox Corporation Total

2025 Q3 298 27 325

(in millions) Xerox Holdings Corporation Xerox Corporation Xerox Other Subsidiaries (1)

2025 Q4 — 128 — 128

2 unchanged sentences

2028 775 90 — 865

2029 531 567 — 1,098

2030 and thereafter 569 1,500 — 2,069

Total $ 2,025 $ 2,485 $ 3 $ 4,513

_____________

(1) As of September 30, 2025, amount reflects debt acquired as a result of the Lexmark Acquisition.

Refer to Note 6 - Acquisition for additional information regarding the Lexmark Acquisition.

Refer to Note 13 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt.

Refer to Note 17 - Shareholders' Equity of Xerox Holdings for additional information regarding the warrants that were issued to a shareholder during the third quarter 2025.

Treasury Stock

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These derivative contracts are likewise required to be recognized each period at fair value and therefore do result in some level of volatility.

The level of volatility will vary with the type and amount of derivative hedges outstanding, as well as fluctuations in the currency and interest rate markets during the period.

The level of volatility will vary with the type and amount of derivative hedges outstanding, as well

Xerox 2025 Form 10-Q 76

as fluctuations in the currency and interest rate markets during the period.

The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.

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Refer to Note 14 – 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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retirees and ex-employees).

These elements include (i) interest cost, (ii) expected return on plan assets, (iii) amortization of prior plan amendments, (iv) amortized actuarial gains/losses and (v) the impacts of any plan settlements/curtailments.

These elements include (i) interest cost,

Xerox 2025 Form 10-Q 77

(ii) expected return on plan assets, (iii) amortization of prior plan amendments, (iv) amortized actuarial gains/losses and (v) the impacts of any plan settlements/curtailments.

Accordingly, we consider these elements of our periodic retirement plan costs to be outside the operational performance of the business or legacy costs and not necessarily indicative of current or future cash flow requirements.

6 unchanged sentences

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:

1 unchanged sentence

• Inventory-related impact - exit of certain production print manufacturing operations

• Goodwill impairment

• Divestitures

2 unchanged sentences

• Commitment fee expenses

• Lexmark - pre-existing employment agreements settled post-acquisition

• Lexmark - inventory-related purchase accounting adjustment

• Lexmark - fixed asset-related purchase accounting adjustment

• Lexmark Acquisition financing - escrow interest, net

• Deferred tax asset valuation allowance

• Goodwill impairment income tax

• Income tax on PARC Donation

• Deferred tax asset valuation allowance

Adjusted Operating Income and Margin

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Refer to "Currency Impact" for a discussion of this measure and its use in our analysis of revenue growth.

Free Cash Flow and Adjusted Free Cash Flow

Refer to "Free Cash Flow" and "Adjusted Free Cash Flow" sections below for a discussion of these non-GAAP measures.

Xerox 2025 Form 10-Q 78

Adjusted Net (Loss) Income and EPS reconciliation:

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

Adjusted Net Income (Loss) and EPS reconciliation:

Ended September 30, Nine Months

Ended September 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

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

$ (760) $ (6.01) $ (1,205) $ (9.71) $ (956) $ (7.67) $ (1,300) $ (10.55)

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

Goodwill Impairment — 1,058 — 1,058

Restructuring and related costs, net 59 56 68 107

5 unchanged sentences

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

Commitment fee expense (3)

Commitment fee expenses (3)

Lexmark - pre-existing employment agreements settled post-acquisition 24 — 24 —

Lexmark - inventory-related purchase accounting adjustment (4)

Lexmark - fixed asset-related purchase accounting adjustment 16 — 16 —

Lexmark Acquisition financing - escrow interest, net (5)

Deferred tax asset valuation allowance (5)

Goodwill Impairment Income Tax — (43) — (43)

Income tax on PARC Donation (6)

Deferred tax asset valuation allowance (7)

467 161 517 161

Income tax on adjustments (8)

5 unchanged sentences

129 — 126 126 126

Fully diluted shares at June 30, 2025 (9)

Fully diluted shares at September 30, 2025 (10)

____________________________

(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:

(1) For the three months ended September 30, 2025, Net (Loss) and Diluted (Loss) per Share includes an inventory-related purchase accounting adjustment, related to the Lexmark Acquisition, of $85 million ($102 million pre-tax) or $0.67 per diluted share, as well as a tax expense charge of $467 million, or $3.68 per diluted share, related to the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability.

For the three months ended September 30, 2024, Net (Loss) and Diluted (Loss) per Share includes a non-cash goodwill impairment charge of approximately $1.0 billion after-tax (approximately $1.1 billion pre-tax), or $8.16 per diluted share, as well as a tax expense charge of $161 million, or $1.29 per diluted share, related to the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability.

For the nine months ended September 30, 2025, Net (Loss) and Diluted (Loss) per Share includes an inventory-related purchase accounting adjustment, related to the Lexmark Acquisition, of $85 million ($102 million pre-tax) or $0.67 per diluted share, tax expense charges of $517 million, or $4.10 per diluted share, related to the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability, financing-related charges, net, of $30 million ($40 million pre-tax), or $0.24 per diluted share, related to financing transactions for the Lexmark Acquisition, repayment of existing borrowings, and general corporate purposes, and tax expense of $28 million, or $0.22 per diluted share, related to interest expense that was not deductible according to tax guidelines in place as of September 30, 2025.

For the nine months ended September 30, 2024, Net (Loss) and Diluted (Loss) per Share includes a non-cash goodwill impairment charge of approximately $1.0 billion after-tax (approximately $1.1 billion pre-tax), or $8.16 per diluted share, a tax expense charge of $161 million, or $1.29 per diluted share, related to the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability, and Reinvention-related charges of $100 million ($129 million pre-tax), or $0.81 per diluted share, primarily related to the exit of certain production print manufacturing operations and geographic simplification.

The tax expense charges related to the establishment of valuation allowances in 2025 and 2024 were excluded due to their unique nature and significant impacts which are not considered part of our core operations.

(2) As a result of the exit of certain production print manufacturing operations, Cost of sales and Cost of services, maintenance, rentals and other excludes inventory-related charges of $3 million and $0 million for the three months ended September 30, 2025 and 2024, respectively, and $19 million and $38 million, for the nine months ended September 30, 2025 and 2024, respectively, as well as the cancellation of related purchase contracts $0 million and $0 million for the three months ended September 30, 2025 and 2024, respectively, and $1 million and $6 million for the nine months ended September 30, 2025 and 2024, respectively.

Xerox 2025 Form 10-Q 79

(3) Primarily reflects fees related to financing transactions for the Lexmark Acquisition, 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;

1 unchanged sentence

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.

(4) Reflects a purchase accounting adjustment related to the Lexmark Acquisition, for cost associated with a net inventory write up.

(5) Reflects net interest expense on net proceeds received from debt issuances which were placed in escrow prior to the completion of the Lexmark Acquisition.

(6) Reflects the change in the realizability of the PARC donation tax benefit recognized in the second quarter of 2023.

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

(8) Refer to Adjusted Effective Tax Rate reconciliation.

(9) 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.

(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.

Xerox 2025 Form 10-Q 72

(10) Reflects common shares outstanding at September 30, 2025, plus potential dilutive common shares used for the calculation of adjusted diluted EPS for the three and nine months ended September 30, 2025.

Adjusted Effective Tax Rate reconciliation:

Three Months Ended June 30,

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

Tax Rate Pre-Tax Income Income Tax Expense Effective

Three Months Ended September 30,

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

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

$ (300) $ 460 (153.3) % $ (1,087) $ 118 (10.9) %

Goodwill impairment (2)

Deferred tax asset valuation allowance (2)

— (467) — (161)

Income tax on PARC donation (2)

Non-GAAP Adjustments (3)

280 (29) 76 13

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

$ (20) $ (47) 235.0 % $ 47 $ 13 27.7 %

Nine Months Ended September 30,

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

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

$ (427) $ 529 (123.9) % $ (1,212) $ 88 (7.3) %

Goodwill impairment (2)

Deferred tax asset valuation allowance (2)

— (517) — (161)

Income tax on PARC donation (2)

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____________________________

(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 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.

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

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

(3) Reflects the tax impacts of pre-tax adjustments.

(4) 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.

Xerox 2025 Form 10-Q 80

Adjusted Operating Income and Margin reconciliation:

Three Months Ended June 30,

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

Three Months Ended

September 30,

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

$ (760) $ 1,961 $ (1,205) $ 1,528

Income tax expense 460 — 118 —

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

Pre-tax loss $ (300) $ 1,961 (15.3) % $ (1,087) $ 1,528 (71.1) %

Goodwill impairment — 1,058

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

Lexmark - inventory-related purchase accounting adjustment 102 —

Lexmark - fixed asset-related purchase accounting adjustment 16 —

Lexmark - pre-existing employment agreements settled post-acquisition 24 —

Reinvention-related costs 3 —

1 unchanged sentence

Amortization of intangible assets 30 10

Divestitures — (3)

Transaction and related costs, net 23 —

1 unchanged sentence

Adjusted $ 65 $ 1,961 3.3 % $ 80 $ 1,528 5.2 %

Six Months Ended June 30,

Nine Months Ended

September 30,

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

$ (956) $ 4,994 $ (1,300) $ 4,608

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

Income tax expense 529 — 88 —

Pre-tax loss $ (427) $ 4,994 (8.6) % $ (1,212) $ 4,608 (26.3) %

Goodwill impairment — 1,058

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

Lexmark - inventory-related purchase accounting adjustment 102 —

Lexmark - fixed asset-related purchase accounting adjustment 16 —

Lexmark - pre-existing employment agreements settled post-acquisition 24 —

Reinvention-related costs 12 —

6 unchanged sentences

____________________________

(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.

(1) Net Loss.

(2) As a result of the exit of certain production print manufacturing operations, Cost of sales and Cost of services, maintenance, rentals and other excludes inventory-related charges of $3 million and $0 million for the three months ended September 30, 2025 and 2024, respectively, and $19 million and $38 million, for the nine months ended September 30, 2025 and 2024, respectively, as well as the cancellation of related purchase contracts of $0 million and $0 million for the three months ended September 30, 2025 and 2024, respectively, and $1 million and $6 million for the nine months ended September 30, 2025 and 2024, respectively.

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

(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.

(4) The three and nine months ended September 30, 2025 includes $80 million and $168 million, respectively, of interest and financing-related charges, net, related to recently completed borrowings in support of the Lexmark Acquisition, repayment of existing borrowings, and general corporate purposes.

The three and nine months ended September 30, 2024 includes $15 million and $38 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 81

Free Cash Flow

To better understand trends in our business, we believe that it is helpful to adjust operating cash flows by subtracting amounts related to capital expenditures.

Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment.

It provides a measure of our ability to fund acquisitions and pay dividends.

Below is a summary of our free cash flow:

(in millions) Nine Months Ended September 30,

Operating Cash Flow (1)

Capital expenditures

Free Cash Flow $ (51) $ 133

_____________

(1) Net cash provided by operating activities.

Adjusted Free Cash Flow Reconciliation

To better understand trends in our business, we believe that it is helpful to adjust operating cash flows, by adding back certain one-time non-recurring cash payments resulting from the Lexmark Acquisition which are included in cash flows from operating activities before subtracting amounts related to capital expenditures.

Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment.

It provides a measure of our ability to fund acquisitions and pay dividends.

We believe this metric more closely aligns with our adjusted operating income by excluding the impacts of the Lexmark Acquisition.

Below is a summary of our adjusted operating cash flow and adjusted free cash flow:

(in millions) ` Nine Months Ended September 30,

Operating Cash Flow (1)

One-time non-recurring acquisition costs (2), (3)

Adjusted Operating Cash Flow 86 160

Capital expenditures

Adjusted Free Cash Flow $ 19 $ 133

_____________

(1) Net cash provided by operating activities.

(2) One-time non-recurring acquisition costs include (i) the effective settlement of certain pre-existing relationships between Xerox and Lexmark (ii) cash paid for transaction and related costs and (iii) cash paid for contractual severance payments paid to Lexmark employees as a result of diminution in their duties.

Xerox 2025 Form 10-Q 82

Pro Forma Basis

To better understand the trends in our business, we discuss our 2025 operating results by comparing them against 2024 pro forma results, which include estimated results for both Lexmark and ITSavvy for the comparable period presented.

ITSavvy is included in our 2025 reported results as the effective date of acquisition was November 20, 2024.

Lexmark is included in our 2025 results as of July 1, 2025, the effective date of acquisition.

Accordingly, we have included ITSavvy and Lexmark's 2024 pro forma results for comparable periods presented.

We refer to comparisons against these adjusted 2024 results as “pro forma” basis comparisons.

The following pro forma information has been prepared in accordance with Article 11 of Regulation S-X, "Pro Forma Financial Information”.

The pro forma combined statements of operations for the three and nine months ended September 30, 2025 and 2024 combine the Consolidated Statements of Operations of Xerox giving effect to the Lexmark Acquisition and ITSavvy as if they had occurred on January 1, 2024 and 2023 respectively.

The pro forma information is presented to facilitate comparisons with our results following these acquisitions.

The historical results of Xerox, ITSavvy and Lexmark have been adjusted to reflect the costs of financing the transactions, fair value adjustments related to inventory, real and personal property (equipment and computer hardware and software), and intangible assets.

In addition, adjustments were made to conform both ITSavvy and Lexmark's accounting policies to those of Xerox, including deferred revenue and inventory.

In accordance with Article 11 of Regulation S-X these proforma results exclude adjustments associated with transaction related costs which are already included in the historical financial statements.

We believe comparisons on a pro forma basis are more meaningful than the actual comparisons given the size and nature of these acquisitions.

We believe the pro forma basis comparisons allow investors to have a better understanding and additional perspective of the expected trends in our business as well as the impact of these acquisitions on the Company’s operations.

The adjustments presented in the following pro forma financial information have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company following the transactions and events described above.

The pro forma financial information is based upon available information and assumptions that we believe are reasonable and is for illustrative purposes only.

The financial results may have been different if the transactions described above had been completed sooner.

You should not rely on the pro forma financial information as being indicative of the historical results that would have been achieved if these transactions and events had been completed as of January 1, 2024 and 2023.

The pro forma combined financial information below should be read in conjunction with the consolidated financial statements and related notes of the Company included elsewhere in this Form 10-Q.

All pro forma adjustments and their underlying assumptions are described more fully below.

The following pro forma combined financial information and associated notes are based on the historical financial statements of Xerox, Lexmark and ITSavvy prior to their acquisitions.

Xerox 2025 Form 10-Q 83

Pro Forma Financial Information

Three Months Ended

September 30, 2025

(in millions, except per-share data) Xerox Historical Pro Forma Adjustments Pro Forma Combined Company

Equipment sales $ 383 $ — $ 383

Supplies, paper and other 445 — 445

IT Products 165 — 165

Sales 993 — 993

Services, maintenance, rentals and other 968 — 968

Total Revenues 1,961 — 1,961

Costs and Expenses

Cost of sales 788 (92) a 696

Cost of services, maintenance, rentals and other 728 — 728

Research, development and engineering expenses 74 — 74

Selling, administrative and general expenses 477 — 477

Restructuring and related costs, net 59 — 59

Amortization of intangible assets 30 — 30

Other expenses, net 105 — 105

Total Costs and Expenses 2,261 (92) 2,169

Loss before Income Taxes $ (300) $ 92 $ (208)

Total Gross Profit $ 445 $ 92 $ 537

Equipment 26.1 % nm 11.6 %

Post sale 21.8 % nm 31.2 %

Total Gross Margin 22.7 % nm a 27.4 %

Segment Revenue

Print and Other $ 1,739 $ — $ 1,739

IT Solutions 226 — 226

Intersegment (4) — (4)

Corporate — — —

Revenue $ 1,961 $ — $ 1,961

Segment Profit

Print and Other $ 64 $ — $ 64

IT Solutions 18 — 18

Intersegment — — —

Corporate $ (17) — $ (17)

Profit $ 65 $ — $ 65

nm - Not meaningful.

Reflects the removal of the impact to Cost of sales for the recognition of the inventory fair value adjustment during the three months ended September 30, 2025.

Xerox 2025 Form 10-Q 84

Pro Forma Financial Information

Three Months Ended

September 30, 2024

(in millions, except per-share data) Xerox Historical ITSavvy Reclassified Lexmark Reclassified Pro Forma Adjustments Pro Forma Combined Company

Equipment sales $ 339 $ — $ 174 $ (55) $ 458

Supplies, paper and other 194 — 308 (24) 478

IT Products 55 94 — — 149

Sales 588 94 482 (79) 1,085

Services, maintenance, rentals and other 940 21 85 (4) 1,042

Total Revenues 1,528 115 567 (83) a 2,127

Costs and Expenses

Cost of sales 390 79 315 (69) a 715

Cost of services, maintenance, rentals and other 643 16 70 3 a 732

Research, development and engineering expenses 45 — 32 — 77

Selling, administrative and general expenses 370 15 86 (2) b 469

Goodwill impairment 1,058 — — — 1,058

Restructuring and related costs, net 56 — (1) — 55

Amortization of intangible assets 10 2 8 14 c 34

Other expenses, net 43 1 23 19 d 86

Total Costs and Expenses 2,615 113 533 (35) 3,226

Loss before Income Taxes $ (1,087) $ 2 $ 34 $ (48) $ (1,099)

Total Gross Profit $ 495 $ 20 $ 182 $ (17) $ 680

Equipment 28.5 % nm (13.0) % nm 14.6 %

Post sale 33.5 % 17.4 % 52.3 % nm 36.7 %

Total Gross Margin 32.4 % 17.4 % 32.1 % 20.5 % a 32.0 %

Segment Revenue

Print and Other $ 1,442 $ — $ 567 $ (83) a $ 1,926

IT Solutions 86 115 — — 201

Intersegment — — — — —

Corporate — — — — —

Total Segment Revenue $ 1,528 $ 115 $ 567 $ (83) $ 2,127

Segment Profit

Print and Other $ 103 $ — $ 69 $ 1 $ 173

IT Solutions — 5 — — 5

Intersegment — — — — —

Corporate (23) — (3) — e (26)

Total Segment Profit $ 80 $ 5 $ 66 $ 1 $ 152

nm - Not meaningful.

Represents the elimination of transactions between Xerox and Lexmark, primarily consisting of Lexmark's revenue and Xerox's cost of sales as well as depreciation expense and the impact of conforming certain of Lexmark's accounting policies to those of Xerox.

Reflects adjustments for compensation to certain Lexmark employees upon close of the transaction, lease expense, and transaction-related expenses.

Reflects the adjustments to Amortization of intangible assets.

Reflects adjustments for interest and amortization of debt issuance costs partially offset by an adjustment related to pension benefits (excluding service cost).

Reflects the corporate costs of Lexmark not allocated to a segment.

Xerox 2025 Form 10-Q 85

Pro Forma Financial Information

Six Months Ended June 30, 2025 Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025

(in millions, except per-share data) Xerox Historical Lexmark Reclassified Pro Forma Adjustments Xerox Historical Pro Forma Adjustments Pro Forma Combined Company

Equipment sales $ 620 $ 258 $ (54) $ 383 $ — $ 1,207

Supplies, paper and other 344 609 (27) 445 — 1,371

IT Products 258 — — 165 — 423

Sales 1,222 867 (81) 993 — 3,001

Services, maintenance, rentals and other 1,811 160 (6) 968 — 2,933

Total Revenues 3,033 1,027 (87) a 1,961 — 5,934

Costs and Expenses

Cost of sales 862 575 (50) a 788 (92) e 2,083

Cost of services, maintenance, rentals and other 1,294 138 (6) a 728 — 2,154

Research, development and engineering expenses 85 61 — 74 — 220

Selling, administrative and general expenses 746 200 (23) b 477 — 1,400

Restructuring and related costs, net 9 (1) — 59 — 67

Amortization of intangible assets 20 16 26 c 30 — 92

Divestitures (4) — — — (4)

Other expenses, net 148 37 (2) d 105 — 288

Total Costs and Expenses 3,160 1,026 (55) 2,261 (92) 6,300

Loss before Income Taxes $ (127) $ 1 $ (174) $ (300) $ 92 $ (366)

Total Gross Profit $ 877 $ 314 $ (31) $ 445 $ 92 $ 1,697

Equipment 25.8 % (26.7) % 25.9 % 26.1 % nm 10.0 %

Post sale 29.7 % 49.8 % 51.5 % 21.8 % nm 33.3 %

Total Gross Margin 28.9 % 30.6 % 35.6 % a 22.7 % nm e 28.6 %

Segment Revenue

Print and Other $ 2,660 $ 1,027 $ (87) a $ 1,739 $ — $ 5,339

IT Solutions 377 — — 226 — 603

Intersegment (4) — — (4) — (8)

Corporate — — — — — —

Total Segment Revenue $ 3,033 $ 1,027 $ (87) $ 1,961 $ — $ 5,934

Segment Profit

Print and Other $ 106 $ 60 $ 44 e $ 64 $ — $ 274

IT Solutions 15 — — 18 — — 33

Intersegment — — — — — — —

Corporate (40) (7) — f (17) — (64)

Total Segment Profit $ 81 $ 53 $ 44 $ 65 $ — $ 243

nm - Not meaningful.

Reflects adjustments for lease expense, transaction-related expenses.

Reflects the adjustments to Amortization of intangible assets.

Reflects adjustments for interest and amortization of debt issuance costs partially offset by an adjustment related to pension benefits (excluding service cost).

Reflects the related impacts to Cost of sales for the purchase accounting adjustments to recognize inventory and fixed assets at fair value.

Reflects the corporate costs of Lexmark not allocated to a segment.

Xerox 2025 Form 10-Q 86

Pro Forma Financial Information

Nine Months Ended

September 30, 2024

(in millions, except per-share data) Xerox Historical ITSavvy Reclassified Lexmark Reclassified Pro Forma Adjustments Pro Forma Combined Company

Equipment sales $ 985 $ — $ 469 $ (134) $ 1,320

Supplies, paper and other 578 — 938 (76) 1,440

IT Products 159 290 — — 449

Sales 1,722 290 1,407 (210) 3,209

Services, maintenance, rentals and other 2,886 61 246 (11) 3,182

Total Revenues 4,608 351 1,653 (221) a 6,391

Costs and Expenses

Cost of sales 1,117 244 936 71 a 2,368

Cost of services, maintenance, rentals and other 2,033 47 205 (137) a 2,148

Research, development and engineering expenses 144 — 93 — 237

Selling, administrative and general expenses 1,160 45 220 16 b 1,441

Goodwill impairment 1,058 — — — 1,058

Restructuring and related costs, net 107 — (3) — 104

Amortization of intangible assets 30 5 24 44 c 103

Divestitures 51 — — — 51

Other expenses, net 120 6 64 81 d 271

Total Costs and Expenses 5,820 347 1,539 75 7,781

Loss before Income Taxes $ (1,212) $ 4 $ 114 $ (296) $ (1,390)

Total Gross Profit $ 1,458 $ 60 $ 512 $ (155) $ 1,875

Equipment 31.4 % nm (21.3) % nm 19.1 %

Post sale 31.7 % 17.1 % 51.7 % nm 32.0 %

Total Gross Margin 31.6 % 17.1 % 31.0 % 70.1 % a 29.3 %

Segment Revenue

Print and Other $ 4,364 $ — $ 1,653 $ (221) a $ 5,796

IT Solutions 244 351 — — 595

Intersegment — — — — —

Corporate — — — — —

Total Segment Revenue $ 4,608 $ 351 $ 1,653 $ (221) $ 6,391

Segment Profit

Print and Other $ 268 $ — $ 208 (52) e $ 424

IT Solutions — 15 — (2) e 13

Intersegment — — — — —

Corporate (70) — (10) — f (80)

Total Segment Profit $ 198 $ 15 $ 198 $ (54) $ 357

nm - Not meaningful.

Represents the elimination of transactions between Xerox and Lexmark, primarily consisting of Lexmark's revenue and Xerox's cost of sales as well as the related impacts to Cost of sales for the purchase accounting adjustments to recognize inventory and fixed assets at fair value, depreciation expense and the impact of conforming certain of Lexmark's accounting policies to those of Xerox.

Reflects adjustments for compensation to certain Lexmark employees upon close of the transaction, lease expense, and transaction-related expenses and depreciation expense.

Reflects the adjustments to Amortization of intangible assets.

Reflects adjustments for interest and amortization of debt issuance costs partially offset by an adjustment related to pension benefits (excluding service cost).

Reflects the related impacts to Cost of sales for the purchase accounting adjustments to recognize inventory and fixed assets at fair value, as well as compensation to certain Lexmark employees upon close of the transaction, and the sale of Lexmark's non-operating assets.

Reflects the corporate costs of Lexmark not allocated to a segment.

Xerox 2025 Form 10-Q 87

Pro Forma Non-GAAP Financial Measures

Management believes that these non-GAAP financial measures provide an additional means of analyzing the current periods’ results against the corresponding prior periods’ results.

However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions.

These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods.

Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.

A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on the following tables:

Pro Forma Adjusted Operating Income and Margin reconciliation

Three Months Ended September 30,

As Reported Pro Forma (1)

Change Pro Forma (1) Change

(in millions) (Loss)

Pre-tax loss (2)

$ (300) $ (1,087) $ (208) $ (1,099) $ 787 $ 891

Goodwill impairment — 1,058 — 1,058 (1,058) (1,058)

Inventory-related impact - exit of certain production print manufacturing operations (3)

Lexmark - inventory-related purchase accounting adjustment (4)

102 — 10 — 102 10

Lexmark - fixed asset-related purchase accounting adjustment (4)

16 — 16 17 16 (1)

Lexmark - pre-existing employment agreements settled post-acquisition 24 — 24 — 24 24

Lexmark - sales of assets — — — 1 — (1)

Reinvention-related costs

Restructuring and related costs, net 59 56 59 55 3 4

Amortization of intangible assets 30 10 30 34 20 (4)

Transaction and related costs, net

23 — 23 — 23 23

Other expenses, net (5), (6), (7)

105 43 105 86 62 19

Adjusted $ 65 $ 80 $ 65 $ 152 $ (15) $ (87)

Revenue 1,961 1,528 1,961 2,127 $ 433 $ (166)

Pre-tax Loss Margin (15.3) % (71.1) % (10.6) % (51.7) % 55.8 pts.

Adjusted Operating Income Margin 3.3 % 5.2 % 3.3 % 7.1 % (1.9) pts.

_____________

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section above for an explanation of this measure.

(2) Pre-tax loss.

(4) Reflects the related impacts to Cost of sales for the purchase accounting adjustments to recognize inventory and fixed assets at fair value.

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

(6) Includes non-financing interest expense of $80 million for the three months ended September 30, 2025, primarily due to interest and financing-related charges, net, related to borrowings made in support of the Lexmark Acquisition.

This compares to $31 million of non-financing interest expense included in Other expenses, net for the three months ended September 30, 2024, which was partially offset by insurance proceeds of $15 million 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.

(7) Includes pro forma adjustments for interest and amortization of debt issuance costs partially offset by an adjustment related to pension benefits (excluding service cost).

Xerox 2025 Form 10-Q 88

Pro Forma Adjusted Operating Income and Margin reconciliation

Nine Months Ended September 30,

As Reported Pro Forma (1)

Change Pro Forma (1) Change

(in millions) (Loss)

Pre-tax loss (2)

$ (427) $ (1,212) $ (366) $ (1,390) $ 785 $ 1,024

Goodwill impairment — 1,058 — 1,058 (1,058) (1,058)

Inventory-related impact - exit of certain production print manufacturing operations (3)

20 44 20 44 (24) (24)

Lexmark - inventory-related purchase accounting adjustment (4)

102 — 10 92 102 (82)

Lexmark - fixed asset-related purchase accounting adjustment (4)

16 — 54 45 16 9

Lexmark - settlement of pre-existing employment agreements — — — 19 — (19)

Lexmark - transaction and related costs, net — — 14 — — 14

Lexmark - pre-existing employment agreements settled post-acquisition 24 — 24 — 24 24

Lexmark - sales of assets — — — (40) — 40

Reinvention-related costs

12 — 12 — 12 12

Restructuring and related costs, net 68 107 67 104 (39) (37)

Amortization of intangible assets 50 30 92 103 20 (11)

Divestiture (4) 51 (4) 51 (55) (55)

Transaction and related costs, net

32 — 32 — 32 32

Other expenses, net (5), (6), (7)

253 120 288 271 133 17

Adjusted $ 146 $ 198 $ 243 $ 357 $ (52) $ (114)

Revenue 4,994 4,608 5,934 6,391 $ 386 $ (457)

Pre-tax Loss Margin (8.6) % (26.3) % (6.2) % (21.7) % 17.7 pts.

Adjusted Operating Income Margin 2.9 % 4.3 % 4.1 % 5.6 % (1.4) pts.

_____________

(1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2024, and ITSavvy was acquired on January 1, 2023.

Refer to the "Pro Forma Basis" section above for an explanation of this measure.

(2) Pre-tax loss.

(3) As a result of the exit of certain production print manufacturing operations, Cost of sales and Cost of services, maintenance, rentals and other excludes inventory-related charges of $19 and $38, for the nine months ended September 30, 2025 and 2024, respectively, as well as the cancellation of related purchase contracts $1 and $6 for the nine months ended September 30, 2025 and 2024, respectively.

(4) Reflects the related impacts to Cost of sales for the purchase accounting adjustments to recognize inventory and fixed assets at fair value.

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

(6) Includes non-financing interest expense of $168 million for the nine months ended September 30, 2025, primarily due to interest and financing-related charges, net, related to borrowings made in support of the Lexmark Acquisition.

This compares to $88 million of non-financing interest expense included in Other expenses, net for the nine months ended September 30, 2024, which was partially offset by insurance proceeds of $38 million 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.

(7) Includes pro forma adjustments for interest and amortization of debt issuance costs partially offset by an adjustment related to pension benefits (excluding service cost).

Xerox 2025 Form 10-Q 89

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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