Xerox Holdings Corp 10-Q

ITEM 1 — FINANCIAL STATEMENTS XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (in millions, except per-share data) 2026 2025 2026 2025 Revenues Sales $ 996 $ 665 $ 1,916 $ 1,222 Services, maintenance, rentals and other 926 911 1,852 1,811 Total Revenues 1,922 1,576 3,768 3,033 Costs and Expenses Cost of sales 579 480 1,179 862 Cost of services, maintenance, rentals and other 655 645 1,352 1,294 Research, development and engineering expenses 67 43 131 85 Selling, administrative and general expenses 432 368 862 746 Restructuring and related costs, net 23 10 68 9 Amortization of intangible assets 30 10 60 20 Divestitures — — — ( 4 ) Non-financing interest expense (1) 100 55 184 88 Other expenses (income), net (1) 5 25 ( 26 ) 60 Total Costs and Expenses 1,891 1,636 3,810 3,160 Income (Loss) before Income Taxes 31 ( 60 ) ( 42 ) ( 127 ) Income tax expense 18 46 50 69 Net Income (Loss) 13 ( 106 ) ( 92 ) ( 196 ) Less: Preferred stock dividends, net ( 3 ) ( 3 ) ( 7 ) ( 7 ) Net Income (Loss) attributable to Common Shareholders $ 10 $ ( 109 ) $ ( 99 ) $ ( 203 ) Basic Income (Loss) per Share $ 0.07 $ ( 0.87 ) $ ( 0.77 ) $ ( 1.62 ) Diluted Income (Loss) per Share $ 0.07 $ ( 0.87 ) $ ( 0.77 ) $ ( 1.62 ) _____________ (1) Prior year amounts have been reclassified to conform to the current year's presentation. Refer to Note 1 - Basis of Presentation for additional information . The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 2 Table of Contents XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Net Income (Loss) $ 13 $ ( 106 ) $ ( 92 ) $ ( 196 ) Other Comprehensive Income (Loss), Net (1) Translation adjustments, net 1 229 ( 76 ) 334 Unrealized gains (losses), net 4 ( 4 ) 8 ( 6 ) Changes in defined benefit plans, net 5 ( 56 ) 45 ( 77 ) Other Comprehensive Income (Loss), Net (1) 10 169 ( 23 ) 251 Comprehensive Income (Loss) , Net $ 23 $ 63 $ ( 115 ) $ 55 _____________ (1) Refer to Note 18 - Other Comprehensive Income (Loss) for gross components of Other comprehensive income (loss), net reclassification adjustments out of Accumulated other comprehensive loss and related tax effects. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 3 Table of Contents XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions, except share data in thousands) June 30, 2026 December 31, 2025 Assets Cash and cash equivalents $ 495 $ 512 Accounts receivable, net (1) 1,185 1,122 Billed portion of finance receivables, net (1) 40 46 Finance receivables, net (1) 442 510 Inventories 1,043 1,016 Other current assets 492 362 Total current assets 3,697 3,568 Finance receivables due after one year, net (1) 732 846 Equipment on operating leases, net 283 299 Land, buildings and equipment, net 378 390 Intangible assets, net 857 921 Goodwill, net 2,234 2,222 Deferred tax assets 86 98 Other long-term assets 1,457 1,479 Total Assets $ 9,724 $ 9,823 Liabilities and Equity Short-term debt and current portion of long-term debt $ 70 $ 231 Financing liability – tariff receivables monetization 90 — Accounts payable 1,456 1,498 Accrued compensation and benefits costs 246 235 Accrued expenses and other current liabilities 1,264 1,258 Total current liabilities 3,126 3,222 Long-term debt 4,153 4,016 Pension and other benefit liabilities 1,027 1,068 Post-retirement medical benefits 148 159 Other long-term liabilities 716 685 Total Liabilities 9,170 9,150 Commitments and Contingencies (See Note 21) Noncontrolling Interests 10 10 Convertible Preferred Stock 214 214 Common stock 131 128 Additional paid-in capital 1,200 1,183 Retained earnings 2,326 2,444 Accumulated other comprehensive loss ( 3,334 ) ( 3,311 ) Xerox Holdings shareholders’ equity 323 444 Noncontrolling interests 7 5 Total Equity 330 449 Total Liabilities and Equity $ 9,724 $ 9,823 Shares of Common Stock Issued and Outstanding 131,243 128,044 _____________ (1) For additional information regarding the allowance for doubtful accounts refer to Note 7 - Accounts Receivable, Net and for additional information regarding the allowance for doubtful credit losses refer to Note 8 - Finance Receivables, Net. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 4 Table of Contents XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, (in millions) 2026 2025 Cash Flows from Operating Activities Net (Loss) $ ( 92 ) $ ( 196 ) Adjustments required to reconcile Net (loss) to Net cash used in operating activities: Depreciation and amortization 201 117 Provisions 36 48 Net (gain) loss on early extinguishment of debt ( 95 ) 4 Net loss (gain) on sales of businesses and assets 2 ( 5 ) Divestitures — ( 4 ) Stock-based compensation 18 26 Restructuring and asset impairment charges 65 10 Payments for restructurings ( 40 ) ( 33 ) Non-service retirement-related costs 42 37 Contributions to retirement plans ( 72 ) ( 67 ) Increase in accounts receivable and billed portion of finance receivables ( 86 ) ( 44 ) Increase in inventories ( 60 ) ( 160 ) Increase in equipment on operating leases ( 67 ) ( 52 ) Decrease in finance receivables 157 212 (Increase) decrease in other current and long-term assets ( 120 ) 16 (Decrease) increase in accounts payable ( 30 ) 25 Increase (decrease) in accrued compensation 18 ( 51 ) Increase (decrease) in other current and long-term liabilities 6 ( 40 ) Net change in income tax assets and liabilities 6 35 Other operating, net 4 22 Net cash used in operating activities ( 107 ) ( 100 ) Cash Flows from Investing Activities Cost of additions to land, buildings, equipment and software ( 47 ) ( 39 ) Proceeds from sales of businesses and assets 8 30 Acquisitions, net of cash acquired 19 1 Other investing, net ( 13 ) ( 4 ) Net cash used in investing activities ( 33 ) ( 12 ) Cash Flows from Financing Activities Net payments on short term debt ( 125 ) — Proceeds from issuance of long-term debt 446 889 Payments on long-term debt ( 251 ) ( 343 ) Tariff receivables monetization 80 — Dividends ( 16 ) ( 58 ) Other financing, net ( 6 ) ( 29 ) Net cash provided by financing activities 128 459 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1 ) 7 (Decrease) increase in cash, cash equivalents and restricted cash ( 13 ) 354 Cash, cash equivalents and restricted cash at beginning of period 565 631 Cash, Cash Equivalents and Restricted Cash at End of Period $ 552 $ 985 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 5 Table of Contents XEROX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Revenues Sales $ 996 $ 665 $ 1,916 $ 1,222 Services, maintenance, rentals and other 926 911 1,852 1,811 Total Revenues 1,922 1,576 3,768 3,033 Costs and Expenses Cost of sales 579 480 1,179 862 Cost of services, maintenance, rentals and other 655 645 1,352 1,294 Research, development and engineering expenses 67 43 131 85 Selling, administrative and general expenses 430 368 860 745 Restructuring and related costs, net 23 10 68 9 Amortization of intangible assets 30 10 60 20 Divestitures — — — ( 4 ) Non-financing interest expense (1) 100 55 184 88 Other expenses (income), net (1) 4 23 ( 27 ) 56 Total Costs and Expenses 1,888 1,634 3,807 3,155 Income (Loss) before Income Taxes 34 ( 58 ) ( 39 ) ( 122 ) Income tax expense 18 46 50 69 Net Income (Loss) $ 16 $ ( 104 ) $ ( 89 ) $ ( 191 ) _____________ (1) Prior year amounts have been reclassified to conform to the current year's presentation. Refer to Note 1 - Basis of Presentation for additional information. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 6 Table of Contents XEROX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Net Income (Loss) $ 16 $ ( 104 ) $ ( 89 ) $ ( 191 ) Other Comprehensive Income (Loss), Net (1) Translation adjustments, net 1 229 ( 76 ) 334 Unrealized gains (losses), net 4 ( 4 ) 8 ( 6 ) Changes in defined benefit plans, net 5 ( 56 ) 45 ( 77 ) Other Comprehensive Income (Loss), Net (1) 10 169 ( 23 ) 251 Comprehensive Income (Loss), Net $ 26 $ 65 $ ( 112 ) $ 60 _____________ (1) Refer to Note 18 - Other Comprehensive Income (Loss) for gross components of Other comprehensive income (loss), net reclassification adjustments out of Accumulated other comprehensive loss and related tax effects. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 7 Table of Contents XEROX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions) June 30, 2026 December 31, 2025 Assets Cash and cash equivalents $ 493 $ 511 Accounts receivable, net (1) 1,185 1,122 Billed portion of finance receivables, net (1) 40 46 Finance receivables, net (1) 442 510 Inventories 1,043 1,016 Other current assets 492 362 Total current assets 3,695 3,567 Finance receivables due after one year, net (1) 732 846 Equipment on operating leases, net 283 299 Land, buildings and equipment, net 378 390 Intangible assets, net 857 921 Goodwill, net 2,234 2,222 Deferred tax assets 86 98 Other long-term assets 1,407 1,438 Total Assets $ 9,672 $ 9,781 Liabilities and Equity Short-term debt and current portion of long-term debt $ 58 $ 110 Short-term related party debt 12 121 Financing liability – tariff receivables monetization 90 — Accounts payable 1,456 1,498 Accrued compensation and benefits costs 246 235 Accrued expenses and other current liabilities 1,254 1,245 Total current liabilities 3,116 3,209 Long-term debt 2,483 2,144 Long-term related party debt 1,670 1,872 Pension and other benefit liabilities 1,027 1,068 Post-retirement medical benefits 148 159 Other long-term liabilities 695 685 Total Liabilities 9,139 9,137 Commitments and Contingencies (See Note 21) Noncontrolling Interests 10 10 Additional paid-in capital 3,505 3,492 Retained earnings 345 448 Accumulated other comprehensive loss ( 3,334 ) ( 3,311 ) Xerox shareholder's equity 516 629 Noncontrolling interests 7 5 Total Equity 523 634 Total Liabilities and Equity $ 9,672 $ 9,781 _____________ (1) For additional information regarding the allowance for doubtful accounts refer to Note 7 - Accounts Receivable, Net and for additional information regarding the allowance for doubtful credit losses refer to Note 8 - Finance Receivables, Net. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 8 Table of Contents XEROX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, (in millions) 2026 2025 Cash Flows from Operating Activities Net (Loss) $ ( 89 ) $ ( 191 ) Adjustments required to reconcile Net (loss) to Net cash used in operating activities: Depreciation and amortization 201 117 Provisions 36 48 Net (gain) loss on early extinguishment of debt ( 95 ) 4 Net loss (gain) on sales of businesses and assets 2 ( 5 ) Divestitures — ( 4 ) Stock-based compensation 18 26 Restructuring and asset impairment charges 65 10 Payments for restructurings ( 40 ) ( 33 ) Non-service retirement-related costs 42 37 Contributions to retirement plans ( 72 ) ( 67 ) Increase in accounts receivable and billed portion of finance receivables ( 86 ) ( 44 ) Increase in inventories ( 60 ) ( 160 ) Increase in equipment on operating leases ( 67 ) ( 52 ) Decrease in finance receivables 157 212 (Increase) decrease in other current and long-term assets ( 123 ) 11 (Decrease) increase in accounts payable ( 30 ) 25 Increase (decrease) in accrued compensation 18 ( 51 ) Increase (decrease) in other current and long-term liabilities 6 ( 40 ) Net change in income tax assets and liabilities 6 35 Other operating, net 4 22 Net cash used in operating activities ( 107 ) ( 100 ) Cash Flows from Investing Activities Cost of additions to land, buildings, equipment and software ( 47 ) ( 39 ) Proceeds from sales of businesses and assets 8 30 Acquisitions, net of cash acquired 19 1 Net cash used in investing activities ( 20 ) ( 8 ) Cash Flows from Financing Activities Net payments on short term debt ( 125 ) — Proceeds from issuance of long-term debt 446 889 Payments on long-term debt ( 251 ) ( 343 ) Tariff receivables monetization 80 — Distributions to parent ( 33 ) ( 71 ) Other financing, net ( 3 ) ( 23 ) Net cash provided by financing activities 114 452 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1 ) 7 (Decrease) increase in cash, cash equivalents and restricted cash ( 14 ) 351 Cash, cash equivalents and restricted cash at beginning of period 564 630 Cash, Cash Equivalents and Restricted Cash at End of Period $ 550 $ 981 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. Xerox 2026 Form 10-Q 9 Table of Contents XEROX HOLDINGS CORPORATION XEROX CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in millions, except per-share data and where otherwise noted) Note 1 – Basis of Presentation References to “Xerox Holdings” refer to Xerox Holdings Corporation and its consolidated subsidiaries, while references to “Xerox” refer to Xerox Corporation and its consolidated subsidiaries. References herein to “we,” “us,” “our,” and the “Company” refer collectively to both Xerox Holdings and Xerox unless the context suggests otherwise. References to "Xerox Holdings Corporation" refer to the stand-alone parent company and do not include its subsidiaries. References to "Xerox Corporation" refer to the stand-alone company and do not include its subsidiaries. The accompanying unaudited Condensed Consolidated Financial Statements and footnotes represent the respective consolidated results and financial results of Xerox Holdings and Xerox and all respective companies that each registrant directly or indirectly controls, either through majority ownership or otherwise. This is a combined report of Xerox Holdings and Xerox, which includes separate unaudited Condensed Consolidated Financial Statements for each registrant. The accompanying unaudited Condensed Consolidated Financial Statements of both Xerox Holdings and Xerox have been prepared in accordance with the accounting policies described in the Combined 2025 Annual Report on Form 10-K (the 2025 Annual Report), except as noted herein, and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. You should read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements included in the 2025 Annual Report. In our opinion, all adjustments necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented have been made. These adjustments consist of normal recurring items. Interim results of operations are not necessarily indicative of the results of the full year. The condensed balance sheet at December 31, 2025, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. For convenience and ease of reference, we refer to the financial statement caption “Income (Loss) before Income Taxes” as “pre-tax income (loss)”. Notes to the Condensed Consolidated Financial Statements reflect the activity for both Xerox Holdings and Xerox for all periods presented, unless otherwise noted. Joint Venture Arrangement On February 17, 2026 (the Closing Date), Xerox Corporation and certain investors including certain funds and accounts managed by Angelo, Gordon & Co., L.P. (collectively, TPG) entered into a joint venture arrangement (the Joint Venture) pursuant to which TPG and certain other investors funded $ 405 aggregate principal amount of senior secured term loans (the Term Loans) to, and purchased $ 45 of Class A Units from, XRX Brandco Holdings LLC (IPCo Holdings) (the Joint Venture Financing). The proceeds of the Joint Venture Financing were distributed by IPCo Holdings to Xerox and are expected to be used for general corporate purposes. In connection with the formation of the Joint Venture, Xerox Corporation contributed (the Contribution) certain intellectual property and related assets, including the trademarks associated with the Xerox brand (collectively, the Contributed IP), to IPCo Holdings and received Class B Units of IPCo Holdings. Subsequent to the Joint Venture Financing, the distribution of the proceeds of the Joint Venture from IPCo Holdings to Xerox Corporation, and the Contribution, Xerox Corporation contributed approximately $ 5 in cash to the common equity capital of IPCo Holdings. IPCo Holdings was formed as an intellectual property holding and licensing entity designed to manage, protect and monetize the Contributed IP. Xerox evaluated IPCo Holdings under ASC 810, Consolidation, and determined that it is a variable interest entity (VIE) as IPCo Holdings is thinly capitalized and its equity holders lack substantive decision-making rights and participation in residual returns. Xerox also determined that it is the primary beneficiary, as it has the power to direct the activities that most significantly impact IPCo Holdings’ economic performance through its Class B ownership and governance rights and retains a potentially significant residual economic interest. Accordingly, Xerox Corporation began consolidating IPCo Holdings in its Condensed Consolidated Financial Statements in the first quarter of 2026, Xerox 2026 Form 10-Q 10 Table of Contents with all intercompany balances and transactions eliminated in consolidation. At June 30, 2026, total assets and liabilities of IPCo Holdings were $ 908 and $ 458 , respectively. The activities that most significantly impact IPCo Holdings’ economic performance include the management, protection, enforcement, licensing and monetization of the Contributed IP, including activities under the Shared Services and License Agreement described below. The assets of IPCo Holdings and its subsidiary are generally not available to satisfy the obligations of Xerox Corporation or Xerox Holdings Corporation, except to the extent distributed or otherwise made available in accordance with the Joint Venture agreements. The obligations of IPCo Holdings under the Term Loans are secured by substantially all assets of IPCo Holdings and IPCo, including specified intellectual property assets, equity interests and related collateral. Cash and cash equivalents received by IPCo Holdings and XRX Brandco LLC (IPCo) are required to be deposited into a reserve account and may be used only for specified purposes, including payments on the Term Loans, payments or distributions in respect of the Class A Units, permitted overhead and other transactions permitted under the Joint Venture financing documents. The carrying amounts and classification of IPCo Holdings’ consolidated assets and liabilities are included in the Company’s Condensed Consolidated Balance Sheet. Such assets principally include the Contributed IP and restricted cash or cash held by IPCo Holdings and IPCo, and such liabilities principally include the Term Loans and related obligations. The Company’s exposure to IPCo Holdings includes its retained Class B Units, its rights and obligations under the SSLA, guarantees and collateral support provided by certain subsidiaries of Xerox Holdings, and its obligation to pay royalties under the SSLA. The Company has not provided financial or other support to IPCo Holdings that it was not contractually required to provide. Creditors and beneficial interest holders of IPCo Holdings have recourse to IPCo Holdings and IPCo assets and to the specific guarantees and collateral support provided under the SSLA Guarantee and related financing documents, but do not have recourse to the general credit of Xerox Corporation or Xerox Holdings Corporation except as expressly provided under those contractual arrangements. Refer to Note 12 - Debt for additional information regarding the Joint Venture Financing. Shared Services and License Agreement On the Closing Date, in connection with the formation of the Joint Venture, Xerox Holdings, Xerox Corporation, IPCo Holdings and IPCo entered into a Shared Services and License Agreement (the SSLA), pursuant to which (i) Xerox Holdings agreed to provide certain services to IPCo Holdings and IPCo and (ii) IPCo granted licenses to the Contributed IP to Xerox Corporation and, at the election of Xerox Holdings, certain of its subsidiaries (collectively, the Licensees). The Licensees are required to pay IPCo a royalty fee equal to 2.0 % of specified consolidated revenue generated by Holdings and its subsidiaries from the Contributed IP. The royalty is payable quarterly based on the specified consolidated revenue and is eliminated in consolidation along with royalty income recognized by IPCo. The royalty fees are required to be deposited into a reserve account and may be used only for specified purposes under the Joint Venture financing documents, including payments of interest and amortization on the Term Loans and payments or distributions in respect of the Class A Units. The obligations of the Licensees in respect of the SSLA are guaranteed by and secured by the assets of certain subsidiaries of Xerox Holdings (the SSLA Guarantee). The SSLA Guarantee contains representations and warranties and covenants limiting certain such guarantors and certain other subsidiaries of Xerox Holdings from incurring debt and liens, selling assets, making investments and limiting certain other transactions and requiring certain such guarantors and other subsidiaries to maintain at the end of each quarter a specified asset coverage ratio, generally defined as the ratio of certain assets held by such guarantors and subsidiaries to the outstanding amount of the Term Loans and Class A Units (net of cash held by IPCo Holdings). The SSLA Guarantee also contains certain events of default relating to, among others, the breach of such representations, warranties and covenants and defaults under the SSLA or SSLA Guarantee. The SSLA also contains certain minimum revenue covenants and other provisions that could require Xerox Holdings or its subsidiaries to provide additional support or payments to IPCo Holdings or IPCo in specified circumstances. Any such amounts would be eliminated in consolidation to the extent payable to consolidated entities. The initial term of the SSLA is 10 years from the effective date, with automatic five-year renewal periods, provided either Xerox Holdings or IPCo may terminate the SSLA effective as of the end of the then-applicable term on 18 months’ advance notice to the other parties. In addition, the SSLA may be terminated by IPCo upon certain events Xerox 2026 Form 10-Q 11 Table of Contents of default by Xerox Holdings, including non-payment, material breach, insolvency or change of control, subject to applicable cure periods. Xerox Holdings may terminate the SSLA with IPCo’s consent or upon certain breaches by IPCo. Upon termination, the Licensees’, and their sublicensees’, rights to use the Contributed IP also cease, subject to a 90-day sell-off period for existing inventory. Because IPCo Holdings is consolidated, royalty expense recognized by Xerox Corporation and royalty income recognized by IPCo, as well as related intercompany balances, are eliminated in consolidation. Amounts payable to holders of the Term Loans and Class A Units that are not eliminated in consolidation are reflected in the Company’s Condensed Consolidated Financial Statements based on their respective classification. Goodwill Interim Impairment Evaluation We assess goodwill for impairment at least annually during the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. As of June 30, 2026, we determined that we did not have a triggering event requiring a quantitative assessment of Goodwill. If the Company's future performance varies from current expectations, assumptions, and estimates, including assumptions related to current macro-economic uncertainties, interest rates, inflationary pressure on product and labor costs, execution of Transformation (formerly Reinvention), and geopolitical uncertainty, the impairment analysis could be impacted and result in a reduction of the underlying cash flows used to estimate fair values resulting in a decline in fair value that may trigger future impairment charges. We will continue to monitor developments throughout the remainder of 2026 including updates to our forecasts as well as discount rates and our market capitalization, and as a result, an update of our assessment and related estimates may be required in the future. Change in Presentation During 2026, the Company revised the presentation of its Condensed Consolidated Statements of Income (Loss) to separately present Non-financing interest expense, which was previously included within Other expenses (income), net. Management believes that separate presentation of these captions provides more meaningful information to investors regarding the Company’s performance. Prior period amounts have been reclassified to conform to the current period presentation. The reclassification for Non-financing interest expense impacted the Condensed Consolidated Statements of Income (Loss) of both Xerox Holdings Corporation and Xerox Corporation, however, the reclassification had no impact on previously reported Total Costs and expenses, or Net Income (Loss), and is as follows: Three months ended June 30, 2025 Six months ended June 30, 2025 Previously Reported Reclassification As Reported Previously Reported Reclassification As Reported Non-financing interest expense $ — $ 55 $ 55 $ — $ 88 $ 88 Other expense (income), net - Xerox Holdings Corporation 80 ( 55 ) 25 148 ( 88 ) 60 Other expense (income) , net - Xerox Corporation 78 ( 55 ) 23 144 ( 88 ) 56 Xerox 2026 Form 10-Q 12 Table of Contents Note 2 – Recent Accounting Pronouncements Xerox Holdings and Xerox consider the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB). The ASUs listed below apply to both registrants. ASUs not listed below were assessed and determined to be not applicable to the Condensed Consolidated Financial Statements of either registrant, nor were they expected to have any significant impact on the Company. Accounting Standard Updates to be Adopted: Environmental Credits and Environmental Credit Obligations In May 2026, the FASB issued ASU 2026-02 , Environmental Credits and Environmental Credit Obligations (Topic 818) , which establishes guidance on the recognition, measurement, presentation, and disclosure of environmental credits and related environmental credit obligations. Under the new guidance, qualifying environmental credits are generally recognized at cost and subsequently measured based on their intended use, while environmental credit obligations are recognized as incurred. The ASU also expands annual disclosure requirements for environmental credit assets, obligations, and related activities. The standard is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. Retrospective adoption through a cumulative-effect adjustment to the opening balance of Retained earnings is required. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures. Interim Reporting - Narrow-Scope Improvements In December 2025, the FASB issued ASU 2025-11 , Interim Reporting (Topic 270): Narrow-Scope Improvements, which amends existing guidance to clarify and improve certain interim reporting requirements, including disclosures and the application of interim period accounting principles in specific circumstances. The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments are effective for interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its interim disclosures and consolidated financial statements. Derivatives and Hedging (Topic 815): Hedge Accounting Improvements In November 2025, the FASB issued ASU 2025-09 , Derivatives and Hedging (Topic 815): Hedge Accounting Improvements , which provides targeted improvements intended to simplify the application of hedge accounting, reduce complexity and cost, and enhance the transparency of hedge-related disclosures. The amendments in this update address certain hedge designation requirements and related documentation, provides targeted relief and clarity regarding methods and timing for assessing effectiveness, improves guidance related to accounting for modifications, and refines and eliminates certain disclosure requirements. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods therein. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its hedge accounting policies and consolidated financial statements. Intangibles - Goodwill and Other - Internal Use Software In September 2025, the FASB issued ASU 2025‑06 , Intangibles — Goodwill and Other — Internal-Use Software (Topic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . The amendments are intended to modernize the recognition and capitalization framework to reflect current software development practices, including iterative and agile methodologies, by removing references to "development stages". It also clarifies the criteria for capitalization, which begins when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The ASU permits companies to elect one of the following adoption methods to apply its amendments: a prospective transition approach, a retrospective transition approach, or a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual reporting period. We are currently evaluating the adoption of this standard and its impact to the Company's consolidated financial statements and related disclosures. Income Statement In November 2024, the FASB issued ASU 2024-03 , Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which is intended to improve disclosures related to certain income statement expenses of the Company. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with Xerox 2026 Form 10-Q 13 Table of Contents early adoption permitted, and should be applied either prospectively or retrospectively. We are currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures. Accounting Standard Updates Recently Adopted: Financial Instruments - Credit Losses In July 2025, the FASB issued ASU 2025‑05 , Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides new optional guidance relating to the estimation of expected credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 326. This ASU permits entities to apply a practical expedient when estimating credit losses. We adopted this update prospectively in 2026 and the adoption did not have a material impact on the Company's consolidated financial statements and related disclosures. Debt In November 2024, the FASB issued ASU 2024-04 , Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments , which is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. We adopted this update prospectively in 2026; there were no events or transactions related to our 3.75 % Convertible Senior Notes due in 2030 in the first half of 2026 that were affected by this update. Note 3 – Revenue Revenues disaggregated by primary geographic markets, major product lines, and sales channels are as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Primary geographical markets (1) : United States $ 1,051 $ 930 $ 2,052 $ 1,780 Europe 531 438 1,060 840 Canada 132 108 258 211 Latin America 97 46 186 87 Asia Pacific 58 10 106 23 Other 53 44 106 92 Total Revenues $ 1,922 $ 1,576 $ 3,768 $ 3,033 Major product and services lines: Equipment $ 387 $ 336 $ 765 $ 620 Supplies, paper and other sales 469 176 906 344 Maintenance agreements (2) 425 379 842 747 IT products (3) 140 153 245 258 Service arrangements (4) 421 439 843 868 Rental and other 55 61 115 131 Financing 25 32 52 65 Total Revenues $ 1,922 $ 1,576 $ 3,768 $ 3,033 Sales channels: Direct equipment lease (5) $ 90 $ 108 $ 181 $ 220 Distributors & resellers (6) 523 238 1,048 447 Customer direct 383 319 687 555 Total Sales $ 996 $ 665 $ 1,916 $ 1,222 _____________ (1) Geographic area data is based upon the location of the subsidiary reporting the revenue. (2) Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners, as well as services revenues related to our IT Solutions. (3) IT products include IT hardware and software solutions sold by the IT Solutions segment. (4) Primarily includes revenues from our Print outsourcing arrangements including revenues from embedded operating leases in those arrangements. (5) Primarily reflects sales through bundled lease arrangements. (6) Primarily reflects sales through our two-tier distribution channels. Xerox 2026 Form 10-Q 14 Table of Contents Contract Assets and Liabilities: Our contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time were $ 39 and $ 34 at June 30, 2026 and December 31, 2025, respectively. Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advance billings for maintenance and other services to be performed, were approximately $ 270 and $ 279 at June 30, 2026 and December 31, 2025, respectively. The majority of the balance at June 30, 2026 will be amortized to revenue over the next 30 months. The following table summarizes our contract liabilities activity: 2026 2025 Balance at January 1 st $ 279 $ 130 Revenue recognized (1) ( 76 ) ( 59 ) Billings and customer advances (2) 68 63 Foreign currency and other — ( 4 ) Acquisition (3) — 22 Balance at March 31 st $ 271 $ 152 Revenue recognized (1) ( 79 ) ( 76 ) Billings and customer advances (2) 72 61 Foreign currency and other 1 — Acquisition (3) 5 — Balance at June 30 th $ 270 $ 137 _____________ (1) Reflects amounts included in the January 1st beginning balance. (2) Excludes revenue recognized during the period. (3) 2026 relates to Lexmark Acquisition-related activity and 2025 relates to ITSavvy acquisition-related activity. Our unsatisfied performance obligations primarily relate to multi-year managed services arrangements and extended warranty contracts where revenue is recognized over time. The aggregate amount of the transaction price allocated to unsatisfied performance obligations including the amounts included in contract liabilities for committed customers was $ 596 at June 30, 2026. The Company expects to recognize these revenues over the next one to five years based upon the nature of the associated agreements. Estimated amounts are subject to change due to various factors including, but not limited to the following: contract terminations, changes in contract scope, revised estimates, unrealized revenue adjustments, and currency fluctuations. Contract Costs: We incur the following contract costs as part of our revenue arrangements: • Incremental direct costs of obtaining a contract are primarily sales commissions paid to salespeople and agents in connection with the placement of equipment with post sale services arrangements. These costs are deferred and amortized to Selling Expenses on a straight-line basis over the estimated contract term, which is currently estimated to be approximately five years . • Contract fulfillment costs, which are costs incurred for resources and assets that will be used to satisfy our future performance obligations included in our service arrangements. These costs are amortized over the contractual service period of the arrangement to cost of services. • Contract inducements are capitalized and amortized as a reduction of revenue over the term of the contract. Changes in contract costs, net are as follows: 2026 2025 Balance at January 1st, $ 163 $ 139 Customer contract costs deferred 17 17 Amortization of customer contract costs ( 17 ) ( 16 ) Other (1) ( 3 ) — Balance at March 31st, $ 160 $ 140 Customer contract costs deferred 12 18 Amortization of customer contract costs ( 18 ) ( 17 ) Other (1) 1 2 Balance at June 30th, $ 155 $ 143 _____________ (1) Includes currency Equipment and software used in the fulfillment of service arrangements, and where the Company retains control, are capitalized and depreciated over the shorter of their useful life or the term of the contract if an asset is contract specific. Xerox 2026 Form 10-Q 15 Table of Contents Note 4 – Segment Reporting Our reportable segments - Print and Other and IT Solutions - are aligned to how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies and are consistent with how we manage the business and view the markets we serve. Our Print and Other segment includes the design, development and sale of document management systems, supplies and services, as well as associated financing and technology-related offerings, digital and print-related software products and services. The segment also includes the delivery of managed services that involve a continuum of solutions and services that help our customers optimize their print and communications infrastructure, apply automation and simplification to maximize productivity, and ensure the highest levels of security. In addition, the segment includes Xerox Financial Services, a global financing solutions provider, primarily enabling the sale of our equipment and services, which includes commissions and other payments for the exclusive right to provide lease financing for Xerox products. The product groupings range from: • “Entry” , which include A4 devices and desktop printers and multifunction devices that primarily serve small and medium workgroups/work teams. • “Mid-Range” , which include A3 devices that generally serve large workgroup/work team environments as well as products in the Light Production product groups serving centralized print centers, print for pay and low volume production print establishments. • “High-End” , which include production printing and publishing systems that generally serve the graphic communications marketplace and print centers in large enterprises. Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic communication enterprises as well as channel partners including distributors and resellers. Our IT Solutions segment provides clients of all sizes integrated IT infrastructure solutions, delivering business outcomes through its suite of Device Lifecycle Solutions, and Managed IT Services. The IT Solutions business leverages its professional services and engineering capabilities, along with an extensive partner ecosystem to design, develop and deliver comprehensive Network and Security Solutions, and Infrastructure and Cloud Solutions. This segment provides services to clients in the U.S., Canada, the U.K., and Western Europe. Selected financial information for our reportable segments was as follows: Three months ended June 30, 2026 Print and Other IT Solutions Total Reportable Segments (10) Corporate (1) Total External revenue $ 1,733 $ 189 $ 1,922 $ — $ 1,922 Intersegment revenue (2) — 5 5 — 5 Total $ 1,733 $ 194 $ 1,927 $ — $ 1,927 Reconciliation to Segment Profit Cost of sales (3) $ 459 $ 115 $ 574 $ — $ 574 Cost of services, maintenance, rentals and other (3)(4)(5) 608 42 650 — 650 Research, development and engineering expenses (3) 66 — 66 — 66 Selling, administrative and general expenses (3)(6)(7) 377 28 405 24 429 Intersegment expense (8) 3 2 5 — 5 Segment profit $ 220 $ 7 $ 227 $ ( 24 ) $ 203 Depreciation $ 71 $ — $ 71 $ — $ 71 Interest income (9) 25 — 25 3 28 Interest expense (5) 18 — 18 100 118 Xerox 2026 Form 10-Q 16 Table of Contents Three months ended June 30, 2025 Print and Other IT Solutions Total Reportable Segments (10) Corporate (1) Total External revenue $ 1,366 $ 210 $ 1,576 $ — $ 1,576 Intersegment revenue (2) — 3 3 — 3 Total $ 1,366 $ 213 $ 1,579 $ — $ 1,579 Reconciliation to Segment Profit Cost of sales $ 347 $ 127 $ 474 $ — $ 474 Cost of services, maintenance, rentals and other (4)(5) 593 48 641 — 641 Research, development and engineering expenses 43 — 43 — 43 Selling, administrative and general expenses (6)(7) 318 25 343 16 359 Intersegment expense (8) — 3 3 — 3 Segment profit $ 65 $ 10 $ 75 $ ( 16 ) $ 59 Depreciation $ 47 $ — $ 47 $ — $ 47 Interest income (9) 32 — 32 6 38 Interest expense (5) 23 — 23 55 78 Six months ended June 30, 2026 Print and Other IT Solutions Total Reportable Segments (10) Corporate (1) Total External revenue $ 3,425 $ 343 $ 3,768 $ — $ 3,768 Intersegment revenue (2) — 7 7 — 7 Total $ 3,425 $ 350 $ 3,775 $ — $ 3,775 Reconciliation to Segment Profit Cost of sales (3) $ 971 $ 198 $ 1,169 $ — $ 1,169 Cost of services, maintenance, rentals and other (3)(4)(5) 1,258 83 1,341 — 1,341 Research, development and engineering expenses (3) 130 — 130 — 130 Selling, administrative and general expenses (3)(6)(7) 756 52 808 45 853 Intersegment expense (8) 3 4 7 — 7 Segment profit $ 307 $ 13 $ 320 $ ( 45 ) $ 275 Depreciation $ 140 $ 1 $ 141 $ — $ 141 Interest income (9) 52 — 52 6 58 Interest expense (5) 37 — 37 184 221 Xerox 2026 Form 10-Q 17 Table of Contents Six months ended June 30, 2025 Print and Other IT Solutions Total Reportable Segments (10) Corporate (1) Total External revenue $ 2,660 $ 373 $ 3,033 $ — $ 3,033 Intersegment revenue (2) — 4 4 — 4 Total $ 2,660 $ 377 $ 3,037 $ — $ 3,037 Reconciliation to Segment Profit Cost of sales $ 639 $ 212 $ 851 $ — $ 851 Cost of services, maintenance, rentals and other (4)(5) 1,190 98 1,288 — 1,288 Research, development and engineering expenses 85 — 85 — 85 Selling, administrative and general expenses (6)(7) 640 48 688 40 728 Intersegment expense (8) — 4 4 — 4 Segment profit $ 106 $ 15 $ 121 $ ( 40 ) $ 81 Depreciation $ 97 $ — $ 97 $ — $ 97 Interest income (9) 65 — 65 8 73 Interest expense (5) 45 — 45 88 133 _____________ (1) Certain administrative and general expenses, which primarily relate to Corporate functions, are not allocated to either of our operating/reportable segments. (2) Intersegment revenue is primarily revenue from IT hardware, software solutions and services, sold by the IT Solutions segment to the Print and Other segment. (3) The Print and Other segment excludes the impact of a fixed asset purchase accounting adjustment related to the Lexmark Acquisition of $ 5 and $ 10 to Cost of sales, $ 5 and $ 11 to Cost of services, maintenance, rentals and other, $ 1 and $ 1 to Research, development, and engineering expenses, and $ 1 and $ 1 to Selling, administrative and general expenses for the three and six months ended June 30, 2026, respectively. (4) As a result of the exit of certain production print manufacturing operations, the Print and Other segment excludes inventory-related charges of $ 6 and $ 11 within Cost of sales, and $ 4 and $ 6 within Cost of services, maintenance, rentals and other for the three and six months ended June 30, 2025, respectively. (5) The Print and Other segment includes equipment financing interest expense associated with the financing debt of the Company. This is fully allocated to the Print and Other segment in support of its Finance assets. No interest expense is allocated to the IT Solutions segment, as the segment has no financing debt. Corporate includes Non-financing interest expense. (6) Selling, administrative and general expenses include bad debt expense related to the Print and Other segment of $ 11 and $ 15 for the three months ended June 30, 2026 and 2025, respectively and $ 17 and $ 24 for the six months ended June 30, 2026 and 2025, respectively. (7) For the three months ended June 30, 2026 and 2025, the Print and Other segment excludes the following costs: Transformation costs of $ 2 and $ 3 , respectively and Transaction and related costs, net of $ 0 and $ 6 , respectively. For the six months ended June 30, 2026 and 2025, the Print and Other segment excludes the following costs: Transformation costs of $ 4 and $ 9 , respectively and Transaction and related costs, net of $ 4 and $ 9 , respectively. (8) Intersegment expense primarily consists of costs related to the sale of IT hardware, software solutions and services by the IT Solutions segment, to the Print and Other segment. (9) Print and Other includes financing income, which is included in Services, maintenance rentals and other. This is fully allocated to the Print and Other segment in support of its financing business. No financing income is allocated to the IT Solutions segment, as the segment has no finance assets. (10) The prior year presentation has been updated to conform with the current year's presentation. Xerox 2026 Form 10-Q 18 Table of Contents Selected financial information for our reportable segments was as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Pre-tax Income (Loss) Total Segment Profit $ 227 $ 75 $ 320 $ 121 Corporate ( 24 ) ( 16 ) ( 45 ) ( 40 ) Restructuring and related costs, net ( 23 ) ( 10 ) ( 68 ) ( 9 ) Amortization of intangible assets ( 30 ) ( 10 ) ( 60 ) ( 20 ) Transformation-related costs (1) ( 2 ) ( 3 ) ( 4 ) ( 9 ) Purchase Accounting Adjustment - Fixed Assets ( 12 ) — ( 23 ) — Transaction-related costs — ( 6 ) ( 4 ) ( 9 ) Inventory-related impact - exit of certain production print manufacturing operations — ( 10 ) — ( 17 ) Divestiture — — — 4 Non-financing interest expense ( 100 ) ( 55 ) ( 184 ) ( 88 ) Other expenses (income), net ( 5 ) ( 25 ) 26 ( 60 ) Total Pre-tax Income (loss) $ 31 $ ( 60 ) $ ( 42 ) $ ( 127 ) Depreciation and Amortization Total reported segments $ 71 $ 47 $ 141 $ 97 Amortization of intangible assets 30 10 60 20 Total Depreciation and amortization $ 101 $ 57 $ 201 $ 117 __________ (1) In the first quarter of 2026, Xerox Holdings Corporation renamed “Reinvention-related costs” to “Transformation-related costs.” This change in terminology did not affect the nature of the costs. Note 5 – Lessor Revenue from sales-type leases is presented on a gross basis when the Company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business, whereas in transactions where the Company enters into a lease for the purpose of generating revenue by providing financing, the profit or loss, if any, is presented on a net basis. In addition, we have elected to account for sales tax and other similar taxes collected from a lessee as lessee costs and therefore we exclude these costs from contract consideration and variable consideration. The components of lease income are as follows: Three Months Ended June 30, Six Months Ended June 30, Location in Statements of Income (Loss) 2026 2025 2026 2025 Revenue from sales type leases Sales $ 90 $ 108 $ 181 $ 220 Interest income on lease receivables (1) Services, maintenance, rentals and other 25 32 52 65 Lease income - operating leases Services, maintenance, rentals and other 37 39 77 80 Variable lease income Services, maintenance, rentals and other 9 10 17 19 Total Lease income $ 161 $ 189 $ 327 $ 384 __________ (1) Primarily includes interest income from sales-type leases, as well as financing leases. Profit at lease commencement on sales-type leases was estimated to be $ 11 and $ 26 for the three months ended June 30, 2026 and 2025, respectively, and $ 28 and $ 57 for the six months ended June 30, 2026 and 2025, respectively. Xerox 2026 Form 10-Q 19 Table of Contents Note 6 – Acquisition Lexmark Acquisition On July 1, 2025, Xerox Corporation completed the acquisition of all of the issued and outstanding equity of Lexmark International II, LLC (Lexmark), a leading developer, manufacturer and supplier of printing, imaging, device management, managed print services (MPS), cloud services, document workflow, and technology solutions (the Lexmark Acquisition). Total consideration paid to the Seller for the net assets acquired from Lexmark was $ 749 , which included Cash and cash equivalents acquired of $ 93 , as well as a working capital adjustment, which was finalized during the first quarter 2026, resulting in a decrease of $ 19 to the total consideration paid. During fourth quarter 2025 and second quarter 2026, adjustments were recorded to correct certain errors in the Lexmark Acquisition preliminary purchase price allocation that existed as of the acquisition date. The errors resulted from misstated balances of accounts receivable, contract assets, and contract liabilities in Lexmark's opening balance sheet as of July 1, 2025. Accordingly, Accounts receivable, net decreased by $ 81 , Other current assets increased by $ 15 , Deferred tax assets increased by $ 7 , Accrued expenses and other liabilities decreased by $ 11 and Other long-term liabilities decreased by $ 7 . The identified errors had an immaterial impact on the Lexmark preliminary purchase accounting. As a result of the correction of errors, we recorded a total increase of $ 41 to Goodwill associated with the Lexmark Acquisition, of which $ 13 was recorded during second quarter 2026, and $ 28 was recorded during fourth quarter 2025. In addition, during 2026 and 2025, the Company recorded immaterial measurement period adjustments to the opening balance sheet which resulted in further increases to Goodwill of $ 28 and $ 11 , respectively. The allocation of the purchase price for this acquisition was finalized during the second quarter 2026. Transaction expense for the Lexmark Acquisition was approximately $ 0 and $ 5 for the three months ended June 30, 2026 and 2025, respectively, and $ 4 and $ 7 for the six months ended June 30, 2026 and 2025, respectively, and was recorded in the Condensed Consolidated Statements of Income (Loss) in Selling, administrative and general expenses. Note 7 – Accounts Receivable, Net Accounts receivable, net were as follows: June 30, 2026 December 31, 2025 Invoiced $ 1,091 $ 1,024 Accrued (1) 168 171 Allowance for doubtful accounts ( 74 ) ( 73 ) Accounts receivable, net $ 1,185 $ 1,122 _____________ (1) Accrued receivables include amounts to be invoiced in the subsequent quarter for current products and services provided. The allowance for doubtful accounts was as follows: 2026 2025 Balance at January 1 st $ 73 $ 69 Provision 3 4 Charge-offs, net ( 3 ) ( 6 ) Recoveries and other (1) — 1 Balance at March 31 st $ 73 $ 68 Provision 8 8 Charge-offs ( 5 ) ( 7 ) Recoveries and other (1) ( 2 ) 3 Balance at June 30 th $ 74 $ 72 _____________ (1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations. We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. The allowance for doubtful accounts receivable is determined based on an Xerox 2026 Form 10-Q 20 Table of Contents assessment of past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends. Accounts Receivable Sales Arrangements We have two facilities in Europe that enable us to sell accounts receivable, without recourse on an ongoing basis. Under these arrangements, we sell our entire interest in the related accounts receivable for cash. Our arrangements are associated with our European distributor network as well as domestic sales in UK, France, Germany and Italy. Accounts receivable sales activity was as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Accounts receivable sales (1) $ 121 $ 111 $ 212 $ 196 ____________ (1) Losses on sales were not material. Note 8 – Finance Receivables, Net Finance receivables include sales-type leases and installment loans arising from the sales of our equipment. These receivables are typically collateralized by a security interest in the underlying equipment. Finance receivables, net were as follows: June 30, 2026 December 31, 2025 Gross receivables $ 1,429 $ 1,643 Unearned income ( 171 ) ( 196 ) Subtotal 1,258 1,447 Residual values — — Allowance for doubtful credit losses (1) ( 44 ) ( 45 ) Finance receivables, net 1,214 1,402 Less: Billed portion of finance receivables, net 40 46 Less: Current portion of finance receivables not billed, net 442 510 Finance receivables due after one year, net $ 732 $ 846 ____________ (1) Reflects the allowance for doubtful credit losses related to (i) Billed portion of finance receivables of $ 3 and $ 3 , and (ii) the current and non-current portions of finance receivables of $ 41 and $ 42 as of June 30, 2026 and December 31, 2025, respectively. Finance Receivables – Allowance for Credit Losses and Credit Quality Our finance receivable portfolios are primarily in the U.S., Canada and EMEA. We generally establish customer credit limits and estimate the allowance for doubtful credit losses on a country or geographic basis. Customer credit limits are based upon an initial evaluation of the customer's credit quality, and are adjusted through ongoing credit assessments of the customer, which includes the past collections experience and changes in credit quality. The allowance for doubtful credit losses is determined based on an assessment of origination year and past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends. Our allowance for doubtful credit losses is determined by geography. The risk characteristics in our finance receivable portfolio segments are generally consistent with the risk factors associated with the economies of the countries/regions included in those geographies. Since EMEA is comprised of various countries and regional economies, the risk profile within that portfolio segment is somewhat more diversified due to the varying economic conditions among and within those countries. Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.5 % at June 30, 2026 and 3.1 % at December 31, 2025. In determining the level of reserve required we critically assessed current and forecasted economic conditions and trends to ensure we objectively considered those expected impacts in the determination of our reserve. Our assessment also included a review of current portfolio credit metrics and the level of write-offs incurred over the past year. We believe our current reserve position remains sufficient to cover expected future losses that may result from current and future macro-economic conditions including higher inflation, interest rates, and the potential for Xerox 2026 Form 10-Q 21 Table of Contents recessions in the geographic areas of our customers. We continue to monitor developments in future economic conditions and trends, and as a result, our reserves may need to be updated in future periods. The allowance for doubtful credit losses as well as the related investment in finance receivables were as follows: United States Canada EMEA Other (2) Total Balance at December 31, 2025 $ 24 $ 5 $ 16 $ — $ 45 Provision — — 2 — 2 Charge-offs, net ( 1 ) — ( 1 ) — ( 2 ) Other (1) — — — — — Balance at March 31, 2026 $ 23 $ 5 $ 17 $ — $ 45 Provision 2 1 1 — 4 Charge-offs, net ( 2 ) ( 1 ) ( 2 ) — ( 5 ) Other (1) — — — — — Balance at June 30, 2026 $ 23 $ 5 $ 16 $ — $ 44 Balance at December 31, 2024 $ 29 $ 5 $ 23 $ — $ 57 Provision ( 1 ) 1 5 — 5 Charge-offs, net ( 3 ) ( 1 ) ( 6 ) — ( 10 ) Other (1) — — 1 — 1 Balance at March 31, 2025 $ 25 $ 5 $ 23 $ — $ 53 Provision 5 — 3 — 8 Charge-offs, net ( 3 ) — ( 4 ) — ( 7 ) Other (1) ( 1 ) 1 1 — 1 Balance at June 30, 2025 $ 26 $ 6 $ 23 $ — $ 55 _____________ (1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations. (2) As a result of the Lexmark Acquisition on July 1, 2025, Other includes finance receivables of Latin America, Asia Pacific and South Africa. However, the related allowance for doubtful credit losses of the Other geography for the three and six months ended June 30, 2026 was nil. Refer to Note 6 - Acquisition for additional information regarding the Lexmark Acquisition. Customers are further evaluated by class based on the type of lease origination. The primary categories are direct, which primarily includes leases originated directly with end-user customers through bundled lease arrangements, and indirect, which primarily includes leases originated through our XBS sales channel and lease financing to end-user customers who purchased equipment we sold to distributors or resellers. We evaluate our customers based on the following credit quality indicators: • Low Credit Risk: This rating includes accounts with excellent to good business credit, asset quality and capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. Loss rates in this category in the normal course are generally in the range of 1 % to 2 %. • Average Credit Risk: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain with such leases. Loss rates in this category in the normal course are generally in the range of 3 % to 5 %. • High Credit Risk: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from low and average credit risk evaluation when the lease was originated. Accordingly, there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category in the normal course are generally in the range of 6 % to 7 %. Xerox 2026 Form 10-Q 22 Table of Contents Credit quality indicators are updated at least annually, or more frequently to the extent required by economic conditions, and the credit quality of any given customer can change during the life of the portfolio. Details about our finance receivables portfolio based on geography, origination year and credit quality indicators are as follows: June 30, 2026 2026 2025 2024 2023 2022 Prior Total Finance Receivables United States (Direct) Low Credit Risk $ 62 $ 89 $ 57 $ 35 $ 11 $ 2 $ 256 Average Credit Risk 12 16 14 22 5 3 72 High Credit Risk 13 19 19 14 8 4 77 Total $ 87 $ 124 $ 90 $ 71 $ 24 $ 9 $ 405 Charge-offs $ — $ — $ 1 $ 2 $ — $ 1 $ 4 United States (Indirect) Low Credit Risk $ 1 $ 2 $ 3 $ 7 $ 10 $ 2 $ 25 Average Credit Risk 4 11 6 17 13 2 53 High Credit Risk — — 8 9 3 1 21 Total $ 5 $ 13 $ 17 $ 33 $ 26 $ 5 $ 99 Charge-offs $ — $ — $ — $ 1 $ 1 $ 1 $ 3 Canada Low Credit Risk $ 12 $ 26 $ 16 $ 10 $ 2 $ 1 $ 67 Average Credit Risk 13 24 16 10 4 1 68 High Credit Risk 2 4 2 1 1 — 10 Total $ 27 $ 54 $ 34 $ 21 $ 7 $ 2 $ 145 Charge-offs $ — $ — $ — $ — $ 1 $ — $ 1 EMEA Low Credit Risk $ 58 $ 101 $ 60 $ 70 $ 36 $ 9 $ 334 Average Credit Risk 32 53 37 58 39 12 231 High Credit Risk 4 7 4 7 4 2 28 Total $ 94 $ 161 $ 101 $ 135 $ 79 $ 23 $ 593 Charge-offs $ — $ 1 $ — $ 2 $ 1 $ — $ 4 Other Low Credit Risk $ 1 $ 6 $ 3 $ 3 $ 1 $ — $ 14 Average Credit Risk 1 — 1 — — — 2 High Credit Risk — — — — — — — Total $ 2 $ 6 $ 4 $ 3 $ 1 $ — $ 16 Charge-offs $ — $ — $ — $ — $ — $ — $ — Total Finance Receivables Low Credit Risk $ 134 $ 224 $ 139 $ 125 $ 60 $ 14 $ 696 Average Credit Risk 62 104 74 107 61 18 426 High Credit Risk 19 30 33 31 16 7 136 Total $ 215 $ 358 $ 246 $ 263 $ 137 $ 39 $ 1,258 Total Charge-offs $ — $ 1 $ 1 $ 5 $ 3 $ 2 $ 12 Xerox 2026 Form 10-Q 23 Table of Contents December 31, 2025 2025 2024 2023 2022 2021 Prior Total Finance Receivables United States (Direct) Low Credit Risk $ 102 $ 66 $ 48 $ 19 $ 7 $ 1 $ 243 Average Credit Risk 49 31 41 14 13 2 150 High Credit Risk 24 23 18 13 5 2 85 Total $ 175 $ 120 $ 107 $ 46 $ 25 $ 5 $ 478 Charge-offs $ — $ 1 $ 3 $ 2 $ 1 $ 2 $ 9 United States (Indirect) Low Credit Risk $ 2 $ 4 $ 10 $ 15 $ 6 $ — $ 37 Average Credit Risk 12 7 25 22 6 1 73 High Credit Risk — 8 13 5 2 — 28 Total $ 14 $ 19 $ 48 $ 42 $ 14 $ 1 $ 138 Charge-offs $ — $ — $ 4 $ 4 $ 2 $ 1 $ 11 Canada Low Credit Risk $ 31 $ 20 $ 13 $ 4 $ 1 $ — $ 69 Average Credit Risk 29 20 13 7 2 — 71 High Credit Risk 4 3 2 1 1 — 11 Total $ 64 $ 43 $ 28 $ 12 $ 4 $ — $ 151 Charge-offs $ — $ 1 $ 1 $ 1 $ — $ — $ 3 EMEA Low Credit Risk $ 135 $ 76 $ 96 $ 51 $ 14 $ 4 $ 376 Average Credit Risk 68 45 79 49 13 3 257 High Credit Risk 8 5 10 4 2 1 30 Total $ 211 $ 126 $ 185 $ 104 $ 29 $ 8 $ 663 Charge-offs $ 5 $ 3 $ 7 $ 4 $ 1 $ — $ 20 Other Low Credit Risk $ 7 $ 4 $ 3 $ 1 $ — $ — $ 15 Average Credit Risk — 1 1 — — — 2 High Credit Risk — — — — — — — Total $ 7 $ 5 $ 4 $ 1 $ — $ — $ 17 Charge-offs $ — $ — $ — $ — $ — $ — $ — Total Finance Receivables Low Credit Risk $ 277 $ 170 $ 170 $ 90 $ 28 $ 5 $ 740 Average Credit Risk 158 104 159 92 34 6 553 High Credit Risk 36 39 43 23 10 3 154 Total $ 471 $ 313 $ 372 $ 205 $ 72 $ 14 $ 1,447 Total Charge-offs $ 5 $ 5 $ 15 $ 11 $ 4 $ 3 $ 43 The aging of our receivables portfolio is based upon the number of days an invoice is past due. Receivables that are more than 90 days past due are considered delinquent. Receivable losses are charged against the allowance when management believes the uncollectibility of the receivable is confirmed and is generally based on individual credit evaluations, results of collection efforts and specific circumstances of the customer. Subsequent recoveries, if any, are credited to the allowance. We generally continue to maintain equipment on lease and provide services to customers that have invoices for finance receivables that are 90 days or more past due and, as a result of the bundled nature of billings, we also continue to accrue interest on those receivables. However, interest revenue for such billings is only recognized if collectability is deemed probable. Xerox 2026 Form 10-Q 24 Table of Contents The aging of our billed finance receivables is as follows: June 30, 2026 Current 31-90 Days Past Due >90 Days Past Due Total Billed Unbilled Total Finance Receivables >90 Days and Accruing Direct $ 15 $ 5 $ 3 $ 23 $ 382 $ 405 $ 29 Indirect 3 1 1 5 94 99 — Total United States 18 6 4 28 476 504 29 Canada 3 1 1 5 140 145 5 EMEA 6 3 1 10 583 593 19 Other — — — — 16 16 — Total $ 27 $ 10 $ 6 $ 43 $ 1,215 $ 1,258 $ 53 December 31, 2025 Current 31-90 Days Past Due >90 Days Past Due Total Billed Unbilled Total Finance Receivables >90 Days and Accruing Direct $ 18 $ 5 $ 4 $ 27 $ 451 $ 478 $ 35 Indirect 4 2 2 8 130 138 — Total United States 22 7 6 35 581 616 35 Canada 3 1 — 4 147 151 4 EMEA 8 1 1 10 653 663 17 Other — — — — 17 17 — Total $ 33 $ 9 $ 7 $ 49 $ 1,398 $ 1,447 $ 56 Sales of Finance Receivables The Company has finance receivables funding arrangements with third-party funding partners in the U.S., Canada, and in EMEA. Under these arrangements, the Company sells certain eligible pools of finance receivables. The transfers are structured to qualify for sale accounting treatment and the related receivables are derecognized from the Company's consolidated financial statements. The Company's funding partners generally do not have recourse to the Company for credit losses on the transferred receivables. In addition, under certain arrangements, the Company may transfer servicing responsibilities for funded receivables to a funding partner. In such cases, the Company pays a servicing fee related to certain retained finance receivables and may continue to service certain finance receivables under prior servicing arrangements with that funding partner for an agreed-upon fee. Finance receivable sales activity was as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Finance receivable sales - net proceeds (1) $ 80 $ 36 $ 122 $ 111 Gain on sale/Commissions (2) — 4 4 9 Servicing revenue (2) $ 2 $ 1 $ 4 $ 3 _____________ (1) Cash proceeds are reported in Net cash used in operating activities. (2) Recorded as Other revenue within Services, maintenance, rentals and other. Amounts include revenues associated with the sale of the underlying leased equipment. Xerox 2026 Form 10-Q 25 Table of Contents Note 9 – Inventories and Equipment on Operating Leases, Net The following is a summary of Inventories by major category: June 30, 2026 December 31, 2025 Finished goods $ 840 $ 802 Work-in-process 132 142 Raw materials 71 72 Total Inventories $ 1,043 $ 1,016 The transfer of equipment from our inventories to equipment subject to an operating lease is presented in our Condensed Consolidated Statements of Cash Flows in the operating activities section. Equipment on operating leases and similar arrangements consist of our equipment rented to customers and depreciated to estimated salvage value at the end of the lease term. Equipment on operating leases and the related accumulated depreciation are as follows: June 30, 2026 December 31, 2025 Equipment on operating leases $ 960 $ 979 Accumulated depreciation ( 677 ) ( 680 ) Equipment on operating leases, net $ 283 $ 299 Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 9 and $ 10 for the three months ended June 30, 2026 and 2025, respectively, and $ 17 and $ 19 for the six months ended June 30, 2026 and 2025, respectively. Note 10 – Restructuring Programs In connection with our ongoing Transformation activities, we engage in restructuring actions in order to reduce our cost structure and realign it to the changing nature of our business. Our restructuring actions are currently related to our efforts to integrate and consolidate certain operations of the legacy Xerox and Lexmark businesses following the Lexmark Acquisition in 2025, as well as our prior restructuring programs, including Reinvention (now referred to as Transformation). Our restructuring actions may also include the off-shoring and/or outsourcing of certain operations, services and other functions, exit from certain product lines and geographies, as well as reducing our real estate footprint. Restructuring and related costs, net reflect the following components: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Restructuring charges, net $ 26 $ 9 $ 71 $ 14 Asset impairment charges, net (1) ( 5 ) 2 ( 6 ) ( 4 ) Related costs, net 2 ( 1 ) 3 ( 1 ) Total Restructuring and related costs, net $ 23 $ 10 $ 68 $ 9 _____________ _ (1) Impairments for the three and six months ended June 30, 2026 and 2025, respectively, are net of cash receipts. Xerox 2026 Form 10-Q 26 Table of Contents Restructuring Charges, Net Restructuring charges, net primarily relate to the Print and Other segment for all restructuring programs, as amounts related to the IT Solutions segment were immaterial for the three and six months ended June 30, 2026. A summary of our restructuring program activity is as follows: Severance Costs Prior Actions Severance Costs Reinvention Severance Costs Integration Other Contractual Termination Costs (2) Total Balance at December 31, 2025 $ 1 $ 43 $ 77 $ 5 $ 126 Restructuring provision — — 56 — 56 Reversals of prior charges — ( 2 ) ( 9 ) — ( 11 ) Net current period charges (1) — ( 2 ) 47 — 45 Charges against reserve and currency — ( 1 ) ( 26 ) — ( 27 ) Balance at March 31, 2026 $ 1 $ 40 $ 98 $ 5 $ 144 Restructuring provision — — 31 — 31 Reversals of prior charges — — ( 5 ) — ( 5 ) Net current period charges (1) — — 26 — 26 Charges against reserve and currency — ( 3 ) ( 17 ) — ( 20 ) Balance at June 30, 2026 $ 1 $ 37 $ 107 $ 5 $ 150 _____________ _ (1) Represents net amount recognized within the Condensed Consolidated Statements of Income (Loss) for the period for restructuring charges. Reversals of prior charges primarily include net changes in estimated reserves from prior period initiatives accrued for in prior periods, including Reinvention (now referred to as Transformation) and Integration. (2) Primarily includes additional costs incurred upon the exit from our facilities, including decommissioning costs and associated contractual termination costs. We expect that the majority of these costs will be paid upon the exercise of an early termination clause in 2027 . At June 30, 2026, we expect to pay $ 78 of the restructuring reserve over the next twelve months. The following table summarizes the reconciliation to the Condensed Consolidated Statements of Cash Flows: Six Months Ended June 30, 2026 2025 Restructuring cash payments $ ( 40 ) $ ( 33 ) Effects of foreign currency and other non-cash items ( 7 ) 6 Charges against reserve and currency $ ( 47 ) $ ( 27 ) Asset Impairment Charges, Net Charges associated with asset impairments represent the write-down of the related assets to their new cost basis. Impairments are net of any potential sublease income or other recovery amounts. Asset impairment charges incurred during 2025 related to the impairment of an operating lease ROU asset, as well as the sale of a facility. Both the impairment and sale are associated with strategic actions associated with Reinvention. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Lease right of use assets (1) $ — $ — $ — $ 4 Owned assets (2) — 2 — 11 Asset impairments — 2 — 15 Less: Proceeds from the sales of owned assets (3) ( 5 ) — ( 6 ) ( 19 ) Net asset impairment (credit) charge $ ( 5 ) $ 2 $ ( 6 ) $ ( 4 ) ____________ _ (1) Primarily related to the exit and abandonment of leased facilities, net of recoveries and any potential sublease income. (2) Primarily related to the exit and abandonment of owned facilities. (3) Reflects proceeds on the sales of exited surplus facilities and land. Xerox 2026 Form 10-Q 27 Table of Contents Related Costs, Net In connection with our restructuring programs, we also incurred certain related costs as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Contractual severance costs $ 2 $ ( 1 ) $ 3 $ ( 1 ) Total $ 2 $ ( 1 ) $ 3 $ ( 1 ) For the six months ended June 30, 2026 and 2025 cash paid for restructuring related costs was $ 3 and $ 0 , respectively, and the restructuring related costs reserve was $ 4 and $ 4 at June 30, 2026 and December 31, 2025, respectively. The balance at June 30, 2026 is expected to be paid over the next twelve months. Note 11 – Supplementary Financial Information Cash, Cash Equivalents and Restricted Cash Restricted cash primarily relates to escrow cash deposits made in Brazil associated with ongoing litigation. As discussed in Note 21 - Contingencies and Litigation, various litigation matters in Brazil require us to make cash deposits to escrow as a condition of the continuing litigation. Restricted cash amounts are classified in our Condensed Consolidated Balance Sheets based on when the cash will be contractually or judicially released. Cash, cash equivalents and restricted cash amounts are as follows: June 30, 2026 December 31, 2025 Cash and cash equivalents $ 495 $ 512 Restricted cash Litigation deposits in Brazil 23 21 Other restricted cash 34 32 Total Restricted cash 57 53 Cash, cash equivalents and restricted cash $ 552 $ 565 Restricted cash is reported in the Condensed Consolidated Balance Sheets as follows: June 30, 2026 December 31, 2025 Other current assets $ 34 $ 31 Other long-term assets 23 22 Total Restricted cash $ 57 $ 53 Supplemental Cash Flow Information Summarized cash flow information is as follows: Source/(Use) Location in Statement of Cash Flows Six Months Ended June 30, 2026 2025 Provision for receivables Operating $ 17 $ 27 Provision for inventory Operating 19 21 Depreciation of buildings and equipment Operating 43 27 Depreciation and obsolescence of equipment on operating leases Operating 80 59 Amortization of internal use software Operating 18 11 Amortization of acquired intangible assets Operating 60 20 Amortization of customer contract costs (1) Operating 36 33 Cost of additions to land, buildings and equipment Investing ( 26 ) ( 9 ) Cost of additions to internal use software Investing ( 21 ) ( 30 ) Payments to acquire noncontrolling interests - Xerox Holdings Investing ( 13 ) ( 4 ) Common stock dividends - Xerox Holdings Financing ( 9 ) ( 51 ) Preferred stock dividends - Xerox Holdings Financing ( 7 ) ( 7 ) Commitment fees Financing — ( 15 ) _____________ (1) Amortization of customer contract costs is reported in (Increase) decrease in other current and long-term assets in the Condensed Consolidated Statements of Cash Flows. Refer to Note 3 - Revenue - Contract Costs for additional information. Xerox 2026 Form 10-Q 28 Table of Contents Supplier Finance Program We have a program through a financial institution that enables vendors and suppliers, at their option, to receive early payment for their invoices. All outstanding amounts related to the program are recorded within Accounts payable in our Condensed Consolidated Balance Sheets, and the associated payments are included in operating activities within our Condensed Consolidated Statements of Cash Flows. The program operates in a similar manner to a purchasing card program, however with this program we directly receive invoices associated with those vendors and suppliers participating in the program and confirm and validate those invoices and the amounts due before submitting the invoices to the financial institution for early payment at a discounted amount. The financial institution subsequently invoices us for the stated or full amount of the invoices paid early and we are required to make payment within 45 days of the statement date. The overall impact of the program generally results in paying our supplier and vendor invoices consistent with their original terms. This program is generally available to all non-inventory vendors and suppliers. Activity related to the Company's supplier finance program is as follows: 2026 2025 Balance at January 1st $ 18 $ 30 Amounts invoiced 18 22 Invoices paid ( 18 ) ( 33 ) Balance at March 31st $ 18 $ 19 Amounts invoiced 21 22 Invoices paid ( 26 ) ( 21 ) Balance at June 30th $ 13 $ 20 Note 12 – Debt Joint Venture Financing As discussed in Note 1 - Basis of Presentation, on February 17, 2026, Xerox and certain investors entered a joint venture arrangement pursuant to which the investors funded $ 405 aggregate principal amount of senior secured five-year Term Loans to, and purchased $ 45 of Class A Units from, XRX Brandco Holdings LLC (IPCo Holdings) which is a consolidated VIE. The Class A Units have a mandatory cumulative redemption expected in five years and as a result we have classified these instruments, as well as the Term Loans, as indebtedness totaling approximately $ 450 in the Condensed Consolidated Balance Sheet. Transaction costs of $ 46 were paid at closing resulting in net proceeds of $ 404 . The costs include amounts paid to lenders at closing representing transaction fees associated with underwriting, structuring, and committing capital, legal fees in connection with the debt financing, and advisory fees, as well as debt discounts. During the second quarter 2026, additional transaction costs of $ 8 for legal fees and expenses related to the joint venture arrangement were incurred. Transaction costs have been accounted for as debt issuance cost and discounts and will be amortized to interest expense over the five-year term. Amounts paid for the formation of the Joint Venture and for other general activities were not significant. The Term Loans are guaranteed by a wholly owned subsidiary of IPCo Holdings, XRX Brandco LLC (IPCo) whose assets include royalty fees collected on the Contributed IP. The Term Loans bear interest at a per annum rate equal to the term SOFR rate, with a floor of 3.000 % plus a margin of 8.125 %. The Class A Units carry a per annum rate equal to the term SOFR rate, with a floor of 3.000 % plus a margin of 11.875 %. Both the Term Loans and the Class A Units amortize at a quarterly rate of 4.50 % of the aggregate amount outstanding as of the Closing Date, with such amounts payable in equal installments, commencing following the fiscal quarter ending September 30, 2026. The remaining outstanding balance is due in full at maturity. This indebtedness is subject to customary voluntary and mandatory prepayment provisions, including requirements to prepay with the proceeds of certain indebtedness and excess cash flow. The Credit Agreement contains customary affirmative covenants, representations and warranties and events of default for borrowers and facilities of this type, including, among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other indebtedness and insolvency events. In addition, the Credit Agreement includes customary negative covenants for borrowers and facilities of this type that, among other things, restrict the ability of IPCo Holdings and its subsidiaries to pay dividends or make other distributions, make investments, incur additional debt and engage in certain other activities. Xerox 2026 Form 10-Q 29 Table of Contents Early Redemptions of Debt During 2026, the Company repurchased approximately $ 194 of its 5.50 % Senior Unsecured Notes due August 2028 and $ 6 of its 13.50 % Senior Secured Notes due 2031 for an aggregate purchase price of approximately $ 101 . In connection with these transactions, a net gain was recognized on the early extinguishment of the debt of approximately $ 39 and $ 95 for the three and six months ended June 30, 2026, respectively, which was recorded to Other expenses (income), net in the Condensed Consolidated Statement of Income (Loss). Financing Liability – Tariff Receivables Monetization On February 20, 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). In addition, on March 4, 2026, the U.S. Court of International Trade (CIT) ruled that U.S. Customs and Border Protection (CBP) must return the IEEPA tariffs that were collected from February 4, 2025 through February 24, 2026. On April 20, 2026, the CBP launched the Consolidated Administration and Processing of Entries (CAPE) system to facilitate returns of previously paid tariffs, and at that time the Company determined that the return of the IEEPA tariffs was estimable and probable, and tariff receivables were recorded within the Condensed Consolidated Balance Sheet in Other current assets. A corresponding reduction to Cost of Sales of $ 105 was recorded in the Condensed Consolidated Statement of Income (Loss) for the three and six months ended June 30, 2026, respectively. The accounting for the return of the IEEPA tariff applies the loss recovery model, and the receivables represents recovery of tariff costs that were previously paid. During the second quarter of 2026, the Company entered into a sale agreement to sell its rights to certain tariff receivables with a carrying amount of $ 105 , for cash consideration of approximately $ 80 . The cash consideration received is reported as a financing transaction in the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2026. Imputed interest expense of approximately $ 25 will be recorded to Other expenses (income), net through December 31, 2026, our current estimate of when we will receive all of the refunds and subsequently transfer those refunds to the purchaser. Any cash received associated with the tariff receivable will be deposited and held in a restricted cash account until repayment is made to the purchaser. At June 30, 2026, a liability of $ 90 was recorded on the Condensed Consolidated Balance Sheet in Financing liability – tariff receivables monetization, reflecting the cash consideration received and the accrual of imputed interest. Capped Calls In connection with the issuance of the 2030 3.75 % Convertible Senior Notes in 2024 (the 2030 Convertible Notes), the Company entered into privately negotiated capped call transactions (the Capped Calls) with certain of the initial purchasers of the 2030 Convertible Notes or their respective affiliates (the option counterparties) at a cost of approximately $ 23 . The Capped Calls cover, subject to anti-dilution adjustments, the number of shares of the Company's common stock initially underlying the 2030 Convertible Notes. By entering into the Capped Calls, we expect to reduce the potential dilution to the Company's common stock (or, in the event a conversion of the 2030 Convertible Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion of the 2030 Convertible Notes the trading price of our common stock price exceeds the conversion price of the 2030 Convertible Notes. The initial cap price of the Capped Calls was approximately $ 28.34 per share, which represents a premium of 70 % over the last reported sale price of our common stock of $ 16.67 on the NASDAQ Stock Exchange on March 6, 2024, and is subject to certain adjustments under the terms of the Capped Calls. Under the terms of the Capped Call, a dividend payment below the Company’s $ 1.00 annual dividend at the time of the purchase of the Capped Call could result in an adjustment to the cap price. This adjustment is intended to preserve the original economics of the Capped Call and is permissible under ASC 815-40, and therefore, the Capped Call continues to meet the conditions for equity classification. The Capped Call cap price was reduced to $ 27.51 per share as a result of the reduction of our annual dividend from $ 1.00 to $ .50 in the first quarter of 2025. In the second quarter of 2025, the annual dividend was reduced to $ .10 per share. The current Capped Call cap price in 2025 was reduced to $ 20.84 per share, which is the same as the conversion price of the 2030 Convertible Notes. Revolving Credit Facility Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, have a revolving credit facility (the ABL Facility), with Citibank, N.A., as administrative agent and collateral agent (the ABL Agent) and several lenders including Citibank N.A. The aggregate outstanding principal amount of the ABL Facility is payable in full at maturity on the earlier of May 22, 2028, and a date that is 91 days prior to the final scheduled maturity date of any Material Springer Debt (as defined in the ABL Facility credit agreement), and there are no scheduled principal Xerox 2026 Form 10-Q 30 Table of Contents payments prior to maturity. The ABL Facility has commitments from the lenders of $ 425 . In May 2026, the Company entered into Amendment No. 3 to the Credit Agreement which, among other things, increased the letter of credit sublimit from $ 100 to $ 125 . As of August 6, 2026, and based on our June availability calculation, we have availability of $ 388 before letters of credit issued under the ABL Facility of approximately $ 112 . There are no current borrowings outstanding. Accordingly, our net availability is approximately $ 276 . 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. Xerox Holdings Corporation/Xerox Corporation Intercompany Loan At June 30, 2026 and December 31, 2025, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 1,682 and $ 1,993 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 28 and $ 36 , respectively. Interest Expense and Income Interest expense and income were as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Equipment financing interest (1) $ 18 $ 23 $ 37 $ 45 Non-financing interest expense (2) 100 55 184 88 Interest expense $ 118 $ 78 $ 221 $ 133 Financing income (3) $ 25 $ 32 $ 52 $ 65 Other interest income (3) 3 6 6 8 Interest income $ 28 $ 38 $ 58 $ 73 ____________ (1) Equipment financing interest is included in Cost of services, maintenance, rentals and other in the Condensed Consolidated Statements of Income (Loss). (2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 35 and $ 29 for the three months ended June 30, 2026 and 2025, respectively and $ 72 and $ 59 for the six months ended June 30, 2026 and 2025. (3) Financing income is included in Services, maintenance, rentals and other, and other interest income is included in Other expenses (income), net, in the Condensed Consolidated Statements of Income (Loss). Note 13 – Financial Instruments Interest Rate Risk Management We use interest rate swap and interest rate cap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges, or non-designated hedges depending on the nature of the risk being hedged. We had no fair value hedges for the three and six months ended June 30, 2026 and 2025, respectively. Foreign Exchange Risk Management We are a global company and we are exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchased option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities: • Foreign currency-denominated assets and liabilities • Forecasted purchases and sales in foreign currency At June 30, 2026 and December 31, 2025, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 2,509 and $ 2,656 respectively, with terms of less than 12 months. At June 30, 2026, approximately 93 % of the contracts mature within three months, 3 % mature in three to six months and 4 % in six to twelve months. Xerox 2026 Form 10-Q 31 Table of Contents Foreign Currency Cash Flow Hedges We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases and certain revenue transactions that have a high probability of occurring. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. The amount of ineffectiveness recorded in the Condensed Consolidated Statements of Income (Loss) for these designated cash flow hedges was not material for the three and six months ended June 30, 2026 and 2025, respectively. The net asset (liability) fair value of these contracts was $ 3 and $( 4 ) as of June 30, 2026 and December 31, 2025, respectively. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities. Summary of Derivative Instruments Gains (Losses) Derivative gains and (losses) affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains (losses). Designated Derivative Instruments Gains (Losses) The following table provides a summary of gains (losses) on derivative instruments in cash flow hedging relationships: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Derivative Loss Recognized in OCI (Effective Portion) Foreign exchange contracts - forwards and options $ 2 $ ( 5 ) $ 3 $ ( 5 ) Interest rate contracts — ( 1 ) — ( 4 ) Total $ 2 $ ( 6 ) $ 3 $ ( 9 ) Location of Derivative Gains (Losses) Reclassified from AOCL to Income (Effective Portion) Cost of sales $ ( 2 ) $ ( 1 ) $ ( 5 ) $ ( 1 ) Total $ ( 2 ) $ ( 1 ) $ ( 5 ) $ ( 1 ) At June 30, 2026, net after-tax gain of $ 4 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity. Refer to Note 14 - Fair Value of Financial Assets and Liabilities for additional information related to the fair value of our derivative instruments. Credit Support Annex The Company may enter into derivative contracts with derivative counterparties that contain a provision to post collateral to the counterparties when these contracts are in a net liability position. At June 30, 2026, the Company had collateral of $ 1 posted due to this provision. Non-Designated Derivative Instruments Gains (Losses) Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. They are not designated as hedges since there is a natural offset for the remeasurement of the underlying foreign currency-denominated asset or liability. The net (liability) asset fair value of these contracts was $( 14 ) and $ 2 as of June 30, 2026 and December 31, 2025, respectively. The following table provides a summary of gains and (losses) on non-designated derivative instruments: Derivatives NOT Designated as Hedging Instruments Location of Derivative Gain (Loss) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Foreign exchange contracts – forwards Other expenses (income), net – Currency (losses) gains, net $ ( 18 ) $ 3 $ ( 33 ) $ 9 Currency losses, net were $ 8 and $ 1 for the three months ended June 30, 2026 and 2025, respectively and $ 13 and $ 1 for the six months ended June 30, 2026 and 2025, respectively. Net currency gains and losses include the mark-to-market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives as well as the remeasurement of foreign currency-denominated assets and liabilities and are included in Other expenses (income), net. Xerox 2026 Form 10-Q 32 Table of Contents Note 14 – Fair Value of Financial Assets and Liabilities The following table represents assets and liabilities measured at fair value on a recurring basis. With the exception of the warrants, whose basis for the measurement of fair value is Level 1 - Quoted Prices, the basis for measurement at fair value for all other assets and liabilities is Level 2 – Significant Other Observable Inputs. June 30, 2026 December 31, 2025 Assets Derivatives (1) $ 12 $ 8 Deferred compensation plan investments in mutual funds 13 12 Total $ 25 $ 20 Liabilities Derivatives (1) $ 22 $ 10 Warrant (2) 21 — Deferred compensation plan liabilities 12 11 Total $ 55 $ 21 ____________ (1) Includes foreign currency derivative contracts. Refer to Note 13 - Financial Instruments for additional information regarding these derivatives. (2) Refer to Note 16 - Shareholders' Equity of Xerox Holdings for additional information regarding the Warrant Dividend. We utilize the income approach to measure the fair value for our derivative assets and liabilities. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices. The fair value of the warrant liability is determined using the market approach in accordance with ASC 820, and is based on quoted market prices for the identical warrants in an active market at the measurement date, which are derived from observable market prices rather than a valuation model. Accordingly, no unobservable inputs or management assumptions are used in determining the fair value. Fair value for our deferred compensation plan investments in mutual funds is based on quoted market prices for those funds. Fair value for deferred compensation plan liabilities is based on the fair value of investments corresponding to employees’ investment selections. Summary of Other Financial Assets and Liabilities The estimated fair values of our other financial assets and liabilities were as follows: June 30, 2026 December 31, 2025 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 495 $ 495 $ 512 $ 512 Accounts receivable, net 1,185 1,185 1,122 1,122 Short-term debt and current portion of long-term debt (1) 70 74 231 236 Long-term Debt Xerox Holdings Corporation 1,670 845 1,872 800 Xerox Corporation 2,096 1,613 2,142 1,676 Xerox - Other Subsidiaries (2) 387 391 2 2 Long-term debt $ 4,153 $ 2,849 $ 4,016 $ 2,478 ____________ (1) Includes $ 12 and $ 121 of Xerox Corporation related party debt for the period ended June 30, 2026 and December 31, 2025 respectively. (2) Represents subsidiaries of Xerox Corporation The fair value amounts for Cash and cash equivalents and Accounts receivable, net, approximate carrying amounts due to the short maturities of these instruments. The fair value of Short-term debt, including the current portion of long-term debt, and Long-term debt was estimated based on the current rates offered to us for debt of similar maturities (Level 2). The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at such date. Xerox 2026 Form 10-Q 33 Table of Contents Note 15 – Employee Benefit Plans The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows: Three months ended June 30, Pension Benefits U.S. Plans Non-U.S. Plans Retiree Health Components of Net Periodic Benefit Costs: 2026 2025 2026 2025 2026 2025 Service cost $ — $ — $ 2 $ 1 $ 1 $ — Interest cost (1) 32 29 50 49 2 2 Expected return on plan assets (1) ( 27 ) ( 22 ) ( 53 ) ( 53 ) — — Recognized net actuarial loss (gain) (1) 6 4 15 15 ( 3 ) ( 3 ) Amortization of prior service cost (credit) (1) — — 3 2 ( 3 ) ( 3 ) Other (1) — — ( 1 ) — — — Defined benefit plans 11 11 16 14 ( 3 ) ( 4 ) Defined contribution plans 5 ( 3 ) 6 4 n/a n/a Net Periodic Benefit Cost (Credit) $ 16 $ 8 $ 22 $ 18 $ ( 3 ) $ ( 4 ) Six Months Ended June 30, Pension Benefits U.S. Plans Non-U.S. Plans Retiree Health Components of Net Periodic Benefit Costs: 2026 2025 2026 2025 2026 2025 Service cost $ — $ — $ 4 $ 2 $ 1 $ — Interest cost (1) 64 57 101 95 4 4 Expected return on plan assets (1) ( 54 ) ( 44 ) ( 107 ) ( 102 ) — — Recognized net actuarial loss (gain) (1) 11 9 30 27 ( 5 ) ( 6 ) Amortization of prior service cost (credit) (1) — — 5 4 ( 6 ) ( 6 ) Other (1) — — ( 1 ) — — — Net Periodic Defined Benefit Cost (Credit) 21 22 32 26 ( 6 ) ( 8 ) Defined contribution plans 10 — 12 10 n/a n/a Total Employee Benefit Plans Cost (Credit) $ 31 $ 22 $ 44 $ 36 $ ( 6 ) $ ( 8 ) _____________ (1) Included in Other expenses (income), net in the Consolidated Statements of Income (Loss). Contributions The following table summarizes cash contributions to our defined benefit pension plans and retiree health benefit plans: Six Months Ended June 30, Year Ended December 31, 2026 (1) 2025 Estimated 2026 (1) 2025 U.S. plans $ 52 $ 44 $ 115 $ 112 Non-U.S. plans 11 12 25 28 Total Pension plans 63 56 140 140 Retiree Health 9 11 20 21 Total Retirement plans $ 72 $ 67 $ 160 $ 161 _____________ (1) Contributions amounts for the six months ended June 30, 2026, as well as full year estimated contributions for 2026, include legacy Lexmark for the entire period. Contributions for 2025 reflect those contributions made for legacy Lexmark beginning July 1, 2025 , the date of the Lexmark Acquisition. Refer to Note 6 - Acquisition for additional information regarding the Lexmark Acquisition. Approximately $ 95 of the estimated 2026 contributions for our U.S. plans are for our tax-qualified defined benefit plans. Xerox 2026 Form 10-Q 34 Table of Contents Note 16 – Shareholders’ Equity of Xerox Holdings (shares in thousands) The shareholders' equity information presented below reflects the consolidated activity of Xerox Holdings. Common Stock (1) Additional Paid-in Capital Retained Earnings AOCL (2) Xerox Holdings Shareholders’ Equity Non-controlling Interests Total Equity Balance at March 31, 2026 $ 131 $ 1,192 $ 2,320 $ ( 3,344 ) $ 299 $ 6 $ 305 Comprehensive income, net — — 13 10 23 — 23 Cash dividends declared - common (3) — — ( 4 ) — ( 4 ) — ( 4 ) Cash dividends declared - preferred (4) — — ( 3 ) — ( 3 ) — ( 3 ) Stock option and incentive plans, net — 8 — — 8 — 8 Transactions with noncontrolling interests — — — — — 1 1 Balance at June 30, 2026 $ 131 $ 1,200 $ 2,326 $ ( 3,334 ) $ 323 $ 7 $ 330 Common Stock (1) Additional Paid-in Capital Retained Earnings AOCL (2) Xerox Holdings Shareholders’ Equity Non- controlling Interests Total Equity Balance at March 31, 2025 $ 126 $ 1,141 $ 3,403 $ ( 3,617 ) $ 1,053 $ 4 $ 1,057 Comprehensive (loss) income, net — — ( 106 ) 169 63 — 63 Cash dividends declared - common (3) — — ( 4 ) — ( 4 ) — ( 4 ) Cash dividends declared - preferred (4) — — ( 3 ) — ( 3 ) — ( 3 ) Stock option and incentive plans, net — 13 — — 13 — 13 Transactions with noncontrolling interests — — — — — 1 1 Balance at June 30, 2025 $ 126 $ 1,154 $ 3,290 $ ( 3,448 ) $ 1,122 $ 5 $ 1,127 Common Stock (1) Additional Paid-in Capital Retained Earnings AOCL (2) Xerox Holdings Shareholders’ Equity Non-controlling Interests Total Equity Balance at December 31, 2025 $ 128 $ 1,183 $ 2,444 $ ( 3,311 ) $ 444 $ 5 $ 449 Comprehensive (loss), net — — ( 92 ) ( 23 ) ( 115 ) — ( 115 ) Cash dividends declared - common (3) — — ( 7 ) — ( 7 ) — ( 7 ) Cash dividends declared - preferred (4) — — ( 7 ) — ( 7 ) — ( 7 ) Distribution of stock warrants (5) — — ( 12 ) — ( 12 ) — ( 12 ) Stock option and incentive plans, net 3 17 — — 20 — 20 Transactions with noncontrolling interests — — — — — 2 2 Balance at June 30, 2026 $ 131 $ 1,200 $ 2,326 $ ( 3,334 ) $ 323 $ 7 $ 330 Common Stock (1) Additional Paid-in Capital Retained Earnings AOCL (2) Xerox Holdings Shareholders’ Equity Non-controlling Interests Total Equity Balance at December 31, 2024 $ 124 $ 1,137 $ 3,514 $ ( 3,699 ) $ 1,076 $ 4 $ 1,080 Comprehensive (loss) income, net — — ( 196 ) 251 55 — 55 Cash dividends declared - common (3) — — ( 21 ) — ( 21 ) — ( 21 ) Cash dividends declared - preferred (4) — — ( 7 ) — ( 7 ) — ( 7 ) Stock option and incentive plans, net 2 17 — — 19 — 19 Transactions with noncontrolling interests — — — — — 2 2 Distributions to noncontrolling interests — — — — — ( 1 ) ( 1 ) Balance at June 30, 2025 $ 126 $ 1,154 $ 3,290 $ ( 3,448 ) $ 1,122 $ 5 $ 1,127 ____________ (1) Common Stock has a par value of $ 1 per share. (2) Refer to Note 18 - Other Comprehensive Income (Loss) for the components of AOCL. (3) Cash dividends declared on common stock for the three months ended June 30, 2026 and 2025 were $ 0.025 per share and $ 0.025 per share, respectively and $ 0.05 per share and $ 0.15 per share for the six months ended June 30, 2026 and 2025, respectively. (4) Cash dividends declared on preferred stock for the three and six months ended June 30, 2026 and 2025 were $ 20.00 and $ 40.00 per share, respectively. (5) Refer to the Warrant Dividend section below for additional information. Xerox 2026 Form 10-Q 35 Table of Contents Common Stock The following is a summary of the changes in common stock shares: Common Stock Shares Balance at December 31, 2025 128,044 Stock based compensation plans, net 2,732 Balance at March 31, 2026 130,776 Stock based compensation plans, net 465 Exercise of warrants 2 Balance at June 30, 2026 131,243 Warrant Dividend In January 2026 the Board of Directors of Xerox Holdings Corporation (Xerox Holdings) approved a pro-rata distribution of warrants to holders (collectively, the Eligible Holders) of Xerox’s common stock, par value $ 1.00 per share (the Common Stock), Series A Convertible Perpetual Voting Preferred Stock (the Series A Preferred Stock) and 3.75 % Convertible Senior Notes due 2030 (the Convertible Notes). On February 12, 2026, 77,271,234 warrants were issued and distributed, at no cost, to the Eligible Holders of record as of the close of business on February 9, 2026. Each holder of record of the Common Stock as of the Record Date received one warrant for every two shares of Xerox Holdings common stock held, rounded down to the nearest whole warrant. Holders of record of the Series A Preferred Stock and the Convertible Notes received warrants based on the same ratio in the manner determined by the charter governing the Series A Preferred Stock and the indenture governing the Convertible Notes, respectively. Each warrant entitles the holder to purchase one share of Common Stock (the Warrant Exercise Rate) at an exercise price of $ 8.00 per share (the Warrant Exercise Price), subject to the terms and conditions of the warrant agreement, and may be exercised (a) for cash, at any time prior to expiration of the warrants, and (b) using designated outstanding Xerox debt securities (the Designated Notes) at any time prior to the earlier of the expiration of the warrants and the termination of the right to use Designated Notes to exercise warrants. Xerox Holdings Corporation may also elect, in its sole and absolute discretion, to remove one or more or all series of its or Xerox Corporation’s notes from being “Designated Notes,” by giving notice to holders of warrants by way of press release. Such redesignation shall only be effective 20 consecutive Business Days from (and including) the date of publication of notice. The Warrant Exercise Rate is subject to certain customary anti-dilution adjustments as set forth in the warrant agreement and Xerox Holdings Corporation’s right to voluntarily increase the Warrant Exercise Rate in its sole and absolute discretion from time to time. The Warrant Exercise Price is subject to Xerox Holdings Corporation’s right to voluntarily decrease the Warrant Exercise Price in its sole and absolute discretion from time to time. The warrants have an expiration date of two years from the distribution date, unless an Early Expiration Price Condition Date (as defined below) is met, in which case the expiration will be accelerated. The warrants will be subject to early expiration if the volume-weighted average price of Xerox common stock equals or exceeds 100 % of the then-applicable warrant exercise price for 20 trading days within any 30 consecutive trading day period (such final day, the Early Expiration Price Condition Date). If this condition is met, the warrants will expire at 5:00 p.m. New York City time on the business day immediately following the Early Expiration Price Condition Date or such other date as Xerox Holdings Corporation may elect in accordance with the warrant agreement. The warrants are classified as derivative liabilities and are remeasured at fair value at each reporting date. Changes in the fair value of the warrant liability are recognized in Other expenses (income), net in the Condensed Consolidated Statements of Income (Loss). On the date of issuance, a warrant liability of $ 12 was recognized in Other long-term liabilities in the Condensed Consolidated Balance Sheet. For the three and six months ended June 30, 2026, the Company recorded expense of $ 14 and $ 9 , respectively. At June 30, 2026, the liability included in Other long-term liabilities was $ 21 . Xerox 2026 Form 10-Q 36 Table of Contents Note 17 – Shareholder's Equity of Xerox The shareholder's equity information presented below reflects the consolidated activity of Xerox. Additional Paid-in Capital Retained Earnings AOCL (1) Xerox Shareholder's Equity Non- controlling Interests Total Equity Balance at March 31, 2026 $ 3,491 $ 336 $ ( 3,344 ) $ 483 $ 6 $ 489 Comprehensive income, net — 16 10 26 — 26 Dividends declared to parent — ( 7 ) — ( 7 ) — ( 7 ) Transfers from parent 14 — — 14 — 14 Investment from noncontrolling interests — — — — 1 1 Balance at June 30, 2026 $ 3,505 $ 345 $ ( 3,334 ) $ 516 $ 7 $ 523 Additional Paid-in Capital Retained Earnings AOCL (1) Xerox Shareholder's Equity Non- controlling Interests Total Equity Balance at March 31, 2025 $ 3,474 $ 1,397 $ ( 3,617 ) $ 1,254 $ 4 $ 1,258 Comprehensive (loss) income, net — ( 104 ) 169 65 — 65 Dividends declared to parent — ( 6 ) — ( 6 ) — ( 6 ) Transfers to parent ( 6 ) — — ( 6 ) — ( 6 ) Transactions with noncontrolling interests — — — — 1 1 Balance at June 30, 2025 $ 3,468 $ 1,287 $ ( 3,448 ) $ 1,307 $ 5 $ 1,312 Additional Paid-in Capital Retained Earnings AOCL (1) Xerox Shareholder's Equity Non- controlling Interests Total Equity Balance at December 31, 2025 $ 3,492 $ 448 $ ( 3,311 ) $ 629 $ 5 $ 634 Comprehensive (loss), net — ( 89 ) ( 23 ) ( 112 ) — ( 112 ) Dividends declared to parent — ( 14 ) — ( 14 ) — ( 14 ) Transfers from parent 13 — — 13 — 13 Transactions with noncontrolling interests — — — — 2 2 Balance at June 30, 2026 $ 3,505 $ 345 $ ( 3,334 ) $ 516 $ 7 $ 523 Additional Paid-in Capital Retained Earnings AOCL (1) Xerox Shareholder's Equity Non- controlling Interests Total Equity Balance at December 31, 2024 $ 3,487 $ 1,504 $ ( 3,699 ) $ 1,292 $ 4 $ 1,296 Comprehensive (loss) income, net — ( 191 ) 251 60 — 60 Dividends declared to parent — ( 26 ) — ( 26 ) — ( 26 ) Transfers to parent ( 19 ) — — ( 19 ) — ( 19 ) Transactions with noncontrolling interests — — — — 2 2 Distributions to noncontrolling interests — — — — ( 1 ) ( 1 ) Balance at June 30, 2025 $ 3,468 $ 1,287 $ ( 3,448 ) $ 1,307 $ 5 $ 1,312 _____________ (1) Refer to Note 18 - Other Comprehensive Income (Loss) for the components of AOCL. Xerox 2026 Form 10-Q 37 Table of Contents Note 18 – Other Comprehensive Income (Loss) Other Comprehensive Income (Loss) is comprised of the following: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Pre-tax Net of Tax Pre-tax Net of Tax Pre-tax Net of Tax Pre-tax Net of Tax Translation Adjustments Gains (Losses) $ 1 $ 1 $ 229 $ 229 $ ( 76 ) $ ( 76 ) $ 334 $ 334 Unrealized Gains (Losses) Changes in fair value of cash flow hedges gains (losses) 2 2 ( 6 ) ( 5 ) 3 3 ( 9 ) ( 7 ) Changes in cash flow hedges reclassed to earnings (1) 2 2 1 1 5 5 1 1 Net Unrealized Gains (Losses) 4 4 ( 5 ) ( 4 ) 8 8 ( 8 ) ( 6 ) Defined Benefit Plans (Losses) Gains Net actuarial/prior service (losses) gains ( 8 ) ( 8 ) 1 1 ( 7 ) ( 7 ) 1 — Prior service amortization (2) — — ( 1 ) — ( 1 ) ( 1 ) ( 2 ) — Actuarial loss amortization/settlement (2) 18 17 15 13 36 34 30 27 Other (losses) gains (3) ( 5 ) ( 4 ) ( 70 ) ( 70 ) 18 19 ( 104 ) ( 104 ) Changes in Defined Benefit Plans Gains (Losses) 5 5 ( 55 ) ( 56 ) 46 45 ( 75 ) ( 77 ) Other Comprehensive Income (Loss) $ 10 $ 10 $ 169 $ 169 $ ( 22 ) $ ( 23 ) $ 251 $ 251 ____________ (1) Reclassified to Cost of sales and interest expense - refer to Note 13 - Financial Instruments for additional information regarding our cash flow hedges. (2) Reclassified to Total Net Periodic Benefit Cost - refer to Note 15 - Employee Benefit Plans for additional information. (3) Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits in AOCL. Accumulated Other Comprehensive Loss (AOCL) AOCL is comprised of the following: June 30, 2026 December 31, 2025 Cumulative translation adjustments $ ( 1,937 ) $ ( 1,861 ) Other unrealized gains (losses), net 4 ( 4 ) Benefit plans net actuarial losses and prior service credits ( 1,401 ) ( 1,446 ) Total Accumulated Other Comprehensive Loss $ ( 3,334 ) $ ( 3,311 ) Xerox 2026 Form 10-Q 38 Table of Contents Note 19 – Income Taxes Second quarter 2026 effective tax rate was 58.1 % and resulted in tax expense of $ 18 . This rate was higher than the U.S. federal statutory tax rate of 21.0% primarily due to Xerox's inability to benefit from certain current year losses and expenses, as well as the geographical mix of earnings. Second quarter 2025 effective tax rate was ( 76.7 )% and resulted in tax expense of $ 46 on a pre-tax (loss). This rate was higher than the U.S. federal statutory tax rate of 21.0%, primarily due to not benefitting from certain current year losses and expenses, as well as the geographical mix of earnings. The effective tax rate for the six months ended June 30, 2026 was ( 119.0 )% and resulted in tax expense of $ 50 on a pre-tax (loss). This rate was higher than the U.S. federal statutory tax rate of 21.0% primarily due to Xerox's inability to benefit from certain current year losses and expenses, as well as the geographical mix of earnings. The effective tax rate for the six months ended June 30, 2025 was ( 54.3 )% and resulted in tax expense of $ 69 on a pre-tax (loss). This rate was 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 from certain current year losses and expenses and the geographical mix of earnings. The effective tax rate is based on nonrecurring events as well as recurring factors, including the taxation of foreign income. In addition, the effective tax rate will change based on discrete or other nonrecurring events that may not be predictable. Xerox 2026 Form 10-Q 39 Table of Contents Note 20 – Income (Loss) per Share (shares in thousands) The following table sets forth the computation of basic and diluted income (loss) per share of Xerox Holdings Corporation's common stock: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Income (Loss) per Share Net Income (Loss) $ 13 $ ( 106 ) $ ( 92 ) $ ( 196 ) Accrued dividends on preferred stock ( 3 ) ( 3 ) ( 7 ) ( 7 ) Adjusted Net income (loss) available to common shareholders $ 10 $ ( 109 ) $ ( 99 ) $ ( 203 ) Weighted average common shares outstanding 130,895 125,791 129,820 125,452 Basic Earnings (Loss) per Share $ 0.07 $ ( 0.87 ) $ ( 0.77 ) $ ( 1.62 ) Diluted Earnings (Loss) per Share: Net Income (Loss) $ 13 $ ( 106 ) $ ( 92 ) $ ( 196 ) Accrued dividends on preferred stock ( 3 ) ( 3 ) ( 7 ) ( 7 ) Adjusted Net income (loss) available to common shareholders $ 10 $ ( 109 ) $ ( 99 ) $ ( 203 ) Weighted average common shares outstanding 130,895 125,791 129,820 125,452 Common shares issuable with respect to: Stock options — — — — Restricted stock and performance shares 3,893 — — — Convertible preferred stock — — — — Adjusted weighted average common shares outstanding 134,788 125,791 129,820 125,452 Diluted Earnings (Loss) per Share $ 0.07 $ ( 0.87 ) $ ( 0.77 ) $ ( 1.62 ) The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive: Stock options 119 132 119 132 Restricted stock and performance shares 17,927 18,522 21,820 18,522 Convertible preferred stock 6,742 6,742 6,742 6,742 Convertible notes 19,196 19,196 19,196 19,196 Warrants 82,464 — 82,464 — Total Anti-Dilutive Securities 126,448 44,592 130,341 44,592 Dividends per Common Share $ 0.025 $ 0.025 $ 0.050 $ 0.150 Xerox 2026 Form 10-Q 40 Table of Contents Note 21 – Contingencies and Litigation Legal Matters We are involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental entity contracting; servicing and procurement law; intellectual property law; environmental law; employment law; the Employee Retirement Income Security Act (ERISA); and other laws and regulations. We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs. Brazil Contingencies Our Brazilian operations have received or been the subject of numerous governmental assessments related to indirect and other taxes. The tax matters principally relate to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals and gross revenue taxes. We are disputing these tax matters and intend to vigorously defend our positions. Based on the opinion of legal counsel and current reserves for those matters deemed probable of loss, we do not believe that the ultimate resolution of these matters will materially impact our results of operations, financial position or cash flows. Below is a summary of our Brazilian tax contingencies: June 30, 2026 December 31, 2025 Tax contingency - unreserved $ 376 $ 338 Escrow cash deposits 21 20 Surety bonds 97 115 Letters of credit — 1 Liens on Brazilian assets — — The increase in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily due to currency and adjustments to ongoing cases, as well as interest, all of which was partially offset by the closed cases. With respect to the unreserved tax contingency, the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the Company. In connection with the above proceedings, customary local regulations may require us to make escrow cash deposits or post other security of up to half of the total amount in dispute, as well as, additional surety bonds and letters of credit, which include associated indexation. Generally, any escrowed amounts would be refundable and any liens on assets would be removed to the extent the matters are resolved in our favor. We are also involved in certain disputes with contract and former employees. Exposures related to labor matters are not material for the periods presented. We routinely assess all these matters as to the probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable. Litigation We are engaged in numerous legal actions arising in the ordinary course of our business. While there can be no assurance, as of June 30, 2026, we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows. Guarantees We have issued or provided approximately $ 282 of guarantees as of June 30, 2026 in the form of letters of credit or surety bonds issued to i) support certain insurance programs; ii) support our obligations related to the Brazil contingencies; iii) support our obligations related to our U.K. pension plans; and iv) support certain contracts, primarily with public sector customers, which require us to provide a surety bond as a guarantee of our performance of contractual obligations. In general, we would only be liable for the amount of these guarantees in the event we, or one of our direct or indirect subsidiaries whose obligations we have guaranteed, defaulted in performing our obligations under each contract; the probability of which we believe is remote. We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support. Xerox 2026 Form 10-Q 41 Table of Contents