Xerox Holdings Corp 10-Q

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Throughout the Management’s Discussion and Analysis (MD&A) that follows, 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. Xerox Holdings' primary direct operating subsidiary is Xerox and Xerox reflects nearly all of Xerox Holdings' operations. Accordingly, the following MD&A primarily focuses on the operations of Xerox and is intended to help the reader understand Xerox's business and its results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, the Condensed Consolidated Financial Statements and the accompanying notes. Throughout this MD&A, references are made to various notes in the Condensed Consolidated Financial Statements which appear in Item 1 of this combined Quarterly Report on Form 10-Q (this Form 10-Q), and the information contained in such notes is incorporated by reference into the MD&A in the places where such references are made. Xerox Holdings' other direct subsidiary is Xerox Ventures LLC, which holds an investment in Myriad Ventures Fund I LP (Myriad). Myriad is fully consolidated by Xerox Holdings. At June 30, 2026 and December 31, 2025 investments in Myriad were $50 million and $41 million, respectively. For ease of discussion, the following MD&A includes the results of Xerox Ventures LLC as they are immaterial to earnings and the balance sheet. Our results include Lexmark International II, LLC (Lexmark) from July 1, 2025, the effective date of the Lexmark Acquisition. In order to provide a clearer comparison of our results to the prior year, we are also providing a discussion and analysis on a pro forma basis. See the “Pro Forma Basis” section below for further explanation and discussion of pro forma results. In addition, the following discussion includes references to "legacy Xerox", which reflects the financial results of Xerox, excluding the impact of the Lexmark Acquisition, as applicable. Currency Impact To understand the trends in the business, we believe that it is helpful to analyze the impact of changes in the translation of foreign currencies into U.S. Dollars on revenue and expenses. We refer to this analysis as "constant currency", "currency impact" or "the impact from currency". This impact is calculated by translating current period activity in local currency using the comparable prior year period's currency translation rate. This impact is calculated for all countries where the functional currency is the local country currency. We do not hedge the translation effect of revenues or expenses denominated in currencies where the local currency is the functional currency. Management believes the constant currency measure provides an additional perspective on revenue trends. Currency impact can be determined as the difference between actual growth rates and constant currency growth rates. Overview In the second quarter 2026, overall market trends remained stable compared to the prior year, with demand broadly consistent with recent quarters. The Supreme Court ruling on IEEPA tariffs provided a meaningful benefit to our cost structure in the second quarter 2026, which we recognized as a receivable and subsequently sold for $80 million in cash. However, ongoing tariff payments, combined with higher memory and oil prices, continue to present headwinds to our cost structure. To date, none of these factors have materially impacted overall demand, apart from certain international markets with exposure to the Middle East conflict. Second quarter 2026 reflects the continued benefits of the Lexmark Acquisition and Xerox's transformation efforts. Pro forma 1 gross margins expanded year-over-year for the second consecutive quarter, driven by integration synergies, cost discipline, and an increasingly unified operating model. These gains are complemented by new product launches under the unified Xerox brand, growing partner validation, and a more focused go-to-market approach which is collectively positioning the company for continued operational and financial improvement in the second half of 2026 and beyond. Equipment sales of $387 million in the second quarter 2026 increased 15.2% in actual currency and 15.0% in constant currency 2 , as compared to the second quarter 2025. Second quarter 2026 equipment sales included a 33.1-percentage point benefit from the Lexmark Acquisition. Total equipment installations increased approximately 97.0% including the impact of the Lexmark Acquisition, partially offset by declines in legacy Xerox installations, primarily in the entry, and mid-range color equipment categories. Excluding the Lexmark Acquisition, equipment sales declined 17.9% in actual currency due to lower installations and a mix shift toward Entry products. On a pro Xerox 2026 Form 10-Q 42 Table of Contents forma 1 basis, second quarter 2026 revenue declined 13.0%, primarily reflecting the impacts noted above, partially offset by modest growth from Lexmark. Post sale revenue of $1,346 million in the second quarter 2026 increased 30.7% in actual currency and 29.7% in constant currency 2 , as compared to second quarter 2025, and included a 37.5-percentage point benefit from the Lexmark Acquisition. Excluding the Lexmark Acquisition, post sale revenue declined 6.8% in actual currency primarily reflecting lower equipment service revenue and managed print services. Post sale revenue was also adversely impacted by intentional reductions in non-strategic revenue, including the exit of certain production print manufacturing operations in prior years, as well as a decline in financing revenue reflecting the continued sales of finance receivables to our various funding affiliates and lower originations. On a pro forma 1 basis, second quarter 2026 revenue decreased 3.9%, primarily reflecting the impacts noted above. IT Solutions revenue of $189 million in the second quarter 2026 declined 10.0% in actual currency and 9.0% in constant currency 2 , as compared to the second quarter 2025. The decline was primarily driven by a mix of revenue subject to net classifications and revenue deferrals. Pre-tax Income of $31 million for the second quarter 2026 increased by $91 million as compared to pre-tax (loss) of $(60) million in the second quarter 2025. Pre-tax margin of 1.6% for the second quarter 2026 improved by 5.4-percentage points as compared to the second quarter 2025 pre-tax (loss) of (3.8)% and included an approximate 5.5-percentage point benefit related to the IEEPA tariff receivables and a 3.8-percentage point benefit from the Lexmark Acquisition. On a pro forma 1 basis, second quarter 2026 pre-tax income margin improved by 4.1-percentage points. Second quarter 2026 adjusted 2 operating income margin of 10.6% increased by 6.9-percentage points compared to second quarter 2025, and included a 6.6-percentage point benefit related to the IEEPA a tariff receivables, as well as an approximate 2.0-percentage point benefit from the Lexmark Acquisition. On a pro forma 1 basis, second quarter 2026 adjusted 2 operating income margin increased by 5.4-percentage points. ____________________________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. (2) Refer to the “Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure. Recent Changes and Developments Acquisition of Lexmark On July 1, 2025, Xerox Corporation completed its previously announced acquisition of all of the issued and outstanding equity of Lexmark International II, LLC (Lexmark) from Ninestar Group Company Limited. Refer to Note 6 - Acquisition in the Condensed Consolidated Financial Statements for additional information regarding the Lexmark Acquisition. Joint Venture Arrangement and Shared Services and License Agreement In February 2026, 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 funded $405 million aggregate principal amount of senior secured term loans (the Term Loans) to, and purchased $45 million of Class A Units from, XRX Brandco Holdings LLC (IPCo Holdings) (the Joint Venture Financing). Also in February 2026, in connection with the formation of the Joint Venture, Xerox Holdings, Xerox Corporation, IPCo Holdings and XRX Brandco LLC (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). Refer to Note 1 - Basis of Presentation in the Condensed Consolidated Financial Statements for additional information regarding the Joint Venture Arrangement and the Shared Services and License Agreement, as well as to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding the Joint Venture Financing. Warrant Dividend In January 2026, the Board of Directors of Xerox Holdings Corporation approved a pro-rata distribution of warrants to holders of Xerox Holdings Corporation’s common stock, par value $1.00 per share, Series A Convertible Perpetual Voting Preferred Stock and 3.75% Convertible Senior Notes due 2030. Refer to Note 16 - Shareholders' Xerox 2026 Form 10-Q 43 Table of Contents Equity of Xerox Holdings in the Condensed Consolidated Financial Statements for additional information regarding the Warrant Dividend. 2026 Review Total revenue of $1.92 billion for second quarter 2026 increased 22.0% from second quarter 2025, including a 31.6-percentage point benefit from the Lexmark Acquisition, as well as a 0.8-percentage point favorable impact from currency. On a pro forma 1 basis total revenue declined 6.5%. Total revenue reflected the following: • an increase of 30.7% in Post sale revenue, including a 37.5-percentage point benefit from the Lexmark Acquisition, as well as a 1.0-percentage point favorable impact from currency. On a pro forma 1 basis post sale revenue declined 3.9%. • an increase of 15.2% in Equipment sales revenue, including a 33.1-percentage point benefit from the Lexmark Acquisition, and a 0.2-percentage point favorable impact from currency. On a pro forma 1 basis equipment sales revenue declined 13.0%. • a decrease of 10.0% in IT Solutions revenue, including a 1.0-percentage point unfavorable impact from currency. Total revenue of $3.77 billion for the six months ended June 30, 2026 increased 24.2% as compared to the prior year period, including a 31.7-percentage point benefit from the Lexmark Acquisition, as well as a 1.8-percentage point favorable impact from currency. On a pro forma 1 basis total revenue declined 5.1%. Total revenue reflected the following: • an increase of 30.4% in Post sale revenue, including a 36.4-percentage point benefit from the Lexmark Acquisition, as well as a 2.3-percentage point favorable impact from currency. On a pro forma 1 basis post sale revenue declined 3.9%. • an increase of 23.4% in Equipment sales revenue, including a 35.3-percentage point benefit from the Lexmark Acquisition, and a 1.2-percentage point favorable impact from currency. On a pro forma 1 basis equipment sales revenue declined 8.1%. • a decrease of 8.0% in IT Solutions revenue, including a 0.2-percentage point unfavorable impact from currency. _____________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Net Income (Loss) and adjusted 1 Net Income (Loss) were as follows: Three months ended June 30, Six Months Ended June 30, (in millions) 2026 2025 B/(W) 2026 2025 B/(W) Net Income (Loss) $ 13 $ (106) $ 119 $ (92) $ (196) $ 104 Adjusted (1) Net Income (Loss) 55 (77) 132 4 (81) 85 ____________________________ (1) Refer to the “Non-GAAP Financial Measures” section for an explanation of the non-GAAP financial measure. Net Income for the second quarter 2026 was $13 million as compared to a Net (Loss) of $(106) million for the second quarter 2025. Net income for the second quarter 2026, which includes the results of Lexmark, increased by $119 million as compared to the second quarter 2025 primarily reflecting higher revenues and higher gross profit, as well as lower Other expenses (income), net and Income tax expense. These benefits were partially offset by higher SAG, Non-financing interest expense, RD&E, Amortization of intangible assets, and Restructuring and related costs, net. Second quarter 2026 adjusted 1 Net Income was $55 million as compared to adjusted 1 Net (Loss) of $(77) million for the second quarter 2025. Adjusted 1 Net Income (Loss), which includes the results of Lexmark, increased by $132 million primarily reflecting primarily reflecting higher revenues and higher gross profit, as well as lower Income tax expense. These benefits were partially offset by higher SAG, Non-financing interest expense, Other expenses (income), net, and RD&E. Net (Loss) for the six months ended June 30, 2026 was $(92) million as compared to the prior year period Net (Loss) of $(196) million, which reflected the establishment of a valuation allowance of $59 million against certain deferred tax assets to reflect their realizability in 2025. Net (Loss) for the six months ended June 30, 2026, which includes the results of Lexmark, decreased by $104 million primarily reflecting higher revenues and higher gross profit, as well as lower Other expenses (income), net and Income tax expense. These benefits were partially offset by higher SAG, Non-financing interest expense, Restructuring and related costs, net, RD&E, and Amortization of intangible assets. Adjusted 1 Net Income for the six months ended June 30, 2026 was $4 million as compared to the prior year period adjusted 1 Net (Loss) of $(81) million. Adjusted 1 Net Income (Loss), which includes the results of Xerox 2026 Form 10-Q 44 Table of Contents Lexmark, increased by $85 million primarily reflecting higher revenues and higher gross profit, as well as lower Other expenses (income), net and Income tax expense. These benefits were partially offset by higher SAG, Non-financing interest expense, RD&E, and Other expenses (income), net. ____________________________ (1) Refer to the “Non-GAAP Financial Measures” section for an explanation of the non-GAAP financial measure. The following is a summary of our segments - Print and Other and IT Solutions : Three months ended June 30, Six Months Ended June 30, (in millions) 2026 2025 % Change 2026 2025 % Change Revenue Print and Other $ 1,733 $ 1,366 26.9 % $ 3,425 $ 2,660 28.8 % IT Solutions 194 213 (8.9) % 350 377 (7.2) % Total Segment revenue 1,927 1,579 22.0 % 3,775 3,037 24.3 % Intersegment elimination (1) (5) (3) NM (7) (4) NM Corporate Other — — NM — — NM Total Revenue $ 1,922 $ 1,576 22.0 % $ 3,768 $ 3,033 24.2 % Expenses Print and Other $ 1,513 $ 1,301 16.3 % $ 3,118 $ 2,554 22.1 % IT Solutions 187 203 (7.9) % 337 362 (6.9) % Total Segment expenses 1,700 1,504 13.0 % 3,455 2,916 18.5 % Intersegment elimination (2) (5) (3) NM (7) (4) NM Corporate Other 24 16 50.0 % 45 40 12.5 % Total Expenses $ 1,719 $ 1,517 13.3 % $ 3,493 $ 2,952 18.3 % Profit Print and Other $ 220 $ 65 238.5 % $ 307 $ 106 189.6 % IT Solutions 7 10 (30.0) % 13 15 (13.3) % Total Segment profit 227 75 202.7 % 320 121 164.5 % Corporate Other (24) (16) 50.0 % (45) (40) 12.5 % Total Profit $ 203 $ 59 244.1 % $ 275 $ 81 239.5 % __________________________ (1) Reflects primarily IT hardware, software solutions and services revenues, sold by the IT Solutions segment to the Print and Other segment. (2) Reflects primarily costs related to the sale of IT hardware, software solutions and services by the IT Solutions segment, to the Print and Other segment. For the six months ended June 30, 2026, net cash used in operating activities was $107 million, net cash used in investing activities was $33 million, and net cash provided by financing activities was $128 million. Refer to the Capital Resources and Liquidity section for additional information regarding our cash flows. Xerox 2026 Form 10-Q 45 Table of Contents Financial Review Revenues Three Months Ended June 30, % of Total Revenue (in millions) 2026 2025 % Change CC % Change Pro Forma % Change (1) 2026 2025 Equipment sales $ 387 $ 336 15.2 % 15.0 % (13.0) % 20 % 21 % Post sale revenue (2) 1,346 1,030 30.7 % 29.7 % (3.9) % 70 % 66 % IT Solutions (3) 189 210 (10.0) % (9.0) % (10.0) % 10 % 13 % Total Revenue $ 1,922 $ 1,576 22.0 % 21.2 % (6.5) % 100 % 100 % Reconciliation to Condensed Consolidated Statements of Income (Loss): Equipment Sales $ 387 $ 336 15.2 % 15.0 % (13.0) % Supplies, paper and other sales (2) 469 176 166.5 % 164.4 % (0.4) % IT products (3) 140 153 (8.5) % (8.8) % (8.5) % Sales $ 996 $ 665 49.8 % 49.0 % (6.8) % Services, maintenance, rentals and other (2) $ 822 $ 785 4.7 % 4.0 % (4.5) % Xerox Financial Services (2) 55 69 (20.3) % (21.0) % (20.3) % IT services (3) 49 57 (14.0) % (14.0) % (14.0) % Services, maintenance, rentals and other $ 926 $ 911 1.6 % 1.0 % (6.2) % Segments (4) Print and Other $ 1,733 $ 1,366 26.9 % 26.0 % (6.1) % 90 % 87 % IT Solutions 194 213 (8.9) % (9.0) % (8.9) % 10 % 13 % Intersegment elimination (5) (5) (3) NM NM NM — % — % Total Revenue $ 1,922 $ 1,576 22.0 % 21.2 % (6.5) % 100 % 100 % _____________ CC - See "Currency Impact" section for a description of Constant Currency. (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from April 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. (2) Post sale revenue includes Supplies, paper and other sales, Service, maintenance, rentals and other, and Xerox Financial Services. Refer to Reportable Segments - Print and Other, for further information. (3) IT Solutions includes IT Products and IT Services provided by the IT Solutions segment. Refer to Reportable Segments - IT Solutions for further information. (4) Refer to Note 4 - Segment Reporting in the Condensed Consolidated Financial Statements for additional information regarding our reportable segments. (5) Primarily reflects IT hardware, software solutions and services sold by the IT Solutions segment to the Print and Other segment. Xerox 2026 Form 10-Q 46 Table of Contents Six Months Ended June 30, % of Total Revenue (in millions) 2026 2025 % Change CC % Change Pro Forma % Change (1) 2026 2025 Equipment sales $ 765 $ 620 23.4 % 22.2 % (8.1) % 20 % 21 % Post sale revenue (2) 2,660 2,040 30.4 % 28.1 % (3.9) % 71 % 67 % IT Solutions (3) 343 373 (8.0) % (7.8) % (8.0) % 9 % 12 % Total Revenue $ 3,768 $ 3,033 24.2 % 22.4 % (5.1) % 100 % 100 % Reconciliation to Condensed Consolidated Statements of Income (Loss): Equipment Sales $ 765 $ 620 23.4 % 22.2 % (8.1) % Supplies, paper and other sales (2) 906 344 163.4 % 159.9 % (1.2) % IT products (3) 245 258 (5.0) % (5.8) % (5.0) % Sales $ 1,916 $ 1,222 56.8 % 55.0 % (4.5) % Services, maintenance, rentals and other (2) $ 1,638 $ 1,548 5.8 % 3.8 % (3.8) % Xerox Financial Services (2) 116 148 (21.6) % (23.9) % (21.6) % IT Services (3) 98 115 (14.8) % (14.8) % (14.8) % Services, maintenance, rentals and other $ 1,852 $ 1,811 2.3 % 0.4 % (5.8) % Segments (4) Print and Other $ 3,425 $ 2,660 28.8 % 26.7 % (4.8) % 91 % 88 % IT Solutions 350 377 (7.2) % (7.8) % (7.2) % 9 % 12 % Intersegment elimination (5) (7) (4) NM NM NM — % — % Total Revenue $ 3,768 $ 3,033 24.2 % 22.4 % (5.1) % 100 % 100 % _____________ CC - See "Currency Impact" section for a description of Constant Currency. (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. (2) Post sale revenue includes Supplies, paper and other sales, Service, maintenance, rentals and other, and Xerox Financial Services. Refer to Reportable Segments - Print and Other, for further information. (3) IT Solutions includes IT Products and IT Services provided by the IT Solutions segment. Refer to Reportable Segments - IT Solutions for further information. (4) Refer to Note 4 - Segment Reporting in the Condensed Consolidated Financial Statements for additional information regarding our reportable segments. (5) Primarily reflects IT hardware, software solutions and services sold by the IT Solutions segment to the Print and Other segment. Second quarter 2026 total revenue increased 22.0% as compared to second quarter 2025, and included a 31.6-percentage point benefit from the Lexmark Acquisition as well as a 0.8-percentage point benefit from currency. The Lexmark contribution was partially offset by lower revenue at legacy Xerox. Total revenue for legacy Xerox decreased 9.6% in actual currency, primarily reflecting lower installations, reduced equipment service revenue, and declines in managed print services and IT Solutions revenue, as well as the adverse impact of Transformation-related actions. On a pro forma 1 basis, second quarter 2026 total revenue declined 6.5% as compared to the second quarter 2025 primarily reflecting the impacts noted above, partially offset by growth from legacy Lexmark. Total revenue for the six months ended June 30, 2026 increased 24.2% as compared to the prior year period and included a 31.7-percentage point benefit from the Lexmark Acquisition as well as a 1.8-percentage point benefit from currency. The Lexmark contribution was partially offset by lower revenue at legacy Xerox. Total revenue for legacy Xerox decreased 7.5% in actual currency, primarily reflecting lower installations, reduced equipment service revenue, and declines in managed print services and IT Solutions revenue, as well as the adverse impact of Transformation-related actions. On a pro forma 1 basis, total revenue for the six months ended June 30, 2026 declined 5.1% as compared to the prior period, primarily reflecting the impacts noted above, partially offset by growth from legacy Lexmark Refer to the Segment Review - Print and Other section below for a discussion of Equipment sales revenue and post sale revenue, and the Segment Review - IT Solutions section below for a discussion of IT Products and IT Services revenues. ____________________________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Xerox 2026 Form 10-Q 47 Table of Contents Costs, Expenses and Other Income Summary of Key Financial Ratios The following is a summary of key financial ratios used to assess our performance: Three months ended June 30, Six Months Ended June 30, (in millions) 2026 2025 B/(W) Pro Forma B/(W) (1) 2026 2025 B/(W) Pro Forma B/(W) (1) Gross Profit $ 688 $ 451 $ 237 $ 93 $ 1,237 $ 877 $ 360 $ 77 RD&E 67 43 (24) 7 131 85 (46) 17 SAG 432 368 (64) 31 862 746 (116) 60 — Equipment Gross Margin 19.5 % 24.0 % (4.5) pts. 12.8 pts. 15.2 % 25.8 % (10.6) pts. 6.4 pts. Post sale Gross Margin (2) 39.9 % 29.9 % 10.0 pts. 4.8 pts. 37.3 % 29.7 % 7.6 pts. 2.7 pts. Total Gross Margin 35.8 % 28.6 % 7.2 pts. 6.9 pts. 32.8 % 28.9 % 3.9 pts. 3.6 pts. RD&E as a % of Revenue 3.5 % 2.7 % (0.8) pts. 0.1 pts. 3.5 % 2.8 % (0.7) pts. 0.2 pts. SAG as a % of Revenue 22.5 % 23.4 % 0.9 pts. — pts. 22.9 % 24.6 % 1.7 pts. 0.3 pts. Pre-tax Income (Loss) $ 31 $ (60) $ 91 $ 82 $ (42) $ (127) $ 85 $ 118 Pre-tax Margin (Loss) 1.6 % (3.8) % 5.4 pts. 4.1 pts. (1.1) % (4.2) % 3.1 pts. 2.9 pts. Adjusted (3) Operating Income $ 203 $ 59 $ 144 $ 97 $ 275 $ 81 $ 194 $ 98 Adjusted (3) Operating Income Margin 10.6 % 3.7 % 6.9 pts. 5.4 pts. 7.3 % 2.7 % 4.6 pts. 2.8 pts. ____________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. (2) Includes the gross margin of IT Solutions. (3) Refer to the “Non-GAAP Financial Measures” section for an explanation of the non-GAAP financial measure. Gross Margin Second quarter 2026 gross margin of 35.8% increased by 7.2-percentage points as compared to second quarter of 2025, which included an approximate 5.5-percentage point benefit related to the IEEPA tariff receivables and a 1.6-percentage point benefit related to the Lexmark Acquisition. The increase in the second quarter 2026 reflects higher revenue and gross profit, which includes the benefits from the IEEPA tariff receivables as well as the benefits associated with Transformation-related cost and productivity actions. These benefits were partially offset by the adverse impact related to an unfavorable revenue mix, including lower equipment service revenue and managed print services, as well as product cost increases. Excluding the impact of the Lexmark Acquisition, gross margin increased 5.6-percentage points reflecting the impacts noted above. On a pro forma 1 basis, second quarter 2026 gross margin of 35.8% increased by 6.9-percentage points driven by the IEEPA tariff receivables. Gross margin for the six months ended June 30, 2026 of 32.8% increased by 3.9-percentage points as compared to the prior year period, which included an approximate 2.8-percentage point benefit related to the IEEPA tariff receivables and a 1.2-percentage point benefit related to the Lexmark Acquisition. The increase for the six months ended June 30, 2026 primarily reflects higher revenue and gross profit, which includes the benefits from the IEEPA tariff receivables as well as the benefits associated with Transformation-related cost and productivity actions. These benefits were partially offset by the adverse impact related to product cost increases and an unfavorable revenue mix, including lower equipment service revenue and managed print services. Excluding the impact of the Lexmark Acquisition, gross margin increased 2.7-percentage points. On a pro forma 1 basis, gross margin for the six months ended June 30, 2026 of 32.8% increased by 3.6-percentage points, driven by the IEEPA tariff receivables. Second quarter 2026 equipment gross margin of 19.5% decreased by 4.5-percentage points as compared to second quarter of 2025, and included a 12.5-percentage point adverse impact from the Lexmark Acquisition. Excluding the impact of Lexmark, second quarter 2026 equipment gross margin increased 8.0-percentage points and included a 13.3-percentage point benefit related to the IEEPA tariff receivables, as well as the benefits associated with Transformation-related cost and productivity actions and the absence of a charge recognized in the second quarter of 2025 related to the exit of certain production print manufacturing operations. These benefits were partially offset by the adverse impact of product cost increases and unfavorable revenue mix. On a pro forma 1 basis, second quarter 2026 equipment gross margin of 19.5% increased by 12.8-percentage points, primarily reflecting the impacts noted above. Xerox 2026 Form 10-Q 48 Table of Contents Equipment gross margin for six months ended June 30, 2026 of 15.2% decreased by 10.6-percentage points as compared to prior year period, and included a 12.3-percentage point adverse impact from the Lexmark Acquisition. Excluding the impact of Lexmark, equipment gross margin for the six months ended June 30, 2026 increased 1.7-percentage points, and included a 5.9-percentage point benefit related to the IEEPA tariff receivables, as well as the benefits associated with Transformation-related cost and productivity actions and the absence of a charge recognized in the second quarter of 2025 related to the exit of certain production print manufacturing operations. The benefits were partially offset by lower gross profit, including the adverse impact of product cost increases and unfavorable revenue mix. On a pro forma 1 basis, six months ended June 30, 2026, equipment gross margin of 15.2% increased by 6.4-percentage points, primarily reflecting the impacts noted above. Second quarter 2026 post sale gross margin of 39.9% increased by 10.0-percentage points as compared to second quarter of 2025, which included a 5.1-percentage point benefit related to the Lexmark Acquisition, and a 3.4-percentage point benefit related to the IEEPA tariff receivables. Excluding the impact of the Lexmark Acquisition, post sale gross margin increased 4.9-percentage points. The increase in the second quarter 2026 primarily reflects higher revenue and gross profit, including the benefits from the IEEPA tariff receivables and Transformation-related cost and productivity actions. These benefits were partially offset by unfavorable revenue mix, including lower equipment service revenue and managed print services, rental and other revenues, as well as lower financing fees, and higher benefits costs and higher incentive compensation expense. On a pro forma 1 basis, second quarter 2026 post sale gross margin of 39.9% increased 4.8-percentage points, primarily reflecting the impacts noted above. Post sale gross margin for the six months ended June 30, 2026 of 37.3% increased by 7.6-percentage points as compared to the prior year period, which included a 4.7-percentage point benefit related to the Lexmark Acquisition, and included a 1.7-percentage point benefit related to the IEEPA tariff receivables. Excluding the impact of the Lexmark Acquisition, post sale gross margin increased 2.9-percentage points. The increase for the six months ended June 30, 2026 primarily reflects higher revenue and gross profit, including the benefits from the IEEPA tariff receivables and Transformation-related cost and productivity actions. These benefits were partially offset by the adverse impact related to a fixed asset-related purchase accounting adjustment related to the Lexmark Acquisition, higher incentive compensation expense and benefit costs, unfavorable revenue mix, including lower equipment service revenue and managed print services, rental and other revenues, as well as lower financing fees, and product cost increases. On a pro forma 1 basis, six months ended June 30, 2026 post sale gross margin of 37.3% increased 2.7-percentage points, primarily reflecting the impacts noted above. ____________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Research, Development and Engineering Expenses (RD&E) Second quarter 2026 RD&E as a percentage of revenue of 3.5% increased 0.8-percentage points as compared to second quarter 2025, and included a 0.8-percentage point adverse impact from the Lexmark Acquisition. For the six months ended June 30, 2026, RD&E as a percentage of revenue of 3.5% increased 0.7-percentage points as compared to the prior year period, and included a 0.9-percentage point adverse impact from the Lexmark Acquisition. The increase for both the three and six months ended June 30, 2026 as compared to their respective prior year periods reflected the impact of the Lexmark Acquisition, as the increase in RD&E spending outpaced the increase in revenue. Second quarter 2026 RD&E of $67 million increased by $24 million as compared to second quarter 2025 and for the six months ended June 30, 2026, RD&E of $131 million increased by $46 million. The increase for both the three and six months ended June 30, 2026 as compared to their respective prior year periods primarily reflected the impact of the Lexmark Acquisition, partially offset by productivity and cost savings related to Transformation actions. On a pro forma 1 basis, RD&E decreased by $7 million for the second quarter 2026, and decreased by $17 million for the six months ended June 30, 2026. The decrease for both the three and six months ended June 30, 2026 as compared to their respective prior year periods, primarily reflected productivity and cost savings related to Transformation actions. ____________________________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Xerox 2026 Form 10-Q 49 Table of Contents Selling, Administrative and General Expenses (SAG) Second quarter 2026 SAG as a percentage of revenue of 22.5% decreased by 0.9-percentage points as compared to second quarter 2025, including a 2.4-percentage point benefit from the Lexmark Acquisition. The decrease primarily reflects revenue growth that outpaced the increase in SAG spending. Second quarter 2026 SAG of $432 million increased by $64 million as compared to second quarter 2025, primarily reflecting the impact of the Lexmark Acquisition, higher incentive compensation expense and benefit costs. These impacts were partially offset by productivity and cost savings related to Transformation actions, including lower marketing spend, as well as lower litigation expense. On a pro forma 1 basis, second quarter 2026 SAG decreased $31 million, primarily reflecting Transformation actions and higher legacy Lexmark SAG expenses in the second quarter of 2025. For the six months ended June 30, 2026, SAG as a percentage of revenue of 22.9% decreased by 1.7-percentage points as compared to the prior year period, including a 2.4-percentage point benefit from the Lexmark Acquisition. The decrease primarily reflects revenue growth that outpaced the increase in SAG spending. For the six months ended June 30, 2026, SAG of $862 million increased by $116 million as compared to the prior year period, primarily reflecting the impact of the Lexmark Acquisition, as well as higher incentive compensation expense and benefit costs, and unfavorable translation currency. These impacts were partially offset by productivity and cost savings related to Transformation actions, including lower marketing spend, as well as lower bad debt expense. On a pro forma 1 basis, six months ended June 30, 2026, SAG decreased $60 million, primarily reflecting Transformation actions and higher legacy Lexmark SAG expenses in the second quarter of 2025. ____________________________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Restructuring and Related Costs, Net Restructuring and related costs, net include the following: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Restructuring and severance costs (1) $ 31 $ 11 $ 87 $ 21 Asset impairments - leased ROU assets (2) — — — 4 Asset impairments - owned assets, net (2) (5) 2 (6) (8) Other contractual termination costs (3) — — — 5 Reversals (4) (5) (2) (16) (12) Restructuring and asset impairment costs 21 11 65 10 Contractual severance costs (5) 2 (1) 3 (1) Restructuring and related costs, net $ 23 $ 10 $ 68 $ 9 _____________ (1) Includes worldwide headcount reductions for restructuring and severance costs of approximately 475 and 115 for the three months ended June 30, 2026 and 2025, respectively, and approximately 1,255 and 340 for the six months ended June 30, 2026 and 2025, respectively, as a result of our efforts to integrate and consolidate certain operations of the legacy Xerox and Lexmark businesses. (2) Primarily related to the sale, exit and abandonment of leased and owned facilities, net of any potential sublease income and recoveries. Asset impairments of owned assets include cash proceeds resulting from asset sales and recoveries of $5 million and $0 million for the three months ended June 30, 2026 and 2025, respectively, and $6 million and $19 million for the six months ended June 30, 2026 and 2025, respectively. (3) Primarily includes additional costs incurred upon the exit from our facilities, including decommissioning costs and associated contractual termination costs. (4) Reversals of prior charges primarily include net changes in estimated reserves from initiatives accrued for in prior periods. (5) Amounts primarily reflect severance and other related costs we are contractually required to pay in connection with employees transferred as part of the shared service arrangement entered into with third party providers. Second quarter 2026 primarily impacted the Print and Other segment in several functional areas, with approximately 40% focused on gross margin improvements, approximately 50% focused on SAG reductions, and the remainder focused on RD&E reductions. Second quarter 2025 actions impacted several functional areas, with approximately 85% focused on gross margin improvements and the remainder focused on SAG reductions. The Restructuring and related costs, net reserve balance for all programs as of June 30, 2026 was $154 million, of which $82 million is expected to be paid over the next twelve months. Refer to Note 10 - Restructuring Programs in the Condensed Consolidated Financial Statements for additional information regarding our restructuring programs. Xerox 2026 Form 10-Q 50 Table of Contents Non-Financing Interest Expense Second quarter 2026 non-financing interest expense of $100 million was $45 million higher than second quarter 2025. For the six months ended June 30, 2026, non-financing interest expense of $184 million increased by $96 million from the prior year period. The increase, as compared to the respective prior year periods, reflected higher interest rates on borrowings in support of the Lexmark Acquisition, as well as funding from the Joint Venture Financing arrangement entered into with TPG in the first quarter of 2026. Also contributing to the increase is a lower debt level allocated to Xerox Financial Services, which reflects a continued reduction in the average finance receivables balance associated with the sales of finance receivables to our various funding affiliates, as well as lower originations. When non-financing interest expense is combined with financing interest expense, total interest expense for the three and six months ended June 30, 2026 increased $40 million and $88 million, respectively, compared to the respective prior year periods. Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt activity and interest expense. Worldwide Employment Worldwide employment was approximately 23,000 as of June 30, 2026, which was relatively consistent with December 31, 2025. Increases to headcount during 2026 were largely offset by the impact of Transformation actions, including workforce reduction actions. Other Expenses (Income), Net Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Interest income $ (3) $ (6) $ (6) $ (8) Non-service retirement-related costs 21 19 42 37 Currency losses, net 8 1 13 1 Change in fair value of warrant liability 14 — 9 — Net (Gain) loss on early extinguishment of debt (39) 4 (95) 4 Commitment fee expenses — 4 — 22 All other expenses, net 4 3 11 4 Other expenses (income), net $ 5 $ 25 $ (26) $ 60 Non-Service Retirement-Related Costs Second quarter 2026 non-service retirement-related costs of $21 million increased by $2 million as compared to the second quarter 2025, and for the six months ended June 30, 2026, non-service retirement-related costs of $42 million increased by $5 million from the prior year period. The increase as compared to each of the prior year respective periods primarily reflects higher interest costs, as well as higher actuarial losses, both of which were partially offset by higher expected returns on plan assets. Refer to Note 15 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding service and non-service retirement-related costs. Currency losses, net Second quarter 2026 currency losses, net of $8 million increased $7 million as compared to the second quarter 2025, and for the six months ended June 30, 2026, currency losses of $13 million increased by $12 million from the prior year period. The increase as compared to each of the prior year respective periods primarily reflects fluctuations in the CNY/USD and EUR/USD exchange rates and hedging costs incurred in connection with the recent acquisition of Lexmark. Net (Gain) loss on early extinguishment of debt For the three and six months ended June 30, 2026, the net (gain) on early extinguishment of debt of $(39) million and $(95) million, respectively, primarily reflects the early repayment of a portion of our 5.500% Senior Unsecured Notes due 2028, as well as a portion of our 13.50% Senior Secured Notes due 2031. The net loss on early extinguishment of debt for the three and six months ended June 30, 2025 of $4 million, respectively, reflects the write-off of deferred debt issuance costs and unamortized discount, as well as other extinguishment costs related to the repayment of Senior Notes. Xerox 2026 Form 10-Q 51 Table of Contents Change in fair value of warrant liability For the three and six months ended June 30, 2026 the change in fair value of the warrant liability of $14 million and $9 million, respectively, relates to the warrant dividend issued in the first quarter of 2026 and reflects an increase in the fair value of the warrant liability during the respective periods. Refer to Note 16 - Shareholders' Equity of Xerox Holdings in the Condensed Consolidated Financial Statements for additional information regarding the warrant dividend. Commitment fee expense Commitment fee expense for the three and six months ended June 30, 2025, primarily reflects fees associated with the Lexmark Acquisition financing which includes: the private offering of $400 million in aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030; $500 million aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031; $250 million aggregate principal amount of 13.00% Senior Notes due 2030; and an incremental term loan borrowing of $327 million under the First Lien Term Loan Credit Agreement. Pre-tax Income (Loss) Margin Second quarter 2026 pre-tax income margin of 1.6% improved by 5.4-percentage points as compared to second quarter of 2025 pre-tax (loss) margin of (3.8)% which included a 3.8-percentage point benefit from the Lexmark Acquisition. The improvement in the second quarter 2026 pre-tax margin income was primarily due to higher revenue and gross profit, which includes an approximate 5.5-percentage point benefit related to the IEEPA tariff receivables as well as the benefits associated with Transformation-related cost and productivity actions, and lower Other expenses (income), net. The decrease in Other expenses (income), net reflects a gain on the early repayment of our 5.50% Senior Unsecured Notes due 2028, as well as a portion of our 13.50% Senior Unsecured Notes due 2031, offset in part by the change in fair value of the warrant dividend liability. These benefits were partially offset by higher SAG and non-financing interest expense, as well as higher RD&E, Amortization of intangible assets, and Restructuring and related costs, net driven by the Lexmark Acquisition. On a pro forma 1 basis second quarter 2026 pre-tax margin improved by 4.1-percentage points primarily reflecting the impacts noted above. Pre-tax margin (loss) for the six months ended June 30, 2026 of (1.1)% improved by 3.1-percentage points as compared to the prior period pre-tax margin (loss) of (4.2)% which included a 3.1-percentage point benefit from the Lexmark Acquisition. Pre-tax margin (loss) for the six months ended June 30, 2026 reflected higher revenue and gross profit, which includes an approximate 2.8-percentage point benefit related to the IEEPA tariff receivables as well as the benefits associated with Transformation-related cost and productivity actions, and lower Other expenses (income), net. The decrease in Other expenses (income), net included a gain on the early repayment of a portion of our 5.50% Senior Unsecured Notes due 2028, and a portion of our 13.50% Senior Unsecured Notes due 2031, as well as the absence of commitment fees incurred during 2025 related to borrowings in support of the Lexmark Acquisition. These benefits were offset by higher SAG and non-financing interest expense, as well as higher Restructuring and related costs, net, RD&E, and Amortization of intangible assets driven by the Lexmark Acquisition. On a pro forma 1 basis, pre-tax margin (loss) for the six months ended June 30, 2026, improved by 2.9-percentage points primarily reflecting the impacts noted above. _____________ (1) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Adjusted 1 Operating Margin Second quarter 2026 adjusted 1 operating income margin of 10.6% increased by 6.9-percentage points as compared to second quarter 2025, and included a 6.6-percentage point benefit related to the IEEPA tariff receivables and an approximate 2.0-percentage point benefit from the Lexmark Acquisition. Excluding the impact of the IEEPA tariff receivables and the Lexmark Acquisition, the decrease reflects lower revenue, including post sale revenue and equipment sales revenue, reflecting an unfavorable revenue mix, including lower outsourcing, service, rental, and other revenues, as well as higher incentive compensation, product cost increases and lower financing fees. These impacts were partially offset by lower SAG expenses as well as productivity and cost savings related to Transformation. On a pro forma 2 basis second quarter 2026 adjusted 1 operating margin increased by 5.4-percentage points primarily reflecting the impacts noted above. Adjusted 1 operating income margin for the six months ended June 30, 2026 of 7.3% increased by 4.6-percentage points as compared to the prior year period, and included a 3.3-percentage point benefit related to the IEEPA tariff receivables and an approximate 2.5-percentage point benefit from the Lexmark Acquisition. Excluding the impact of the IEEPA tariff receivables and the Lexmark Acquisition, the decrease reflects lower revenue, including post sale Xerox 2026 Form 10-Q 52 Table of Contents revenue and equipment sales and lower gross profit, due to as well product cost increases and an unfavorable revenue mix, including lower outsourcing, rental, and other revenues, as well as lower financing fees. These impacts were partially offset by productivity and cost savings related to Transformation, and lower SAG and RD&E expenses. On a pro forma 2 basis adjusted 1 operating margin for the six months ended June 30, 2026 increased by 2.8-percentage points primarily reflecting the impacts noted above, as well as the impact of the Lexmark Acquisition. _____________ (1) Refer to the Adjusted Operating Income and Margin reconciliation table in the "Non-GAAP Financial Measures" section. (2) Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Income Taxes Second quarter 2026 effective tax rate was 58.1% and resulted in tax expense of $18 million. On an adjusted 1 basis, the second quarter 2026 effective tax rate was 31.3%, which resulted in tax expense of $25 million. Both of these rates were higher than the U.S. federal statutory tax rate of 21.0% primarily due 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 a tax expense of $46 million on a pre-tax (loss). On an adjusted 1 basis, the second quarter 2025 effective tax rate was 527.8%, which resulted in tax expense of $95 million. Both these rates were higher than the U.S. federal statutory tax rate of 21.0% primarily due to not benefiting certain current year losses and expenses, as well as the geographical mix of earnings. The effective tax rate for the six months ended June 30, 2026 was (119.0)% and resulted in tax expense of $50 million on a pre-tax (loss). On an adjusted 1 basis, the effective tax rate for the six months ended June 30, 2026 was 93.8%, which resulted in tax expense of $60 million. Both of these rates were higher than the U.S. federal statutory tax rate of 21.0% primarily due the 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 a tax expense of $69 million on a pre-tax (loss). On an adjusted 1 basis, the effective tax rate for the six months ended June 30, 2025 was 1,112.5%, which resulted in tax expense of $89 million. Both these rates were higher than the U.S. federal statutory tax rate of 21.0% primarily due to the establishment of a valuation allowance in the first quarter 2025 against certain deferred tax assets as well as not benefiting certain current year losses and expenses and the geographical mix of earnings. The effective tax rate 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. Refer to Note 19 - Income Taxes in the Condensed Consolidated Financial Statements for additional information. _____________ (1) Refer to the Adjusted Effective Tax Rate reconciliation table in the "Non-GAAP Financial Measures" section. Xerox 2026 Form 10-Q 53 Table of Contents Net Income (Loss) Second quarter 2026 Net Income was $13 million, or $0.07 per diluted share, and included a $39 million net gain on the early extinguishment of debt, or $0.29 per diluted share. On an adjusted 1 basis, Net Income was $55 million, or $0.38 per diluted share. Second quarter 2025 Net (Loss) was $(106) million, or $(0.87) per diluted share and included $22 million ($17 million after-tax) of financing-related charges, net, or $0.13 per diluted share, related to the borrowings in support of the Lexmark Acquisition, and $28 million of tax expense related to non-deductible interest expense, or $0.22 per diluted share. On an adjusted 1 basis, Net (Loss) was $(77) million, or $(0.64) per diluted share. Net (Loss) for the six months ended June 30, 2026 was $(92) million, or $(0.77) per diluted share, and included a $95 million net gain on the early extinguishment of debt, or $0.73 per diluted share. On an adjusted 1 basis, Net Income for the six months ended June 30, 2026 was $4 million, or $(0.03) per diluted share. The loss per diluted share reflects the impact of preferred stock dividends of $7 million. Net (Loss) for the six months ended June 30, 2025 was $(196) million, or $(1.62) per diluted share and include a charge to tax expense related to the establishment of $59 million of valuation allowances, or $0.47 per diluted share, financing-related charges, net of $40 million ($30 million after-tax), or $0.24 per diluted share, related to the borrowings in support of the Lexmark Acquisition financing, and tax expense of $28 million, or $0.22 per diluted share, related to non-deductible interest expense. On an adjusted 1 basis, Net (Loss) was $(81) million, or $(0.71) per diluted share. Refer to Note 20 - Income (Loss) per Share in the Condensed Consolidated Financial Statements for additional information regarding the calculation of basic and diluted loss per share. _____________ (1) Refer to the Adjusted Net Income (Loss) and EPS reconciliation table in the "Non-GAAP Financial Measures" section. For the calculations of basic and diluted loss per share, refer to Note 20 - Income (Loss) per Share in the Notes to the Condensed Consolidated Financial Statements. Other Comprehensive Income (Loss) Second quarter 2026 Other Comprehensive Income, Net was $10 million and included the following: i) $5 million of net gains from the changes in defined benefit plans primarily reflecting the amortization of net actuarial losses, partially offset by actuarial losses and the negative impact of currency; ii) $4 million of net unrealized gains; and iii) net translation adjustment gains of $1 million reflecting the strengthening of the Chinese Yuan and Mexican Peso against the U.S. Dollar, partially offset by the weakening of the Canadian Dollar, Euro, and the Philippine Peso against the U.S. Dollar during the quarter. This compares to Other Comprehensive Income, Net of $169 million for the second quarter 2025, which included the following: i) net translation adjustment gains of $229 million reflecting the strengthening of all of our major foreign currencies against the U.S. Dollar during the quarter; ii) $(56) million of net (losses) from the changes in defined benefit plans reflecting the negative impact of currency, partially offset by the amortization of actuarial losses; and iii) $(4) million of net unrealized (losses). Other Comprehensive (Loss) for the six months ended June 30, 2026 was $(23) million and included the following: i) net translation adjustment (losses) of $(76) million reflecting the weakening of the Canadian Dollar, Euro, and British Pound against the U.S. Dollar, partially offset by the strengthening of the Chinese Yuan and Mexican Peso against the U.S. Dollar; ii) $45 million of net gains from the changes in defined benefit plans primarily reflecting the amortization of net actuarial losses, and the positive impact of currency; and iii) $8 million of net unrealized gains. This compares to Other Comprehensive Income, Net of $251 million for the six months ended June 30, 2025, which included the following: i) net translation adjustment gains of $334 million reflecting the strengthening of all of our major foreign currencies against the U.S. Dollar; ii) $(77) million of net (losses) from the changes in defined benefit plans reflecting the negative impact of currency, partially offset by amortization of actuarial losses; and iii) $(6) million of net unrealized (losses). Refer to Note 18 - Other Comprehensive Income (Loss) in the Condensed Consolidated Financial Statements for the components of Other Comprehensive Income (Loss), Note 13 - Financial Instruments in the Condensed Consolidated Financial Statements for additional information regarding Unrealized gains (losses), net, and Note 15 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding net changes in our defined benefit plans. Reportable Segments Our business is organized to ensure we focus on efficiently managing operations while serving our customers and the markets in which we operate. We have two operating and reportable segments – Print and Other and IT Solutions . Refer to Note 4 - Segment Reporting in the Condensed Consolidated Financial Statements for additional information regarding our reportable segments. Xerox 2026 Form 10-Q 54 Table of Contents Segment Review Three Months Ended June 30, (in millions) Print and Other IT Solutions Total Segment Intersegment Elimination (1) Corporate Other (2) Total 2026 Revenues $ 1,733 $ 194 $ 1,927 $ (5) $ — $ 1,922 % of Total Revenue 90 % 10 % 100 % Expenses $ 1,513 $ 187 $ 1,700 $ (5) $ 24 $ 1,719 Segment Profit (Loss) $ 220 $ 7 $ 227 $ — $ (24) $ 203 Segment Margin (3) 12.7 % 3.7 % NM 10.6 % 2025 Revenues $ 1,366 $ 213 $ 1,579 $ (3) $ — $ 1,576 % of Total Revenue 87 % 13 % 100 % Expenses $ 1,301 $ 203 $ 1,504 $ (3) $ 16 $ 1,517 Segment Profit (Loss) $ 65 $ 10 $ 75 $ — $ (16) $ 59 Segment Margin (3) 4.8 % 4.8 % NM 3.7 % 2025 Pro Forma (4) Revenues $ 1,846 $ 213 $ 2,059 $ (3) $ — $ 2,056 % of Total Revenue 90 % 10 % 100 % Expenses $ 1,730 $ 203 $ 1,933 $ (3) $ 20 $ 1,950 Segment Profit (Loss) $ 116 $ 10 $ 126 $ — $ (20) $ 106 Segment Margin (3) 6.3 % 4.8 % NM 5.2 % Six Months Ended June 30, (in millions) Print and Other IT Solutions Total Segment Intersegment Elimination (1) Corporate Other (2) Total 2026 Revenues $ 3,425 $ 350 $ 3,775 $ (7) $ — $ 3,768 % of Total Revenue 91 % 9 % 100 % Expenses $ 3,118 $ 337 $ 3,455 $ (7) $ 45 $ 3,493 Segment Profit (Loss) $ 307 $ 13 $ 320 $ — $ (45) $ 275 Segment Margin (3) 9.0 % 3.8 % — — NM 7.3 % 2025 Revenues $ 2,660 $ 377 $ 3,037 $ (4) $ — $ 3,033 % of Total Revenue 88 % 12 % 100 % — — — % Expenses $ 2,554 $ 362 $ 2,916 $ (4) $ 40 $ 2,952 Segment Profit (Loss) $ 106 $ 15 $ 121 $ — $ (40) $ 81 Segment Margin (3) 4.0 % 4.0 % NM 2.7 % 2025 Pro Forma (4) Revenues $3,599 $377 $ 3,976 $ (4) $ — $ 3,972 % of Total Revenue 91 % 9 % 100 % — Expenses $3,389 $362 $ 3,751 $ (4) $ 48 $ 3,795 Segment Profit (Loss) $210 $15 $ 225 $ — $ (48) $ 177 Segment Margin (3) 5.8 % 4.0 % NM 4.5 % Total ___________ (1) Primarily reflects IT hardware, software solutions and services, sold by the IT Solutions segment to the Print and Other segment. (2) Corporate Other reflects certain administrative and general expenses, which primarily relate to corporate functions, and are not allocated to either of our reportable segments. (3) Segment margin is based on total revenue. IT Solutions segment margin is net of Intersegment Elimination. (4) Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Xerox 2026 Form 10-Q 55 Table of Contents Print and Other The Print and Other segment includes the design, development and sale of document management systems, supplies and services as well as financing and technology-related offerings, digital and print-related software products and services. This segment also includes our recent Lexmark Acquisition, and Xerox Financial Services. In addition to direct sales and end-user customers, we utilize distributors and resellers to sell our equipment, supplies, parts, and maintenance services to end-user customers. Revenue Three Months Ended June 30, (in millions) 2026 2025 % Change CC % Change Pro Forma (1) % Change Equipment sales $ 387 $ 336 15.2% 15.0% (13.0)% Supplies, paper and other sales 469 176 166.5% 164.4% (0.4)% Services, maintenance, rentals and other 822 785 4.7% 4.0% (4.5)% Xerox Financial Services 55 69 (20.3)% (21.0)% (20.3)% Post sale revenue 1,346 1,030 30.7% 29.7% (3.9)% Total Print and Other Revenue $ 1,733 $ 1,366 26.9% 26.0% (6.1)% Six Months Ended June 30, (in millions) 2026 2025 % Change CC % Change Pro Forma (1) % Change Equipment sales $ 765 $ 620 23.4% 22.2% (8.1)% Supplies, paper and other sales 906 344 163.4% 159.9% (1.2)% Services, maintenance, rentals and other 1,638 1,548 5.8% 3.8% (3.8)% Xerox Financial Services 116 148 (21.6)% (23.9)% (21.6)% Post sale revenue 2,660 2,040 30.4% 28.1% (3.9)% Total Print and Other Revenue $ 3,425 $ 2,660 28.8% 26.7% (4.8)% _____________ CC - See "Currency Impact" section for a description of Constant Currency. (1) Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Second quarter 2026 Print and Other segment revenue increased 26.9% as compared to second quarter 2025 and included a 0.9-percentage point benefit from currency. Print and Other segment revenue increased 28.8% for the six months ended June 30, 2026 as compared to the prior year period and included a 2.1-percentage point benefit from currency. The increase for the three and six months ended June 30, 2026 was due to the Lexmark Acquisition. Print and Other segment revenues included the following: Equipment sales Equipment sales revenue increased 15.2% during the second quarter 2026 as compared to second quarter 2025, and included a 33.1-percentage point benefit from the Lexmark Acquisition as well as a 0.2-percentage point benefit from currency. The increase in constant currency 1 was driven by higher installations resulting from the Lexmark Acquisition. Excluding the Lexmark Acquisition, equipment sales declined 17.9% in actual currency due to lower installations and a mix shift toward Entry products. On a pro forma 2 basis, second quarter 2026 equipment sales revenue declined 13.0% as compared to the prior year period, primarily reflecting the impacts noted above, partially offset by modest growth from Lexmark. During the six months ended June 30, 2026, equipment sales revenue increased 23.4% as compared to prior year period, and included a 35.3-percentage point benefit from the Lexmark Acquisition as well as a 1.2-percentage point benefit from currency. The increase in constant currency 1 was driven by higher installations resulting from the Lexmark Acquisition. Excluding the Lexmark Acquisition, equipment sales declined 11.9% in actual currency due to lower installations and a mix shift toward Entry products. On a pro forma 2 basis, equipment sales revenue for six Xerox 2026 Form 10-Q 56 Table of Contents months ended June 30, 2026 declined 8.1% as compared to the prior year period, primarily reflecting the impacts noted above, partially offset by modest growth from Lexmark. ___________ (1) Refer to the “Currency Impact” section for a description of constant currency. (2) Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Detail by product group is shown below: Three Months Ended June 30, % of Equipment Sales (in millions) 2026 2025 % Change CC % Change 2026 2025 Entry $ 140 $ 63 122.2% 122.7% 36% 19% Mid-range 162 181 (10.5)% (11.2)% 42% 54% High-end 82 87 (5.7)% (6.6)% 21% 26% Other 3 5 (40.0)% (40.0)% 1% 1% Equipment sales (1)(2) $ 387 $ 336 15.2% 15.0% 100% 100% Six Months Ended June 30, % of Equipment Sales (in millions) 2026 2025 % Change CC % Change 2026 2025 Entry $ 278 $ 113 146.0% 144.3% 36% 18% Mid-range 324 330 (1.8)% (2.8)% 43% 53% High-end 154 168 (8.3)% (9.9)% 20% 27% Other 9 9 —% —% 1% 2% Equipment sales (1)(2) $ 765 $ 620 23.4% 22.2% 100% 100% ____________ CC - See "Currency Impact" section for a description of constant currency. (1) Refer to the Products and Offerings Definitions section. (2) Prior year equipment sales revenues by product group were recast in the second quarter of 2026 to conform to the current year's presentation. Refer to the Equipment Sales Revenue - Revision section below. The change at constant currency 1 primarily reflects the Lexmark Acquisition, as well as the following: • Entry - The increase in the three months ended June 30, 2026 primarily reflects the Lexmark Acquisition. Excluding the Lexmark Acquisition, the decrease was driven by lower installations, partially offset by a shift in mix to color from MFPs. The increase in the six months ended June 30, 2026 primarily reflects the Lexmark Acquisition. Excluding the Lexmark Acquisition, the decrease was driven by a shift in mix from color to black-and-white as well as lower installations as compared to the prior year period. • Mid-range - The decrease for the three and six months ended June 30, 2026 reflects lower installations and a shift in mix from color to black-and-white. • High-end - The decrease for the three months ended June 30, 2026 was primarily due to lower installations partially offset by a shift in mix to color and recent product launches. The decrease for the six months ended June 30, 2026 was primarily due to lower installations of black-and-white systems, partially offset by higher installations of entry production color products _____________ (1) Refer to the “Currency Impact” section for a description of constant currency. Xerox 2026 Form 10-Q 57 Table of Contents Total Installs Installs reflect new placements of devices to end-user customers, and sales to distributors and resellers. Revenue associated with equipment installations may be reflected up-front in Equipment sales or over time either through rental income or as part of our services revenues (which are both reported within our Post sale revenues), depending on the terms and conditions of our agreements with customers. Installs include activity for Xerox and non-Xerox branded products. Detail by product group (see Products and Offerings Definitions ) is shown below. Installs for the three months ended June 30, 2026, as compared to the prior year period, reflect the following: • Entry increased 131% driven by the contribution of Lexmark. Excluding the Lexmark Acquisition, installations were down primarily due to declines in black-and-white printers and MFPs, partially offset by growth in color printers and MFPs. • Mid-Range 1 increased 5% driven by the contribution of Lexmark. Excluding the Lexmark Acquisition, installations were down primarily due to declines in both color and black-and-white MFPs. • High-End 1 decreased 19% primarily reflecting declines in Light Production and EPC Low offerings. Installs for the six months ended June 30, 2026, as compared to the prior year period, reflect the following: • Entry increased 134% driven by the contribution of Lexmark. Excluding the Lexmark Acquisition, installations declined primarily due to black-and-white printers partially offset growth in color and black-and white printers. • Mid-Range 1 was flat reflecting the contribution of Lexmark as well as color MFPs, partially offset by declines in black-and-white. • High-End 1 decreased 13% primarily reflecting the decision to exit certain production print manufacturing operations in prior years. partially offset by growth in Entry Production Color Mid and High. _____________ (1) Installations were recast in the second quarter of 2026 to reflect a revision in our classification methodology. Refer to the Equipment Installs - Classification Methodology Revision section below. Products and Offerings Definitions Our 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 teams 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. Xerox 2026 Form 10-Q 58 Table of Contents Equipment Sales Revenue - Revision During second quarter 2026, we revised equipment sales revenue by category for the following: i) to revise our equipment installation classification methodology for certain products, as more fully discussed below in the Equipment Installs - Classification Methodology Revision section and ii) to reflect changes to our product groupings within the XBS sales unit. Accordingly, equipment sales revenue by product group for the periods presented below were revised to conform to the current period presentation, with no impact on reported total equipment sales revenue. As Reported 2025 2026 Q1 Q2 Q3 Q4 FY Q1 Entry $43 $51 $119 $168 $381 $135 Mid-range 198 235 222 258 913 198 High-end 40 44 39 52 175 40 Other 3 6 3 7 19 5 Total $284 $336 $383 $485 $1,488 $378 Change 2025 2026 Q1 Q2 Q3 Q4 FY Q1 Entry $7 $12 $10 $11 $40 $3 Mid-range (50) (53) (44) (53) (200) (36) High-end 41 43 32 43 159 32 Other 2 (2) 2 (1) 1 1 Total $0 $0 $0 $0 $0 $0 As Revised 2025 2026 Q1 Q2 Q3 Q4 FY Q1 Entry $50 $63 $129 $179 $421 $138 Mid-range 148 182 178 205 713 162 High-end 81 87 71 95 334 72 Other 5 4 5 6 20 6 Total $284 $336 $383 $485 $1,488 $378 Equipment Installs - Classification Methodology Revision During second quarter 2026, we revised our equipment installation classification methodology for certain products to reflect the evolution of our product portfolio and the markets in which we sell these products. As our go-to-market strategy advances, certain products previously classified within the mid-range category, including certain product families, increasingly meet the needs of our high-end customers and compete in markets historically associated with our high-end products. Accordingly, to provide a more meaningful disaggregation of our revenue, we have reclassified certain product families from the mid-range to the high-end category. Installations for first quarter 2026 have been revised to conform to the current period presentation. Installs % Change YOY Prior Methodology Revised Methodology 2026 2026 Q1 Q1 Q2 YTD Entry 136 % 136 % 131 % 134 % Mid-range (5) % (5) % 5 % — % High-end 31 % (5) % (19) % (13) % Xerox 2026 Form 10-Q 59 Table of Contents Post sale revenue Post sale revenue primarily reflects revenues from managed print services, supplies, paper and financing. These revenues are associated not only with the population of devices in the field, which is affected by installs and removals, but also by the page volumes generated from the usage of such devices and the revenue per printed page. Post sale revenue also includes revenues from the sale of Digital services, as well as gains, commissions, and servicing revenue associated with the sale of finance receivables. Post sale revenue for the second quarter 2026 reflected the following: Supplies, paper and other sales includes unbundled supplies, paper and other sales. Second quarter 2026 revenues increased 166.5% and included a 170.5-percentage point benefit from the Lexmark Acquisition and a 2.1-percentage point benefit from currency. The increase in constant currency 1 was primarily driven by supplies sales from the Lexmark Acquisition as well as higher supplies sales to our distributors and resellers. Excluding the Lexmark Acquisition, revenue decreased 4.0% in actual currency due to lower other sales, as well as lower paper and supplies sales. On a pro forma 2 basis, second quarter 2026 revenue decreased 0.4%, primarily reflecting the impacts noted above. Supplies, paper and other sales revenue for the six months ended June 30, 2026 increased 163.4% as compared to the prior year period and included a 167.2-percentage point benefit from the Lexmark Acquisition and a 3.5-percentage point benefit from currency. The increase in constant currency 1 was primarily driven by supplies sales from the Lexmark Acquisition as well as higher supplies sales to our distributors and resellers. Excluding the Lexmark Acquisition, revenue decreased 3.8% in actual currency due to lower other sales, as well as lower supplies and paper, reflecting in part the prior-year sale of our European paper business. On a pro forma 2 basis, revenue for the six months ended June 30, 2026 decreased 1.2%, primarily reflecting the impacts noted above. Services, maintenance, rentals and other revenue includes managed print services revenue, maintenance revenue (including bundled supplies), digital services revenue, rentals, financing, extended warranties, and other revenues. Second quarter 2026 revenues increased 4.7% and included a 10.9-percentage point benefit from the Lexmark Acquisition and a 0.7-percentage point benefit from currency. The increase in constant currency 1 was primarily driven by equipment service revenue associated with the Lexmark Acquisition. Excluding the Lexmark Acquisition, revenue declined 6.2% in actual currency primarily reflecting lower rental revenue, as well as lower equipment service revenue and managed print services, and the impact of exiting certain production print manufacturing operations in prior years. On a pro forma 2 basis, second quarter 2026 revenue decreased 4.5%, primarily reflecting the impacts noted above. Services, maintenance, rentals and other revenue for the six months ended June 30, 2026 increased 5.8% and included a 10.8-percentage point benefit from the Lexmark Acquisition and a 2.0-percentage point benefit from currency. The increase in constant currency 1 was primarily driven by equipment service revenue associated with the Lexmark Acquisition. Excluding the Lexmark Acquisition, revenue declined 5.0% in actual currency primarily reflecting lower rental revenue as well as lower equipment service revenue and managed print services, and the impact of exiting certain production print manufacturing operations in prior years. On a pro forma 2 basis, revenue for the six months ended June 30, 2026 decreased 3.8%, primarily reflecting the impacts noted above. Xerox Financial Services is a financing solutions business for direct channel customer purchases of Xerox equipment and solutions, and lease financing to end-user customers who purchase Xerox equipment and solutions. Second quarter 2026 revenues decreased 20.3% compared to second quarter 2025, and included a 0.7-percentage point benefit from currency, and revenues for the six months ended June 30, 2026 decreased 21.6% as compared to the prior year period, and included a 2.3 percentage point benefit from currency. Xerox Financial Services revenue decreased primarily due to a lower average finance receivable balance during 2026, driven by sales of finance receivables in recent quarters to our funding affiliates, as well as lower originations. __________ (1) Refer to the “Currency Impact” section for a description of constant currency. (2) Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Xerox 2026 Form 10-Q 60 Table of Contents Segment Expenses Research, Development and Engineering Expenses (RD&E) Second quarter 2026 RD&E of $66 million increased $23 million as compared to second quarter 2025. For the six months ended June 30, 2026 , RD&E of $130 million increased $45 million as compared to prior year period. The increase as compared to the respective prior year periods primarily reflected the Lexmark Acquisition, partially offset by productivity and cost savings related to the Company's Transformation actions. Selling, Administrative and General Expenses (SAG) Second quarter 2026 SAG of $377 million increased by $59 million as compared to second quarter 2025. For the six months ended June 30, 2026 SAG of $756 million increased by $116 million as compared to the prior year period. The increase as compared to the respective prior year periods primarily reflected the Lexmark Acquisition, as well as higher incentive compensation expense and benefit costs, and unfavorable currency. These impacts were partially offset by productivity and cost savings related to the Company's Transformation initiatives including lower marketing spend. Segment Margin Second quarter 2026 Print and Other segment margin of 12.7% increased 7.9-percentage points as compared to second quarter of 2025, and for the six months ended June 30, 2026, Print and Other segment margin of 9.0% increased 5.0-percentage points as compared to prior year period. The increase as compared to the respective prior year periods was primarily due to higher revenues and gross profit. Segment margin expansion was driven by the contribution from the Lexmark Acquisition, benefits from the IEEPA tariff receivables, as well as Transformation-related cost and productivity actions, and lower bad debt expense. These benefits were partially offset by higher SAG expense, including higher incentive compensation expense and benefit costs, as well as RD&E expenses. On a pro forma 1 basis, second quarter 2026 Print and Other segment margin of 12.7% increased by 6.4-percentage points as compared to second quarter of 2025, and for the six months ended June 30, 2026, Print and Other segment margin of 9.0% increased 3.2-percentage points as compared to prior year period. The increase as compared to the respective prior year periods primarily reflected the impacts noted above. ___________ (1) Reflects the inclusion of Lexmark's estimated results from January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. Xerox 2026 Form 10-Q 61 Table of Contents IT Solutions The 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. Revenue Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 % Change CC % Change 2026 2025 % Change CC % Change IT Products (1) $ 140 $ 153 (8.5)% (8.8)% $ 245 $ 258 (5.0)% (5.8)% IT Services (2) 49 57 (14.0)% (14.0)% 98 115 (14.8)% (14.8)% Intersegment revenue (3) 5 3 NM NM 7 4 NM NM Total IT Solutions $ 194 $ 213 (8.9)% (9.0)% $ 350 $ 377 (7.2)% (7.8)% _____________ CC - See "Currency Impact" section for a description of Constant Currency. (1) IT Products reflect the sale of IT hardware and software solutions. Hardware product sales include the sale of notebooks, network communications and other endpoint devices, desktop computers and other IT hardware. Software product sales include deployments of cloud and security solutions, endpoint security application suites, operating systems, other applications and network management solutions. (2) IT Services reflect revenue associated with the implementation of IT solutions, including product lifecycle, deployment and network monitoring services, and managed services. (3) Primarily reflects IT hardware, software solutions and services sold by the IT Solutions segment to the Print and Other segment. Second quarter 2026 IT Solutions segment revenue decreased 8.9% as compared to second quarter of 2025 and included a 0.1-percentage point benefit from currency, and for the six months ended June 30, 2026 decreased 7.2% as compared to the prior year period and included a 0.6-percentage point benefit from currency. IT Solutions segment revenue included the following: IT Products revenue decreased 8.5% during the second quarter 2026, as compared to the second quarter of 2025. For the six months ended June 30, 2026 revenue decreased 5.0% as compared to the prior year period. For both the three and six months ended June 30, 2026 gross billings growth was offset by the mix of revenue subject to net classifications, and revenue deferrals. IT products revenue for the six months ended June 30, 2026 was also impacted by component cost increases. IT Services revenue decreased 14.0% during the three months ended June 30, 2026 as compared to the second quarter of 2025. For the six months ended June 30, 2026, revenue decreased 14.8% as compared to the prior year period. The decrease for the three and six months ended June 30, 2026 primarily reflected higher revenue deferrals, as well as the mix of revenue subject to net classifications. Segment Expenses Selling, Administrative and General Expenses (SAG) Second quarter 2026 SAG of $28 million increased by $3 million as compared to second quarter 2025, and SAG of $52 million for the six months ended June 30, 2026 increased by $4 million as compared to the prior year period. The increase as compared to the respective prior year periods primarily reflected increased investments in the sales organization. The adverse impacts were partially offset by productivity and cost savings related to the Company's Transformation initiatives. Segment Margin Second quarter 2026 IT Solutions segment margin of 3.7% decreased 1.1-percentage points as compared to second quarter of 2025, and for the six months ended June 30, 2026, IT Solutions segment margin of 3.8% decreased 0.2-percentage points as compared to prior year period. The decrease as compared to the respective prior year periods primarily reflected lower revenues, as well as higher administrative expenses and increased investments in the sales organization, all of which were partially offset by higher gross profit. Xerox 2026 Form 10-Q 62 Table of Contents Capital Resources and Liquidity Our liquidity is primarily dependent on our ability to generate positive cash flows from operations. Additional liquidity is also provided through access to the financial capital markets and a committed asset-based revolving credit agreement (the ABL Facility), as well as the sales and assignment of finance lease receivables. Our access to financial capital markets may be limited from time to time due to a number of factors, including our credit ratings, the level of our outstanding indebtedness, and prevailing market conditions, including the trading levels of our existing debt securities. Based on our current level of operations, we do not expect our near term liquidity needs to be dependent on access to the financial capital markets and we believe that our available sources will be adequate to meet our liquidity needs for at least the next 12 months. Currently, we are not aware of any other trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months from August 6, 2026, the date these Condensed Consolidated Financial Statements were issued. We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under the Company's ABL facility and in amounts sufficient to enable us to repay our indebtedness or to fund our other liquidity needs. The following is a summary of our liquidity position: • As of June 30, 2026 and December 31, 2025, total cash, cash equivalents and restricted cash of Xerox Holdings Corporation were $552 million and $565 million, respectively, and apart from restricted cash of $57 million and $53 million at June 30, 2026 and December 31, 2025, respectively, was readily accessible for use. The decrease of $13 million primarily reflects net cash used in operating activities of $107 million, as well as net cash used in investing activities of $33 million, both of which were partially offset by net cash provided by financing activities of $128 million, which includes $80 million related to the IEEPA tariff receivables monetization. • During the second quarter of 2026, the Company entered into a sale agreement to sell its rights to its IEEPA tariff receivables of $105 million, for cash consideration of approximately $80 million, which is reported as a financing transaction in the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2026. At June 30, 2026, a liability of $90 million was recorded on the Condensed Consolidated Balance Sheet in Financing liability – tariff receivables monetization. We currently estimate receiving the tariff refunds by December 31, 2026. Subsequent to the receipt, we will transfer any cash received to the purchaser of the tariff receivables. • Total debt at June 30, 2026 was $4,223 million, of which $1,310 million is allocated to, and supports the Company's finance assets. The remaining debt of $2,913 million is attributable to the non-financing business and increased from $2,759 million at December 31, 2025. Debt at June 30, 2026 consists of senior secured and unsecured notes, secured promissory notes, borrowings under a Term Loan B facility, and senior secured term loans associated with a joint venture financing. • In connection with Xerox Corporation's joint venture arrangement (the Joint Venture Arrangement) with TPG during the first quarter 2026, XRX Brandco Holdings LLC (IPCo Holdings), a fully consolidated variable interest entity (VIE) of Xerox Corporation, as borrower, entered into a credit agreement with Alter Domus (US) LLC, who provided $405 million aggregate principal amount of senior secured term loans (the Term Loans) (the Joint Venture Financing Arrangement). The Term Loans are accounted for as Debt in the Condensed Consolidated Balance Sheet of Xerox Corporation at June 30, 2026. The proceeds of the Joint Venture Financing Arrangement were distributed by dividend from IPCo Holdings to Xerox Corporation and are expected to be used for general corporate purposes and opportunistically addressing Xerox Holdings’ capital structure over time (which may include the redemption or payment of debt). In addition, Xerox Corporation purchased $45 million of Class A Units from IPCo Holdings. The Class A Units have a mandatory cumulative redemption which is expected in 2031. • During the first half of 2026, the Company repurchased approximately $194 million of its 5.50% Senior Unsecured Notes due 2028 and $6 million of its 13.50% Senior Secured Notes due 2031 for an aggregate purchase price of approximately $101 million. The Company recognized a net gain of approximately $95 million on the early extinguishment of the debt, which was recorded to Other expenses (income), net in the Condensed Consolidated Statements of Income (Loss). • As of August 6, 2026, and based on our June availability calculation, we have availability of $388 million before letters of credit issued under the ABL Facility of approximately $112 million. There are no current borrowings outstanding. Accordingly, our net availability is approximately $276 million. 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 Xerox 2026 Form 10-Q 63 Table of Contents any debt covenants. Our capacity to borrow under the ABL Facility may be adversely impacted by the terms of the ABL Facility and certain other agreements that govern our indebtedness. • We now expect operating cash flows to be approximately $340 million, which is a decrease from our previous guidance of $350 million, and includes $80 million related to the IEEPA tariff receivables monetization. The decrease reflects higher restructuring expense resulting from our increased synergy target, higher interest expense resulting from the Joint Venture Financing Arrangement, and lower than previously expected working capital 1 . Although not committed, we believe we have the ability to sell finance receivables for additional liquidity. Refer to the Condensed Consolidated Financial Statements as follows: Note 1 - Basis of Presentation for additional information related to the Joint Venture Arrangement, Note 11 - Supplementary Financial Information for additional information related to cash, cash equivalents and restricted cash, and supplemental cash flow information, and Note 12 - Debt for additional information related to the monetization of the IEEPA tariff receivables, Debt, and ABL activity. _____________ (1) Working capital reflects Accounts receivable, net, Inventories and Accounts payable. Cash Flow Analysis The following summarizes our cash, cash equivalents and restricted cash: Six Months Ended June 30, Change (in millions) 2026 2025 Net cash used in operating activities $ (107) $ (100) $ (7) Net cash used in investing activities (33) (12) (21) Net cash provided by financing activities 128 459 (331) Effect of exchange rate changes on cash, cash equivalents and restricted cash (1) 7 (8) (Decrease) increase in cash, cash equivalents and restricted cash (13) 354 (367) Cash, cash equivalents and restricted cash at beginning of period 565 631 (66) Cash, Cash Equivalents and Restricted Cash at End of Period $ 552 $ 985 $ (433) Cash Flows from Operating Activities Net cash used in operating activities was $107 million for the six months ended June 30, 2026, a decrease of $7 million from the prior year period. Cash flow from operating activities was impacted by a $55 million decrease related to finance receivables, primarily due to lower sales of finance receivables, partially offset by increased portfolio run-off as origination volumes declined. Working capital changes contributed to the use of cash, including higher accounts receivable and lower accounts payable. The unfavorable working capital movements were partially offset by lower use of cash for inventory. Refer to Note 8 – Finance Receivables, Net in the Condensed Consolidated Financial Statements for additional information regarding the sale of finance receivables Cash Flows from Investing Activities Net cash used in investing activities was $33 million for the six months ended June 30, 2026, a decrease of $21 million from the prior year period. The decrease was primarily driven by the sale of surplus property and assets in the U.S. in the prior year, higher capital expenditures and higher noncontrolling investments offset by a Lexmark Acquisition working capital adjustment. Cash Flows from Financing Activities Net cash provided by financing activities was $128 million for the six months ended June 30, 2026, a decrease of $331 million from the prior year period. The decrease in cash primarily reflected lower net debt issuances offset by the sale of IEEPA tariff receivables and lower dividend payments in 2026. During 2025, financing activities included $860 million from Senior Notes issuances and the repayments of existing debt, including secured financing arrangements, secured promissory notes and Term Loan B borrowings. Cash used in financing activities during 2025 also reflected commitment fees associated with the Lexmark Acquisition financing. Xerox 2026 Form 10-Q 64 Table of Contents Debt and Customer Financing Activities The following summarizes our debt: (in millions) June 30, 2026 December 31, 2025 Xerox Holdings Corporation $ 1,706 $ 2,025 Xerox Corporation 2,199 2,316 Xerox - Other Subsidiaries (1) 452 3 Subtotal - Principal debt balance 4,357 4,344 Debt issuance costs Xerox Holdings Corporation (16) (20) Xerox Corporation (83) (39) Subtotal - Debt issuance costs (99) (59) Net unamortized (discount) (35) (38) Total Debt $ 4,223 $ 4,247 _____________ (1) Includes secured debt issued by subsidiaries of Xerox Corporation as part of the securitization of finance receivables. The balance at June 30, 2026 includes debt of $450 million associated with the Joint Venture Arrangement as described in Note 1 - Basis of Presentation in the Condensed Consolidated Financial Statements, and Note 12 - Debt in the Condensed Consolidated Financial Statements. Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt. Finance Assets and Related Debt The following represents our total finance assets, net associated with our lease and finance operations: (in millions) June 30, 2026 December 31, 2025 Total finance receivables, net (1) $ 1,214 $ 1,402 Equipment on operating leases, net 283 299 Total Finance Assets, net $ 1,497 $ 1,701 _____________ (1) Includes (i) Billed portion of finance receivables, net, (ii) Finance receivables, net and (iii) Finance receivables due after one year, net as included in our Condensed Consolidated Balance Sheets. Our lease contracts permit customers to pay for equipment over time rather than at the date of installation; therefore, we maintain a certain level of debt (that we refer to as financing debt) to support our investment in these lease contracts, which are reflected in total finance assets, net. For this financing aspect of our business, we maintain an assumed 7:1 leverage ratio of debt to equity as compared to our finance assets. Based on this leverage, the following represents the breakdown of total debt between financing debt and core debt: (in millions) June 30, 2026 December 31, 2025 Finance receivables debt (1) $ 1,062 $ 1,227 Equipment on operating leases debt 248 261 Financing debt 1,310 1,488 Core debt 2,913 2,759 Total Debt $ 4,223 $ 4,247 ________________ (1) Finance receivables debt is the basis for our calculation of Equipment financing interest expense, which is included in Cost of services, maintenance, rentals and other in the Condensed Consolidated Statements of Income (Loss). Sales of Finance Receivables and Third Party Leasing Programs Refer to Note 8 - Finance Receivables, Net in the Condensed Consolidated Financial Statements for additional information regarding our sales of finance receivables and our third party leasing programs. Capital Market/Debt Activity Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding our debt activity including our Joint Venture Financing Arrangement and the early redemptions of debt during the first half of 2026. Financing Liability – Tariff Receivables Monetization Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information related to the monetization of the IEEPA tariff receivables. Xerox 2026 Form 10-Q 65 Table of Contents Liquidity and Financial Flexibility We manage our worldwide liquidity using internal cash management practices, which are subject to i) the statutes, regulations and practices of each of the local jurisdictions in which we operate, ii) the legal requirements of the agreements to which we are a party, and iii) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services. Our principal debt maturities are spread over the next five years as follows: (in millions) Xerox Holdings Corporation Xerox Corporation Xerox Other Subsidiaries (1) Total 2026 Q3 — — — — 2026 Q4 — — 21 21 2027 25 50 82 157 2028 581 90 81 752 2029 531 565 81 1,177 2030 569 400 81 1,050 2031 and thereafter — 1,094 106 1,200 Total $ 1,706 $ 2,199 $ 452 $ 4,357 _____________ (1) Represents subsidiaries of Xerox Corporation. The balance at June 30, 2026 includes debt of $450 million associated with the Joint Venture Arrangement as described in Note 1 - Basis of Presentation in the Condensed Consolidated Financial Statements, and Note 12 - Debt in the Condensed Consolidated Financial Statements. Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt. Treasury Stock Xerox Holdings Corporation made no open-market repurchases of its Common Stock during 2026. Financial Risk Management We are exposed to market risk from foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. We utilize derivative financial instruments to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. We enter into limited types of derivative contracts, including interest rate swap agreements, interest rate caps, foreign currency spot, forward and swap contracts and net purchased foreign currency options to manage interest rate and foreign currency exposures. Our primary foreign currency market exposures include the Euro, U.K. Pound Sterling and Japanese Yen. The fair market values of all our derivative contracts change with fluctuations in interest rates and/or currency exchange rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes. We are required to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. As permitted, certain of these derivative contracts have been designated for hedge accounting treatment. Certain of our derivatives that do not qualify for hedge accounting are effective as economic hedges. These derivative contracts are likewise required to be recognized each period at fair value and therefore do result in some level of volatility. The level of volatility will vary with the type and amount of derivative hedges outstanding, as well as fluctuations in the currency and interest rate markets during the period. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities. By their nature, all derivative instruments involve, to varying degrees, elements of market and credit risk. The market risk associated with these instruments resulting from currency exchange and interest rate movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with a diversified group of major financial institutions. Further, our policy is to deal with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties. The current market events have not required us to materially modify or change our financial risk management strategies with respect to our exposures to interest rate and foreign currency risk. Refer to Note 13 – Financial Instruments in the Condensed Consolidated Financial Statements for further discussion and information on our financial risk management strategies. Xerox 2026 Form 10-Q 66 Table of Contents Non-GAAP Financial Measures We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In addition, we have discussed our financial results using the non-GAAP measures described below. We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results. Management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Accordingly, we believe it is necessary to adjust several reported amounts, determined in accordance with GAAP, to exclude the effects of certain items as well as their related income tax effects. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our Condensed Consolidated Financial Statements prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth below. Adjusted Earnings Measures • Adjusted Net Income (Loss) and Income (Loss) per Share (EPS) • Adjusted Effective Tax Rate The above measures were adjusted for the following items: Restructuring and related costs, net: Restructuring and related costs, net include restructuring and asset impairment charges as well as costs associated with our transformation programs beyond those normally included in restructuring and asset impairment charges. Restructuring consists of costs primarily related to severance and benefits paid to employees pursuant to formal restructuring and workforce reduction plans. Asset impairment includes costs incurred for those assets sold, abandoned or made obsolete as a result of our restructuring actions, exiting from a business or other strategic business changes. Additional costs for our Transformation programs are primarily related to the implementation of strategic actions and initiatives and include third-party professional service costs as well as one-time incremental costs. All of these costs can vary significantly in terms of amount and frequency based on the nature of the actions as well as the changing needs of the business. Accordingly, due to that significant variability, we will exclude these charges since we do not believe they provide meaningful insight into our current or past operating performance, nor do we believe they are reflective of our expected future operating expenses as such charges are expected to yield future benefits and savings with respect to our operational performance. Amortization of intangible assets: The amortization of intangible assets is driven by our acquisition activity which can vary in size, nature and timing as compared to other companies within our industry and from period to period. The use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods. Non-service retirement-related costs: Our defined benefit pension and retiree health costs include several elements impacted by changes in plan assets and obligations that are primarily driven by changes in the debt and equity markets as well as those that are predominantly legacy in nature and related to employees who are no longer providing current service to the Company (e.g. retirees and ex-employees). These elements include (i) interest cost, (ii) expected return on plan assets, (iii) amortization of prior plan amendments, (iv) amortized actuarial gains/losses and (v) the impacts of any plan settlements/curtailments. Accordingly, we consider these elements of our periodic retirement plan costs to be outside the operational performance of the business or legacy costs and not necessarily indicative of current or future cash flow requirements. This approach is consistent with the classification of these costs as non-operating in Other expenses (income), net. Adjusted earnings will continue to include the service cost elements of our retirement costs, which are related to current employee service as well as the cost of our defined contribution plans. Xerox 2026 Form 10-Q 67 Table of Contents Transaction and related costs, net : Transaction and related costs, net are costs and expenses primarily associated with certain major or significant strategic M&A projects. These costs are primarily for third-party legal, accounting, consulting and other similar types of professional services as well as potential legal settlements that may arise in connection with those M&A transactions. These costs are considered incremental to our normal operating charges and were incurred or are expected to be incurred solely as a result of the planned transactions. Accordingly, we exclude these expenses from our Adjusted Earnings Measures in order to evaluate our performance on a comparable basis. Discrete, unusual or infrequent items: We exclude the following item(s), when applicable, given their discrete, unusual or infrequent nature and their impact on the comparability of our results for the period to prior periods and future expected trends. • Inventory-related impact - exit of certain production print manufacturing operations • Divestitures • Net gain (loss) on early extinguishment of debt • Transformation-related costs • Lexmark - fixed asset-related purchase accounting adjustment • Commitment fee expenses • Lexmark Acquisition financing - escrow interest, net • PARC Donation - Income tax • Deferred tax asset valuation allowance Adjusted Operating Income and Margin We calculate and utilize adjusted operating income and margin measures by adjusting our reported pre-tax (loss) and margin amounts. In addition to the costs and expenses noted above as adjustments for our adjusted earnings measures, adjusted operating income and margin also exclude the remaining amounts included in Other expenses (income), net, which include certain other non-operating costs and expenses. We exclude these amounts in order to evaluate our current and past operating performance and to better understand the expected future trends in our business. Constant Currency (CC) Refer to the "Currency Impact" section above for a discussion of this measure and its use in our analysis of revenue growth. Xerox 2026 Form 10-Q 68 Table of Contents Adjusted Net Income (Loss) and EPS reconciliation: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions, except per share amounts) Net Income Diluted EPS Net (Loss) Diluted EPS Net (Loss) Income Diluted EPS Net (Loss) Diluted EPS Reported (1) $ 13 $ 0.07 $ (106) $ (0.87) $ (92) $ (0.77) $ (196) $ (1.62) Adjustments: Inventory-related impact - exit of certain production print manufacturing operations — 10 — 17 Restructuring and related costs, net 23 10 68 9 Amortization of intangible assets 30 10 60 20 Divestitures — — — (4) Net (gain) loss on early extinguishment of debt (2) (39) 4 (95) 4 Non-service retirement-related costs 21 19 42 37 Transformation-related costs (3) 2 3 4 9 Transaction and related costs, net — 6 4 9 Lexmark - fixed asset-related purchase accounting adjustment (4) 12 — 23 — Commitment fee expense (5) — 4 — 22 Lexmark Acquisition financing - escrow interest, net (5) — 12 — 12 PARC Donation income tax (6) — — — 9 Deferred tax asset valuation allowance (7) 1 — 9 50 Income tax on adjustments (8) (8) (49) (19) (79) Adjusted $ 55 $ 0.38 $ (77) $ (0.64) $ 4 $ (0.03) $ (81) $ (0.71) Dividends on preferred stock used in adjusted EPS calculation (9) $ 3 $ 3 $ 7 $ 7 Weighted average shares for adjusted EPS (9) 135 126 130 125 Fully diluted shares at June 30, 2026 (10) 135 ____________________________ (1) Net Income (Loss) and Income (Loss) per Share. For the three months ended June 30, 2026 Net Income and Diluted Earnings per Share included $39 million gain on the early extinguishment of debt, or $0.29 per diluted share. For the three months ended June 30, 2025, Net (Loss) and Diluted (Loss) include $22 million ($17 million after tax) of financing-related charges, net or $0.13 per share, related to recently completed borrowings in support of the Lexmark Acquisition financing, and $28 million of tax expense, or $0.22 per share, related to interest expense that was not deductible according to tax guidelines in place as of June 30, 2025. For the six months ended June 30, 2026 Net (Loss) and Diluted (Loss) include included $95 million gain on the early extinguishment of debt, or $0.73 per diluted share. For the six months ended June 30, 2025, Net (Loss) and Diluted (Loss) include a charge to tax expense related to the establishment of $59 million of valuation allowances, or $0.47 per share, financing-related charges, net of $40 million ($30 million after-tax), or $0.24 per share, related to recently completed borrowings in support of the Lexmark Acquisition financing, repayment of existing borrowings, and general corporate purposes, and tax expense of $28 million, or $0.22 per share, related to interest expense that was not deductible according to tax guidelines in place as of June 30, 2025. (2) Reflects the early repayment of a portion of our 5.50% Senior Unsecured Notes due 2028, and a portion of our 13.50% Senior Unsecured Notes due 2031. (3) 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. (4) Reflects purchase accounting adjustments related to the Lexmark Acquisition. (5) Primarily reflects fees associated with the 2025 private offering of $400 million in aggregate principal amount of 10.25% Senior Secured First Lien Notes and $400 million aggregate principal amount of 13.50% Senior Secured Second Lien Notes Due in 2031. (6) Reflects the change in the realizability of the PARC donation tax benefit recognized in the second quarter of 2023. (7) Reflects the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability. (8) Refer to Adjusted Effective Tax Rate reconciliation. (9) For those periods that include the preferred stock dividend, the average shares for the calculations of diluted EPS exclude the 7 million shares associated with Xerox Holdings Corporation's Series A Convertible preferred stock. (10) Reflects common shares outstanding at June 30, 2026, plus potential dilutive common shares used for the calculation of adjusted diluted EPS for the three months ended June 30, 2026. Excludes potentially dilutive common shares associated with our series A convertible preferred stock, shares granted under stock-based compensation programs, as well as warrants and convertible notes, all of which were anti-dilutive. Xerox 2026 Form 10-Q 69 Table of Contents Adjusted Effective Tax Rate reconciliation: Three Months Ended June 30, 2026 2025 (in millions) Pre-Tax Income Income Tax Expense Effective Tax Rate Pre-Tax (Loss) Income Income Tax Expense Effective Tax Rate Reported (1) $ 31 $ 18 58.1 % $ (60) $ 46 (76.7) % Deferred tax asset valuation allowance (2) — (1) — — Non-GAAP Adjustments (2) 49 8 78 49 Adjusted $ 80 $ 25 31.3 % $ 18 $ 95 527.8 % Six Months Ended June 30, 2026 2025 (in millions) Pre-Tax (Loss) Income Income Tax Expense Effective Tax Rate Pre-Tax (Loss) Income Income Tax Expense Effective Tax Rate Reported (1) $ (42) $ 50 (119.0) % $ (127) $ 69 (54.3) % Income tax on PARC donation (2) — — — (9) Deferred tax asset valuation allowance (2) — (9) — (50) Non-GAAP Adjustments (2) 106 19 135 79 Adjusted $ 64 $ 60 93.8 % $ 8 $ 89 1,112.5 % ____________________________ (1) Pre-tax Income (loss) and Income tax expense. (2) Refer to Adjusted Net Income (Loss) and EPS reconciliation for details. Adjusted Operating Income and Margin reconciliation: Three months ended June 30, 2026 2025 (in millions) Profit Revenue Margin (Loss) Profit Revenue Margin Reported (1) $ 13 $ 1,922 $ (106) $ 1,576 Income tax expense 18 — 46 — Pre-tax Income (Loss) $ 31 $ 1,922 1.6 % $ (60) $ 1,576 (3.8) % Adjustments: Inventory-related impact - exit of certain production print manufacturing operations — 10 Lexmark - fixed asset-related purchase accounting adjustment (2) 12 — Restructuring and related costs, net 23 10 Amortization of intangible assets 30 10 Transformation-related costs (3) 2 3 Transaction and related costs, net — 6 Non-financing interest expense (4) 100 55 Other expenses (income), net (5) 5 25 Adjusted $ 203 $ 1,922 10.6 % $ 59 $ 1,576 3.7 % Xerox 2026 Form 10-Q 70 Table of Contents Six months ended June 30, 2026 2025 (in millions) (Loss) Profit Revenue Margin (Loss) Profit Revenue Margin Reported (1) $ (92) $ 3,768 $ (196) $ 3,033 Income tax expense 50 — 69 — Pre-tax (loss) $ (42) $ 3,768 (1.1) % $ (127) $ 3,033 (4.2) % Adjustments: Inventory-related impact - exit of certain production print manufacturing operations — 17 Lexmark - fixed asset-related purchase accounting adjustment (2) 23 — Restructuring and related costs, net 68 9 Amortization of intangible assets 60 20 Divestitures — (4) Transformation-related costs (3) 4 9 Transaction and related costs, net 4 9 Non-financing interest expense (4) 184 88 Other expenses (income), net (5) (26) 60 Adjusted $ 275 $ 3,768 7.3 % $ 81 $ 3,033 2.7 % ____________________________ (1) Net Income (Loss). (2) Reflects purchase accounting adjustments related to the Lexmark Acquisition. (3) 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. (4) Reflects interest expense primarily related to the borrowings in support of the Lexmark Acquisition financing, as well as interest related to the funding from the Joint Venture Financing arrangement entered into with TPG in the first quarter of 2026. (5) Includes non-service retirement-related costs as well as a gain of approximately $39 million and $95 million for the three and six months ended June 30, 2026, respectively, on the early repayment of a portion of our 5.500% Senior Unsecured Notes due 2028 and a portion of our 13.50% Senior Secured Notes due 2031. Pro Forma Basis To better understand the trends in our business, we discuss our 2026 operating results by comparing them against 2025 pro forma results, which include estimated results of Lexmark. Lexmark is included in our 2025 results as of July 1, 2025, the effective date of acquisition. We refer to comparisons against these adjusted results as “pro forma” basis comparisons. The pro forma information has been prepared in accordance with Article 11 of Regulation S-X, "Pro Forma Financial Information.” The pro forma information is presented to facilitate comparisons with our results following the acquisition. Xerox and Lexmark's 2025 historical results have been adjusted to reflect the costs of financing the transactions, fair value adjustments related to inventory, real and personal property (equipment and computer hardware and software) and intangible assets. In addition, adjustments were made to conform Lexmark's accounting policies to those of Xerox, including deferred revenue and inventory. In accordance with Article 11 of Regulation S-X, these pro forma results exclude adjustments associated with transaction related costs which are already included in the historical financial statements. We believe comparisons on a pro forma basis are more meaningful than the actual comparisons given the size and nature of the Lexmark Acquisition. We believe the pro forma basis comparisons allow investors to have a better understanding and additional perspective of the expected trends in our business as well as the impact of the Lexmark Acquisition on the Company’s operations. The pro forma financial information is based upon available information and assumptions that we believe are reasonable and is for illustrative purposes only. The pro forma combined financial information below should be read in conjunction with the Consolidated Financial Statements and related notes to our 2025 Annual Report on Form 10-K. Xerox 2026 Form 10-Q 71 Table of Contents Pro Forma Adjusted Operating Income and Margin reconciliation Three Months Ended June 30, As Reported Pro Forma (1) 2026 2025 2025 Change Pro Forma (1) Change (in millions) Profit (Loss) Profit (Loss) Profit Pre-tax income (loss) $ 31 $ (60) $ (51) $ 91 $ 82 Adjustments: Inventory-related impact - exit of certain production print manufacturing operations — 10 10 (10) (10) Lexmark - fixed asset-related purchase accounting adjustment (2) 12 — 17 12 (5) Restructuring and related costs, net 23 10 10 13 13 Amortization of intangible assets 30 10 31 20 (1) Transformation-related costs (3) 2 3 3 (1) (1) Transaction and related costs, net — 6 18 (6) (18) Non-financing interest expense (4) 100 55 55 45 45 Other expenses (income), net (5) 5 25 13 (20) (8) Adjusted $ 203 $ 59 $ 106 $ 144 $ 97 Revenue $ 1,922 $ 1,576 $ 2,056 $ 346 $ (134) Pre-tax Margin (Loss) 1.6 % (3.8) % (2.5) % 5.4 pts. 4.1 pts. Adjusted Operating Income Margin 10.6 % 3.7 % 5.2 % 6.9 pts. 5.4 pts. Six Months Ended June 30, As Reported Pro Forma (1) 2026 2025 2025 Change Pro Forma (1) Change (in millions) (Loss) Profit (Loss) Profit (Loss) Profit Pre-tax (loss) $ (42) $ (127) $ (160) $ 85 $ 118 Adjustments: Inventory-related impact - exit of certain production print manufacturing operations — 17 17 (17) (17) Lexmark - fixed asset-related purchase accounting adjustment (2) 23 — 38 23 (15) Restructuring and related costs, net 68 9 8 59 60 Amortization of intangible assets 60 20 62 40 (2) Divestitures — (4) (4) 4 4 Transformation-related costs (3) 4 9 9 (5) (5) Transaction and related costs, net 4 9 23 (5) (19) Non-financing interest expense (4) 184 88 88 96 96 Other expenses (income), net (5) (26) 60 96 (86) (122) Adjusted $ 275 $ 81 $ 177 $ 194 $ 98 Revenue $ 3,768 $ 3,033 $ 3,972 $ 735 $ (204) Pre-tax (Loss) Margin (1.1) % (4.2) % (4.0) % 3.1 pts. 2.9 pts. Adjusted Operating Income Margin 7.3 % 2.7 % 4.5 % 4.6 pts. 2.8 pts. _____________ (1) Reflects the inclusion of Lexmark as if it was acquired on January 1, 2025 through June 30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition. (2) Reflects purchase accounting adjustments related to the Lexmark Acquisition. (3) 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. (4) Reflects interest expense primarily related to the borrowings in support of the Lexmark Acquisition financing, as well as interest related to the funding from the Joint Venture Financing arrangement entered into with TPG in the first quarter of 2026. (5) Includes non-service retirement-related costs as well as a gain of approximately $39 million and $95 million for the three and six months ended June 30, 2026, respectively, related to the early repayment of a portion of our 5.500% Senior Unsecured Notes due August 2028 and a portion of our 13.50% Senior Secured Notes due 2031. Xerox 2026 Form 10-Q 72 Table of Contents ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information set forth under the “Financial Risk Management” section of this Quarterly Report on Form 10-Q is hereby incorporated by reference in answer to this Item.