XRX 10-K & 10-Q changes, risk factors and insider trading

Our business is subject to change, risks, and uncertainties, as described herein. The risksprimary risk factors that the Company considers material include, but are not limited to, the following:

•We have outsourced a significantmaterial portion of our manufacturing operations and increasinglysignificantly rely on third-party manufacturers, subcontractors, and suppliers;

•Our level of indebtednessdebt could adversely affect our financial condition and reduce our financial flexibility.

•The international nature of our business subjects us to a number of risks, including unfavorable political, regulatory, currency, and tax conditions in foreign countries; and

•Tariffs or other restrictions on foreign imports have and could continue to negatively impact our financial performance.

Global macroeconomic developments, including conflicts throughout the world, may adversely affect our business and financial results. Our business and financial performance depend on worldwide economic conditions, which affect the demand for our products and services in the markets we serve as well as the cost and availability of inputs to our business. Prolonged or more severe economic weakness and uncertainty, including economic slowdowns or recessions, global market volatility, tariffs, government shutdowns, rising inflation andinflation, interest rates, employment,unemployment, and other adverse economic conditions, may result in decreased demand for our products and services, logistical and supply-related challenges, and increased difficulty with financial forecasting. Moreover, the global macroeconomy has a significant impact on interest rates, borrowing costs, and availability and cost of capital, all of which could have an adverse impact on our business. In addition, inflation may adversely affect customers’ financing costs, cash flows, and profitability, which could adversely impact their operations and our ability to collect receivables. Rising interestInterest rates may rise, which could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or Xerox 2024 Annual Report 10 both of which could negatively affect customer demand for our products and our customers’ ability to repay obligations to us. TheseAdverse economic conditions may result in reduced consumer and business confidence and spending in many countries,spending, a tightening in the credit markets, a reduced level of liquidity in many financial markets, high volatility in credit, fixed incomefixed-income and equity markets, currency exchange rate fluctuations, and global economic uncertainty. In addition, longer termlong-term disruptions in the capital and credit markets could adversely affect our access to liquidity needed for our business. If financial institutions that have extended credit commitments to us are adversely affected by the conditions of the U.S. and international capital markets, they may become unable to fund borrowings under their credit commitments to us, which could have an adverse impact on our financial condition and our ability to borrow additional funds, if needed, for working capital, capital expenditures, acquisitions, research and development and other corporate purposes.

The global supply chain has experienced and may continue to experience pronounced disruptions impacting service providers, logistics, and the flow, cost, and availability of supplies and products. Our business depends on its timely supply of equipment, services, and related productsproducts, including semiconductors, to meet the technical and volume requirements of our customers. Shortages of parts, materials, and services needed to manufacture and service our products, as well as delays and unpredictability of shipments due to transportation interruptions,delays, have adversely impacted, and may continue to adversely impact, our suppliers’ ability to meet our requirements, and in turn our ability to meet our customers’ needs. Moreover, supply chain constraints may continue to increase costs of logistics and parts for our products, which costs we may not be able to pass on to our customers. We may experience further disruptions to our manufacturing operations, supply chain, and/or distribution channels in the future, and these disruptions may be prolonged.

If we fail to successfully develop new and existing products, technologies, and service offerings, we may be unable to retain current customers and gain new customers and our revenues would decline.customers.

We operate in an environment of significant competition, driven by rapid technological developments, changes in industry standards, and demands of customers to become more efficient. Our primary competitors are exerting increased competitive pressure in targeted areas and are entering new markets, and emerging competitors may introduce new technologies, business models, or other innovations. Our competitors include large international companies, some of which have significant financial resources and compete with us globally to provide document processing products and services in each of the markets we serve. We compete primarily on the basis of technology, performance, price, quality, reliability, brand, distribution, and customer service and support. Our future success is largely dependent upon our ability to compete in the markets we currently serve, to promptly and effectively react to changing technologies and customer expectations, and to expand into additional geographies and/or market segments. To remain competitive, we must develop or acquire new services, applicationsapplications, and products and periodically enhance our existing offerings. If we are unable to compete successfully through existing and new sales channels, including new partnerships, we could lose market share and important customers to our competitors, and such loss could materially adversely affect our results of operations and financial condition.

Our digital services strategy involves developing and deploying essential products and services that address the productivity challenges of a hybrid workplace and distributed workforce. We also expect to extend our IT and digital services presence in the mid- marketmid-market through organic and inorganic investments.investments over time. Our future success depends on our ability to make thesuch investments and commit the necessary resources to execute our business strategy in this highly competitive market. Despite this investment, the process of developing new products, services, and technologies is inherently complex and uncertain, and there are a number of risks to which we are subject, including the risk that our products, services, or technologies will not successfully satisfy our customers’ needs, conform to evolving preferences or technologies, or gain market acceptance, which could adversely affect our results of operations and financial condition.

Our success depends on our ability to obtain adequate pricing for our products and services that will provide a reasonable return to our shareholders. Changes in market conditions, including tariffs, inflation, interest rates, foreign currency exchange movements, and global supply chain disruptions,disruptions have and may continue to exert pressure on the margins we obtain for our products and services. Cost-reduction and pricing actions we undertake may not prove sufficient to offset the adverse impacts of such market conditions.

Our ability to sustain and improve profit margins is dependent on a number of factors, including geographygeographic mix, our ability to continue to improve the cost efficiency of our operations, our ability to sustain pricing increases across our portfolio of products and services in a competitive and inflationary environment, our success in diversifying our suite of products and services, the additional costs imposed by supply chain disruptions, the proportion of high-end, midmid- and entry-level equipment sales, and IT Solutions-related equipment sales (i.e., product and services mix), post-salepost sale Xerox 2025 Annual Report 12 revenue trendstrends, and our ability to successfully complete information technology initiatives. If any of these factorsadverse adverselydevelopments materialize or if we are unable to achieve and maintain productivity or efficiency improvements, our ability to offset labor cost inflation, potential materials cost increases and competitive price pressures would be impaired, all of which could adversely affect our results of operations and financial condition.

Supply chain disruptions and interest rate increases have increased the cost of the materials and components required to manufacture our products, transportation of components and products, and labor associated with all steps of the supply chain. We continually review our operations with a view towards reducing our cost structure, including reducing our employee base, exiting certain businesses and/or geographies, seeking more favorable terms in our current and future supply contracts, improving process and system efficiencies, and outsourcing some internal functions.

We have outsourced a significantmaterial portion of our manufacturing operations and increasinglysignificantly rely on third-party manufacturers, subcontractors, and suppliers.

Xerox engages in global manufacturing operations, which are capital-intensive, involving long lead times, and are subject to interdependencies with customers, labor, and suppliers. We have outsourced a significantmaterial portion of our manufacturing operations to third parties, such as FUJIFILM Business Innovation Corp. (formerly Fuji Xerox Co., Ltd.). In the normal course of business, we regularly reevaluate our relationships with these third parties and have discussions with other third parties in order to maintain competitive tension and seek moreimproved optimalcontracting terms. There is no guarantee that such discussions will lead to better arrangements, and our existing suppliers could react negatively to any alternative arrangements we seek to negotiate with them or with other third parties. In addition, we could incur significant costs in order to transition from one third-party manufacturing partner to another. We have experienced, and may continue to experience, cost increases from our third-party manufacturing partners and we may not be able to pass on all such cost increases to our customers. In addition, we could incur significant costs in order to transition from one third-party manufacturing partner to another and in sourcing manufacturing would be capital-intensive and require significant lead time.

We face the risk that our third-party manufacturing partners may not be able to develop or manufacture products satisfying all of our requirements, quickly respond to changes in customer demand, and obtain supplies and materials necessary for the manufacturing process. In addition, in the normal course of business and exacerbated by supply chain disruptions, our partners may experience labor shortages and/or disruptions, transportation cost increases, materials cost increases, and/or manufacturing cost increases that could lead to higher prices for our products and/or lower reliability of our products. Further, since certain third parties to whom we have outsourced manufacturing are also our competitors in the print market, or may become competitors in the future, we could experience product disruption as a result of competitive pressures that increase the cost of the products supplied. If we face product shortages and/or cost increases and are unable to transition to third parties, we could experience supply interruptions, experience lower profit margins, damage our relationships with our customers, and reduce our market share, all of which could materially adversely affect our results of operations and financial condition.

Xerox is undergoing significant changes in our business modelmodel, including as a result of the Lexmark Acquisition, and, accordingly, current and prospective employees may experience uncertainty about their future and may havepursue other opportunities available to them given the competitive labor market.opportunities. Our success is dependent, among other things, on our ability to attract, develop and retain highly qualified senior management and other key employees. Competition for key personnel is intense, and our ability to attract and retain key personnel is dependent on a number of factors, including prevailing market conditions and compensation packages offered by companies competing for the same talent. Our ability to do so also depends on how well we maintain a strong corporate culture and corporate brand that is attractive to employees. Hiring and training ofretraining new employees haswill beencontinue adverselyto impactedbe bya globalchallenge economicdue uncertainty,to the tightcompetitive labor marketmarkets causedfor bycritical lowskills, unemployment,ongoing operating model changes, and changesheightened tocompetition officefor environmentsleadership and workplacedigital trends precipitated by COVID-19.talent. The departure of existing key employees or the failure of potential key employees to accept employment with Xerox, Xerox 2025 Annual Report 13 despite our recruiting efforts, could have a material adverse impact on our business, financial condition, and operating results.

We may not achieve the expected benefits of our restructuring and transformation plans, including Reinvention, which may adversely affect our business.

We engage in transformation and restructuring actions, as well as other transformation efforts,efforts such as Reinvention, in orderReinvention to reduce cost, simplify our cost structure, manageand cash flow,offerings, achieve operating efficiencies, and aligndiversify our businessbusiness, and facilitate the "mix shift" to fitincrease withprofitability ourand operatingsustainable plan.cash Inflow. addition,Reinvention theseis actions are expectedintended to simplify our organizational structure, upgrade our IT infrastructure and redesign our business processes. As a result of theseour Reinvention initiatives, we may experience adisruptions, lossinefficiencies, of continuity, loss of accumulated knowledge and/or inefficiencyother setbacks during transitional periods. TransformationReinvention and restructuring may requirerequires a significant amount of time and focus from both management and other employees, which may divert attention from operating and growing our business. The wide-ranging nature and number of actions underway at any point in time may become difficult for the organization to satisfactorily manage and implement, as these actions may have impacts across the organization, processes and systems that are not apparent by individual project but may have unintended consequences in the aggregate. Furthermore, the expectedtiming and amount of project savings associated with thesetransformation or restructuring initiatives such as Reinvention may be offset to some extent by business disruptiondisruptions during the implementation phasephase, asrequired wellinitial asor ongoing investments in new processes and systems untilor such time as the initiatives are fully implemented and stabilized.otherwise.

Moreover, we are adopting new pricing strategies, distribution models, go-to-market models, and changes in our partner models. The market may not respond as expected to such actions. Changes in our pricing structure or approach may not align with customer expectations or industry standards, leading to reduced demand or customer dissatisfaction.

If we fail to achieve some or all of the expected benefits of our restructuring and transformation plans,Reinvention, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows.

Among our Reinvention initiatives is the implementation of a new Enterprise Resource Planning (“ERP”) system. ERP implementations are complex, labor-intensive and time-consuming projects and involve substantial expenditures on system software and implementation activities.projects. The ERP system is critical to our ability to provide important information to our management, obtain and deliver products, provide services and customer support, send invoices and track payments, fulfill contractual obligations, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, and otherwise operate our business. ERP implementations also require transformation of business and financial processes in order to reap the benefits of the ERP system. Any such implementation involves risks inherent in the conversion to a new ERP, including loss of information and potential disruption to our normal operations. The implementation and maintenance of the new ERP system has required, and will continue to require, the investment of significant financial and human resources, the re-engineering of processes of our business, and the attention of many employees who would otherwise be focused on other aspects of our business. Our results of operations could be adversely affected if we experience time delays or cost overruns during the ERP implementation process, or if we are unable to reap the benefits we expect from the ERP system. Any material deficiencies in the design and implementation of the new ERP system could also result in potentially materially higher costs than we had incurred previously and could adversely affect our ability to operate our business and otherwise negatively impact our financial reporting and internal controls. Any of these consequences could have a material adverse effect on our results of operations and financial condition.

As part of our efforts to streamline operations and reduce costs, in 2024 we launched a Global Business Services (GBS) organization with the goal to centralize, standardize and streamline the Company’s support and operational functions across regions, business units and service lines, thereby lowering operating costs, improving quality and enabling continuous improvement. Historically, we have offshored and outsourced certain of our operations, servicesservices, and other functions through arrangements with third parties (e.g., TCS and HCL) and we will continue to evaluate additionalthe offshoring or outsourcing possibilitiesarrangements in the future. Through the acquisition of Lexmark we plan to leverage their model of global capability centers in the Philippines, Hungary, and India for engineering, IT, cybersecurity, sales operations and service delivery, among other functions. If the transition to these centers leads to disruption and the service does not meet the needs of our outsourcing partners fail to perform their obligations in a timely manner or at satisfactory quality levelscustomers, or if we are unable to attract or retain sufficient personnel with the necessary skill sets to meetsets, our offshoring or outsourcing needs, the quality of our services, products, and operations, as well as our reputation,reputation could suffer. In addition, much of our offshoring takes place in developing countries and as a result may also be subject to geopolitical uncertainty. Diminished service quality from offshoring and outsourcing could have an adverse material impact to our operating results due to service interruptions and negative customer reactions.

A significant portion of our revenue is derived from contracts with U.S. federal, state and local governments and their agencies, as well as international governments and their agencies. Government entities typically finance projects through appropriated funds. While these projects are often planned and executed as multi-year projects, government entities usually reserve the right to change the scope of or terminate these projects for lack of approved funding and/or at their convenience. Changes in government or political developments, including budget deficits, shortfalls or uncertainties, government spending reductions (e.g., Congressional sequestration of funds under the Budget Control Act of 2011), government shutdowns, or other debt or funding constraints, could result in lower Xerox 2025 Annual Report 14 governmental sales and in our projects being reduced in price or scope or terminated altogether, which also could limit our recovery of incurred costs, reimbursable expenses and profits on work completed prior to the termination.

XeroxAdditionally, 2024our Annualbusiness Reportwith 14the U.S. government, direct or indirect, is subject to specific laws and regulations with numerous and unique compliance requirements relating to formation, administration and performance of U.S. federal or federally funded contracts. These requirements, which may increase or change over time, may increase our performance and compliance costs thereby reducing our margins, which could have an adverse effect on our financial condition. Violations or other failures to comply with these laws, regulations or other compliance requirements could lead to terminations for default, suspension or debarment from U.S. government contracting or subcontracting for a period of time or other adverse actions. Such laws, regulations or other compliance requirements include those related to procurement integrity, export control, U.S. government security and information security regulations, supply chain and sourcing requirements and restrictions, employment practices, protection of criminal justice data, protection of the environment, accuracy of records, proper recording of costs, foreign corruption, Trade Agreements Act, Buy America Act, other domestic content requirements, and the False Claims Act.

The long-term viability and profitability of our financing business is dependent, in part, on our ability to borrow against or sell leases and the cost of borrowing in the credit markets. This ability and cost, in turn, is dependent on (i) our credit rating, which is currently non-investment grade according to credit rating agency assessments that are subject to periodic reviews and can change following a review and (ii) credit market volatility, which is impacted by global macroeconomic developments such as the war in Ukraine, conflicts in the Middle East. and other global macroeconomic developments. Increased credit market volatility has, among other things, increased the cost of borrowing and reduced access to debt and equity markets. We have historically funded our financing business through a combination of sales and securitizations of finance receivables, capital markets offerings, cash generated from operations and cash on hand. Our current sourcing strategy is centered on selling existing and newly originated finance receivables under long term arrangements with financing partners.partners, which may impact the future revenues of the financing business. Our ability to continue to offer customer financing and be successful in the placement of equipment, software, and IT services with customers seeking to finance those transactions through Xerox is largely dependent on our ability to source funding at a reasonable cost.cost, or at all. If our credit rating declines, the credit market becomes more volatile, or other events occur that reduce the demand for, or our funding partners' ability to provide at attractive rates on, customer financing, it may adversely impact our finance business and results of operations, however, there are alternative sources of funding available to the majority of our customers, which could reduce the overall impact to the broader Xerox business.

Our level of indebtednessdebt could adversely affect our financial condition and reduce our financial and operational flexibility.

•a significant portion of our cash flows could be used to service our indebtednessdebt;

•the covenants contained in the agreements governing our outstanding indebtednessdebt may limit our ability to borrow additional funds, dispose of assets, pay dividends, and make certain investments;

•our debt covenants may also affectinhibit our flexibilityability into planningplan for,for and reactingreact to,to changes in the economy and in our industry;

•a high level of debt may place us at a competitive disadvantage compared to our competitors that may be less leveraged and therefore may be able to take advantage of opportunities that our indebtednessdebt would prevent us from pursuing; and

In addition to our debt service obligations,Moreover, our operations require substantial expenditures on a continuing basis. Our ability to service debt make scheduled debt payments, to refinance our obligations with respect to our indebtednessdebt, and to fund capital and non‑capital expenditures necessary to maintain the condition of our operating assets and properties, as well as to provide capacity for the continuity and growth of our business, depend on our financial and operating performance. WeIf maywe notare be ableunable to generate sufficient cash flows to pay the interest onrepay our debt, and future Xerox 2024 Annual Report 15 working capital borrowings or debt orwhen equitydue, financingwe may not be availableable to pay or refinance such debt at attractive rates or at all.

Xerox Holdings' other direct subsidiary is Xerox Ventures LLC, which was established in 2021 solely to invest in startups and early/mid-stage growth companies aligned with the Company’s innovation focus areas and targeted adjacencies. The investments are primarily equity or equity-linked securities and for less than 20% ownership. Xerox Ventures LLC had investments of approximately $40 million and $26 million at December 31, 2024 and 2023, respectively. In January 2024, Myriad Ventures Fund I LP (Myriad) was established, and the investments held by Xerox Ventures LLC were transferred to this new entity,Myriad, which will continue to be fully consolidated by Xerox Holdings. DueThe toinvestments itsare primarily equity or equity-linked and for less than 20% ownership. At December 31, 2025 and 2024 Xerox's investment in Myriad was $41 million and $40 million, respectively. The following discussion includes the results of Xerox Ventures LLC as they are immaterial impact to earnings and the balance sheet, and for ease of discussion, Xerox Ventures LLC's results are included within the following discussion.

20242025 was thea secondpivotal year offor ourReinvention, Reinvention. Reinventionwhich is a multi-year strategy designed to transform the way Xerox operates. Its objectives are to strengthen our core business and improve financial flexibility to enableenabling investments in solutions, initiatives, and capabilities that will position Xerox to delivergain share in existing markets and mix shift into higher growth verticals beyond print, delivering long-term, sustainable growth in revenue and profits. Total revenue for full year 20242025 of $6.2$7.0 billion decreasedincreased 9.7%12.9% reflecting a 15.5-percentage point benefit and 6.5-percentage point benefit from the Lexmark Acquisition and ITsavvy, respectively, as well as a 0.7-percentage point benefit from acquisitions,currency. as well asOn a 0.2-percentagepro pointforma1 adversebasis impacttotal fromrevenue currency.declined 7.6%.

The focus of ourOur Reinvention efforts inare 2024focused was threefold: Geographic Simplification,on Operational Simplification, and Commercial Optimization &and Growth. WeDuring 2025, we made significant progress across each priority.

With annual revenues of approximately $6.2$7.0 billion, we are a leading global provider of digital print technology and related services, software and solutions. Our business spans five primary offerings span four main areas: Workplace Solutions, Production Solutions, Xerox Services, and Xerox Financial Services (XFS)., all of which are included in the Print and Other segment, and IT Solutions.

•Production Solutions areincludes high-end solutions designed for customers in the graphic communications, in-plant and production print environments with high-volume printing requirements. Our broad portfolio of presses and solutions provides black-and-white and full-color, as well as on-demand printing across a wide range of applications. Production Solutions revenues include the sale of products (captured primarily in equipment sales) as well as, software, supplies and the associated technical service and financing of those products (captured as post sale revenue).

•Xerox® Services includes a continuum of solutions and services that helps our customers optimize their physical print and digital information infrastructures, apply automation and simplification to maximize productivity, and ensure the highest levels of security. Our primary offerings in this area are Managed Print Services1 (MPS), IT Solutions, Capture & Content Services (CCS) and Customer Engagement Services (CES). CCS and CES encompass a range of Digital Services that leverage our software capabilities in Workflow Automation, Personalization and Communication Software, Content Management Solutions, and Digitization Services.

(1)Previously known as contractual print services, and includesIncludes revenues from service, maintenance and rentals. IT solutionsSolutions and digital services are not included in managed print services.

Cash from operating activities was $511$224 million in 20242025 as compared to $686$511 million in 2023.2024. The decrease of $175$287 million was primarily related to lower net income as well as higher payments for accrued compensation, pension contributions, and restructuring, partially offset by net proceeds of approximately $752 million from the on-going sales of finance receivables under the finance receivables funding agreement,agreements, asthe wellimpacts asof one-time cash costs related to the Lexmark Acquisition and higher pension contributions, all of which were partially offset by the timing of working capital1, lower finance receivable originations, andlower improvements in cashpayments for workingaccrued capital1.compensation, and lower payments for restructuring.

Cash used in investing activities was $198$698 million in 20242025 as compared to $5$198 million in 2023.2024. 20242025 primarily reflected the acquisitionLexmark Acquisition of ITsavvy,$676 million, net of cash acquired, as well as capital expenditures of $44$91 million, $11and the investment in a noncontrolling interest of $13 million, all of which were partially offset by $53 million related to the impactsales of theland deconsolidationand ofthree ansurplus entityfacilities, that$6 ismillion nowrelated accountedto lower payments for usingfinance theleases, equity$11 methodmillion offrom accounting,divestitures, and $16 million for investments in noncontrolling interests, all of which was partially offset by net cash proceeds of approximately $20$7 million from the sale of assets, and $7 million from the sales of our business operations in Argentina and Chile.patents.

Approximately 45%43% of our consolidated revenues during 20242025 and 2023,2024, respectively, are derived from operations outside of the U.S. where the U.S. Dollar is normally not the functional currency. As a result, foreign currency translation had a 0.7-percentage point benefit on revenue in 2025 and a 0.2-percentage point adverse impact on revenue in 2024 and a 0.2-percentage point favorable impact on revenue in 2023.2024.

Bundled Lease Arrangements: We sell our equipment direct to end customers under bundled lease arrangements, which typically include the equipment, service, supplies and a financing component for which the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term. These arrangements also typically include an incremental, variable component for page volumes in excess of the contractual page volume minimums, which are often expressed in terms of price-per-image or page. In certain arrangements, some elements, such as supplies, may be separately contracted and billed, while the remaining components are billed through a negotiated fixed monthly payment. Lease deliverables include the equipment and financing, while the non-lease deliverables generally consist of thesupplies services,and which include supplies.services. Sales made under bundled lease arrangements directly to end customers comprise 51%31% or $706$454 million of our equipment sales revenue. Revenues under these bundled lease arrangements are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement. The allocation of revenue among the elements – equipment versus post sale (service, supplies and financing) – has remained fairly consistent.

Sales to Distributors and Resellers: We utilize distributors and resellers to sell many of our products, supplies and parts to end-user customers. Sales to distributors and resellers are generally recognized as revenue when products are shipped to such distributors and resellers. Distributors and resellers participate in various discount, rebate, price-support, cooperative marketing and other programs, and we record provisions and allowances for these programs as a reduction to revenue when the sales occur. Similarly, we also record estimates for sales returns and Xerox 2025 Annual Report 36 other discounts and allowances when the sales occur. We consider various factors, including a review of specific transactions and programs, historical experience and market and economic conditions when calculating these provisions and allowances. Total sales of equipment, supplies and parts to distributors and resellers were $973$1,249 million for the year ended December 31, 20242025 and provisions, and allowances recorded on these sales were approximately 26%35% of the associated gross revenues.

As of MarchJune 31,30, 2026, there have been no material changes to the risk factors that were previously disclosed in Part I, Item 1A of the combined Xerox Holdings Corporation and Xerox Corporation Annual Report on Form 10-K for the year ended December 31, 2025.

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 MarchJune 31,30, 2026 and December 31, 2025 investments ofin Myriad were $45$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.

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 investors an additional perspective on revenue trends. Currency impact can be determined as the difference between actual growth rates and constant currency growth rates.

In the firstsecond quarter of 2026, overall market trends improvedremained stable compared to 2025,the whenprior year, with demand wasbroadly affectedconsistent bywith DOGE-relatedrecent spending reductions, tariff uncertainty, and the government shutdown.quarters. The February 2026 Supreme Court ruling on IEEPA tariffs isprovided expecteda meaningful benefit to haveour cost structure in the second quarter 2026, which we recognized as a netreceivable positiveand impactsubsequently onsold Xerox’sfor cost$80 structure.million in cash. However, thoseongoing benefitstariff arepayments, expectedcombined to be slightly more than offset bywith higher memory and oil prices.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.

FirstSecond quarter 2026 reflects the continued benefits of the Lexmark Acquisition and fromXerox's Xerox’s Transformation1transformation efforts. Pro forma1 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 anew moreproduct launches under the unified go-to-marketXerox model,brand, increasinggrowing partner validation, and strategica initiativesmore tofocused enhancego-to-market long-termapproach profitability,which is collectively positioning the company for sustainedcontinued operational and financial improvements.improvement in the second half of 2026 and beyond.

Equipment sales of $378$387 million in the firstsecond quarter 2026 increased 33.1%15.2% in actual currency and 30.7%15.0% in constant currency2, as compared to the firstsecond quarter 2025. FirstSecond quarter 2026 equipment sales included a 38.0-percentage33.1-percentage point benefit from the Lexmark Acquisition. Total equipment installations increased approximately 98.0%97.0% including the impact of the Lexmark Acquisition, partially offset by declines in legacy Xerox installations, primarily in the entry-andentry, and mid-range color equipment categories. Excluding the Lexmark acquisition,Acquisition, equipment sales declined 4.9%17.9% in actual currency due to lower installations,installations partiallyand offseta bymix entryshift markettoward leadEntry generation initiatives.products. On a pro forma3Xerox 2026 Form 10-Q 42 forma1 basis, firstsecond quarter 2026 revenue declined 2.3%,13.0%, primarily reflecting the impacts noted above, partially offset by modest growth from Lexmark.

Post sale revenue of $1,314$1,346 million in the firstsecond quarter 2026 increased 30.1%30.7% in actual currency and 26.5%29.7% in constant currency2, as compared to firstsecond quarter 2025. First quarter 2026 post sale revenue reflected higher sales of supplies to our distributors and resellers2025, and included a 35.3-percentage37.5-percentage point benefit from the Lexmark Acquisition. Excluding the Lexmark Acquisition, post sale revenue declined 5.2%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 forma3forma1 basis, firstsecond quarter 2026 revenue decreased 3.8%,3.9%, primarily reflecting the impacts noted above.

IT Solutions revenue of $154$189 million in the firstsecond quarter 2026 declined 5.5%10.0% in actual currency and 6.2%9.0% in constant currency2, as compared to the firstsecond quarter 2025. The decline was primarily driven by a mix of revenue subject to net classifications,classifications and revenue deferrals and impacts on demand resulting from component cost increases.deferrals.

Also in February 2026, in connection with the formation of the Joint Venture, Xerox Holdings, Xerox Corporation, IPCo Holdings and XeroxXRX 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).

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 Equity of Xerox Holdings in the Condensed Consolidated Financial Statements for additional information regarding the Warrant Dividend.

Total revenue of $1.85$1.92 billion for firstsecond quarter 2026 increased 26.7%22.0% from firstsecond quarter 2025, including a 31.9-percentage31.6-percentage point benefit from the Lexmark Acquisition, as well as a 3.1-percentage0.8-percentage point favorable impact from currency. On a pro forma1 basis total revenue declined 3.7%.6.5%. Total revenue reflected the following:

•a decrease of 5.5%10.0% in IT ProductsSolutions revenue, including a 0.7-percentage1.0-percentage point favorableunfavorable 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 MarchJune 31,30, 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 (lossLoss) and adjusted1 Net Income (lossLoss) were as follows:

First quarter 2026 Net (Loss) for the six months ended June 30, 2026 was $(105) million and increased by $(1592) million as compared to the firstprior quarteryear 2025 Net (loss) of $(90) million.period Net (Loss) forof the$(196) firstmillion, quarterwhich 2025 reflectsreflected the establishment of a valuation allowance of $59 million against certain deferred tax assets to reflect their realizability.realizability Firstin quarter 20262025. Net (Loss) reflectsfor 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. Adjusted1 Net Income for the six months ended June 30, 2026 was $4 million as compared to the prior year period adjusted1 Net (Loss) of $(81) million. Adjusted1 Net Income (Loss), which includes the results of Xerox 2026 Form 10-Q 4144 intangibleLexmark, assets,increased by $85 million primarily reflecting higher revenues and higher gross profit, as well as lower Other expenses (income), net and Income tax expense,expense. allThese ofbenefits which waswere partially offset by higher revenues,SAG, higherNon-financing grossinterest profit,expense, RD&E, and lower Other expenses,expenses (income), net.

For the firstsix quartermonths 2026ended June 30, 2026, net cash used in operating activities was $144$107 million, net cash used in investing activities was $24$33 million, and net cash provided by financing activities was $242$128 million. Please referRefer to the Capital Resources and Liquidity section for additional information regarding our cash flows.

(1)Refer to the "Pro Forma Basis" section for an explanation of this measure. Reflects the inclusion of Lexmark's estimated results from JanuaryApril 1, 2025 through MarchJune 31,30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition.

(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 MarchJune 31,30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition.

FirstSecond quarter 2026 gross margin of 29.7%35.8% increased by 0.5-percentage7.2-percentage points as compared to firstsecond quarter of 2025, which included an approximate 0.9-percentage5.5-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 firstsecond quarter 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.services, as well as product cost increases. Excluding the impact of the Lexmark acquisition,Acquisition, gross margin declinedincreased 0.4-percentage5.6-percentage points.points reflecting the impacts noted above. On a pro forma1 basis, firstsecond quarter 2026 gross margin of 29.7%35.8% increased by 0.2-percentage6.9-percentage points.points driven by the IEEPA tariff receivables.

FirstGross quartermargin for the six months ended June 30, 2026 Post sale gross margin of 34.6%32.8% increased by 5.0-percentage3.9-percentage points as compared to firstthe quarterprior ofyear 2025,period, which included an approximate 2.8-percentage point benefit related to the IEEPA tariff receivables and a 4.4-percentage1.2-percentage point benefit related to the Lexmark acquisition. Excluding the impact of the Lexmark acquisition, post sale gross margin increased 0.6-percentage points.Acquisition. The increase infor the firstsix quartermonths ended June 30, 2026 primarily reflects higher revenue and gross profit, includingwhich 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,increases aand fixed asset-related purchase accounting adjustment related to the Lexmark acquisition,an unfavorable revenue mix, including lower equipment service revenue and managed print services,services. rentalExcluding andthe otherimpact revenues,of asthe wellLexmark asAcquisition, lowergross financingmargin fees.increased 2.7-percentage points. On a pro forma1 basis, first quarter 2026 post sale gross margin for the six months ended June 30, 2026 of 34.6%32.8% increased 0.5by -percentage3.6-percentage points.points, driven by the IEEPA tariff receivables.

FirstSecond quarter 2026 RD&E as a percentage of revenue of 3.5% increased 0.6-percentage0.8-percentage points as compared to firstsecond 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.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 primarily due to the Lexmark Acquisition.revenue.

(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 MarchJune 31,30, 2025. Lexmark's actual results are included in Xerox's reported results beginning on July 1, 2025, the effective date of the acquisition.