Heavily Shorted Xerox Stock Sees Short Squeeze Surge After Earnings

Xerox Holdings Corp. (NASDAQ: XRX ) reported second-quarter results on Thursday that topped Wall Street estimates for earnings and revenue, helped by improved profitability, the integration of Lexmark and a one-time tariff-related benefit.

Following the results, the stock jumped nearly 27%.

Stock Surges On Earnings Beat And Short Squeeze The rally was likely magnified by elevated short interest, with 32% of the public float sold short, signaling substantial bearish positioning that may have fueled a squeeze.

The company has a short float of 36.47 million shares, representing 32.09% of its publicly traded float, indicating an exceptionally high level of short interest.

Second-Quarter Earnings Top Expectations Adjusted earnings came in at 38 cents per share, beating the analyst consensus estimate for a loss of 14 cents per share.

Revenue rose to $1.92 billion from $1.58 billion a year earlier and exceeded the Street estimate of $1.90 billion.

On a pro forma basis, which includes Lexmark in the prior-year comparison, revenue declined 6.5%.

GAAP net income was $13 million, or 7 cents per share, compared with a loss of $106 million, or 87 cents per share, a year earlier.

Adjusted operating income increased to $203 million from $59 million, while adjusted operating margin expanded to 10.6% from 3.7%.

The quarter included a $105 million pre-tax benefit related to the recognition of IEEPA tariff receivables following a recent U.S.

Supreme Court ruling.

Segment Performance And Cash Flow Improve The company’s Print and Other segment generated $1.73 billion in revenue, while IT Solutions revenue declined to $194 million from $213 million a year earlier.

Operating cash flow improved to $37 million from a use of $11 million a year earlier, and free cash flow increased to $11 million from a negative $30 million.

Xerox ended the quarter with $495 million in cash and cash equivalents, compared with $512 million as of Dec.

31, 2025.

Total debt, including the current portion, stood at $4.22 billion, compared with $4.25 billion at the end of 2025.

Lexmark Integration Supports Outlook Chief Executive Officer Louie Pastor said the company made progress on its priorities of stabilizing revenue, increasing profitability and reducing leverage.

Xerox also increased its Lexmark gross cost synergy target by $50 million to at least $350 million during the quarter.

2026 Outlook Improves For fiscal 2026, Xerox now expects revenue of approximately $7.6 billion, compared with analysts’ estimate of $7.61 billion.

The company also raised its adjusted operating income outlook to a range of $555 million to $605 million from its prior forecast of $450 million to $500 million and reiterated free cash flow guidance of about $250 million.

XRX Stock Price Activity: Xerox shares were up 26.78% at $3.347 during premarket trading on Thursday, according to Pro data.

Photo by T.

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