Good morning, everyone. I'm David Beckel, Vice President and Head of Investor Relations at Xerox Holdings Corporation. Welcome to the Xerox Holdings Corporation Second Quarter 2025 Earnings Release Conference Call, hosted by Steve Bandrowczak, Chief Executive Officer. He is joined by John Bruno, President and Chief Operating Officer; and Mirlanda Gecaj, Chief Financial Officer. At the request of Xerox Holdings Corporation, today's conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without the expressed permission of Xerox. During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor and we'll make comments that contain forward-looking statements, which, by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein. At this time, I'd like to turn the meeting over to Mr. Bandrowczak.

Good morning, and thank you for joining our Q2 2025 earnings conference call. The closing of the Lexmark acquisition in early July marked an important milestone in Xerox's Reinvention. With this transaction, we unite two industry leaders with complementary sets of operations, offering strengths and market reach. Xerox and the Lexmark offering will be combined and optimized to enhance client value, providing the foundation from which we can expand the penetration of our IT solutions and digital services businesses as we help our clients navigate the increasingly digital nature of document workflows and processes. I'd like to commend both the Xerox and Lexmark teams who this quarter navigated a challenging operating environment while preparing for an accelerated transaction close and integration timeline. Summarizing results for the quarter, revenue of around $1.58 billion was roughly flat with the prior year in actual currency and declined 1.1% in constant currency, inclusive of ITsavvy. Adjusted operating income margin of 3.7% was lower year-over-year by 170 basis points. Free cash flow was a use of cash of $30 million, reflecting in part a delay in the sale of a large portfolio of finance receivables. And adjusted loss per share of $0.64 declined $0.93 year-over-year due in large part to an unfavorable tax rate. This quarter demonstrated the improved resiliency of revenue and adjusted operating income afforded by our Reinvention, specifically the benefits of a more favorable mix of revenue from faster-growing businesses and a more flexible and simplified operating structure. In the second quarter, strong demand for cloud enablement services at our IT Solutions segment helped offset a brief period of softer demand for print equipment in April and May amid peak DOGE and tariff-driven uncertainty. Our relentless focus on cost discipline helped preserve adjusted operating income, offsetting the effects of lower-than-expected sales of print equipment and higher tariff costs. The improved resiliency demonstrated in Q2 provides an affirmation of our strategic direction, the benefits which are expected to be further enhanced through the acquisition of Lexmark. Our strategic focus this year in anticipation of the close of the Lexmark acquisition has been the continued execution of Reinvention, ensuring the full realization of benefits from the ITsavvy and Lexmark acquisition and preserving balance sheet strength. I'll provide a brief update on this quarter's progress in each of these areas. Starting with the execution of Reinvention. In the second quarter, we advanced a number of Reinvention initiatives aimed at optimizing our commercial offering and simplifying operations, each of which will provide benefits well beyond the Lexmark integration. This quarter, we expanded our inside sales program to cover new territories and product lines, further enabling our direct sales force to concentrate on larger client opportunities. We also reduced the time it takes to process orders at our XBS business unit by four days, improving both time to revenue and client satisfaction. In IT Solutions, we continue to build momentum in the cross-sell of advanced IT offerings in the Xerox print client base, an important contributor to this segment's recent strength. Ongoing operational simplification efforts leveraging technology-driven efficiencies enabled another double-digit percentage reduction in adjusted organic operating expenses. We will continue advancing Reinvention initiatives currently in flight and those planned for the future as we progress the phasing of our Reinvention to now include the integration of Lexmark. John will describe the evolution of our Reinvention strategy to incorporate the Lexmark integration in more detail.

Thank you, Steve. We are very excited to have closed the Lexmark acquisition and are now in full execution mode with the integration of the two companies. Lexmark strengthens our print business by adding scale and exposure to faster-growing parts of the market like A4 color. These advantages are expected to improve revenue and gross margin in print as well as accelerate the growth of our IT and digital solutions businesses. I'll expand on four specific ways in which the Lexmark acquisition directly benefits our near-term financial outlook on Slide 7. Starting with the print market share gains. We expect to leverage the top 3 position we now hold in all major print categories to expand our share of print-related spend with existing and new clients. The overlap between Xerox and Lexmark clients and partners is relatively small, enabling the combined companies to sell a broader set of offerings into a larger combined client base, including the 43 Lexmark A4 product configurations that were not previously offered to Xerox clients and partners. We also expect our combined engineering teams to advance the pace of innovation of Lexmark's leading A4 and recently launched A3 platforms. A more diverse and competitive offering is expected to improve win rates, a view that is supported by the positive feedback and excitement we are hearing from clients in just a month since the transaction closed. Market expansion opportunities in print are expected to contribute to an improved revenue trajectory. We will leverage Lexmark's distribution footprint in the Asia Pacific region to begin selling Xerox's A3 and high-end products as well as our suite of software and services where until now, we've had no presence. We expect to grow Lexmark's recently launched A3 OEM platform, which addresses a $12 billion print market. The Lexmark acquisition also enhances service expansion opportunities. Our print, IT, and digital service businesses address stable or growing markets and provide differentiation in a competitive environment. An early focus of our integration efforts will be the standardization and evolution of Managed Print Services. Xerox and Lexmark combined serve approximately 25% of this $14 billion market. We expect the sharing of best practices and an optimization of our respective service models to result in a combined managed print offering that is more attractive to clients and more profitable to operate. Beyond print, we'll accelerate our efforts to promote the cross-sell of IT and digital solutions to the combined Xerox and Lexmark client bases. These markets in total are more than 10 times the size of the print market. Cross-sells of IT solutions to legacy Xerox clients even prior to the acquisition of Lexmark are running ahead of our initial expectations. Year-to-date, we have generated an IT product and services pipeline of close to $50 million from more than 80 traditional Xerox print clients. We've barely scratched the surface of this opportunity with IT solutions penetration of the Xerox print client base currently in the low single-digit range. Lexmark adds around 15,000 print clients for our IT solutions business to target. Most importantly, the Lexmark acquisition provides us with an opportunity to improve profitability with more than $250 million of identified cost synergies realizable within 2 years. Many of the expected synergies will address print product costs, enabling improvement in gross margin. Key among the opportunities is the adoption of the Lexmark A3 platform, which reduces our landed product costs for this important segment. We also expect product cost improvements from the transition of Lexmark toner to Xerox's technology, which is 30% more cost-effective, the integration of Lexmark's more efficient controller technology into Xerox machines, and the utilization of Lexmark's Mexico facility to optimize global tariff exposure. I'll now provide an update on Reinvention and its role in driving these cost synergies to realization. With the Lexmark acquisition complete, our Reinvention will begin to incorporate the strategic priorities of the combined businesses. The directives of our Reinvention remain in place and the guiding principles of operating simplification, commercial optimization, and growth will continue to influence our approach to the integration of Lexmark. Operational simplification efforts will focus near-term on combining our operating capabilities, including our respective Global Business Services functions, consolidating corporate organizations, optimizing labor spend, and standardizing technology platforms. Commercial optimization initiatives address the value proposition cost to serve of Managed Print Services, the expansion and diversification of Xerox's print portfolio, and the continued optimization of our regional and channel distribution presence. Product expansion and diversification will be driven by the adoption of Lexmark's A3 technology and the addition of new high-end OEM partnerships, such as the partnership with Kyocera announced today. This partnership provides Xerox with the ability to offer Kyocera's leading cut-sheet inkjet products to our production print clients, strengthening our suite of production print products while wrapping Xerox's software and solutions around a more diverse production print ecosystem. As noted in the previous slide, growth initiatives will focus on expanding Xerox's presence in higher-growth print markets such as APAC, A4 color, and cut-sheet inkjet, as well as the continued expansion of Xerox IT and digital solutions into our client base. The financial objectives of Reinvention also remain the same: revenue stabilization and a return to double-digit adjusted operating income margin. Revenue stabilization will be driven by an improved trajectory in print, supported by stronger print business post Lexmark and an improved mix of revenue from higher-growth businesses. IT services and digital solutions today comprise more than 10% of revenue on a pro forma basis. Over time, we expect these businesses to comprise more than 20% of our revenue. Revenue stabilization will, in turn, allow more savings to fall to the bottom line. We continue to expect more than $700 million of gross cost savings and profit opportunities associated with the Reinvention strategy. When combined with more than $265 million of Lexmark and ITsavvy acquisition-related synergies, we expect around $1 billion of savings and profit improvement opportunities to be realized through our Reinvention by 2028, with around half or $500 million yet to be realized. Focusing now on Lexmark synergies. The more than $250 million of gross cost synergies are wide-ranging, covering our shared services and global support functions, service delivery, engineering, manufacturing, and other organizations. In 2025, we expect to implement synergies with run-rate savings of $100 million to $125 million, which will result in an in-year cash investment of about $50 million to $75 million. These initial synergies will focus on the elimination of duplicative shared service overheads and technology spend. In 2026, the focus of synergies will turn to the optimization of our supply chain, R&D, and certain cost and purchasing advantages afforded by larger operating scale. We expect that most of the run-rate synergies will be implemented by the end of 2026. In 2027, we will realize the benefits of a consolidated real estate footprint and IT infrastructure and continue to optimize our managed print delivery structure. To summarize, the Reinvention through integration has begun. The next phase is expected to strengthen our print business and drive an improved mix of revenue from higher-growth businesses, leading to revenue stabilization and a higher flow-through of roughly $500 million of identified cost savings and profit opportunities yet to be realized.

Thank you, John, and good morning, everyone. Revenue this quarter was roughly flat year-over-year in actual currency or 1.1% lower in constant currency. Organic core revenue, which excludes ITsavvy and the effects of currency and Reinvention actions, declined around 5% this quarter. This pace of decline was larger than our expectations, reflecting softer print equipment demand in April and May amid peak DOGE and tariff-related uncertainty and, to a lesser extent, delays in the sales of OEM supplies due to recently implemented tariffs. Despite these unexpected headwinds, revenue was in line with our guidance due to stronger-than-expected results at our IT Solutions segment, which benefited from an acceleration in demand and momentum in the cross-sale of IT Solutions to Xerox print clients. Turning to profitability, adjusted gross margin of 29.3% declined around 420 basis points year-over-year. Around 300 basis points of the decline reflected lower financing and other fees associated with the intentional reduction of our finance receivable portfolio and higher product costs. Around 100 basis points of the year-over-year decline was due to the inclusion of ITsavvy, which has a lower gross margin but a similar operating margin profile as the print business. Nearly 100 basis points of the decline reflected tariff charges, net of price-related mitigation actions, and adverse currency impacts. These effects were partially offset by Reinvention related and other cost reductions. Adjusted operating margin of 3.7% was 170 basis points lower year-over-year, reflecting lower gross profit and, to a lesser extent, higher bad debt expense, partially offset by Reinvention savings and other cost reduction efforts as well as the inclusion of ITsavvy, which carries a lower operating expense base than our print business. Adjusted operating income of $59 million was $4 million below the low end of our Q2 guidance range. A continued focus on cost control drove operating expenses $32 million lower year-over-year. Included in operating expenses in the second quarter were $9 million of Reinvention and transaction-related costs and $14 million of ITsavvy operating expenses. Excluding these costs, operating expenses declined $55 million, a reduction to our operating expense base of around 12% year-over-year. Adjusted other expenses net were $41 million, $11 million higher year-over-year due primarily to higher net interest expense. Excluded from adjusted other expenses this quarter was $12 million of net interest expense associated with debt financing that was contingent upon the completion of the Lexmark acquisition. Adjusted tax rate of 528% compared to 25.5% in the same quarter last year. The current year rate reflects an inability to deduct certain losses and expenses, including interest. We continue to assess the impact of the Lexmark acquisition and recent tax law changes on our effective tax rate for the remainder of the year. We expect the Lexmark acquisition and tax law changes to contribute favorably to adjusted operating income and adjusted tax rate in future periods. Adjusted loss per share of $0.64 was $0.93 lower than the prior year, primarily due to a higher adjusted tax rate as well as lower adjusted operating income and higher interest expenses. GAAP loss per share of $0.87 was $0.98 lower year-over-year. The increase in GAAP loss reflects a higher tax expense, lower operating income, higher net interest, and one-time costs associated with the Lexmark transaction in the current year and insurance proceeds related to a legal settlement in the prior year. Let me now review segment results. Q2 equipment sales of $336 million declined 5.6% in actual currency and 6.7% in constant currency. Excluding the effects of Reinvention-related actions, equipment sales declined around 3% compared to a decline of around 1% in Q1. The sequential slowdown reflected a period of softer equipment demand in April and May, which was partially offset by a recovery and return to normalized demand conditions in June. Total equipment installations declined 12% due in part to the aforementioned period of demand weakness at the beginning of quarter 2 and the effects of prior year's Reinvention actions, including geographic and offering simplification. Entry installations declined 14%, driven in part by a prior year reduction and current year build in backlog for mono devices. Mid-range installations declined 6% as continued strength in sales of the recently launched PrimeLink 9200 series was partially offset by slower demand for other products. Entry and mid-range equipment revenue declined at a slower pace than installations due to a stronger mix of color devices and the benefits of tariff-related price actions. High-end equipment installations and revenue both declined year-over-year, reflecting in part the ongoing evolution of our production print portfolio and high-end offering simplification actions taken last year. Print post-sale revenue of around $1 billion declined 9.5% in actual currency and 10.5% in constant currency. Excluding the effect of Reinvention actions, print post-sale revenue declined around 6% in constant currency. The decline in core print post-sale revenue reflects lower supplies and page volumes, offset by growth in digital services. Print segment adjusted gross margin of 31.2% declined 330 basis points year-over-year due to higher product costs, including tariff expenses, lower financing fees, lower managed print volumes, and unfavorable equipment channel mix and currency effects, partially offset by Reinvention savings and other cost reduction efforts. Print segment margin of 4.8% declined 240 basis points year-over-year due to lower revenue and gross profit, partially offset by Reinvention savings and other cost controls. Turning to IT Solutions results, in Q2, IT Solutions revenue and gross profit increased more than 150% year-over-year, reflecting the inclusion of ITsavvy in segment results and strong organic growth from the legacy ITsavvy business. Pro forma for the acquisition of ITsavvy, IT Solutions gross billings, a reflection of business activity, increased 8% year-over-year compared to an increase of 0.4% in Q1. The sequential improvements in billing growth reflect strong PC sales, in part associated with the Windows 11 upgrade cycle, and an acceleration in demand for infrastructure and networking products with particular strength in Microsoft cloud service provider implementations. As Steve and John noted, we're seeing momentum in the cross-sale of IT products and services to existing Xerox print clients, which helped contribute to another quarter of double-digit growth in gross bookings, a measure of forward billings. IT Solutions gross profit grew $22 million year-over-year, and gross margin of 16.4% expanded 90 basis points compared to the prior year, reflecting the inclusion of ITsavvy. Segment profit grew $9 million year-over-year due to the inclusion of ITsavvy. Segment profit now reflects the full run rate benefit of annualized synergies. Let's now review cash flow. Operating cash flow was a use of $11 million compared to a source of $123 million in the prior year quarter. The reduction in operating cash flow reflects lower pretax cash net income and lower proceeds from finance receivables, partially offset by ongoing improvements in working capital, lower restructuring payments, and lower cash taxes. Investing activity was a use of cash of $18 million compared to a use of $2 million in the prior year quarter due primarily to an increase in capital expenditures associated with the implementation of a new enterprise-wide technology platform and lower proceeds from the sale of assets. Financing activity resulted in a source of cash of more than $600 million compared to the use of cash in the prior year of $336 million. Current year financing activity included proceeds from the sale of first and second lien notes, partially offset by the early redemption of a portion of our 2025 notes, the prepayment of a portion of our term loan, and quarterly amortization of other secured debt. Prior year financing activity included the repayment of our 2024 senior unsecured notes and other secured debt payments. Free cash flow was a use of $30 million in the second quarter, $145 million lower year-over-year. The reduction in free cash flow reflects, in part, fewer-than-expected proceeds from the sale of finance receivables due to a delay in the sale of roughly $100 million of European finance receivables not expected in quarter 3. In the second half of the year, we expect seasonal improvements in adjusted operating income, continued working capital discipline, and benefits from the reduction in finance receivables to drive positive free cash flow. As is typical, we anticipate quarter 4 to be our seasonally strongest quarter of free cash flow generation. However, as noted, free cash flow in quarter 3 is expected to benefit from a higher-than-normal level of finance receivable sales. Moving to capital structure. We ended Q2 with $985 million in cash, cash equivalents, and restricted cash, of which around $500 million reflects proceeds from the sale of second lien notes, which were held in escrow to fund the Lexmark acquisition. Total debt of $3.9 billion at quarter end increased by more than $600 million from Q1 levels due primarily to financing activity associated with the Lexmark acquisition. Around $1.6 billion of the $3.9 billion of outstanding debt supports our finance assets, resulting in core debt of $2.3 billion related to the non-financing business. Adjusted for the Lexmark acquisition, which closed on July 1 and repayment of the August 2025 unsecured notes, total debt was $4.3 billion and total core debt, which excludes financing allocated debt, was $2.7 billion. The Lexmark acquisition increased total debt levels but resulted in a lower gross debt leverage ratio. On a pro forma basis, gross debt leverage is 5.4x trailing 12 months EBITDA, more than a half turn lower than our Q1 leverage ratio. Including the more than $250 million of expected synergies, gross debt leverage would be reduced further to 4.1x trailing 12 months EBITDA. Our top capital allocation priority remains the reduction of debt, and we continue to target a gross debt leverage ratio of 3x trailing 12 months EBITDA in the medium term. Finally, I will address fiscal year 2025 guidance, which now includes Lexmark's expected results beginning July 1. We expect revenue to grow 16% to 17% in constant currency, inclusive of around $1 billion of Lexmark revenue. As noted, we experienced a recovery in equipment demand in June following a period of softer demand in April and May. While demand conditions are currently stable and expected to remain stable in the absence of further tariff and trade-related disruption, our guidance for the second half of the year accounts for a degree of conservatism to reflect the volatile and unpredictable nature of tariff and other government policies. For the full year, we expect an adjusted operating income margin of around 4.5%, inclusive of $100 million to $110 million of adjusted operating income from Lexmark. Lexmark's expected contribution excludes $10 million to $15 million of one-time intercompany gross profit eliminations. Relative to prior Xerox-only guidance, this updated guidance reflects $30 million to $35 million of tariff charges net of mitigation efforts, a delay in the in-year realization of certain Reinvention-related gross cost savings, and a more conservative outlook for full-year equipment demand, partially offset by a modest amount of Lexmark synergies. As John noted, our target for Reinvention-related gross cost savings and other profit improvement opportunities remains unchanged at more than $700 million. However, we expect to realize fewer Reinvention-related savings in 2025 than originally expected as we evaluate the pace and scope of certain Reinvention initiatives relative to Lexmark integration priorities. Any delayed savings in 2025 are timing-related and expected to directly benefit adjusted operating income in 2026 or 2027. The high end of the $30 million to $35 million range of expected tariff expense, net of mitigation efforts, reflects tariff rates currently proposed to take effect August 1. The full year tariff impact is larger than previously communicated due to a brief period of 145% tariffs applied to goods sourced from China, a higher-than-expected increase in transition costs associated with products moved from China to Mexico, and a more deliberate rollout of price increases as we await final tariff rates. Assuming rates remain unchanged, we expect to recover the net impact of 2025 tariff expenses in 2026. Finally, free cash flow is expected to be around $250 million. The roughly $125 million reduction in free cash flow relative to the midpoint of prior guidance reflects higher in-year cash tariff expenses and $50 million to $75 million of expected cash payments associated with an accelerated implementation of Lexmark synergies. These headwinds are offset by expected improvements in working capital and mild in-year free cash flow accretion from Lexmark net of incremental interest expense. We continue to aggressively manage working capital to improve the conversion of free cash flow from adjusted operating income. Free cash flow associated with the Lexmark acquisition is expected to improve in future periods as run-rate synergies outpace implementation costs. It is important to note that expected free cash flow in 2025 will be impacted by certain onetime items that are not expected to recur in future years. Current year cash tariff outlays, net of mitigation efforts of $60 million to $65 million are expected to be recouped over time through future price increases. Synergy implementation costs of $50 million to $75 million in 2025 are expected to decline in 2026 and be reduced to less than $25 million in 2027. This year, we incurred a roughly $50 million one-time cash flow headwind associated with changes in inventory ownership terms with a large supplier partner. Excluding the impact of these items, excess pension payments, and the expected contribution of finance receivable proceeds, free cash flow conversion from adjusted operating income would approach Xerox's target range of 35% to 40% this year, a range that is expected to be further supported in future periods as adjusted operating income increases and interest expense decreases. For purposes of modeling results between quarters, in the second half of 2025, we expect stronger than typical seasonal operating income generation in Q4 due to the consolidation of Lexmark, which has a heavier weighting of operating income in Q4 than the legacy Xerox business and the cumulative benefits of tariff mitigation, Reinvention, and synergy savings, which are expected to be more heavily weighted to quarter 4. Moving to 2026. To help model results for the combined companies, we are providing preliminary operating expectations for 2026. Starting with revenue, we expect the legacy Xerox print business to decline at roughly the pace of the broader print market, which we assume to be low to mid-single digits, consistent with recent trends. This expectation reflects the ongoing benefits of various Reinvention-related sales productivity and service renewal initiatives as well as market share growth opportunities afforded by the Lexmark acquisition, offset by a degree of conservatism associated with future integration planning. Lexmark revenue is expected to be relatively flat year-over-year, resulting in another $950 million of revenue, net of intercompany eliminations in 2026. Our IT and digital solutions businesses are expected to grow faster than their respective markets as we continue to benefit from growth in the penetration of both types of services within the legacy Xerox print and now the Lexmark print client bases. We expect significant year-over-year growth in adjusted operating income resulting from the inclusion of Lexmark, synergy realization, and further Reinvention-related savings. Addressing items that contribute to adjusted operating income, we expect the full year consolidation of Lexmark to add around 50 basis points to 2025's achieved gross margin in 2026, reflecting Lexmark's gross margin of around 35%, excluding intercompany revenue. Adjusted operating income growth is expected to be further supported by at least $250 million of year-over-year cost reductions from acquisition synergies, Reinvention savings, and ongoing cost discipline. To conclude, I'm excited to welcome the Lexmark team to Xerox. Lexmark improves our competitive position in print and will be an important contributor to Reinvention's financial targets of revenue stabilization and double-digit adjusted operating income margins.

I have probably three questions, if I could, and thanks for all the great detail. I guess the first one is the June slowdown. You mentioned June and July slowdown. You mentioned it stabilized. I think you guys mentioned in the prepared remarks that sort of you mentioned DOGE and tariffs. Was there just DOGE related? Was there a meaningful sort of federal component to the softness that you guys had? I guess the tariff comment. Does that sort of speak to that there was broader sort of pricing pressure? You mentioned tariffs were a little bit more onerous than you had anticipated. Do you think it was sort of print-specific pricing that caused it? Or do you think your customers were just sort of in wait-and-see mode, generally speaking, and not related to pricing? I got a couple of follow-ups.

That's all right. No problem. It's John. And you're spot on. The timing, I just want to be clear, it was May, June. Excuse me, it's actually April, May, with the June recovery, my apologies. You're correct in your last component. You have a lot of these environments, SLED, and Fed that are dependent upon funding. All those DOGE and DOGE-related issues just caused pause. Nothing has come out as a cancellation. We've seen no cancellations in the pipeline, just a delay. And the tariff piece for sure. The tariff piece is not as much of a cost flow-through in those particular months as it is an impact of people making decisions as they look at landed cost and the type. We had been the same. You can imagine, we did the same. When we didn't understand what the destination and the source was on the tariff-related products, we had to hold and make some decisions before we let things get shipped to us because we had no idea what we were applying to that actual cost basis. We wanted to hold until we started getting clarity. That has been consistent throughout the industry. We've seen and heard that with consistency. That's not unique to us. But those types of things is what gives you the softness in that kind of April and May timeframe. That's why we saw such a stronger June recovery against both of those related issues.

It's Maya on for Erik. I was wondering if you could elaborate on the weakness observed in April and May, whether it was widespread across customer segments or more concentrated in SMB, for example, and across different geographies as well. Additionally, does your full-year outlook, which reflects some conservatism for the latter half of the year, assume that demand will remain stable and does not expect improvement from the end of June? Or does it factor in an additional decline in demand from where you finished the quarter?

I will begin by noting that the situation is somewhat uneven, although enterprise operations remained relatively steady. We experienced more pressure within Fed and SLED accounts. Our focus was primarily on installations, with changes observed between quarters resulting in some sequential slowdowns. When comparing our entry products to our mid products, the variations in entry products were mainly due to changes in our backlog, while the declines in mid products were primarily linked to weak performance in April and May. However, as Mirlanda mentioned, we saw robust growth in our PrimeLink installations, which exceeded 30%. We anticipate maintaining our market share in the upcoming periods. The declines in high-end products were self-inflicted, reflecting our strategic decisions to exit certain areas within our print product portfolio. We did this intentionally to re-enter those segments with improved offerings. The Kyocera announcement this morning is pivotal because we aim to streamline our production portfolio in areas with declining products and higher costs, making room to pursue opportunities in cut-sheet inkjet. This segment is projected to grow at over 13% annually, according to external analysts between 2025 and 2030. By integrating our products like free flow, finishing, and remote services with stabilizing mid-range offerings, we believe that the core aspects of our strategy in A4 color and high-end cut-sheet inkjet are crucial. This is how we are addressing the fluctuations we experienced, both in market demand and product performance.

Yes. But Maya, also to add to John's, right, you clearly pointed out and we mentioned in our prepared remarks, our guidance for the rest of the year has some conservatism on it. We saw that softness, and we built that into our equipment demand for the rest of the year.

This is Priyanka Thapa on for Samik Chatterjee. I got a couple of questions on Lexmark. One of them is, why is the outlook for Lexmark's revenue in 2026 expected to be flat when they're exposed to growth markets and stronger growth markets than legacy Xerox print?

Yes. I can answer that. So from a Lexmark perspective, our expectation of Lexmark being flat, that is better than industry, which we expect is reducing by 3%. What drives that is Lexmark is very well positioned in the A4 market, which is an area that is growing, to say the least. 80% of their revenue is basically annuity-based and gives them an upper hand as it relates to the print market in 2025 and going forward.

All right. And what is the driver of operating margins declining to 4.5% for the full year in '25 versus 5% before?

Let me break down the operating margin for 2025. We expect revenue to grow by 16% to 17%, which includes approximately $1 billion from Lexmark revenue. In regard to the Xerox legacy, we project it to be around 150 basis points lower than our previous guidance, partly due to conservative estimates driven by the demand softness we experienced in April and May. It's important to note that our full-year guidance for Xerox legacy includes a 400 basis point headwind from the Reinvention initiatives started last year, which will carry over into 2025. Consequently, we estimate core revenue in the range of 3% to 4% for Xerox, a slight improvement from a 4% decline in the previous year. We anticipate further improvements in Xerox legacy revenue as we gain market share and expand our digital legacy IT solutions. Our adjusted profit margin for 2025 is projected to be 4.5%, largely due to a decrease in top-line revenue. We expect gross margins to be between 29% and 30%. Tariffs are likely to affect our adjusted operating margins by $30 million to $35 million, even after accounting for higher-than-expected initiatives discussed in Q1, particularly regarding products imported from China facing 145% tariffs. We also expect increased costs associated with shifting our supply chain from China to Mexico. As we've mentioned, we are carefully managing any price increases we pass on to our customers. Two-thirds of the decline in operating profit margin can be attributed to our slowdown and intentional delays in Reinvention actions while we prepare for integration and synergies with Lexmark, with a portion associated with demand softness and a conservative stance in estimating equipment sales and revenue for the remainder of 2025.

Thank you, everybody. Recapping today's call, the addition of Lexmark advances our Reinvention by strengthening our print businesses. A stronger print business improves Xerox's revenue trajectory and provides a platform from which we can accelerate the growth of IT solutions and our portfolio of digital services, as demonstrated this quarter, leading to revenue stabilization. Revenue stabilization is key to realizing the value of our roughly $500 million of identified gross savings in operating income, and we target a return of double-digit adjusted operating income and substantially higher free cash flow generation. Thank you, everybody, and have a great day.