Xerox Holdings Corp (NASDAQ:XRX) saw its stock price surge by 5.07% in Friday's pre-market trading session, following the release of its Q1 2025 earnings report. Despite some challenges, investors appeared to focus on several positive indicators that suggest the company's turnaround efforts are gaining traction.

The earnings report highlighted several encouraging developments for Xerox. Equipment installation growth stood out as a particular bright spot, increasing by 24% and marking the third consecutive quarter of double-digit growth. This improvement in hardware placements bodes well for future post-sale revenue streams. Additionally, sales force productivity advanced by 13% year-over-year, contributing to an improved equipment revenue trajectory.

While overall revenue declined by 3% in actual currency, the company made significant strides in its IT Solutions segment. Both revenue and gross profit in this area more than doubled compared to the previous year, underscoring Xerox's successful pivot towards higher-margin digital services. The integration of ITsavvy, a recent acquisition, is reportedly ahead of schedule, with synergy realization and cross-sale opportunities exceeding expectations.

Despite these positives, Xerox still faces challenges. The company reported an adjusted loss per share of $0.06, which was $0.12 lower year-over-year. Free cash flow also remained negative at -$109 million. However, management's efforts to strengthen the balance sheet were evident, with total debt decreased by approximately $100 million following the repayment of secured debt.

The market's positive reaction suggests that investors are focusing on Xerox's growth potential and turnaround progress rather than short-term financial pressures. As the company continues to navigate its transition from a traditional print-focused business to a more diversified IT services provider, today's stock movement indicates growing confidence in Xerox's strategic direction.