Xerox Holdings Corporation (XRX) shares are soaring 5.44% in pre-market trading on Thursday following the release of its first-quarter 2025 earnings report. Despite missing analyst expectations, the company's optimistic outlook for the full year appears to have buoyed investor sentiment.

For the first quarter, Xerox reported revenue of $1.46 billion, down 3% year-over-year and slightly below the consensus estimate of $1.50 billion. The company posted an adjusted loss per share of $0.06, worse than the expected loss of $0.03 per share. Adjusted operating income came in at $22 million, down from $33 million in the same period last year, while gross margin slightly contracted to 29.2% from 29.5%.

However, investors seem to be looking past the disappointing quarterly results and focusing on Xerox's upbeat guidance for 2025. The company expects low single-digit revenue growth for the full year, with an adjusted operating margin of at least 5.0% and free cash flow in the range of $350 million to $400 million. This positive outlook suggests that Xerox's ongoing transformation efforts and cost-saving initiatives may be gaining traction.

Additionally, Xerox addressed concerns about potential tariff impacts, stating that it currently expects minimal tariff-related effects on its financial results in the second quarter. The company also mentioned that it is working closely with supplier partners to minimize tariff-related cost increases, which may have further reassured investors about its ability to navigate ongoing macroeconomic challenges.

While Xerox continues to face headwinds in its traditional printing business, the market appears to be rewarding the company's efforts to diversify its revenue streams and improve profitability. The stock's significant pre-market rally indicates that investors are optimistic about Xerox's potential for recovery and growth in the coming quarters.