Pitney Bowes Inc.

10/29/2026 | Press release | Distributed by Public on 10/29/2026 09:17

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains statements that are forward-looking. We caution readers that any forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act) may change based on various factors. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on current expectations and assumptions, which we believe are reasonable; however, such statements are subject to risks and uncertainties, and actual results could differ materially from those projected or assumed in any of our forward-looking statements. Words such as "estimate," "target," "project," "plan," "believe," "expect," "anticipate," "intend," "will," "forecast," "strategy," "goal," "should," "would," "could," "may" and similar expressions may identify such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Forward-looking statements in this Form 10-Q speak only as of the date hereof.
Although we believe the expectations reflected in any of our forward-looking statements are reasonable, our results of operations, financial condition and forward-looking statements are subject to change and to inherent risks and uncertainties disclosed or incorporated by reference in our filings with the Securities and Exchange Commission ("SEC"). Other factors which could cause future financial performance to differ materially from expectations, include, without limitation:
•changes in postal regulations or the operations and financial health of posts in the U.S. or other major markets, or changes to the broader postal or shipping markets
•accelerated or sudden decline in physical mail or shipping volumes
•the loss of some of our larger clients
•periods of difficult economic conditions impacting the company and our clients, including inflation and rising prices, changes in interest rates and a slow-down in economic activity, including a global recession, or a prolonged U.S. government shutdown
•our ability to compete successfully
•changes in banking regulations, major bank failures, the loss of our Industrial Bank charter or limitations on our banking activities
•changes in government contracting regulations and compliance challenges
•changes in labor and transportation availability and costs
•global supply chain issues adversely impacting our third-party suppliers' ability to provide us with products and services
•changes in trade policies, tariffs and regulations
•changes in senior management and Board of Directors, loss of key employees and ability to attract and retain employees
•expenses and potential impacts resulting from cyber-attacks or other cybersecurity incidents affecting us or our suppliers
•inability to comply with data privacy and protection laws and regulations
•interruptions or difficulties in the operation of our cloud-based applications and systems or those of our suppliers
•changes in credit ratings, capital market disruptions, decline in cash flows, noncompliance with debt covenants or future interest rate increases that may adversely impact our ability to access capital markets at reasonable costs
•our indebtedness, including Convertible Notes, and the impact of any conversion, repurchase or redemption of the Convertible Notes
•our success at managing customer credit risk
•changes in foreign currency exchange rates
•the risks and uncertainties associated with the Ecommerce Restructuring
•changes in tax rates, laws or regulations
•inability to protect our intellectual property rights and intellectual property infringement claims
•our success in developing and marketing new products and services and obtaining regulatory approvals, if required
•acts of nature and the impact of a pandemic on the Company and the services and solutions we offer
•shareholder activism
Further information about factors that could materially affect us, including our results of operations and financial condition, is contained in Item 1A. "Risk Factors" in our 2025 Annual Report, as supplemented by Part II, Item 1A in this Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS
Three Months Ended September 30,
Favorable/(Unfavorable)
2026 2025 % Change
Total revenue $ 456,182 $ 459,675 (1) %
Total cost of revenue 208,874 215,396 3 %
Selling, general and administrative 139,201 144,154 3 %
Research and development 3,383 3,409 1 %
Restructuring charges 1,529 1,836 17 %
Interest expense, net 25,984 26,072 - %
Other components of pension and postretirement cost 10,274 1,645 >(100%)
Other income (3,155) (981) >100%
Income before taxes 70,092 68,144 3 %
Provision for income taxes 17,426 16,181 (8) %
Net income $ 52,666 $ 51,963 1 %
Nine Months Ended September 30,
Favorable/(Unfavorable)
2026 2025 % Change
Total revenue $ 1,385,093 $ 1,415,004 (2) %
Total cost of revenue 635,726 654,078 3 %
Selling, general and administrative 401,324 480,611 16 %
Research and development 10,560 11,773 10 %
Restructuring charges 9,978 17,042 41 %
Interest expense, net 80,556 75,279 (7) %
Other components of pension and postretirement cost 33,564 5,446 >(100%)
Other (income) expense (2,672) 16,628 >100%
Income before taxes 216,057 154,147 40 %
Provision for income taxes 55,345 36,787 (50) %
Net income $ 160,712 $ 117,360 37 %
In the Condensed Consolidated Statements of Operations, we allocate a portion of total interest expense to finance interest expense which is included in Cost of financing and other. The amount of total interest expense allocated to finance interest expense is based on the average outstanding finance receivables and our overall effective interest rate for the period. For segment reporting purposes, finance interest expense is excluded from segment results.
SEGMENT RESULTS
Our segments include SendTech Solutions and Presort Services. Management measures segment profitability and performance using adjusted segment earnings before interest and taxes (EBIT). Adjusted segment EBIT is calculated as segment revenues less the related costs and expenses attributable to the segment. Segment results exclude interest, including finance interest, taxes, corporate expenses, restructuring charges and other items not allocated to the segments. Effective January 1, 2026, we are also excluding expense related to U.S. and Canada pension plans that we have taken steps to terminate. Prior periods were not recast.
SendTech Solutions
Within SendTech Solutions, we offer physical and digital shipping and mailing technology solutions and other applications to help companies simplify and save on the sending, tracking and receiving of letters, parcels and flats, as well as supplies and maintenance services for these offerings. We also offer financing options for the purchase or lease of Pitney Bowes' or other manufacturers' equipment or to provide working capital. We also offer an unsecured revolving credit solution that enables clients to make meter rental payments and purchase postage, services and supplies, and an interest-bearing deposit solution to clients who prefer to prepay postage.
Financial results for the SendTech Solutions segment was as follows:
Three Months Ended September 30,
Favorable/(Unfavorable)
2026 2025
% change
Services $ 137,106 $ 140,583 (2) %
Products 90,257 89,712 1 %
Financing and other 77,892 80,487 (3) %
Total revenue 305,255 310,782 (2) %
Cost of services 47,973 47,613 (1) %
Cost of products 47,688 54,293 12 %
Cost of financing and other
3,282 3,493 6 %
Total costs of revenue 98,943 105,399 6 %
Gross margin 206,312 205,383 - %
Gross margin % 67.6 % 66.1 %
Selling, general and administrative 84,082 99,009 15 %
Research and development 3,773 3,718 (1) %
Other components of pension and post retirement cost
3,422 1,597 >(100%)
Adjusted Segment EBIT $ 115,035 $ 101,059 14 %
SendTech Solutions revenue decreased $6 million in the third quarter of 2026 compared to the prior year period. Services revenue decreased $3 million compared to the prior year period primarily due to a declining meter population, which was partially offset by higher revenue from a cross-border services contract. Financing and other revenue declined $3 million compared to the prior year period primarily due to a decline in our leasing portfolio. Products revenue increased $1 million primarily due to a significant deal in the current quarter, partially offset by a large international deal in the prior year period.
Gross margin increased $1 million and gross margin percentage increased to 67.6% from 66.1% compared to the prior year period primarily driven by favorable product mix.
Selling, general and administrative ("SG&A") expense declined $15 million compared to the prior period primarily driven by lower employee-related expenses of $8 million, lower marketing expenses of $2 million, lower depreciation and amortization expense of $2 million and lower equipment maintenance expense of $1 million.
Adjusted segment EBIT was $115 million in the third quarter of 2026 compared to $101 million for the prior year period.
Nine Months Ended September 30,
Favorable/(Unfavorable)
2026 2025 % change
Services
$ 422,159 $ 421,431 - %
Products
266,430 273,782 (3) %
Financing and other
239,543 242,891 (1) %
Total revenue 928,132 938,104 (1) %
Cost of services
148,365 146,904 (1) %
Cost of products
137,811 159,699 14 %
Cost of financing and other
9,890 10,479 6 %
Total costs of revenue 296,066 317,082 7 %
Gross margin 632,066 621,022 2 %
Gross margin % 68.1 % 66.2 %
Selling, general and administrative 259,079 304,052 15 %
Research and development 11,479 12,325 7 %
Other components of pension and post retirement costs 10,265 5,304 (94) %
Adjusted Segment EBIT $ 351,243 $ 299,341 17 %
SendTech Solutions revenue decreased $10 million in the first nine months of 2026 compared to the prior year period. Revenue in 2025 includes an unfavorable adjustment of $4 million related to prior periods. Products revenue declined $7 million primarily due to customers opting to extend leases of their existing advanced-technology equipment rather than purchase new equipment as well as a declining meter population. Financing and other revenue declined $3 million compared to the prior year period primarily due to a decline in our lease portfolio. Services revenue was flat compared to the prior year period driven by higher revenue in a cross-border services contract and higher subscription revenue which was offset by a declining meter population.
Gross margin increased $11 million and gross margin percentage increased to 68.1% from 66.2% compared to the prior year period primarily driven by a $5 million tariff refund in 2026, the unfavorable revenue adjustment of $4 million in 2025 and favorable product mix.
SG&A expense declined $45 million compared to the prior year period primarily driven by lower employee-related expenses of $19 million, lower professional and outsourcing fees of $6 million, lower marketing expenses of $6 million, lower depreciation and amortization expense of $5 million and lower equipment maintenance expense of $4 million.
Adjusted segment EBIT was $351 million in the first nine months of 2026 compared to $299 million for the prior year period.
Presort Services
Presort Services is the largest workshare partner of the USPS and national outsource provider of mail sortation services that allow clients to qualify large volumes of First Class Mail, First Class Flats, Marketing Mail, and Marketing Mail Flats/Bound Printed Matter for postal worksharing discounts.
Financial results for the Presort Services segment was as follows:
Three Months Ended September 30,
Favorable/(Unfavorable)
2026 2025
% Change
Services $ 150,927 $ 148,893 1 %
Cost of services 101,465 98,492 (3) %
Gross Margin 49,462 50,401 (2) %
Gross Margin % 32.8 % 33.9 %
Selling, general and administrative 17,569 17,728 1 %
Other components of net pension and postretirement cost 32 47 32 %
Adjusted segment EBIT $ 31,861 $ 32,626 (2) %
Revenue increased $2 million in the third quarter of 2026 compared to the prior year period primarily due to a 4% increase in total mail volumes partially offset by pricing actions. The processing of First Class Flats, First Class Mail and Marketing Mail Flats/Bound Printed Matter contributed revenue increases of $3 million, $1 million and $1 million, respectively, partially offset by a revenue decrease in Marketing Mail of $3 million.
Gross margin decreased $1 million and gross margin percentage decreased to 32.8% from 33.9% in the prior period primarily due to increased transportation and fuel costs of $6 million, which was offset by lower employee-related benefits.
SG&A expense decreased slightly compared to the prior year period.
Adjusted segment EBIT was $32 million in the third quarter of 2026 compared to $33 million in the prior year period.
Nine Months Ended September 30,
Favorable/(Unfavorable)
2026 2025 % Change
Services
$ 456,961 $ 476,900 (4) %
Cost of services
312,584 299,279 (4) %
Gross Margin 144,377 177,621 (19) %
Gross Margin % 31.6 % 37.2 %
Selling, general and administrative 53,226 54,134 2 %
Other components of net pension and postretirement costs 106 142 25 %
Adjusted segment EBIT $ 91,045 $ 123,345 (26) %
Revenue decreased $20 million in the first nine months of 2026 compared to the prior year period primarily due to a 2% decline in total mail volumes driven by a broader market decline, client losses from the first half of 2025 and pricing actions. The processing of First Class Mail, Marketing Mail and First Class Flats contributed revenue decreases of $12 million, $6 million and $4 million, respectively, partially offset by a revenue increase in Marketing Mail Flats/Bound Printed Matter of $2 million.
Gross margin decreased $33 million and gross margin percentage decreased to 31.6% from 37.2% in the prior period primarily due to lower revenue and increased transportation and fuel costs of $15 million.
SG&A expense decreased $1 million compared to the prior year period.
Adjusted segment EBIT was $91 million in the first nine months of 2026 compared to $123 million in the prior year period.
CORPORATE EXPENSES
The majority of operating expenses are recorded directly or allocated to our reportable segments. Operating expenses not recorded directly or allocated to our reportable segments are reported as corporate expenses, and primarily represent corporate administrative functions such as finance, human resources, legal and information technology.
Corporate expenses were as follows:
Three Months Ended September 30,
Favorable/(Unfavorable)
2026 2025 Actual % change
Corporate expenses
$ 32,980 $ 26,350 (25) %
Corporate expenses for the third quarter of 2026 increased $7 million compared to the prior year period primarily due to higher employee-related expenses of $12 million, partially offset by lower depreciation expense of $2 million, lower insurance expense of $1 million and lower excise tax of $1 million.
Nine Months Ended September 30,
Favorable/(Unfavorable)
2026 2025 Actual % change
Corporate expenses
$ 81,942 $ 93,369 12 %
Corporate expenses for the first nine months of 2026 decreased $11 million compared to the prior year period primarily due to lower insurance expense of $6 million and lower depreciation expense of $6 million.
CONSOLIDATED EXPENSES
SG&A Expense
SG&A expense decreased $5 million in the third quarter of 2026 compared to the prior year period. In addition to the changes in SG&A expense previously discussed, SG&A also increased $2 million due to higher non-cash foreign currency revaluation gains/losses on intercompany loans.
SG&A expense decreased $79 million in the first nine months of 2026 compared to the prior year period. In addition to the changes in SG&A expense previously discussed, SG&A also declined $28 million due to lower non-cash foreign currency revaluation gains/losses on intercompany loans partially offset by higher transaction and strategic review costs of $5 million.
Restructuring charges
Restructuring charges decreased slightly in the third quarter of 2026 and $7 million in the first nine months of 2026 compared to the prior year periods primarily due to a reduction in the number of actions taken during the current year compared to the prior year.
Interest expense, net
We allocate a portion of total interest expense to finance interest expense which is included in Cost of financing and other. Total interest expense is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Interest expense, net
$ 25,984 $ 26,072 $ 80,556 $ 75,279
Allocated finance interest expense
8,466 11,215 27,077 37,392
Total interest expense
$ 34,450 $ 37,287 $ 107,633 $ 112,671
Total interest expense declined $3 million in the third quarter of 2026 and $5 million in the first nine months of 2026 compared to the prior year periods primarily due to a reduction in total debt and lower effective interest rates. The decline in allocated finance interest expense was driven primarily by a decline in finance receivables.
Other components of net pension and postretirement cost
Other components of net pension and postretirement cost increased $9 million in the third quarter of 2026 and $28 million in the first nine months of 2026 compared to the prior year periods primarily due to the lower expected return on pension plan assets year over year driven by the U.S. and Canada buy-in contracts. The amount of other components of net pension and postretirement cost recognized each year will vary based on actuarial assumptions and actual results of our pension plans. See Note 11 to the Condensed Consolidated Financial Statements for further information.
Other (income) expense
See Note 16 to the Condensed Consolidated Financial Statements for further information.
Income taxes
See Note 12 to the Condensed Consolidated Financial Statements for further information.
OUTLOOK
For full year 2026, we expect low to mid-single digit decline in revenue driven by the continued secular decline in mailing. We expect low-single digit decline to low-single digit growth in Adjusted EBIT, primarily driven by higher transportation costs and competitive pricing pressures, partially offset by lower worldwide operating costs from previous and continued cost-cutting actions and stronger than expected year-to-date results.
The transportation market continues to experience significant volatility due to higher third-party carrier spot rates, driver shortages and increases in oil and diesel fuel prices caused by the Iran conflict. These factors have impacted our financial results and are expected to continue to adversely impact our financial results in the fourth quarter.
We will also continue to implement capital allocation strategies to opportunistically reduce debt and lower interest costs, return capital to our shareholders through share repurchases and dividends and pursue other long-term investment opportunities.
LIQUIDITY AND CAPITAL RESOURCES
Our principal source of liquidity is cash generated from operations and access to credit markets, including borrowing capacity under our revolving credit facility. At September 30, 2026, we had cash and cash equivalents of $269 million, which includes $64 million held at our foreign subsidiaries used to support their liquidity needs. We believe that existing cash and cash equivalents, cash generated from operations and borrowing capacity under our revolving credit facility will be sufficient to fund our cash needs and meet our obligations for the next 12 months.
Cash Flow Summary
Changes in cash and cash equivalents were as follows:
2026 2025 Change
Net cash from operating activities $ 348,212 $ 161,557 $ 186,655
Net cash from investing activities (28,637) (110,531) 81,894
Net cash from financing activities (335,098) (202,387) (132,711)
Effect of exchange rate changes on cash and cash equivalents (850) 2,629 (3,479)
Change in cash and cash equivalents $ (16,373) $ (148,732) $ 132,359
Operating Activities
Cash flows from operating activities for the first nine months of 2026 improved $187 million compared to the prior year period primarily due to higher net income and changes in working capital, primarily driven by lower accounts payable and accrued liability payments and inventory spending.
Investing Activities
Cash flows from investing activities for the first nine months of 2026 improved $82 million compared to the prior year period primarily due to lower investments in loan receivables of $77 million and higher cash from investment activities of $12 million, partially offset by a $9 million DIP Facility reimbursement in the prior year.
Financing Activities
Cash flows from financing activities for the first nine months of 2026 declined $133 million compared to the prior year period. Net cash from debt activities decreased $265 million as net cash of $110 million was used to redeem/refinance debt in 2026 whereas we received net cash of $155 million in 2025. This decrease was partially offset by higher cash from changes in customer account deposits at PB Bank of $50 million, lower common stock repurchases of $46 million, a capped call payment of $25 million in 2025 associated with a convertible notes issuance and higher proceeds from stock option exercises of $15 million.
We paid dividends of $41 million in the first nine months of 2026. Each quarter, our Board of Directors considers whether to approve the payment of a dividend. We currently expect to continue paying a quarterly dividend; however, no assurances can be given.
Debt and Financing Activities
In the first quarter of 2026, we issued an additional aggregate $150 million of the Notes due March 2029 with identical terms to the prior notes outstanding. In the second quarter of 2026, we borrowed an additional $150 million under the Term Loan due March 2028 and extended the maturity date to May 2031. The proceeds of the additional term loan borrowing were used to repay the Notes due March 2027. In the third quarter of 2026, we completed a tender offer and redeemed an aggregate $46 million of the Notes due January 2037 and Notes due March 2043 and recorded a gain of $5 million in other (income) expense. Also, in the third quarter of 2026, we amended the Term loan due March 2032 to reduce the spread by 0.75%.
We maintain a $450 million revolving credit facility (increased from $400 million in the first quarter of 2026) that matures in May 2031. This credit facility requires that we maintain (with maintenance tested quarterly) (i) a Consolidated Interest Coverage Ratio (as defined in the credit facility agreement) of not less than 2.00 to 1.00, (ii) a Consolidated Secured Net Leverage Ratio (as defined in the credit facility agreement) of no greater than 3.00 to 1.00 and (iii) a Consolidated Total Net Leverage Ratio (as defined in the credit facility agreement) of no greater than (a) 4.75 to 1.00 for each of the fiscal quarters in 2026, (b) 4.50 to 1.00 for each of the fiscal quarters in 2027, (c) 4.25 to 1.00 for each of the fiscal quarters in 2028 and (d) 4.00 to 1.00 for each fiscal quarter thereafter. At September 30, 2026, we were in compliance with these financial covenants. During 2026, we borrowed an aggregate $177 million under this credit facility, $80 million of which was borrowed in the third quarter, and was fully repaid by September 30, 2026. At September 30, 2026, we have remaining borrowing capacity of $427 million. Borrowings under this credit facility are secured by assets of the Company.
The credit facility also contains provisions whereby if, on any day prior to December 14, 2028, the Notes due March 2029 have not been redeemed in full and liquidity is less than an amount equal to the amount to redeem the Notes due March 2029 plus $100 million, the Term loan due May 2031 and any borrowings under the revolving credit facility would become due on such date. Further, if on any day prior to May 16, 2030, the Convertible Notes due August 2030 (the "Convertible Notes") have not been redeemed in full and liquidity is less than an amount equal to the amount to redeem the Convertible Notes plus $100 million, the Term loan due May 2031 and any borrowings under the revolving credit facility would become due on such date.
The Convertible Notes are senior unsecured obligations of the Company and are guaranteed jointly and severally, on a senior unsecured basis, by each of the Company's existing and future wholly owned U.S. subsidiaries that guarantee the Company's existing credit agreement, existing senior notes or any other series of capital market debt with an aggregate principal amount outstanding in excess of $150 million.
The conversion rate is 70.4648 shares of common stock per $1,000 principal amount, or $14.19 per share, subject to adjustment. Conversions of the Convertible Notes will be settled by paying cash up to the aggregate principal amount of the Convertible Notes being converted and by delivering shares of our common stock in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.
Off-Balance Sheet Arrangements
At September 30, 2026, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our financial condition, results of operations or liquidity.
Regulatory Matters
There have been no significant changes to the regulatory matters disclosed in our 2025 Annual Report.
Critical Accounting Estimates
There have been no significant changes to the Critical Accounting Estimates disclosed in our 2025 Annual Report.
Pitney Bowes Inc. published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 15:17 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]