“While equipment revenue fell short of expectations, we continue to see steady progress from Reinvention initiatives taken to date. Adjusted operating income and margin grew year-over-year, and the pending acquisition of ITsavvy will improve Xerox’s value proposition with clients, as well as the mix of revenue from growing businesses,” said Steve Bandrowczak, chief executive officer at Xerox.

  • Revenue of $1.53 billion, down 7.5 percent, or 7.3 percent in constant currency.
  • GAAP net (loss) of $(1.2) billion, or $(9.71) per share, a decrease of $1.3 billion or $9.99 per share, year-over-year, respectively. This quarter includes an after-tax non-cash goodwill impairment charge of $1.0 billion, or $8.16 per share and a charge to tax expense related to the establishment of a valuation allowance of $161 million, or $1.29 per share.
  • Adjusted net income of $34 million, or $0.25 per share, down $43 million or $0.21 per share, year-over-year, respectively.
  • Adjusted operating margin of 5.2 percent, up 110 basis points year-over-year.
  • Operating cash flow of $116 million, down $8 million year-over-year.
  • Free cash flow of $107 million, down $5 million year-over-year.
  • Lowered 2024 revenue guidance to a decline of around 10% in constant currency, adjusted operating margin guidance to around 5.0%, and free cash flow guidance to a range of $450 to $500 million.

In Q3 2024, the company experienced improved financial results due to the benefits of Reinvention. The company experienced a second consecutive period of moderating revenue declines, year-over-year improvements in adjusted operating income and income margin, and over 100% free cash flow conversion from adjusted operating income. The pending acquisition of ITsavvy is expected to improve the mix of revenue from complementary, value-added businesses with higher underlying rates of revenue growth.

Equipment sales declined 12.2% in actual and constant currency, primarily due to fluctuations in backlog and other Reinvention actions. The remainder of the decline was primarily due to the delayed global launch of two new products, lower-than-expected improvements in sales force productivity, delays in the timing of installations associated with Hurricane Helene, unfavourable mix, and a large Production equipment sale in the prior year. Total equipment installations increased approximately 17.0% year-over-year, due to growth in entry level equipment.

Post-sale revenue declined 6.1% in actual currency, or 5.7% in constant currency, as compared to Q3 2023. This decline was primarily due to lower outsourcing and service revenue, intentional reductions in non-strategic revenue, and the effects of geographic simplification. Pre-tax loss decreased by approximately $1.1 billion, and a pre-tax, non-cash goodwill impairment charge of $1.1 billion ($1.0 billion after-tax) or $8.16 per share was included.

Adjusted operating income increased by $12 million as compared to Q3 2023, partially offset by lower selling, administrative, and general expenses associated with actions taken to simplify the organization. Revenue guidance was reduced from 5% to 6% in constant currency to about 10% in constant currency, reflecting the incremental effects of intentional reductions in non-strategic revenue and lower equipment revenue. Free cash flow guidance was reduced from at least $550 million to a range of $450 million to $500 million, reflecting the after-tax effects of the reduction in adjusted operating income guidance.

Source: Business Wire
Source: Yahoo Finance
Source: Xerox