Xerox Reports Third-Quarter Earnings Below Expectations

NORWALK, Conn. – Xerox (NASDAQ:XRX) Holdings Corporation reported third-quarter earnings that fell short of analyst expectations, which caused its stock to tumble 8% in early trading.

The office equipment and services company posted adjusted earnings per share of $0.25 for the quarter, significantly below the $0.51 consensus estimate. Revenue came in at $1.53 billion, missing projections of $1.63 billion and declining 7.5% year-over-year (YoY).

Xerox CEO Steve Bandrowczak acknowledged that "equipment revenue fell short of expectations" but highlighted the "steady progress from Reinvention initiatives" taken to date. The company's adjusted operating margin improved 110 basis points YoY to 5.2%.

"Q3 results demonstrate no single quarter or performance metric in isolation defines our Reinvention," Bandrowczak stated. "Operational improvements and enterprise-wide efficiencies are driving services signings momentum, improved decision-making, and a sustainably lower cost base."

In light of the weak quarter, Xerox lowered its full-year 2024 guidance. The company now expects revenue to decline around 10% in constant currency, compared to a previous outlook of 5-6%. Adjusted operating margin guidance was revised from at least 6.5% to around 5.0%.

Free cash flow projections were also reduced to a range of $450 million to $500 million, down from a prior target of at least $550 million.

Xerox noted that its 2024 guidance excludes any impact from its pending acquisition of ITsavvy, which it believes will "improve Xerox's value proposition with clients, as well as the mix of revenue from growing businesses."

Despite these near-term challenges, Bandrowczak expressed confidence that the company's multi-year reinvention efforts "will enable long-term profitable growth."

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