Double-digit drop at Xerox

Print giant Xerox has reported its Q1 earnings, with the top line falling by more than 13% in constant currencies.

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Print giant Xerox has reported its Q1 earnings, with the top line falling by more than 13% in constant currencies.

Q1 2024 revenue at Xerox was $1.5 billion, $213 million lower than the same quarter last year. Equipment sales slid by more than 26% to $290 million as all device classes fell steeply, while post-sale revenue was down by 9.3% to $1.21 billion.

Xerox said the prior-year effect of backlog reduction as well as its geographic “simplification” drove more than half of the decline in equipment sales. Post-sale was negatively impacted by several factors, including planned decreases in the paper category, the termination of the Fuji royalty and last year’s sale of the PARC R&D facility. Excluding these, revenue would have been down in the low single-digits.

The bottom line also took a hit.

Adjusted gross margin decreased by 240 basis points to 31.9%, adjusted operating profit slumped by 72% to $33 million, and the company reported a pre-tax loss of $150 million (versus a profit of $85 million 12 months ago).

Xerox admitted that sales had fallen short of expectations in Q1, partly blaming this on the major restructuring programme it is implementing. It said that demand for its products and services remains stable in a corporate spending environment that is “improving yet somewhat cautious”.

Despite this slow start to the year, Xerox has not changed its 2024 revenue guidance, which still stands at a constant currency decline of between 3-5%. It also confirmed cost reductions and productivity initiatives would help it achieve its full-year operating margin goals. One action the OEM is taking is to discontinue its iGen3 and Nuvera presses in its Production Print operations.

The stock market reacted negatively to Xerox’s results, with its share price down by around 14% in early trading on 23 April.

Norwalk (CT), USA