• Revenue: Approximately $1.5 billion, decreased 3% in actual currency and 1.1% in constant currency.
• Adjusted Operating Income Margin: 1.5%, lower by 70 basis points year over year.
• Free Cash Flow: Use of $109 million compared to a use of $89 million in the prior year.
• Adjusted Loss Per Share: $0.06, $0.12 lower year over year.
• Equipment Installation Growth: 24%, third consecutive quarter of double-digit growth.
• Sales Force Productivity: Advanced 13% year over year.
• Total Debt: Decreased by around $100 million following the repayment of secured debt.
• IT Solutions Revenue and Gross Profit: Increased more than 100% year over year.
• Print Segment Adjusted Gross Margin: 31.4%, declined 140 basis points year over year.
• Operating Expenses: Declined $46 million, a reduction of 10% year over year, excluding reinvention-related costs and ITsavvy expenses.
• Adjusted Gross Margins: Declined approximately 220 basis points year over year.

• Warning! GuruFocus has detected 5 Warning Signs with XRX.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Xerox Holdings Corp (NASDAQ:XRX) reported a 24% growth in equipment installation, marking the third consecutive quarter of double-digit growth.
• The integration of ITsavvy is ahead of schedule, with synergy realization and cross-sale opportunities already exceeding expectations.
• Sales force productivity improved by 13% year over year, contributing to an improved equipment revenue trajectory.
• The company successfully launched the new PrimeLink product globally, aiding in mid-range installations and revenue growth.
• Xerox Holdings Corp (NASDAQ:XRX) reduced its total debt balance by approximately $100 million, strengthening its balance sheet.

Negative Points

• Revenue declined by 3% in actual currency and 1.1% in constant currency, reflecting challenges in the operating environment.
• Adjusted operating income margin decreased by 70 basis points year over year, indicating pressure on profitability.
• Free cash flow was a use of $109 million, higher than the $89 million use in the prior year, reflecting cash flow challenges.
• Adjusted loss per share was $0.06, $0.12 lower year over year, highlighting financial performance issues.
• The company faces uncertainty due to tariff and trade-related disruptions, impacting product costs and operating income.

Q & A Highlights

Q: Are you seeing any discernible impact from macroeconomic conditions, and what are your large corporate customers and VARs communicating about SMBs? A: John Bruno, President and COO, noted that while the environment is volatile, they haven't seen a real impact in Q1. There was some concern about funding for upgrades, particularly in SMBs, but this has eased. Steven Bandrowczak, CEO, added that spending is expected in areas driving productivity and necessary upgrades, such as Windows 11 and AI PCs. Mirlanda Gecaj, CFO, mentioned that while there are delays, there haven't been cancellations.

Q: Can you provide more context on the integration of ITsavvy and its impact on the business? A: Steven Bandrowczak, CEO, expressed optimism about the integration, noting that penetrating just 5% of existing accounts with ITsavvy could double the business. The integration has led to pipeline and booking acceleration, with strong collaboration between Xerox's print sales force and ITsavvy's team. John Bruno, President and COO, highlighted the effective integration and collaboration, which has strengthened digital services discussions.

Q: Why maintain full-year guidance despite potential tariff impacts and macroeconomic uncertainties? A: Mirlanda Gecaj, CFO, explained that since tariffs are not final and could change, maintaining guidance is a way to hold the company accountable to its 2025 plans. The impact of tariffs has been communicated, but guidance remains unchanged until tariffs are finalized.

Q: How should we think about the future margin rates for the IT Solutions business? A: Steven Bandrowczak, CEO, stated that they aim for double-digit operating profit in IT Solutions, leveraging lower SG&A costs. John Bruno, President and COO, added that while gross margins are lower, the mix of services and value-added reselling will drive healthy operating margins.

Q: Can you discuss the drivers behind the decline in post-sale revenue and expectations for stabilization? A: John Bruno, President and COO, noted that the decline reflects lower supplies and managed print volumes, driven by the number of machines in the field. However, post-sale trends are expected to improve following recent installation growth. Mirlanda Gecaj, CFO, added that excluding one-off impacts, the decline was about 4%, and improvements are expected as installations translate into post-sale revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.