Xerox hit by weaker equipment sales
October 30, 2024
Cost-saving measures provide some relief, but Q3 revenue hit by weaker equipment sales.
Xerox Holdings Corp a $1.2 billion (£990 million) loss in the third quarter of 2024 as lower-than-expected sales, delayed product launches, and a one-time goodwill impairment charge eroded its profitability. The loss, which includes a $1 billion (€950 million) impairment charge following a decline in market capitalisation, highlights the ongoing challenges the document management company faces as it seeks to reinvent itself through cost-cutting and diversification.
Revenue dropped 7.5% year-over-year to $1.53 billion (€1.44 billion), reflecting a slowdown in equipment sales, which fell by 12.2 per cent due to delays in two new product launches, lower-than-expected productivity from its salesforce, and a mixed product portfolio. The impact of Hurricane Helene on installation schedules in North America also added to revenue pressures.
Mid-range and high-end printer sales were particularly affected, declining by 13.8% and 14.9%, respectively, although entry-level models fared slightly better with a more modest drop of 5.4%, likely due to increased demand from small businesses and home offices.
“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. “Q3 results demonstrate no single quarter or performance metric in isolation defines our Reinvention. Operational improvements and enterprise-wide efficiencies are driving services signings momentum, improved decision-making and a sustainably lower cost base. These gains give us confidence Reinvention will enable long-term profitable growth as we continue this multi-year journey.”
Xerox has revised its 2024 outlook downward, now forecasting a revenue decline of approximately 10% in constant currency, compared to the previously projected 5% to 6% decline. The adjusted operating margin guidance has also been lowered to around 5%, reflecting the reduced revenue forecast and a slower pace in executing certain cost-cutting measures initially slated for 2024.
Xerox added: “Due to lower-than-expected revenue in 2024, we no longer expect to grow adjusted1 operating income $300 million (€277 million) above 2023 levels by 2026. However, we continue to expect growth in adjusted operating income and a return to double-digit adjusted operating income margin over the course of our Reinvention.”
Categories : City News
Tags : Business Financials OEM Xerox
