Reinvention drives increased profitability despite a challenging quarter for equipment sales; pending acquisition of ITsavvy to improve revenue mix from higher growth businesses.
Xerox Holdings Corporation (NASDAQ: XRX) announced its 2024 third-quarter results. “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.”
Financial Summary Q3 2024
• 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.
2024 Guidance Update
• Revenue: from a decline of 5% to 6% in constant currency1 to a decline of around 10% in constant
currency 1
• Adjusted 1 Operating Margin: from at least 6.5% to around 5.0%
• Free cash flow1
: from at least $550 million to a range of $450 to $500 million
2024 guidance excludes any impact from the pending acquisition of ITsavvy. Revenue guidance was
lowered to reflect additional reductions in non-strategic revenue and lower-than-expected equipment
sales. Adjusted 1 operating income margin guidance was lowered primarily to reflect the reduction in
revenue guidance. Free cash flow1 guidance was lowered to reflect the after-tax impact of lower adjusted
1 operating income margin guidance.
Due to lower-than-expected revenue in 2024, we no longer expect to grow adjusted 1 operating income
$300 million above 2023 levels by 2026. However, we continue to expect growth in adjusted1 operating
income and a return to double-digit adjusted1 operating income margin over the course of our Reinvention.
