Xerox Clocks 7th Consecutive Revenue Miss Quarter In Q3, Slashes 2024 Outlook, Stock Tanks

Xerox Holdings Corp (NASDAQ: XRX) reported a fiscal third-quarter 2024 sales decline of 7.5% year-on-year to $1.53 billion, missing the analyst consensus of $1.63 billion. This was the company’s seventh consecutive quarter of revenue missing the expectations.

Revenues declined 7.3% at constant currency. Adjusted EPS of $0.25 missed the analyst consensus estimate of $0.51. 

XRX stock dropped after the print on Tuesday.

Also Read: Xerox Snaps Up ITsavvy For $400M, Expanding Its Footprint In IT Infrastructure

Equipment sales decreased by 12.2%, while post-sale revenue declined by 6.1%. 

Gross margin was firm Y/Y at 32.4%. The equipment margin fell by 250 bps to 28.5%. The post-sale margin increased by 60 bps to 33.5%.

The company reported an adjusted operating income of $80 million, compared to $68 million last year, and the margin grew 110 basis points to 5.2%.

Xerox held $521 million in cash and equivalents as of September 30, 2024. Operating cash flow for the quarter totaled $116 million, with a free cash flow of $107 million.

“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.

FY24 Outlook: The company expects a revenue decline of 10% (prior 5%-6% decline) consensus of $6.42 billion. The company projected a free cash flow guidance of $450 million– $500 million (prior $550 million–$600 million).

Xerox maintained an adjusted operating margin outlook of around 5.0% (prior $6.5% – 7.5%).

Xerox Holdings stock plunged 43% year-to-date as the company missed the topline estimates for all three quarters of 2024 due to a decline in equipment sales revenue.

Price Action: XRX stock is down 16.70% at $8.56 premarket at last check on Tuesday.

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