Xerox Q2 Revenue Falls 10%, Full-Year Forecast Lowered, But CEO Expects Turnaround – Xerox Holdings (NASDAQ:XRX)

Xerox Holding Company (NASDAQ: XRX reported a 10.0% year-over-year decline in second-quarter fiscal 2024 sales to $1.58 billion, below analysts' consensus estimate of $1.60 billion. The stock fell after Thursday's release.

Revenue decreased 9.6% at constant currency. Adjusted EPS of $0.29 was below the analyst consensus estimate of $0.43.

Equipment sales decreased by 15.2%, while aftermarket revenue decreased by 8.4%.

Gross margin decreased 100 basis points year-on-year to 33.0%. Equipment margin decreased 70 basis points to 34.5%. Aftermarket margin decreased 110 basis points to 32.5%.

The company reported adjusted operating income of $85 million, down from $107 million last year, and margin narrowed 70 basis points to 5.4%.

As of June 30, 2024, Xerox held $485 million in cash and cash equivalents. Operating cash flow for the quarter was $123 million, with free cash flow of $115 million.

“The comprehensive and strategic operating model changes implemented in the first quarter caused a brief period of disruption but are delivering the expected improvements in financial results. Adjusted operating margin, free cash flow and revenue trajectory improved sequentially in the second quarter. Order momentum, improved sales operations and new product initiatives are expected to support a return to revenue growth in the second half,” said CEO Steve Bandrowczak.

Outlook for fiscal year 2024:The company expects revenue of $6.47 billion to $6.54 billion (previously $6.54 billion to $6.68 billion) versus consensus of $6.45 billion. The company expects free cash flow of $550 million to $600 million (previously $600 million).

Xerox maintained its adjusted operating margin outlook of 6.5% to 7.5% (versus 7.5% previously).

In June, Citi started tracking Xerox Holdings with a sell rating and an $11 price target. The stock has lost 28% over the past 12 months.

Price action: XRX shares fell 8.15% to $10.82 at last check Thursday.

Photo via Wikimedia Commons