Xerox Holdings Corporation (NASDAQ: XRX) today announced its 2024 second-quarter results.
“The comprehensive and strategic operating model changes implemented in Q1 caused a short period of
disruption but are delivering the intended improvements in financial results. Adjusted operating income
margin, free cash flow and revenue trajectory improved sequentially in Q2. Momentum in orders,
enhanced sales operations and new product initiatives are expected to drive a return to revenue growth
in the second half of the year,” said Steve Bandrowczak, chief executive officer at Xerox. “Q2 results give
us confidence Xerox’s new operating model, which is more streamlined and closely aligned to the
economic buyers of our products and services, is enabling the operating improvements required to
deliver an incremental $300 million of adjusted operating income over 2023 levels and a return to double-digit adjusted operating income margin by 2026.”
Financial Summary
Q2 2024
• Revenue of $1.58 billion, down 10 percent, or 9.6 percent in constant currency.
• GAAP net income of $18 million, or $0.11 per share, up $79 million or $0.52 per share, year-overyear, respectively.
• Adjusted net income of $41 million, or $0.29 per share, down $31 million or $0.15 per share, yearover-year, respectively.
• Adjusted operating margin of 5.4 percent, down 70 basis points year-over-year.
• Operating cash flow of $123 million, up $28 million year-over-year.
• Free cash flow of $115 million, up $27 million year-over-year.
• Lowered 2024 revenue guidance to a range of -5% to -6% in constant currency to reflect
incremental strategic actions, adjusted operating income guidance to at least 6.5%, and free cash
flow guidance to at least $550 million.
• Maintained $300 million adjusted operating income improvement target over 2023 levels by the
end of 2026.
2024 Guidance Update
• Revenue: from a decline of 3% to 5% to a decline of 5% to 6% in constant currency 1
• Adjusted 1 Operating Margin: from at least 7.5% to at least 6.5%
• Free cash flow1
: from at least $600 million to at least $550 million
2024 revenue guidance was lowered to reflect additional reductions in non-strategic revenue, including
those associated with incremental Reinvention actions. Adjusted 1 operating income margin guidance was
lowered primarily to reflect the reduction in revenue guidance, as well as higher-than-expected freight
and product costs. Free cash flow 1 guidance was lowered to reflect lower revenue and adjusted 1
operating income margin guidance.
Guidance assumes growing Print demand and growth in Digital and IT Services in the second half of the
year. The expected year-over-year decline in full-year revenue is attributable to the following: around 200
basis points of headwind from prior-year backlog reduction and 350 basis points from a reduction in
certain non-strategic revenue, including lower sales of paper, financing income and Reinvention actions.
Adjusted1 Operating Margin guidance implies full-year improvement of at least 90 basis points, primarily
reflecting structural reductions in operating expense associated with our Reinvention.
The company maintains its three-year target of $300 million of incremental adjusted1 operating income
above 2023 levels and a return to double-digit adjusted1 operating income margin by the end of 2026.\
Non-GAAP Measures
This release refers to the following non-GAAP financial measures:
• Adjusted Gross Profit and Margin, which exclude the inventory impact related to the exit of
certain Production Print manufacturing operations, included in Cost of services, maintenance and
rentals.
• Adjusted EPS, which excludes Restructuring and related costs, net, Amortization of intangible
assets, non-service retirement-related costs, and other discrete adjustments from GAAP EPS, as
applicable.
• Adjusted operating income and margin, which exclude the EPS adjustments noted above as well
as the remainder of Other expenses, net from pre-tax income (loss) and margin.
• Constant currency (CC) revenue change, which excludes the effects of currency translation.
• Free cash flow which is operating cash flow less capital expenditures.
A reconciliation of the estimated three-year target for Adjusted Operating Income and Margin to the
closest GAAP financial measures, Net Income (loss) and Pre-tax Margin, is not provided. GAAP
measures for those periods are not available without unreasonable effort, in part because certain
incremental costs related to the Reinvention, as well as Restructuring and related costs, net, Amortization
of intangible assets, amounts included in Other expenses, net, which are primarily non-financing interest
expense and certain other non-operating costs and expenses, and other discrete, unusual or infrequent
items, are not available at this time.
