News

Xerox Holdings Corporation XRX reported dismal first-quarter 2024 results, wherein both earnings and revenues missed the Zacks Consensus Estimate.

The discouraging numbers caused the stock to decline 2.6% since the company’s earnings release on Apr 23. Xerox had depreciated 21.5% year to date against the 0.4% growth of the industry it belongs to.

First quarter adjusted EPS of 6 cents missed the Zacks Consensus Estimate by 84.2% and declined more than 87.8%% year over year. Total revenues of $1.5 billion missed the consensus mark by 4.8% and decreased 12.4% year over year on a reported basis. Revenues declined 13.2% on a constant-currency (CC) basis.

Revenue Details

Post-sale revenues came in at $1.2 billion, down 8.5% year over year on a reported basis and 9.3% on a constant currency basis, and surpassing our estimate of $1.19 billion. The decline was mainly due to reductions in non-strategic, lower margin paper and IT endpoint device placements, impacts of geographic simplification, the termination of the Fuji Royalty and the absence of PARC revenue.

Equipment sales declined 25.8% year over year on a reported basis and 26.3% at cc to $290 million, lagging our estimate of $394.7 million. The decline was due to the prior-year effect of backlog reduction and geographic simplification.

Print and Other segment’s revenues totaled $1.43 billion, down 12.6% year over year. Xerox Financial Services revenues totaled $91 million, down 10.8% year over year.

Sales revenues totaled $523 million, down 20.6% year over year on a reported basis and 21.3% at cc. Services, maintenance and rental revenues totaled $937 million, down 6.7% year over year on a reported basis and 7.4% at cc. Financing revenues of $42 million decreased 19.2% year over year on a reported basis and 20.8% at cc.

Operating Performance

Adjusted operating income came in at $33 million, down 72% on a year-over-year basis. Adjusted operating margin came in at 2.2%, up 470 basis points year over year.

Kay Balance Sheet and Cash Flow Figures

Xerox exited the quarter with a cash and cash equivalent balance of $685 billion compared with $519 million at the end of the prior quarter. The company’s operating cash outflow and free cash outflow were $79 million and $89 million, respectively, in the quarter.

2024 Guidance

Xerox expects its 2024 revenues to decline 3% to 5% on a constant currency basis, adjusted operating margin to be at least 7.5%, and free cash flow of at least $600 million.

The company currently carries a Zacks Rank #2 (Buy).

Recent Earnings Snapshots

Omnicom OMC reported impressive first-quarter 2024 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.

OMC’s earnings of $1.67 per share beat the consensus estimate by 9.9% and increased 7.1% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 1.6% and increased 5.4% year over year.

Equifax EFX reported mixed first-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.

EFX’s adjusted earnings were $1.5 per share, beating the Zacks Consensus Estimate by 4.2% and increasing 4.9% from the year-ago quarter. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but increased 6.7% from the year-ago quarter.

ManpowerGroup MAN reported mixed first-quarter 2024 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Quarterly adjusted earnings of 94 cents per share surpassed the consensus mark by 4.4% but declined 41.6% year over year. Revenues of $4.4 billion lagged the consensus mark by 0.6% and dipped 7% year over year.

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