Xerox reports 19 percent drop in third-quarter revenue

GaryPageau
Xerox Holdings Corp. announced its third-quarter 2020 revenue of $1.77 billion, down 18.9 percent year-over-year or 19.7 percent in constant currency and up $302 million from the second quarter. Operating cash flow from continuing operations was $106 million, down $242 million year-over-year and up $72 million from the second quarter.

“The flexibility and financial discipline we have built in our company enabled us to increase earnings and cash flow sequentially,” said John Visentin, vice chairman and CEO, Xerox. “While we can’t reliably predict the ongoing economic impact of the pandemic, we are prepared to respond however events unfold and are committed to delivering positive cash flow and earnings in the fourth quarter. Investments in digital solutions and services are paying off as companies prepare for a more hybrid work experience that shifts seamlessly between the office and home

Third-Quarter Key Financial Results – Continuing Operations

(in millions, except per share data)

Q3 2020

Q3 2019

B/(W)

YOY

% Change

YOY

Revenue

$1,767

$2,179

$(412)

(18.9)% AC

(19.7)% CC1

Gross Margin

36.8%

40.0%

(320) bps

RD&E %

4.3%

4.6%

30 bps

SAG %

25.1%

23.4%

(170) bps

Pre-Tax Income

$119

$223

$(104)

(46.6)%

Pre-Tax Income Margin

6.7%

10.2%

(350) bps

Operating Income – Adjusted1

$131

$262

$(131)

(50.0)%

Operating Margin – Adjusted1

7.4%

12.0%

(460) bps

GAAP EPS

$0.41

$0.68

$(0.27)

(39.7)%

EPS – Adjusted1

$0.48

$0.80

$(0.32)

(40.0)%

Business Highlights

  • Added or renewed contracts with Fortune 500 and public sector clients such as Aflac, Bell Canada, Mizuho Bank, the State of Illinois, the Texas Health and Human Services Commission, Purolator, the Union of Public Purchasing Groups in France and the Government of Bangladesh
  • Grew market share in production in the region Xerox serves and grew share in entry segments in both the Americas and EMEA. Maintained the top market share position in production in the Americas and EMEA, and maintained overall market share leadership for equipment sales revenue in the Americas, according to the most recent IDC data.
  • Awarded a contract from the Defense Advanced Research Projects Agency to develop the next phase of the Ocean of Things, its project to expand what scientists know about the seas
  • Established a new diversity, inclusion and belonging roadmap, focusing on areas where Xerox can make the biggest impact within the company and society, including a partnership with A Better Chance, a nonprofit dedicated to increasing education, access and opportunity for young people of color