Xerox reports second quarter revenue down 10 percent but income up

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Xerox Corp. reported second-quarter revenue of $1.58 billion, down 10 percent, and GAAP net income of $18 million, up $79 million from the same period last year.

“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.”

Second-Quarter Key Financial Results

B/(W)                % Change

(in millions, except per share data)                           Q2 2024               Q2 2023                  YOY                 B/(W) YOY

Revenue   $1,578   $1,754   $(176)   (10.0)% AC    

(9.6)% CC1

Gross Profit   $520   $597   $(77)   (12.9)%
Gross Margin   33.0%   34.0%     (100) bps    
   RD&E %   3.2%   3.2%   —    
   SAG %   24.9%   24.7%     (20) bps    
Pre-Tax Income (Loss)2   $25   $(89)   $114   NM
Pre-Tax Income (Loss) Margin2   1.6%   (5.1)%     670 bps    
Gross Profit – Adjusted1   $528   $597   $(69)   (11.6)%
Gross Margin – Adjusted1   33.5%   34.0%     (50) bps    
Operating Income – Adjusted1   $85   $107   $(22)   (20.6)%
Operating Income Margin – Adjusted1   5.4%   6.1%   (70) bps    
GAAP Diluted Earnings (Loss) per Share2   $0.11   $(0.41)   $0.52   NM
Diluted Earnings Per Share – Adjusted1   $0.29   $0.44   $(0.15)   (34.1)%

Second-Quarter Segment Results

B/(W)                % Change

(in millions)                                                         Q2 2024                Q2 2023                  YOY                B/(W) YOY

Revenue                
    Print and Other     $1,508   $1,674 $(166)   (9.9)%
    XFS     89      101 (12)   (11.9)%
    Intersegment Elimination3     (19)   (21) 2   (9.5)%
Total Revenue     $1,578 1 $1,754 $(176)   (10.0)%

Profit                                                                                    5

    Print and Other       $81   $107     $(26)   (24.3)%
    XFS       4   —     4   NM
Total Profit       $85   $107     $(22)   (20.6)%

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  1. Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures and their reconciliation to the reported GAAP measures.
  2. Second quarter 2023 Pre-Tax (Loss) and Margin, and (Loss) per Share, includes the net after-tax PARC donation charge of $92 million ($132 million pre-tax), or $0.58 per diluted share.
  3. Reflects revenue, primarily commissions and other payments, made by the XFS segment to the Print and Other segment for the lease of Xerox equipment placements.