Xerox’s Q3 earnings missed on both the top and bottom lines.
The tech company reported third quarter sales of $1.75 billion (£1.53 billion), essentially flat compared with last year, but up by almost 5% on a constant currency basis. The EMEA region (32% of revenue) grew by 9.3%. The increase reflected the impact of acquisitions as well as what Xerox described as “resilient demand for our products and services amid an increasingly challenging macroeconomic environment”.
Equipment sales were up by 6.7% to $390 million (£341 million) as supply chain issues eased, although the pace of improvement was slower than expected. Xerox noted that equipment availability improved more in EMEA compared with the Americas and that page volumes continue to correlate with return-to-office trends.
Post-sale revenue grew by 4.1% to $1.36 billion (£1.19 billion), driven by price rises in paper and supplies and the gradual recovery in print-related activity. Xerox said it also saw strong growth in IT and digital services, including contributions from recent acquisitions.
“The global macroeconomic outlook has become more volatile in the past three months, but we are not yet seeing a meaningful effect of a global slowdown on our revenues,” the OEM noted in its earnings release. “We continue to see resiliency in demand for our office products, particularly our A3 devices. However, consistent with the uncertain macro environment, we are beginning to see longer project deployment times and, in some cases, lower page volume commitments.”
CEO Steve Bandrowczak said profitability remains challenged by persistently high inflation and continued supply chain constraints. Xerox lowered its full-year revenue outlook to around the $7 billion (£6.12 billion) mark, but this was largely due to weaker currencies in Europe, which accounts for around 30% of the company’s total sales. Free cash flow guidance was also cut significantly, partly driven by higher-than-expected use of working capital at the FITTLE financing business and for inventory.