Xerox Holdings Corp. on Tuesday reported a decline in third-quarter revenue and earnings but managed to beat Street estimates.
For the quarter ended Sept. 30, the document company reported sales of $1.77 billion, down roughly 19 percent from $2.18 billion in the year-ago quarter. Operating income for the quarter was $131 million, down from $262 million in the third quarter last year. On a per-share basis, earnings were down 40 percent to 41 cents from 68 cents a year ago.
Analysts had expected GAAP earnings of 2 cents on revenue of $1.61 billion.
“The flexibility and financial discipline we have built in our company enabled us to increase earnings and cash flow sequentially. 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,” said Xerox Vice Chairman and CEO John Visentin. “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.”
Business highlights during the quarter include:
• 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;
• Expanded the company’s software portfolio with the launch of DocuShare Go, a cloud-based, SaaS content management platform focused on the small and medium-sized business that automates how users organize, share, collaborate and back up business-critical content;
• Honored with several industry awards including “Best Innovation Project of the Year” by Health Tech Digital and named one of the “World’s Most Sustainably Managed Companies” by the Wall Street Journal; and
• 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.
Xerox ended the quarter with cash of $3.24 billion, up from $2.74 billion in the year-ago quarter. Total assets climbed to $15.35 billion from $15.05 billion a year ago.
For the nine-month period, net income fell to $115 million from $542 million in the same period last year. Due to the pandemic, Xerox officials declined to give future financial guidance.
“During the third quarter, corresponding with business reopenings, the rate of decline of equipment installations (including in areas of our business that support our hybrid workplace initiatives) improved, as did printed-page volumes,” officials said in the earnings report. “These operational improvements resulted in a moderation of our rate of revenue decline during the third quarter as compared to the second quarter, which gives us confidence in the resilience and readiness of our business to recover as progress is made to control the pandemic and as businesses and economies reopen.”
Officials added: “During the current year, the most significant impact from the pandemic has been on sales of our equipment and unbundled supplies. However, due to their transactional nature, these revenues experienced the largest recovery during the third quarter and we expect that they will continue to fluctuate and gradually improve concurrent with business reopenings.”
Shares of company stock (NYSE: XRX) spiked early on Tuesday to $19.06 but had settled at $18.63 at midday, down from Monday’s close at $18.92.