Xerox Reports Slight Revenue Decline for Second-Quarter Revenue, But Much Higher Net Income

On July 29th, Xerox, which is set to separate into two publicly traded companies by the end of this year, reported results for its second quarter, with total revenue of $4.4 billion, down 4 percent year-over-year, but also reported net income of $155 million, or 15 cents per share, which was much higher than the $12 million it reported for second-quarter 2015. However, in second-quarter 2015, it reported a software-impairment charge, among other one-time items, that cut into profits. For its second-quarter 2016 results, Xerox also maintained its full-year earnings guidance.

Xerox reported earnings per share (EPS) of 15 cents. Its Services business provided $2.5 billion in revenue, a decrease of 2 percent, while its Document Technology business delivered total revenue of $1.8 billion, down 7 percent. For its Document Technology group, Xerox reported “good growth” in high-end and mid-range office-imaging color models, although installations of entry-level devices declined, driven by developing markets.

“We delivered strong second-quarter results reflecting significant progress across our 2016 priorities: delivering on our financial commitments, executing our separation and driving our strategic transformation,” said Ursula Burns, Xerox chairman and chief executive officer. “Our Services segment delivered substantial margin expansion and continued revenue growth in Document Outsourcing. Document Technology revenue declines moderated and margin improved driven by cost and productivity initiatives.”

Separation and Strategic Transformation Update

During the second quarter, Xerox reported significant progress on its planned separation into two independent, publicly traded companies. The company announced that the new Business Process Outsourcing company will be named Conduent Incorporated and that Ashok Vemuri will become its chief executive officer. The Document Technology company will retain the Xerox Corporation name and Jeff Jacobson will serve as its chief executive officer. Ursula Burns will continue in her current role as chairman and chief executive officer of Xerox until the separation, and will serve as chairman of the Xerox board following the separation.

Xerox says it’s “on track to realize the approximately $700 million in annualized savings it targeted for 2016.” Estimated restructuring and related charges continue to be approximately $300 million for full-year 2016, including $71 million recorded in the second quarter and $197 million year-to-date.

For its third quarter, Xerox expects EPS of 14 to 16 cents per share. The company reiterated its full-year guidance for EPS of 45 to 55 cents.

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