Xerox Outlines Roadmap for Growth at Investor Day Meeting

Advertisements
Xerox Outlines Three-Year Strategy at Investor Day; Guides to over $3 Billion of Cumulative Cash Flow and Annual EPS Expansion

In a previous post, we explained how at its 2019 Investor Day meeting last week, Xerox executives laid out how the company plans to simplify its operations, making it easier to do business with, as well as how it plans to substantially reduce overall costs.

In this post, we’ll look at Xerox’s overall strategy for growth as outlined at its Investor Day meeting:

  • First, the company doesn’t expect revenue growth in 2019 as it instead builds towards positive revenue growth in 2021. For 2019, it expects revenue to be down approximately 5 percent, and down approximately 3 percent in 2020. By 2020 it expects revenue to stabilize. As for adjusted earnings per share (EPS), it expects EPS of $3.70 to $3.80 for 2019; over $4.00 for 2020; and, by 2021, annual 7-percent growth for EPS. It also expects to generate $3 billion of free cash flow over the next three years.
  • Xerox will increasingly focus on its software and XMPie business, which it says in the past was lost in the product business.
  • Xerox will introduce a new “Powered by Xerox” trademark to leverage Xerox’s innovation and intellectual property across non-Xerox brands.
  • Increasingly focus on the managed print services (MPS) market, a market Xerox feels it created.

Xerox noted that it has the number-one market share in the A3 copier/MFP market, production-printing market, and MPS market, according to market-research firm IDC, and intends to build on these foundations in these segments:

Xerox’s Core Market segment, which is valued at $67 billion:

  • The $19 billion A3 market, which has a projected compound annual growth rate (CAGR) of -6 percent for 2018 to 2020.
  • The $27 billion managed services market, which has a projected CAGR of +3 percent for 2018 to 2020.
  • The $14 billion A4 multifunction-printer market, which has a projected CAGR of +2 percent for 2018 to 2020.
  • The $7 billion production-printer market, which has a projected CAGR of +2 percent for color and -12 percent for monochrome for 2018 to 2020.

Xerox’s Adjacent Market valued at $31 billion:

  • The $25 billion Digital Services market, which has projected CAGR of +7 percent for 2018 to 2020.
  • The $6 billion Software market, which has a projected CAGR of +6 percent for 2018 to 2020.

Xerox’s New Market segment, which is valued at $23 billion:

  • The $5 billion Digital Packaging market, which has a projected CAGR of +11 percent for 2018 to 2020.
  • The $8 billion 3D-printing market, which has a projected CAGR of +25 percent for 2018 to 2020.
  • The $8 billion Internet of Things (IoT) market, which has a projected CAGR of +9 percent for 2018 to 2020.
  • The $2 billion Artificial Intelligence (AI) workplace assistants market, which has a projected CAGR of +45 for 2018 to 2020.

Xerox also noted that it will be helped by its diverse customer base, which it says includes:

  • Ten of the top-10 global banks.
  • Eight of the top-10 telecom companies.
  • Ten of the top-10 healthcare payers and providers.
  • Seven of the top-10 largest auto and truck manufacturers.
  • 50 U.S. state governments.
  • Ten of the top-10 universities.

Channel Mix

Xerox’s current channel mix consists of:

  • Direct/enterprise: 41 percent.
  • Xerox Business Solutions (previously called Global Imaging Systems): 22 percent.
  • Indirect channels: 31 percent.

Xerox also introduced its current executive team, which includes, both familiar and new members:

Xerox’s complete Investor Day presentation can be found here.

Advertisements

More Resources

Advertisements
%d bloggers like this: