Xerox Focusing on Growing Software, Services to Reverse Revenue Trajectory

In a second-quarter earnings call held yesterday, Xerox CEO John Visentin stated that growing Xerox’s software and services businesses will be key to reversing its declining revenue trajectory. Visentin said that the company will expand its IT services offerings, selling them through the company’s Xerox Business Solutions (previously known as Global Imaging Systems). It expects that about a third of those locations will begin offering IT services by the end of 2019.  (For a detailed look at Xerox’s second-quarter results, including hardware installations and more, see here).

During the conference call yesterday, Visentin said:  “We see significant opportunity for IT services within the SMB space. Today, three of our Xerox Business Solution cores offer IT services to clients such as the 10th-largest school district in the United States. With the competition fragmented and often regional, XBS is well positioned to capitalize on this growing market.”

Visentin continued: “We are ramping up our operations and capabilities to expand IT services to about a third of our XBS cores by the end of the year, and we will roll it out to the rest of the cores and Europe in 2020.”

Xerox began reorganizing Xerox Business Systems (XBS) earlier this year, beginning with closing about half of XBX branches and laying off associated employees. It’s gone from 186 XBS locations to less than 100.

Visentin said that in July, Xerox began working with American Express to market to their small business card-members through the AmEx Offers program and other channels to further increase Xerox’s penetration of the SMB market. This multi-month, multi-channel digital program focuses on increasing business owners awareness of DocuShare, XMPie, Xerox ConnectKey apps, and Xerox office MFPs.

Visentin also stated that, starting in 2020, HP will make DocuShare Flex, Xerox’s cloud-based content management platform, available on PCs and tablets sold to SMBs in the United States. He also said that another part of the newly expanded Xerox-HP Inc. relationship will “allow us to source toner, which will add volume to our toner plants.”

Lower Supplies Revenue

Xerox CFO William Osbourn noted that during the second quarter, Xerox’s supplies revenues declined at a “rate similar to last quarter, but higher than that trend in the prior year.”

Osbourn said the declines were mostly in Xerox’s developing market regions and in Xerox’s indirect channels in the United States, and reflects lower page volume trends, “as well as the timing of sales within our two-tiered distribution channel.”

Services revenue, which is included as a part of both equipment sale and post-sale revenue streams, declined 4.1 percent, and was also affected by these factors.

A3 MFP Embellishment Kit

Visentin also reported on an interesting new option for Xerox A3 MFPs that’s available for high-end A3 Xerox models in EMEA (Europe, Middle-East, Africa).

The option enables a standard A3 Xerox MFP to print materials with metallic  toners to produce eye-catching metallic output, similar to the capability of Xerox’s more advanced Iridesse press. Visentin said Xerox has a large installed base in these regions, enabling the company to upsell the option to its customers, and to increase print volumes.

Xerox will also continue to focus on technologies for the future, which include 3D printing and digital manufacturing, digital packaging and print, and sensors and services for IoT and AI workflow systems.

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