This Week in Imaging: Xerox Leadership Discuss New Reinvention Program Designed to Boost Company Profitability

by Kathleen Wirth · October 27, 2023

This week in a third-quarter earnings conference call, Xerox leadership took a closer look at the company’s new Reinvention program announced this week that’s designed to boost company profitability.

Xerox CEO and President Steve Bandrowczak noted that Xerox continues to work to simplify its business, focusing on its core operations of print, digital, and IT services.

However, this week, the company introduced its new Reinvention program, a multiyear strategic transformation plan.

Bandrowczak explained: “Reinvention is a comprehensive and operational simplification of our business resulting in a strategic repositioning of the company to take advantage of favorable macro trends, including the digitization of document workflows associated with the power of AI, while managing the secular headwinds associated with traditional print.

“Reinvention does not mean we are abandoning our core print business, which we expect to continue generating strong profits and cash flow for many years,” Bandrowczak said.

The ultimate goal of Reinvention is to “facilitate Xerox’s shift from a leader in print technology to an unparalleled technology and service provider,” with Bandrowczak noting that Reinvention is not simply a cost-cutting program.

Reinvention will include:

Geographic optimization, which entails taking a more selective approach to direct operations in certain markets and, when appropriate, shifting to a partner-led distribution model. Xerox says this is initially expected to result in lower revenue, but will provide a stronger and more profitable foundation from which to grow revenue going forward.
Optimization of Xerox’s product offerings and pricing models. Through Reinvention, Xerox will streamline its product offerings to maximize profitability and allow greater internal focus on the delivery of products and services that address the evolving needs of a hybrid workplace. The company says it will also introduce a more consumer-like “touch-less” experience to improve client satisfaction, and will simplify its pricing models to deliver faster and more effective decision-making when pursuing new and renewal business.

According to Bandrowczak, “Equally important, if not more so, is Xerox’ ability to transition over time to become a services-led, software-enabled provider of advanced workplace solutions.”

In total, Reinvention is expected to generate a substantial improvement in operating income and income margin over the next few years. By 2026, the company expects to deliver an improvement to 2023 adjusted operating income of at least $300 million, resulting in a return to double-digit adjusted operating income margins.

This will be driven by a more diversified revenue mix with greater exposure to markets with high rates of growth

Xerox CFO Xavier Heiss also explained that “what we are planning to do with Reinvention is to drive the revenue shift from a print-only or print-centric company into a company where print will still be present, but also targeting higher ongoing market that will give the revenue – improve the revenue trajectory of the company, not relying only on print.”

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