Xerox Leadership Discusses Second Quarter, Ninestar Ban
Earlier this week, Xerox leadership held a second-quarter earnings conference call, discussing the company’s latest financial results. Xerox leadership also addressed the U.S. import ban on printers and consumables from Ninestar Corporation of Zhuhai, China, as well as products from eight of its subsidiaries (but not Lexmark International).
Second-Quarter Financial Results
While Xerox’s second-quarter revenue was flat and the company reported a net loss, there was some good news. For instance, Xerox CEO Steve Bandrowczak noted that the company grew its profit margin year-over-year for the third consecutive quarter. He explained that this improvement reflects specific actions taken to drive profitable revenue growth, optimize Xerox operations, and offset product cost inflation with price increases.
Xerox also continues to look for ways to streamline its operations. For instance, it recently sold the Xerox Research Center of Canada (XRCC) to Myant Capital Partners (in April 2023, Xerox also donated its Palo Alto Research Center to a non-profit research organization).
Streamlining its operations has also included the use of advanced technologies such as robotic process association (RPA), augmented reality, and artificial intelligence (AI).
Internally, Xerox uses more than 600 bots to conduct 7 million transactions per quarter. It says these bots reduce resources required to process manual and repetitive tasks, and improve client response times.
For providing service, Xerox uses augmented reality and AI to improve remote solve rates, infield decision making, and service delivery profitability. And, when Xerox’s CareAR and AI are incorporated into its service offerings, it says it sees meaningful improvement in client satisfaction.
Strong A3 Growth
Xerox CFO Xavier Heiss said that printer installation growth was strongest for its high-margin A3 multifunction printers and color production-print equipment. At the same time, entry-level A4 installations were down year-over-year due to the ongoing normalization of the work-from-home trend.
FITTLE Changes
Beginning this quarter, Xerox also revised the presentation of its segment results, transferring revenue and costs associated with operating leases from FITTLE (Xerox’s financing business), to its Print and Other segment. This change was made to better reflect differences in ownership and oversight for this type of lease between segments, including the effect of the receivable funding agreement with HPS. The result is said to be a reduction to FITTLE segment revenue and profit.
Ninestar Ban
Bandrowczak also addressed Ninestar’s ban. As noted previously, last month, the U.S. Department of Homeland Security banned imports from Ninestar and eight of its subsidiaries, alleging the companies employed Chinese Uyghur slave labor to produce printers and printer consumables. Xerox has currently been sourcing some laser printers from Lexmark, which is not on the ban list, but does source some products from Ninestar. Lexmark, however, has said it will no longer source from Ninestar.
Bandrowczak explained: “First of all, we’re constantly looking at our supply chain and making sure we’re adhering to all regulatory and government requirements around the world and Ninestar was no different than that.
“And we immediately looked at and made sure that we continue to be a good corporate citizen around the world. From a materiality standpoint, it wasn’t material for us in the quarter and going forward, we should be just fine,” Bandrowczak said.
More Resources
- July 2023: Revenue Flat for Xerox, But Reports Improvements in Equipment Sales, Backlog
- April 2023: Xerox Leadership Discusses Earnings, Installations, Order Backlog
- April 2023: Xerox Reports Another Quarter of Improved Financial Results
- April 2023: Xerox Donates Famed Palo Alto Research Center
- January 2023: Light at the End of the Tunnel for Xerox? Company Reports Much Improved Fourth-Quarter Results