Xerox Holdings Corp (XRX) Q3 2023 Earnings: Profitability and Cash Flow Growth Amid Revenue Decline
Q3 2023 revenue of $1.65 billion, down 5.7 percent, or 7.4 percent in constant currency.
GAAP net income of $49 million, or $0.28 per share, up $432 million or $2.76 per share, year-over-year.
Adjusted net income of $77 million, or $0.46 per share, up $44 million or $0.27 per share, year-over-year.
Operating cash flow of $124 million, up $132 million year-over-year.
On October 24, 2023, Xerox Holdings Corp (NASDAQ:XRX) released its third-quarter earnings for 2023. Despite a 5.7% decline in revenue, the company reported growth in profitability and cash flow. This performance reflects Xerox's strategic initiatives, cost efficiency actions, and productivity amid a challenging macroeconomic backdrop.
Financial Performance
Xerox reported a Q3 2023 revenue of $1.65 billion, down 5.7% or 7.4% in constant currency. However, the company's GAAP net income stood at $49 million or $0.28 per share, a significant increase from the previous year. Adjusted net income was $77 million or $0.46 per share, up $44 million or $0.27 per share, year-over-year. The company's operating cash flow also increased by $132 million year-over-year to $124 million.
Reinvention Initiative
Xerox announced a Reinvention initiative, which is expected to deliver an improvement in adjusted operating income of at least $300 million by 2026. The initiative aims to reposition the business to enable sustainable profit improvement and revenue growth through the expansion of services that best serve clients' needs.
Financial Tables
Key financial results for Q3 2023 include a gross margin of 32.4%, up 60 basis points from Q3 2022, and an adjusted operating margin of 4.1%, up 40 basis points year-over-year. The company's total revenue was $1,652 million, a decrease of 5.7% from Q3 2022. The GAAP diluted earnings per share were $0.28, a significant increase from the loss of $2.48 per share in Q3 2022.
Company's Outlook
For full-year 2023, Xerox expects total revenue to be flat to down low-single-digits in constant currency. The company continues to see momentum in demand for its products and services in the Americas, particularly for its faster-growing Digital Services. However, there has been a mild softening of demand in European markets, reflecting weaker macroeconomic conditions. As a result, revenue is expected to come in at the lower end of the expected range. The company also expects free cash flow for full-year 2023 to be at least $600 million.
This article first appeared on GuruFocus.
