Holdings stock is lower Tuesday after the printer company posted lower-than-expected first-quarter profits, while projecting a return to top-line growth later in the year as the economy recovers from the Covid-19 pandemic.
For the quarter, Xerox (ticker: XRX) reported revenue of $1.71 billion, down 8.1% from a year ago, or 10.4% lower on a constant-currency basis, ahead of the Street consensus forecast of $1.59 billion. Adjusted profits were 22 cents a share, up a penny from a year earlier, but below the Street consensus estimate of 30 cents.
On a GAAP basis, the company earned 18 cents a share, up from a loss of 3 cents in the year-ago quarter. Free cash flow in the quarter was $100 million, down $50 million from a year ago, while gross margin fell to 35.7% from 38.3%.
“In the first quarter, in an environment where many offices remained closed, we grew equipment sales and IT services revenue year-over-year,” Xerox CEO John Visentin said in a statement.
Visentin also said the company has made progress on its previously announced plan to structure its Xerox Financial Services, Xerox Software, and PARC Innovation units as separate business, and that the process should be completed by year-end. Visentin added that he is confident Xerox will “return to growth in 2021.” While the company has not detailed its intentions, the plan raises the possibility that Xerox could sell or spin off one or more of those units.
Xerox affirmed its previous guidance for full-year 2021 free cash flow of at least $500 million.
Xerox stock on Tuesday is down 3.6% to $24.41.
Write to Eric J. Savitz at [email protected]