Xerox Holdings(US:XRX)2025-05-01 12:00Financial Data and Key Metrics Changes - Revenue for Q1 2025 was approximately $1.5 billion, a decrease of 3% in actual currency and 1.1% in constant currency, including IT Savvy [5][24] - Adjusted operating income margin was 1.5%, down 70 basis points year over year [5][25] - Free cash flow was a use of $109 million, compared to a use of $89 million in the prior year [5][34] - Adjusted loss per share was $0.06, a decrease of $0.12 year over year [5][26] Business Line Data and Key Metrics Changes - Equipment revenue adjusted for currency declined approximately 1%, a 500 basis point improvement from the pace of decline in 2024 [6] - Equipment installations grew 24%, marking the third consecutive quarter of double-digit growth [6][29] - IT Solutions revenue and gross profit increased more than 100% year over year due to the inclusion of IT Savvy [31] - Print post-sale revenue declined around 11.2% in actual currency and 9.2% in constant currency [30] Market Data and Key Metrics Changes - Services renewal rates for large client contracts reached a multi-year high [6] - IT Solutions order activity was strong despite an uncertain operating environment [31] - The total IT solutions pipeline increased by 26% since the acquisition of IT Savvy [32] Company Strategy and Development Direction - The company is focused on executing over 100 reinvention initiatives to drive revenue stabilization and improve profitability [14] - The integration of IT Savvy is ahead of plan, with expected run rate synergies of over $15 million already implemented [10] - The company is actively engaged in the integration planning for the Lexmark acquisition, which is expected to close soon [17] Management's Comments on Operating Environment and Future Outlook - Management noted that the near-term operating environment is clouded by tariff and trade-related uncertainty, but improvements from organizational changes are evident [6] - The company expects minimal tariff or macro-related impacts on financial results in Q2 [40] - Guidance for the full year remains unchanged despite the fluid nature of tariff policies [37][64] Other Important Information - The company’s top capital allocation priority is debt repayment, with total debt decreasing by around $100 million [12] - The company expects to realize over $100 million in gross cost savings in 2025 [37] Q&A Session Summary Question: Impact of macroeconomic conditions on large corporate customers and SMBs - Management indicated that there has not been a discernible impact in Q1, although there is caution among clients [46][49] Question: Context on IT Savvy integration and metrics - Management expressed optimism about the potential to double the IT Solutions business by penetrating existing accounts [51][52] Question: Rationale for maintaining full year guidance amid tariff uncertainties - Management stated that guidance is maintained until tariffs are finalized, providing transparency to investors [63][64] Question: Future gross and operating margin rates for IT Solutions - Management aims for double-digit operating profit in IT Solutions, leveraging lower SG&A and cost structures [67][68]