Xerox Holdings(US:XRX)2025-05-01 13:02Financial 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][25] - Adjusted operating income margin was 1.5%, down 70 basis points year over year [5][26] - Free cash flow was a use of $109 million, compared to a use of $89 million in the prior year [5][36] - Adjusted loss per share was $0.06, a decrease of $0.12 year over year [5][27] 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 [7] - Equipment installations grew 24%, marking the third consecutive quarter of double-digit growth [7] - IT Solutions revenue and gross profit increased more than 100% year over year due to the inclusion of IT Savvy [33] Market Data and Key Metrics Changes - Services renewal rates for large client contracts reached a multi-year high [7] - IT Solutions order activity was strong, with pro forma gross bookings increasing 30% year over year [34] Company Strategy and Development Direction - The company is focused on executing over 100 reinvention initiatives aimed at driving revenue stabilization and improving 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 be accretive immediately [19] 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][8] - The company expects minimal tariff or macro-related impacts to financial results in Q2, with revenue decline in constant currency consistent with Q1 [41][42] Other Important Information - The company ended Q1 with $390 million in cash equivalents and restricted cash, and total debt decreased by around $100 million [37][38] - The company expects to realize over $100 million in gross cost savings in 2025 from reinvention initiatives [39] Q&A Session Summary Question: Impact of macroeconomic conditions on large corporate customers and VARs - Management indicated that while there is volatility, they have not seen a real impact in Q1, and conversations with clients reflect a cautious but stable environment [46][48] Question: Context on IT Savvy integration - Management expressed optimism about the integration of IT Savvy, highlighting the potential to double the business by penetrating existing accounts with IT solutions [52][54] Question: Rationale for maintaining full-year guidance amid tariff uncertainties - Management maintained guidance due to the fluid nature of tariffs, emphasizing accountability and the goal to deliver planned results [65][66] Question: Future margin expectations for IT Solutions - Management indicated that they aim for double-digit operating profit in IT Solutions, leveraging synergies and a mix of services to improve margins over time [68][70]