Xerox: Our Digital, Print Solutions Are Well Positioned For Hybrid Work

‘Our solutions like our cloud-based print solution [and] our security solution helps a lot in a hybrid environment. What we also found that as clients return back to the office, even in a hybrid environment, or three days a week or four days a week or two days a week, a lot of the printing is done still in the office,’ says John Visentin, vice chairman and CEO of Xerox Holdings Corp.

Whether companies return to the office later this year or continue with a hybrid approach, Xerox Holdings Corp. said it’s well positioned to serve its customers with print, cloud and security solutions even as it faces pandemic-related headwinds.

“If you think of our digital solutions, we are positioned well in a hybrid environment where print will be done both at the office and at home,” John Visentin, vice chairman and CEO of Xerox, said in a Q4 earnings call on Tuesday. “But as importantly, workflow solutions of assuring where the information is going from one place to the other, keeping it secure and assuring that it's being printed properly at the right places becomes important.”

Even as the pandemic continues and the omicron variant surges, Visentin said he assumed in-office work would normalize in 2021 with the rollout of the COVID-19 vaccine.

“However, the delta and omicron variants of COVID-19 delayed company’s plans to return workers to the office, causing a reduction in expected post sale revenue and profits,” he said. “In the second half of the year, we experienced an unprecedented level of supply chain disruption, with conditions deteriorating throughout the final two quarters of the year. These disruptions resulted in revenue falling below expectations we laid out at the beginning of the year, with most of the shortfall comprised of high margin, mid-range devices, and post-sale revenue.”

Although he doesn’t see an improvement in the supply chain currently, he predicted that it would start to stabilize in the second half of the year and a return-to-office workforce in the new few quarters

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To further business growth, Xerox executives said the company is investing $200 million in research and development, go-to-market and its partnerships.

“We’re doing investments both in R&D and go-to-market and partnerships and standing up these businesses so that they can fly on their own [and] don't have just a reliability on us,” Visentin said. “XFS (Xerox Financial Services) is an example, where in the past they relied on Xerox and Xerox products alone. And now we've asked and they've started becoming a global payment solution business where they're looking for OEM and third-party partners and that takes investment.”

Xavier Heiss, Xerox executive vice president and CFO, said the $200 million investment is about $70 million above what the company was doing last year, which is about a 50 percent increase.

He said more details about the major investment will be discussed during their investor day conference call in February.

The Norwalk, Conn.-based vendor reported $1.78 billion in revenue for the fourth quarter, down 7.9 percent year-over-year. It also reported $7.04 billion in revenue for the fiscal year. Fourth quarter and fiscal year GAAP earnings per share were $3.97 and $2.56, down $4.33 and $3.40 year-over-year, respectively. On Wednesday, Xerox stock stood at $20.11 per share, about an 11 percent from where it stood at the start of this year.

Although there is revenue backlog in its print business, Visentin said the company has invested in its IT services business, “which wraps a lot of solutions and digital services around the product and we've seen a lot of good growth come from both those businesses.”

“Our strategy moving forward is one, win market share, which we have in the last few quarters, and continue to win market share in the spaces where we're strong,” he said. “And then two, continue to wrap our services around security services, IT services, NPS services around our product base, so that we could have sustainable growth going forward.”