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Jun 30, 2020
Xerox Q2 2020 Earnings Report
Xerox's financial performance was impacted by the COVID-19 pandemic but delivered positive EPS and cash flow through financial discipline.
Key Takeaways
Xerox Holdings Corporation announced its second-quarter 2020 financial results, reporting a revenue of $1.47 billion, a GAAP EPS of $0.11, and an adjusted EPS of $0.15. The company's performance was significantly impacted by the COVID-19 pandemic, but financial discipline enabled positive earnings per share and cash flow.
Revenue decreased by 35.3% year-over-year, or 34.6% in constant currency.
GAAP earnings per share (EPS) from continuing operations decreased to $0.11 per share, down $0.49 year-over-year.
Adjusted operating margin decreased to 4.2 percent, down 820 basis points year-over-year.
The company launched 'Make Now Work,' an integrated content marketing campaign to support clients’ digital transformations.
Xerox
Xerox
Xerox Revenue by Segment
Revenue by Segment
Equipment Sales Revenue
CapyFin.comPost Sale Revenue
CapyFin.com Forward Guidance
Due to the uncertainty caused by COVID-19, Xerox is not providing financial guidance at this time but has modeled numerous recovery scenarios.
Positive Outlook
- Strong balance sheet and sufficient liquidity, including access to an undrawn $1.8 billion revolver.
- More flexible cost structure due to Project Own It transformation.
- Focus on incremental actions to prioritize and preserve cash.
- Majority of business is contractually based with bundled services contracts.
- Expect transactional portion of the business to begin to recover gradually in the second half as businesses reopen.
Challenges Ahead
- The most significant near-term impact from the crisis has been on equipment and unbundled supplies sales.
- Sales are expected to continue to decline significantly as businesses hold off or delay purchases.
- Variable charges are impacted by customers' employees not being in the office and using our equipment.
- Continued uncertainty around the spread and resurgence of the virus has changed our prior expectation for an inflection point following the second quarter.
- Expect a slower pace of gradual recovery in the second half of the year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income