Xerox Revenue Continues Slide, Sales Down, $422m Backlog Crushes Earnings

Xerox earnings are out and the bad news continues as a $425 million backlog in orders adds to the company’s woes.

Even though print volumes were finally increasing, Xerox appears unable to capitalize on that as revenue, equipment sales and nearly every line-item in their earnings release is down year-over-year when comparing 2022 with 2021.

Gross margins were also down significantly across the board in Q1.

When specifically looking at equipment sales, Xerox reported some of the worst quarterly numbers we have ever seen;

Down 10.3% in Entry Level
Down 18.5% in Mid-Range
Down 22.9% in High-Volume

As a result of plummeting equipment sales, other areas of Xerox are suffering as well, such as financing, which is down 12.2% YoY. The one ray of light from recent earnings was their entry-level hardware sales, but even they are down more 10% when comparing Q1 numbers from 2022 and 2021.

Negative Sales Now to Affect Xerox for Next 3-5 Years

The equipment portion of the cost of owning or renting print hardware typically only accounts for about 10% of the revenue Xerox earns on copier/printer placements. The other roughly 90% comes from service and supplies and financing contracts. Simply stated, whatever Xerox doesn’t sell today will haunt them for the next 3 – 5 years. One would think that Xerox cannot sustain quarterly earnings like this indefinitely.

Here is the official press release:

NORWALK, Conn., —

Financial Summary

$1.67 billion of revenue, down 2.5 percent year-over-year or 0.7 percent in constant currency.
GAAP (loss) earnings per share (EPS) of $(0.38), down $0.56 year-over-year, and adjusted (loss) per share of $(0.12), down $0.34 year-over-year.
Pre-tax margin of (5.3) percent, down 840 basis points, and adjusted operating margin of (0.2) percent, down 540 basis points year-over-year.
$66 million of operating cash flow, down $51 million year-over-year.
$50 million of free cash flow, down $50 million year-over-year.