Xerox Holdings Corp (NASDAQ: XRX) reported a third-quarter FY23 sales decline of 5.7% year-on-year to $1.65 billion, missing the consensus of $1.71 billion.
Revenues declined 7.4% at constant currency. Adjusted EPS of $0.46 beat the analyst consensus of $0.35.
Equipment sales decreased by 1%, while post-sale revenue declined by 7%.
Gross margin expanded 60 basis points Y/Y to 32.4%. The equipment margin increased by 1,000 bps to 31%. Post-sale margin declined by 200 bps to 32.9%.
The company reported an adjusted operating income of $68 million, compared to $65 million last year, and the margin expanded 40 basis points to 4.1%.
Xerox held $532 million in cash and equivalents. Operating cash flow for the quarter totaled $124 million, with a free cash flow of $112 million.
“Growth in adjusted profit, EPS and free cash flow reflects solid execution of our strategic priorities amid a challenging macro backdrop,” said Steve Bandrowczak, chief executive officer at Xerox.
FY23 Outlook: The company expects revenue of $7.00 billion (prior $7.10 billion) vs. consensus of $7.01 billion. The company reiterated a free cash flow guidance of at least $600 million.
The company also reiterated the adjusted operating margin of 5.5% – 6.0%.
Price Action: XRX shares are trading higher by 2.60% at $13.83 premarket on the last check Tuesday.
