Xerox Holdings Corporation (NASDAQ:XRX) Q1 2023 Earnings Conference Call April 25, 2023 8:00 AM ET

Company Participants

David Beckel – Vice President and Head-Investor Relations

Steve Bandrowczak – Chief Executive Officer

Xavier Heiss – Executive Vice President and Chief Financial Officer

Conference Call Participants

Ananda Baruah – Loop Capital

Erik Woodring – Morgan Stanley

Samik Chatterjee – JPMorgan

Shannon Cross – Credit Suisse

Operator

Welcome to the Xerox Holdings Corporation First Quarter 2023 Earnings Release Conference Call. After the presentation, there will be a question-and-answer session. [Operator Instructions]

At this time, I would like to turn the meeting over to Mr. David Beckel, Vice President of – and Head of Investor Relations. Please go ahead, sir.

David Beckel

Good morning, everyone. I’m David Beckel, Vice President and Head of Investor Relations at Xerox Holdings Corporation. Welcome to the Xerox Holdings Corporation first quarter 2023 earnings release conference call hosted by Steve Bandrowczak, Chief Executive Officer. He is joined by Xavier Heiss, Executive Vice President and Chief Financial Officer. At the request of Xerox Holdings Corporation, today’s conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without the expressed permission of Xerox. During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor. And we’ll make comments that contain forward-looking statements which, by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein.

At this time, I’d like to turn the meeting over to Mr. Bandrowczak.

Steve Bandrowczak

Good morning and thank you for joining our Q1 2023 earnings call. I would like to start by complementing the Xerox team in its execution of another solid quarter. We delivered another quarter of revenue and profitability growth in what continues to be a dynamic and challenging operating environment. Some of the challenges we faced in prior quarters, such as supply constraints and elevated logistics costs have receded, but new challenges have emerged as central banking policies remain restrictive to global economic growth. Against this backdrop, we at Xerox remained focused on the execution of our 2023 priorities and the goal of delivering client success through products and services that address the productivity challenges of today’s hybrid workplace. In other words, we are focused on making work, work for our clients.

Summarizing results for the quarter revenue of $1.72 billion grew 5.5% in constant currency and 2.8% in actual currency. Adjusted EPS was $0.49, $0.61 higher year-over-year. Free cash flow was $70 million compared to $50 million in the prior year quarter, and adjusted operating margin of 6.9% was higher year-over-year by 710 basis points. Demand for our print equipment and related services remains resilient, as evidenced by another quarter of constant currency growth in both equipment and post-sale revenue. This quarter, we also observed a pickup in office-related print activity. As a result, we continue to expect a stable revenue and demand outlook for the year.