Xerox's Q1 2025: Navigating Contradictions in Macroeconomic Impact and ITsavvy Growth Prospects

Macroeconomic conditions and demand impact, ITsavvy integration and synergy realization, impact of macroeconomic conditions on demand, growth potential of ITsavvy, and revenue growth strategy are the key contradictions discussed in Xerox's latest 2025Q1 earnings call.



Revenue Stabilization and Reinvention Impact:
- Xerox Holdings Corporation reported revenue of approximately $1.5 billion in Q1 2025, showing a 3% decline in actual currency and 1.1% in constant currency.
- The decline reflects a mix of IT Solution products and services billed in Q1, as well as higher-than-expected costs due to trade and macroeconomic disruptions.
- The improvements in revenue trajectory and double-digit operating expense reductions are attributed to cumulative benefits from reinvention actions and organizational changes.

IT Solutions Growth and Integration:
- IT Solutions revenue and gross profit increased more than 100% year-over-year, reflecting the inclusion of ITsavvy in segment results.
- The integration of ITsavvy is ahead of plan, with expected run-rate synergies contributing to improved IT Solutions and total company profit.
- Early cross-sale success with IT Solutions to existing print clients is encouraging, indicating potential growth opportunities.

Print Revenue and Post-Sale Trends:
- Q1 print post-sale revenue declined 11.2% in actual currency and 9.2% in constant currency.
- The decline is primarily due to lower supplies and page volumes, offset partially by growth in digital services.
- The decline in post-sale revenue is expected to improve following a period of strong equipment installation growth.

Acquisition and Strategic Focus:
- Xerox focuses on the pending acquisition of Lexmark, with expected synergies and operational integration to strengthen its position.
- The Lexmark acquisition is anticipated to enhance Xerox's A4/A3 platform and expand its OEM business.
- The integration is expected to further contribute to Xerox's target of sustainable growth in revenue, adjusted operating income, and free cash flow.