Xerox (ticker: XRX) has announced its second-quarter financial results, surpassing profit expectations despite a continued decline in demand. The company reported revenue of $1.75 billion for the quarter, in line with estimates, and recorded an adjusted profit of 44 cents per share, significantly higher than the consensus forecast of 30 cents per share.
Improvements in adjusted operating margin were also highlighted, rising from 2% in the year-ago quarter to 6%. Additionally, Xerox’s free cash flow saw a positive turnaround, amounting to $88 million compared to a loss of $98 million in the previous year.
Xerox CEO Steve Bandrowczak expressed his satisfaction with the company’s performance: “Over the last 12 months, Xerox has taken significant steps to strengthen its operating and financial discipline, leading to another quarter of profitable growth amid a dynamic macroeconomic backdrop.”
Despite some challenges within its larger client base, Xerox views demand as resilient. The company noted that delays in project implementations are starting to decrease, which signals a positive trend. Xerox attributed its margin improvement to factors such as reduced supply chain-related costs, price increases, cost reductions, and an increased focus on profitable revenue growth.
Looking ahead, Xerox projects flat to single-digit revenue decline in constant currency for the full year. The company anticipates an adjusted operating margin of 5.5% to 6% and free cash flow of at least $600 million. This revised guidance reflects an upgrade from its previous forecast of a 5% to 5.5% adjusted operating margin and $500 million in free cash flow.
Xerox also maintains a dividend policy that ensures at least 50% of its free cash flow will be returned to shareholders. Currently, the company offers a dividend of $1 per share, resulting in a generous yield of 6.5%.