Xerox Holdings Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ananda Baruah - Loop Capital Markets LLC - Analyst : Hey, guys. Yeah. Good morning, Appreciate the questions and all the helpful context, by the way. That was -- that's really -- that covers a lot upfront. So let me just start with this. You're not seeing any discernible impact from macro yet. Are you getting -- I guess, sort of conversationally what is some of the communications and messaging that both your sort of large corporate customers you guys deal with directly are conveying to you and then whether the VAR is telling you about SMB right now? Some of the underlying context, and then I have a quick follow-up. . REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, XRX.OQ - Q1 2025 Xerox Holdings Corp Earnings Call

Question: Ananda Baruah - Loop Capital Markets LLC - Analyst : Got it. That's all really great context. I appreciate that. I guess my quick follow-up, it sounds like -- the ITsavvy high-level metrics sounds really positive. Any, I guess, underlying context you can share about things that you did or that occurred as you continue to integrate ITsavvy into the broader corporate processes would be helpful.

Question: Erik Woodring - Morgan Stanley & Co. LLC - Analyst : Hey, good morning, guys. Thank you for taking my questions. Maybe the first one for you, Mirlanda. I was just -- I understand you haven't necessarily seen an impact to demand, and the tariff situation remains fluid. I'm just curious the thought process behind maintaining full-year guidance as we sit here today. Just -- I think there's a perception that growth is slowing. I understand you have long-term contracts. But at the same time, you noted $50 million net of potential tariff costs that are not included in your guidance. And so just kind of given how your stock has performed, why not set the bar lower rather than potentially incur, what I would call, negative estimate revisions in the event or if policy doesn't change and/or demand slows? And then I have a follow-up, please. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, XRX.OQ - Q1 2025 Xerox Holdings Corp Earnings Call

Question: Erik Woodring - Morgan Stanley & Co. LLC - Analyst : Okay. I appreciate that. And then my follow-up -- and it could be for Steve, John or you, Mirlanda -- I appreciate the new disclosures on IT Solutions. As we just think about the margin rates that we see for that business right now, realizing that you can gain benefits of scale, realizing that you should be able to -- perhaps your synergies, as you've mentioned, how do I think -- if I look one, two, three years out for this business, how do I think about the gross and operating margin rates for your IT Solutions business? Where can they go to as you sit here today and think about the initiatives and growth opportunities you have in place? Thanks so much.

Question: Samik Chatterjee - J.P. Morgan Securities LLC - Analyst : Hi, good morning and thanks for taking my question. I guess for the first one, if I can ask on post sales and I'm looking at the Q1 performance there, where in constant currency, the decline was about 9%. And I know you don't really break out the impact of non-strategic revenue and other reinvention items to post sales specifically. But just looking directionally, it looks like a mid-single-digit decline at least. Maybe if you can talk about the drivers there in terms of what are you seeing in terms of the -- what's driving the decline on the -- an organic basis in that post-sale revenue, where do you expect to exit the year, and in relation to sort of stabilization trends, what you're seeing on that post-sale revenue, particularly given that you have (multiple speakers)

Question: Samik Chatterjee - J.P. Morgan Securities LLC - Analyst : Got it. And quickly for my follow-up, you mentioned in the prepared remarks that free cash flow is more resilient than the operating profit performance. And you mentioned sort of the -- sort of pulled the lever on finance receivables. Can you just outline in terms of maintaining the free cash flow guide for the year? What are you seeing in terms of core cash flow from the business relative to what are the incremental changes you've been making on the finance receivables that's enabling to maintain the free cash flow guide? . REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, XRX.OQ - Q1 2025 Xerox Holdings Corp Earnings Call

Question: Samik Chatterjee - J.P. Morgan Securities LLC - Analyst : Okay. Maybe if I can just sneak in a quick clarification here. So in terms of the finance receivables and the benefit from that to free cash flow, that's largely unchanged relative to your prior expectation for 2025?