Xerox's European sales fall as partners 'respond to lower demand'

Print vendor says ongoing COVID-19 crisis has slashed both its top and bottom line

Xerox has seen revenues across all its geographies plummet by double digits, with CEO John Visentin blaming markets being "fully or partially shut down during the quarter".

For Q2, the print vendor's revenue totalled $1.47bn (£1.08bn), down 34.6 per cent year on year. Sales in EMEA fell 39.6 per cent to $428m.

In an earnings call transcribed by Seeking Alpha, Visentin called recent months "an extraordinary time in our lives" as he pointed the finger of blame firmly at the COVID-19 pandemic.

"It was not easy to deliver profitable results and continue investing in key areas of growth, while the bulk of our markets were fully or partially shut down during the quarter," he said.

However, he hailed the expansion of Xerox's software portfolio within Q2, with the launch of the Xerox Team Availability App to support flexible workplace demands.

In Europe, the CEO said sales fell as partners "managed" their inventory levels to balance books through the pandemic.

"Geographically, we saw larger revenue declines in Europe, where more of our sales are through indirect channel partners who are protecting their liquidity and managing their inventories in response to lower demand," he said.

Also within the quarter, Xerox withdrew its contentious €34bn hostile takeover bid of rival HP Inc. citing "market turmoil".

However, Xerox was able to log profits in Q2, albeit down 85.1 per cent to $27m in net income.

Visentin also shared details of the US vendor giant's pivot towards returning some of its 26,000 employees to their offices, within its 40 country markets.

"We have now reopened roughly half of our own facilities and more than 50 per cent of our active employees have resumed working onsite in some capacity.

"We continue to monitor COVID-19 transmission trends to ensure employees engage in onsite work remain safe."

Looking ahead to Q3, Visentin expressed a hope that its home-based printers segment - which declined in Q2 - will rebound amid more flexible work arrangements.

"Even though folks will be working from home, what they are realising is it's not just the printer, it's got to be secure. We've been investing in these areas."

He added:

"However, given the uncertainty, it is difficult to predict the timing and pace of the recovery and the full impact on our financial results this year. We are not providing financial guidance for 2020 at this time."

Since the start of the year, Xerox shares are down 55 per cent.