Xerox (XRX) UBS Global Technology and AI Conference summary

Reinvention strategy and progress

• Reinvention is a three-year program focused on cost structure alignment, investment in growth areas, and positioning for future growth.

• Major organizational restructuring was implemented to enhance client success and partner focus, including the creation of Global Business Services for continuous improvement and automation.

• $700 million in cost-saving opportunities identified, with $300 million addressed in the current year and the remainder targeted over the next two years.

• ITsavvy acquisition brings $450 million in IT services, targeting mid-market clients and aiming to offset secular print decline.

• The program is not linear; quarter-over-quarter fluctuations are expected, but the trajectory remains positive.

Revenue growth and portfolio shift

• Goal to shift revenue mix to 80% print and 20% IT/digital services by 2026-2028, with ITsavvy already raising IT/digital to 15% of revenue.

• Minimal overlap between existing print and IT services customers, presenting significant cross-sell opportunities.

• Sales and partner channels are being retrained and retooled to sell IT and digital services, with a focus on doubling wallet share in existing accounts.

• Security is the top demand from clients, with network and cybersecurity services as key offerings.

• Mid-market clients value trusted relationships and are receptive to expanded service offerings.

Margin improvement and financial targets

• Operating margin target is 10% post-reinvention, up from 5% currently, with sequential improvements seen each quarter.

• Both cost reduction and revenue growth are necessary to achieve margin goals; incremental IT/digital revenue is accretive to margins.

• Deleveraging is a priority, with a target of 3x EBITDA leverage after reinvention.

• The strategy can be achieved organically, without further M&A, by growing IT and digital services.

• Revenue from IT/digital services is value-added and not margin-dilutive compared to print.