WEBVTT - Xerox CEO Steven Bandrowczak Talks Earnings

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<v Speaker 1>Please to say.

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<v Speaker 2>Joining us here in Studio two is the CEO of

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<v Speaker 2>Xerox see advantrasact, see it great to.

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<v Speaker 1>Have you, welcome, Thank you for having me.

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<v Speaker 3>What is the reinvention?

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<v Speaker 1>Yeah, the reinvention is about.

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<v Speaker 4>Getting Zerox back to being a tech powerhouse and driving

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<v Speaker 4>productivity in the workplace. She's just talking about real estate

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<v Speaker 4>a few minutes ago, and what's happening with inside the workplace.

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<v Speaker 4>People are working all over the place in different areas

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<v Speaker 4>and we've always been driving that productivity in the workplace.

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<v Speaker 4>So part of the reinvention strategy is three things. One,

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<v Speaker 4>how do we get back to a declining core business

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<v Speaker 4>that's declining single digits? How do we get back to growth?

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<v Speaker 4>What do we do there in growth? And there are

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<v Speaker 4>sectors that are actually growing. We have a four printers

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<v Speaker 4>colored that are actually growing. We grew double digits in

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<v Speaker 4>Q four. We have the ability to be able to

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<v Speaker 4>outgrow the market and market share through changing our channel partners,

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<v Speaker 4>productivity in our salesforce, and so forth. So how do

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<v Speaker 4>we get our core strengthen so that decline is slowed down.

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<v Speaker 4>Second piece of it is how do we get twenty

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<v Speaker 4>percent of our revenue in growth areas.

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<v Speaker 1>So we just.

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<v Speaker 4>Acquired a company called it Sava, which is around IT solutions.

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<v Speaker 4>And if you think about what's happening in the workplace today,

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<v Speaker 4>technology is complex, AI is complex. All the different major

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<v Speaker 4>chnds in technology is tough. They're looking for a partner

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<v Speaker 4>like Xerox who can bring solutions. We're going to be

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<v Speaker 4>a solutions driven, a service driven software enabled business going forward,

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<v Speaker 4>and we can help our clients, especially in the mid market,

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<v Speaker 4>drive and help them inside of driving productivity and IT solutions.

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<v Speaker 1>So if you think about some of the big.

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<v Speaker 4>Tech transformations, Windows, AI, etc.

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<v Speaker 2>I'm very fascinated by this. In full disclosure, I actually

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<v Speaker 2>started my career covering is Xerox way. I won't tell

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<v Speaker 2>you what year that was, but it was a much

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<v Speaker 2>different company there, and it was going through a lot

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<v Speaker 2>of issues. When I look at the breakdown, you know

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<v Speaker 2>what you're selling equipment and this idea that's kind of

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<v Speaker 2>post sales revenue, which is now the bult or It's

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<v Speaker 2>always been the vault, but it's become much more dominant.

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<v Speaker 2>What is the complexion of that? Who are you selling to?

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<v Speaker 2>What types of sectors, what types of companies?

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<v Speaker 1>Yeah, so two different worlds.

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<v Speaker 4>One is we have our major direct sales where we

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<v Speaker 4>sell a lot into SMB right, a lot of the

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<v Speaker 4>small business and medium business and with two hundred thousand

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<v Speaker 4>plus accounts large channels where we sell into and we

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<v Speaker 4>have channel resellers that sell over ten thousand channel partners

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<v Speaker 4>that sell around the world.

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<v Speaker 1>So we sell.

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<v Speaker 4>Into AMA in the medium we got a forty five

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<v Speaker 4>percent of our business there and then the fifty plus

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<v Speaker 4>percent in the Americas, so medium SMB business. But more importantly,

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<v Speaker 4>we're now creating vertical solutions. So you think about how

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<v Speaker 4>you can sell into hospitality, how you can sell into education,

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<v Speaker 4>and how do we put infrastructure around our devices that

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<v Speaker 4>drives productivity in education.

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<v Speaker 1>So we talk about AI a lot of AI today.

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<v Speaker 4>You think about the print that the print that has

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<v Speaker 4>a lot of intelligence and a lot of capabilities in

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<v Speaker 4>there that we can help with document flows, We can

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<v Speaker 4>help with intelligence on documents and driving productivity in that space.

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<v Speaker 5>To be honest, the street doesn't like it right now.

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<v Speaker 5>I mean the stock is off over six percent off

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<v Speaker 5>its lows, but still short interest is also building into

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<v Speaker 5>the quarter.

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<v Speaker 6>What do you think is being missed right now?

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<v Speaker 4>I think the reinvention story in terms of where we're

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<v Speaker 4>going right, they're looking for us to give proof points on.

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<v Speaker 5>The IT solution, the acceleration part of the story that

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<v Speaker 5>you guys are hoping to execute this year and next year.

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<v Speaker 6>You feel like that part's being missed.

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<v Speaker 1>That's correct, right, and it's a timing issue. Right.

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<v Speaker 4>We're doing a lot of different things, and it's very

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<v Speaker 4>difficult to do the amount of change that we have

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<v Speaker 4>as a public company and doing all the changes that

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<v Speaker 4>we're doing simultaneously. That's the part that they're missing in

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<v Speaker 4>terms of where we're going right. We acquired it Savvy,

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<v Speaker 4>we acquired Lexmak recently, and so the story is going forward,

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<v Speaker 4>we will get to growth, we'll get to double digit

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<v Speaker 4>operating profit.

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<v Speaker 5>When do you think you see the it's not a trough, really,

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<v Speaker 5>but when do you think you start to see the

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<v Speaker 5>turn where investors and analysts can really start to see

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<v Speaker 5>that momentum.

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<v Speaker 4>We're seeing it internally right in terms of the key

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<v Speaker 4>performing indicators that we see, whether it's around orders, whether

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<v Speaker 4>it's around growth, where it's around mix in our revenue,

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<v Speaker 4>we're seeing it. As we get into end of second

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<v Speaker 4>quarter of this year, we'll see Q one growth year

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<v Speaker 4>over year. We'll see Q two growth over year over year,

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<v Speaker 4>and they'll start to see it as we get out

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<v Speaker 4>to the second half of the year.

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<v Speaker 2>I want to ask you about the structure of the

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<v Speaker 2>company itself in terms of the amount of employees you have.

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<v Speaker 3>Are they all working from the office?

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<v Speaker 2>Do you have more of a remote strategy, hybrid remote strategy?

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<v Speaker 2>What's that been like coming out of the pandemic?

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<v Speaker 1>Well, hybrid all over the place.

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<v Speaker 4>Now, I've got ten thousand service technicians that work in

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<v Speaker 4>the fields and body.

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<v Speaker 1>It's very nature.

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<v Speaker 4>We got people in trucks, we've got people touching clients

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<v Speaker 4>all around the world, and then the rest of it

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<v Speaker 4>is a hybrid strategy where we've got people that are

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<v Speaker 4>working from home that have certain expertise, and then we've

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<v Speaker 4>got individuals that are working in the office.

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<v Speaker 3>Are you hiring a lot right now?

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<v Speaker 4>We're not hiring because right now we're integrating companies and

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<v Speaker 4>you want to make sure that we get the best

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<v Speaker 4>of the acquisitions that we've made. And as we're going

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<v Speaker 4>through that, we will look for technical skills, specifically in

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<v Speaker 4>software and software engineering.

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<v Speaker 5>When you take a look broadly, because you guys are

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<v Speaker 5>a global business talking about the impact of the stronger

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<v Speaker 5>dollar and sort of headline risk when it comes to tariffs, Like,

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<v Speaker 5>how do you guys think about these macro problems?

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<v Speaker 4>I think for us, everybody in the tech industry is

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<v Speaker 4>dealing with tariffs today and is dealing with these macro trends,

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<v Speaker 4>and so we will adjust to them.

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<v Speaker 1>Our supply chain is flexible, We'll adjust to whatever tariffs

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<v Speaker 1>come out way.

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<v Speaker 4>And we've always done that historically during the pandemic or

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<v Speaker 4>supply chain challenges.

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<v Speaker 1>It's the same thing for us on the tariffs. Everybody

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<v Speaker 1>in the tech industry is dealing with it.

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<v Speaker 6>Strong dollar freak you out or no, No, it doesn't.

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<v Speaker 1>Bother me at all.

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<v Speaker 6>Why not?

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<v Speaker 4>Well, look, we've got a diversified business, right, So I've

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<v Speaker 4>got businesses in Europe, businesses here in the US. So

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<v Speaker 4>we've got a diversified business and it's balanced. So strong

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<v Speaker 4>dollar doesn't bother me at all.

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<v Speaker 2>There are, of course, a lot of I say institutional investors.

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<v Speaker 2>They look at your market valuation and they say this

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<v Speaker 2>is a company, and they look at your assets and

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<v Speaker 2>they look at a company that could be ripe for

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<v Speaker 2>an acquisition itself. Have you been approached at all by

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<v Speaker 2>any other companies.

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<v Speaker 4>So we have always said, and I've been very bold,

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<v Speaker 4>we want to be in the position to be the

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<v Speaker 4>acquirer and the consolidator of our industry. If you think

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<v Speaker 4>about our industry today, we've got many japan players in

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<v Speaker 4>our industry.

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<v Speaker 1>We think that is right for consolidation.

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<v Speaker 4>I did the IBM PC spin out many years ago,

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<v Speaker 4>was part of the team that built Lenobo and at

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<v Speaker 4>that time we got the same dynamics in the print industry.

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<v Speaker 4>It needs to consolidate. We will be the consolidator.

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<v Speaker 2>Is the business environment conducive to those types of acquisitions,

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<v Speaker 2>particularly you mentioned Japan? Yea, do we get a cross

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<v Speaker 2>border transition transaction like that done these days?

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<v Speaker 4>Well, look, it's always difficult in that environment in Japan

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<v Speaker 4>with Japanese players for show, but there are a lot

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<v Speaker 4>of other roll ups that we can do specifically in

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<v Speaker 4>our industry.

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<v Speaker 1>So we withave the consolidator.

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<v Speaker 5>Yeah, and you're still integrating of course, the IT savvy

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<v Speaker 5>as well as as I'm saying, the Lenx.

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<v Speaker 1>Let's work there. Thanks love.

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<v Speaker 6>So there's a lot to be done on that front.

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<v Speaker 5>Talk to me a little bit about how you see

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<v Speaker 5>your cost cutting and your margins versus your growth.

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<v Speaker 6>Like you guys have been in cost cutting mode.

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<v Speaker 5>Particularly the synergies you're going to get from these acquisitions,

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<v Speaker 5>and that's going to help margins, but at some point

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<v Speaker 5>it's going to be that top line.

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<v Speaker 1>Yeah.

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<v Speaker 4>Look, growth is important for us and part of the

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<v Speaker 4>reinvention is getting back to growth. So I talked about

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<v Speaker 4>acquiring it savvy. You think about that space alone. The

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<v Speaker 4>Kagara over the next five years has got mid single

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<v Speaker 4>to high single digit growth just in that space with

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<v Speaker 4>the tech transitions that we see.

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<v Speaker 1>So the idea is to get twenty percent of our

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<v Speaker 1>revenue that is in high growth areas digital services. We

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<v Speaker 1>talk about AI.

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<v Speaker 4>You know, you spend a lot of time about AI,

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<v Speaker 4>but think about your cell phone with out network connection.

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<v Speaker 4>AI without data is completely useless, right, and so we

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<v Speaker 4>play a role in aggregating data and serving data up

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<v Speaker 4>for all these AI modules.

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<v Speaker 1>When you think.

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<v Speaker 4>About AI, it's about the workplace in terms of the

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<v Speaker 4>process and adding AI on top of the process that

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<v Speaker 4>actually drives value.

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<v Speaker 1>And that's what we play.

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<v Speaker 4>We've got a tremendous amount of intelligence in industries like education,

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<v Speaker 4>education and law firms. You see it in hospitalities, you

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<v Speaker 4>see it in education, and so what we do is

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<v Speaker 4>we bring a tremendous amount of intelligence, serve up that data,

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<v Speaker 4>and then when you put AI on top of it

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<v Speaker 4>actually has real use cases that drive value.

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<v Speaker 5>So do you sell that data to like large language

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<v Speaker 5>model firms.

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<v Speaker 1>To We don't sell it.

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<v Speaker 6>You use it yourself.

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<v Speaker 4>We don't sell it, but we help our clients. We

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<v Speaker 4>want to help our clients be successful.

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<v Speaker 6>Hence a service as a service exactly.

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<v Speaker 4>So you think about you know, when everybody thinks about data.

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<v Speaker 4>Everybody thinks about static data, whether it's you know, CRM data,

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<v Speaker 4>whether it's around financial data. But think about video, think

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<v Speaker 4>about center data, think.

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<v Speaker 1>About data and motion.

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<v Speaker 4>How do you aggregate all that and you make it

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<v Speaker 4>such that you have really real time actionable solutions video

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<v Speaker 4>for example on education campuses. Well, that video is only

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<v Speaker 4>as good as the AI, and then that AI has

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<v Speaker 4>to be able to turn it into some sort of action.

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<v Speaker 4>And that's where we play because we're really good in

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<v Speaker 4>that space.

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<v Speaker 2>We only have time for one final question. Unfortunately, it's

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<v Speaker 2>a bit of a complicated question, and it is about

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<v Speaker 2>efforts at maintaining diversity. Yeah, Xerox was a pioneer in there.

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<v Speaker 2>You going back to Bernar Kinsey and what he did

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<v Speaker 2>back in the seventies.

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<v Speaker 3>And I've had.

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<v Speaker 2>Family members who found their way up through you know,

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<v Speaker 2>the old school companies here in the Northeast.

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<v Speaker 3>Does that exist anymore? Is there still a commitment to that?

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<v Speaker 1>Oh? For sure.

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<v Speaker 4>We're extremely proud of the heritage of Xerox, and you know,

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<v Speaker 4>we mirror the environments that we live in today and we'll.

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<v Speaker 1>Continue that going forward.

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<v Speaker 4>Obviously, we will be in compliant to any of the

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<v Speaker 4>regulatory or any of the things that come out. But

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<v Speaker 4>Xerox has always been incredibly diverse. You know, diversity drives innovation,

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<v Speaker 4>Diversity drives what.

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<v Speaker 1>We do in communities that were and we're proud of

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<v Speaker 1>what we do.

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<v Speaker 4>We've always been very successful in that area and we

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<v Speaker 4>love our communities that we live in today.

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<v Speaker 5>Night, Steve, thanks for coming in. We really wonderful to

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<v Speaker 5>see you. Dee Branzac joining as CEO of Xerox