Speaker 1: Please to say.
Speaker 2: Joining us here in Studio two is the CEO of
Speaker 2: Xerox see advantrasact, see it great to.
Speaker 1: Have you, welcome, Thank you for having me.
Speaker 3: What is the reinvention?
Speaker 1: Yeah, the reinvention is about.
Speaker 4: Getting Zerox back to being a tech powerhouse and driving
Speaker 4: productivity in the workplace. She's just talking about real estate
Speaker 4: a few minutes ago, and what's happening with inside the workplace.
Speaker 4: People are working all over the place in different areas
Speaker 4: and we've always been driving that productivity in the workplace.
Speaker 4: So part of the reinvention strategy is three things. One,
Speaker 4: how do we get back to a declining core business
Speaker 4: that's declining single digits? How do we get back to growth?
Speaker 4: What do we do there in growth? And there are
Speaker 4: sectors that are actually growing. We have a four printers
Speaker 4: colored that are actually growing. We grew double digits in
Speaker 4: Q four. We have the ability to be able to
Speaker 4: outgrow the market and market share through changing our channel partners,
Speaker 4: productivity in our salesforce, and so forth. So how do
Speaker 4: we get our core strengthen so that decline is slowed down.
Speaker 4: Second piece of it is how do we get twenty
Speaker 4: percent of our revenue in growth areas.
Speaker 1: So we just.
Speaker 4: Acquired a company called it Sava, which is around IT solutions.
Speaker 4: And if you think about what's happening in the workplace today,
Speaker 4: technology is complex, AI is complex. All the different major
Speaker 4: chnds in technology is tough. They're looking for a partner
Speaker 4: like Xerox who can bring solutions. We're going to be
Speaker 4: a solutions driven, a service driven software enabled business going forward,
Speaker 4: and we can help our clients, especially in the mid market,
Speaker 4: drive and help them inside of driving productivity and IT solutions.
Speaker 1: So if you think about some of the big.
Speaker 4: Tech transformations, Windows, AI, etc.
Speaker 2: I'm very fascinated by this. In full disclosure, I actually
Speaker 2: started my career covering is Xerox way. I won't tell
Speaker 2: you what year that was, but it was a much
Speaker 2: different company there, and it was going through a lot
Speaker 2: of issues. When I look at the breakdown, you know
Speaker 2: what you're selling equipment and this idea that's kind of
Speaker 2: post sales revenue, which is now the bult or It's
Speaker 2: always been the vault, but it's become much more dominant.
Speaker 2: What is the complexion of that? Who are you selling to?
Speaker 2: What types of sectors, what types of companies?
Speaker 1: Yeah, so two different worlds.
Speaker 4: One is we have our major direct sales where we
Speaker 4: sell a lot into SMB right, a lot of the
Speaker 4: small business and medium business and with two hundred thousand
Speaker 4: plus accounts large channels where we sell into and we
Speaker 4: have channel resellers that sell over ten thousand channel partners
Speaker 4: that sell around the world.
Speaker 1: So we sell.
Speaker 4: Into AMA in the medium we got a forty five
Speaker 4: percent of our business there and then the fifty plus
Speaker 4: percent in the Americas, so medium SMB business. But more importantly,
Speaker 4: we're now creating vertical solutions. So you think about how
Speaker 4: you can sell into hospitality, how you can sell into education,
Speaker 4: and how do we put infrastructure around our devices that
Speaker 4: drives productivity in education.
Speaker 1: So we talk about AI a lot of AI today.
Speaker 4: You think about the print that the print that has
Speaker 4: a lot of intelligence and a lot of capabilities in
Speaker 4: there that we can help with document flows, We can
Speaker 4: help with intelligence on documents and driving productivity in that space.
Speaker 5: To be honest, the street doesn't like it right now.
Speaker 5: I mean the stock is off over six percent off
Speaker 5: its lows, but still short interest is also building into
Speaker 5: the quarter.
Speaker 6: What do you think is being missed right now?
Speaker 4: I think the reinvention story in terms of where we're
Speaker 4: going right, they're looking for us to give proof points on.
Speaker 5: The IT solution, the acceleration part of the story that
Speaker 5: you guys are hoping to execute this year and next year.
Speaker 6: You feel like that part's being missed.
Speaker 1: That's correct, right, and it's a timing issue. Right.
Speaker 4: We're doing a lot of different things, and it's very
Speaker 4: difficult to do the amount of change that we have
Speaker 4: as a public company and doing all the changes that
Speaker 4: we're doing simultaneously. That's the part that they're missing in
Speaker 4: terms of where we're going right. We acquired it Savvy,
Speaker 4: we acquired Lexmak recently, and so the story is going forward,
Speaker 4: we will get to growth, we'll get to double digit
Speaker 4: operating profit.
Speaker 5: When do you think you see the it's not a trough, really,
Speaker 5: but when do you think you start to see the
Speaker 5: turn where investors and analysts can really start to see
Speaker 5: that momentum.
Speaker 4: We're seeing it internally right in terms of the key
Speaker 4: performing indicators that we see, whether it's around orders, whether
Speaker 4: it's around growth, where it's around mix in our revenue,
Speaker 4: we're seeing it. As we get into end of second
Speaker 4: quarter of this year, we'll see Q one growth year
Speaker 4: over year. We'll see Q two growth over year over year,
Speaker 4: and they'll start to see it as we get out
Speaker 4: to the second half of the year.
Speaker 2: I want to ask you about the structure of the
Speaker 2: company itself in terms of the amount of employees you have.
Speaker 3: Are they all working from the office?
Speaker 2: Do you have more of a remote strategy, hybrid remote strategy?
Speaker 2: What's that been like coming out of the pandemic?
Speaker 1: Well, hybrid all over the place.
Speaker 4: Now, I've got ten thousand service technicians that work in
Speaker 4: the fields and body.
Speaker 1: It's very nature.
Speaker 4: We got people in trucks, we've got people touching clients
Speaker 4: all around the world, and then the rest of it
Speaker 4: is a hybrid strategy where we've got people that are
Speaker 4: working from home that have certain expertise, and then we've
Speaker 4: got individuals that are working in the office.
Speaker 3: Are you hiring a lot right now?
Speaker 4: We're not hiring because right now we're integrating companies and
Speaker 4: you want to make sure that we get the best
Speaker 4: of the acquisitions that we've made. And as we're going
Speaker 4: through that, we will look for technical skills, specifically in
Speaker 4: software and software engineering.
Speaker 5: When you take a look broadly, because you guys are
Speaker 5: a global business talking about the impact of the stronger
Speaker 5: dollar and sort of headline risk when it comes to tariffs, Like,
Speaker 5: how do you guys think about these macro problems?
Speaker 4: I think for us, everybody in the tech industry is
Speaker 4: dealing with tariffs today and is dealing with these macro trends,
Speaker 4: and so we will adjust to them.
Speaker 1: Our supply chain is flexible, We'll adjust to whatever tariffs
Speaker 1: come out way.
Speaker 4: And we've always done that historically during the pandemic or
Speaker 4: supply chain challenges.
Speaker 1: It's the same thing for us on the tariffs. Everybody
Speaker 1: in the tech industry is dealing with it.
Speaker 6: Strong dollar freak you out or no, No, it doesn't.
Speaker 1: Bother me at all.
Speaker 6: Why not?
Speaker 4: Well, look, we've got a diversified business, right, So I've
Speaker 4: got businesses in Europe, businesses here in the US. So
Speaker 4: we've got a diversified business and it's balanced. So strong
Speaker 4: dollar doesn't bother me at all.
Speaker 2: There are, of course, a lot of I say institutional investors.
Speaker 2: They look at your market valuation and they say this
Speaker 2: is a company, and they look at your assets and
Speaker 2: they look at a company that could be ripe for
Speaker 2: an acquisition itself. Have you been approached at all by
Speaker 2: any other companies.
Speaker 4: So we have always said, and I've been very bold,
Speaker 4: we want to be in the position to be the
Speaker 4: acquirer and the consolidator of our industry. If you think
Speaker 4: about our industry today, we've got many japan players in
Speaker 4: our industry.
Speaker 1: We think that is right for consolidation.
Speaker 4: I did the IBM PC spin out many years ago,
Speaker 4: was part of the team that built Lenobo and at
Speaker 4: that time we got the same dynamics in the print industry.
Speaker 4: It needs to consolidate. We will be the consolidator.
Speaker 2: Is the business environment conducive to those types of acquisitions,
Speaker 2: particularly you mentioned Japan? Yea, do we get a cross
Speaker 2: border transition transaction like that done these days?
Speaker 4: Well, look, it's always difficult in that environment in Japan
Speaker 4: with Japanese players for show, but there are a lot
Speaker 4: of other roll ups that we can do specifically in
Speaker 4: our industry.
Speaker 1: So we withave the consolidator.
Speaker 5: Yeah, and you're still integrating of course, the IT savvy
Speaker 5: as well as as I'm saying, the Lenx.
Speaker 1: Let's work there. Thanks love.
Speaker 6: So there's a lot to be done on that front.
Speaker 5: Talk to me a little bit about how you see
Speaker 5: your cost cutting and your margins versus your growth.
Speaker 6: Like you guys have been in cost cutting mode.
Speaker 5: Particularly the synergies you're going to get from these acquisitions,
Speaker 5: and that's going to help margins, but at some point
Speaker 5: it's going to be that top line.
Speaker 1: Yeah.
Speaker 4: Look, growth is important for us and part of the
Speaker 4: reinvention is getting back to growth. So I talked about
Speaker 4: acquiring it savvy. You think about that space alone. The
Speaker 4: Kagara over the next five years has got mid single
Speaker 4: to high single digit growth just in that space with
Speaker 4: the tech transitions that we see.
Speaker 1: So the idea is to get twenty percent of our
Speaker 1: revenue that is in high growth areas digital services. We
Speaker 1: talk about AI.
Speaker 4: You know, you spend a lot of time about AI,
Speaker 4: but think about your cell phone with out network connection.
Speaker 4: AI without data is completely useless, right, and so we
Speaker 4: play a role in aggregating data and serving data up
Speaker 4: for all these AI modules.
Speaker 1: When you think.
Speaker 4: About AI, it's about the workplace in terms of the
Speaker 4: process and adding AI on top of the process that
Speaker 4: actually drives value.
Speaker 1: And that's what we play.
Speaker 4: We've got a tremendous amount of intelligence in industries like education,
Speaker 4: education and law firms. You see it in hospitalities, you
Speaker 4: see it in education, and so what we do is
Speaker 4: we bring a tremendous amount of intelligence, serve up that data,
Speaker 4: and then when you put AI on top of it
Speaker 4: actually has real use cases that drive value.
Speaker 5: So do you sell that data to like large language
Speaker 5: model firms.
Speaker 1: To We don't sell it.
Speaker 6: You use it yourself.
Speaker 4: We don't sell it, but we help our clients. We
Speaker 4: want to help our clients be successful.
Speaker 6: Hence a service as a service exactly.
Speaker 4: So you think about you know, when everybody thinks about data.
Speaker 4: Everybody thinks about static data, whether it's you know, CRM data,
Speaker 4: whether it's around financial data. But think about video, think
Speaker 4: about center data, think.
Speaker 1: About data and motion.
Speaker 4: How do you aggregate all that and you make it
Speaker 4: such that you have really real time actionable solutions video
Speaker 4: for example on education campuses. Well, that video is only
Speaker 4: as good as the AI, and then that AI has
Speaker 4: to be able to turn it into some sort of action.
Speaker 4: And that's where we play because we're really good in
Speaker 4: that space.
Speaker 2: We only have time for one final question. Unfortunately, it's
Speaker 2: a bit of a complicated question, and it is about
Speaker 2: efforts at maintaining diversity. Yeah, Xerox was a pioneer in there.
Speaker 2: You going back to Bernar Kinsey and what he did
Speaker 2: back in the seventies.
Speaker 3: And I've had.
Speaker 2: Family members who found their way up through you know,
Speaker 2: the old school companies here in the Northeast.
Speaker 3: Does that exist anymore? Is there still a commitment to that?
Speaker 1: Oh? For sure.
Speaker 4: We're extremely proud of the heritage of Xerox, and you know,
Speaker 4: we mirror the environments that we live in today and we'll.
Speaker 1: Continue that going forward.
Speaker 4: Obviously, we will be in compliant to any of the
Speaker 4: regulatory or any of the things that come out. But
Speaker 4: Xerox has always been incredibly diverse. You know, diversity drives innovation,
Speaker 4: Diversity drives what.
Speaker 1: We do in communities that were and we're proud of
Speaker 1: what we do.
Speaker 4: We've always been very successful in that area and we
Speaker 4: love our communities that we live in today.
Speaker 5: Night, Steve, thanks for coming in. We really wonderful to
Speaker 5: see you. Dee Branzac joining as CEO of Xerox