Xerox CEO Steven Bandrowczak Talks Earnings

Published Jan 28, 2025, 9:55 PM

Xerox CEO Steven Bandrowczak discusses the company's latest earnings and outlook for 2025. He speaks with Bloomberg's Alix Steel and Romaine Bostik. 

Please to say.

Joining us here in Studio two is the CEO of Xerox see advantrasact, see it great to.

Have you, welcome, Thank you for having me.

What is the reinvention?

Yeah, the reinvention is about.

Getting Zerox back to being a tech powerhouse and driving productivity in the workplace. She's just talking about real estate a few minutes ago, and what's happening with inside the workplace. People are working all over the place in different areas and we've always been driving that productivity in the workplace. So part of the reinvention strategy is three things. One, how do we get back to a declining core business that's declining single digits? How do we get back to growth? What do we do there in growth? And there are sectors that are actually growing. We have a four printers colored that are actually growing. We grew double digits in Q four. We have the ability to be able to outgrow the market and market share through changing our channel partners, productivity in our salesforce, and so forth. So how do we get our core strengthen so that decline is slowed down. Second piece of it is how do we get twenty percent of our revenue in growth areas.

So we just.

Acquired a company called it Sava, which is around IT solutions. And if you think about what's happening in the workplace today, technology is complex, AI is complex. All the different major chnds in technology is tough. They're looking for a partner like Xerox who can bring solutions. We're going to be a solutions driven, a service driven software enabled business going forward, and we can help our clients, especially in the mid market, drive and help them inside of driving productivity and IT solutions.

So if you think about some of the big.

Tech transformations, Windows, AI, etc.

I'm very fascinated by this. In full disclosure, I actually started my career covering is Xerox way. I won't tell you what year that was, but it was a much different company there, and it was going through a lot of issues. When I look at the breakdown, you know what you're selling equipment and this idea that's kind of post sales revenue, which is now the bult or It's always been the vault, but it's become much more dominant. What is the complexion of that? Who are you selling to? What types of sectors, what types of companies?

Yeah, so two different worlds.

One is we have our major direct sales where we sell a lot into SMB right, a lot of the small business and medium business and with two hundred thousand plus accounts large channels where we sell into and we have channel resellers that sell over ten thousand channel partners that sell around the world.

So we sell.

Into AMA in the medium we got a forty five percent of our business there and then the fifty plus percent in the Americas, so medium SMB business. But more importantly, we're now creating vertical solutions. So you think about how you can sell into hospitality, how you can sell into education, and how do we put infrastructure around our devices that drives productivity in education.

So we talk about AI a lot of AI today.

You think about the print that the print that has a lot of intelligence and a lot of capabilities in there that we can help with document flows, We can help with intelligence on documents and driving productivity in that space.

To be honest, the street doesn't like it right now. I mean the stock is off over six percent off its lows, but still short interest is also building into the quarter.

What do you think is being missed right now?

I think the reinvention story in terms of where we're going right, they're looking for us to give proof points on.

The IT solution, the acceleration part of the story that you guys are hoping to execute this year and next year.

You feel like that part's being missed.

That's correct, right, and it's a timing issue. Right.

We're doing a lot of different things, and it's very difficult to do the amount of change that we have as a public company and doing all the changes that we're doing simultaneously. That's the part that they're missing in terms of where we're going right. We acquired it Savvy, we acquired Lexmak recently, and so the story is going forward, we will get to growth, we'll get to double digit operating profit.

When do you think you see the it's not a trough, really, but when do you think you start to see the turn where investors and analysts can really start to see that momentum.

We're seeing it internally right in terms of the key performing indicators that we see, whether it's around orders, whether it's around growth, where it's around mix in our revenue, we're seeing it. As we get into end of second quarter of this year, we'll see Q one growth year over year. We'll see Q two growth over year over year, and they'll start to see it as we get out to the second half of the year.

I want to ask you about the structure of the company itself in terms of the amount of employees you have.

Are they all working from the office?

Do you have more of a remote strategy, hybrid remote strategy? What's that been like coming out of the pandemic?

Well, hybrid all over the place.

Now, I've got ten thousand service technicians that work in the fields and body.

It's very nature.

We got people in trucks, we've got people touching clients all around the world, and then the rest of it is a hybrid strategy where we've got people that are working from home that have certain expertise, and then we've got individuals that are working in the office.

Are you hiring a lot right now?

We're not hiring because right now we're integrating companies and you want to make sure that we get the best of the acquisitions that we've made. And as we're going through that, we will look for technical skills, specifically in software and software engineering.

When you take a look broadly, because you guys are a global business talking about the impact of the stronger dollar and sort of headline risk when it comes to tariffs, Like, how do you guys think about these macro problems?

I think for us, everybody in the tech industry is dealing with tariffs today and is dealing with these macro trends, and so we will adjust to them.

Our supply chain is flexible, We'll adjust to whatever tariffs come out way.

And we've always done that historically during the pandemic or supply chain challenges.

It's the same thing for us on the tariffs. Everybody in the tech industry is dealing with it.

Strong dollar freak you out or no, No, it doesn't.

Bother me at all.

Why not?

Well, look, we've got a diversified business, right, So I've got businesses in Europe, businesses here in the US. So we've got a diversified business and it's balanced. So strong dollar doesn't bother me at all.

There are, of course, a lot of I say institutional investors. They look at your market valuation and they say this is a company, and they look at your assets and they look at a company that could be ripe for an acquisition itself. Have you been approached at all by any other companies.

So we have always said, and I've been very bold, we want to be in the position to be the acquirer and the consolidator of our industry. If you think about our industry today, we've got many japan players in our industry.

We think that is right for consolidation.

I did the IBM PC spin out many years ago, was part of the team that built Lenobo and at that time we got the same dynamics in the print industry. It needs to consolidate. We will be the consolidator.

Is the business environment conducive to those types of acquisitions, particularly you mentioned Japan? Yea, do we get a cross border transition transaction like that done these days?

Well, look, it's always difficult in that environment in Japan with Japanese players for show, but there are a lot of other roll ups that we can do specifically in our industry.

So we withave the consolidator.

Yeah, and you're still integrating of course, the IT savvy as well as as I'm saying, the Lenx.

Let's work there. Thanks love.

So there's a lot to be done on that front.

Talk to me a little bit about how you see your cost cutting and your margins versus your growth.

Like you guys have been in cost cutting mode.

Particularly the synergies you're going to get from these acquisitions, and that's going to help margins, but at some point it's going to be that top line.

Yeah.

Look, growth is important for us and part of the reinvention is getting back to growth. So I talked about acquiring it savvy. You think about that space alone. The Kagara over the next five years has got mid single to high single digit growth just in that space with the tech transitions that we see.

So the idea is to get twenty percent of our revenue that is in high growth areas digital services. We talk about AI.

You know, you spend a lot of time about AI, but think about your cell phone with out network connection. AI without data is completely useless, right, and so we play a role in aggregating data and serving data up for all these AI modules.

When you think.

About AI, it's about the workplace in terms of the process and adding AI on top of the process that actually drives value.

And that's what we play.

We've got a tremendous amount of intelligence in industries like education, education and law firms. You see it in hospitalities, you see it in education, and so what we do is we bring a tremendous amount of intelligence, serve up that data, and then when you put AI on top of it actually has real use cases that drive value.

So do you sell that data to like large language model firms.

To We don't sell it.

You use it yourself.

We don't sell it, but we help our clients. We want to help our clients be successful.

Hence a service as a service exactly.

So you think about you know, when everybody thinks about data. Everybody thinks about static data, whether it's you know, CRM data, whether it's around financial data. But think about video, think about center data, think.

About data and motion.

How do you aggregate all that and you make it such that you have really real time actionable solutions video for example on education campuses. Well, that video is only as good as the AI, and then that AI has to be able to turn it into some sort of action. And that's where we play because we're really good in that space.

We only have time for one final question. Unfortunately, it's a bit of a complicated question, and it is about efforts at maintaining diversity. Yeah, Xerox was a pioneer in there. You going back to Bernar Kinsey and what he did back in the seventies.

And I've had.

Family members who found their way up through you know, the old school companies here in the Northeast.

Does that exist anymore? Is there still a commitment to that?

Oh? For sure.

We're extremely proud of the heritage of Xerox, and you know, we mirror the environments that we live in today and we'll.

Continue that going forward.

Obviously, we will be in compliant to any of the regulatory or any of the things that come out. But Xerox has always been incredibly diverse. You know, diversity drives innovation, Diversity drives what.

We do in communities that were and we're proud of what we do.

We've always been very successful in that area and we love our communities that we live in today.

Night, Steve, thanks for coming in. We really wonderful to see you. Dee Branzac joining as CEO of Xerox

Bloomberg Talks

Curating today’s top interviews from around Bloomberg News. Hear conversations with the biggest name 
Social links
Follow podcast
Recent clips
Browse 1,658 clip(s)