Xerox Corporation (NYSE:XRX) Q2 2019 Earnings Conference Call - Final Transcript
Jul 30, 2019 • 08:00 am ET
[Operator instructions] And our first question will come from Shannon Cross of Cross Research. Your line is now open.
Thank you very much. So I guess I just want to understand a bit more about what's going on in the top line, what you saw toward the end of the quarter, how quickly you think some of the incremental investments you're making will start to run through the model. I guess because at some point, obviously, you can't sort of offset the top line declines with all the cost cuts. So when we look out a year or two, do you still feel comfortable with what you laid out at the Analyst Day? I don't know, John, if you can just sort of talk to your thoughts sort of top line?
Yeah. Hi, Shannon. We're still focused on the trajectory that we laid out in February. And if you think on the revenue side, we're doing a lot of things, whether it's expansion in channels. I talked about what we're doing with American Express, even with HP, both on the DocuShare side, some of the large accounts we've done. We're building more e-commerce capabilities. We're hiring software sales specialists, some of it's tactical. We're expanding on our IT as servicing -- services. And these investments, while we're reporting them in the place now, some of these will take time, like we had discussed back in February, but it will provide top line benefits near the end of '19, but also we're expecting the returns to come in '20 and '21 on these.
Yeah. Just to add on, Shannon, the investments John mentioned, we will see, and certain of those, some impact in the second half, but a lot more in 2020 and beyond. But some other things, specifically related to the second half, we brought it up on the call, I can't emphasize enough, the rate of improvement we saw later in the quarter, particularly at XBS and the rate of decline and the lessening of the impact of just all the transition that we've gone through in the company in connection with Project Own It. So that is key, and we saw that improvement coming later in the quarter, particularly in June, and we expect that to continue. That gives us confidence in improvement in the second half.
There were some certain large deals that were delayed in EMEA that we expect to close in the second half to have a favorable impact, and we're expecting continued strong demand for Iridesse and the just launched Baltoro to help. And then finally, the OEM business, I know we've talked about it for a lot of quarters, but it is lessening the impact and the first quarter -- first half was about 0.8%, and we expect that to be closer to about 0.5 point. So there are various things that give us the confidence in the improvement in the second of revenue trajectory and it's well ahead -- the investments we're making