Xerox Corporation (NYSE:XRX) Q2 2019 Earnings Conference Call Transcript

Jul 30, 2019 • 08:00 am ET

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Xerox Corporation (NYSE:XRX) Q2 2019 Earnings Conference Call Transcript

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Presentation
Executive
John Visentin

transformation like this, we anticipated there would be some impact on operations, but we remain focused on responding to and mitigating risks associated with this transition. We are on track to stand up our automation center of excellence, to leverage robots, to streamline repetitive tasks, such as responding to break-fix requests via the call center. Today, we have 150 bots and have plans to add more by year-end.

One other key component of Project Own It is rationalizing our supply chain. Our supply chain operations have become more efficient and inventory levels have improved, but there's more work we can do here. We are making several upfront investments to grow our market and wallet share in large accounts and within the small- to mid-size business market.

We see a significant opportunity for IT services within the SMB space. Today, three of our Xerox business solution cohorts offer IT services to clients, such as the 10th largest school district in the United States. With the competition fragmented and often regional, XBS is well positioned to capitalize on this growing market. We are ramping up our operations and capabilities to expand IT services to about a third of our XBS cores by the end of the year, and we will roll it out to the rest of the cores and Europe in 2020.

This month, we started working with American Express to market to their small business cardmembers through the AmEx Offers program and other channels to further increase our penetration of the SMB market. This multi-month, multi-channel digital program focuses on increasing business owners awareness of DocuShare, XMPie, our ConnectKey apps and workplace multi-function printers. In June, we announced a multipart agreement with HP, which opens up additional revenue opportunities and new routes to market. Starting in 2020, HP will make DocuShare Flex, Xerox's cloud-based content management platform, available on PCs and tablets sold to SMBs in the United States.

Another component of this agreement will allow us to source toner, which will add volume to our toner plants. Growing our software and services business is key to reversing of revenue trajectory for the long term, and we are gaining traction with several new clients, such as Morgan Stanley and Motorola, with additional major deal in the pipeline. With Morgan Stanley, we offered the bank a unique value proposition to help drive their digital transformation with intelligent workplace services, which advances traditional Managed Print Services with a suite of tools, including analytics, digitalization and ConnectKey technologies that boost efficiency, security and productivity. As the only OEM provider with FedRAMP authorization, Xerox continues to lead the industry in security.

This differentiator is a driver of new opportunities, particularly with public clients like the County of San Diego and Commonwealth of Massachusetts. This momentum with the public sector is carrying over into the third quarter with large contract renewals with clients, such as the State of Texas, already secured. This quarter, we announced several new products that increase our ability to capture incremental