Printing and imaging solutions provider Xerox Corporation’s profit and revenue increased in the third quarter, the results of signing more long-term deals to provide business services to companies.
Revenue from services was up 6pc or 5pc in constant currency, reflecting growth in business process and document outsourcing, while revenue from IT outsourcing was flat.
Signings for Xerox’s services totalled US$3.9bn in the third quarter – an increase of 33pc from third-quarter 2010.
“Backed by a growing pipeline, our increasing services signings boost our annuity stream and contribute to a strong revenue base,” said Ursula Burns, Xerox chairman and chief executive officer.
“Notable in the quarter was 12pc revenue growth in our document outsourcing business as we continue to lead the industry with our broad-based managed print services, and 6pc growth in business process outsourcing.
“As demand increased for services, we did see an impact on gross margin, which we continued to offset with cost reductions and operational improvements that helped deliver solid bottom-line results,” she added.
Xerox reported adjusted earnings per share of 26 cents, up 18pc from third-quarter 2010. Adjusted EPS excludes 4 cents related to the amortisation of intangibles, resulting in GAAP EPS of 22 cents.
Third-quarter revenue of US$5.6bn was up 3pc, or 1pc in constant currency. Revenue from technology, representing the sale of document systems, supplies, technical service and financing of products, was up 1pc, or down 1pc in constant currency.
Third-quarter gross margin was 32.7pc, and selling, administrative and general expenses were 19.9pc of revenue. Operating margin of 9.6pc was up 0.4 points from third-quarter 2010.
Xerox generated US$366m in operating cash flow during the third quarter. As planned, the company resumed its stock buyback program during the third quarter, repurchasing US$309m in Xerox shares with about US$400m more expected in the fourth quarter.