How Xerox Plans to Print Money in 2018

January 22, 2018

It's been one year since the split between Xerox and Conduent. Kevin Warren, Executive Vice President and Chief Commercial Officer of Xerox, joins The Long and The Short to discuss the company's growth in 2017 and its focus in 2018.

Since spinning off Conduent, Xerox has been able to focus more on its sole products and mitigating cybersecurity risks. It recently launched 29 new products under its ConnectKey brand. Warren's focus is growing revenue off these products, and he says he's on track for the rest of the year.

Plus, Xerox has beefed up its Security = Safety philosophy. He explains how single and multifunction printers are now capable of working at the heart of business operations with limited risk of a hack. With the exponential growth of wireless devices, cloud-hosting software and services, printers not only need to work with these technologies but also need to stay secure themselves.


FEMALE_1: [MUSIC] Welcome back to The Long and The Short presented by TradeStation. TradeStation is a leading fin tech company, an online broker providing an award winning trading and investing experience that support education and tools to help you navigate the markets.

MALE_1: Xerox just rang the New York Stock Exchange opening bell and will hold a security summit here in New York City today. Joining us now is Kevin Warren, Executive Vice President and Chief Commercial Officer at Xerox. Kevin, great to see you.

MALE_2: Good morning.

MALE_1: It's been almost exactly a year.

MALE_2: Yes.

MALE_1: Since, uh, two companies split off.

MALE_2: Yes.

FEMALE_1: How is this first year been?

MALE_2: It's been amazing. It's it's it's unbelievable how much we've accomplished, uh, in the first year as a separate company. Xerox totally focused on the technology market. Um, almost every, uh, expectation and promise that we set out to do a year ago, we're on track delivering. So, uh, very excited to be back here, um, and the prospects that our company going forward.

FEMALE_1: What are your prospects as you look at the new goals that you've set to focus back to your roots in hardware?

MALE_2: Yes. So, you know, okay, we said, okay, as a separate company, we're going to be able to focus just on this technology. So, our research and development, our innovation, our talent, our energies, our management, uh, focus is all going to be on the technology markets. So primarily, number one, was to make sure that we de- deliver the bottom line results, uh, to our investors, which we're on track to do. Second was to improve the revenue performance of the company, which were on the track to do. Thirdly, was to drive strong cash generation, uh, because our investors uh, like that as well. So, pretty much all of the metrics that we decided that we wanted to, uh, kind of focus on and improve, we're on track and we feel real good about our progress today.

FEMALE_1: Yeah, and just a re-reminder for our viewers. Conduent is the other company that is now-

MALE_2: That's correct.

FEMALE_1: Completely separate from you guys.

MALE_2: That's correct.

MALE_1: And you guys are here for Cyber Security Summit.

MALE_2: Yes, yes.

MALE_1: In terms of technology and what you guys are focused on at Xerox, how does cyber security and security play a role in that?

MALE_2: Yeah. So, you know, one of the things we're also focusing on is really kind of updating the mini model of what Xerox and what Xerox technology is, and its relevance in the marketplace. So, you know, most people think of Xerox as just kind of a copier or a printer. Uh, but now, this is a device that sits on the Internet. This is the device, uh, where most of the value is is software-based versus just hardware-based. It's a device that has open APIs in which you can i- it's been driven by apps to really kind of customize a worker experience. So, when you're sitting on the Internet and it's software-based, well, just like every other Internet citizen, it can be open to security breaches. So, we're here really, and you know, kind of explain to our customers, we have over 250 customers here, standing room only, and so, what we're doing to keep them safe, and how we're engaging in the discussion on security, and how important that is.

FEMALE_1: You recently introduced ConnectKey. This is a new function that enables Xerox to kind of took advantage of market segments that you are really trying to gain some share in. Talk about that a little bit.

MALE_2: Yes. So, we came up with 29 new products as part of this ConnectKey family. It's the largest product introduction in the history of the company. And the products range from something really small, real small device to something big, black and white, and colored. Um, and they've gotten fantastic reviews. The cool thing is that, I kind of mentioned before, is not just the fact that it prints in great quality or scans but has these apps. This open, these these APIs, we've opened up to our partners, which will allow device to be more of a workplace assistant versus just a copier or a printer. So think about your phone, and you think about 10 years ago when Apple came out with the iPhone, it it mainly made phone calls and sent e-mails. That's what smartphone did. Now, if you look at all the things user phone to do, it's amazing. That's a really small percentage of. The workplace assisted with ConnectKey has the same promise to revolutionize the work environment similar to what the iPhone did in our personal lives.

MALE_1: Kevin, I think when people think of the Xerox, a lot of people think of huge enterprise clients, Fortune 500 companies that use Xerox technology.

MALE_2: Yes.

MALE_1: But how are you guys catering to small and medium business sized businesses because that's actually the majority.

MALE_2: Yes.

MALE_1: Of businesses here.

MALE_2: Yes.

MALE_1: in the US. The vast majority of businesses.

MALE_2: Absolutely. So so, we have the lion's share of the business, as you reference, in large enterprise and that's a great business for us. Uh, and we have the global capabilities. So large clients like to do business with us. But you're right. In the small and medium sized, that's where the job growth is and that's where, you know, that is an underserved market for us. And those clients tend to buy from partners. They don't buy from direct sales people, which traditionally has been Xerox's strength. So, we have a huge initiative to recruit channel partners, uh, and to enable them to be able to take these cool products I talked about to those SMB customers.

MALE_1: Break down some of those channel partners and what that actually means.

MALE_2: So so, they come in different flavors. So so, you have a set that are mono, we call mono-branded partners. They sell just Xerox. So, they will be Xerox agents, uh, or concessionaires, if you will. Then you have print, uh, you have print re-sellers that that they pretty much, uh, sell print devices, the bigger print devices. Um, and we only have a one percent share in that part of the market base. That's a huge opportunity for growth. Um, and then, you have solution providers, uh, and, and what we called Value Velocity Resellers. They sell the smaller A4 kind of printer devices. And we only have a five percent share in that channel. So, that is a big bet we're making. Uh, we've invested in talent and processes, and we're going to get a strong uplift in revenue because we've engaged that those channels.

MALE_1: Uh, want to take a look at the TradeStation chart here and show the performance of Xerox over the past year, especially after it split into two different companies. You can see right here where the stock shot up, uh, and that's of course, when broke off into two different companies or Xerox became its own company. Uh, trading at about $28 a share there, now at about $32.43. Uh, Kevin a, uh, behind the market gains that we've seen on the broader indices this year, how are you feeling about the performance of the stock market price over the last year?

MALE_2: Well, you know, we're we're feeling good. I think if you did the math, we're probably slightly higher than the a than the S&P uh, performance over the last year. So, the fact that we're we're outperforming the market is always a good thing. I think the reason that we've seen this uptick is we did have an investor conference in December 7th right here in New York Stock Exchange in 2016. And we set up a number of things we were going to do. And pretty much every quarter we've checked the box and we recently reaffirmed our full year guidance back in December. We do our announcement, uh, we now see earnings on the 31st. So, we've been delivering and the marketplace has uh, has reacted positively towards that. And we're, you know, we're confident we'll continue our trend going forward.

FEMALE_1: Yes. So, would love your insight on some recent news reports that we're seeing that Fujifilm Holdings and Xerox are looking at a new deal where Fuji could be taking more of a controlling share. You guys have another strategic partnership with them in another capacity. Could you explain the terms of those deals?

MALE_2: Yes. So so as far as any sort of uh, um, projections, it's been our company policy that we don't comment on rumors. Uh, so, you know, I can't comment on anything. A lot a lot has been, you know, in the news. As far as our current relationship uh, with Fuji, Xerox, it it is a partnership. Uh, it's a partnership that goes back to 1962.

FEMALE_1: Uh um.

MALE_2: Uh, well, you know, they they have part of the geography, particularly in the Asia-Pacific area, uh, and we have the western market, and we source products from them and vice versa.

FEMALE_1: Right.

MALE_2: And it's been a very successful and strong partnership.

FEMALE_1: A- and Carl, I kinda I just kinda called for I mean, negotiation of of this particular partnership. What are your reactions to that?

MALE_2: Well, you know, again, you know, we just talked about the stock's performance. We start we start we just talked about how we're delivering every quarter. We talked about how we're reaffirmed full year guidance. We talked about these new products, and the apps, and how it's positioned, and the fact that security and standard remotely from a customer standpoint. So, we're pretty we're feeling pretty good. Um, you know, we- we're not really kinda focused on the noise. We got head down, executing, and delivering, and I think we'll be okay as long as we continue to do that.

FEMALE_1: A rebirth of sorts after what, after this one year.

MALE_2: Absolutely, absolutely. That's a great way to say it.

MALE_1: All right. Kevin, we're going to have to leave it there. Thanks so much for joining us.

MALE_2: No, thank you. It's been a pleasure. Thank for the opportunity.

MALE_1: Great to see you. Thank you very much..

MALE_2: Okay. All for the best. Oh, I hope.

FEMALE_1: Thanks, Kevin.

MALE_1: That's Kevin Warren, he's the Executive Vice President and Chief Commercial Officer at Xerox.