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April 21, 2008
Strength in Service Revenues
With the first-quarter financial reporting season upon us, Xerox’s results show reasons for encouragement for solution providers that have or are contemplating an expansion of their services business.
Although Xerox reported a loss in the quarter, due in large measure to a large write down of legal charges, revenues in this volatile economic period climbed 13 percent. A significant revenue boost came from money streams that kick in after new hardware is up and running at customer sites. In particular, cost-per-page business helped push post-sale revenues higher by 11 percent. In all, the post-sale annuity stream represented more than 70 percent of Xerox’s total revenues in the period.
“This quarter we saw our investments flow through to improved install activity – activity that fuels our profitable annuity stream,” Anne M. Mulcahy, Xerox chairman and chief executive officer, said in a statement.
Service revenues were part of another revenue stream that showed gains—in this case by 10 percent—on top of the 18 percent jump in equipment revenues.
Two lessons are clear: First, companies in the printing and imaging business can cultivate additional—and significant—revenues from post-sales activities. Second, these revenues can help mitigate the impact of an economy that’s immersed or teetering on a recession.
Posted by ajoch at April 21, 2008 07:38 AM
