Segment Reporting

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Our reportable segments - Print and Other, and Xerox Financial Services (XFS) (formerly FITTLE) – are aligned to how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies and are consistent with how we manage the business and view the markets we serve.

Our Print and Other segment includes the sale of document systems, supplies and technical services and managed services. The segment also includes the delivery of managed services that involve a continuum of solutions and services that help our customers optimize their print and communications infrastructure, apply automation and simplification to maximize productivity, and ensure the highest levels of security. This segment also includes Digital and IT services and software. The product groupings range from:

•“Entry”, which include A4 devices and desktop printers and multifunction devices that primarily serve small and medium workgroups/work teams.

•“Mid-Range”, which include A3 devices that generally serve large workgroup/work team environments as well as products in the Light Production product groups serving centralized print centers, print for pay and low volume production print establishments.

•“High-End”, which include production printing and publishing systems that generally serve the graphic communications marketplace and print centers in large enterprises.

Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic communication enterprises as well as channel partners including distributors and resellers. Segment revenues also include commissions and other payments from our XFS segment for the exclusive right to provide lease financing for Xerox products. These revenues are reported as part of Intersegment Revenues, which are eliminated in consolidated revenues.

The XFS segment provides global leasing solutions and currently offers leasing for direct channel customer purchases of Xerox solutions through bundled lease agreements and lease financing to end-user customers who purchase Xerox solutions through our indirect channels. Segment revenues primarily include financing income on sales-type leases (including month-to-month extensions) and leasing fees. Segment revenues also include gains/

losses from the sale of finance receivables including commissions, fees on the sales of underlying equipment residuals and servicing fees.

Selected financial information for our reportable segments was as follows:

	Three Months Ended March 31,
	2024									2023
	Print and Other			XFS			Total			Print and Other			XFS			Total
External revenue	$	1,411		$	91		$	1,502		$	1,613		$	102		$	1,715
Intersegment revenue(1)	19			—			19			23			—			23
Total Segment revenue	$	1,430		$	91		$	1,521		$	1,636		$	102		$	1,738
Segment profit	$	33		$	—		$	33		$	100		$	18		$	118
Segment margin(2)	2.3		%	—		%	2.2		%	6.2		%	17.6		%	6.9		%
Depreciation and amortization	$	49		$	—		$	49		$	53		$	—		$	53
Interest income	—			42			42			—			52			52
Interest expense	—			27			27			—			39			39

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(1)Intersegment revenue is primarily commissions and other payments made by the XFS Segment to the Print and Other Segment for the lease of Xerox equipment placements.

(2)Segment margin based on External revenue only.

Selected financial information for our reportable segments was as follows:

	Three Months Ended March 31,
	2024		2023
Pre-tax (Loss) Income
Total reported segments	$	33	$	118
Restructuring and related costs, net	(39)		(2)
Amortization of intangible assets	(10)		(11)
Divestitures	(54)		—
Inventory-related impact - exit of certain production print manufacturing operations	(36)		—
Other expenses, net	(44)		(20)
Total Pre-tax (loss) income	$	(150)	$	85
Depreciation and Amortization
Total reported segments	$	49	$	53
Amortization of intangible assets	10		11
Total Depreciation and amortization	$	59	$	64
Interest Expense
Total reported segments	$	27	$	39
Corporate	26		11
Total Interest expense	$	53	$	50
Interest Income
Total reported segments	$	42	$	52
Corporate	3		5
Total Interest income	$	45	$	57

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(1)Reflects the reduction of raw materials inventory of approximately $32 and the cancellation of related purchase contracts of approximately $4, as a result of the exit of certain production print manufacturing operations during the three months ended March 31, 2024.