MPS revenue sees record growth of 18 percent and acquisitions strengthen software solutions in 3Q13.
Lexmark has announced its third quarter results, with the company seeing a revenue growth of five percent when excluding its inkjet exit and a record 18 percent growth in MPS revenue. GAAP revenue meanwhile was recorded at $890 million (€647 million), including $5 million (€3.6 million) of acquisition-related adjustments; with the company acquiring two software solutions providers – Germany-based Saperion for $72 million (€52.3 million) and PACSGEAR for $54 million (€39.25 million).
However, non-GAAP revenue declined three percent year-on-year to $896 million (€651.3 million), but grew five percent when excluding the on-going decline in Inkjet Exit revenue, with Lexmark exiting the inkjet segment last year. GAAP earnings per share in 3Q13 were $0.45 (€0.33) compared to $0.00 per share in 3Q12; while 3Q13 non-GAAP earnings were $0.95 (€0.69) per share compared to $0.94 (€0.68) in 3Q12.
In terms of segments, Imaging Solutions and Services (ISS) saw revenue decline five percent year-on-year to $837 million (€608.4 million), although this was a growth of three percent when excluding the Inkjet Exit revenue. Lexmark’s MPS segment meanwhile reached a record of $184 million (€133.7 million) in revenue; and Perceptive Software saw revenue grow 38 percent to $54 million, or $59 million (€42.8 million) when excluding acquisition-related adjustments.
Non-MPS revenue on the other hand declined one percent to $569 million (€413.6 million); and Inkjet Exit revenue decline 44 percent to $84 million (€61 million), representing nine percent of the company’s total revenue. Lexmark said that it expects this to decline as a percentage of total revenue as the trailing inkjet supplies revenue from the remaining installed base of inkjet printers decreases over time.
Reporting on product revenue, Lexmark said that hardware revenue declined 11 percent year-on-year to $182 million (€132.3 million), with supplies revenue also declining by four percent to reach a total of $606 million (€440.5 million). It was the opposite case for the OEM’s software and “other” revenue, which grew 21 percent year-on-year to $102 million (€74 million).
The company’s software solutions presence was strengthened by the two acquisitions, which enabled Lexmark to increase its enterprise content management (ECM) presence in Europe and further strengthen its capabilities of providing the platform, products and solutions to help healthcare customers manage their information challenges.
Commenting on the results, Paul Rooke, Chairman and CEO of Lexmark, said: “In the third quarter, Lexmark continued solid execution of our strategy of transforming to an end-to-end solutions provider, and delivered revenue that exceeded our July guidance range, EPS at the top of the range and also strong free cash flow. Perceptive Software’s profitability increased significantly compared to last year and once again both managed print services and Perceptive Software revenue grew at a double-digit rate, reflecting the imaging and software synergies we’re creating.
“Lexmark’s value proposition is unique and squarely focused on helping our customers solve their unstructured information challenges, enabling us to lead in this large and expanding market.”
He added that the company “is continuing to increase shareholder value through acquisitions and organic investments that are accelerating our transition to a higher value solutions portfolio, and through the on-going capital return of more than 50 percent of free cash flow”.
Looking ahead, Lexmark expects 4Q13 revenue (excluding Inkjet Exit revenue) to be flat to up to two percent year-on-year, with the company predicting a continued negative impact from its decision to exit inkjet. Total revenue meanwhile is expected to decline by between three and five percent.