Good morning, and welcome to the Xerox Holdings Corporation First Quarter 2021 Earnings Release Conference Call hosted by John Visentin, Vice Chairman and Chief Executive Officer. He is joined by Xavier Heiss, Chief Financial Officer. During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor. At the request of Xerox Holdings Corporation, today's conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without the expressed permission of Xerox. After the presentation, there will be a question-and-answer session. During this conference call, Xerox executives will make comments that contain forward-looking statements, which by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein. At this time, I would like to turn the meeting over to Mr. Visentin. Mr. Visentin, you may begin.

Good morning and thank you for joining our Q1 2021 earnings call. I hope everyone is safe and healthy. Our first quarter results were in line with our expectations. Revenue totaled $1.71 billion, down 8.1% year-over-year or 10.4% in constant currency. Free cash flow was $100 million, down $50 million from last year. Adjusted earnings per share totaled $0.22, up $0.01 year-over-year and adjusted operating margin was 5.2%, up 50 basis points year-over-year. In the first quarter and in an environment where many offices remain closed, we grew equipment sales and IT services revenue year-over-year. I am proud of how our employees have continued to deliver for our customers during the pandemic. With small and medium-sized businesses and enterprise clients planning to return more employees to the office, our differentiated offerings are well positioned to serve their growing needs. The strength of our performance, portfolio, and strategy gives us confidence we will return Xerox to growth in 2021. The team remains laser-focused on our four strategic initiatives: optimize operations, drive revenue, reenergize the innovation engine, and focus on cash flow and increasing capital returns. We made progress across each of these initiatives during the quarter. Continuing to optimize operations for simplicity, improve our cost structure, and expand margins must be balanced against investing in growth. Project Own It helps us strike the right balance as does our focus on cash. Project Own It is on track to deliver $375 million of gross cost savings this year. Part of these savings are funding investments in growth areas, and transformational initiatives, such as our effort to reimagine the service experience from supply chain logistics to customer care. Our investments in artificial intelligence, augmented reality, predictive analytics, robotics, and workflow automation are reducing our costs and making it easier to work with Xerox. We have now integrated these technologies to create software solutions that can transform how service teams support customers. We deployed these software solutions within our technical service organization. Our differentiated capabilities paired with our experience have allowed us to commercialize both the software solutions and a technical services offering, creating new revenue streams for Xerox. In fact, we recently signed our first competitive OEM customer for technical service. This OEM will outsource parts of their field service operations to Xerox. Our solution will help them gain efficiencies and provide quality service to their customers. We plan to introduce this offering to other OEMs and companies outside of our industry as well. We have observed a positive correlation between vaccination distribution, people returning to the workplace, and page volumes from our equipment. For the quarter, volumes on the whole remained relatively flat versus Q4. As vaccination distribution progressed, we saw volumes in certain geographies start to increase modestly in late March. For example, in Israel, where more than half the population is vaccinated, the highest vaccination rate in the world, work-from-home transitioned to more of a hybrid work environment and page volumes returned to near pre-COVID levels. The return to the office and accelerating vaccine distribution combined with strong demand for our equipment during the first quarter are leading indicators that the improvement in our revenue trend will continue throughout the year. Investments in our workplace A3 and A4 and production portfolios have allowed us to grow equipment sales revenue in every category year-over-year and take share in our territory according to the most recent IDC data. New capabilities in workflow automation and enhanced security are driving increased interest in our workplace products and earning Xerox industry recognitions. Quocirca recently recognized the strength of our hardware and security as well as our cloud software and delivery capabilities by naming Xerox the leader in its Worldwide Managed Print Services Market Report. Our IT Service business grew for the third consecutive quarter. The team is winning increasingly sizable and comprehensive deals to manage the full IT stack for SMB customers. In the quarter, we expanded our IT Services portfolio by launching robotic process automation as a service, leveraging our own experience deploying this technology internally across all of Xerox. The pandemic has challenged SMBs to find sustainable cost reductions while maintaining productivity. Our offerings to automate routine tasks such as deal pricing, order processing, payroll, and resource management have already gained traction with customers. In software, the team started to integrate CareAR, an enterprise augmented reality company we acquired in late 2020, both operationally and from a portfolio perspective. CareAR makes any user an expert capable of solving issues remotely through live visual interactions, self-guided instructions, and contextual data for greater insights. This technology provides many benefits from reducing costs and downtime to improving the customer experience and eliminating many onsite visits. CareAR is at the center of our software solutions, which integrates PARC's artificial intelligence technology, Alto AI, our content management system, DocuShare, and XMPie's personalization software. These solutions focus on three main areas: digital platform as a service, content creation and management, and automated workflows and intelligence, and have several industry-specific applications. Use cases include training retail associates, virtually processing claims, helping with facility-related issues, and troubleshooting data center operations. Within a few months' time, we launched pilots with several global businesses in hospitality, high tech, and IT services. We also signed up major partners including ServiceNow, Deloitte, and HCL. These partnerships are already helping us reach new prospective clients and build a strong and growing pipeline. Regarding Xerox Financial Services, we signed our first OEM partner. Our strategy focuses on adding other OEMs and customers outside of our industry while increasing penetration rates of Xerox accounts, all of which should enable us to grow the portfolio. PARC innovation has continued to make progress across our focus areas, including 3D printing, Industrial IoT, and Cleantech. In additive manufacturing, our solutions are designed to integrate into manufacturing operations to reduce risk in the supply chain. Global supply chains that rely on just-in-time models are becoming increasingly vulnerable. The recently launched Xerox ElemX 3D liquid metal printer can help alleviate some of that vulnerability. This printer provides advantages over powder-based metal 3D printing which is predominantly deployed technology today. The ElemX printer is safer, more cost-effective, and faster. At the end of last year, we established a product development collaboration with the U.S. Naval Postgraduate School. This collaboration will aid NPS in pushing the adoption of 3D printing throughout the U.S. Navy. The military supply chain is among the most complex in the world, and NPS understands firsthand the challenges manufacturers must address. Their feedback is helping us refine the ElemX's roadmap, which includes incorporating additional metal alloys, more complex geometries, and larger build volumes of production parts. In IoT, we are preparing to commercialize solutions that monitor critical infrastructure such as bridges and roads. Aging infrastructure is a global challenge. We recently completed a pilot with VicTrack, a state-owned enterprise in Victoria, Australia, to monitor various infrastructure assets for structural degradation and prioritize maintenance. Public/private partnerships will be critical in solving the infrastructure challenges there and throughout the world. Xerox has a long history of inventing technologies that make the world more sustainable, and we are now carrying forward our legacy with our clean technologies. The team continues to make progress on engineering air-conditioning solutions that significantly reduce greenhouse gas emissions through greater energy efficiencies. Other research projects include batteries, green hydrogen, and environmental sensing and monitoring. These innovations will open the doors to new partnerships for PARC Innovation and can potentially have a major impact on the world. Given the progress we've made, we are accelerating our plans to separate XFS, Xerox Software, and PARC Innovation into distinct businesses, which will provide greater focus, visibility, and flexibility for each. We expect to complete this separation in 2021 and will provide more information on each business, including financial metrics and relevant KPIs such as loan originations for XFS. Balancing investments in new and existing businesses while generating cash continues to remain a focus for our team. Our free cash flow in the first quarter was in line with our expectations. The first quarter is seasonally our smallest quarter, and the business continued to experience headwinds from the impacts of COVID-19, though we kept investing, because we are managing the company to deliver long-term sustainable growth. We closed the quarter with $2.5 billion in cash, cash equivalents, and restricted cash on hand. In the quarter, we purchased $162 million of shares, demonstrating our confidence in the company's long-term trajectory. We remain committed to our shareholders’ return policy, including our current dividend rate, and plan to return at least 50% of annual free cash flow. Before turning it over to Xavier, let me address some of the frequently asked questions we receive. We expect improvement in our revenue trend to continue. More employees returning to offices, the acceleration of vaccine distribution, and increased demand for our equipment during the first quarter give us confidence that we will meet our full year guidance. We are managing modest supply constraints. Investments we have made in our portfolio of offerings are starting to pay off. IT services grew organically for the third consecutive quarter. Expanding this portfolio to include robotic process automation as a service will further enhance our momentum. We are seeing increased interest in our differentiated software solutions, which have the potential to transform the service experience across many industries. We will continue to invest in our future while managing our expense profile. We are accelerating our plans to separate XFS, Xerox Software, and PARC Innovation to position Xerox to return to growth and unlock value sooner. Now I'd like to hand it over to Xavier to cover our financial results in detail.

Thank you, John, and good morning, everyone. As John mentioned, we are pleased with Q1 performance. For revenue, we delivered a strong improvement compared to the trend over the last three quarters. Most equipment and post-sales revenue improved in March, consistent with the progress of vaccinations and the gradual reopening of workplaces. Equipment revenue growth was stronger than higher-margin post-sales revenue, driving the 260 basis point gross margin erosion year-over-year. I will provide more details on revenue in the next slide. Adjusted operating margin of 5.2% in the first quarter increased 50 basis points year-over-year. The 50 basis point improvement in margins reflect the favorable impact from lower bad debt expense and savings from Project Own It on discretionary spend action, partially offset by the impact of lower post-sales gross profit. SAG expense of $448 million decreased $93 million year-over-year, reflecting a continuous focus on cost. The improvement includes the impact of a $60 million bad debt reserve taken in the first quarter of 2020, lower selling expenses, and cost savings associated with Project Own It through temporary cost reduction measures. RD&E investment we have maintained to protect innovation and future revenue streams. Investment focus on existing and new products and solutions in the Print business as well as adjacencies on the innovation tower. Q1 RD&E as a percent of revenue was 4.3%, which is 20 basis points lower year-over-year, reflecting continuous optimization of the print portfolio. Other expenses, net of $4 million, were $19 million lower year-over-year, primarily driven by a reduction in non-service retirement related costs, partially offset by higher net interest expense. The first quarter adjusted tax rate was 27.7%, compared to 29.4% last year. The 170 basis point year-over-year decrease results primarily from the change in the geographical mix of earnings. Adjusted EPS of $0.22 compared to $0.21 in the same quarter last year, reflecting slightly lower adjusted net income impacted by $10 million higher net non-financing interest expense, which was more than offset by our reduced share count. GAAP EPS of $0.18 was $0.21 higher year-over-year due to lower year-over-year restructuring and related costs, and non-service retirement related costs. Turning to revenue, the trend improved across all geographies. In EMEA, the rate of revenue decline moderated more significantly than in the U.S., in part due to the earlier onset of COVID-19 in EMEA last year and partly due to a higher proportion of SMB customers, as our vision. SMB customers have been returning to the workplace more rapidly than large enterprises who are slower to return to large office buildings. Equipment sales of $381 million increased 17.2% year-over-year, or 14.2% in constant currency. Sales increased across entry, mid-range, and high-end products in both North America and EMEA. We are encouraged by the increased activity indicating customers' confidence in returning to the workplace. Indirect channel sales in EMEA and the U.S. remain strong in entry models. Channel sales of mid-range products, including low-end color and black and white devices, as well as recently launched PrimeLink light production devices, grew significantly. We continued to manage inventory below pre-pandemic levels but are modestly increasing inventory based upon firming them up. In the Americas, sales in North America were in line with expectations. In the U.S. Federal Government, sales remained strong and education is starting to recover as schools prepare to reopen. Post-sales revenue of $1.3 billion in Q1 declined 13.4% year-over-year or 15.6% in constant currency. However, sequentially the rate of decline in post-sales revenue improved by 7.9% in constant currency. Post-sales revenue is largely contractable and most of our contracts include a minimum fixed charge on a valuable charge based upon print volume. Print volumes remained below 2019 levels due to COVID-19 related business closures. However, we saw modest sequential increases in page volume as the quarter progressed, consistent with the rollout of vaccination and more employees returning to offices. Post-sales also include unbundled supplies, paper, and other sales, which are largely sourced through indirect channels and are more transactional. So, the rate of decline of unbundled supplies improved sequentially across all geographies, reflecting higher equipment sales and increasing page volume in the quarter. IT Services sales for the quarter, which are included in other sales, grew organically in its base in the U.S. and grew in the UK and Canada as a result of prior year acquisitions. We are pleased with the traction in IT Services and we're continuing to expand our coverage of these offerings to SMB customers. While the environment remains uncertain, we are encouraged by the quarter's performance, the strength of the service contract pipeline on installs backlog, which provides confidence that businesses are ready to reopen and resume investing. Turning to cash, we closely manage cash at every level of the organization. Even though COVID-19 headwinds continue to impact Q1 results, we generated $117 million of cash from operations. Our continued focus on working capital management resulted in a $43 million source of cash in the quarter, down $48 million year-over-year, with strong year-over-year improvement in cash from inventory, partially offset by lower cash from accounts receivable and accounts payable. Cash from accounts receivable was impacted by a lower sequential decrease in revenue compared to the prior year. For accounts payable, cash was impacted by the timing of payment, as well as lower production in Q1 2021 due to inventory reduction efforts and lower expenses. CapEx was $17 million in the quarter, supporting the strategic growth program and continued investment in IT infrastructure. We continue to expect CapEx of $100 million for the full year. Within financing cash flow, we repaid $94 million of debt from securitizations. This debt amortized monthly, and we expect to refinance with new securitizations in support of XFS through global payments social business. We also repurchased $162 million of shares in the quarter and paid $54 million in dividends. We expect to repurchase shares opportunistically and have $378 million of repurchase authority remaining as of March 31. Free cash flow for the quarter was $100 million. With a maniacal focus on cash, we remain confident in the guidance of generating at least $500 million of free cash flow in 2021. Regarding profitability, we are relentless in the effort to optimize operations to drive profit on cash. Since its inception in late 2018, we have taken $1.4 billion of gross costs out of operations through the Project Own It cost transformation program, and now the $375 million of gross cost savings is targeted in 2021. We generated positive cash flow on adjusted earnings in every quarter impacted by the pandemic due to a flexible cost structure and disciplined expense management. Not only do we expect margin on cash flow to improve in 2021 as the economy recovers, but from continuous focused actions, we expect margin to improve beyond this year. Let's focus on XFS now. In January, we discussed the plan to stand up three businesses: XFS, Software, and PARC innovation. Looking at XFS, Xerox has provided leading options to customers for decades. The XFS product enables customers to purchase the newest technology and office equipment while managing their cash flow. The XFS growth strategy includes expanding leasing options beyond Print to adjacencies like IT services and software. We are also expanding leasing beyond Xerox products and solutions to OEM partners such as Lexmark, which we announced will be partnering with Xerox to provide financing for managed print services engagement. We know and understand leasing in this space. Today, XFS manages over 700,000 equipment leases across a diverse portfolio of customers and geographies. We employ a proprietary and disciplined credit approval process that drives a low annualized loss rate, while allowing for a wide credit window. XFS lease origination increased in the quarter as compared to the first quarter of 2020 due to an increased level of XBS origination in line with our strategy. At the end of March, XFS had $3.4 billion of finance assets, consisting of finance receivable on equipment and operating leases. We leveraged finance assets at a 7:1 debt-to-equity ratio to date, therefore $2.9 billion of total debt supports XFS assets. XFS debt includes senior unsecured bonds on securitization, and we plan to increase the amount of securitization, which provides cost-effective funding. Looking at capital structure, net core cash was $1 billion at the end of the first quarter and $4.4 million of debt outstanding, the majority of which—$2.9 billion—supports XFS. The remaining debt of around $1.5 billion supports the core business. Debt primarily consists of senior unsecured bonds on securitization, and there are no bonds maturing in 2021. We had $2.5 billion of cash, cash equivalents, and unrestricted cash at the end of the quarter, which again resulted in the net core cash position of $1 billion. The decline in cash from year-end primarily reflects the initiation of opportunistic share repurchases, given the confidence in our strategy. Now to wrap up. We are pleased with the gradual recovery during the first quarter, given the evolution of the pandemic. The pace of the global rollout of vaccinations should result in more employees returning to the workplace in the coming weeks and months. Therefore, we expect a recovery in the business throughout the year, especially in the second half. This, along with first quarter results, provides us confidence in delivering full year revenue of at least $7.2 billion and generating at least $500 million of free cash flow in 2021. Thank you, and now, back to John.

Thank you, Xavier. Now, let’s open the line for questions.

Thank you. Our first question comes from Ananda Baruah with Loop Capital. Your line is open.

Hi, good morning guys and congrats on the solid progress. Hey, a few questions if I could. You guys mentioned that small medium business is opening up faster than large enterprise. I noticed small medium business expansion in general is an important part of the structural strategy, and so I was wondering if there's anything that you're doing there to accelerate the small medium business expansion given it’s the part of the economy that you see opening up more quickly? And then I have two follow-ups, thanks.

Yes, Ananda. With small and medium business, we're seeing progress in different areas. Our IT services business, we're helping them not only reopen but we're helping them focus on their cost reductions and managing their businesses. So our IT services offerings, we've seen some good progression in SMB. We just announced six bot offerings; that inside of the first quarter, we already had clients that are taking it over. So, it's a full solution for SMB and that's how we've been approaching it.

And John, reflecting on five or six quarters ago, do you believe there is a revenue opportunity over time due to some of the new solutions that have emerged in the past year? Do you think this enhances the revenue potential?

Yes, I think what gives us confidence is, if you look back, we announced the IT services. We continue to announce offerings in SMB. We've also expanded IT services in the UK, and what gives us confidence is seeing not only our growth in these services, but also our growth in the ESR and in the hardware that we saw in the first quarter.

That's awesome. And just real quick on large enterprise, or just enterprise in general, is it free from SMB, do you have any context you can share from your conversations with enterprise customers? Sort of the timing of after they open up when they may begin, like how long before they begin to print projects on?

What we've noticed is, as clients open and think of as clients open our clicks, as we call them, continue to increase. I think, as we're looking at the correlation between vaccination rates, the page volumes in our geographies, we're seeing our post-sales growth as well. More and more CEOs are talking up if they're going to reopen, but when and at what speed.

Okay, that's helpful. And then one quick one for Xavier. Xavier, any reason that long-term free cash flow should not return to the same percentage of net income as historically it's been?

As John mentioned, our business is based on two revenue streams, the equipment stream and the post-sales stream. The post-sales stream is gradually recovering, and this is a stream that has the higher margin here. Over time, this mix will improve. We have seen some positive signs on sales volume coming back, as well as activities that we are doing for our customers, which are not directly related to print, but related to transactional volume. These volumes are increasing. We see increasing opportunities for income growing and then free cash flow growing as well.

Okay, that's helpful, guys. Thanks a lot. I appreciate it.

Thank you, Ananda.

Thank you. Our next question comes from Matt Cabral with Credit Suisse. Your line is open.

Yes, thank you. Good bounce back on the equipment side this quarter. I guess as we dig underneath there, I'm curious how much you characterize as some sort of backlog or pent-up demand as employees are returning to the office versus more just the underlying demand picture that you're seeing and just going forward, how we should think about the cadence of equipment revenue for the balance of the year?

Matt, what we see is that the sales of our equipment probably grew in every segment. We saw significant growth in the entry segments, but also a suite on production growth during the quarter. So, we see confidence from customers bringing back employees in the office and in acquiring or renewing some equipment, which will drive, at the end, the page volume on the annuity stream. This is one of the main streams of our revenue here. So it's not only a backlog we have; we ended the quarter with a strong productive backlog. It's not only like a backlog of work but very literally related to the confidence that the business has currently in order to bring back employees in the office.

Thanks for that, and then on XFS on the stand up, I'm wondering if you could expand a little more on the opportunity you see that securitizes as a cheaper way to get access to financing versus, historically, you used the wider Xerox balance sheet as you've tried to get capital. And I guess as that securitization picks up going forward, I'm curious what that means in terms of incremental balance sheet capacity for more of the core business, and assuming that does free up some capacity, just what you'd like to do with it going forward?

Yes, so the first one, securitization, as you mentioned, gives us two benefits. The first benefit is it moderates or decreases the cost of funds that we have to support this business, and this is part of the strategy that we initiated by setting up XFS. XFS is a significant part of the enablement that we bring to this business, and as you saw, we are now expanding the XFS portfolio and offering not only to develop products, but to also sell to the OEM on other lenders here. So, securitization, apart from a financial point of view, helps us also own our ability to expand this activity and to manage properly our free cash flow. We will certainly be more, I would say industrial or stricter in the way we approach securitization, quarter-by-quarter, and we have started last year to have two main tranches of securitization, and we continue this year on securitization as well.

Thank you.

Thank you. Our next question comes from Katy Huberty with Morgan Stanley. Your line is open.

Thank you. Good morning. I'm a little surprised to see the Americas revenue so weak just given the success of the vaccine rollout here and also, given all the surveys are showing that U.S. tech spending is rebounding much faster than Europe. I know you made a few comments about SMB exposure in Europe, but can you talk a little bit more about why that is? Are European customers less likely to be on contracts or that's just a more transactional business? And then, just as a second part to that, what do you think the contribution to equipment sales was in the quarter from inventory rebuild at some of those channel partners?

Okay, so Katy, I will take care of North America first. The Americas revenue is in line with our expectations. Regarding the vaccination progress here, we have large enterprises slowly starting to bring people back while SMB has seen growth specifically in the areas we've seen improvement in page volume coming back. Europe, as you know, has been hit last year for the entirety of the year as well. So when you look at the year-over-year compare, you had more weeks of COVID impact in Europe compared to this year. You also have seen that in both geography EMEA and in Europe, after Q4 where we saw some activity coming back in page volume, lockdowns occurred in December, January, and February in certain geographic segments. The good sign or indicator we are currently seeing is in March, both geographies and territories saw page volume improving and transaction improvements here, which give us confidence in the revenue trajectory. Commenting now on the equipment sales regarding the rebuilding of inventory, there is no direct correlation. What we saw is that there is a progressive rebound or step-by-step improvement in inventory levels, but this level is almost at the levels we were seeing before.

Okay, and if you think longer-term about a more hybrid workforce, would you expect page volumes and post-sales revenue to return to pre-COVID levels, or do you think we should contemplate post-sales revenue that's maybe a little bit below where we were pre-COVID once the end markets stabilize?

We have KPIs, as John mentioned. When we look at countries which have a high vaccination rate, like Israel, we are specifically monitoring this country. In Israel with more than 60% of the population being vaccinated, we observe page volumes coming back to pre-COVID levels. Even in a hybrid work environment, many companies are finding that the definition of hybrid is different company by company. When we’re in a hybrid model, we do see that page volume may be lower than some of the pages printed at home, but so far, it’s too early to confirm all these cases here. But as I mentioned, in March, we showed page volume increasing, and we clearly monitor the correlation between vaccination, office presence, and page volume; this indicator correlates very strongly.

Great. And then just lastly, the $60 million of bad debt expense, is that largely coming from your small medium business customers, is that from channel partners, and was there any concentration by region?

The $60 million was a provision we took last year across our entire XFS portfolio. As you know, our portfolio is diversified by geography, but also by customer type. Our provision was put in place to assess what could be the impact; we conduct assessments every quarter in order to prepare for any potential risk we may encounter in our portfolio.

Okay, understood. Thank you so much.

Thank you, Katy.

Thank you. Our next question comes from Shannon Cross with Cross Research. Your line is open.

Thank you very much. I have a few questions as well. John, just from a big picture standpoint, and some of your peers in Japan have started talking about this more. When you go out, say three or four years, how do you envision Xerox? And what I'm trying to figure out is, what kind of revenue percentages would be coming from printing versus some of your more focus areas, software, PARC, XFS Services? And then how do you sort of, again, 50,000-foot level, see the margins shifting, because, obviously, print is a very high margin business, but not growing? And some of the others, have more opportunities. So, I'm just trying to get an idea of maybe from the high level how you see the business shifting? And then I have a couple of follow-ups.

Yes, Shannon, what excites us is our four-pronged strategy. One of them being monetizing innovation and driving revenue, and in there we've seen progress in our software business; we've seen progress in XFS, and we've seen progress in all our innovation. We did just say we're going to be standing up these businesses before the end of the year. We're doing that for a few reasons: focus, flexibility, but also to provide transparency to our investors. You can expect us to have an Analyst Day in the second half of the year, where we will go through this and explain to our investors why Xerox is a good investment for now and for the future.

Okay, so we can't get it quite yet. I guess then, in terms of cash usage, you used $216 million during the quarter. You said you'll return at least 50% to shareholders and targeting $500 million at a minimum for cash. So, clearly, there's a little more room, but if I add in what you've done so far, plus keeping the dividends, you're going to be somewhere around 75% of cash usage already or free cash generation. So how should we think about share repurchases going forward, and obviously, I'm assuming the dividend is solid? Thank you.

Hi, Shannon, Xavier here. Yes, we will always look at share repurchases in an opportunistic way, as you mentioned. We repurchased $452 million of shares during the quarter. We mentioned in prior calls that we have an authority of $500 million, so there's still more than $300 million left. We'll do that opportunistically for the year.

Okay, and then my final question is just, to some more extent going back decades, as you talked to customers these days, and now that we're a year plus through the pandemic, and people are kind of reevaluating how their offices are going to look, what kind of changes are you hearing in terms of structure? Are people looking at more distributed printing? I would assume so, given the growth in the low end, and then how are they thinking about what contract levels they're willing to sort of commit to, given there is still uncertainty in terms of who's going to be in the office, and how many people are going to go hybrid? Thank you.

Yes, Shannon, like if we look at surveys that were done with CEOs last summer, 69% of CEOs stated they were going to downsize their real estate footprint. This was just re-conducted recently, and it's down to 17%. The focus is on what rate and pace employees will return to the office, and it's a direct correlation to vaccination and to safety. The other thing that we're witnessing as a trend is that when employees return to the office, even in a hybrid environment, the print volumes go up. For cost reasons and security reasons, it is much less expensive to print in an office than it is to print at home for security reasons. So, we're seeing that trend and that's what gives us confidence with our guidance for this year to get back to revenue growth.

What's your plan for Xerox, when are you going back to the office?

April 19.

Hi Shannon, just to get back to your question on the customer: what customers are buying currently? They buy multifunction devices, as you know it is much more than a printer. The multifunction is a core of workflows that customers are looking at, and there is something we learned in COVID-19; this concept of digital transformation or enabling workflows is much more efficient for employees. Required devices that are able to support this process transformation, and multifunction devices are becoming a prime device to drive this.

Thank you.

Thank you. Our next question comes from Paul Coster with JP Morgan. Your line is open.

Chung on for Coster. Thanks for taking our questions. So just on the OpEx side, we saw a big decline in cost execution, lower discretionary spend in 2020, and the Q1 run rate is pretty in line as well. Just want to get a sense of what do you think about OpEx in the back half as some of those costs come back? And then secondly, where are you targeting those investments and marketing spend when it does come back? Thank you.

OpEx, you know, you need to look at it by looking at last year versus this year. We had, last year, tailwinds. We declared the government subsidies that contributed to our benefits. We also look at the whole cost opportunity we had within the concept of Project Own It, specifically in Q2 and Q3. This year we resumed some of the benefits we had for compensation as the rate of growth related to government subsidies are less as you know. We see our focus on Project Own It so we have declared that for this year we will run another $375 million of gross savings driven by this program and it is again across the different areas. We also have a specific focus on innovation, automation, and improving our current properties making customer relationships efficient and easier.

Thanks. This is very helpful.

Thank you. Our next question comes from Jim Suva with Citigroup. Your line is open.

Thank you. I have a question probably for each of you, and I'll ask them immediately at this time, so you can decide how to answer them in any order you want. But John or Xavier, can you talk about the success Xerox is having on the type of services being offered? This seems intriguing and quite encouraging. Is it help desk, bot programming, or what are some examples so we can kind of grasp and visualize it? And then my second question is, has there been an impact from the semiconductor shortages globally? Some sectors like automobiles or PCs have seen a severe shortage of semiconductor chips. So I'm just wondering if that has replicated or found its way into the sectors you deal with or maybe it hasn't? Thank you.

Yes, hi Jim. Look, our IT services is focused primarily on SMB. Our mission is to provide end-to-end professional IT solutions for them. We've introduced new offerings like RPA as a service, but at the end of the day, we're designing solutions to manage the IT stack of an SMB, with the goal being virtual CIOs for them. Our customers are largely served by our XPS organization in the U.S., they are served by our channels in Europe. These are direct sales organizations that have skills and local touch points, so that we can expand on our offerings, cross-sell into existing accounts and new customers. We've seen a lot of good traction with our RPA products. We're focused on how we help them be more efficient as they come back to the office, and we’ve been pleased with our results in all of that.

Regarding semiconductors, we see shortages in certain components and certain raw materials. It does not believe at this stage it is impacting us directly. We are monitoring it and we are looking at potential backlogs that we could have related to it, but it’s not at a high level or higher rate of complexity.

Great. And then the quick follow-up on the bad debt reserve—is it? It sounds like it was a release in that there was a positive that you reserved a year ago, a higher amount for potential uncertainty of customers. If they’d be able to pay given the pandemic uncertainties. And it turns out that you're collecting better than previously thought; am I correct on that? And is that kind of like an annual assessment or quarterly assessment where there could be some more positive releases?

Yes, it’s a year-over-year compare. Last year, we booked around $60 million of provision for potential bad debt release across our leasing portfolio. As you know, this portfolio has an average maturity date of around four years, so this pertains to their current risk profile that could have happened this year. We did not release any provision; we kept this provision because it's too early in the cycle for us to assess if or when we should release any of these provisions at this stage. Currently, our assessment is that the provision level we have is sufficient to cover potential risks in the portfolio.

Thank you so much for the details and clarifications. It's greatly appreciated.

Thank you, Jim.

Thank you, and ladies and gentlemen, that does conclude our Q&A session for today. I would now like to turn the call over to John Visentin for closing remarks.

Thank you for your questions. This past Sunday, we celebrated our 115-year anniversary. We believe today our future is filled with exciting possibilities that we are working to make reality. Xerox has repeatedly redefined how the world works, and we are well on our way to doing it yet again. Be safe and be well.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.