- In addition beating Q4 estimates, Lexmark (LXK +7.4%) is guiding for Q1 revenue to be down only 3%-5% Y/Y, less than a consensus for a 5.1% drop. Q1 EPS is expected to be in a range of $0.80-$0.90, in-line with an $0.85 consensus.
- The report acts as further validation of Lexmark's efforts to grow its software exposure, and thereby lower its dependence on printing hardware and supplies markets that remain pressured by a long-term shift towards digital document and photo sharing/viewing. While hardware revenue fell 8% Y/Y to $763M, and supplies revenue 6% to $2.48B, software/other revenue jumped 27% to $420M.
- Lexmark's Perceptive Software (content management, data capture, and enterprise search software) unit posted Q4 sales of $224M, +48% Y/Y. Excluding sales tied to Lexmark's discontinued inkjet printing business (-37% Y/Y to $405M), hardware revenue only fell 2%, and supplies revenue rose 2%.
- Thanks to rising software sales, gross margin came in at 40.7%, +180 bps Y/Y. $82M was spent on buybacks.