Lexmark 2015 Annual Report Download - page 3

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Paul Rooke
Chairman and CEO
To My Fellow Shareholders,
Once again in 2015, Lexmark made significant progress in its ongoing transformation. Beginning in
2010, we began making strategic acquisitions that have significantly expanded our leadership in
enterprise software, adding an important capability to our leadership in smart laser multifunction
products (MFPs) and managed print services (MPS) — always with a relentless focus on better serving
our customers. Our commitment to our shareholders, customers and employees is as strong as ever,
even as we continue to consider the best path forward for the company.
Continued Software Expansion and Industry Recognition
Lexmark brings to market the powerful combination of technology ownership, industry expertise and
customer engagement to deliver solutions of superior value. Our offering is unique in the industry,
and, in 2015, we further expanded it with the acquisition of Kofax, a leading provider of smart process
software applications. The Kofax acquisition nearly doubled the size of Lexmark Enterprise Software
to an approximately $700 million run-rate business, and immediately enhanced Lexmark’s industry-
leading enterprise content management and business process management offerings.
Lexmark’s development of world-class imaging and software solutions continued to impress the indus-
try’s most influential market analyst firms in 2015. Throughout the year these firms positioned Lexmark
as a leader in their key evaluations. Accolades for our technology leadership in imaging range from
smart MFPs to multiple honors for our MPS offerings, and Enterprise Software also received top billing
in key evaluations for the year – varying from enterprise search to enterprise content management
and healthcare content management.
Strategic Progress Reflected in Financial Performance
Lexmark delivered solid financial performance in 2015, despite significant currency headwinds from the
strong U.S. dollar.
The strategic progress we made in 2015 is reflected in the strong performance of our higher value MPS
and Enterprise Software solutions. Lexmark’s higher value solutions revenue grew 24 percent to $1.4
billion, comprising nearly 40 percent of our Core revenue.
2015 marks the 16th consecutive year of growth in MPS, a testament to Lexmark’s differentiated value
proposition and high customer retention.
In 2015, Enterprise Software expanded its non-GAAP operating income margin by $95 million, more
than tripling the segment’s operating income margin percentage for the year. We have long had our
sights set on aggressively growing Enterprise Software revenue to $500 million and on delivering 25
percent segment non-GAAP operating income margin exiting 2016. This past year we far exceeded
the revenue goal and nearly reached the profit goal a year early, as we exited 2015 at approximately
24 percent.