Latest news with #RaulFernandez
Yahoo
04-06-2025
- Business
- Yahoo
DXC Q1 Earnings Call: Revenue Misses Expectations, Management Focuses on Bookings and Turnaround
IT services provider DXC Technology (NYSE:DXC) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 6.4% year on year to $3.17 billion. Its non-GAAP EPS of $0.84 per share was 8.6% above analysts' consensus estimates. Is now the time to buy DXC? Find out in our full research report (it's free). Revenue: $3.17 billion (6.4% year-on-year decline) Adjusted EPS: $0.84 vs analyst estimates of $0.77 (8.6% beat) Adjusted Operating Income: $230 million vs analyst estimates of $221.6 million (7.3% margin, 3.8% beat) Revenue Guidance for Q2 CY2025 is $3.07 billion at the midpoint, below analyst estimates of $3.11 billion Adjusted EPS guidance for the upcoming financial year 2026 is $3 at the midpoint, missing analyst estimates by 12.3% Operating Margin: 11.7%, up from -7.4% in the same quarter last year Organic Revenue fell 4.2% year on year, in line with the same quarter last year Market Capitalization: $2.73 billion DXC's first quarter results reflected ongoing challenges in reversing a longstanding revenue decline, as management continued to emphasize the operational overhaul underway. CEO Raul Fernandez attributed the performance to a combination of structural and cultural changes, including significant new hires and leadership turnover, aimed at stabilizing the business. He pointed to a 20% increase in bookings and a second straight quarter with a book-to-bill ratio above 1.0, suggesting early signs of improved market traction. Fernandez acknowledged that the rebuilding of operational capabilities was 'deeper and more extensive' than initially anticipated, with a focus on streamlining sales processes and incentivizing performance. Notably, a major contract win with Carnival Cruise Line was highlighted as evidence of progress in large enterprise deals, though management remained candid about the need for continued discipline in execution. Looking ahead, DXC's guidance is shaped by expectations of ongoing investment in sales, marketing, and core solution areas, while recognizing persistent headwinds in key markets. CFO Rob Del Bene outlined that the company's outlook incorporates a wider range to account for macroeconomic uncertainty and project-based volatility, particularly in consumer and media sectors. Fernandez stated, 'Our strategy is clear, and we are committed to executing with the discipline required for DXC to generate sustainable and profitable growth.' Management expects longer-duration contracts and increased AI-related projects to gradually improve revenue visibility, but cautioned that meaningful top-line growth depends on scaling recent wins and further pipeline development. The company's decision to resume share repurchases also reflects a belief in its turnaround strategy, though leadership admitted that the timing for a return to revenue growth remains uncertain. Management attributed the quarter's performance to improvements in sales execution, major new client wins, and ongoing investments in operational capabilities. They also acknowledged ongoing revenue headwinds and the need for further progress in key segments. Sales and leadership overhaul: CEO Raul Fernandez reported 22 new leadership hires and 14 departures within 15 months, including the onboarding of a chief revenue officer, to rebuild the sales organization and align incentives more closely with performance metrics. Large contract momentum: DXC secured a significant new contract with Carnival Cruise Line, which management described as a competitive win showcasing the company's ability to deliver integrated infrastructure and application management for large-scale clients. Bookings growth and pipeline: The company achieved a 20% year-over-year increase in bookings and maintained a book-to-bill ratio above 1.0 for a second consecutive quarter, indicating improved pipeline quality and future revenue potential. AI-driven service offerings: Management highlighted early progress in generative AI (GenAI) pilots across industries, with a focus on building repeatable, scalable solutions to meet growing customer demand for digital modernization and automation. Segment-specific dynamics: Consulting and engineering services (CES) saw strong bookings in strategic projects but continued pressure in custom application work, while insurance services recorded mid-single-digit growth, offset by one-time items affecting the quarter's rate. DXC's outlook centers on expanding its pipeline, driving adoption of AI-enabled solutions, and scaling enterprise contracts, but remains cautious given ongoing market and project-based uncertainties. Expanding AI and digital offerings: Management expects increased investment in developing scalable, replicable AI solutions and digital transformation services to drive future growth, particularly in financial services where client demand is strongest. Margin pressures from investment: The company plans to continue investing in sales, marketing, and solution development, which may weigh on margins in the near term as leadership prioritizes building long-term capabilities over immediate profitability. Macroeconomic and industry risks: Guidance for the year allows for potential volatility in consumer, retail, and media verticals, with CFO Rob Del Bene noting that lower-end forecasts account for possible demand softness and project delays in these sectors. In coming quarters, the StockStory team will closely watch (1) DXC's ability to convert recent large bookings, like the Carnival Cruise Line deal, into sustainable revenue streams; (2) the pace at which AI and digital transformation projects move from pilots to scaled deployments; and (3) execution on leadership stability and improvements in sales effectiveness. Progress on segment restructuring and visibility into insurance and consulting performance will also be important indicators of turnaround momentum. DXC currently trades at a forward P/E ratio of 4.4×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
15-05-2025
- Business
- Yahoo
Q4 2025 DXC Technology Co Earnings Call
Roger Sachs; Vice President, Investor Relations; DXC Technology Co Raul Fernandez; President, Chief Executive Officer, Director; DXC Technology Co Robert Del Bene; Chief Financial Officer, Executive Vice President; DXC Technology Co Bryan Bergin; Analyst; TD Securities LLC Jonathan Lee; Analyst; Guggenheim Securities James Faucette; Analyst; Morgan Stanley Keith Bachman; Analyst; BMO Capital Markets Paul Obrecht; Analyst; Wolfe Research Tyler DuPont; Analyst; BofA Global Research Jamie Friedman; Analyst; Susquehanna Financial Group Rod Bourgeois; Analyst; DeepDive Equity Operator Hello and welcome to the DXC Technology fourth quarter and fiscal year end 2025 earnings call. (Operator Instructions)I would now like to turn the conference over to Roger Sachs, Vice President of Investor Relations. You may begin. Roger Sachs Thank you, operator. Good afternoon, everybody and welcome to DXC Technologies' fourth quarter and fiscal year-end 2025 earnings call. We hope you had a chance to review our earnings release posted to the IR section of DXC's website. Speaking on today's call, are Raul Fernandez, our President and CEO; and Robert Del Bene, our Chief Financial me walk you through today's agenda. First, Raul will share an overview of our results and provide an update on our strategic initiatives. And Rob will take you through our financial performance, full year fiscal 2026 guidance, and offer some thoughts on our outlook for the first quarter. After that, both Raul and Rob will take your comments made during today's call are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially from those expressed on the call. You can find details of these risks and uncertainties in our annual report on Form 10-K and other SEC filings. We do not commit to updating any forward-looking statements during today's during this call, we will be discussing non-GAAP financial measures that we believe provide useful information to our investors. Reconciliations to the most comparable GAAP measures are included in the tables that are in today's earnings with that, let me turn the call over to Raul. Raul Fernandez Thank you, Roger. Our fourth quarter results represent another important step towards our goal of achieving sustainable, profitable revenue growth. We are gaining momentum with bookings up more than 20%, resulting in a book to bill ratio of 1.2. This marks our second consecutive quarter above 1.0, bringing us to a second half booking's growth rate of 24%, a clear indication of traction in the market and building the foundation to drive long-term top line eight consecutive years of revenue decline remains the highest priority for me, our leadership team, and the entire DXC organization. The rebuilding of our operational capabilities is deeper and more extensive than I originally appreciated. But the work the team is doing is addressing structural, operational, and cultural issues that will better position us going companies are built by teams of experienced people who share an intense passion to win. I am proud that we have recruited 22 great new members of our extended leadership team in the last 15 months. Each brings exceptional skills with the intensity to win. And in that time, we also rotated out 14 executives. DXC has had significant turnover in top Executive Leadership since its leadership stability is absolutely critical to ensuring we give our turnaround the time, attention, and persistence it deserves. In that spirit, I'm happy to announce that Rob and I have received equity grants designed to secure our continued leadership through fiscal year 2028. These grants align our compensation with sustainable long-term shareholder value area of critical importance to us is to deepen our customer relationships and identify new opportunities to expand our pipeline. I recognized this GAAP in our organization and started rebuilding these capabilities from the ground up, with an eye toward operational discipline and improved execution. My team and I have reviewed quota attainment data and segmented the existing on achievement, we developed strict quantitative performance criteria for 2025 year-end reviews with a documented process. We held CEO calls with HR business partners and sales leaders to communicate changing expectations and initiated better reporting for tracking sales performance. In preparation for our new fiscal year, we completed a quota deployment audit to ensure proper coverage for fiscal year aligned pay incentives for our sales organization, and onboarded our first Chief Revenue Officer, TR Newcomb, someone I've worked with in the past and who brings an incredible amount of focus, energy, and operational excellence to the role. Our work has led to continuous improvement in our systems, processes, and pay structures, all of which will lay an even stronger has been a significant global technology player for over 40 years, in four major technology cycles, personal computing in the 80s, internet computing in the 90s, mobile and cloud computing in the 2000 era, and now AI in 2020 and beyond. This is a company with tremendous assets, loyal customers, deep and broad capabilities, and a global footprint with local impact of AI is just beginning to accelerate within our client base, and AI spending is increasing year-to-year. This comes at a time when our customers are favoring further consolidation of their IT spending, putting DXC in a unique position to compete with the combined power of our full stack, infrastructure, and app management have built an early but strong track record of delivering real bottom line results for our customers in key areas, including modernization, technical support, development time, testing, process improvement, deployment, and maintenance by harnessing the power of AI. While it's very early in the Gen AI adoption cycle, it is clear to me that we are very well positioned to lead our clients into what I believe is the largest transformational technology opportunity of our of my top commitments as President and CEO is to spend as much time with our current and prospective customers as possible. During my tenure, I've met with over 100 customers, which has equipped me to better understand how we can more effectively meet their changing needs and identify new opportunities for mutual logos of significant size have been scarce in DXC's recent history, and this is something we have been laser focused on improving. We are thrilled to share that Carnival Cruise Line just tapped DXC to manage its critical infrastructure powering operations across the entire fleet. This was a highly competitive bid with ISG advising throughout the selection process, and we won because we are uniquely qualified. We brought the full weight of our infrastructure capabilities enterprise applications and technical muscle to the table, and DXC was chosen to be their critical partner. Carnival is one of the largest cruise lines in the world that hosts over 6 million guests a year. Their bar is very high. Everything must run safely and flawlessly from shore to ship with great customer where we come in. We deliver complete operational confidence. So Carnival can focus on their customers, knowing every system is firing on all cylinders and running smoothly, no matter where they are. This one isn't just about one client. It's a clear signal that we are a trusted partner and operator for some of the world's largest a winning culture, which sets the foundation for us to win consistently in the marketplace, is not an overnight mission. It requires experienced leaders who are able to translate vision into action with sustainable becoming CEO, I have focused on increasing the clarity, consistency, and transparency of internal communication, embedding a startup ethos that emphasizes flat, fast, and learning-focused collaboration, and ensuring that we all think in terms of generating sound financial results while driving profitable growth, not just growth for growth's the past year, we've made targeted investments and brought in new leaders to jumpstart innovation across all our offerings, redesign and expand our AI capabilities and software platforms, and streamline how we develop applications using Gen AI. We expect fiscal 2026 to be a year of continued disciplined execution to sharpen operations and drive near-term uncertainty over tariffs, we are clear on our strategy, confident in our team, and committed to executing with the discipline required for DXC to generate sustainable and profitable growth. Reflecting our confidence in the company's future, we will restart our share repurchase program. This underscores our commitment to delivering long-term value to that, let me turn it over to Rob. Robert Del Bene Thank you, Raul, and good afternoon, everyone. Today I'll go over our fourth quarter results, touch upon our full year performance, and then provide guidance for the full fiscal year 2026 and the first quarter. Starting with the fourth quarter, total revenue of $3.2 billion was slightly above our expectations, declining 4.2% year-to-year on an organic delivered another strong quarter of bookings, up more than 20% year-to-year, resulting in a book to bill ratio of 1.2. Growth was broad-based across all of our offerings and markets. Adjusted EBIT margin was 7.3%, down 110 basis points year-to-year and like revenue slightly above our expectations. Performance was driven by investments in our employee base, improving the capability of our sales force and investments in marketing and communications and to the dynamics we saw during the first three quarters, the decline in revenue was offset by labor and non-labor efficiencies. Non-GAAP gross margin for the fourth quarter came in at 24.2%, down 40 basis points year-to-year, and non-gap SG&A as a percentage of revenue expanded 160 basis points year-to-year to 11.3%. Our gross margin and SG&A performance were driven by the same factors just mentioned for adjusted a reminder, the year-to-year changes in our non-gap gross margin and non-GAAP SG&A are normalized for the reclassification of certain business development costs to SG&A. Non-GAAP EPS was $0.84, down from $0.97 in the fourth quarter of last year, driven by lower adjusted EBIT, partially offset by a decline to non-controlling interest and lower net interest turning to our segments. GBS, which represents 51% of total revenue, was down 2.4% year-to-year organically, with a profit margin decrease of 240 basis points to 10.9%. The margin decline was driven by investments in our employees and to further build our industry leading insurance capabilities. Within GBS, consulting and engineering services had a second straight quarter of strong bookings, up 9% year-to-year, with a book to build ratio of trailing 12-month book-to-bill for CES has now increased to $1.08. Last quarter, we noted an increase in larger projects in our CES pipeline. And in the fourth quarter, we converted those opportunities to bookings. While these bookings have less revenue yield in the short term, they contribute to building our backlog and future revenues. The growth profile of bookings in the quarter was more heavily weighted to enterprise applications and data and AI consistent with our growth strategy of revenue for CES declined 3.9% year-to-year, reflecting ongoing market pressures on custom application projects. Insurance and BPS organic revenue grew 2.7% year-to-year. Our insurance services and software business, which accounts for about 80% of the total, grew 1% year-to-year organically. Through the first three quarters of the year, the insurance business grew at mid-single-digit performance in the fourth quarter was similar with the growth rate largely impacted by onetime items. We have confidence that the growth rate for the insurance business will continue to perform at mid-single-digit growth rates for fiscal 2026. GIS, which represents 49% of total revenue, declined 6% year-to-year organically, the second consecutive quarter of narrowing the year-to-year revenue improvement was driven by cloud offerings and workplace support services. Fourth quarter bookings for GIS grew 33% year-to-year with a book-to-bill of 1.28. It was the second consecutive quarter of strong bookings existing the year with a 12-month book-to-bill of 1.03. Profit margin declined 50 basis points year-to-year to 7.0%, primarily reflecting our increased investments in our continue to drive cost savings through optimization of software and data center costs. Now let me briefly touch upon our full year fiscal 2025 results. Fueled by our strong performance in the second half of the year, full year bookings increased 7% year-to-year, significantly better than the fiscal 2024 performance. With bookings up 24% in the second half of the year, the book-to-bill ratio was 1.28 in the second half and 1.03 for the full revenue was $12.9 billion, down 4.6% year-to-year on an organic basis with GBS declining 1% and GIS down 8.2%. Adjusted EBIT margin expanded 50 basis points year-to-year to 7.9%, driven by the execution of our cost reduction initiatives which we accomplished with significantly less restructuring than originally estimated. Non-GAAP diluted EPS was $3.43, up 11% year-to-year primarily driven by a lower share count and a higher adjusted turning to our cash flow and balance sheet. For our full year fiscal 2025, we generated $687 million of free cash flow, above our most recent expectation of $625 million largely driven by lower restructuring spend and better working capital management. In the year, we executed on our strategy of minimizing new financial lease originations and funding equipment purchases, primarily through capital expenditures, which is a negative impact to free cash flow, but reduces our debt a result, capital expenditures increased year-to-year. Without this change in approach, free cash flow would have increased year-to-year and CapEx would have declined. Total debt at fiscal year-end 2025 was equal to $3.9 billion, down $213 million year-to-year including $298 million of capital lease and asset financing paydowns. Total cash on our balance sheet increased by approximately $570 million year-to-year to $1.8 was driven by our free cash flow generation and asset sale proceeds of approximately $190 million. As a result, we lowered net debt by $785 million to approximately $2.1 billion. As a reminder, we do not include asset sales in our reported free cash flow. At the beginning of fiscal 2025, our financial priorities centered around strengthening our balance sheet, creating financial flexibility and reducing excess capacity with the help of restructuring accomplished these objectives while spending less than originally planned on restructuring. With our improved financial position in fiscal 2026, we will focus on the following financial priorities. We'll continue to invest in our business to accomplish our top priority, driving sustained profitable revenue growth. We will continue to reduce outstanding debt by minimizing financial lease originations and paying down a portion of our senior notes maturing in January of finally, we plan to return $150 million to shareholders in fiscal 2026 in the form of share repurchases. Now let me provide you with our full year fiscal 2026 guidance. We expect total organic revenue to decline 3% to 5%. GBS is projected to be down low single digits with consistent performance during the year reflecting the larger, longer duration deals booked in the second half of fiscal '25 and increased economic uncertainty, particularly with shorter-term project-based GIS, we are projecting organic revenue to decline mid-single digits, which reflects an improvement to last year's rate of decline. We expect adjusted EBIT margin to be between 7% to 8%, which reflects our intent to continue to build our revenue growth capabilities and invest in the business. With this revenue and adjusted EBIT margin guidance, we expect non-GAAP diluted EPS to be between $2.75 and $ expect free cash flow for the fiscal year 2026 of about $600 million, reflecting our EBIT guidance and about $30 million of increased restructuring spending as we complete the execution actions planned in fiscal '25. Consistent with prior years, free cash flow generation will be strongest in the second half of the fiscal now for the first quarter of fiscal 2026, we expect total organic revenue to decline between 4.0% and 5.5%. We anticipate adjusted EBIT margin to be in the range of 6% to 7%, a function of lower revenue and first quarter seasonality with margins improving throughout the second half of the year. And finally, we expect non-GAAP diluted EPS of $0.55 to $ wrapping up, I want to highlight that beginning in the first quarter, we will report our financial results under a new segment structure that better aligns with how we now run the business. We will report three segments. Insurance Services and Software; Consulting and Engineering Services; and GIS, which will include cloud and ITO, modern workplace, security and horizontal BPO. We plan to provide restated historical results under our new reporting segments prior to the release of our fiscal first quarter with that, let me turn the call back over to Roger. Raul Fernandez Thank you, Rob. We now like to open the call to your questions. Operator, can you please provide the instructions? Operator (Operator Instructions). Bryan Bergin, TD Cowen. Bryan Bergin I wanted to just kick off on demand and the broader question about kind of what you saw as you moved through the quarter and then post quarter April into May. And if you can comment on kind of what you've been seeing by industry as it relates to the ones that are more product-based that would have direct implications for tariff dynamics versus those that are not?So any commentary as you've seen in demand evolve, particularly if you've seen anything in the most recent week change just given, I guess, better directionality and geopolitics. Raul Fernandez Sure. It's Raul here. Let me start. Look, we've had really good progress and good wins at the mega level, $100 million plus, and at the strategic level of $5 million to $100 million. The $5 million under is the category that's highly discretionary and easier for corporations to turn on and turn off. There are some segments where there has been some softness since early April. And those are -- I'm going to hand it over to Rob now. Robert Del Bene Yes, we -- Bryan, as we look at the pipeline, consumer industries and retail the pipeline has dropped, particularly in project-based services. So it's been concentrated. The drops have been concentrated there and a little bit also in the media and entertainment industry, which is not obvious why, but it has in those two industries. The pipeline has gone down a rest of the industries are all strong. But banking, capital markets, manufacturing, public sector, insurance are all really robust for us. The other thing I will mention, I'll just second is that project-based services pipelines are solid, meaning the below $5 million. But really robust in the -- we call them the strategic segments between $5 million and $100 million, which are more complex, a little longer in duration, but the pipelines there are really solid. Bryan Bergin Okay. I appreciate that. And then for my follow-up on free cash flow. So the $600 million target, can you help -- can you bridge from fiscal '25 levels to this '26 target? And we speak to kind of free cash flow post finance lease expectations as you go through the year? Robert Del Bene Yes. The bridge going year-to-year into '26 is simply the '25 result adjusted for the after-tax EBIT guidance that we gave and the increase in restructuring by about $30 million. So that implies the rest of the dynamics of free cash flow are essentially flat in our guide. And the chart we showed in the earnings presentation is meant to demonstrate the strength of our underlying free cash flow and the consistency of performance. And while the number -- the headline number for free cash flow was down year-to-year '24 to ' you take into consideration the lease originations on a capital lease financing that we have done in the past and factor that into the equation if we had in the past instead of financing those capital purchases, run them through capital and free cash flow, it shows that we're improving free cash flow consistently over the last two years. So strong underlying, very good underpinning of free cash flow performance for the company. Bryan Bergin Okay. I know the capital finance lease piece was like just under around $300 million for this past fiscal year. Where do you expect that to be comparable? Or do you still see that being lower for '25? Robert Del Bene We see those because the originations were far lower in fiscal '25, that amount is going to drop year-to-year. That's going to decline nicely in '26. Operator Jonathan Lee, Guggenheim Partners. Jonathan Lee First, can you help decompose what's contemplated in your outlook at both the high end and the low end of the range from a macroeconomic perspective? Robert Del Bene Yes. Jonathan. So we've -- let's take the first quarter revenue outlook of minus 4% to minus 5.5%. In that range, we've left room at the low end for uncertainty. So we traditionally have given a one-point range one quarter out, we widened it to 1.5 points to give us that room at the low end. The -- so we don't see that exposure sitting here today, but we left room for we gave a traditional two-point range on the full year '26, but we did account for -- similar to first quarter, we did account for within that range some exposure at the low end if conditions deteriorate. So we've taken the uncertainty, -- we think we've taken the uncertainty into account in both the first quarter and full year guidance. Jonathan Lee Appreciate that color. And just as a follow-up, how would you characterize the pricing environment and sort of what you've seen through the quarter and how that may compare to what you saw last year? Raul Fernandez Yes. The-- for us, the pricing environment has been very stable. And when I say that, for us, in particular, at for mega deals, we've made improvements as we have renewals coming due. So that environment has been favorable for us in project-based services, everything below the mega deal, both strategic projects in the $5 million to $100 million category and the below five categories have both been very stable for us. So that's actually been good for us. Operator James Faucette, Morgan Stanley. James Faucette I just want to ask structurally your Gen AI spend -- or Gen AI spend generally has been increasing. How is that being reflected in your P&L? And now and where are you seeing that show up? And I guess, maybe more importantly, how fast are these projects growing? And what's the relative size compared to your typical engagements. Raul Fernandez Yes. Look, the spend from major corporations in the last two years have been in the smaller side. So it's $5 million. And they've been pilots to prove out proof points, meaning, faster, better development time, faster, better documentation, et cetera. And we see across every industry a considerable amount of pilot work. And that's an area that I'm super excited about, because we've got a great set of building blocks that we're putting in place with regards to replicability, with regards to scale of our that's key for us in terms of taking the opportunity, the AI opportunity for our clients in different industries and being able to bring them real results, real case studies that have ROI behind them and having them quickly adopt. So I'm super excited about the demand on that front. We are still very, very early in the cycle, but we are very, very, very well positioned for several reasons. And let me just add two of the clear considerations for companies as they're looking to engage any part of their business functions into any sort of Gen AI work is to look at their data readiness, their infrastructure readiness and their people and process readiness. And we are uniquely positioned to have incredible insight there. So I feel very, very strong about our early returns on that front with our customers and the foundation we're building because that foundation will be part of our growth in the future. James Faucette Got it. Appreciate that. And it seems like you're seeing increasing bookings. Obviously, the time to convert that to revenue is -- it takes a little while, and that makes sense. But I'm wondering if you can talk about how the duration of the new contracts you're signing in compares to what you've done in the past and how that may be improving, if at all, your revenue visibility? Raul Fernandez I think number one, and I'll turn it over to Rob in a second, is we're building a bigger, more qualified pipeline through the fundamental restructuring and rebuilding of our sales operation. I went into a lot of detail in the remarks to begin with around that because it gives you some insight as to the level of foundational work that was needed in that particular now with a great new leader that I've worked with in the past here taking that and operationalizing it and scaling it is key for us. And we've got the building blocks in place now. And frankly, if you think about the type of work that we've done in sales, we're doing similar work across every business function. And now with our leadership team in place, we've got not just the foundation set in the right direction, but leaders that can continue to grow. Robert Del Bene James, it's Rob. Let me just throw in one more comment. So in our CES business, where the pipeline has been very good, and the bookings were very strong in the strategic project category, that means between $5 million and $100 million. Those projects are typically more complex, they're longer in duration. So we are experiencing within the CES business, that longer duration entering into our backlog and revenue projections going that's reflected in our guide. So that became more pronounced in the third quarter and into the fourth quarter where it was really evident to us. So if we continue to see -- and hopefully, we will, the bookings in that category increase because their strategic enterprise apps related as opposed to custom apps. It'll be really good for the business, but the yield turn the conversion into revenue is extended a bit versus traditional custom apps, smaller projects. Operator Keith Bachman, BMO. Keith Bachman Yes. My question follows that is more broadly, what are the conditions in order to generate revenue growth. And so I think investors are a little bit disappointed with the fiscal year '26 guidance, call it, negative 4% at the midpoint. You talked about maybe duration is impacting that conversion of what appears to be solid bookings into revenues. But what longer-term message do you want to leave with investors about what would cause the business to turn to a positive number. And I don't know if you want to venture this far, but when would that be? Raul Fernandez Sure. So look, the foundation elements there are both quantitative and qualitative. On the quantitative side, we spoke a little bit about the progress we've made in bookings, the trailing book-to-bill and also the increase in size and quality of our pipeline. That's key. The size and quality of our pipeline and also the effectiveness of our ability to win those are all part of execution and having a better sales and marketing that's both in terms of human capital and actual materials that we're bringing to market are key to that. So for me, it falls into two areas are the, -- is the foundation in place, meaning the story is in place, the solution in place, the bidding proposals in place, the people to lead those. Do we get the opportunities, absolutely get the opportunities? Can we execute? Yes. Can we execute at the key in terms of timing, how quickly can we get to scale. And again, the rebuild was pretty substantial. We've got that in place and we've got key leaders in place as we go throughout the year. I feel that we'll have better insight as to when we'll see the turn. Keith Bachman Okay. Maybe my follow-on then is do you think the underlying markets you serve are growing in your seeding share? Or do you think the markets that you serve, not the broader IT services are contracting and you're doing better, so to speak. And I'd like to hear within that context, maybe you could flush out a little bit on the Carnival Cruise Line deal about why do you think that -- why do you think that you won that deal? And how important was price in the ultimate conclusion? Raul Fernandez Yes. Great question. We have more than enough opportunities in every vertical that we serve in every geography that we're in. AI is not -- an AI adoption isn't segmented by geographies or verticals. It's happening across every industry and every company. So the opportunity is there. That's a full stop. Our ability to win is executing on the big and small one of the things that I'm reflecting on, which has been great with regards to Carnival is that I was in one of the very early pitches with the team, new teammates that had just joined us were part of the bid and proposal and solutioning team. And we competed against 12 others, and it was a very, very good competition at the end. We won across the board on all the key metrics, but it wasn't down on price, it was on was on being a proven partner. It was on having the foundation, technical foundation, leadership, partnership to take them to another level. And we were able to clearly convey that in terms of what we bring to the table, and that was a great proof point and a great win. The key here is to scale that over and over again. Demand is there. We have presence, we have customers. We just have to scale the winning motions that led to a great, great new partnership with Carnival. Operator Paul Obrecht, Wolfe Research. Paul Obrecht This is Paul Obrecht on for Darren. So now we're a few quarters into the revamped go-to-market approach. Can you just touch on what the company's cross-sell motion looks like today? And as we're improving engagement with clients and helping build their understanding of all DXC's offerings, are you seeing incremental demand from GIS clients for the GBS offerings? Raul Fernandez Yes. We've recently begun to hold client engagement inside forums where we bring multiple clients across different industries together to really talk about the current challenges, the opportunities there are with AI, the proof points that we've got with real case studies and real return on investments. And they've been great to participate and have been in a couple of what it's clear, -- what's clear is that when customers appreciate the full breadth of capabilities that we have from the infrastructure side, all the way to the application and AI and custom development side, we are one of only a handful of players that both have the end-to-end capabilities. And also can deliver it globally with local excellence. So we are very, very well positioned to, -- continue to build on have to just get the motions in place to scale solutioning, to scale premarketing to target opportunities better within our existing customer base and turn that into revenue quicker. Paul Obrecht Great. That's helpful. And then Rob, if we look at the margin guide for 7% to 8% for the year, can you just walk us through the bridge from the fiscal '25 margin to this range? And then you're guiding to 6% to 7% for the first quarter. So just curious on the drivers for expanding margins throughout the year. Robert Del Bene Yes. The -- so the -- from the -- to the midpoint, the drop is about 40 basis points to the midpoint of the guide on a year-to-year basis. And it is a combination of the revenue declines offset by cost -- disciplined cost management, which we demonstrated we are capable of achieving in fiscal '25. So we're going to repeat that to offset any revenue then we have other cost reductions in excess of that to cover investments for the most part, but we have left room in our guide for an increase in investments year-to-year. And bottom line, that's -- that really accounts at the midpoint for the decline in margin is leaving room for investments to help us continue to progress on this growth that is the number one factor in the margins at the midpoint. And again, as we did in '25, we'll monitor that throughout the year and invest appropriately and make sure we're getting the yields we need to from the investments. Operator (Operator Instructions). Tyler DuPont, Bank of America. Tyler DuPont Raul and Rob, this is Tyler DuPont on for Jason. Raul, I wanted to start by asking about the current leadership structure. You mentioned you've onboarded 22, give or take new members. If I heard, you correctly to the extended leadership team since you are at the helm of DXC. The new three-year employment agreement was interesting to see this at this point, what gives you the confidence that you have all the building blocks in place to improve the second derivative and growth rate and ultimately end up in positive territory? Robert Del Bene Yes. Look, one of the things that gives me confidence is that these great leaders that I've worked with in other companies have voted with their feet and they've joined us. They see what I see. They see an opportunity to take an incredible company that has incredible customers and solutions that have been deployed and use that as a launch pad to really take advantage of the AI opportunity that's in front of so I'm very encouraged that we've been able to give the caliber of new talent in. And again, some like TR are just in for a month or two, some have been here for a year. But in total, I've been here 15 months. And I think that the team that we've got in place has both the experience and the capacity from an execution standpoint to take what we have been fixing and building and scale it. Tyler DuPont Okay. Great. And so I guess as a follow-up, I mean there have been several bookings related questions after night, and I thought it might be able to pile on and ask one more myself, but from a slightly different lens. It was encouraging to see book-to-bill on an LTM basis above one for both GBS and GIS. I think that's the first time since June of '23 that we've seen just given we've seen a decent amount of these contracts moving from pipeline into bookings and then ultimately into revenue. Just from a sustainability standpoint, what's the level of visibility that DXC has into being able to backfill that pipeline to make sure that once the bookings convert to revenue, we're still on a strong footing. Robert Del Bene So we have -- the visibility begins with the opportunity pipeline -- and we have a pipeline that supports sustainability. We have confidence that pipeline will progress, turn into actual bookings and then convert to revenue. So it all starts with identification pipeline and progression, and we've improved performance in all areas throughout '25, and we expect to continue to both improve that performance and progress the current pipeline, which is good and continue to add more opportunities as we progress throughout the year. Raul Fernandez And we've talked a lot about the pipeline, the opportunities, both quantitatively increasing but also just from a qualitative standpoint, from a renewal standpoint, we're also more successful in renewing existing contracts on terms that both the customer and we are happy with. So that's another factor in terms of being able to build a solid foundation to it really does begin and end with a better, bigger qualified pipeline. And then getting that timed correctly so that we can convert that to revenue and building it quarter-over-quarter to a point where, mathematically, you can see a trajectory that's positive. Operator Jamie Friedman, Susquehanna. Jamie Friedman I wanted to ask about insurance. So are you -- did I hear you say that you're going to break that out as a segment in more detail. I was wondering if that's the case, and sorry, if I heard you wrong, I'm sorry. And then if so, what the rationale for that? That's the first one on insurance. And also on you just revisit where you are in the revenue recognition? I remember there was some journey between like term and license and subscription. Is that still part of the plan? Is that underway? Where are we in that process? Robert Del Bene So Jamie, it's Rob. We are going to break out -- you did hear that correctly. We're going to break out insurance as a separate segment beginning in '26. And the rationale for that is simply -- it's a reflection of how we manage the business. And the three segments that we are going to be disclosing in '26 or the management system we use internally, right? And so that's the last question, I think it's related to in the past, we've discussed progressing and developing our SaaS business within insurance. And that is a longer-term strategy that we have. We've started down that road and as we progress down that journey, we'll think about the appropriate time to break that out separately as we report insurance as a separate segment. Jamie Friedman Okay. And then for my follow-up, by the way, I like a lot of these new slides to slide 6 on the technology innovation cycle is helpful. I guess, bigger picture role. Do you feel like if you look at this continuum, where you put Internet mobile cloud AI, I'm just looking at slide 6. Is this -- like some of these technologies, I think are it can be deflationary for the service provider, some create more advantage. How do you feel about your hand and your view of the technology estate relative to what's going on in tech innovation right now? Raul Fernandez No, I feel great. I think that -- and I spoke about it earlier. Our insight in terms of our customers with regards to their infrastructure, their people, their processes, their data readiness, that insight is incredibly valuable, and it makes us best positioned to help them take on journeys in the AI front that are both targeted and meaningful and have a real for us, it's marrying the existing knowledge and relationships that we have with the proven capabilities that we've deployed across multiple industries that have real return on investment and cross selling that more effectively and frankly, just being better at communicating the real results that we're seeing. But we are very, very well you look at that set of technology super cycles that you were referring to, I started my career after the PC super cycle and the Internet super cycle. And I believe that this actually has more disruption and more capability to really change how companies operate globally, and we're in a great position to be their partner. Operator Rod Bourgeois, DeepDive Equity Research. Rod Bourgeois And I just want to hone in on one topic, and that is the investment plans going forward. So I just want to ask about your priorities or investing in new solution capabilities in order to drive that more positive growth. If you could give us any sense also of the magnitude of investments that you're planning over the next year relative to your current investment said a little bit about that in the margin bridge, but it might be helpful to say more. But the main question really is what are the specific solution areas that you're investing most in to drive the profitable and positive growth? Raul Fernandez Yes, it's replicability of large capabilities that are repeatable capabilities that our clients are asking for. And we're in the process of putting together great frameworks that we're going to be rolling out again as part of the new team that's come in place to take the point work that we've got going around the globe, package that up create a comprehensive story and be able to both not just cross pollinate internally, but use that as an ability to generate what I believe is going to be great sales opportunities for us because we have proven ROI proof we've got the other factor, which is industry knowledge. And probably most importantly, we've got a great client base. So for us, it's internal optimization, internal collaboration, internal knowledge sharing and then external packaging. I mean those are the key ingredients. Robert Del Bene And I'd just add to what Raul said that we are also investing in sales and marketing. So that's the other area where we're building our capabilities, and that's part of the plans for next year as well -- for '26 as well. And Rod, if just look at the guide and the bridge I gave, I think that's a pretty good indication of the magnitude of the year-to-year investment profile. Rod Bourgeois Okay. Are there specific market segments that you want to major in or deal types like core modernization or I mean, -- I get the investment in sales and marketing and working on the pipeline in a more rigorous way. But in terms of how you go to market and differentiate yourself, are there certain solution or market categories that you really want to major in? Raul Fernandez We're seeing a lot of traction in financial services, and we're seeing a lot of replicability there in terms of deployments that we have and deployments that we can scale and bring to our customers in new ways of consuming them. So that is one probably was the biggest industry that both we have a footprint in, and we've got some great ROI models and that we're beginning to share with the larger client base. Operator This concludes the question-and-answer session. I'll turn the call to Roger Sachs for closing remarks. Roger Sachs Thank you, operator, and thank you, everybody, for joining us today. And we look forward to speaking with you again next quarter. Operator This concludes today's conference call. Thank you for joining. You may now disconnect.
Business Wire
15-05-2025
- Business
- Business Wire
DXC Technology Reports Fourth Quarter and Full Year Fiscal 2025 Results
ASHBURN, Va.--(BUSINESS WIRE)--DXC Technology (NYSE: DXC) today reported results for the fourth quarter and full year fiscal 2025. 'Our fourth quarter results represent continued progress toward our goal of achieving sustained, profitable revenue growth,' said DXC Technology President and CEO, Raul Fernandez. 'For the second consecutive quarter, we reported bookings growth of more than 20% and book to bill ratios of greater than 1. While the macro backdrop remains uncertain, we're staying focused on our priorities, delivering our deep and broad capabilities to our customers, driving performance with a newly energized and engaged employee base, and continuing to build a culture of accountability, collaboration, and urgency.' Financial Highlights - Fourth Quarter Fiscal Year 2025 Total revenue was $3.17 billion, down 6.4% year-over-year (down 4.2% on an organic basis) (1). EBIT was $350 million, with a corresponding margin of 11.0% compared to ($289) million in the prior year quarter. Adjusted EBIT (2) was $230 million, down 19.0% year-over-year, with a corresponding margin (2) of 7.3%. Diluted earnings per share was $1.43, compared to ($1.10) in the prior year quarter. Non-GAAP diluted earnings per share (3) was $0.84, down 13.4% year-over-year. Cash generated from operations was $315 million, up 12.5% year-over-year. Free cash flow (4) was $111 million in the fourth quarter of fiscal year 2025, compared to $155 million in the fourth quarter of fiscal year 2024. Book to Bill ratio of 1.22x, compared to 0.94x in the fourth quarter of fiscal year 2024. Segment Highlights - Fourth Quarter Fiscal Year 2025 Global Business Services ("GBS") Revenue was $1.63 billion, down 4.8% year-over-year (down 2.4% on an organic basis). (1) Segment profit was $178 million, down 21.9% year-over-year, with a corresponding margin of 10.9%. Book to Bill ratio of 1.16x, compared to 0.99x during the fourth quarter of fiscal 2024. Global Infrastructure Services ("GIS") Revenue was $1.54 billion, down 8.1% year-over-year (down 6.0% on an organic basis). (1) Segment profit was $107 million, down 14.4% year-over-year, with a corresponding margin of 7.0%. Book to Bill ratio of 1.28x, compared to 0.89x during the fourth quarter of fiscal 2024. Financial Highlights - Full Year Fiscal 2025 Total revenue was $12.87 billion, down 5.8% year-over-year (down 4.6% on an organic basis) (1). EBIT was $696 million, up 260.6% year-over-year with a corresponding margin of 5.4%. Adjusted EBIT (2) was $1,019 million, up 1.0% year-over-year, with a corresponding margin (2) of 7.9%. Diluted earnings per share was $2.10, up 356.5% year-over-year. Non-GAAP diluted earnings per share (3) was $3.43, up 10.6% year-over-year. Cash generated from operations was $1,398 million, up 2.7% year-over-year. Free cash flow (4) was $687 million in the full year of fiscal year 2025, compared to $756 million in the full year fiscal 2024. Book to Bill ratio of 1.03x, compared to 0.91x in the full year fiscal 2024. Segment Highlights - Full Year Fiscal 2025 Global Business Services ("GBS") Revenue was $6.65 billion, down 2.6% year-over-year (down 1.0% on an organic basis). (1) Segment profit was $797 million, down 4.6% year-over-year, with a corresponding margin of 12.0%. Book to Bill ratio of 1.03x, compared to 0.96x during the full year fiscal 2024. Global Infrastructure Services ("GIS") Revenue was $6.23 billion, down 9.1% year-over-year (down 8.2% on an organic basis). (1) Segment profit was $451 million, up 4.2% year-over-year, with a corresponding margin of 7.2%. Book to Bill ratio of 1.03x, compared to 0.86x during the full year fiscal 2024. Full Year Fiscal 2026 and First Quarter Fiscal Year 2026 Guidance Full Year Fiscal 2026 Total revenue in the range of $12.18 billion and $12.44 billion, a decline of 5.0% to 3.0% on an organic basis (1). Adjusted EBIT margin (2) of 7.0% to 8.0%. Non-GAAP diluted EPS (3) of $2.75 to $3.25. Free Cash Flow (4) of ~$600 million. First Quarter Fiscal 2026 Total revenue in the range of $3.04 billion and $3.09 billion, a decline of 5.5% to 4.0% year-over-year on an organic basis. (1) Adjusted EBIT margin (2) of 6.0% to 7.0%. Non-GAAP Diluted EPS (3) of $0.55 to $0.65. (1) Revenue growth on an organic basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period's foreign currency exchange rates, adjusted for the impact of acquisitions and divestitures. A reconciliation of GAAP to non-GAAP measure are attached to this release. (2) Adjusted EBIT and Adjusted EBIT margin are non-GAAP measures. Reconciliations of GAAP Net Income to such measures are attached to this release. (3) Non-GAAP diluted earnings per share is a non-GAAP measure. A reconciliation of GAAP diluted earnings per share to non-GAAP diluted per share is attached to this release. (4) Free cash flow is a non-GAAP measure. Free cash flow is calculated by subtracting capital expenditures (Purchase of Property, Plant & Equipment, Transition and Transformation Contract Costs and Software Purchased or Developed) from cash flow from operations. Free cash flow for the fourth quarter of fiscal year 2025 is calculated by subtracting capital expenditures of $204 million from cash flow from operations of $315 million. Free cash flow for the fourth quarter of fiscal year 2024 is calculated by subtracting capital expenditures of $125 million from cash flow from operations of $280 million. Free cash flow for the full year of fiscal year of 2025 is calculated by subtracting capital expenditures of $711 million from cash flow from operations of $1,398 million. Free cash flow for the full year of fiscal year 2024 is calculated by subtracting capital expenditures of $605 million from cash flow from operations of $1,361 million. Expand Additional metrics for the first quarter and full year fiscal 2026 guidance are presented in the table below. DXC does not provide reconciliations of non-GAAP measures included in its guidance because certain key information necessary for such reconciliations—most notably the impact of significant non-recurring items—is unavailable without unreasonable effort or may not be available at all. As a result, DXC believes any such reconciliation would not be meaningful. Earnings Conference Call and Webcast DXC Technology senior management will host a conference call and webcast to discuss fourth quarter fiscal 2025 results at 5:00 p.m. ET on May 14, 2025. The dial-in number for domestic callers is 888-330-2455. Callers who reside outside of the United States should dial +1-240-789-2717. The passcode for all participants is 4164760#. The webcast audio and any presentation slides will be available through a link posted on DXC Technology's Investor Relations website. A replay of the conference call will be available approximately two hours after its conclusion until 11:59 PM ET on May 21, 2025, at 800-770-2030 for domestic callers and at +1-647-362-9199 for international callers. The replay passcode is 4164760#. A transcript of the conference call will be posted on DXC Technology's Investor Relations website. About DXC Technology DXC Technology (NYSE: DXC) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. The world's largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates. Learn more about how we deliver excellence for our customers and colleagues at Forward-Looking Statements Except for the historical information and discussions contained herein, statements contained in this document may constitute 'forward-looking statements' that are based on the Company's current assumptions regarding future operating or financial performance. These statements involve numerous risks, uncertainties and other important factors that could cause actual results to differ materially from those described in forward-looking statements, many of which are outside of our control, and include, but are not limited to: our inability to succeed in our strategic objectives; the risk of liability, reputational damages or adverse impact to business due to service interruptions from security breaches, cyber-attacks, other security incidents or disclosure of confidential information or personal data; compliance, or failure to comply, with obligations arising under new or existing laws, regulations, and customer contracts relating to the privacy, security and handling of personal data; our product and service quality issues; our inability to develop and expand our service offerings to address emerging business demands and technological trends, including our inability to sell differentiated services amongst our offerings and the competitive pressures faced by our business; our inability to compete in certain markets and expand our capacity in certain offshore locations; failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs; difficulty in understanding the changes to our business model by equity research or industry analysts or our failure to meet our publicly announced financial guidance; public health crises; our indebtedness and potential material adverse effect on our financial condition and results of operations; our inability to accurately estimate the cost of services, and the completion timeline of contracts; failure by us or third party partners to deliver on commitments or otherwise breach obligations to our customers; the risks associated with climate change and natural disasters; increased scrutiny of, and evolving expectations for, sustainability and environmental, social and governance initiatives; our inability to attract and retain key personnel and maintain relationships with key partners; the risks associated with prolonged periods of inflation or adverse changes in macroeconomic conditions; the risks associated with our international operations, such as risks related to currency exchange rates; our inability to comply with existing and new laws and regulations, including social and environmental responsibility regulations, policies and provisions; our inability to achieve the expected benefits of our restructuring plans; our inadvertent infringement of third-party intellectual property rights or infringement of our intellectual property rights by third parties; our inability to procure third-party licenses required for the operation of our products and service offerings; risks associated with disruption of our supply chain or increases in procurement costs, including as a result of ongoing trade tensions and tariff changes; our inability to maintain effective disclosure controls and internal control over financial reporting; potential losses due to asset impairment charges; our inability to pay dividends or repurchase shares of our common stock; pending investigations, claims and disputes and any adverse impact on our profitability and liquidity; disruptions in the credit markets, including disruptions that reduce our customers' access to credit and increase the costs to our customers of obtaining credit; counterparty default risk in our hedging program; our failure to bid on projects effectively; financial difficulties of our customers and our inability to collect receivables; our inability to maintain and grow our customer relationships over time and to comply with customer contracts or government contracting regulations or requirements; our inability to succeed in our strategic transactions; changes in tax rates, tax laws, and the timing and outcome of tax examinations; risks related to our completed strategic transactions; volatility of the price of our securities, which is subject to market and other conditions. For a written description of these factors, see our upcoming Annual Report on Form 10-K for the fiscal year ended March 31, 2025, and any updating information in subsequent SEC filings. Any forward-looking statement contained herein speaks only as of the date on which it is made. Except as required by law, we assume no obligation to update or revise any forward-looking statements. About Non-GAAP Measures In an effort to provide investors with supplemental financial information, in addition to the preliminary and unaudited financial information presented on a GAAP basis, we also disclose in this press release preliminary non-GAAP information including: earnings before interest and taxes ("EBIT"), EBIT margin, adjusted EBIT, adjusted EBIT margin, non-GAAP diluted EPS, organic revenues, organic revenue growth, free cash flow, and non-GAAP tax rate. We believe EBIT, adjusted EBIT, non-GAAP income before income taxes, non-GAAP net income, non-GAAP net income attributable to DXC common stockholders, and non-GAAP EPS provide investors with useful supplemental information about our operating performance after excluding certain categories of expenses as well as gains and losses on certain dispositions and certain tax adjustments. We believe constant currency revenues provides investors with useful supplemental information about our revenues after excluding the effect of currency exchange rate fluctuations for currencies other than U.S. dollars in the periods presented. See below for a description of the methodology we use to present constant currency revenues. One category of expenses excluded from adjusted EBIT, non-GAAP income before income tax, non-GAAP net income, non-GAAP net income attributable to DXC common stockholders, and non-GAAP EPS, incremental amortization of intangible assets acquired through business combinations, if included, may result in a significant difference in period over period amortization expense on a GAAP basis. We exclude amortization of certain acquired intangible assets as these non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Although DXC management excludes amortization of acquired intangible assets, primarily customer-related intangible assets, from its non-GAAP expenses, we believe it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and support revenue generation. Any future transactions may result in a change to the acquired intangible asset balances and associated amortization expense. Another category of expenses excluded from adjusted EBIT, non-GAAP income before income tax, non-GAAP net income, non-GAAP net income attributable to DXC common stockholders, and non-GAAP EPS is impairment losses, which, if included, may result in a significant difference in period-over-period expense on a GAAP basis. We exclude impairment losses as these non-cash amounts reflect generally an acceleration of what would be multiple periods of expense and are not expected to occur frequently. Further, assets such as goodwill may be significantly impacted by market conditions outside of management's control. Selected references are made to revenue growth on an 'organic basis' in order that certain financial results can be viewed without the impact of fluctuations in foreign currency rates and without the impacts of acquisitions and divestitures, thereby providing comparisons of operating performance from period to period of the business that we have owned during both periods presented. Organic revenue growth is calculated by dividing the year-over-year change in GAAP revenues attributed to organic growth by the GAAP revenues reported in the prior comparable period. Organic revenue is calculated as constant currency revenue excluding the impact of mergers, acquisitions or similar transactions until the one-year anniversary of the transaction and excluding revenues of divestitures during the reporting period. This approach is used for all results where the functional currency is not the U.S. dollar. We believe organic revenue growth provides investors with useful supplemental information about our revenues after excluding the effect of currency exchange rate fluctuations for currencies other than U.S. dollars and the effects of acquisitions and divestitures in both periods presented. Free cash flow represents cash flow from operations, less capital expenditures. Free cash flow is utilized by our management, investors, and analysts to evaluate cash available for normal business operations, to pay debt, repurchase shares, and provide further investment in the business. There are limitations to the use of the non-GAAP financial measures presented in this report. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Additionally, other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes between companies. Selected references are made on a 'constant currency basis' so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby providing comparisons of operating performance from period to period. Financial results on a 'constant currency basis' are non-GAAP measures calculated by translating current period activity into U.S. Dollars using the comparable prior period's currency conversion rates. This approach is used for all results where the functional currency is not the U.S. Dollar. Selected Condensed Consolidated Balance Sheet Data (preliminary and unaudited) As of (in millions) March 31, 2025 March 31, 2024 Assets Cash and cash equivalents $ 1,796 $ 1,224 Receivables, net 2,972 3,253 Prepaid expenses 477 512 Other current assets 118 146 Total current assets 5,363 5,135 Intangible assets, net 1,642 2,130 Operating right-of-use assets, net 635 731 Goodwill 526 532 Deferred income taxes, net 819 804 Property and equipment, net 1,253 1,671 Other assets 2,967 2,857 Assets held for sale - non-current — 11 Total Assets $ 13,205 $ 13,871 Liabilities Short-term debt and current maturities of long-term debt $ 880 $ 271 Accounts payable 549 846 Accrued payroll and related costs 571 558 Operating lease liabilities 227 282 Accrued expenses and other current liabilities 1,358 1,437 Deferred revenue and advance contract payments 762 866 Income taxes payable 64 134 Total current liabilities 4,411 4,394 Long-term debt, net of current maturities 2,996 3,818 Non-current deferred revenue 635 671 Non-current operating lease liabilities 444 497 Non-current income tax liabilities and deferred tax liabilities 495 556 Non-current pension obligations 387 423 Other long-term liabilities 347 446 Total Liabilities 9,715 10,805 Total Equity 3,490 3,066 Total Liabilities and Equity $ 13,205 $ 13,871 Expand Condensed Consolidated Statements of Cash Flows (preliminary and unaudited) Fiscal Years Ended (in millions) March 31, 2025 March 31, 2024 Cash flows from operating activities: Net income $ 396 $ 86 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,313 1,433 Operating right-of-use expense 309 353 Pension & other post-employment benefits, actuarial & settlement (gains) losses (232 ) 445 Share-based compensation 79 109 Deferred taxes (35 ) (416 ) Loss (gain) on dispositions 24 (131 ) Provision for losses on accounts receivable 12 — Unrealized foreign currency exchange losses (gains) 40 (7 ) Impairment losses and contract write-offs 32 18 Amortization of debt issuance costs and discount 5 5 Cash surrender value in excess of premiums paid (12 ) (14 ) Other non-cash charges, net 7 9 Changes in assets and liabilities, net of effects of acquisitions and dispositions: Decrease in receivables 320 176 (Increase) Decrease in prepaid expenses and other current assets (81 ) 211 Decrease in accounts payable and accruals (335 ) (278 ) (Decrease) Increase in income taxes payable and income tax liability (57 ) 13 Decrease in operating lease liability (309 ) (353 ) (Decrease) Increase in advance contract payments and deferred revenue (78 ) (290 ) Other operating activities, net — (8 ) Net cash provided by operating activities 1,398 1,361 Cash flows from investing activities: Purchases of property and equipment (248 ) (182 ) Payments for transition and transformation contract costs (135 ) (198 ) Software purchased and developed (328 ) (225 ) Business dispositions 26 26 Proceeds from sale of assets 161 75 Other investing activities, net 12 13 Net cash used in investing activities (512 ) (491 ) Cash flows from financing activities: Borrowings of commercial paper 367 1,784 Repayments of commercial paper (369 ) (1,887 ) Payments on finance leases and borrowings for asset financing (298 ) (430 ) Taxes paid related to net share settlements of share-based compensation awards (20 ) (35 ) Repurchase of common stock (14 ) (898 ) Other financing activities, net 17 (21 ) Net cash used in financing activities (317 ) (1,487 ) Effect of exchange rate changes on cash and cash equivalents 3 (17 ) Net increase (decrease) in cash and cash equivalents 572 (634 ) Cash and cash equivalents at beginning of year 1,224 1,858 Cash and cash equivalents at end of year $ 1,796 $ 1,224 Expand Segment Profit We define segment profit as segment revenues less costs of services, segment selling, general and administrative, depreciation and amortization, and other income (excluding the movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges). The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated costs generally include certain corporate function costs, stock-based compensation expense, pension and other post-retirement benefits ('OPEB') actuarial and settlement gains and losses, restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets. Three Months Ended Twelve Months Ended (in millions) March 31, 2025 March 31, 2024 March 31, 2025 March 31, 2024 GBS profit $ 178 $ 228 $ 797 $ 835 GIS profit 107 125 451 433 Unallocated expenses (55 ) (69 ) (229 ) (259 ) Subtotal $ 230 $ 284 $ 1,019 $ 1,009 Interest income 46 56 199 214 Interest expense (58 ) (76 ) (265 ) (298 ) Restructuring costs (29 ) (20 ) (153 ) (111 ) Transaction, separation and integration-related costs — (1 ) (25 ) (7 ) Amortization of acquired intangibles (85 ) (88 ) (348 ) (354 ) Merger related indemnification (2 ) (1 ) (2 ) (16 ) (Losses) gains on dispositions — (17 ) 13 115 Gains (losses) on real estate and facility sales 9 (1 ) (23 ) 7 Impairment losses (5 ) — (17 ) (5 ) Pension and OPEB actuarial and settlement gains (losses) 232 (445 ) $ 232 $ (445 ) Income (loss) before income taxes 338 (309 ) $ 630 $ 109 Segment profit margins GBS 10.9 % 13.3 % 12.0 % 12.2 % GIS 7.0 % 7.5 % 7.2 % 6.3 % Expand Reconciliation of Non-GAAP Financial Measures Our non-GAAP adjustments include: Restructuring costs – includes costs, net of reversals, related to workforce and real estate optimization and other similar charges. Transaction, separation and integration-related ('TSI') costs – includes third party costs related to integration, separation, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions incurred within one year of such transactions closing, except for costs associated with related disputes, which may arise more than one year after closing. Amortization of acquired intangible assets – includes amortization of intangible assets acquired through business combinations. Pension and OPEB actuarial and settlement gains and losses – pension and OPEB actuarial mark to market adjustments and settlement gains and losses. Merger related indemnification - in fiscal 2025 and fiscal 2024, represents the Company's estimate of potential net liability to HPE for tax related indemnifications. Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities. Gains and losses on real estate and facility sales – gains and losses related to dispositions of real property. (1) Impairment losses – non-cash charges associated with the permanent reduction in the value of the Company's assets (e.g., impairment of goodwill and other long-term assets including fixed assets and impairments to deferred tax assets for discrete changes in valuation allowances). Future discrete reversals of valuation allowances are likewise excluded. Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets, adjustments for changes in tax legislation and the impact of merger and divestitures. Income tax expense of all other (non-discrete) non-GAAP adjustments is based on the difference in the GAAP annual effective tax rate (AETR) and overall non-GAAP provision (consistent with the GAAP methodology). Fiscal Year Ended March 31, 2025 Income before income taxes $ 630 $ 153 $ 25 $ 348 $ 2 $ 17 $ (13 ) $ 23 $ (232 ) $ — $ 953 Income tax expense 234 33 5 77 6 1 (3 ) 9 (66 ) 17 313 Net income 396 120 20 271 (4 ) 16 (10 ) 14 (166 ) (17 ) 640 Less: net income attributable to non-controlling interest, net of tax 7 — — — — — — — (1 ) — 6 Net income attributable to DXC common stockholders $ 389 $ 120 $ 20 $ 271 $ (4 ) $ 16 $ (10 ) $ 14 $ (165 ) $ (17 ) $ 634 Effective Tax Rate 37.1 % 32.8 % Weighted average common shares outstanding for: Basic EPS 180.68 180.68 180.68 180.68 180.68 180.68 180.68 180.68 180.68 180.68 180.68 Expand Three Months Ended March 31, 2024 (Loss) income from continuing operations, before taxes $ (309 ) $ 20 $ 1 $ 88 $ 1 $ 17 $ 1 $ 445 $ — $ 264 Income tax (benefit) expense (114 ) 5 — 22 2 (6 ) 1 109 60 79 Net (loss) income (195 ) 15 1 66 (1 ) 23 — 336 (60 ) 185 Less: net income attributable to non-controlling interest, net of tax 5 — — — — — — 2 — 7 Net (loss) income attributable to DXC common stockholders $ (200 ) $ 15 $ 1 $ 66 $ (1 ) $ 23 $ — $ 334 $ (60 ) $ 178 Effective Tax Rate 36.9 % 29.9 % Diluted EPS $ (1.10 ) $ 0.08 $ 0.01 $ 0.36 $ (0.01 ) $ 0.13 $ — $ 1.82 $ (0.33 ) $ 0.97 Weighted average common shares outstanding for: Basic EPS 181.06 181.06 181.06 181.06 181.06 181.06 181.06 181.06 181.06 181.06 Diluted EPS 181.06 183.47 183.47 183.47 183.47 183.47 183.47 183.47 183.47 183.47 Expand Fiscal Year Ended March 31, 2024 Income before income taxes $ 109 $ 111 $ 7 $ 354 $ 16 $ 5 $ (115 ) $ (7 ) $ 445 $ — $ 925 Income tax expense 23 23 1 75 14 1 (26 ) (2 ) 109 97 315 Net income 86 88 6 279 2 4 (89 ) (5 ) 336 (97 ) 610 Less: net loss attributable to non-controlling interest, net of tax (5 ) — — — — (4 ) — — 2 — (7 ) Effective Tax Rate 21.1 % 34.1 % Basic EPS $ 0.46 $ 0.45 $ 0.03 $ 1.42 $ 0.01 $ 0.04 $ (0.45 ) $ (0.03 ) $ 1.71 $ (0.50 ) $ 3.15 Diluted EPS $ 0.46 $ 0.44 $ 0.03 $ 1.40 $ 0.01 $ 0.04 $ (0.45 ) $ (0.03 ) $ 1.68 $ (0.49 ) $ 3.10 Weighted average common shares outstanding for: Basic EPS 195.80 195.80 195.80 195.80 195.80 195.80 195.80 195.80 195.80 195.80 195.80 Diluted EPS 198.78 198.78 198.78 198.78 198.78 198.78 198.78 198.78 198.78 198.78 198.78 Expand The above tables serve to reconcile the non-GAAP financial measures to the most directly comparable GAAP measures. Please refer to the 'About Non-GAAP Measures' section of the press release for further information on the use of these non-GAAP measures. Year-over-Year Organic Revenue Growth Fiscal Year 2025 Q1 FY25 Q2 FY25 Q3 FY25 Q4 FY25 FY25 Total revenue growth (6.1 )% (5.7 )% (5.1 )% (6.4 )% (5.8 )% Foreign currency 1.4 % — % 0.7 % 2.1 % 1.0 % Acquisitions and divestitures 0.3 % 0.1 % 0.2 % 0.1 % 0.2 % Organic revenue growth (4.4 )% (5.6 )% (4.2 )% (4.2 )% (4.6 )% GBS revenue growth (1.8 )% (1.9 )% (1.8 )% (4.8 )% (2.6 )% Foreign currency 1.8 % 0.1 % 0.9 % 2.1 % 1.2 % Acquisitions and divestitures 0.5 % 0.2 % 0.4 % 0.3 % 0.4 % GBS organic revenue growth 0.5 % (1.6 )% (0.5 )% (2.4 )% (1.0 )% GIS revenue growth (10.3 )% (9.4 )% (8.5 )% (8.1 )% (9.1 )% Foreign currency 1.0 % (0.2 )% 0.7 % 2.1 % 0.9 % Acquisitions and divestitures — % — % — % — % — % GIS organic revenue growth (9.3 )% (9.6 )% (7.8 )% (6.0 )% (8.2 )% Expand Fiscal Year 2024 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY24 Total revenue growth (7.0 )% (3.6 )% (4.7 )% (5.7 )% (5.3 )% Foreign currency 0.7 % (2.0 )% (1.7 )% 0.2 % (0.7 )% Acquisitions and divestitures 2.7 % 2.0 % 1.9 % 0.6 % 1.9 % Organic revenue growth (3.6 )% (3.6 )% (4.5 )% (4.9 )% (4.1 )% GBS revenue growth (3.1 )% (0.2 )% (2.4 )% (2.2 )% (2.0 )% Foreign currency 0.8 % (1.6 )% (1.4 )% 0.6 % (0.4 )% Acquisitions and divestitures 5.6 % 4.2 % 4.1 % 1.3 % 3.8 % GBS organic revenue growth 3.3 % 2.4 % 0.3 % (0.3 )% 1.4 % GIS revenue growth (10.6 )% (6.8 )% (6.8 )% (9.0 )% (8.3 )% Foreign currency 0.7 % (2.3 )% (2.1 )% (0.3 )% (1.0 )% Acquisitions and divestitures — % — % — % — % — % GIS organic revenue growth (9.9 )% (9.1 )% (8.9 )% (9.3 )% (9.3 )% Expand EBIT and Adjusted EBIT Fiscal Year 2025 (in millions) Q1 FY25 Q2 FY25 Q3 FY25 Q4 FY25 FY25 Net income $ 25 $ 45 $ 63 $ 263 $ 396 Income tax expense 43 48 68 75 234 Interest income (51 ) (51 ) (51 ) (46 ) (199 ) Interest expense 72 69 66 58 265 EBIT 89 111 146 350 696 Restructuring costs 39 42 43 29 153 Transaction, separation, and integration-related costs 7 15 3 — 25 Amortization of acquired intangible assets 87 89 87 85 348 Merger related indemnification — — — 2 2 Gains on disposition of businesses — (5 ) (8 ) — (13 ) Losses and (gains) on real estate and facility sales 2 27 3 (9 ) 23 Impairment losses — — 12 5 17 Pension and OPEB actuarial and settlement gains — — — (232 ) (232 ) Adjusted EBIT $ 224 $ 279 $ 286 $ 230 $ 1,019 EBIT margin 2.8 % 3.4 % 4.5 % 11.0 % 5.4 % Adjusted EBIT margin 6.9 % 8.6 % 8.9 % 7.3 % 7.9 % Expand Fiscal Year 2024 (in millions) Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY24 Net income (loss) $ 42 $ 99 $ 140 $ (195 ) $ 86 Income tax expense (benefit) 36 29 72 (114 ) 23 Interest income (49 ) (53 ) (56 ) (56 ) (214 ) Interest expense 66 78 78 76 298 EBIT 95 153 234 (289 ) 193 Restructuring costs 20 35 36 20 111 Transaction, separation, and integration-related costs 1 3 2 1 7 Amortization of acquired intangible assets 89 89 88 88 354 Merger related indemnification 11 2 2 1 16 Losses and (gains) on disposition of businesses 5 (33 ) (104 ) 17 (115 ) (Gains) and losses on real estate and facility sales (6 ) — (2 ) 1 (7 ) Impairment losses 3 2 — — 5 Pension and OPEB actuarial and settlement losses — — — 445 445 Adjusted EBIT $ 218 $ 251 $ 256 $ 284 $ 1,009 EBIT margin 2.8 % 4.5 % 6.9 % (8.5 )% 1.4 % Adjusted EBIT margin 6.3 % 7.3 % 7.5 % 8.4 % 7.4 % Expand Offerings Details (in millions) Q4 FY25 Q3 FY25 Q2 FY25 Q1 FY25 Q4 FY24 Consulting & Engineering Services $ 1,237 $ 1,270 $ 1,281 $ 1,284 $ 1,317 Insurance Software & BPS 393 396 396 389 388 Cloud, ITO & Security 1,180 1,184 1,188 1,206 1,290 Modern Workplace 359 375 376 357 384 Subtotal 3,169 3,225 3,241 3,236 3,379 M&A and Divestitures — — — — 7 Total Revenues 3,169 3,225 3,241 3,236 3,386 Expand Source: DXC Technology Category: Investor Relations
Yahoo
14-05-2025
- Business
- Yahoo
DXC Technology Extends CEO and CFO Employment Agreements to Strengthen Focus on Growth and Shareholder Value
ASHBURN, Va., May 14, 2025--(BUSINESS WIRE)--DXC Technology (NYSE: DXC) today announced that its Board of Directors has unanimously approved special equity grants for Raul Fernandez, President and Chief Executive Officer, and Rob Del Bene, Executive Vice President and Chief Financial Officer. These grants are designed to secure the continued leadership of both key executives through fiscal year 2028 and further align their compensation with sustainable long-term shareholder value creation. These agreements reflect the Board's confidence in the executive team's strategic vision and operational execution, as DXC continues to progress to a more focused, customer-centric and growth-driven technology services leader. Under Raul's leadership, "DXC has sharpened its strategic focus, revitalized its go-to-market execution, and reignited cultural momentum across the organization," said David Herzog, Chairman of the DXC Board of Directors. "Together with Rob's financial stewardship and focus on operational excellence, this leadership team has positioned DXC to deliver long-term value for our customers, employees, and shareholders." In lieu of annual equity grants for fiscal years 2026 through fiscal 2028, Mr. Fernandez and Mr. Del Bene will receive one-time three year equity grants that closely link their future pay with achievement of performance goals related to three key metrics: free cash flow, revenue generation, and total shareholder return relative to a competitive peer set. This structure is designed to promote retention and incentivize execution on DXC's long-term strategy, with the goal of delivering meaningful shareholder returns over the next three years. "I'm honored to continue leading DXC and our revamped leadership team," said Raul Fernandez. "I've personally met over a hundred customers over the past 15 months and their message has been loud and clear, DXC has the expertise, talent, and the trust to be their critical partner. We've brought in incredible talent to build a winning team that's fully aligned around a single mission, to drive sustainable profitable growth. We have made important progress in laying the foundation for success and I believe we are well-positioned to deliver success for our clients and shareholders." Terms of the awards are provided in a Form 8-K filed with the Securities and Exchange Commission on May 14, 2025. For more information on DXC, visit Forward Looking Statements All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking statements." These statements represent current expectations and beliefs, and no assurance can be given that any result, goal or plan set forth in any forward-looking statement can or will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. For a written description of these factors, see the section titled "Risk Factors" in DXC's upcoming Annual Report on Form 10-K for the fiscal year ended March 31, 2025, and any updating information in subsequent SEC filings. Readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as required by law. About DXC Technology DXC Technology (NYSE: DXC) helps global companies run their mission-critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. The world's largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates. Learn more about how we deliver excellence for our customers and colleagues at View source version on Contacts Roger Sachs, CFA, Investor Relations, +1-201-259-0801, Kaveri Camire, +1-914-625-6395,
Business Wire
07-05-2025
- Business
- Business Wire
DXC Technology to Present at TD Cowen's 53 rd Annual TMT Conference
ASHBURN, Va.--(BUSINESS WIRE)-- DXC Technology (NYSE: DXC), a leading Fortune 500 global technology services company, today announced it will participate at the TD Cowen 53 rd Annual Technology, Media & Telecom Conference on May 29, 2025 in New York City. Raul Fernandez, DXC's President and CEO, is scheduled to present at 1:15 pm ET. A webcast of the fire side chat will be available on the 'Events and Presentations' section of DXC's investor webpage at About DXC Technology DXC Technology (NYSE: DXC) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. The world's largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates. Learn more about how we deliver excellence for our customers and colleagues at Source: DXC Technology Category: Investor Relations
