- Total Revenue: $3.2 billion, declining 4.2% year-to-year on an organic basis.
- Bookings Growth: Up more than 20% year-to-year, with a book-to-bill ratio of 1.2.
- Adjusted EBIT Margin: 7.3%, down 110 basis points year-to-year.
- Non-GAAP Gross Margin: 24.2%, down 40 basis points year-to-year.
- Non-GAAP SG&A: 11.3% of revenue, expanded 160 basis points year-to-year.
- Non-GAAP EPS: $0.84, down from $0.97 in the prior year quarter.
- GBS Revenue: Down 2.4% year-to-year organically, with a profit margin of 10.9%.
- GIS Revenue: Declined 6% year-to-year organically, with a profit margin of 7.0%.
- Full Year Revenue: $12.9 billion, down 4.6% year-to-year on an organic basis.
- Full Year Adjusted EBIT Margin: 7.9%, expanded 50 basis points year-to-year.
- Full Year Non-GAAP EPS: $3.43, up 11% year-to-year.
- Free Cash Flow: $687 million for fiscal 2025.
- Total Debt: $3.9 billion, down $213 million year-to-year.
- Total Cash: $1.8 billion, increased by approximately $570 million year-to-year.
- Net Debt: Reduced by $785 million to approximately $2.1 billion.
- Fiscal 2026 Guidance - Revenue Decline: Expected to decline 3% to 5% organically.
- Fiscal 2026 Guidance - Adjusted EBIT Margin: Expected between 7% to 8%.
- Fiscal 2026 Guidance - Non-GAAP EPS: Expected between $2.75 and $3.25.
- Fiscal 2026 Guidance - Free Cash Flow: Approximately $600 million.
- Q1 Fiscal 2026 Guidance - Revenue Decline: Expected between 4.0% and 5.5% organically.
- Q1 Fiscal 2026 Guidance - Adjusted EBIT Margin: Expected between 6% to 7%.
- Q1 Fiscal 2026 Guidance - Non-GAAP EPS: Expected between $0.55 to $0.65.
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DXC Technology Co (DXC, Financial) reported a significant increase in bookings, up more than 20%, with a book-to-bill ratio of 1.2, indicating strong market traction.
- The company has successfully recruited 22 new members to its leadership team, enhancing its operational capabilities.
- DXC Technology Co (DXC) has secured a major contract with Carnival Cruise Line, showcasing its ability to win competitive bids.
- The company is well-positioned to capitalize on the growing AI market, with early success in delivering AI-driven solutions to clients.
- DXC Technology Co (DXC) plans to restart its share repurchase program, reflecting confidence in its future performance and commitment to shareholder value.
Negative Points
- DXC Technology Co (DXC) reported a 4.2% year-over-year decline in revenue for the fourth quarter, continuing a trend of revenue decline.
- Adjusted EBIT margin decreased by 110 basis points year-over-year to 7.3%, impacted by investments in employees and sales force improvements.
- The company projects a further 3% to 5% decline in organic revenue for fiscal year 2026, indicating ongoing challenges in reversing revenue decline.
- Non-GAAP EPS decreased from $0.97 to $0.84 year-over-year, driven by lower adjusted EBIT.
- DXC Technology Co (DXC) faces near-term uncertainty due to tariffs and economic conditions, which could impact future performance.
Q & A Highlights
Q: Can you comment on the demand trends you observed during the quarter and into April and May, particularly regarding industries affected by tariff dynamics?
A: Raul Fernandez, President and CEO, noted good progress and wins at both mega and strategic levels. However, there has been some softness in consumer industries and retail, particularly in project-based services, as well as in media and entertainment. Other industries like banking, capital markets, manufacturing, public sector, and insurance remain robust.
Q: How does the $600 million free cash flow target for fiscal 2026 compare to fiscal 2025, and what are the expectations for finance lease originations?
A: Robert Del Bene, CFO, explained that the target is based on fiscal 2025 results adjusted for after-tax EBIT guidance and increased restructuring spending. The company expects finance lease originations to decline in fiscal 2026, contributing to improved free cash flow.
Q: What is included in your fiscal 2026 guidance range from a macroeconomic perspective?
A: The guidance accounts for potential uncertainties, with a wider range for the first quarter to accommodate possible exposure. The full-year guidance also considers potential macroeconomic challenges, providing room for uncertainty at the low end.
Q: How is the increasing Gen AI spend reflected in your P&L, and what is the growth potential of these projects?
A: Raul Fernandez highlighted that Gen AI projects are currently in the pilot phase, with significant potential for growth. The company is well-positioned to leverage its data, infrastructure, and process readiness to capitalize on AI opportunities, which are expected to be a major growth driver.
Q: What are the conditions necessary for DXC to achieve revenue growth, and when might this occur?
A: Raul Fernandez emphasized the importance of a strong pipeline, effective sales and marketing capabilities, and execution at scale. While the company is building a foundation for growth, the timing for achieving positive revenue growth will depend on the scalability of these efforts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
