Dxc Technology Company ((DXC)) has held its Q4 earnings call. Read on for the main highlights of the call.
Confident Investing Starts Here:
- Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
The recent earnings call for DXC Technology presented a mixed performance, reflecting both achievements and ongoing challenges. While the company celebrated significant strides in bookings and strategic initiatives, including a major contract win with Carnival Cruise Line, these positives were tempered by continued revenue declines and reduced profit margins. The conservative fiscal 2026 guidance further underscores the challenges DXC faces in certain segments and market conditions.
Increase in Bookings
DXC Technology reported a substantial increase in bookings, with a year-over-year rise of more than 20%, resulting in a book-to-bill ratio of 1.2. The latter half of the year was particularly strong, with bookings growing by 24%, showcasing the company’s ability to secure new contracts effectively.
Leadership Stability and Strategic Alignment
The company announced equity grants to ensure the continued leadership of Raul Fernandez and Rob Del Bene through fiscal year 2028. This move aligns their compensation with long-term shareholder value creation, highlighting DXC’s commitment to strategic leadership stability.
Carnival Cruise Line Win
A significant highlight was DXC Technology’s success in securing a critical infrastructure management contract with Carnival Cruise Line. This win underscores the company’s capabilities and competitive edge in delivering complex solutions.
Strong Full Year Book-to-Bill Ratio
For the full fiscal year 2025, DXC achieved a book-to-bill ratio of 1.03, indicating robust performance in securing contracts relative to revenue, further solidifying its market position.
Focus on AI Capabilities
DXC Technology emphasized its strategic focus on leveraging AI, boasting an early but strong track record in transforming its client base. This positions the company well for future technological advancements.
Improved Free Cash Flow Management
The company reported free cash flow of $687 million, surpassing expectations. This was driven by better working capital management and reduced restructuring expenses, reflecting improved financial discipline.
Revenue Decline
Despite these successes, DXC faced a 4.2% year-over-year decline in fourth-quarter revenue on an organic basis, with total revenue for the fiscal year down 4.6%, highlighting ongoing challenges.
Decline in Profit Margins
The adjusted EBIT margin for the fourth quarter was 7.3%, down 110 basis points year-over-year. This decline was attributed to investments in the workforce and sales force, indicating a strategic focus on future growth.
Continued Challenges in GIS Segment
The GIS segment saw a 6% year-over-year revenue decline organically, although this was an improvement over previous declines, suggesting some progress in addressing segment-specific issues.
Negative Revenue Guidance for Fiscal 2026
DXC Technology’s guidance for fiscal 2026 projects a 3% to 5% decline in total organic revenue, reflecting anticipated challenges in both the GBS and GIS segments.
Lower Earnings Per Share
Non-GAAP EPS for the fourth quarter was $0.84, down from $0.97 in the previous year, indicating pressure on profitability despite strategic initiatives.
Forward-Looking Guidance
For fiscal 2026, DXC Technology projects organic revenue to decline between 3% to 5%, with adjusted EBIT margin anticipated to be between 7% and 8%. Non-GAAP diluted EPS is forecasted to range from $2.75 to $3.25. The company expects free cash flow to be around $600 million, reflecting increased restructuring spending. DXC plans to invest in sales, marketing, and new leadership to drive sustainable growth, with a commitment to returning $150 million to shareholders through share repurchases.
In summary, the DXC Technology earnings call highlighted a mixed performance, with notable achievements in bookings and strategic initiatives. However, ongoing challenges in revenue and profit margins, along with conservative guidance for fiscal 2026, underscore the hurdles the company faces. Investors will be keenly watching how DXC navigates these challenges while leveraging its strategic initiatives for future growth.
Trending Articles:
Looking for a trading platform? Check out TipRanks' Best Online Brokers , and find the ideal broker for your trades.
Report an Issue