DXC

It has been about a month since the last earnings report for SoundHound AI, Inc. (SOUN). Shares have lost about 4.8% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is SoundHound AI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. SoundHound AI, Inc. delivered a strong second-quarter 2026 performance, with earnings and revenues surpassing expectations. The quarter reflected accelerating enterprise demand for voice and agentic AI, major OASYS-driven deals and improving cost discipline. Profitability strengthened year over year, with higher GAAP gross margin and narrower adjusted EBITDA and net losses. In the second quarter, SoundHound reported record revenues of $61.9 million, up 45% year over year. The figure surpassed the Zacks Consensus Estimate of $52.49 million by 17.9%. Management attributed the top-line growth to major enterprise AI deals linked to OASYS, reflecting rising adoption of the company’s voice and agentic AI offerings across industries.The company posted an adjusted loss of 2 cents per share compared with the Zacks Consensus Estimate of a loss of 3 cents, representing a favorable surprise of 33.3%. The adjusted loss also narrowed from 3 cents per share in the prior-year quarter. On a year-over-year basis, SOUN’s profitability improved. GAAP gross profit rose 68% to $27.9 million from $16.7 million, while GAAP gross margin expanded to 45.1% from 39%, reflecting stronger growth in gross profit than revenues.Non-GAAP gross profit increased 45% to $36.2 million. Non-GAAP gross margin remained unchanged at 58.4%, indicating stable underlying profitability after excluding amortization, stock-based compensation and acquisition-related expenses. Adjusted EBITDA also improved year over year, with the loss narrowing to $9.6 million from $14.3 million. Non-GAAP net loss decreased 24% to $9 million, while GAAP operating loss narrowed to $43.3 million from $78.1 million. Management highlighted rising demand across health care, financial services, telecommunications, automotive, restaurants and consumer-facing applications. In health care, SoundHound signed a seven-figure agreement with a nationally ranked system employing 30,000 people across hospitals, health parks and medical offices.The company also secured new and expanded business with health care technology, pharmacy care and electronic health record customers. Financial services renewals included a Japanese online brokerage serving more than 6 million accounts, a global asset manager, a major U.S. bank and a Canadian financial services organization. Automotive activity included a seven-figure deal with an infotainment software company in China. Stellantis increased overall unit adoption and added live generative AI capabilities, while Hyundai expanded its adoption of the technology. Restaurant wins and expansions included Ruby Tuesday, Five Guys, IHOP and Jersey Mike’s. OASYS remained central to SoundHound’s enterprise growth strategy. Management said major agreements attributed to the platform supported the quarter’s record revenues and demonstrated strong customer interest in deploying voice and agentic AI across business workflows. The company describes OASYS as a self-learning, orchestrated platform that allows organizations to build and deploy conversational agents across phones, chat, kiosks, smart devices, drive-thrus, televisions and vehicles. Its broader deployment model is intended to support transactions, tasks and customer-service workflows across digital and physical channels.SoundHound also expanded its distribution reach through a multi-year partnership in Latin America representing an initial eight-figure agreement. The arrangement covers a network spanning more than 20 countries. A partnership with a global IT services provider is expected to extend access to enterprise digital-transformation customers. As of June 30, 2026, SOUN ended the quarter with $203 million in cash and cash equivalents and no debt. The debt-free position preserves financial flexibility as the company continues investing in platform development and prepares for the pending LivePerson transaction. Operating cash flow weakened year over year during the first half. Net cash used in operating activities was $60 million compared with $43.7 million in the prior-year period. Net cash used in investing activities totaled $32.7 million, while financing activities provided $46.7 million.The quarter’s GAAP results included an approximately $4 million gain tied to the revaluation of contingent acquisition liabilities. This noncash item was excluded from the company’s non-GAAP performance measures. For 2026, SOUN raised its revenue outlook to $230 million to $260 million from the previous range of $225 million to $260 million. The revision followed the company’s strong second-quarter performance and reflected continued demand for OASYS and its broader voice and agentic AI portfolio. The outlook does not yet contemplate the pending acquisition of LivePerson. SoundHound expects the transaction to close before the end of 2026 and plans to update its guidance after the deal is completed. Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted 7.89% due to these changes. At this time, SoundHound AI has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in. SoundHound AI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months. SoundHound AI belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, DXC Technology Company. (DXC), has gained 5.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. DXC Technology reported revenues of $3 billion in the last reported quarter, representing a year-over-year change of -5.1%. EPS of $0.40 for the same period compares with $0.68 a year ago. DXC Technology is expected to post earnings of $0.57 per share for the current quarter, representing a year-over-year change of -32.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for DXC Technology. Also, the stock has a VGM Score of A. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SoundHound AI, Inc. (SOUN) : Free Stock Analysis Report DXC Technology Company. (DXC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. DXC Technology stock has had a tough run over the past few years, yet its current valuation checks now lean cheap compared with its fundamentals. Recent AI focused product launches and partnerships are adding a new angle to the story, so the question is whether the market is still pricing in too much pessimism. DXC Technology shares have fallen 70.8% over the past 5 years, which suggests investors have been pricing in significant execution and business risk over an extended period. DXC's push into AI native platforms and services, including CoreIgnite, DXC Workplace Services and an AI focused security partnership, may help support growth expectations. The risk is that execution or adoption falls short and keeps pressure on profitability and cash flows. The stock screens as undervalued in 5 of 6 checks, which means the broader valuation work currently leans cheap for DXC Technology compared with typical peers and its own fundamentals, according to the latest valuation summary. The issue now is whether DXC Technology's current price already reflects the long running challenges, or if the renewed AI focus and valuation upside case still leave room for a more patient re rating. Find out why DXC Technology's -20.8% return over the last year is lagging behind its peers. The P/E ratio suits DXC Technology because the market still focuses heavily on its earnings power. DXC trades on a P/E of 14.0x, which is below both the IT industry average of about 17.9x and the peer group average of 18.9x. That means the stock is priced at a lower earnings multiple than many comparable IT services companies. The fair P/E ratio implied by broader modelling for DXC Technology is 21.7x. This is higher than where the stock trades today and suggests the current market price applies a sizeable discount to the earnings multiple that might be expected given its profile. Despite DXC's recent AI product launches and partnerships, the P/E still reflects a cheaper entry point than peers for the same dollar of earnings. On the P/E multiple, DXC Technology stock currently appears to trade at a lower valuation compared with both its fair ratio and typical sector peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the DXC Technology valuation puzzle leaves off by spelling out which future paths for growth, margins and earnings would need to play out for DXC Technology's stock to be worth materially more or less than it is today, using the Community page as the home for those scenarios. Rather than relying on a single multiple or model output, each narrative lays out its own fair value assumptions so you can compare them with DXC Technology's actual results over time. Community views on DXC Technology are wide apart, with one side focusing on AI contracts and the other on ongoing revenue and margin pressure. Bull case: 22% undervalued Read the full Bull Case to see why DXC Technology could be undervalued Bear case: 21% overvalued Read the full Bear Case to see why DXC Technology could be overvalued Do you think there's more to the story for DXC Technology? Head over to our Community to see what others are saying! DXC Technology screens as undervalued on market multiples, which suggests investors are still pricing in a heavy discount despite the recent AI focused efforts. The key question is whether DXC can stabilise revenue and margins enough for that discount to narrow over time. For you as an investor, the crux is whether current AI and platform initiatives translate into durable earnings power, or whether ongoing execution and competitive pressure keep DXC as a value trap rather than a value opportunity. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include DXC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how DXC (NYSE:DXC) and the rest of the it services & consulting stocks fared in Q2. IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI. The 8 it services & consulting stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.7% below. Thankfully, share prices of the companies have been resilient as they are up 5.3% on average since the latest earnings results. Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE:DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations. DXC reported revenues of $3.00 billion, down 5.1% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a significant miss of analysts’ EPS estimates. "Our first quarter results were in line with our expectations, and we are maintaining our full-year guidance," said DXC Technology President and CEO, Raul Fernandez. DXC delivered the slowest revenue growth and weakest full-year guidance update among its peers. The market seems disappointed with the results as the stock is down 6.6% since reporting and currently trades at $10.50. Read our full report on DXC here, it’s free. With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities. Gartner reported revenues of $1.68 billion, flat year on year, outperforming analysts’ expectations by 1.8%. The business had an exceptional quarter with a beat of analysts’ EPS estimates. Gartner achieved the biggest analyst estimate beat of the whole group. The market seems happy with the results as the stock is up 20% since reporting. It currently trades at $181.79. Is now the time to buy Gartner? Access our full analysis of the earnings results here, it’s free. With a workforce of approximately 774,000 people serving clients in more than 120 countries, Accenture (NYSE:ACN) is a professional services firm that helps organizations transform their businesses through consulting, technology, operations, and digital services. Accenture reported revenues of $18.72 billion, up 5.6% year on year, in line with analysts’ expectations. It was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations. Accenture delivered the weakest guidance update in the group. Interestingly, the stock is up 3% since the results and currently trades at $172.54. Read our full analysis of Accenture’s results here. Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, Everforth (EFOR) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies. Everforth reported revenues of $1.01 billion, down 1.3% year on year. This print topped analysts’ expectations by 1.6%. It was an exceptional quarter as it also recorded a solid beat of analysts’ EPS guidance for next quarter estimates and a beat of analysts’ EPS estimates. Everforth scored the highest guidance raise among its peers. The stock is up 28.9% since reporting and currently trades at $30.18. Read our full, actionable report on Everforth here, it’s free. Born from IBM's managed infrastructure services business in a 2021 spinoff, Kyndryl (NYSE:KD) is the world's largest IT infrastructure services provider that designs, builds, and manages technology environments for enterprise customers. Kyndryl reported revenues of $3.62 billion, down 3.3% year on year. This result came in 0.7% below analysts’ expectations. Aside from that, it was a very strong quarter as it logged a beat of analysts’ EPS estimates. The stock is down 15.7% since reporting and currently trades at $12.39. Read our full, actionable report on Kyndryl here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Image source: The Motley Fool. Thursday, July 30, 2026 at 5:00 p.m. ET Vice President of Investor Relations - Roger Sachs President and Chief Executive Officer - Raul J. Fernandez Chief Financial Officer - Robert F. Del Bene Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the DXC Technology Services First Quarter Fiscal 27 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then 1 on your telephone keypad. And if you would like to withdraw that question, again, *1. Thank you. I would now like to turn the conference over to Roger Sachs, Vice President of Investor Relations. Robert? Please go ahead. Roger Sachs: Thank you, operator. Good afternoon, everyone, and welcome to DXC Technology's First Quarter Fiscal 27 Earnings Conference Call. We hope you had an opportunity to review our earnings release, which is available in the IR section of DXC's website. Speaking on today's call are Raul J. Fernandez, our president and CEO, and Robert F. Del Bene, our chief financial officer. Here's today's agenda. First, Raul will update you on our strategic initiatives. Robert will then review our quarterly financial performance, as well as provide thoughts on our second quarter and fiscal full year 2027 guidance. Raul and Robert will then take your questions. Please note certain comments made during today's call are forward looking and subject to risks and uncertainties that could cause actual results to differ materially. Details of these risks and uncertainties are in our annual report on Form 10 k and other SEC filings. We undertake no obligation to update any forward looking statements. Unless otherwise noted, year over year or quarter over quarter revenue growth rates discussed on today's call refer to organic revenue growth on a non GAAP basis which exclude the impact of foreign exchange and inorganic activity. We will also be discussing certain other non GAAP financial measures that we believe provide useful information to investors. Reconciliations to the most comparable GAAP measures are included in today's earnings release. And with that, let me turn the call over to Raul. Raul J. Fernandez: Thank you, Raul. On June 11th, we held our Investor Day. Where we put our strategy on the table and demonstrated the agentic solutions we have built and deployed. We also announced our global partnership with Anthropic. Since then, we have continued to move from strategy to execution. And what is becoming increasingly clear to me is that the opportunity in front of DXC is not simply to use AI to make our existing business more efficient. It is to use Agentic AI to change how we build, sell, and deliver technology and ultimately return DXC to growth. People and leadership have always mattered. But they matter even more as we enter this next phase. An agentic company operates differently. It needs to move faster. make decisions closer to the customer, build and deploy solutions more quickly, and continuously learn. That requires leaders with deep customer understanding commercial discipline, entrepreneurial thinking, and the ability to bring people together to deliver better outcomes for customers. That is why I am very pleased to announce that Raymond August is joining DXC as President. Raymond brings more than 30 years of technology and commercial leadership spanning financial markets, enterprise technology, and entrepreneurship. He was a partner at IHS Markit through a period of significant profitable growth and scale. Culminating in its approximately $44 billion acquisition. By S&P Global. Most recently, he founded and led Hub, an AI driven technology business acquired by Astra, where AI agents and workflow automation were central to the company's operating model. Raymond brings the combination of commercial leadership entrepreneurial thinking, and operational expertise needed to leverage world class technology, great teams, and deep customer relationships to help customers transform their businesses. Together, Robert, Raymond, and I will streamline how DXC operates, bring our markets offerings, and delivery teams closer together, and execute an aggressive agentic playbook that helps our customers move faster. We are also making a leadership change at GIS. This morning, we announced Dan Gray will take over leadership of GIS from Christopher R. Drumgoole. Dan has co led the development of OASIS and our AgenTxSOC solutions. So he brings both the technical understanding and the operating mindset that we need to accelerate the transformation of GIS. I want to thank Christopher R. Drumgoole for his service to DXC and wish him the very best in his next chapter. Christopher will remain connected to DXC through my CEO council of advisers. Earlier this week, we also announced the promotion of Jennifer Ragone, to president of AI innovation strategy and LabX. Together, these changes reflect a single principle, placing the strongest leaders in the areas where we see the greatest opportunity to create value for customers and shareholders. The most important thing we can demonstrate today is not our vision for AI, it is proof. Over the last year, DXC has adopted a simple philosophy we call customer zero. Build it, run it in our own environment, prove it works, measure the results, and then take it to our customers. This approach is producing tangible results. In our own security operations, our AgenTxSOC solution has transformed how we detect and respond to threats. With traditional software and manual processes, meantime to intrusion detection was approximately 21 minutes. With our AgenTxSOC solution, we are seeing that reduced to approximately 6 seconds. This is not incremental improvement. This is a fundamentally different operating model for our cybersecurity. We are seeing similar outcomes for DXC Oasis. Which is now deployed across 57 customer environments. Oasis is helping organizations improve the speed, consistency, and intelligence of mission critical IT operations. In measured use cases, we have seen significant improvement in resolution time, and ticket backlogs while maintaining high diagnostic accuracy. What matters is not simply that these technologies work together, What matters is that they are creating customer demand shortening time to value, and expanding the set of opportunities where DXC can lead. As I meet with CEOs, CIOs, and business leaders around the world, 1 theme comes up consistently. Organizations are excited about the potential and promise of AI but they want to adopt it responsibly They want innovation. But they also want trust. We believe enterprises will not deploy agentic AI at scale. Unless they can trust the architecture underneath it. That means protecting customer data preserving governance, maintaining auditability, and ensuring accountability for business outcomes. This is where DXC is uniquely positioned for decades our customers have trusted us to operate some of the most critical systems applications, and infrastructure. As AI adoption accelerates, we believe that trust becomes even more valuable. Another principle that differentiates DXC is what we describe as connect, do not convert strategy. We do not believe enterprises should have to discard decades of business logic institutional knowledge, and technology investment in order to benefit from AI. Instead, we connect new intelligence to existing environments. We help customers preserve the systems that run their businesses while unlocking new levels of automation insight, and productivity. Their legacy investments are not liabilities. They are strategic assets. By combining AI with the technologies customers already depend on, DXC can accelerate modernization while reducing risk, cost, and disruption. And because our architecture is designed around flexibility and portability, customers retain the ability to adopt new models and technologies as the market evolves. We believe this flexibility will become increasingly important as enterprises seek to avoid becoming dependent on any single AI provider or technology stack. And this brings me to the most important point, The return to growth at DXC will be fueled increasingly by products and solutions that we can build in a capital light way. This is not an M&A strategy. it is not about buying growth. It is about taking the assets we already have. Our customer relationships, our industry expertise, our heritage platforms, our proprietary IP, and our 113 thousand colleagues. And using AI to build products around them faster, with less capital, and less dependency on incremental labor. Since Investor Day, we are already seeing evidence of this in how customers move. Where traditional enterprise technology sales cycles have historically taken 6 to 12 months, we are now seeing evaluation, proof of value, and contracting in 6 weeks or less. For OASIS, prospects are completing full evaluations and reaching contract stage in under 6 weeks. With our AgenTxSOC offering, a leading global entertainment and technology company, completed their technical evaluation in just over 4 weeks. And went on to sign a multiyear, multimillion dollar engagement. That acceleration matters because speed compounds. Faster innovation creates faster adoption. Faster adoption creates more proof points. More proof points create more demand. 1 of the clearest examples of how we are moving from AI strategy to execution is the launch of our forward deployed engineer model. FDEs are a new class of hybrid AI builders, who work directly inside customer environments. Turning AI concepts into deployed outcomes and then capturing the reusable patterns that allow us to scale. In mid July, we began certifying DXC engineers with anthropic through hands on base camps in San Francisco and London. This brings together some of the best technical talent from DXC and Anthropic. And creates a new class of forward deployed engineers. Who take these capabilities directly into customer environments. We are seeing early momentum with our first 86 trained. Giving us an initial deployment ready bench. As we shared last month, together with Anthropic, our goal is to certify tens of thousands of forward deployed cloud certified engineers and builders. We are taking that 1 step further DXC is developing a multilingual forward deployed engineer certification model that combines Amazon QuickSight Anthropic, Microsoft Copilot, 7AI, and 11 Labs. whose FDE partnership we announced earlier this week with our proprietary Discover build, scale methodology. Historically, technology services grew largely through labor expansion, Revenue growth generally required proportional increases in headcount. AI changed that equation. It allows us to build faster, operate more efficiently, support more customers, and increasingly deliver outcomes that are measured by value rather than effort. At the same time, the economics of AI continue to improve. As models become more capable and operating costs continue to decline, the number of economically viable use cases continues to expand. This creates opportunities to introduce new products, new pricing models, and new sources of recurring and consumption based revenue. Combined with our scale, customer relationships, intellectual property, and industry expertise, We believe this represents a meaningful opportunity to improve both growth and profitability over time. Most importantly, we can pursue this opportunity while remaining disciplined with capital, and focused on free cash flow generation. When I compare DXC today with where we were a year ago, I see a company that is increasingly turning strategy into execution. We have clear priorities, We have stronger leadership. We have built and deployed real agenic solutions with measurable results. We have trusted partnerships. And we are creating a new generation of AI enabled talent and capabilities. Importantly, we are seeing customers respond. The strategy remains unchanged. We will continue to stabilize and improve the core business while building AI native sources of growth. What has changed is the evidence. We are proving our technology, We are proving our operating model. And we are proving that AI can help create a stronger, more profitable, and more sustainable DXC. Now, our focus is on execution, scaling what works, creating value for customers, and delivering long term growth for shareholders. Through 11 Labs, my script will be available in 6 languages immediately following this call. Thank you. Robert F. Del Bene: Thank you, Raul, and good afternoon, everyone. Today, I will go over our first quarter results, provide guidance for the second quarter and update our full fiscal year 2027 outlook. Starting with the first quarter results. Total revenue was $3 billion down 6.7% year-to-year, slightly above the midpoint of our guidance range. Driven by better than expected performance in CES. Market conditions remained as expected with continued customer caution and short term discretionary projects most pronounced in IT infrastructure projects. Total bookings increased 5% year-over-year driven by several large deal wins in GIS. This resulted in a book to bill of 0.99x the highest first quarter level in the past 3 years. Bringing our trailing 12-month book-to-bill to slightly above 1.0x. As expected, our adjusted EBIT margin was 5.0% down 180 basis points year-to-year. The performance reflects the revenue profile we anticipated for the quarter as well as normal seasonal factors. Non GAAP EPS was $0.40 in line with our guidance. Now turning to our segment results. The CES book to bill ratio for the quarter was 0.98x, with a trailing 12-month book-to-bill of 1.04x. Bookings in both DXC Engineering and Growth grew year-to-year, while a tougher comparison for the first quarter of fiscal 26 in the applications business, led to a total CES bookings decline of 19% year-to-year. As we discussed in our Investor Day presentation, both DXC Engineering and GrowthX are important elements of our platform based product strategy and our longer term revenue growth plans. CES revenues declined 3% year-to-year, modestly ahead of our expectations, primarily due to better performance in project revenues in both Growth and DXC Engineering. Our applications business performed consistently quarter to quarter and in line with our expectation, with growth and enterprise application services for the third consecutive quarter and consistent quarter to quarter declines in custom applications. For GIS, the book-to-bill ratio was 1.11x, reflecting a year-to-year bookings increase of 35% year-to-year, driven by several large deal wins including both new logos and renewals in our intelligent infrastructure and workplace businesses. With the introduction of Oasis and other new product content like our AgenTxSOC solutions, we are now delivering AI based products to our clients greatly enhancing the effectiveness and productivity of their IT operations and security posture. This is translating into increased opportunities with new potential clients and with our installed base of existing customers. This is encouraging and supports our longer term outlook for GIS. By the end of the first half of the year, we expect 85 customers to be on the Oasis platform and have a deployment plan for 125 customers by the end of the fiscal year. We are solutioning all new intelligent infrastructure engagements with Oasis the client feedback on existing accounts and the market interest levels have been very positive. In the short term, revenue in Q1 continued to be impacted by softer levels of discretionary project work that have a more immediate impact on our quarterly revenue. As a result, GIS declined 11% year-to-year, slightly lower than our expectation and fourth quarter performance. Insurance grew 1.4% year-to-year, in line with our expectation. We continue to build momentum in our SaaS based Azure platform and Horizon solutions with SaaS revenues more than doubling year-to-year. Our SaaS-based revenues will build with the continued migration of customers to our Azure platform and the sales of our AI based smart apps grow throughout the year. Total insurance software revenue grew 13% year-to-year, while services were down about 1% year-to-year, impacted by the wind-down of a BPO contract which will also impact the second and third quarters of this fiscal year. We generated $314 million of free cash flow during the quarter, including a $214 million associated with successful resolution of our long running trade secrets litigation involving TCS. Excluding that benefit, free cash flow totaled $100 million a modest year over year improvement driven by lower annual executive compensation and reduced cash tax payments offsetting lower adjusted EBIT. We ended the quarter with approximately $1.9 billion of cash an increase of $200 million from fiscal year-end 26, including proceeds from the TCS litigation. During the quarter, we also repurchased $70 million of shares and reduced capital lease obligations by $38 million. As a result, net debt declined by nearly $270 million from Q4 levels to approximately $1.5 billion, further strengthening our balance sheet. Consistent with our previously announced capital allocation plans, we anticipate retiring $400 million of our US dollar bonds maturing in September of 2026 and expect to repurchase approximately $50 million of shares during the fiscal year. Now let me provide you with an updated view of our full-year fiscal 2027 guidance. We continue to expect total organic revenue to decline 3% to 5% year-to-year, with an improvement in the rate of decline in the second half of the year. The drivers of our top line trajectory for the year are reflected in our segment outlook as follows. In CES, we now expect revenue to decline at low single digit range consistently throughout the year reflecting better performance in project based services than we previously anticipated. In GIS, we continue to anticipate a mid single digit revenue decline for the year. Performance is trending modestly below our original assumptions, largely reflecting lower levels of discretionary project activity. We continue to expect a stronger second half profile as the impact of contract losses incurred in previous years moderates. In insurance, we continue to expect low single digit revenue growth for the year with better second half performance driven by the ramp of expected new customer contracts continued momentum in our AI and cloud SaaS offerings, and the positive impact of the previously mentioned contract runoff which wraps in the fourth quarter. The midpoint of our guidance for all 3 segments does not assume any change to the current macro environment. Continue to anticipate adjusted EBIT margin for the full year in the range of 6% to 7%, with margins improving sequentially throughout the year supported by cost management, operational efficiencies, and improving revenue profile in the second half of the year. Our non GAAP diluted EPS outlook remains between $2.40 and $2.90 We now expect full fiscal year 27 free cash flow of approximately $685 million This outlook reflects the following. Maintaining our underlying prior free cash flow expectation of approximately $600 million a $214 million cash benefit from the TCS litigation I discussed earlier, and a payment related to a previously disclosed tax litigation case with the IRS regarding currency losses from 2009. While we determine the appropriate path forward, including potential appeal, we included in guidance a deposit with the IRS to stop future interest from accruing. The second quarter of fiscal 2027, we expect total organic revenue to decline between 5.5% and 6.5% year-to-year. And at the segment level, we expect CES to decline low single digits consistent with the first quarter GIS is anticipated to decline at a high single digit rate and insurance is expected to grow at a similar rate as the first quarter. We expect adjusted EBIT margin to be approximately 6.0% and we expect non GAAP diluted EPS to be approximately $0.55 With that, let me turn the call back over to Raul. Roger Sachs: Thank you, Raul. We would like to now open the call for your questions. Operator, can you please provide the instructions? Operator: Thank you. We will now begin the question and answer session. And if you would like to withdraw that question, again, press *1. We do ask that you limit yourself to 1 question and 1 follow-up. For any additional questions, please re queue. And your first question comes from Bryan Bergin with TD Cowen. Please go ahead. Bryan, your line is open. Brian Bergen: Thank you. I wanted to ask about the Q2 to second-half walk. Can you help unpack the implied improvement in the second half relative to kind of what you are guiding here in Q2? Raul J. Fernandez: And any particular factors as you look across CES, GIS, and insurance? Robert F. Del Bene: Bryan, it is Robert. Thanks for the question. Yeah. Let me unpack the revenue for you. there is a material improvement in growth rate going from the first half to the second half. And it implies it is going from the range of call it, minus 6.5 to minus 2-ish in the second half, right? So that is that is the improvement required. Now when you look at the factors driving that improvement, the majority of that is going to come majority of the improvement comes from our GIS business. And about 90% of the improvement to quantify it for you. And then looking at the dynamics within GIS, about 3 quarters of that improvement comes from the opening backlog dynamics throughout the year. So we have line of sight and have a high degree of certainty around 75% of that improvement. The remainder of the improvement comes from in year sales performance, and that performance does count on a modest improvement in your sales for GIS, and we think it is a, you know, a reasonable improvement given all the new content we are bringing to market and the momentum we see with our client base. And so to characterize that a little bit for you, about 15% to 20% of that was delivered already in the first quarter bookings. So when you cut through all of that, where's confidence in our ability to have a significant improvement in the growth rates of GIS. And then we are not counting on significant improvements in CES. First half to second half. And we did a little better in CES in the first and we think we have some momentum building. So we feel confident there. And then the same with insurance. We have line of sight, a modest you know, modest dollar improvement in the into the third quarter. In the fourth quarter, we wrap on the 1 contract that I mentioned in my prepared remarks. So we have pretty good line of sight in insurance as well. So that is what gives us the confidence for the second half improvement. Okay. Okay. that is clear. Brian Bergen: My follow-up, maybe I will go to CES then. Just looking at the organic revenue decline and the bookings this quarter, I guess, what needs to happen here to really get that going again and improve CES and reaccelerate in the client caution continues with muted discretionary But what can you more than offset the custom app weakness with new offerings and engineering and growth x? Dig in there, please. Robert F. Del Bene: Yeah. So yeah. So let me take that 1 too, Bryan. So the dynamics of the bookings in CES really have to be parsed between product smaller project base deals and larger deals. Now just as you recall, first quarter last year, had significant a significant number of larger deals in CES. So we had a very tough comparison. And that drove our bookings numbers down year to year. The project based services portion of CES in the first quarter performed better than we anticipated. And that stability gives us more confidence going into the second quarter and the rest of the year. So that dynamic, the project base bookings give us the foundation for the guide for the remainder of the year. And then the big deals will kind of come and go with the pipeline and the closing cadence of the big deals. But the fundamental underlying bookings of project based services were better. And they were better in growth x and DXC Engineering. 2 of the business areas that Raymond emphasized in our investor day. And we had really good growth in enterprise apps, our best in a couple of years. And we have had 3 consecutive quarters of growth there. And so, yes, we do think with the momentum of growth ex DXC engineering and the performance in enterprise apps, that we will be able to make progress against the industry declines in custom apps. Raul J. Fernandez: Let me add, it is Raul. Let me just add that when you step back and look at the biggest beneficiary from an offering or business unit standpoint, to the anthropic relationship where we are getting certified forward deployed multilingual engineers. CES is the single biggest beneficiary within our offerings. We have taken an extremely conservative approach to modeling that, zero, because A, they are just getting certified. As you heard in the prepared remarks, the cohort of 86 just came out. And we have just started to market. And we announced it in June. Those FTE pods, both to our existing customer base, as well as to new customers that we know are looking for that kind of talent. So it is everything Robert said plus a reliance on a new set of products that we know are hot and in demand in the market. that is what gives us confidence. Brian Bergen: Okay. Understood. Thanks, guys. Operator: Your next question comes from the line of Jonathan Lee with Guggenheim Securities. Please go ahead. Analyst: Great. Thanks for taking my questions. Your GIS bookings are up 35% year-on-year, second consecutive 1.1x book-to-bill. But you saw revenue get worse and margins more than halved to 2.6%. Help us reconcile those 2? what is the expected timing for the bookings to start converting into revenue? And with Dan now leading GIS with an operating and technical mindset, are there specific changes that we should expect on the margin side there? Robert F. Del Bene: Yeah. So, Jonathan Lee, in GIS, you know, it was kind of the opposite situation from CES. In that we had we have a strong pipeline of larger deals, and it continues to build. We executed on the closing of those deals in the first quarter, and there was some carryover from the fourth quarter. So that was expected. And so we had better execution. In the quarter of the larger deals. The discretionary short term infrastructure projects were a little softer than we anticipated. So that is what drove down the revenue versus our expectation for GIS in the quarter. It did fall-- it fell through to margin. But as we progress with the revenue improvements throughout the year, we do expect the margins in GIS to bounce back And by the end of the year, we will have year to year flat margins or slightly better. And we have Dan we are very excited with Dan taking over in GIS. We have got a lot of muscle behind the cost takeout plans that we are going to execute on for the rest of the year. And Dan's going to just accelerate that and help us even. Raul J. Fernandez: And let me just add to that, that Dan's been the architect of our agentic transformation within GIS. Now he is the architect plus the P and L owner. That unification of responsibilities and is absolutely critical and clear, and the speed at which that we have to get done. He fully appreciates and understands and has a lot of confidence that he will get it done. Analyst: Thanks for that color. And just as a follow-up, you know, the fiscal 2027 outlook midpoint assumes no change to the current macro, but your commentary through June, July has trended a little more cautious What gets you to the high end of the range versus the low end of the range? And then within that range, how much of that back half improvement is already contracted or in late stage signing versus what remains in that to-go-get phase? Robert F. Del Bene: Yeah. So we do have no change in macroeconomics baked into the forecast If there is 2 things for us, would help get us to the high end of the range. First is if there if there is a loosening of discretionary project based work, that would that would be very helpful and get us push us to the higher end of the range. And secondly, as Raul just mentioned, you know, we have been very conservative in the yield for the new content that we have, particularly the anthropic content. So if we make progress there, and generate bookings and start to generate revenue in the second half of the year, that will help us as well. So those are the those are the 2 factors that could push us to the higher end. Terms of in terms of the risk, I kind of framed it in my first answer to Bryan's question. We have a very solid base of improvement baked into our opening backlog. And we are we are not contemplating a significant improvement in project based services in GIS. it is very modest. The CES assumptions right now are a little more conservative than GIS. So we are not expecting a pickup in project based services in GIS. So I would say there is more opportunity than not in the guide. On balance. Analyst: Thank you for that, and so my congrats to Raul J. Fernandez, Dan, and Jennifer Ragone. Thanks so much. Operator: Your next question comes from the line of Jamie Friedman with Susquehanna. Please go ahead. James Friedman: Hi. Those were all good questions. I was wondering, Raul, I realized we are only 1 quarter into a long journey relative to the Analyst Day. And that 1 landed right in the middle. But is there is there anything in either GIS or CES that you are seeing that would influence or inform your view about this long term strategy. For example, I think GIS is really predicated on an OASIS incremental value contribution strengthening the core On the CES side, it is a lot of growth x. So yeah, I realize it is, you know, you are just first couple steps after that event, but, is there anything to you know Yeah. If you increase confidence, you are on track or otherwise? Thank you. Raul J. Fernandez: Yeah. I just finished, since Investor Day, a really great tour of existing customers and prospects. And I led with the most important content, from our deployments with Oasis and AgenixSOC. That is the real unbelievable reduction in time and cost to do critical functions that are very routine, both in network operating centers and security operating centers. Those 2 pages, those 2 charts are the only things I would bring to a CEO level conversation. Because once they see what we can document, and by the way, we I mentioned this when, for AgenTxSOC with a major entertainment technology company. That evaluation time from beginning to end to then beginning in contract phase was less than 4 weeks. So an incredible time to decision making We are seeing that with AgenTxSOC. We are seeing early similar signals from our OASIS sales And so I that gives me comm a, that we have data and solutions that have real benefit and impact. B, that it gets us in a totally different conversation than we have traditionally been. And c, technically, as we win these new engagements. I am just really, really proud of the team because they are technically winning. And really standing out very, very far ahead of any competitive benchmark. So technical win speed to close, and just data that no CEO CIO, CTO, or business unit head can afford to ignore. Those are all the positive signals that I have seen since Investor Day. James Friedman: Okay. And then just as a follow-up, and I should know this. But with the bookings, do you give the net new or renew? And if not, at least qualitatively, can you talk about how the new is resonating. Robert F. Del Bene: Yeah. Yeah. Jamie, qualitatively, the new net new bookings have improved. And the first quarter was better than it is been in a while. So we are making progress in net new. James Friedman: Interesting. Okay. Thank you both. Thank you. Operator: You are your next question comes from the line of Keith Bachman with BMO. Please go ahead. Keith Bachman: Hi, good evening. Thank you. I wanted to ask you brought in new leadership. What do you think was missing? Why the new leadership? Do you feel like, you have the leadership in place to execute on the plan. Raul J. Fernandez: Look. Running a company an agentic world is very different than anybody's previous work experience. And that cuts across every industry every type of company. So finding the right attributes that define an a player in an AI world has been something that we are all going through the discernment phase. But you realize that there are certain things that keep coming up as early indicators of success. 1, an ability to move very quickly. An ability to move in a nonlinear way, and also in a nonstructured way, so traditional engagement pyramids, et cetera. Those are those are gone. In a world where you are quickly discovering, building, and scaling, traditional methodologies are gone. So looking for quick, thoughtful, technically deep talent that can manage in a new fashion. And, really, the bottom line is speed. And agility. Those are the key attributes. And I am just super happy that we had a great bench of great young leaders that are now getting an opportunity to be front and center and display what I think are the key attributes for success in an AI world. Keith Bachman: Okay. Okay. I wanted to transition to insurance. The book to bill was well below 1. Just maybe outline with the advancement of a quarter, how you are thinking about the year and sort of what the puts and takes are on the insurance segment. Robert F. Del Bene: Yeah. Keith, it is Robert. So the book to bill is low, but, again, insurance has very big lumpy deals. That are predominantly renewal based. So it you know, they you will get big swings in the book to bill in any in any given quarter. We do have line of sight to a couple of larger transactions. Again, new con new customers for us. That are baked into our guide for the year and our forecast for the year, and we have confidence that we are going to land them. So that is the dine that is the dynamic. I will just remind you that at the beginning of any given year, the revenue from backlog for insurance is the highest proportion of any of our Right. Offering. So the go get within a year is relatively small. But part of that go get we have this year is a couple of deals that we have line of sight to, and I think we are gonna obviously, think we are going to execute on those. Yeah. Keith Bachman: And sort of the spirit of the question is it would help obviously, if you could demonstrate some acceleration in that business. Over time, so getting those new customers is a leading indicator. Robert F. Del Bene: Okay. Thanks, Robert. Yep. And in my and just do 1 last point, Keith, is in my in my remarks. I mentioned that there. We will wrap on a 1 particular contract. The contract stability in insurance is extremely, extremely high. We do not have customers leave. But we had 1 contract where we are winding down the relationship with a with a customer and it is a drag on our growth rate for the first 3 quarters. And we are about that will be behind us. And so you will see a little bit of a pickup in the fourth quarter partly because of that relationship. You know, we are wrapping on that. And partly because of the couple of deals I mentioned. Okay. Thanks, Robert. Thanks. Operator: Your next question comes from the line of Tien-Tsin Huang with JPMorgan. Please go ahead. Tien-Tsin Huang: Thanks a lot. So the large bookings did come through, help to book the bill in GIS, the opening backlog you talked about, Robert. So I am just curious from here, thinking about bookings in the coming quarter or 2, any callouts and visibility and ability to replenish that is that is 1 question I have. Thank you. Robert F. Del Bene: Yeah. Yep. So our cup couple different elements that are know, baked in baked into our forecast, which are important. And the first is that the project base in CES, the benefit we saw in the first quarter is also reflected in the pipeline going forward. So you know, we have confidence that we are gonna be able to continue to execute at the rates we had in the first quarter. So that is a real positive. The second thing I would mention, just longer term, in GIS, even though we had a good, you know, we had a good quarter of bookings, a pipeline in along big deal longer term big deal pipeline in infrastructure services is strong. And I attribute a lot of that to the fact that we now have Oasis, and there is a you know, there is lots of interest in it. And we have a lot you know, a very nice proportion of new customers in the pipeline. So that is encouraging and gives us confidence in the in the longer term here in GIS that will improve our performance. Operator: Again, if you would like to ask a question, please press 1 on your telephone keypad. Your next question comes from the line of Antonio Jaramillo with Morgan Stanley. Please go ahead. Analyst: I want to just quickly on the bookings and pipeline conversion. Things like, you know, that there is some opportunity to improve that, and it seems like you have Just can you talk to us about, like, you know, how we should think about ongoing improvements and know, how important those are gonna be to being able to realize kinda targets on a go forward basis. Yeah. Robert F. Del Bene: So, Antonio, I think 1 thing that is encouraging to us and we are albeit early, the discussions we are having on potential OASIS customers are moving at a faster pace than traditional IT outsourcing discussions we have had in the past. So it gives us it gives us, you know, optimism that the that the rate you know, close rates on those longer term deals are gonna move faster. Now we have to prove that, and, you know, we are we are just beginning here. But the early indications are that customer interest is driving an acceleration of timing. So we are hopeful with that. Now we do not have that baked into our numbers. So we are not counting on that in the numbers in the in the guide. Analyst: Got it. Got it. Okay. that is that is super helpful. And then wanted to also follow-up on Raul's comment on change of leadership. Are you feeling like, clearly, like, agentic has some different skill set requirements, etcetera, and, you know, that may be there may be some opportunity there at the leadership level. But what about in just regular staffing and developing skills on of the organization generally. Is that something you can do organically? Or should we look for you to look outside, whether it be acquisition or increased hiring and associated churn? Just wondering how to think about that component of management. Thanks. Raul J. Fernandez: Yeah. No. that is a great question. And you know what is interesting is in this in this calendar year, we have gone from thinking about engaging with a customer with a mindset of, discovery taking 3 to 6 months, prototyping 6 to 12 months, deployment at month 12 and beyond. Those have now been cut down to days and weeks. And the ability for people to differently, to move beyond best practices of yesterday, move beyond and not be burdened by what used to be a great way of building things like Agile. it is a completely different mindset. We are all going through this. We are all discerning how our teams are across every company. And we are taking lessons learned in terms of what makes a great AI player and trying to put those tools and that training into the hands of every single employee that we have. Now having said that, some will make it, some will not. But I also believe that an organic non-M&A approach where you are selecting players in a very thoughtful manner is absolutely the best approach. The skills, the mix of collaboration, the mix of being able to own an outcome, the mix of being able to work in much smaller but faster teams, that is a different combination. And frankly, we have some of those people. And if we do not, we are going to try to retrain our people. And if we are not able to do that, we will aggressively recruit those people. So I think it is a complexity of this moment in time and the transformation that AI both provides as an opportunity and the challenge of finding the right skills, the right players in the right places to take advantage of that opportunity. Operator: Your next question comes from the line of Rod Bourgeois with DeepDive Equity Research. Please go ahead. Rod Bourgeois: Hey, guys. Hey. I want to ask about how AI is impacting data center activities in spending priorities and how this is affecting your demand. You had IBM get hit by clients shifting their spending priorities You have got enterprises trying to optimize their token usage. And wanting to work across multiple AI model types And so there is a lot of shifting happening with data center priorities, it seems. Should those trends be helpful to you or is some of the weakness in your discretionary demand in GIS related to those shifting priorities. Help us sort that out because it might also be an opportunity as you roll out Oasis to address some of those prevailing trends? Thanks. Raul J. Fernandez: Yeah. No, you are totally right there. And I think the dynamics that I have viewed and that I have spoken to customers about is that they are as they are making decisions, their management team, their boards, are asking extra questions with regards to, is this the right technical approach? Is there enough agentic in this solution? How long is this solution going to have a useful life Those questions are absolutely smart, needed, and should be asked. But those questions do introduce delay in decision making. I think that is something that will dissipate over time. As those questions and cycle time become shorter. And as more proof points are deployed and people can point to real returns and they can move more quickly, to saying yes to the new kind of agentic products. Now, you know, I think clearly, our whole sector has been impacted by a macro shift in spend, and focus on kind of the infrastructure side But the other point that you made about complexity drives the need for DXC and others more than ever. Because that complexity, needing to understand how to optimize architecture, tokens, harnessing, where you use what model, that is a real time you only know it if you are doing it. And we are doing it. And so I do believe medium to long term, it is a huge upside for us. Because we are in the middle of solving these for a small set of customers but that small set of customers and those proof points are gonna be very valuable to us as we scale. And frankly, we have deployable multilingual certified FTE talent. That makes sense. Rod Bourgeois: Hey. I am getting some follow-up questions about the GIS margin situation. So the margins are quite low. I mean, even relative to history. what is the main driver of improving those margins? what is the main reason they are down? And what is the main driver of getting them up as the year progresses? Robert F. Del Bene: Yeah. Rod, it is Robert. So in the first quarter, the revenue decline is the main driver of the decline in margins. First quarter is normally seasonally low. But the revenue performance in the quarter drove the margin down below where we expected. Now going forward, we have 2, you know, 2 main factors which are gonna drive the improvement. The first is the improvement in revenue performance throughout the year. That is the significant driver. And second is just progress on our cost reduction road map. Or cost takeout road map. And we do typically have that normally bills as we progress throughout the year, and we expect that to happen again this year. As I mentioned earlier, we expect to exit the year at margins that are similar to last year's. Thank you. Thanks. Operator: And that concludes our question and answer session. I would now like to turn the conference back over to Roger Sachs for closing comments. Roger Sachs: Thank you, everybody, for joining us today. Thank you for your ongoing support, and we look forward to speaking with everybody again next quarter. Operator: This concludes today's conference call. Thank you for your participation and you may now disconnect. Before you buy stock in DXC Technology, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and DXC Technology wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. DXC (DXC) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. DXC Technology (DXC) has come into focus after reporting first quarter fiscal 2027 results, with revenue of US$2.999b and net income of US$122m, followed by updated guidance and fresh leadership changes. See our latest analysis for DXC Technology. DXC Technology's recent earnings, guidance and leadership reshuffle have come alongside a 7 day share price return of 11.84% and a 30 day share price return of 17.82%. However, the year to date share price return has fallen 20.17% and the 5 year total shareholder return is down 72.65%, which points to improving short term momentum against a weaker longer term record. If you are weighing DXC's AI push against other opportunities in technology, this could be a good moment to scan the market using our screener for 55 AI infrastructure stocks Bulls point to DXC Technology's AI focus, rising bookings and buybacks. Bears highlight falling revenue and a weak multiyear return record. As you weigh the stock today, which side does the current valuation appear to favor? DXC Technology's most followed narrative places fair value at $11.43, which sits only slightly above the last close of $11.24 and frames a modest discount built on detailed earnings and cash flow work. Read the complete narrative. Want to see what sits behind that fair value for DXC Technology? The narrative leans on shifting margins, changing revenue trends and a reset earnings multiple that could surprise you. Result: Fair Value of $11.43 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, DXC Technology still faces falling organic revenue and pressure in its Global Infrastructure Services segment, which could limit the extent to which today’s valuation gap can close. Find out about the key risks to this DXC Technology narrative. The most followed DXC Technology narrative leans on earnings forecasts and a future P/E of 9.8x to label the stock modestly undervalued at $11.43. Yet today DXC trades on a P/E of 99.8x, versus a fair ratio of 14x and a US IT industry average of 18.6x. That gap points to meaningful valuation risk if earnings or sentiment slip again. Which signal do you treat as more important? For a closer look at how that current P/E stacks up against peers and what the fair ratio implies, See what the numbers say about this price — find out in our valuation breakdown. Mixed signals around DXC Technology's valuation and fundamentals can feel confusing, so move quickly from headline impressions to your own view using the 1 key reward and 4 important warning signs If DXC Technology has your attention, do not stop here. Broaden your watchlist with fresh ideas so you are not missing potential standouts elsewhere. Target potential value opportunities by scanning companies that pass tight quality and valuation filters through the 55 high quality undervalued stocks. Strengthen your income focus by reviewing stocks that feature resilient payouts in the 9 dividend fortresses. Dial down risk by checking companies that show robust financial footing using the solid balance sheet and fundamentals stocks screener (45 results). This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include DXC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is transitioning DXC from a labor-dependent services model to an 'agentic' company, using AI to decouple revenue growth from headcount expansion. The 'customer zero' philosophy—building and testing AI solutions internally before client deployment—is driving significant performance proof points, such as reducing cybersecurity detection times from 21 minutes to 6 seconds. A 'connect, do not convert' strategy is being utilized to modernize legacy systems without requiring customers to discard existing technology investments, positioning legacy assets as strategic AI foundations. The company is aggressively deploying a 'forward deployed engineer' (FDE) model, setting a goal to certify tens of thousands of builders with partners like Anthropic to embed AI talent directly into customer environments. Strategic leadership changes, including a new President and GIS head, were implemented to align the organization with the speed and technical depth required for AI-driven execution. Sales cycles for new AI offerings like OASIS and AgenTxSOC have accelerated dramatically, moving from traditional 6-12 month windows to under 6 weeks. Performance attribution for the quarter was mixed, with better-than-expected project work in CES offset by continued customer caution and softer discretionary infrastructure spending in GIS. Full-year organic revenue guidance remains a decline of 3% to 5%, but management anticipates a material improvement in the second half, particularly in the GIS segment. The second-half recovery is underpinned by opening backlog dynamics (75% visibility) and expected moderation of prior-year contract losses. Insurance segment growth is projected to accelerate in the fourth quarter as the company wraps a specific BPO contract wind-down and ramps new SaaS-based Azure platform migrations. Guidance assumes a stable macro environment; however, management identifies potential upside from a loosening of discretionary spending or faster-than-modeled yield from the Anthropic partnership. The company plans to retire $400 million in debt maturing in September 2026 while continuing a $50 million share repurchase program for the fiscal year. Free cash flow guidance was raised to $685 million, primarily reflecting a $214 million benefit from the successful resolution of trade secrets litigation with TCS. The updated cash flow outlook includes a deposit with the IRS related to a 2009 tax litigation case to prevent further interest accrual while the company considers an appeal. GIS margins were significantly pressured in Q1 (2.6%) due to revenue declines, but management expects to exit the year with margins flat to slightly better year-over-year through cost-takeout initiatives. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that 90% of the second-half improvement comes from GIS, with 75% of that driven by existing backlog dynamics rather than new sales. The remaining improvement relies on modest in-year sales, of which 15-20% was already secured via Q1 bookings. Raul Fernandez acknowledged that board-level questioning regarding AI strategy is introducing some temporary delays in traditional infrastructure decision-making. He argued that the resulting architectural complexity actually increases the long-term value of DXC's advisory and optimization services. The CEO emphasized that an AI-driven world requires 'non-linear' and 'non-structured' leadership that moves faster than traditional Agile methodologies. The company is prioritizing organic retraining of its 113,000 employees but will 'aggressively recruit' where internal skills do not meet the new speed requirements. While book-to-bill was low this quarter, management attributed this to the 'lumpy' nature of large insurance renewals and cited a strong pipeline of new logos. Growth is expected to normalize in Q4 as the drag from a single winding-down contract concludes.

DXC Technology (NYSE:DXC) reported first-quarter fiscal 2027 revenue of $3 billion, down 6.7% year over year, while executives said the company is pursuing an AI-led strategy intended to stabilize its core operations and create new sources of growth. President and CEO Raul Fernandez said the company is moving beyond using artificial intelligence solely for internal efficiency and is working to use agentic AI to change how it builds, sells and delivers technology services. He pointed to deployments of DXC’s OASIS IT-operations platform and Agentic SOC cybersecurity offering as early evidence of customer demand. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now “The return to growth at DXC will be fueled increasingly by products and solutions that we can build in a capital-light way,” Fernandez said. “This is not an M&A strategy. It’s not about buying growth.” DXC announced that Paul Taylor will join the company as President. Taylor previously was a partner at IHS Markit and most recently founded and led HUB, an AI-driven technology business that was acquired by OSTTRA. → Microsoft Just Flipped the AI Spending Narrative Overnight The company also named Dan Gray to lead its Global Infrastructure Services, or GIS, segment, replacing Chris Drumgoole. Fernandez said Gray had co-led the development of OASIS and the company’s Agentic SOC solutions. Drumgoole will remain connected to DXC through Fernandez’s CEO Council of Advisors. In addition, DXC promoted Holly Grant to President of AI Innovation, Strategy & LabX. → Carrier Earnings Could Send the Stock to a New All-Time High Fernandez said the changes reflect the need for leaders who can move quickly, work closer to customers and operate effectively in an AI-driven environment. He also said DXC is developing forward-deployed engineers, or FDEs, who work directly in customer environments to turn AI concepts into deployments and identify reusable patterns. DXC began certifying engineers with Anthropic through hands-on programs in San Francisco and London in mid-July. Fernandez said the company has trained its first 86 engineers and intends to expand the certification effort, including through a multilingual FDE model incorporating technologies from Amazon QuickSight, Anthropic, Microsoft Copilot, 7AI and ElevenLabs. Fernandez said DXC is using a “Customer Zero” approach in which the company builds and tests AI tools internally before offering them to customers. In DXC’s own security operations, he said the Agentic SOC reduced mean time to intrusion detection from approximately 21 minutes using traditional software and manual processes to about six seconds. OASIS has been deployed across 57 customer environments, according to the company. Fernandez said measured use cases have produced reductions in resolution times and ticket backlogs while maintaining diagnostic accuracy. DXC said its “connect, don’t convert” strategy is designed to allow customers to add AI capabilities to existing systems rather than replacing legacy technology environments. Fernandez said enterprises want to adopt AI while maintaining data protection, governance, auditability and accountability. The company said sales cycles for some newer offerings have shortened. Fernandez said OASIS prospects have completed evaluations and reached the contracting stage in less than six weeks. A global entertainment and technology company completed an Agentic SOC technical evaluation in just over four weeks before signing a multiyear, multimillion-dollar engagement, he said. Chief Financial Officer Rob Del Bene said total bookings rose 5% year over year, producing a book-to-bill ratio of 0.99, the company’s highest first-quarter level in three years. DXC’s trailing 12-month book-to-bill ratio was slightly above 1. Adjusted EBIT margin was 5%, down 180 basis points from a year earlier, while non-GAAP earnings per share were $0.40, in line with DXC’s guidance. Customer Experience Services: Revenue declined 3% year over year, modestly ahead of DXC’s expectations. The segment’s book-to-bill ratio was 0.98, with a trailing 12-month ratio of 1.04. DXC Engineering and GrowthX bookings increased from a year earlier, though total CES bookings declined 19% because of a difficult comparison in applications services. Global Infrastructure Services: Revenue declined 11% year over year, as softer discretionary project activity affected quarterly performance. However, GIS bookings rose 35%, and its book-to-bill ratio reached 1.11, supported by large deal wins, including new customer contracts and renewals. Insurance: Revenue grew 1.4% year over year. Insurance software revenue increased 13%, while services revenue declined about 1% due partly to the wind-down of a business-process-services contract. SaaS revenue more than doubled year over year. Del Bene said DXC expects to have 85 customers on the OASIS platform by the end of the fiscal first half and has a deployment plan for 125 customers by the end of fiscal 2027. The company is incorporating OASIS into all new Intelligent Infrastructure engagements, he said. Free cash flow totaled $314 million during the quarter, including $214 million from the resolution of long-running trade-secrets litigation involving TCS. Excluding that benefit, free cash flow was $100 million. DXC ended the quarter with about $1.9 billion in cash and net debt of approximately $1.5 billion, down nearly $270 million from the prior quarter. DXC maintained its fiscal 2027 outlook for organic revenue to decline 3% to 5% year over year, with the rate of decline improving during the second half. The company continues to project adjusted EBIT margin of 6% to 7% and non-GAAP diluted EPS of $2.40 to $2.90. The company updated its free-cash-flow outlook to approximately $685 million. That figure includes its prior underlying expectation of about $600 million, the $214 million TCS litigation benefit and a payment related to a previously disclosed IRS tax litigation matter involving currency losses from 2009. For the fiscal second quarter, DXC expects organic revenue to decline 5.5% to 6.5% year over year, with CES declining at a low-single-digit rate, GIS declining at a high-single-digit rate and Insurance growing at a rate similar to the first quarter. The company expects adjusted EBIT margin of about 6% and non-GAAP diluted EPS of about $0.55. Del Bene said most of the expected improvement in second-half revenue trends is expected to come from GIS, primarily as the effect of prior contract losses moderates and backlog converts into revenue. He said DXC’s assumptions do not rely on a major improvement in discretionary project spending, while increased adoption of newer AI offerings could provide upside. DXC Technology, headquartered in Tysons Corner, Virginia, is a global leader in IT services and solutions. The company was formed in 2017 through the merger of Computer Sciences Corporation (CSC) and the Enterprise Services business of Hewlett Packard Enterprise, combining decades of experience in consulting, systems integration and managed services. Since its inception, DXC has focused on helping clients modernize IT environments and drive digital transformation across their organizations. DXC Technology's core service offerings encompass cloud and platform services, applications and analytics, security, and workplace and mobility solutions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "DXC Technology Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Total Revenue: $3 billion, down 6.7% year over year. Adjusted EBIT Margin: 5%, down 180 basis points year over year. Non-GAAP EPS: $0.40, in line with guidance. Book-to-Bill: 0.99, the highest first-quarter level in three years; trailing 12-month book-to-bill slightly above 1. CES Revenue: Declined 3% year over year, modestly ahead of expectations. GIS Revenue: Declined 11% year over year, impacted by softer discretionary project work. Insurance Revenue: Grew 1.4% year over year; SaaS revenues more than doubled year over year. Free Cash Flow: $314 million, including $214 million from TCS litigation settlement; excluding that, $100 million. Cash Position: Approximately $1.9 billion at quarter end. Share Repurchases: $70 million of shares repurchased during the quarter. Net Debt: Declined by nearly $270 million from Q4 levels to approximately $1.5 billion. Full-Year Fiscal 2027 Guidance: Organic revenue decline of 3% to 5%; adjusted EBIT margin of 6% to 7%; non-GAAP diluted EPS of $2.40 to $2.90; free cash flow of approximately $685 million. Second-Quarter Fiscal 2027 Guidance: Organic revenue decline of 5.5% to 6.5%; adjusted EBIT margin of approximately 6%; non-GAAP diluted EPS of approximately $0.55. Warning! GuruFocus has detected 2 Warning Sign with DXC. Is DXC fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. DXC Technology Co (NYSE:DXC) reported total bookings increased 5% year-over-year, with a book-to-bill of 0.99, the highest first-quarter level in three years, and a trailing 12-month book-to-bill above 1. The company's agentic AI solutions, such as Oasis and agentic SOC, are gaining traction, with Oasis deployed across 57 customer environments and a leading entertainment company signing a multiyear, multimillion-dollar engagement after a technical evaluation of just over four weeks. DXC Technology Co (NYSE:DXC) is executing on its AI strategy with the launch of a forward-deployed engineer model, certifying 86 engineers with Anthropic and aiming to certify tens of thousands, which is expected to drive new revenue streams. The company generated $314 million in free cash flow in Q1, including a $214 million benefit from the TCS litigation, and reduced net debt by nearly $270 million, strengthening its balance sheet. Insurance segment showed resilience with 1.4% revenue growth, and SaaS-based revenues more than doubled year-over-year, driven by momentum in Azure platform and Horizon Solutions. DXC Technology Co (NYSE:DXC) is seeing faster sales cycles for AI products, with evaluations and contracting completed in six weeks or less, compared to traditional 6-12 month cycles, indicating growing customer demand. Total revenue declined 6.7% year-over-year in Q1, with GIS revenue down 11%, reflecting continued customer caution and softer discretionary project work. Adjusted EBIT margin fell to 5%, down 180 basis points year-over-year, impacted by revenue profile and seasonal factors, with GIS margins dropping to 2.6%. The company faces a challenging macro environment with no expected improvement, and guidance assumes no change, limiting upside potential. CES bookings declined 19% year-over-year due to tough comparisons and weakness in custom applications, despite growth in other areas. Insurance segment is impacted by the wind-down of a BPS contract, which will drag on growth in Q2 and Q3, and the book-to-bill was below 1 due to lumpy deal timing. DXC Technology Co (NYSE:DXC) expects a significant second-half improvement in revenue, but this relies on GIS performance and in-year sales, with 15-20% of the improvement already delivered in Q1 bookings, indicating execution risk. Q: Can you help unpack the implied improvement in the second half relative to the 2Q guidance, particularly across CES, GIS, and insurance?A: CFO Rob Del Bene explained that the material improvement in growth rate from the first half to the second half is primarily driven by the GIS business, which accounts for about 90% of the improvement. Within GIS, roughly 75% of that improvement comes from the opening backlog dynamics, providing high certainty. The remainder depends on in-year sales performance, with 15% to 20% of that already delivered in first-quarter bookings. CES and insurance have solid line of sight, with insurance wrapping on a contract runoff in the fourth quarter. Q: GIS bookings were up 35% year-over-year with a strong book-to-bill, but revenue declined and margins fell to 2.6%. Can you reconcile this and discuss the timing for bookings to convert to revenue?A: CFO Rob Del Bene noted that GIS had a strong pipeline of larger deals with better execution in the quarter, but discretionary short-term infrastructure projects were softer than anticipated, driving down revenue and margins. As revenue improves throughout the year, margins are expected to bounce back, exiting the year flat or slightly better year-over-year. CEO Raul Fernandez added that new GIS leader Dan Gray, who co-developed Oasis and agentic SOC solutions, now unifies technical architecture and P&L ownership to accelerate the transformation. Q: What gets you to the high end of the fiscal 2027 guidance range versus the low end, and how much of the back-half improvement is already contracted?A: CFO Rob Del Bene stated that the forecast assumes no change in macroeconomics. Two factors could push results to the higher end: a loosening of discretionary project-based work and progress on new AI content, particularly the Anthropic partnership, which was modeled very conservatively. He emphasized a solid base of improvement is baked into the opening backlog, with more opportunity than risk in the guide. Q: With new leadership brought in, what was missing, and do you have the right leadership to execute the plan?A: CEO Raul Fernandez explained that running a company in an agentic world requires different attributes, including speed, agility, and nonlinear thinking. Traditional engagement pyramids and methodologies are gone. He expressed confidence in the bench of leaders, including Paul Taylor as President and Holly Grant as President of AI Innovation, who possess the technical depth and commercial discipline needed for success in an AI-driven environment. Q: Can you provide more detail on the insurance segment's low book-to-bill and how you're thinking about the year?A: CFO Rob Del Bene noted that insurance has large, lumpy, predominantly renewal-based deals, causing big swings in book-to-bill. The company has line of sight to a couple of larger new customer transactions baked into the forecast. He highlighted that insurance has the highest proportion of revenue from backlog at the start of the year, and a contract wind-down will wrap in the fourth quarter, contributing to a pickup in growth. Q: How is AI impacting data center activities and spending priorities, and should these trends be helpful or are they causing weakness in GIS discretionary demand?A: CEO Raul Fernandez acknowledged that boards are asking extra questions about technical approaches and agentic content, introducing delays in decision-making. However, he believes complexity drives the need for DXC's expertise in optimizing architecture, tokens, and model selection. Medium to long term, this is a huge upside as proof points scale, especially with deployable multilingual certified forward-deployed engineers. Q: What is the main driver of improving GIS margins as the year progresses?A: CFO Rob Del Bene explained that the first-quarter revenue decline was the main driver of lower margins, compounded by normal seasonal factors. Going forward, improvement will be driven by two factors: better revenue performance throughout the year and progress on the cost reduction roadmap. He expects GIS to exit the year with margins similar to last year's. Q: Are you seeing any signals that influence your long-term strategy, particularly regarding Oasis and agentic SOC?A: CEO Raul Fernandez shared that since Investor Day, he has seen real, documented reductions in time and cost for critical functions in network and security operating centers. He cited a major entertainment and technology company that completed an agentic SOC evaluation in under four weeks and signed a multiyear, multimillion-dollar engagement. These technical wins and speed to close are positive signals validating the strategy. Q: How should we think about ongoing improvements in bookings and pipeline conversion, and their importance to realizing targets?A: CFO Rob Del Bene noted that discussions with potential Oasis customers are moving faster than traditional IT outsourcing discussions, giving optimism for faster close rates on longer-term deals. However, this acceleration is not baked into the current guidance. The project-based services in CES performed better than anticipated, providing confidence for continued execution. Q: Regarding regular staffing and developing skills, can you do this organically or should we expect outside hiring or acquisitions?A: CEO Raul Fernandez emphasized an organic, non-M&A approach, selecting players thoughtfully. The company is retraining employees with lessons learned from AI deployments, but some will not make it. If retraining isn't possible, DXC will aggressively recruit the right talent. He noted the transformation provides both an opportunity and a challenge in finding the right skills and players. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

DXC Technology DXC reported first-quarter fiscal 2027 non-GAAP earnings of 40 cents per share, which declined 41.2% year over year and missed the Zacks Consensus Estimate by 4.8%. Revenues decreased 5.1% year over year to $3 billion but beat the Zacks Consensus Estimate by 0.46%. The quarter was highlighted by a 5% increase in bookings, a 0.99x book-to-bill ratio, robust free cash flow generation of $314 million and continued momentum in the company's AI-enabled platform strategy. Management said enterprise customers remain cautious on discretionary technology spending, particularly for short-duration infrastructure projects. However, DXC continues to invest in agentic AI capabilities, highlighting growing customer interest in its AI-enabled platforms, including Oasis and AgenTxSOC. DXC Technology Company. price-consensus-eps-surprise-chart | DXC Technology Company. Quote The company noted that AI deployments are accelerating customer engagement, while partnerships such as Anthropic are helping expand its engineering capabilities. Management believes these initiatives position DXC for improved growth once enterprise spending normalizes. Consulting and Engineering Services ("CES") revenues were $1.23 billion, down 1.2% year over year (down 3% organically). Segment profit declined 4.8% to $100 million, while bookings fell 18.5%, resulting in a book-to-bill ratio of 0.98x. Global Infrastructure Services ("GIS") revenues decreased 9.4% year over year to $1.45 billion (down 11.1% organically). Segment profit plunged 60.8% year over year to $38 million, reflecting weaker discretionary infrastructure spending. Despite the revenue decline, GIS bookings increased 34.7% year over year, driving a healthy book-to-bill ratio of 1.11x. Insurance Software & Services remained the bright spot. Revenues increased 1.9% year over year to $319 million (up 1.4% organically), while segment profit rose 3% to $34 million. Bookings increased 3.6% year over year. DXC generated $418 million in operating cash flow during the quarter. Free cash flow jumped to $314 million from $97 million in the year-ago quarter, benefiting from $214 million of litigation-related proceeds. The company returned $70 million to shareholders through share repurchases during the quarter. Management also highlighted continued focus on strengthening the balance sheet through debt reduction. For fiscal 2027, DXC continues to expect revenues between $12.10 billion and $12.35 billion, representing an organic decline of 5% to 3% year over year. The company reaffirmed adjusted EBIT margin guidance of 6-7% and non-GAAP earnings per share guidance of $2.40-$2.90. Free cash flow guidance was raised to approximately $685 million, reflecting litigation-related cash proceeds. For the second quarter of fiscal 2027, DXC expects revenues between $2.97 billion and $3.00 billion, implying an organic decline of 6.5-5.5% year over year. The company projects an adjusted EBIT margin of approximately 6% and non-GAAP earnings per share of about 55 cents. DXC currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Computer and Technology sector are Analog Devices ADI, Applied Materials AMAT and Cisco Systems CSCO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Shares of Analog Devices have rallied 37.1% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $12.42 per share, up by 10 cents over the past 30 days, indicating an increase of 59.4% year over year. Shares of Applied Materials have skyrocketed 101.1% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.14 per share, up by 4 cents over the past 30 days, indicating a rise of 28.9% year over year. Cisco Systems shares have surged 48.7% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2026 earnings is pegged at $4.28 per share, unchanged over the past 30 days, indicating an increase of 12.3% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DXC Technology Company. (DXC) : Free Stock Analysis Report Analog Devices, Inc. (ADI) : Free Stock Analysis Report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 30, 2026 at 5:00 p.m. ET Vice President of Investor Relations - Roger Sachs President and Chief Executive Officer - Raul J. Fernandez Chief Financial Officer - Robert F. Del Bene Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the DXC Technology Services First Quarter Fiscal 27 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then 1 on your telephone keypad. And if you would like to withdraw that question, again, *1. Thank you. I would now like to turn the conference over to Roger Sachs, Vice President of Investor Relations. Robert? Please go ahead. Roger Sachs: Thank you, operator. Good afternoon, everyone, and welcome to DXC Technology's First Quarter Fiscal 27 Earnings Conference Call. We hope you had an opportunity to review our earnings release, which is available in the IR section of DXC's website. Speaking on today's call are Raul J. Fernandez, our president and CEO, and Robert F. Del Bene, our chief financial officer. Here's today's agenda. First, Raul will update you on our strategic initiatives. Robert will then review our quarterly financial performance, as well as provide thoughts on our second quarter and fiscal full year 2027 guidance. Raul and Robert will then take your questions. Please note certain comments made during today's call are forward looking and subject to risks and uncertainties that could cause actual results to differ materially. Details of these risks and uncertainties are in our annual report on Form 10 k and other SEC filings. We undertake no obligation to update any forward looking statements. Unless otherwise noted, year over year or quarter over quarter revenue growth rates discussed on today's call refer to organic revenue growth on a non GAAP basis which exclude the impact of foreign exchange and inorganic activity. We will also be discussing certain other non GAAP financial measures that we believe provide useful information to investors. Reconciliations to the most comparable GAAP measures are included in today's earnings release. And with that, let me turn the call over to Raul. Raul J. Fernandez: Thank you, Raul. On June 11th, we held our Investor Day. Where we put our strategy on the table and demonstrated the agentic solutions we have built and deployed. We also announced our global partnership with Anthropic. Since then, we have continued to move from strategy to execution. And what is becoming increasingly clear to me is that the opportunity in front of DXC is not simply to use AI to make our existing business more efficient. It is to use Agentic AI to change how we build, sell, and deliver technology and ultimately return DXC to growth. People and leadership have always mattered. But they matter even more as we enter this next phase. An agentic company operates differently. It needs to move faster. make decisions closer to the customer, build and deploy solutions more quickly, and continuously learn. That requires leaders with deep customer understanding commercial discipline, entrepreneurial thinking, and the ability to bring people together to deliver better outcomes for customers. That is why I am very pleased to announce that Raymond August is joining DXC as President. Raymond brings more than 30 years of technology and commercial leadership spanning financial markets, enterprise technology, and entrepreneurship. He was a partner at IHS Markit through a period of significant profitable growth and scale. Culminating in its approximately $44 billion acquisition. By S&P Global. Most recently, he founded and led Hub, an AI driven technology business acquired by Astra, where AI agents and workflow automation were central to the company's operating model. Raymond brings the combination of commercial leadership entrepreneurial thinking, and operational expertise needed to leverage world class technology, great teams, and deep customer relationships to help customers transform their businesses. Together, Robert, Raymond, and I will streamline how DXC operates, bring our markets offerings, and delivery teams closer together, and execute an aggressive agentic playbook that helps our customers move faster. We are also making a leadership change at GIS. This morning, we announced Dan Gray will take over leadership of GIS from Christopher R. Drumgoole. Dan has co led the development of OASIS and our AgenTxSOC solutions. So he brings both the technical understanding and the operating mindset that we need to accelerate the transformation of GIS. I want to thank Christopher R. Drumgoole for his service to DXC and wish him the very best in his next chapter. Christopher will remain connected to DXC through my CEO council of advisers. Earlier this week, we also announced the promotion of Jennifer Ragone, to president of AI innovation strategy and LabX. Together, these changes reflect a single principle, placing the strongest leaders in the areas where we see the greatest opportunity to create value for customers and shareholders. The most important thing we can demonstrate today is not our vision for AI, it is proof. Over the last year, DXC has adopted a simple philosophy we call customer zero. Build it, run it in our own environment, prove it works, measure the results, and then take it to our customers. This approach is producing tangible results. In our own security operations, our AgenTxSOC solution has transformed how we detect and respond to threats. With traditional software and manual processes, meantime to intrusion detection was approximately 21 minutes. With our AgenTxSOC solution, we are seeing that reduced to approximately 6 seconds. This is not incremental improvement. This is a fundamentally different operating model for our cybersecurity. We are seeing similar outcomes for DXC Oasis. Which is now deployed across 57 customer environments. Oasis is helping organizations improve the speed, consistency, and intelligence of mission critical IT operations. In measured use cases, we have seen significant improvement in resolution time, and ticket backlogs while maintaining high diagnostic accuracy. What matters is not simply that these technologies work together, What matters is that they are creating customer demand shortening time to value, and expanding the set of opportunities where DXC can lead. As I meet with CEOs, CIOs, and business leaders around the world, 1 theme comes up consistently. Organizations are excited about the potential and promise of AI but they want to adopt it responsibly They want innovation. But they also want trust. We believe enterprises will not deploy agentic AI at scale. Unless they can trust the architecture underneath it. That means protecting customer data preserving governance, maintaining auditability, and ensuring accountability for business outcomes. This is where DXC is uniquely positioned for decades our customers have trusted us to operate some of the most critical systems applications, and infrastructure. As AI adoption accelerates, we believe that trust becomes even more valuable. Another principle that differentiates DXC is what we describe as connect, do not convert strategy. We do not believe enterprises should have to discard decades of business logic institutional knowledge, and technology investment in order to benefit from AI. Instead, we connect new intelligence to existing environments. We help customers preserve the systems that run their businesses while unlocking new levels of automation insight, and productivity. Their legacy investments are not liabilities. They are strategic assets. By combining AI with the technologies customers already depend on, DXC can accelerate modernization while reducing risk, cost, and disruption. And because our architecture is designed around flexibility and portability, customers retain the ability to adopt new models and technologies as the market evolves. We believe this flexibility will become increasingly important as enterprises seek to avoid becoming dependent on any single AI provider or technology stack. And this brings me to the most important point, The return to growth at DXC will be fueled increasingly by products and solutions that we can build in a capital light way. This is not an M&A strategy. it is not about buying growth. It is about taking the assets we already have. Our customer relationships, our industry expertise, our heritage platforms, our proprietary IP, and our 113 thousand colleagues. And using AI to build products around them faster, with less capital, and less dependency on incremental labor. Since Investor Day, we are already seeing evidence of this in how customers move. Where traditional enterprise technology sales cycles have historically taken 6 to 12 months, we are now seeing evaluation, proof of value, and contracting in 6 weeks or less. For OASIS, prospects are completing full evaluations and reaching contract stage in under 6 weeks. With our AgenTxSOC offering, a leading global entertainment and technology company, completed their technical evaluation in just over 4 weeks. And went on to sign a multiyear, multimillion dollar engagement. That acceleration matters because speed compounds. Faster innovation creates faster adoption. Faster adoption creates more proof points. More proof points create more demand. 1 of the clearest examples of how we are moving from AI strategy to execution is the launch of our forward deployed engineer model. FDEs are a new class of hybrid AI builders, who work directly inside customer environments. Turning AI concepts into deployed outcomes and then capturing the reusable patterns that allow us to scale. In mid July, we began certifying DXC engineers with anthropic through hands on base camps in San Francisco and London. This brings together some of the best technical talent from DXC and Anthropic. And creates a new class of forward deployed engineers. Who take these capabilities directly into customer environments. We are seeing early momentum with our first 86 trained. Giving us an initial deployment ready bench. As we shared last month, together with Anthropic, our goal is to certify tens of thousands of forward deployed cloud certified engineers and builders. We are taking that 1 step further DXC is developing a multilingual forward deployed engineer certification model that combines Amazon QuickSight Anthropic, Microsoft Copilot, 7AI, and 11 Labs. whose FDE partnership we announced earlier this week with our proprietary Discover build, scale methodology. Historically, technology services grew largely through labor expansion, Revenue growth generally required proportional increases in headcount. AI changed that equation. It allows us to build faster, operate more efficiently, support more customers, and increasingly deliver outcomes that are measured by value rather than effort. At the same time, the economics of AI continue to improve. As models become more capable and operating costs continue to decline, the number of economically viable use cases continues to expand. This creates opportunities to introduce new products, new pricing models, and new sources of recurring and consumption based revenue. Combined with our scale, customer relationships, intellectual property, and industry expertise, We believe this represents a meaningful opportunity to improve both growth and profitability over time. Most importantly, we can pursue this opportunity while remaining disciplined with capital, and focused on free cash flow generation. When I compare DXC today with where we were a year ago, I see a company that is increasingly turning strategy into execution. We have clear priorities, We have stronger leadership. We have built and deployed real agenic solutions with measurable results. We have trusted partnerships. And we are creating a new generation of AI enabled talent and capabilities. Importantly, we are seeing customers respond. The strategy remains unchanged. We will continue to stabilize and improve the core business while building AI native sources of growth. What has changed is the evidence. We are proving our technology, We are proving our operating model. And we are proving that AI can help create a stronger, more profitable, and more sustainable DXC. Now, our focus is on execution, scaling what works, creating value for customers, and delivering long term growth for shareholders. Through 11 Labs, my script will be available in 6 languages immediately following this call. Thank you. Robert F. Del Bene: Thank you, Raul, and good afternoon, everyone. Today, I will go over our first quarter results, provide guidance for the second quarter and update our full fiscal year 2027 outlook. Starting with the first quarter results. Total revenue was $3 billion down 6.7% year-to-year, slightly above the midpoint of our guidance range. Driven by better than expected performance in CES. Market conditions remained as expected with continued customer caution and short term discretionary projects most pronounced in IT infrastructure projects. Total bookings increased 5% year-over-year driven by several large deal wins in GIS. This resulted in a book to bill of 0.99x the highest first quarter level in the past 3 years. Bringing our trailing 12-month book-to-bill to slightly above 1.0x. As expected, our adjusted EBIT margin was 5.0% down 180 basis points year-to-year. The performance reflects the revenue profile we anticipated for the quarter as well as normal seasonal factors. Non GAAP EPS was $0.40 in line with our guidance. Now turning to our segment results. The CES book to bill ratio for the quarter was 0.98x, with a trailing 12-month book-to-bill of 1.04x. Bookings in both DXC Engineering and Growth grew year-to-year, while a tougher comparison for the first quarter of fiscal 26 in the applications business, led to a total CES bookings decline of 19% year-to-year. As we discussed in our Investor Day presentation, both DXC Engineering and GrowthX are important elements of our platform based product strategy and our longer term revenue growth plans. CES revenues declined 3% year-to-year, modestly ahead of our expectations, primarily due to better performance in project revenues in both Growth and DXC Engineering. Our applications business performed consistently quarter to quarter and in line with our expectation, with growth and enterprise application services for the third consecutive quarter and consistent quarter to quarter declines in custom applications. For GIS, the book-to-bill ratio was 1.11x, reflecting a year-to-year bookings increase of 35% year-to-year, driven by several large deal wins including both new logos and renewals in our intelligent infrastructure and workplace businesses. With the introduction of Oasis and other new product content like our AgenTxSOC solutions, we are now delivering AI based products to our clients greatly enhancing the effectiveness and productivity of their IT operations and security posture. This is translating into increased opportunities with new potential clients and with our installed base of existing customers. This is encouraging and supports our longer term outlook for GIS. By the end of the first half of the year, we expect 85 customers to be on the Oasis platform and have a deployment plan for 125 customers by the end of the fiscal year. We are solutioning all new intelligent infrastructure engagements with Oasis the client feedback on existing accounts and the market interest levels have been very positive. In the short term, revenue in Q1 continued to be impacted by softer levels of discretionary project work that have a more immediate impact on our quarterly revenue. As a result, GIS declined 11% year-to-year, slightly lower than our expectation and fourth quarter performance. Insurance grew 1.4% year-to-year, in line with our expectation. We continue to build momentum in our SaaS based Azure platform and Horizon solutions with SaaS revenues more than doubling year-to-year. Our SaaS-based revenues will build with the continued migration of customers to our Azure platform and the sales of our AI based smart apps grow throughout the year. Total insurance software revenue grew 13% year-to-year, while services were down about 1% year-to-year, impacted by the wind-down of a BPO contract which will also impact the second and third quarters of this fiscal year. We generated $314 million of free cash flow during the quarter, including a $214 million associated with successful resolution of our long running trade secrets litigation involving TCS. Excluding that benefit, free cash flow totaled $100 million a modest year over year improvement driven by lower annual executive compensation and reduced cash tax payments offsetting lower adjusted EBIT. We ended the quarter with approximately $1.9 billion of cash an increase of $200 million from fiscal year-end 26, including proceeds from the TCS litigation. During the quarter, we also repurchased $70 million of shares and reduced capital lease obligations by $38 million. As a result, net debt declined by nearly $270 million from Q4 levels to approximately $1.5 billion, further strengthening our balance sheet. Consistent with our previously announced capital allocation plans, we anticipate retiring $400 million of our US dollar bonds maturing in September of 2026 and expect to repurchase approximately $50 million of shares during the fiscal year. Now let me provide you with an updated view of our full-year fiscal 2027 guidance. We continue to expect total organic revenue to decline 3% to 5% year-to-year, with an improvement in the rate of decline in the second half of the year. The drivers of our top line trajectory for the year are reflected in our segment outlook as follows. In CES, we now expect revenue to decline at low single digit range consistently throughout the year reflecting better performance in project based services than we previously anticipated. In GIS, we continue to anticipate a mid single digit revenue decline for the year. Performance is trending modestly below our original assumptions, largely reflecting lower levels of discretionary project activity. We continue to expect a stronger second half profile as the impact of contract losses incurred in previous years moderates. In insurance, we continue to expect low single digit revenue growth for the year with better second half performance driven by the ramp of expected new customer contracts continued momentum in our AI and cloud SaaS offerings, and the positive impact of the previously mentioned contract runoff which wraps in the fourth quarter. The midpoint of our guidance for all 3 segments does not assume any change to the current macro environment. Continue to anticipate adjusted EBIT margin for the full year in the range of 6% to 7%, with margins improving sequentially throughout the year supported by cost management, operational efficiencies, and improving revenue profile in the second half of the year. Our non GAAP diluted EPS outlook remains between $2.40 and $2.90 We now expect full fiscal year 27 free cash flow of approximately $685 million This outlook reflects the following. Maintaining our underlying prior free cash flow expectation of approximately $600 million a $214 million cash benefit from the TCS litigation I discussed earlier, and a payment related to a previously disclosed tax litigation case with the IRS regarding currency losses from 2009. While we determine the appropriate path forward, including potential appeal, we included in guidance a deposit with the IRS to stop future interest from accruing. The second quarter of fiscal 2027, we expect total organic revenue to decline between 5.5% and 6.5% year-to-year. And at the segment level, we expect CES to decline low single digits consistent with the first quarter GIS is anticipated to decline at a high single digit rate and insurance is expected to grow at a similar rate as the first quarter. We expect adjusted EBIT margin to be approximately 6.0% and we expect non GAAP diluted EPS to be approximately $0.55 With that, let me turn the call back over to Raul. Roger Sachs: Thank you, Raul. We would like to now open the call for your questions. Operator, can you please provide the instructions? Operator: Thank you. We will now begin the question and answer session. And if you would like to withdraw that question, again, press *1. We do ask that you limit yourself to 1 question and 1 follow-up. For any additional questions, please re queue. And your first question comes from Bryan Bergin with TD Cowen. Please go ahead. Bryan, your line is open. Brian Bergen: Thank you. I wanted to ask about the Q2 to second-half walk. Can you help unpack the implied improvement in the second half relative to kind of what you are guiding here in Q2? Raul J. Fernandez: And any particular factors as you look across CES, GIS, and insurance? Robert F. Del Bene: Bryan, it is Robert. Thanks for the question. Yeah. Let me unpack the revenue for you. there is a material improvement in growth rate going from the first half to the second half. And it implies it is going from the range of call it, minus 6.5 to minus 2-ish in the second half, right? So that is that is the improvement required. Now when you look at the factors driving that improvement, the majority of that is going to come majority of the improvement comes from our GIS business. And about 90% of the improvement to quantify it for you. And then looking at the dynamics within GIS, about 3 quarters of that improvement comes from the opening backlog dynamics throughout the year. So we have line of sight and have a high degree of certainty around 75% of that improvement. The remainder of the improvement comes from in year sales performance, and that performance does count on a modest improvement in your sales for GIS, and we think it is a, you know, a reasonable improvement given all the new content we are bringing to market and the momentum we see with our client base. And so to characterize that a little bit for you, about 15% to 20% of that was delivered already in the first quarter bookings. So when you cut through all of that, where's confidence in our ability to have a significant improvement in the growth rates of GIS. And then we are not counting on significant improvements in CES. First half to second half. And we did a little better in CES in the first and we think we have some momentum building. So we feel confident there. And then the same with insurance. We have line of sight, a modest you know, modest dollar improvement in the into the third quarter. In the fourth quarter, we wrap on the 1 contract that I mentioned in my prepared remarks. So we have pretty good line of sight in insurance as well. So that is what gives us the confidence for the second half improvement. Okay. Okay. that is clear. Brian Bergen: My follow-up, maybe I will go to CES then. Just looking at the organic revenue decline and the bookings this quarter, I guess, what needs to happen here to really get that going again and improve CES and reaccelerate in the client caution continues with muted discretionary But what can you more than offset the custom app weakness with new offerings and engineering and growth x? Dig in there, please. Robert F. Del Bene: Yeah. So yeah. So let me take that 1 too, Bryan. So the dynamics of the bookings in CES really have to be parsed between product smaller project base deals and larger deals. Now just as you recall, first quarter last year, had significant a significant number of larger deals in CES. So we had a very tough comparison. And that drove our bookings numbers down year to year. The project based services portion of CES in the first quarter performed better than we anticipated. And that stability gives us more confidence going into the second quarter and the rest of the year. So that dynamic, the project base bookings give us the foundation for the guide for the remainder of the year. And then the big deals will kind of come and go with the pipeline and the closing cadence of the big deals. But the fundamental underlying bookings of project based services were better. And they were better in growth x and DXC Engineering. 2 of the business areas that Raymond emphasized in our investor day. And we had really good growth in enterprise apps, our best in a couple of years. And we have had 3 consecutive quarters of growth there. And so, yes, we do think with the momentum of growth ex DXC engineering and the performance in enterprise apps, that we will be able to make progress against the industry declines in custom apps. Raul J. Fernandez: Let me add, it is Raul. Let me just add that when you step back and look at the biggest beneficiary from an offering or business unit standpoint, to the anthropic relationship where we are getting certified forward deployed multilingual engineers. CES is the single biggest beneficiary within our offerings. We have taken an extremely conservative approach to modeling that, zero, because A, they are just getting certified. As you heard in the prepared remarks, the cohort of 86 just came out. And we have just started to market. And we announced it in June. Those FTE pods, both to our existing customer base, as well as to new customers that we know are looking for that kind of talent. So it is everything Robert said plus a reliance on a new set of products that we know are hot and in demand in the market. that is what gives us confidence. Brian Bergen: Okay. Understood. Thanks, guys. Operator: Your next question comes from the line of Jonathan Lee with Guggenheim Securities. Please go ahead. Analyst: Great. Thanks for taking my questions. Your GIS bookings are up 35% year-on-year, second consecutive 1.1x book-to-bill. But you saw revenue get worse and margins more than halved to 2.6%. Help us reconcile those 2? what is the expected timing for the bookings to start converting into revenue? And with Dan now leading GIS with an operating and technical mindset, are there specific changes that we should expect on the margin side there? Robert F. Del Bene: Yeah. So, Jonathan Lee, in GIS, you know, it was kind of the opposite situation from CES. In that we had we have a strong pipeline of larger deals, and it continues to build. We executed on the closing of those deals in the first quarter, and there was some carryover from the fourth quarter. So that was expected. And so we had better execution. In the quarter of the larger deals. The discretionary short term infrastructure projects were a little softer than we anticipated. So that is what drove down the revenue versus our expectation for GIS in the quarter. It did fall-- it fell through to margin. But as we progress with the revenue improvements throughout the year, we do expect the margins in GIS to bounce back And by the end of the year, we will have year to year flat margins or slightly better. And we have Dan we are very excited with Dan taking over in GIS. We have got a lot of muscle behind the cost takeout plans that we are going to execute on for the rest of the year. And Dan's going to just accelerate that and help us even. Raul J. Fernandez: And let me just add to that, that Dan's been the architect of our agentic transformation within GIS. Now he is the architect plus the P and L owner. That unification of responsibilities and is absolutely critical and clear, and the speed at which that we have to get done. He fully appreciates and understands and has a lot of confidence that he will get it done. Analyst: Thanks for that color. And just as a follow-up, you know, the fiscal 2027 outlook midpoint assumes no change to the current macro, but your commentary through June, July has trended a little more cautious What gets you to the high end of the range versus the low end of the range? And then within that range, how much of that back half improvement is already contracted or in late stage signing versus what remains in that to-go-get phase? Robert F. Del Bene: Yeah. So we do have no change in macroeconomics baked into the forecast If there is 2 things for us, would help get us to the high end of the range. First is if there if there is a loosening of discretionary project based work, that would that would be very helpful and get us push us to the higher end of the range. And secondly, as Raul just mentioned, you know, we have been very conservative in the yield for the new content that we have, particularly the anthropic content. So if we make progress there, and generate bookings and start to generate revenue in the second half of the year, that will help us as well. So those are the those are the 2 factors that could push us to the higher end. Terms of in terms of the risk, I kind of framed it in my first answer to Bryan's question. We have a very solid base of improvement baked into our opening backlog. And we are we are not contemplating a significant improvement in project based services in GIS. it is very modest. The CES assumptions right now are a little more conservative than GIS. So we are not expecting a pickup in project based services in GIS. So I would say there is more opportunity than not in the guide. On balance. Analyst: Thank you for that, and so my congrats to Raul J. Fernandez, Dan, and Jennifer Ragone. Thanks so much. Operator: Your next question comes from the line of Jamie Friedman with Susquehanna. Please go ahead. James Friedman: Hi. Those were all good questions. I was wondering, Raul, I realized we are only 1 quarter into a long journey relative to the Analyst Day. And that 1 landed right in the middle. But is there is there anything in either GIS or CES that you are seeing that would influence or inform your view about this long term strategy. For example, I think GIS is really predicated on an OASIS incremental value contribution strengthening the core On the CES side, it is a lot of growth x. So yeah, I realize it is, you know, you are just first couple steps after that event, but, is there anything to you know Yeah. If you increase confidence, you are on track or otherwise? Thank you. Raul J. Fernandez: Yeah. I just finished, since Investor Day, a really great tour of existing customers and prospects. And I led with the most important content, from our deployments with Oasis and AgenixSOC. That is the real unbelievable reduction in time and cost to do critical functions that are very routine, both in network operating centers and security operating centers. Those 2 pages, those 2 charts are the only things I would bring to a CEO level conversation. Because once they see what we can document, and by the way, we I mentioned this when, for AgenTxSOC with a major entertainment technology company. That evaluation time from beginning to end to then beginning in contract phase was less than 4 weeks. So an incredible time to decision making We are seeing that with AgenTxSOC. We are seeing early similar signals from our OASIS sales And so I that gives me comm a, that we have data and solutions that have real benefit and impact. B, that it gets us in a totally different conversation than we have traditionally been. And c, technically, as we win these new engagements. I am just really, really proud of the team because they are technically winning. And really standing out very, very far ahead of any competitive benchmark. So technical win speed to close, and just data that no CEO CIO, CTO, or business unit head can afford to ignore. Those are all the positive signals that I have seen since Investor Day. James Friedman: Okay. And then just as a follow-up, and I should know this. But with the bookings, do you give the net new or renew? And if not, at least qualitatively, can you talk about how the new is resonating. Robert F. Del Bene: Yeah. Yeah. Jamie, qualitatively, the new net new bookings have improved. And the first quarter was better than it is been in a while. So we are making progress in net new. James Friedman: Interesting. Okay. Thank you both. Thank you. Operator: You are your next question comes from the line of Keith Bachman with BMO. Please go ahead. Keith Bachman: Hi, good evening. Thank you. I wanted to ask you brought in new leadership. What do you think was missing? Why the new leadership? Do you feel like, you have the leadership in place to execute on the plan. Raul J. Fernandez: Look. Running a company an agentic world is very different than anybody's previous work experience. And that cuts across every industry every type of company. So finding the right attributes that define an a player in an AI world has been something that we are all going through the discernment phase. But you realize that there are certain things that keep coming up as early indicators of success. 1, an ability to move very quickly. An ability to move in a nonlinear way, and also in a nonstructured way, so traditional engagement pyramids, et cetera. Those are those are gone. In a world where you are quickly discovering, building, and scaling, traditional methodologies are gone. So looking for quick, thoughtful, technically deep talent that can manage in a new fashion. And, really, the bottom line is speed. And agility. Those are the key attributes. And I am just super happy that we had a great bench of great young leaders that are now getting an opportunity to be front and center and display what I think are the key attributes for success in an AI world. Keith Bachman: Okay. Okay. I wanted to transition to insurance. The book to bill was well below 1. Just maybe outline with the advancement of a quarter, how you are thinking about the year and sort of what the puts and takes are on the insurance segment. Robert F. Del Bene: Yeah. Keith, it is Robert. So the book to bill is low, but, again, insurance has very big lumpy deals. That are predominantly renewal based. So it you know, they you will get big swings in the book to bill in any in any given quarter. We do have line of sight to a couple of larger transactions. Again, new con new customers for us. That are baked into our guide for the year and our forecast for the year, and we have confidence that we are going to land them. So that is the dine that is the dynamic. I will just remind you that at the beginning of any given year, the revenue from backlog for insurance is the highest proportion of any of our Right. Offering. So the go get within a year is relatively small. But part of that go get we have this year is a couple of deals that we have line of sight to, and I think we are gonna obviously, think we are going to execute on those. Yeah. Keith Bachman: And sort of the spirit of the question is it would help obviously, if you could demonstrate some acceleration in that business. Over time, so getting those new customers is a leading indicator. Robert F. Del Bene: Okay. Thanks, Robert. Yep. And in my and just do 1 last point, Keith, is in my in my remarks. I mentioned that there. We will wrap on a 1 particular contract. The contract stability in insurance is extremely, extremely high. We do not have customers leave. But we had 1 contract where we are winding down the relationship with a with a customer and it is a drag on our growth rate for the first 3 quarters. And we are about that will be behind us. And so you will see a little bit of a pickup in the fourth quarter partly because of that relationship. You know, we are wrapping on that. And partly because of the couple of deals I mentioned. Okay. Thanks, Robert. Thanks. Operator: Your next question comes from the line of Tien-Tsin Huang with JPMorgan. Please go ahead. Tien-Tsin Huang: Thanks a lot. So the large bookings did come through, help to book the bill in GIS, the opening backlog you talked about, Robert. So I am just curious from here, thinking about bookings in the coming quarter or 2, any callouts and visibility and ability to replenish that is that is 1 question I have. Thank you. Robert F. Del Bene: Yeah. Yep. So our cup couple different elements that are know, baked in baked into our forecast, which are important. And the first is that the project base in CES, the benefit we saw in the first quarter is also reflected in the pipeline going forward. So you know, we have confidence that we are gonna be able to continue to execute at the rates we had in the first quarter. So that is a real positive. The second thing I would mention, just longer term, in GIS, even though we had a good, you know, we had a good quarter of bookings, a pipeline in along big deal longer term big deal pipeline in infrastructure services is strong. And I attribute a lot of that to the fact that we now have Oasis, and there is a you know, there is lots of interest in it. And we have a lot you know, a very nice proportion of new customers in the pipeline. So that is encouraging and gives us confidence in the in the longer term here in GIS that will improve our performance. Operator: Again, if you would like to ask a question, please press 1 on your telephone keypad. Your next question comes from the line of Antonio Jaramillo with Morgan Stanley. Please go ahead. Analyst: I want to just quickly on the bookings and pipeline conversion. Things like, you know, that there is some opportunity to improve that, and it seems like you have Just can you talk to us about, like, you know, how we should think about ongoing improvements and know, how important those are gonna be to being able to realize kinda targets on a go forward basis. Yeah. Robert F. Del Bene: So, Antonio, I think 1 thing that is encouraging to us and we are albeit early, the discussions we are having on potential OASIS customers are moving at a faster pace than traditional IT outsourcing discussions we have had in the past. So it gives us it gives us, you know, optimism that the that the rate you know, close rates on those longer term deals are gonna move faster. Now we have to prove that, and, you know, we are we are just beginning here. But the early indications are that customer interest is driving an acceleration of timing. So we are hopeful with that. Now we do not have that baked into our numbers. So we are not counting on that in the numbers in the in the guide. Analyst: Got it. Got it. Okay. that is that is super helpful. And then wanted to also follow-up on Raul's comment on change of leadership. Are you feeling like, clearly, like, agentic has some different skill set requirements, etcetera, and, you know, that may be there may be some opportunity there at the leadership level. But what about in just regular staffing and developing skills on of the organization generally. Is that something you can do organically? Or should we look for you to look outside, whether it be acquisition or increased hiring and associated churn? Just wondering how to think about that component of management. Thanks. Raul J. Fernandez: Yeah. No. that is a great question. And you know what is interesting is in this in this calendar year, we have gone from thinking about engaging with a customer with a mindset of, discovery taking 3 to 6 months, prototyping 6 to 12 months, deployment at month 12 and beyond. Those have now been cut down to days and weeks. And the ability for people to differently, to move beyond best practices of yesterday, move beyond and not be burdened by what used to be a great way of building things like Agile. it is a completely different mindset. We are all going through this. We are all discerning how our teams are across every company. And we are taking lessons learned in terms of what makes a great AI player and trying to put those tools and that training into the hands of every single employee that we have. Now having said that, some will make it, some will not. But I also believe that an organic non-M&A approach where you are selecting players in a very thoughtful manner is absolutely the best approach. The skills, the mix of collaboration, the mix of being able to own an outcome, the mix of being able to work in much smaller but faster teams, that is a different combination. And frankly, we have some of those people. And if we do not, we are going to try to retrain our people. And if we are not able to do that, we will aggressively recruit those people. So I think it is a complexity of this moment in time and the transformation that AI both provides as an opportunity and the challenge of finding the right skills, the right players in the right places to take advantage of that opportunity. Operator: Your next question comes from the line of Rod Bourgeois with DeepDive Equity Research. Please go ahead. Rod Bourgeois: Hey, guys. Hey. I want to ask about how AI is impacting data center activities in spending priorities and how this is affecting your demand. You had IBM get hit by clients shifting their spending priorities You have got enterprises trying to optimize their token usage. And wanting to work across multiple AI model types And so there is a lot of shifting happening with data center priorities, it seems. Should those trends be helpful to you or is some of the weakness in your discretionary demand in GIS related to those shifting priorities. Help us sort that out because it might also be an opportunity as you roll out Oasis to address some of those prevailing trends? Thanks. Raul J. Fernandez: Yeah. No, you are totally right there. And I think the dynamics that I have viewed and that I have spoken to customers about is that they are as they are making decisions, their management team, their boards, are asking extra questions with regards to, is this the right technical approach? Is there enough agentic in this solution? How long is this solution going to have a useful life Those questions are absolutely smart, needed, and should be asked. But those questions do introduce delay in decision making. I think that is something that will dissipate over time. As those questions and cycle time become shorter. And as more proof points are deployed and people can point to real returns and they can move more quickly, to saying yes to the new kind of agentic products. Now, you know, I think clearly, our whole sector has been impacted by a macro shift in spend, and focus on kind of the infrastructure side But the other point that you made about complexity drives the need for DXC and others more than ever. Because that complexity, needing to understand how to optimize architecture, tokens, harnessing, where you use what model, that is a real time you only know it if you are doing it. And we are doing it. And so I do believe medium to long term, it is a huge upside for us. Because we are in the middle of solving these for a small set of customers but that small set of customers and those proof points are gonna be very valuable to us as we scale. And frankly, we have deployable multilingual certified FTE talent. That makes sense. Rod Bourgeois: Hey. I am getting some follow-up questions about the GIS margin situation. So the margins are quite low. I mean, even relative to history. what is the main driver of improving those margins? what is the main reason they are down? And what is the main driver of getting them up as the year progresses? Robert F. Del Bene: Yeah. Rod, it is Robert. So in the first quarter, the revenue decline is the main driver of the decline in margins. First quarter is normally seasonally low. But the revenue performance in the quarter drove the margin down below where we expected. Now going forward, we have 2, you know, 2 main factors which are gonna drive the improvement. The first is the improvement in revenue performance throughout the year. That is the significant driver. And second is just progress on our cost reduction road map. Or cost takeout road map. And we do typically have that normally bills as we progress throughout the year, and we expect that to happen again this year. As I mentioned earlier, we expect to exit the year at margins that are similar to last year's. Thank you. Thanks. Operator: And that concludes our question and answer session. I would now like to turn the conference back over to Roger Sachs for closing comments. Roger Sachs: Thank you, everybody, for joining us today. Thank you for your ongoing support, and we look forward to speaking with everybody again next quarter. Operator: This concludes today's conference call. Thank you for your participation and you may now disconnect. Before you buy stock in DXC Technology, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and DXC Technology wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. DXC (DXC) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

Total revenue for Q1 FY27 of $3.00 billion, down 5.1% YoY, down 6.7% on an organic basis(1) Q1 FY27 Bookings of $3.0 billion, up 5% YoY with a book to bill ratio of 0.99x Q1 FY27 EBIT margin of 6.9%, and adjusted EBIT(2) margin of 5.0% Q1 FY27 Diluted earnings per share of $0.73; Non-GAAP diluted earnings per share(3) of $0.40, down 41.2% YoY Free cash flow(4) was $314 million compared to $97 million last year Repurchased $70 million of shares ASHBURN, Va., July 30, 2026 /CNW/ -- DXC Technology (NYSE: DXC) today reported results for the first quarter fiscal 2027. "Our first quarter results were in line with our expectations, and we are maintaining our full-year guidance," said DXC Technology President and CEO, Raul Fernandez. "Through our Fast Track approach to innovation, we are bringing a new generation of AI-enabled platforms to market that help customers modernize operations and deliver measurable business outcomes. The momentum we are building is strengthening our capabilities, deepening customer engagement, and creating a clearer path to long-term value creation. The recent addition of Paul Taylor as incoming President further strengthens our leadership team and positions us to execute our strategy with greater speed and focus." Financial Highlights - First Quarter Fiscal Year 2027 Total revenue was $3.00 billion, down 5.1% year-over-year (down 6.7% on an organic basis).(1) EBIT was $207 million, up 176.0% year-over-year with a corresponding margin of 6.9%. Adjusted EBIT(2) was $150 million, down 30.6% year-over-year, with a corresponding margin(2) of 5.0%. Diluted earnings per share was $0.73. Non-GAAP diluted earnings per share(3) was $0.40, down 41.2% year-over-year. Cash generated from operations was $418 million, up 124.7% year-over-year. Free cash flow(4) was $314 million, compared to $97 million in the first quarter of fiscal year 2026. Free cash flow in fiscal 2027 includes cash proceeds of $214 million related to a litigation judgment. Bookings of $3.0 billion increased 5% year-over-year, with a book to bill ratio of 0.99x. Returned $70 million of capital to shareholders by repurchasing approximately 6.7 million shares. Segment Highlights - First Quarter Fiscal Year 2027 Consulting and Engineering Services ("CES") Revenue was $1,231 million, down 1.2% year-over-year (down 3.0% on an organic basis).(1) Segment profit was $100 million, down 4.8% year-over-year, with a corresponding margin of 8.1%. Bookings declined 18.5% year-over-year, with a book to bill ratio of 0.98x. Global Infrastructure Services ("GIS") Revenue was $1,449 million, down 9.4% year-over-year (down 11.1% on an organic basis).(1) Segment profit was $38 million, down 60.8% year-over-year, with a corresponding margin of 2.6%. Bookings increased 34.7% year-over-year, with a book to bill ratio of 1.11x. Insurance Software & Services ("Insurance") Revenue was $319 million, up 1.9% year-over-year (up 1.4% on an organic basis).(1) Segment profit was $34 million, up 3.0% year-over-year, with a corresponding margin of 10.7%. Bookings increased 3.6% year-over-year, with a book to bill ratio of 0.54x. Full Year Fiscal 2027 and Second Quarter Fiscal Year 2027 Guidance Full Year Fiscal 2027 Total revenue in the range of $12.10 billion and $12.35 billion, a decline of 5.0% to 3.0% year-over-year on an organic basis.(1) Adjusted EBIT margin(2) in the range of 6.0% to 7.0%. Non-GAAP diluted EPS(3) in the range of $2.40 to $2.90. Free Cash Flow(4) of ~$685 million compared to the prior guide of ~$600 million. The increase is the reflection of litigation related matters. Second Quarter Fiscal 2027 Total revenue in the range of $2.97 billion and $3.00 billion, a decline of 6.5% to 5.5% year-over-year on an organic basis.(1) Adjusted EBIT margin(2) of ~6.0%. Non-GAAP Diluted EPS(3) of ~$0.55. Additional metrics for the second quarter and full year fiscal 2027 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 first quarter fiscal 2027 results at 5:00 p.m. ET on July 30, 2026. The dial-in number for domestic callers is 888-596-4144. Callers who reside outside of the United States should dial +1-646-968-2525. The passcode for all participants is 9664077#. 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 August 6, 2026, at 800-770-2030. The replay passcode is 9664077#. A transcript of the conference call will be posted on DXC Technology's Investor Relations website. About DXC Technology DXC Technology (NYSE: DXC) is a leading technology and innovation partner delivering software, services, and solutions to global enterprises and public sector organizations — helping them harness AI to drive outcomes at a time of exponential change with speed. With deep expertise in Managed Infrastructure Services, Application Modernization, and Industry-Specific Software Solutions, DXC modernizes, secures, and operates some of the world's most complex technology estates. Learn more at DXC.com. Forward-Looking Statements Except for historical information, statements in this document may constitute "forward-looking statements" based on our current assumptions regarding future performance. These statements involve numerous risks, uncertainties, and other factors outside our control that could cause actual results to differ materially, including: inability to effectively manage our sales organization, including execution, pipeline, and talent management; our inability to expand service offerings to address emerging technological trends and competitive pressures; failure to attract and retain key personnel, including artificial intelligence (AI) and technical experts, or maintain partner relationships; risks associated with AI, including adoption, deployment, and governance, reliance on third-party platforms, cybersecurity, privacy, evolving regulations, and competitive displacement; inability to accurately estimate contract costs and timelines, or failure by us or third parties to deliver on commitments; systems failures, catastrophic events, and resulting service interruptions; liability or reputational damage from security breaches, cyber-attacks, or disclosure of confidential or personal data; failure to comply with new or existing laws, regulations, and customer contracts, including those relating to data privacy, economic sanctions, export controls, AI, and environmental, social, and governance (ESG) expectations; failure to maintain our credit rating, manage indebtedness, or raise capital, adversely affecting our liquidity and borrowing costs; risks associated with international operations, including exchange rate fluctuations and geopolitical conflicts (such as in Russia/Ukraine and the Middle East); macroeconomic challenges, including inflation, reduced customer spending, and economic slowdowns affecting deal closures and cost-takeout efforts; inability to compete effectively, maintain customer relationships, collect receivables, or comply with government contracting regulations; failure to succeed in strategic transactions, acquisitions, or partnerships; securities price volatility; supply chain disruptions, supplier non-performance, or increased procurement costs due to trade tensions, tariffs, or hostilities; climate change, natural disasters, and increased scrutiny of ESG initiatives; infringement of intellectual property rights, or inability to procure necessary third-party licenses; failure to achieve expected benefits of restructuring plans, workforce reductions, and automation/AI reliance; failure to maintain effective disclosure controls and internal control over financial reporting; asset impairment charges, including but not limited to intangibles and deferred tax assets; inability to pay dividends or repurchase shares; pending investigations, claims, and disputes; changes in tax rates, tax laws, and the timing and outcome of tax examinations; and risks related to completed strategic transactions. For a written description of these factors, see our most recently filed Annual Report on Form 10-K, and any updating information in subsequent SEC filings. Forward-looking statements speak only as of the date 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. 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. Merger-related indemnification – represents the Company's estimate of potential net liability for tax related indemnifications. Gain on litigation award – reflects a gain related to the TCS Litigation judgment. Gains and losses on real estate and facility sales – gains and losses related to dispositions of real property. Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities. 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). Non-GAAP Results A reconciliation of reported results to non-GAAP results is as follows: 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 Segment Profit Segment profit is defined as segment revenues less costs of services, selling, general and administrative, depreciation and amortization, and other segment items. The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated expenses generally include certain corporate function costs, pension and OPEB actuarial and settlement gains and losses, restructuring costs, transaction, separation, and integration-related costs, amortization of acquired intangible assets, impairment losses, gains/(losses) on dispositions of businesses, gains/(losses) on real estate and facility sales, and other costs that do not reflect ongoing segment operating performance. As part of the transition to the new segment structure, the Company updated the assumptions that define which expenses remain in corporate post allocation. The tables below reflect those revised assumptions. View original content to download multimedia:https://www.prnewswire.com/news-releases/dxc-technology-reports-first-quarter-fiscal-year-2027-results-302839256.html

IT services provider DXC Technology (NYSE:DXC) met Wall Street’s revenue expectations in Q2 CY2026, but sales fell by 5.1% year on year to $3.00 billion. On the other hand, next quarter’s revenue guidance of $2.99 billion was less impressive, coming in 1.5% below analysts’ estimates. Its non-GAAP profit of $0.40 per share was 11.3% below analysts’ consensus estimates. Is now the time to buy DXC? Find out in our full research report. Revenue: $3.00 billion vs analyst estimates of $2.99 billion (5.1% year-on-year decline, in line) Adjusted EPS: $0.40 vs analyst expectations of $0.45 (11.3% miss) The company reconfirmed its revenue guidance for the full year of $12.23 billion at the midpoint Management reiterated its full-year Adjusted EPS guidance of $2.65 at the midpoint Operating Margin: 6.9%, up from 3.8% in the same quarter last year Free Cash Flow Margin: 10.5%, up from 3.1% in the same quarter last year Organic Revenue fell 6.7% year on year (beat) Market Capitalization: $1.91 billion "Our first quarter results were in line with our expectations, and we are maintaining our full-year guidance," said DXC Technology President and CEO, Raul Fernandez. Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE:DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations. A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. With $12.48 billion in revenue over the past 12 months, DXC is larger than most business services companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. This also gives it the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, DXC likely needs to optimize its pricing or lean into new offerings and international expansion. As you can see below, DXC struggled to generate demand over the last five years. Its sales dropped by 6.4% annually, a poor baseline for our analysis. We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. DXC’s annualized revenue declines of 3.7% over the last two years suggest its demand continued shrinking. DXC also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, DXC’s organic revenue averaged 4.9% year-on-year declines. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results. This quarter, DXC reported a rather uninspiring 5.1% year-on-year revenue decline to $3.00 billion of revenue, in line with Wall Street’s estimates. Company management is currently guiding for a 5.6% year-on-year decline in sales next quarter. Looking further ahead, sell-side analysts expect revenue to decline by 3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not accelerate its top-line performance yet. ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention. AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice. Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes. DXC’s adjusted operating margin has more or less stayed the same over the last 12 months , averaging 7.9% over the last five years. This profitability was paltry for a business services business and caused by its suboptimal cost structure. Looking at the trend in its profitability, DXC’s adjusted operating margin might have fluctuated slightly but has generally stayed the same over the last five years, meaning it will take a fundamental shift in the business model to change. In Q2, DXC generated an adjusted operating margin profit margin of 7.5%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable. We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable. DXC’s flat EPS over the last five years was weak but better than its 6.4% annualized revenue declines. However, this alone doesn’t tell us much about its business quality because its adjusted operating margin didn’t improve. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For DXC, its two-year annual EPS declines of 4.8% show its recent history was to blame for its underperformance over the last five years. These results were bad no matter how you slice the data. In Q2, DXC reported adjusted EPS of $0.40, down from $0.68 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects DXC’s full-year EPS to shrink by 5.3% from $2.97 to $2.81. We enjoyed seeing DXC beat analysts’ full-year EPS guidance expectations this quarter. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed and its EPS fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 5.2% to $10.66 immediately following the results. DXC underperformed this quarter, but does that create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.