DXC Technology 2025 Q4 Earnings Returns to Profitability with Net Income Swinging 234.9%

DXC Technology (DXC) reported its fiscal 2025 Q4 earnings on May 14th, 2025. The company returned to profitability, with earnings per share (EPS) of $1.46, reversing a loss of $1.10 per share from the prior year. DXC's net income reached $263 million, marking a 234.9% positive shift from a previous net loss of $195 million. Revenue for the quarter was $3.17 billion, slightly beating expectations of $3.13 billion. Despite this, the company's guidance for the upcoming quarter and fiscal year fell short of analyst estimates, which may weigh on investor sentiment.

Revenue

DXC Technology's total revenue for Q4 2025 was $3.17 billion, a decline of 6.4% compared to the previous year. The revenue breakdown reveals that Global Business Services contributed $1.63 billion, reflecting a 4.8% decrease, while Global Infrastructure Services generated $1.54 billion, down 8.1% year-over-year.

Earnings/Net Income

DXC Technology delivered an EPS of $1.46 for Q4 2025, a drastic improvement from the loss of $1.10 per share in the previous year. Net income surged to $263 million from a loss of $195 million, showcasing a significant turnaround in profitability. The EPS reflects a positive financial outcome.

Post-Earnings Price Action Review

The investment strategy of purchasing DXC shares following a revenue beat and holding them for 30 days has underperformed significantly, yielding a return of -24.91% and lagging behind the benchmark return of 87.14%. The strategy demonstrated high risk with a Sharpe ratio of -0.12 and a maximum drawdown of -68.96%. These metrics highlight the strategy's inability to capitalize on positive revenue surprises, resulting in substantial financial risk and underwhelming returns compared to the broader market. Investors may need to reassess their strategies when trading DXC shares post-earnings announcements, considering the volatility and performance metrics observed.

CEO Commentary

Raul Fernandez, President and CEO, emphasized DXC Technology's progress in achieving sustainable and profitable revenue growth, with bookings up over 20% and a book-to-bill ratio of 1.2. He acknowledged the priority of reversing revenue decline and the necessary work to strengthen operational capabilities. Fernandez highlighted the importance of enhancing customer relationships and sales performance, noting the hiring of a new chief revenue officer. He expressed optimism about leveraging AI for client transformation and stressed the significance of leadership stability in the company's turnaround.

Guidance

For fiscal year 2026, DXC Technology anticipates a 3% to 5% organic revenue decline, with non-GAAP diluted EPS projected between $2.75 and $3.25. The adjusted EBIT margin is expected to range from 7% to 8%. The company forecasts approximately $600 million in free cash flow, accounting for increased restructuring spending. For Q1 2026, DXC expects a 4.0% to 5.5% decline in organic revenue, with an adjusted EBIT margin between 6% and 7% and non-GAAP diluted EPS ranging from $0.55 to $0.65.

Additional News

In recent weeks, DXC Technology has announced significant management changes, including the appointment of a new Chief Revenue Officer, aimed at boosting sales performance and customer engagement. The company also revealed plans for a strategic partnership with a leading AI technology firm to enhance its service offerings and drive client transformation. Additionally, DXC has been involved in discussions regarding potential acquisitions to strengthen its market position and expand its service capabilities. These developments reflect DXC's strategic initiatives to improve operational efficiency and achieve sustainable growth.