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DXC Technology (DXC) 7 Nov 24 2025 Q2 Earnings call transcript

AInvestThursday, Nov 7, 2024 10:19 pm ET
2min read

DXC Technology's second quarter earnings call for FY '25 highlighted a solid performance with adjusted EBIT margin and non-GAAP EPS exceeding guidance, despite a 5.6% year-over-year decline in revenue on an organic basis. The company's management team, led by Raul Fernandez and Rob Del Bene, provided an insightful overview of the company's strategic initiatives, financial performance, and future outlook. Here are some key themes and trends that emerged from the call:

Strategic Initiatives and Financial Performance

DXC Technology's strategic initiatives, particularly its self-help initiatives, were a focal point of the call. The company's focus on execution and building a solid foundation for future growth was evident, as they raised their full-year guidance for adjusted EBIT margin and non-GAAP EPS. This strategic focus, coupled with disciplined cost management and improved resource management, led to a notable improvement in delivery metrics and overall quality of service, resulting in a record Net Promoter Score and a reduction in contract terminations.

Focus on AI and Innovation

The company's commitment to leveraging AI across its offerings was a recurring theme. DXC Technology's recent engagements with clients such as Equitable Holdings and a large global bank showcased the significant impact of AI in accelerating digital transformations, improving operational efficiency, and driving growth. The company's investment in AI capabilities, including the creation of Gen AI Centers of Excellence, is a strategic move that positions DXC Technology as a leader in AI-driven solutions.

Revenue and Bookings

Despite a decline in revenue, particularly in the GIS segment, the company expressed confidence in improving bookings in the upcoming quarters. The recruitment of new senior leaders and the implementation of a revamped go-to-market approach are expected to drive better performance in both GIS and GBS. The company's emphasis on sales execution, geography, and the recruitment of talented professionals is a positive sign for future growth.

Looking Ahead

DXC Technology's outlook for the third quarter and the full year remains positive, with expectations of improved bookings and a higher investment in sales, marketing, and IT. The company's focus on execution and accountability, coupled with its strategic initiatives and talent acquisition, positions it well for future growth. The company's disciplined approach to cost management and its commitment to innovation, particularly in AI, are key drivers for its long-term success.

Investor Questions and Responses

During the Q&A session, investors and analysts focused on topics such as free cash flow sustainability, revenue stabilization, and growth expectations in GBS. The management team's responses provided valuable insights into the company's strategic direction, the impact of macroeconomic factors, and its confidence in executing on its initiatives. The company's transparency and willingness to engage with investors demonstrated a strong commitment to maintaining open communication and building trust with its stakeholders.

Conclusion

DXC Technology's second quarter earnings call for FY '25 showcased a company in the midst of transformation, with a clear strategic focus on execution, innovation, and growth. Despite facing challenges in certain areas, the company's leadership team expressed confidence in its ability to navigate these challenges and position the company for long-term success. With a strong focus on self-help initiatives, AI-driven solutions, and strategic talent acquisition, DXC Technology is well-positioned to capitalize on the opportunities in the digital transformation landscape.

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