DXC Technology — Second Quarter Fiscal Year 2027 Earnings Summary

Financial Performance:

• Total revenue for Q2 FY27 was $3.03 billion, a 4.0% decrease year-over-year (YoY) and 4.0% on an organic basis.
• EBIT was $66 million, down 52.2% YoY, with a margin of 2.2%.
• Adjusted EBIT was $187 million, down 26.4% YoY, with a margin of 6.2%.
• Diluted earnings per share (EPS) was $0.15.
• Non-GAAP diluted EPS was $0.67, down 20.2% YoY.
• Cash generated from operations was $217 million, down 46.9% YoY.
• Free cash flow for Q2 FY27 was $91 million, compared to $240 million in Q2 FY26; free cash flow for the first half of FY27 was $405 million, compared to $337 million in the prior year period.
• Bookings for Q2 FY27 were $2.4 billion, a 10% decline YoY, with a trailing twelve-month book-to-bill ratio of 1.0x.

Guidance and Future Outlook:

• Full Fiscal Year 2027 revenue guidance is $11.91 billion to $11.98 billion, representing a 5.0% to 5.5% decline YoY on an organic basis.
• Full Fiscal Year 2027 Adjusted EBIT margin guidance is 5.75% to 6.25%.
• Full Fiscal Year 2027 Non-GAAP diluted EPS guidance is $2.25 to $2.50.
• Full Fiscal Year 2027 Free Cash Flow guidance is approximately $600 million.
• Third Quarter Fiscal 2027 revenue guidance is approximately $2.98 billion, a ~6.0% decline YoY on an organic basis.
• Third Quarter Fiscal 2027 Adjusted EBIT margin guidance is ~6.0%.
• Third Quarter Fiscal 2027 Non-GAAP Diluted EPS guidance is ~$0.55.
• FX assumptions for Q3 FY27 include $1.12/Euro, $1.32/GBP, and $0.70/AUD.
• FX assumptions for Full Year FY27 include $1.14/Euro, $1.33/GBP, and $0.70/AUD.

Business Segments and Product Lines:

• Consulting and Engineering Services (CES) revenue was $1,213 million, down 3.3% YoY (organic), with segment profit of $125 million (margin 10.3%) and bookings down 17.0% YoY.
• Global Infrastructure Services (GIS) revenue was $1,427 million, down 10.0% YoY (organic), with segment profit of $66 million (margin 4.6%) and bookings down 12.7% YoY.
• Insurance Software & Services (Insurance) revenue was $394 million, up 23.1% YoY (organic), driven by a favorable contract modification; segment profit was $45 million (margin 11.4%) and bookings increased 43.5% YoY.
• Management noted progress with agentic and AI-based solutions, citing clearer average deal sizes, close cycle timing, and pace of follow-on work for agentic solutions.

Market and Competitive Landscape:

• Management stated that core revenue recovery will take time but emphasized DXC's differentiated position in operating mission-critical systems as enterprises deploy AI at scale.
• The Insurance segment's growth included a favorable contract modification, indicating specific customer deal activity.

Risks and Challenges:

• Forward-looking statements cite risks including inability to manage sales organization, expand service offerings, or attract/retain AI and technical talent.
• Risks include AI adoption, deployment, governance, reliance on third-party platforms, cybersecurity, privacy, and evolving regulations.
• Challenges include inability to estimate contract costs, systems failures, security breaches, and compliance with data privacy and ESG expectations.
• Financial risks include inability to maintain credit rating, manage indebtedness, or raise capital, as well as exchange rate fluctuations and geopolitical conflicts.
• Other risks include macroeconomic challenges, supply chain disruptions, climate change, and asset impairment charges.

Management Commentary and Tone:

• CEO Raul Fernandez stated the company delivered revenue, adjusted EBIT, and Non-GAAP diluted EPS above expectations for the quarter.
• Management expressed confidence that DXC's role in operating mission-critical systems provides a differentiated position for AI deployment.
• The tone acknowledged that core revenue recovery is a longer-term process.

Other Key Points:

• DXC repurchased approximately 5.7 million shares for $60 million during the quarter.
• DXC acknowledged ongoing discussions regarding a possible sale of its insurance business.
• The company does not provide reconciliations of non-GAAP measures in its guidance due to the unavailability of key information regarding significant non-recurring items.
• Segment profit excludes unallocated corporate expenses, including restructuring costs, transaction/separation/integration costs, amortization of acquired intangibles, and impairment losses.
• The TCS litigation judgment resulted in a $168 million gain in the first half of FY27, excluded from non-GAAP results.
• Cash and cash equivalents were $1.599 billion as of September 30, 2026, down from $1.737 billion as of March 31, 2026.
• Total liabilities were $8.891 billion as of September 30, 2026, down from $9.681 billion as of March 31, 2026.