DXC Technology Q1 Earnings Call Highlights

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.

“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.”

Leadership Changes and AI Talent Strategy

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.

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.

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.

OASIS and Agentic SOC Deployments

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.

Quarterly Performance

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.

Guidance Maintained

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.

About DXC Technology (NYSE:DXC)

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.

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