DXC Technology (DXC) reported results for the first quarter of fiscal year 2020, representing the period from April 1 through June 30, 2019.
“In the first quarter of fiscal 2020, DXC Technology continued to build momentum in our Digital business with Digital revenue growth of 35% and Digital pipeline growth of 80%,” said Mike Lawrie, chairman, president and CEO. “We continue to invest in Digital talent, capabilities, and offerings, and we are seeing strong demand for these solutions. During the quarter, we also completed the acquisition of Luxoft, which brings differentiated offerings and platforms, deep vertical expertise, and world-class talent to strengthen DXC’s unique value proposition as a leading end-to-end IT services provider.”
Financial Highlights - First Quarter Fiscal 2020
- Diluted earnings per share from continuing operations was $0.61 in the first quarter, including $(0.42) per share of restructuring costs, $(0.31) per share of transaction, separation and integration-related costs, and $(0.40) per share of amortization of acquired intangible assets. This compares with $0.78 in the year ago period.
- Non-GAAP diluted earnings per share from continuing operations was $1.74. This compares with $1.93 in the year ago period.
- Revenue in the first quarter was $4,890 million. Revenue decreased 7.4% compared with $5,282 million in the prior year.
- Income from continuing operations before income taxes was $206 million in the first quarter, including $(142) million of restructuring costs, $(105) million of transaction, separation and integration-related costs, and $(138) million of amortization of acquired intangibles. This compares with $360 million in the year ago period.
- Non-GAAP income from continuing operations before income taxes was $591 million compared with $750 million in the year ago period.
- Net income was $168 million for the first quarter, including $(114) million of restructuring costs, $(83) million of transaction, separation and integration-related costs and $(107) million of amortization of acquired intangibles. This compares with $266 million in the prior year period.
- Non-GAAP net income was $472 million.
- Adjusted EBIT was $652 million in the first quarter compared with $803 million in the prior year. Adjusted EBIT margin was 13.3% compared with 15.2% in the year ago quarter.
- Net cash used in operating activities was $66 million in the first quarter, compared with net cash provided by operating activities of $369 million in the year ago period.
- Adjusted free cash flow was $72 million in the first quarter.
Global Business Services (GBS)
GBS revenue was $2,159 million in the quarter compared with $2,213 million for the prior year. GBS revenue decreased 2.4% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.9%. GBS revenues increased 0.5% year-over-year at constant currency as a result of continued growth in our Enterprise and Cloud applications business and contributions from acquisitions. This was offset by continued headwinds in our traditional application maintenance and management business. GBS profit margin in the quarter was 17.0%, down from 18.2% in the prior year, reflecting investments to support Digital hiring and capabilities. New business awards for GBS were $2.4 billion in the first quarter.
Global Infrastructure Services (GIS)
GIS revenue was $2,731 million in the quarter compared with $3,069 million for the prior year. GIS revenues decreased 11.0% year-over-year, including an unfavorable foreign currency exchange rate impact of 3.4%. GIS revenues decreased 7.6% year-over-year at constant currency as a result of the acceleration of client savings on several large contracts as well as continued decline in our IT outsourcing services business as clients shift to cloud environments. GIS profit margin in the quarter was 12.4%, down from 15.4% in the prior year, reflecting investments in the business and less impact from cost improvement actions. New business awards for GIS were $1.8 billion in the first quarter.
A replay of the conference call will be available until August 15, 2019. The replay dial-in number is 888-203-1112 for domestic callers and +1-719-457-0820 for callers who reside outside of the United States. The replay passcode is also 6653201. A replay of this webcast is also available on DXC Technology’s Investor Relations website.
