DXC Technology reported results for the first quarter of fiscal year 2025.
"I am pleased with our first quarter results that came in ahead of our expectations on top line, adjusted EBIT margin and adjusted diluted EPS," said DXC Technology President and Chief Executive Officer, Raul Fernandez. "Our performance is an early testament to the improved execution by our teams along many fronts. Our teams are focused on designing and implementing solutions that embed engineering skills, AI and industry expertise to capture opportunities in an expanding addressable market. As our enhanced operating model gains traction, we believe it positions us well to deliver greater value for our customers, improve financial performance and drive long-term shareholder value.”
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(1) |
Revenue growth on an organic basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period's foreign currency exchange rates, adjusted for the impact of acquisitions and divestitures. A reconciliation of GAAP to non-GAAP measure are attached to this release . |
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(2) |
Non-GAAP diluted earnings per share is a non-GAAP measure. A reconciliation of GAAP diluted earnings per share to non-GAAP diluted per share is attached to this release . |
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(3) |
Free cash flow is a non-GAAP measure. Free cash flow for the first quarter of fiscal year 2025 is calculated by subtracting capital expenditures (Purchase of Property, Plant & Equipment, Transition and Transformation Contract Costs and Software Purchased or Developed) of $193 million from cash flow from operations of $238 million. Free cash flow for the first quarter of fiscal year 2024 is calculated by subtracting capital expenditures of $202 million from cash flow from operations of $127 million. |
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(4) |
Adjusted EBIT and Adjusted EBIT margin are non-GAAP measures. Reconciliations of GAAP Net Income to adjusted EBIT are attached to this release . |
Financial Highlights - First Quarter Fiscal Year 2025
- Total revenue was $3.24 billion, down 6% year-over-year (4% on an organic basis). (1)
- Net income of $25 million, down 40% year-over-year, with a corresponding margin of 0.8%, compared to net income of $42 million in the first quarter of fiscal 2024, or 1.2% of sales.
- EBIT was $89 million, down 6% year-over-year with a corresponding margin of 2.8%. Adjusted EBIT (4) was $222 million, down 1% year-over-year, with a corresponding margin of 6.9%.
- Diluted earnings per share was $0.14, down 18% year-over-year. Non-GAAP diluted earnings per share (2) was $0.74, up 17% year-over-year.
- Cash generated from operations was $238 million, up 87% year-over-year. Free cash flow (3) was $45 million in the first quarter of fiscal year 2025, as compared to using $75 million in the first quarter of fiscal year 2024.
- Book to Bill ratio was 0.77x, compared to 0.89x in the first quarter of fiscal year 2024.
Segment Highlights - First Quarter Fiscal Year 2025
Global Business Services ("GBS")
- Revenue was $1.67 billion, down 2% year-over-year (up 1% on an organic basis) (1)
- Segment profit was $181 million, down 6% year-over-year, with a corresponding margin of 10.8%
- Book to Bill ratio of 0.83x, compared to 0.84x during the first quarter of fiscal 2024
Global Infrastructure Services ("GIS")
- Revenue from GIS was $1.56 billion, down 10% year-over-year (down 9% on an organic basis) (1)
- Segment profit was $114 million, up 25% year-over-year, with a corresponding margin of 7.3%
- Book to Bill ratio of 0.70x, compared to 0.94x during the first quarter of fiscal 2024
Full Year Fiscal 2025 and Second Quarter Fiscal Year 2025 Outlook
Full Year Fiscal 2025
- Total revenue in the range of $12.74 billion and $13.02 billion, compared to the prior outlook of $12.67 billion to $12.95 billion, a decline of 6% to 4% on an organic basis (1)
- Adjusted EBIT margin (4) between 6.5% to 7.0%, compared to the prior outlook of 6.0% to 7.0%
- Non-GAAP diluted EPS (2) in the range of $2.75 to $3.00, compared to the prior outlook of $2.50 to $3.00
- Free Cash Flow (3) of approximately $450 million, up from the prior outlook of approximately $400 million
Second Quarter Fiscal 2025
- Total revenue in the range of $3.19 billion and $3.22 billion, a decline of 6.5% to 5.5% year-over-year on an organic basis (1)
- Adjusted EBIT margin (4) between 6.5% to 7.0%
- Non-GAAP Diluted EPS (2) in the range of $0.70 to $0.75
Additional metrics for the second quarter and full fiscal year 2025 outlook are presented in the table below.
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Revenue |
Q2 FY25 Outlook |
FY25 Outlook |
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Lower End |
Higher End |
Lower End |
Higher End |
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YoY Organic Revenue % |
(6.5)% |
(5.5)% |
(6.0)% |
(4.0)% |
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Acquisition & Divestitures Revenues % |
(0.1)% |
(0.1)% |
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Foreign Exchange Impact on Revenues % |
(0.6)% |
(0.6)% |
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Others |
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Pension Income Benefit* |
~$27 |
~$105 |
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Net Interest Expense |
~$21 |
~$80 |
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Non-GAAP Tax Rate |
~32% |
~32% |
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Weighted Average Diluted Shares Outstanding |
~184 |
~184 |
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Restructuring & TSI Expense |
~$375 |
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Capital Lease / Asset Financing Payments |
~$275 |
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Foreign Exchange Assumptions |
Current Estimate |
Current Estimate |
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$/Euro Exchange Rate |
$1.08 |
$1.08 |
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$/GBP Exchange Rate |
$1.28 |
$1.28 |
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$/AUD Exchange Rate |
$0.65 |
$0.65 |
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* Pension benefit is split between Cost Of Sales (COS) & Other Income: |
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Fiscal year 2025 : Net pension benefit of $105 million; $50 million service cost in COS, $155 million pension benefit in Other income Fiscal year 2024: Net pension benefit of $92 million; $53 million service cost in COS, $145 million pension benefit in Other income |
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DXC does not provide a reconciliation of non-GAAP measures that it discusses as part of its guidance because certain significant information required for such reconciliation is not available without unreasonable efforts or at all, including, most notably, the impact of significant non-recurring items. Without this information, DXC does not believe that a reconciliation would be meaningful.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast to discuss results at 5:00 p.m. EDT August 8, 2024. The dial-in number for domestic callers is 888-330-2455. Callers who reside outside of the United States should dial +1-240-789-2717. The passcode for all participants is 4164760#. The webcast audio and any presentation slides will be available through a link posted on DXC Technology’s Investor Relations website.
A replay of the conference call will be available approximately two hours after the conclusion of the call until 11:59 PM EDT on August 15, 2024, at 800-770-2030 for domestic callers and at +1-647-362-9199 for international callers. The replay passcode is 4164760. A transcript of the conference call will be posted on DXC Technology’s Investor Relations website.
