DXC Technology reported results for the second quarter fiscal 2026.
"For the second quarter, we delivered Adjusted EBIT margin and Non-GAAP diluted EPS above our guidance and generated very strong free cash flow. Our revenue performance has remained consistent throughout the year, and we continue to be laser focused on better execution and driving pipeline conversion in the quarters ahead," said DXC Technology President and CEO, Raul Fernandez. "We are introducing a strategic and tactical game plan to win in a rapidly evolving AI global economy. This game plan includes formalizing a two-track approach to running our business, core track and fast track, and the launch of our Xponential AI framework."
Financial Highlights - Second Quarter Fiscal Year 2026
- Total revenue was $3.16 billion, down 2.5% year-over-year (down 4.2% on an organic basis).(1)
- EBIT was $138 million, up 24.3% year-over-year with a corresponding margin of 4.4%. Adjusted EBIT(2) was $254 million, down 9.0% year-over-year, with a corresponding margin(2) of 8.0%.
- Diluted earnings per share was $0.20, down 13.0% year-over-year. Non-GAAP diluted earnings per share(3) was $0.84, down 9.7% year-over-year.
- Cash generated from operations was $409 million, up $214 million year-over-year. Free cash flow(4) was $240 million, up $192 million year-over-year.
- Bookings of $2.7 billion increased 2.4% year-over-year, with a book to bill ratio of 0.85x. The trailing twelve month book to bill ratio was 1.08x.
- Returned $75 million of capital to shareholders by repurchasing approximately 5.3 million shares.
Segment Highlights - Second Quarter Fiscal Year 2026
Consulting and Engineering Services ("CES")
- Revenue was $1,255 million, down 1.9% year-over-year (down 3.4% on an organic basis).(1)
- Segment profit was $145 million, down 17.1% year-over-year, with a corresponding margin of 11.6%.
- Bookings declined 2.7% year-over-year, with a book to bill ratio of 0.92x.
- Trailing Twelve month book to bill ratio of 1.15x.
Global Infrastructure Services ("GIS")
- Revenue was $1,586 million, down 4.2% year-over-year (down 6.3% on an organic basis).(1)
- Segment profit was $122 million, up 1.7% year-over-year, with a corresponding margin of 7.7%.
- Bookings increased 4.1% year-over-year, with a book to bill ratio of 0.82x.
- Trailing Twelve month book to bill ratio of 1.08x.
Insurance Services ("Insurance")
- Revenue was $320 million, up 4.6% year-over-year (up 3.6% on an organic basis).(1)
- Segment profit was $28 million, down 24.3% year-over-year, with a corresponding margin of 8.8%.
- Bookings increased 24.9% year-over-year, with a book to bill ratio of 0.68x.
- Trailing Twelve month book to bill ratio of 0.76x.
Full Year Fiscal 2026 and Third Quarter Fiscal Year 2026 Guidance
Full Year Fiscal 2026
- Total revenue in the range of $12.67 billion and $12.81 billion, a decline of 4.5% to 3.5% year-over-year on an organic basis compared to the prior guide of $12.61 billion and $12.87 billion, a decline of 5.0% to 3.0%.(1)
- Adjusted EBIT margin(2) in the range of 7.0% to 8.0%.
- Non-GAAP diluted EPS(3) in the range of $2.85 to $3.35.
- Free Cash Flow(4) of ~$650 million compared to the prior guide of $600 million.
Third Quarter Fiscal 2026
- Total revenue in the range of $3.18 billion and $3.22 billion, a decline of 5.0% to 4.0% year-over-year on an organic basis.(1)
- Adjusted EBIT margin(2) in the range of 7.0% to 8.0%.
- Non-GAAP Diluted EPS(3) in the range of $0.75 to $0.85.
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(1) |
Revenue growth on an organic basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period's foreign currency exchange rates, adjusted for the impact of acquisitions and divestitures. A reconciliation of GAAP to non-GAAP measure are attached to this release. |
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(2) |
Adjusted EBIT and Adjusted EBIT margin are non-GAAP measures. Reconciliations of GAAP Net Income to such measures are attached to this release. |
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(3) |
Non-GAAP diluted earnings per share is a non-GAAP measure. A reconciliation of GAAP diluted earnings per share to non-GAAP diluted per share is attached to this release. |
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(4) |
Free cash flow is a non-GAAP measure, calculated by subtracting capital expenditures (Purchase of Property, Plant & Equipment, Transition and Transformation Contract Costs and Software Purchased or Developed) from cash flow from operations. |
Additional metrics for the third quarter and full year fiscal 2026 guidance are presented in the table below.
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Revenue |
Q3 FY26 |
FY26 Guidance |
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|
Lower |
Higher |
Lower |
Higher |
|
|
YoY Organic Revenue % |
(5.0) % |
(4.0) % |
(4.5) % |
(3.5) % |
|
Acquisition & Divestitures Revenues % |
— % |
(0.1) % |
||
|
Foreign Exchange Impact on Revenues % |
3.7 % |
3.1 % |
||
|
Others |
||||
|
Net Interest Expense ($M) |
$11 |
$55 |
||
|
Non-GAAP Tax Rate |
~36% |
~37% |
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|
Foreign Exchange Assumptions |
Current Estimate |
Current Estimate |
||
|
$/Euro Exchange Rate |
$1.17 |
$1.16 |
||
|
$/GBP Exchange Rate |
$1.34 |
$1.34 |
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|
$/AUD Exchange Rate |
$0.66 |
$0.66 |
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DXC does not provide reconciliations of non-GAAP measures included in its guidance because certain key information necessary for such reconciliations—most notably the impact of significant non-recurring items—is unavailable without unreasonable effort or may not be available at all. As a result, DXC believes any such reconciliation would not be meaningful.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast to discuss second quarter fiscal 2026 results at 5:00 p.m. ET on October 30, 2025. 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 its conclusion until 11:59 PM ET on November 6, 2025, 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.
