DXC Technology Reports Mixed Fiscal 2025 Results Amid Bookings Growth

For the fourth quarter, DXC reported total revenues of $3.17 billion, reflecting a 6.4% decline year-over-year (4.2% on an organic basis). However, the company reported an EBIT of $350 million, marking a significant improvement compared to the previous year's loss of $289 million, resulting in an EBIT margin of 11.0%. Adjusted EBIT, on the other hand, was $230 million, down 19.0% year-over-year, with a margin of 7.3%.

The diluted earnings per share (EPS) stood at $1.43, a substantial recovery from a loss of $1.10 in the prior year. Non-GAAP diluted EPS was reported at $0.84, down 13.4% compared to the previous year.

Cash generated from operations reached $315 million, an increase of 12.5% year-over-year, while free cash flow was $111 million, down from $155 million in the same quarter last year. Notably, the company achieved a book-to-bill ratio of 1.22, significantly higher than 0.94 in the fourth quarter of fiscal 2024, indicating a positive trend in new bookings.

The GBS segment reported revenues of $1.63 billion, a decline of 4.8% year-over-year (2.4% on an organic basis). Profit for this segment was $178 million, down 21.9%, with a margin of 10.9%. The book-to-bill ratio for GBS improved to 1.16, up from 0.99 in the previous year.

GIS revenues totaled $1.54 billion, down 8.1% year-over-year (6.0% organic decline). Despite this, segment profit increased to $107 million, down 14.4%, leading to a margin of 7.0%. The book-to-bill ratio in this segment showed strong performance at 1.28, compared to 0.89 in the fourth quarter of the previous year.

For the full fiscal year 2025, DXC reported total revenues of $12.87 billion, a decrease of 5.8% from the prior year (4.6% on an organic basis). EBIT for the year was $696 million, a remarkable 260.6% increase year-over-year, with an EBIT margin of 5.4%. Adjusted EBIT reached $1.019 billion, up 1.0% year-over-year, with a margin of 7.9%.

The diluted EPS for the fiscal year was $2.10, an impressive 356.5% increase from the prior year, while non-GAAP diluted EPS rose 10.6% to $3.43. Cash generated from operations was reported at $1.398 billion, a 2.7% increase from the previous year, with free cash flow totaling $687 million, down from $756 million in fiscal 2024.

Looking ahead, DXC provided guidance for fiscal year 2026, projecting total revenue in the range of $12.18 billion to $12.44 billion, reflecting an organic decline of 5.0% to 3.0%. The company expects an adjusted EBIT margin between 7.0% and 8.0%, with non-GAAP diluted EPS estimated between $2.75 and $3.25. Free cash flow is anticipated to be around $600 million.

For the first quarter of fiscal 2026, DXC projects total revenue between $3.04 billion and $3.09 billion, expecting a year-over-year organic decline of 5.5% to 4.0%. The adjusted EBIT margin is forecasted at 6.0% to 7.0%, with non-GAAP diluted EPS expected to range from $0.55 to $0.65.

Raul Fernandez, President and CEO of DXC Technology, expressed optimism about the company's trajectory, stating, “Our fourth quarter results represent continued progress toward our goal of achieving sustained, profitable revenue growth. For the second consecutive quarter, we reported bookings growth of more than 20% and book-to-bill ratios of greater than 1.”

As DXC Technology navigates through a fluctuating economic landscape, the company's focus on enhancing operational capabilities and fostering a culture of accountability is likely to be essential for future growth and stability.