DXC Technology Company Q1 FY2026 earnings call

Raul Fernandez mentioned first quarter results were at the high end of guided ranges for organic revenue growth and adjusted EBIT margin. Non-GAAP EPS was above guidance. Bookings increased 14% Y/Y. Ramnath Venkataraman joined as President of CES, focusing on profitable growth. AI initiatives include integrating AI into client operations, partnerships with Boomi, and internal AI applications in IT, security, marketing, HR, legal, and finance. Pipeline expansion and execution focus for sustainable growth.

Total revenue was $3.2 billion, declining 4.3% on an organic basis. Segment results: Consulting & Engineering Services (CES) represents 39% of total revenue, declined 4.4% organically year-over-year; bookings grew 32% Y/Y with a book-to-bill ratio of 1.2. Global Infrastructure Services (GIS) represents 51% of total revenue, declined 5.7% organically; bookings grew modestly with a book-to-bill of 0.7. Insurance Software & Services (insurance) represents 10% of total revenue, grew 3.6% organically; expected mid-single-digit growth for the year.

Total organic revenue expected to decline 3%-5%, reported revenue range $12.6B-$12.9B. Adjusted EBIT margin 7%-8%, non-GAAP EPS $2.85-$3.35. Second quarter organic revenue decline 3.5%-4.5%, adjusted EBIT margin 6.5%-7.5%, non-GAAP diluted EPS $0.65-$0.75.

Economic uncertainty, seasonality affecting bookings, potential deferral of larger deals, and early-stage AI impact on quality assurance in coding.

Q: Bryan Bergin asked about free cash flow confidence and 2Q bookings outlook.

A: Robert Del Bene said confident in guidance, working on working capital and tax legislation, pipeline for 2Q is strong with solid growth in non-mega deals.

Q: Jonathan Lee asked about fiscal '26 revenue growth outlook and macro perspective.

A: Robert Del Bene said macro perspective includes economic uncertainty, expecting narrowing declines in CES, mid-single-digit growth in insurance, and GIS decline. Pipeline for 2Q is strong.

Q: Jamie Friedman asked about insurance transition to subscription and AI competitive position.

A: Raul Fernandez said AI is early stage, coding gains but testing still needed; Robert Del Bene said insurance bookings and backlog dynamics different, transition to SaaS planned later.

Q: Keith Bachman asked about bookings trends and book-to-bill needed for revenue growth.

A: Robert Del Bene said full year pipelines are healthy, book-to-bill needs vary by segment, trailing 12-month book-to-bill needed 1.05-1.11 sustained. Raul Fernandez added proactive solutioning is key.

Q: Antonio asked about lower-margin contracts and GenAI investment strategy.

A: Robert Del Bene said approach to lower-margin contracts is working with customers on price/terms; Raul Fernandez said GenAI investment is learning by doing across functions.

Q: Tien-Tsin Huang asked about enterprise readiness for AI and gross margin comparability.

A: Raul Fernandez said enterprise readiness varies, data and process rethinking needed; Robert Del Bene said gross margins are stable, affected by spending classification changes.

Q: Paul Obrecht asked about employee response to company changes and enterprise AI readiness.

A: Raul Fernandez said employees are energized, foundation laid, and AI is rethinking processes; Paul Obrecht also asked about enterprise readiness, Raul Fernandez discussed data and process needs.

Q: Rod Bourgeois asked about margin seasonality and profitable growth factors.

A: Robert Del Bene said margins expected to improve in back half of year; Raul Fernandez said trailing book-to-bill, winning renewals, and proactive solutions are key factors for profitable growth.