DXC Technology Company Q4 FY2026 earnings call

Raul mentioned in Q4, they delivered strong profitability with adjusted EBIT margin and free cash flow ahead of guidance. On revenue, missed organic guide by ~$75 million. Pursued 13 large opportunities in Q4 with over $2 billion potential contract value, won 32%, lost 40%, 28% outstanding. Focus on improving quarter conversion. DXC is moving with intent on AI enablement, using themselves as first proving ground. Examples like internal AI challenge with over 100 teams forming, building nearly 1,300 working AI agents. FastTrack is about building AI-native products and services. Core Ignite helps banks modernize without touching core. Oasis is agentic orchestration platform rewriting managed services delivery, launched with 10 customers on April 28th with early traction. Core track is about execution, pricing discipline, etc. 80% of revenue in outcome-based categories. Investor Day on June 11th to go deeper on strategy, products, etc. Rob covered Q4 results, full-year performance, and guidance for 2027 and first quarter. Adjusted EBIT margin 7.6% in Q4, non-GAAP EPS 77 cents. Segment results: CES book-to-bill 1.07, trailing 12-month 1.10; GIS book-to-bill 1.11; insurance grew 4%. Full-year 2026 total revenue $12.6B, bookings down ~6%, adjusted EBIT margin 7.7%, non-GAAP diluted EPS $3.23. Cash flow: $110M free cash flow in Q4, full-year $713M. Capital allocation priorities for 2027: invest in business, strengthen balance sheet, repurchase $250M shares.

Total revenue in Q4 was $3.1 billion, down 6.6% year-to-year. CES (40% of total revenue) declined 3.9% year-to-year, with book-to-bill ratio 1.07 for the quarter and trailing 12-month book-to-bill 1.10. Enterprise applications grew in 4Q but custom applications weakened. GIS (approximately 50% of total revenue) declined 10.6% year-over-year, book-to-bill ratio 1.11 for the quarter with year-to-year bookings reduction of 19%. Insurance (approximately 10% of total revenue) grew 4% year over year, driven by software business growth. Full-year 2026 total revenue was $12.6 billion, down 4.8% year-to-year. CES declined 3.8%, GIS declined 7.2%, and insurance grew 3.6%. Full-year bookings declined ~6% year-to-year, book-to-bill ratio slightly below 1, adjusted EBIT margin declined 20 basis points to 7.7%, non-GAAP diluted EPS was $3.23, down 6% year-to-year.

Full-year fiscal 2027: total organic revenue expected to decline 3% to 5% year-over-year, with three- to four-point improvement in second half. GIS expected mid-single-digit revenue decline, second half improvement. CES expected mid-single-digit revenue decline consistently. Insurance expected revenue growth in line with 2026, improving throughout year. Adjusted EBIT margin expected 6% to 7%. Non-GAAP diluted EPS between $2.40 to $2.90. Free cash flow expected about $600 million. First quarter 2027: total organic revenue expected to decline between 6.5% to 7.5% year-to-year. CES expected mid-single digits decline, GIS similar to Q4 decline, insurance expected low single-digit growth. Adjusted EBIT margin expected ~5%, non-GAAP diluted EPS expected ~40 cents.

Q: Kate Schwartzen asked about 2027 guide assumptions, macro impact, and second half inflection.

A: Rob said macro affects guide, GIS has benefit from backlog wrap, insurance has new contracts and smart apps pipeline, CES has conservative guide. Raul added fast-track initiatives are conservative.

Q: Jonathan Lee asked about rate card compression and combating competitive pricing.

A: Pricing stable, longer-term projects have multi-year assumptions, AI helps gain efficiency.

Q: Raul asked about win rates and missed opportunities.

A: Felt short in large multi-year deals, not pricing, working on solutioning and positioning.

Q: Bradley Clark asked about DSP success and margin expansion.

A: Fast-track offerings help in different deal sizes, narrowing revenue declines will relieve margin pressure.

Q: Tianxin Wang asked about Q1 margin cadence.

A: Q1 is low point, then margin improves with seasonality and natural improvement.

Q: Doug Bourgeois asked about AI impact on revenue growth and apps business.

A: AI a huge opportunity on existing contracts, apps business delay due to macro and new tech cycle.