DXC Technology(US:DXC)2025-08-01 00:36PART I – FINANCIAL INFORMATION Financial Statements DXC Technology reported Q1 FY2026 revenues of $3.16 billion, a 2.4% decrease, with net income of $18 million, and implemented a new three-segment structure Condensed Consolidated Statements of Operations Consolidated Statements of Operations Highlights (unaudited, in millions, except EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenues | $3,159 | $3,236 | | Income before income taxes | $67 | $68 | | Net income | $18 | $25 | | Net income attributable to DXC | $16 | $26 | | Diluted EPS | $0.09 | $0.14 | Condensed Consolidated Balance Sheets Consolidated Balance Sheet Highlights (unaudited, in millions) | Metric | As of June 30, 2025 | As of March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,792 | $1,796 | | Total Assets | $13,438 | $13,205 | | Total current liabilities | $4,497 | $4,411 | | Long-term debt | $3,100 | $2,996 | | Total Liabilities | $10,008 | $9,715 | | Total Equity | $3,430 | $3,490 | Condensed Consolidated Statements of Cash Flows Consolidated Cash Flow Highlights (unaudited, in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $186 | $238 | | Net cash used in investing activities | $(77) | $(188) | | Net cash (used in) provided by financing activities | $(110) | $41 | | Net (decrease) increase in cash | $(4) | $93 | Notes to Condensed Consolidated Financial Statements - In Q1 fiscal 2026, the company implemented a new segment structure with three reportable segments: Consulting & Engineering Services (CES), Global Infrastructure Services (GIS), and Insurance Services184988 - Following a segment realignment, the company reallocated goodwill and recorded a full impairment of $14 million for the goodwill balance allocated to the GIS segment5153 Segment Revenue and Profit (Q1 FY2026, in millions) | Segment | Revenues | Segment Profit | | :--- | :--- | :--- | | Consulting & Engineering Services (CES) | $1,246 | $105 | | Global Infrastructure Services (GIS) | $1,600 | $97 | | Insurance Services | $313 | $33 | - As of June 30, 2025, the company has approximately $16.7 billion in remaining performance obligations, with about 32% expected to be recognized as revenue in fiscal 202657 - The company is involved in ongoing tax disputes with the IRS, with potential unreserved federal and state tax expense of approximately $552 million if the company does not prevail6873 - In the TCS litigation, a court affirmed a jury verdict in DXC's favor, awarding a total of $194 million plus attorney's fees and costs. The decision is pending appeal and has not been recognized in the financial statements99100 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 2.4% revenue decline to $3.16 billion for Q1 FY2026, with varied segment performance and total liquidity of $5.0 billion Q1 FY2026 Financial Highlights vs. Q1 FY2025 (in millions, except EPS and ratios) | Metric | Q1 FY2026 | Change (YoY) | | :--- | :--- | :--- | | Revenues | $3,159 | -2.4% | | Organic Revenue | N/A | -4.3% | | Adjusted EBIT | $216 | -3.6% | | Adjusted Diluted EPS | $0.68 | -9.3% | | Free Cash Flow | $97 | +115.6% | | Book-to-bill ratio | 0.90x | +0.13x | Segment Performance (YoY Change) | Segment | Revenue Change | Organic Revenue Change | Segment Profit Change | | :--- | :--- | :--- | :--- | | CES | -2.7% | -4.4% | -14.6% | | GIS | -3.5% | -5.7% | -4.0% | | Insurance | +5.4% | +3.6% | -25.0% | - The decrease in operating cash flow was primarily due to lower net income and an unfavorable change in working capital. The cash conversion cycle increased from 14 days to 17 days year-over-year149 - Total liquidity as of June 30, 2025, was $5.0 billion, consisting of $1.8 billion in cash and $3.2 billion available under the revolving credit facility. The company continues to suspend dividend payments to maintain financial flexibility156157 Quantitative and Qualitative Disclosures About Market Risk The company states that its exposure to market risk has not materially changed since the end of the previous fiscal year, March 31, 2025 - There have been no material changes to the company's market risk exposure since March 31, 2025161 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Based on an evaluation as of the end of the quarter, the CEO and CFO concluded that disclosure controls and procedures were effective162 - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting163 PART II – OTHER INFORMATION Legal Proceedings This section refers to Note 17 of the financial statements for details on legal proceedings, including a securities class action settlement and ongoing TCS litigation - For information regarding legal proceedings, the report directs readers to Note 17 – "Commitments and Contingencies" in the financial statements165 Risk Factors The company reports that there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K - There have been no material changes in the three months ended June 30, 2025, to the risk factors described in the company's most recent Form 10-K166 Unregistered Sales of Equity Securities and Use of Proceeds During Q1 FY2026, the company repurchased approximately 3.28 million shares for $50 million, with $542 million remaining for future repurchases Issuer Purchases of Equity Securities (Q1 FY2026) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | — | — | | May 2025 | 1,010,414 | $15.14 | | June 2025 | 2,264,854 | $15.32 | - As of June 30, 2025, approximately $542 million remained available for repurchase under the company's share repurchase programs170 Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement during the quarter174 Exhibits This section lists exhibits filed with the Form 10-Q, including various agreements, plan amendments, and CEO/CFO certifications - The report includes exhibits such as executive compensation agreements, amendments to the receivables purchase agreement, and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906175