DXC Technology Company (NYSE:DXC) Q3 2026 Earnings call January 29, 2026 05:00 PM ET Company ParticipantsBrendan Biles - Equity Research AssociatePaul Obrecht - Equity Research AssociateRaul Fernandez - President and CEORob Del Bene - CFORod Bourgeois - Managing Partner and Head of ResearchRoger Sachs - VP of Investor RelationsConference Call ParticipantsAntonio Jaramillo - Equity Research AnalystBryan Bergin - Managing Director and Senior Equity Research AnalystJamie Friedman - Financial Analyst and Valuat ...

DXC Technology Company (NYSE:DXC) Q3 2026 Earnings call January 29, 2026 05:00 PM ET Company ParticipantsBrendan Biles - Equity Research AssociatePaul Obrecht - Equity Research AssociateRaul Fernandez - President and CEORob Del Bene - CFORod Bourgeois - Managing Partner and Head of ResearchRoger Sachs - VP of Investor RelationsConference Call ParticipantsAntonio Jaramillo - Equity Research AnalystBryan Bergin - Managing Director and Senior Equity Research AnalystJamie Friedman - Financial Analyst and Valuat ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2026 was $3.2 billion, a decline of 4.3% year-over-year, consistent with guidance [15] - Adjusted EBIT margin was 8.2%, slightly above the high end of guidance, but down 70 basis points year-over-year [16][17] - Non-GAAP EPS was $0.96, up from $0.92 in the same quarter last year, driven by a lower share count and net interest expense [17] Business Line Data and Key Metrics Changes - CES revenues, representing 40% of total revenue, declined 3.6% year-over-year, with a book-to-bill ratio of 1.2 [17][18] - GIS, which accounts for 50% of total revenue, saw a decline of 6.2% year-over-year, with a book-to-bill ratio of 1.09 [18] - Insurance revenue, making up 10% of total revenue, grew 3.2% year-over-year, primarily due to growth in the software business [18][19] Market Data and Key Metrics Changes - The U.S. market experienced declining performance, while the rest of the world showed improvement [15][18] - The company noted a pronounced difference in performance between the U.S. and other regions, with Europe and APAC on an improving trajectory [85] Company Strategy and Development Direction - The company is pursuing a dual-track strategy to stabilize heritage businesses while building new AI-native revenue streams [4] - Fast-Track initiatives are focused on AI-infused solutions and are expected to achieve 10% of run rate revenue by the end of Q2 Fiscal 2029 [11] - The strategy emphasizes connecting legacy systems to AI rather than replacing them, allowing for faster deployment and innovation [10][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pipeline for Q4, driven by corporate spinouts and restructurings [46] - The company anticipates total organic revenue to decline by 4%-5% in Q4, with CES and GIS revenues expected to decline at similar rates [22][23] - Management highlighted the importance of AI in driving future growth and operational efficiency [12][41] Other Important Information - Free cash flow for Q3 was $266 million, bringing the year-to-date total to $603 million, on track to meet the full-year guidance of approximately $650 million [19][21] - The company repurchased $190 million worth of shares year-to-date, with plans to repurchase an additional $60 million in Q4 [20][21] Q&A Session Questions and Answers Question: Insights on Fast-Track attributes and services - Management discussed the importance of leveraging existing value in legacy systems like Hogan to create new, scalable offerings [28][29] Question: Drivers and assumptions behind growth rates in segments - Management noted strong bookings in CES for long-term projects but delays in short-term project bookings impacted revenue expectations [38][39] Question: Pricing environment across business segments - Pricing dynamics vary by segment, with stable pricing observed across GIS, CES, and insurance [63] Question: Capital allocation priorities and M&A considerations - The company remains open to accretive acquisitions that align with business goals while prioritizing internal growth investments [76][77]

Macro worries are once again pulling attention away from adoption news in the XRP market. XRP traded near $1.89 on January 26 after briefly dipping below $1.90 in the past 24 hours. Traders stayed focused on this week’s Federal Reserve meeting, even as Ripple announced a major partnership with DXC Technology that brings XRP into a leading core banking system. The payments token, which supports Ripple’s cross-border network, moved in a wide intraday range while US rate uncertainty kept pressure on risk ...

Core Insights - DXC Technology has announced a strategic partnership with Euronet Worldwide to enhance issuing, revolving credit, and payment capabilities for financial institutions globally [1][5] - The collaboration aims to integrate DXC's Hogan core banking platform, which manages over 300 million deposit accounts and $5 trillion in deposits, with Euronet's Ren platform for modern issuing and payment solutions [2][5] Company Overview - DXC Technology is a leading enterprise technology partner that provides software, services, and solutions to global enterprises, focusing on modernizing and securing complex technology environments [6] - Euronet Worldwide is a global leader in payment processing and cross-border transactions, offering a wide range of services including money transfers, credit and debit processing, and ATM services across more than 200 countries [7] Partnership Objectives - The partnership will enable mutual clients to adopt pre-integrated issuing and payment solutions that support various credit and debit programs, enhancing operational efficiency and reducing time to market for new products [3][4] - The collaboration is designed to help banks and fintechs modernize their payment infrastructures, allowing them to compete effectively and expand their market offerings [5][6] Market Context - As competition in financial services intensifies, issuing and payments have become critical growth areas for banks, prompting investments in modern capabilities to meet rising consumer expectations for speed and flexibility [4][5] - The partnership is positioned to address the fragmented nature of current issuing and payment processes, enabling faster deployment and scalability for financial institutions [5][6]

Financial Data and Key Metrics Changes - Total revenue for the quarter was $3.2 billion, a decline of 4.2% year-over-year on an organic basis, consistent with previous quarters [14] - Adjusted EBIT margin was 8%, above the high end of guidance, but down 60 basis points year-over-year due to productivity savings and higher investment levels [15] - Non-GAAP EPS was $0.84, down from $0.93 in the same quarter last year, primarily due to lower adjusted EBIT and higher taxes [16] - Free cash flow generated was $240 million, significantly up from $48 million last year, bringing first-half free cash flow to $337 million, an increase of $244 million year-over-year [18][20] Business Line Data and Key Metrics Changes - Consulting and Engineering Services (CES) revenue declined 3.4% year-over-year, with a book-to-bill ratio of 0.92 [16] - Global Infrastructure Services (GIS) revenue declined 6.3% year-over-year, with a book-to-bill ratio of 0.82 [17] - Insurance Services revenue grew 3.6% year-over-year, driven by software growth and volume increases in existing accounts [18] Market Data and Key Metrics Changes - The trailing 12-month book-to-bill ratio for CES improved to 1.15, indicating potential revenue growth in the latter part of the year [16] - The trailing 12-month book-to-bill ratio for GIS remained at approximately 1.1, reflecting a strong pipeline despite longer closing cycles [17] Company Strategy and Development Direction - The company is focusing on a two-track approach: Core Track for existing business and Fast Track for new AI-native solutions [4][5] - Fast Track solutions aim to become 10% of the business within 36 months, targeting large and growing markets with measurable results [6] - The company is enhancing its offerings with AI-enabled solutions and has plans to pilot new products like Oasis in the coming months [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in revenue and bookings but remains focused on building a predictable and growing company [4] - The company anticipates a book-to-bill ratio greater than one in the third quarter, supported by a robust pipeline of new large opportunities [14] - Management is confident in the ability to close large deals based on strong customer interest and the deployment of new tools [43] Other Important Information - The company has reduced total debt by approximately $107 million, bringing it to around $4 billion, while increasing cash balance to $1.9 billion [20][21] - The full-year revenue guidance has been narrowed to a decline of 3.5% to 4.5%, with expectations for adjusted EBIT margin between 7% and 8% [22][23] Q&A Session Summary Question: Update on CES performance under new leadership - Management highlighted targeted goals and go-to-market plans to improve CES performance, leveraging strong SAP capabilities [26][27] Question: Trends in GIS business and Hogan - Management noted improved customer-related metrics in GIS and emphasized the importance of new product development for revenue generation [36][38] Question: Free cash flow sustainability - Management indicated that the improved free cash flow performance is expected to be sustainable moving forward [33][70] Question: Headcount strategy in light of AI integration - Management discussed the evolving labor model, emphasizing the need for workforce skills to adapt to AI deployment [62][63] Question: Fast Track solution plans and milestones - Management attributed the pivot to new talent acquisition and the development of a product framework for Fast Track opportunities [68]