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Overview of DXC Technology's Q1 Fiscal 2026 Results

DXC Technology has released its financial results for the first quarter of fiscal 2026, revealing insights into its performance and strategic direction amidst a challenging market environment. The company reported total revenues of $3.16 billion, marking a 2.4% decline year-over-year. This decline is even steeper when considering organic growth, which fell by 4.3%.

Financial Highlights

• - EBIT Margin: The company reported an EBIT margin of 2.4%, with an adjusted EBIT margin rising slightly to 6.8%.
• - Earnings Per Share: Diluted earnings per share stood at $0.09, a significant drop from $0.14 from the same quarter the previous year. Meanwhile, the non-GAAP diluted earnings per share dropped to $0.68.
• - Bookings: Notably, DXC experienced a 14% increase in bookings, totaling $2.8 billion, indicating strong client engagement and new business opportunities.
• - Share Repurchase: The company has initiated a share repurchase program, returning $50 million to shareholders, reflecting confidence in its long-term strategy despite the short-term hurdles.

Management Comments

Raul Fernandez, CEO and President of DXC Technology, expressed optimism regarding the results. He emphasized that the quarterly performance lay at the high end of their guidance for both organic revenue growth and adjusted EBIT margins. He stated, “For the third straight quarter, we reported double-digit bookings growth, a clear sign we are connecting better with clients.” This comment illustrates the company’s commitment to leverage AI and full-stack expertise to provide better insights for clients and foster improved outcomes.

Segment Analysis

The financial results were driven by various segments:
1. Consulting and Engineering Services (CES): Revenue declined to $1,246 million, down 2.7% year-over-year. Despite the revenue drop, bookings surged by 32%, showcasing strong demand.
2. Global Infrastructure Services (GIS): GIS revenue fell to $1,600 million, reflecting a 3.5% decrease year-over-year. Bookings saw modest growth of 4%.
3. Insurance Services: In contrast, the Insurance segment reported a revenue increase of 5.4%, amounting to $313 million, despite a decrease in bookings by 19%.

Financial Outlook

For the full fiscal year 2026, DXC Technology projects total revenue in the range of $12.61 billion to $12.87 billion, indicating a year-over-year decline of 3.0% to 5.0% on an organic basis. Adjusted EBIT margins are expected to fall between 7.0% to 8.0%, with non-GAAP diluted EPS projected between $2.85 to $3.35.

Q2 Fiscal 2026 Guidance

As for the upcoming second quarter, DXC anticipates total revenues in the range of $3.15 billion to $3.18 billion. Adjusted EBIT margins are expected to be between 6.5% and 7.5%, with non-GAAP diluted EPS falling between $0.65 and $0.75. This forward-looking outlook signals the company’s cautious optimism in recovering amidst a fluctuating economic backdrop.

Conclusion

DXC Technology's Q1 fiscal 2026 results reveal a mixed bag of outcomes that underscore both challenges and opportunities. While revenues have declined, the surge in bookings is an encouraging sign of future growth potential and client confidence. As the company integrates AI into its services, it hopes to strengthen its foundation and drive performance, indicating a potential rebound in the upcoming quarters.

Investors will keenly watch the forthcoming earnings call for further insights and any strategic pivots that DXC may pursue to navigate the shifting landscape of business technology effectively.