Company Overview
DXC Technology Company (DXC) is a leading global technology services provider that is revolutionizing the way businesses operate in the digital age. With a rich history spanning over five decades, DXC has evolved from a pioneering mainframe computer company to a powerhouse in the realm of enterprise IT services and solutions.
Established in 1959 as the Computer Sciences Corporation (CSC), the company underwent a transformative merger in 2017 with the Enterprise Services business of Hewlett Packard Enterprise, creating the current entity known as DXC Technology. This strategic combination brought together two established IT services providers to create a leading global IT services company. The merger united CSC, which had grown over decades through organic growth and strategic acquisitions, with the Enterprise Services business of Hewlett Packard Enterprise Company (HPES), which had its origins in Hewlett-Packard's acquisition of Electronic Data Systems (EDS) in 2008 for $13.9 billion.
The newly formed DXC Technology emerged as a $25 billion global IT services company serving clients in over 70 countries. In the early years following the merger, DXC faced challenges integrating the two legacy businesses and driving expected synergies. To address these issues, the company implemented cost reduction initiatives and organizational restructuring to streamline operations and improve profitability.
Business Segments
Despite these early post-merger challenges, DXC has continued to serve its global client base across its two main business segments - Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment provides innovative technology solutions to help clients with digital transformations, while GIS delivers a portfolio of technology offerings to drive predictable outcomes and operational cost savings for customers.
At the heart of DXC's success lies its unwavering commitment to innovation. The company has consistently invested in cutting-edge technologies, including artificial intelligence (AI), cloud computing, and data analytics, to help its clients navigate the complexities of the digital landscape. In 2025, DXC reported annual revenue of $9.70 billion, a testament to its ability to provide valuable services and solutions that resonate with its global customer base.
Global Business Services (GBS)
One of the key areas where DXC has excelled is its Global Business Services (GBS) segment, which accounts for 52% of the company's total revenue. Through its Consulting and Engineering Services (CES) and Insurance and Horizontal Business Process Services (IHBPS) offerings, DXC has helped clients across various industries accelerate their digital transformation journeys. The company's expertise in enterprise applications, data management, and industry-specific solutions has enabled it to drive increased bookings and maintain a healthy book-to-bill ratio of 1.28 in the third quarter of fiscal 2025.
The GBS segment provides innovative technology solutions that help customers address key business challenges and accelerate transformations tailored to each customer's industry and specific objectives. This segment offers a range of services, including application services, business process services, and industry software and solutions. For example, the GBS segment helps customers modernize their IT infrastructure, optimize data architectures, and ensure security and scalability across public, private, and hybrid cloud environments.
During the third quarter of fiscal 2025, GBS revenue was $1.67 billion, a decrease of 1.8% compared to the same period in the prior year. The decrease was primarily due to a 0.5% decline in organic revenue, a 0.4% decline from the disposition of certain businesses, and a 0.9% unfavorable foreign currency exchange rate impact.
Global Infrastructure Services (GIS)
DXC's Global Infrastructure Services (GIS) segment, which represents 48% of total revenue, has also been instrumental in the company's success. By delivering secure and innovative infrastructure solutions, including cloud, IT outsourcing (ITO), security, and modern workplace offerings, DXC has helped its clients optimise their IT systems and enhance their operational efficiency. The company's focus on delivering high-quality services has led to record Net Promoter Scores, further strengthening its client relationships.
The GIS segment provides a portfolio of technology offerings that deliver predictable outcomes and measurable results while reducing business risk and operational costs for customers. This segment offers services such as cloud, workplace, and security solutions. For instance, the GIS segment helps customers migrate to the cloud, manage and optimize IT infrastructure, and enhance cybersecurity.
During the third quarter of fiscal 2025, GIS revenue was $1.56 billion, a decrease of 8.5% compared to the same period in the prior year. The decrease was primarily due to a 7.8% decline in organic revenue from project completions and lower resale revenue, as well as a 0.7% unfavorable foreign currency exchange rate impact.
Market Performance
Throughout the year, DXC has demonstrated its ability to navigate the evolving market landscape. Despite facing global uncertainties, such as trade policy, geopolitical conflicts, inflation, and labor costs, the company has continued to drive profitable and sustainable revenue growth. Its revamped go-to-market approach, which emphasizes client centricity, performance management, and accountability, has resulted in a significant improvement in bookings, with the book-to-bill ratio reaching 1.33x in the third quarter of fiscal 2025 – the highest in eight quarters.
Financials
DXC's financial performance has been mixed in recent periods. In the most recent fiscal year (2024), the company reported revenue of $13.67 billion, net income of $91 million, operating cash flow of $1.36 billion, and free cash flow of $954 million.
In the third quarter of fiscal 2025, DXC reported total revenue of $3.23 billion, a decrease of 5.1% compared to the same period in the prior year. This decline included a 0.7% unfavorable foreign currency exchange rate impact, a 0.2% decline from the disposition of certain businesses, and a 4.2% decline in organic revenue. Despite the revenue decline, the company's organic revenue performance was better than the top end of its guidance range.
Net income for the third quarter was $63 million, down 55% year-over-year. The decrease in revenue and net income was primarily due to lower services and resale revenue, as well as a $10 million charge related to the disposal of hardware assets as the company consolidates its data centers.
On a more positive note, DXC's adjusted EBIT margin expanded by 140 basis points year-over-year to 8.9%, driven by cost management initiatives and the deferral of certain planned investments. Non-GAAP earnings per share (EPS) increased by 7% year-over-year to $0.92, showcasing the company's ability to drive profitability.
DXC's non-GAAP earnings before interest and taxes (Adjusted EBIT) for the third quarter of fiscal 2025 was $286 million, an increase of 11.7% compared to the same period in the prior year. The company's non-GAAP net income for the third quarter was $170 million.
Cash Flow and Liquidity
DXC has demonstrated strong cash flow generation. During the first nine months of fiscal 2025, the company generated $1.08 billion in operating cash flow and $576 million in free cash flow, which it used to invest in the business and maintain a healthy balance sheet. In the third quarter alone, DXC generated $483 million in free cash flow, exceeding their prior full-year fiscal 2025 guidance of approximately $550 million.
As of December 31, 2024, the company had $1.72 billion in cash and cash equivalents and $3.83 billion in total debt. DXC's liquidity position remains strong, with a debt-to-equity ratio of 0.28, a current ratio of 1.34, and a quick ratio of 1.34. The company also has access to a $3.2 billion revolving credit facility, further enhancing its financial flexibility.
Geographic Performance
DXC operates globally, with a presence in North America, Europe, Asia, and Australia. While the company does not break out detailed performance by geographic market, it reported broad-based improvements across all regions in the third quarter of fiscal 2025.
Industry Trends and Future Outlook
The global IT services industry is projected to grow at a compound annual growth rate (CAGR) of 4-6% over the next 5 years, driven by the continued adoption of cloud computing, artificial intelligence, and digital transformation initiatives by enterprises. DXC is well-positioned to capitalize on these trends with its portfolio of IT outsourcing, cloud, and consulting services.
Looking ahead, DXC's management remains focused on executing its strategic priorities, which include driving profitable revenue growth, improving operational efficiency, and strengthening its capital structure. The company has also made significant investments in its leadership team, bringing in experienced talent to further bolster its capabilities and position it for long-term success.
For the fourth quarter of fiscal year 2025, DXC expects total organic revenue to decline 5.5% to 4.5% year-over-year, with an adjusted EBIT margin of about 7% and non-GAAP diluted EPS of about $0.75.
For the full fiscal year 2025, the company has revised its guidance upward. DXC now expects total revenue to decline between 4.7% and 4.9% year-over-year organically, an improvement from their prior guidance of a 5.5% to 4.5% decline. The full-year adjusted EBIT margin is expected to be approximately 7.9%, up from their prior guidance range of 7.0% to 7.5%. Non-GAAP diluted EPS is now expected to be about $3.35, an increase from their prior guidance of $3 to $3.25. Additionally, DXC now expects full-year free cash flow to be approximately $625 million, an increase from their prior guidance of about $550 million.
DXC's transformation journey is far from over, but the company's resilience, innovative mindset, and strong client relationships position it well to navigate the ever-changing technology landscape. As businesses continue to seek reliable partners to guide their digital transformation efforts, DXC stands ready to leverage its comprehensive suite of services and solutions to drive growth, enhance operational efficiency, and create long-term value for its stakeholders.