DXC Technology recently held their Q2 2025 earnings call on November 7, 2024. This call was hosted by Aaron, the conference operator, and featured remarks from Roger Sachs, Vice President of Investor Relations, Raul Fernandez, President and CEO, and Rob Del Bene, CFO. The call primarily focused on discussing the company’s strategic initiatives and financial performance for the quarter, alongside future expectations.
Raul Fernandez began by expressing satisfaction with the company’s performance, highlighting how the adjusted EBIT margin and non-GAAP EPS exceeded guidance, and revenue remained strong. This performance has led the company to increase its full-year guidance for these metrics. Notably, revenue saw a year-over-year decline of 5.6% on an organic basis, but the adjusted EBIT margin expanded by 130 basis points to 8.6%. Non-GAAP diluted EPS was reported at $0.93, a substantial 33% increase. Additionally, DXC generated free cash flow of $48 million, bringing the year-to-date total to $93 million versus $16 million previously.
Fernandez emphasized the importance of self-help initiatives, particularly given the pressure on corporate discretionary spending. The company's bookings are a focal point, and management is optimistic about improving the book-to-bill ratio in the third quarter. The global presence of DXC, which combines global delivery capabilities with deep local market understanding, offers a distinct competitive advantage.
The second quarter saw several initiatives aimed at strengthening the sales strategy. These included a client relationship training program and a new executive client sponsorship initiative. Additionally, DXC is focusing on refining delivery models in their Global Business Services (GBS) segment, especially within Consulting & Engineering Services. The company is also expanding its GenAI offerings through new engagements like developing a GenAI-powered virtual service agent for Equitable Holdings, which resulted in faster response times and increased engagement.
In terms of infrastructure services, DXC is working on improving profitability by revamping workforce management and driving innovation in software platforms. The implementation of a global shared services model is helping in cost optimization and increasing agility. These strategic actions are aimed at ensuring consistent quality of service and improving client relationships.
Rob Del Bene provided a detailed financial review for the quarter, noting that revenue totaled $3.2 billion, while the book-to-bill ratio slightly improved. GIS segment profitability saw a significant rise due to efficient resource management and a strategic reduction of low-margin deals.
In addressing questions from analysts, DXC management provided insights into strategies for improving free cash flow and sustaining growth across various segments, particularly given the macroeconomic challenges. The enthusiasm for AI and the strategic position of DXC in this domain were evident, and the company aims to leverage its experience and expertise to enhance solutions for their clients.
In conclusion, DXC Technology’s focus remains on executing strategic initiatives aimed at solidifying its foundation for long-term growth and profitability, leveraging both internal efficiencies and the emerging opportunities in digital transformation and AI solutions.
