DXC Reports $3.03 Billion in Revenue and Adjusted EPS of $0.67 Despite Year-Over-Year Declines
Key Facts
DXC Technology reported revenue of $3.03 billion in the second quarter of fiscal 2027, down 4.0% from the year-earlier period, while diluted earnings per share were $0.67 under the company’s non-GAAP measure, down 20.2% year over year. Diluted GAAP earnings per share were $0.15. Adjusted operating income fell 26.4% to $187 million, with a margin of 6.2%. The company said revenue, adjusted operating income and non-GAAP EPS nevertheless came in above its internal expectations. Investors were watching the results amid declining revenue and mixed performance across the company’s businesses.
Revenue topped analysts’ estimate of $2.98 billion, while adjusted EPS exceeded their forecast of $0.55, according to Investing.com before the results were announced. But the quarterly beats did not change the year-over-year trend: revenue was below the year-earlier level, and adjusted EPS fell by more than a fifth. The company said a recovery in underlying revenue would take time, according to Chief Executive Raul Fernandez, as reported by the company. The combination of results above internal expectations and declining year-over-year metrics reflects a quarter in which performance improved against management’s expectations without removing pressure on the underlying business.
Pressure extended to cash flow and bookings. Free cash flow was $91 million in the second quarter, compared with $240 million in the same quarter of fiscal 2026. For the first half, free cash flow rose to $405 million from $337 million in the first half of the prior year. Bookings were $2.4 billion, down 10% year over year, while the book-to-bill ratio was 0.80 times in the quarter. The ratio was 1.0 times for the twelve months ended in the second quarter, a measure that puts bookings in the context of revenue over a longer period.
Segment results showed a clear contrast between infrastructure and insurance. Global Infrastructure Services revenue fell 10% year over year to $1.427 billion in the second quarter. By contrast, insurance revenue rose 23.1% to $394 million. The company said organic revenue growth in insurance included a favorable adjustment to a contract signed during the quarter. Before the results were announced, Investing.com reported that the insurance business generated about $1.3 billion in revenue over the previous twelve months, with an adjusted operating margin of 10%, and contributed about 14% of the company’s adjusted operating income. Those figures put the business’s performance in the context of its importance to the group, while infrastructure revenue declined; based on the second-quarter figures in the earnings release, it was the larger of the two businesses.
The results coincided with talks over a sale of the insurance business. On October 19, Reuters reported that DXC was in advanced talks to sell its insurance software and services division to private investment firm Eldridge Industries for about $2.4 billion, citing people familiar with the matter. Reuters said Eldridge was discussing combining the business with the Zinnia platform, but that a deal was not certain. DXC confirmed in its earnings release that talks were under way about a potential sale of the insurance business. The information provided does not include an announcement of a definitive agreement; the talks come as insurance posted quarterly growth while Global Infrastructure Services revenue declined.
The company’s guidance reflects continued near-term caution. DXC expects revenue of about $2.98 billion and non-GAAP diluted EPS of about $0.55 in the third quarter of fiscal 2027, with an adjusted operating margin of about 6.0%. For fiscal 2027, it set a revenue range of $11.91 billion to $11.98 billion, non-GAAP EPS of $2.25 to $2.50, and free cash flow of about $600 million. These figures outline the company’s revenue, earnings and cash flow outlook for the rest of the fiscal year, alongside the CEO’s statement that an underlying recovery will take time. DXC shares closed at $15.23 on October 29, according to Investing.com.