DXC Technology Q3 Earnings Call Highlights

DXC Technology (NYSE:DXC) executives used the company’s fiscal third-quarter 2026 earnings call to outline progress on a “dual-track” strategy aimed at stabilizing its legacy operations while building what management described as “AI-native” revenue streams. The quarter included steps to refresh the company’s market positioning, invest in sales enablement, and advance a portfolio of “Fast-Track” product initiatives, alongside results that showed continued revenue declines but improved bookings and solid free cash flow.

Strategy update: brand refresh, sales enablement, and “Fast-Track” products

President and CEO Raul Fernandez said the company moved “from design to deployment” during the quarter, highlighting a refreshed brand, new sales materials, and a consistent customer message. He emphasized that the work “wasn’t cosmetic,” and said early signals have been encouraging where teams are using the new tools.

Fernandez also said DXC established a centralized sales enablement function for the first time, rebuilding onboarding, creating sales plays for priority offerings, and setting baseline metrics across regions. He acknowledged that consistent execution across a large global sales organization “takes time and discipline,” but said third-party advisors at a recent ISG summit noted DXC’s clearer market presence.

As an example of go-to-market execution, Fernandez cited a new logo win with the London Metropolitan Police, describing it as a “master vendor engagement” for enterprise transformation that includes replacing core ERP and resource management platforms and integrating modern SaaS and AI into mission-critical operations.

On the company’s “Fast-Track” initiatives, Fernandez said development timelines and early client interest were tracking ahead of initial plans. He described Fast-Track as centered on “AI-infused solutions,” repeatable IP, and productized offerings designed to support higher growth and margins. Fernandez said DXC’s approach is based on connecting legacy systems to AI through an orchestration layer that routes work across multiple providers with security, governance, and audit trails.

Fernandez said DXC has deployed AI across its workforce of 115,000 employees, integrating multiple AI providers and routing tasks to the best model for the job. He described DXC as “Customer Zero,” using the architecture internally before taking solutions to market.

Fast-Track examples: security, banking platform modernization, and partnerships

Management pointed to specific offerings under development or commercialization:

• Agentic Security Operations Center: Fernandez said DXC’s internally deployed SOC, powered by “7AI,” protects the company from 4.5 million threats daily, with over 90% resolved automatically. DXC is offering the capability to clients in banking, healthcare, and government, citing customer concerns about alert volume.
• CoreIgnite for Hogan banking customers: Fernandez described DXC’s Hogan core banking platform as processing over $2.5 trillion in transactions per day across 300 million accounts. Rather than core replacement, DXC built CoreIgnite as a “connect, don’t convert” layer intended to help banks integrate fintechs, launch digital products, and modernize experiences without replacing the mainframe core.

Fernandez also outlined several partnerships intended to expand CoreIgnite’s ecosystem, including Ripple for digital asset custody and real-time global payments, Euronet for the Ren payments platform, Aptys for FedNow and real-time payments, and Splitit for buy now, pay later options.

Looking longer term, Fernandez said the company believes Fast-Track initiatives can reach 10% of DXC run-rate revenue by the end of fiscal Q2 2029. He also said DXC is structuring products and contracts to maintain “strategic flexibility,” describing multiple paths for value creation as these initiatives mature.

During Q&A, Fernandez added that Fast-Track offerings are designed to move away from “rates times hours” toward value-based models. Using CoreIgnite as an example, he described a transaction-fee sharing approach rather than traditional services pricing. Fernandez also mentioned another offering within the company’s Global Infrastructure Services segment called “OASIS,” which he said the company plans to launch and discuss in more detail at its Investor Day.

Fiscal Q3 results: revenue down, bookings improve, margins above guidance

Chief Financial Officer Rob Del Bene reported total revenue of $3.2 billion, down 4.3% year-over-year on an organic, non-GAAP basis and within guidance. He said performance declined in the U.S., while the rest of the world improved from the first half of the year.

Bookings improved versus the first half, with a book-to-bill ratio of 1.12 and trailing 12-month book-to-bill of 1.02, marking the fourth consecutive quarter above 1.0 on a trailing basis. Del Bene noted that last year’s Q3 bookings were unusually strong, creating a tougher comparison. He said three large opportunities closed during the quarter and the company has “good line of sight” on others.

Adjusted EBIT margin was 8.2%, slightly above the high end of guidance due to disciplined spending and the timing of one-time benefits not included in the guide. Year over year, adjusted EBIT margin declined 70 basis points, which Del Bene attributed primarily to planned higher investment levels, offering development, and marketing initiatives.

Non-GAAP EPS was $0.96, above the high end of guidance and up from $0.92 in the prior-year quarter, driven by a lower share count, net interest expense, and taxes, partially offset by lower adjusted EBIT.

Segment performance: CES and GIS declines, insurance grows

Del Bene provided additional segment details:

• Consulting & Engineering Services (CES): Book-to-bill of 1.2 (trailing 12-month 1.13). CES revenue, about 40% of total, declined 3.6% year over year, with strength in longer-term strategic projects but continued pressure in short-term discretionary engagements. Del Bene said the company expects longer-term bookings to support improved CES revenue performance in fiscal 2027.
• Global Infrastructure Services (GIS): Book-to-bill improved to 1.09, driven by large deal wins, with trailing 12-month book-to-bill just below one. GIS revenue, about 50% of total, declined 6.2% year over year, in line with the company’s full-year expectation.
• Insurance: Revenue, about 10% of total, grew 3.2% year over year, largely due to software growth and customer migrations to the cloud-based Assure platform. Del Bene said DXC is investing in software capabilities, including AI-enabled smart apps aimed at improving insurer revenue growth and productivity without changing core systems. He also noted that a couple of large business process services opportunities expected in Q3 were delayed to Q4, impacting the Q4 outlook for insurance.

Cash flow, balance sheet actions, and updated outlook

DXC generated $266 million in free cash flow in the quarter, bringing year-to-date free cash flow to $603 million, up from $576 million in the prior year period. Del Bene reiterated the company remains on pace for approximately $650 million in full-year free cash flow, noting that some Q3 strength reflected timing dynamics rather than a change in the full-year view.

On the balance sheet, Del Bene said DXC refinanced a EUR 650 million bond due January 2026 and prepaid $300 million of a $700 million bond due in September. The company also repurchased $65 million of stock in Q3, bringing year-to-date repurchases to $190 million, and now expects $250 million in total buybacks for fiscal 2026. DXC also continued paying down capital lease liabilities, reducing them by $47 million in the quarter and more than $450 million since fiscal 2025, while holding new lease originations to $33 million in that period.

For fiscal Q4 2026, DXC guided to an organic revenue decline of 4% to 5%, adjusted EBIT margin of 6.5% to 7.5%, and non-GAAP diluted EPS of $0.65 to $0.75. The updated full-year fiscal 2026 outlook calls for an organic revenue decline of approximately 4.3%, adjusted EBIT margin of approximately 7.5%, non-GAAP diluted EPS of approximately $3.15, and free cash flow of approximately $650 million.

Del Bene also provided an early view of capital allocation for the first half of fiscal 2027, including plans to retire $400 million of remaining U.S. dollar bonds due in September and repurchase $250 million of shares in the first half. Management said more detail will be provided on the year-end call in May, and the company plans to expand on Fast-Track initiatives at an Investor Day in New York City in the second week of June.

About DXC Technology (NYSE:DXC)

DXC Technology, headquartered in Tysons Corner, Virginia, is a global leader in IT services and solutions. The company was formed in 2017 through the merger of Computer Sciences Corporation (CSC) and the Enterprise Services business of Hewlett Packard Enterprise, combining decades of experience in consulting, systems integration and managed services. Since its inception, DXC has focused on helping clients modernize IT environments and drive digital transformation across their organizations.

DXC Technology’s core service offerings encompass cloud and platform services, applications and analytics, security, and workplace and mobility solutions.