DXC Technology Co, a leading global provider of IT services, has released its annual 10-K report, detailing the company’s financial and operational performance for the fiscal year. The report highlights key financial metrics, business performance, strategic initiatives, and the challenges and risks faced by the company.
Financial Highlights
Total Revenue: $12,871 million, a decline of 5.8% compared to the prior fiscal year, primarily driven by a 4.6% decline in organic revenue and a 1.0% unfavorable foreign currency exchange rate impact.
Gross Profit: $3,101 million, calculated as Total Revenue minus Costs of Services ($12,871 million – $9,770 million), reflecting a gross margin of 24.1%, an increase of 150 basis points against the prior fiscal year.
Operating Income: $630 million, an increase from $109 million in the prior fiscal year, reflecting improved cost management and efficiency.
Net Income: $396 million, a significant increase from $86 million in the prior fiscal year, driven by higher operating income and lower total costs and expenses.
Diluted EPS: $2.10, compared to $0.46 in fiscal 2024, reflecting a substantial increase due to higher net income and a lower weighted average share count from the Company’s share repurchases.
Business Highlights
Business Overview: DXC Technology is a leading global provider of IT services, offering solutions that help clients simplify, optimize, and modernize their systems. The company operates through two main segments: Global Business Services (GBS) and Global Infrastructure Services (GIS).
Global Business Services (GBS): This segment focuses on providing technology solutions that address key business challenges and accelerate transformations. Key offerings include Consulting & Engineering Services and Insurance Software and Business Process Services.
Global Infrastructure Services (GIS): GIS is responsible for implementing and operating the technology underpinning critical systems for global businesses and governments. Key offerings include Cloud ITO & Security and Modern Workplace solutions.
Geographical Performance: The company serves a global client base, including many Fortune 500 companies, with operations in over 60 countries. Revenue performance varied across regions, with declines noted in the United States, United Kingdom, Other Europe, and Australia.
Segment Revenue: GBS reported a revenue of $6.6 billion, a decrease of 2.6% year-over-year, while GIS reported a revenue of $6.2 billion, a decrease of 9.1% year-over-year.
Future Outlook: DXC Technology aims to continue leveraging its expertise in IT services to drive innovation and operational resilience for its clients. The company is focused on integrating AI-powered intelligence into operations and maintaining a secure-by-design approach to safeguard against cyber threats.
Strategic Initiatives
Strategic Initiatives: DXC Technology Company is focused on optimizing its capital structure and enhancing liquidity. The company has implemented global cost savings initiatives to better align its workforce, facility, and data center requirements, resulting in restructuring costs of $153 million. Additionally, DXC is actively managing its portfolio through business dispositions, which generated a gain of $7 million in fiscal 2025.
Capital Management: DXC Technology has been actively managing its capital through various initiatives. The company reduced its total debt by $213 million during fiscal 2025, primarily due to net decreases in finance lease liabilities and borrowings for asset financing. The company also repurchased $14 million of its common stock and suspended quarterly dividend payments to maintain financial flexibility. As of March 31, 2025, DXC’s liquidity included $1.8 billion in cash and cash equivalents and $3.2 billion of available borrowings under its revolving credit facility.
Future Outlook: Looking ahead, DXC plans to continue using cash generated from operations as a primary source of liquidity. The company expects its existing cash and cash equivalents, along with cash generated from operations, to be sufficient to meet normal operating requirements for the next 12 months and beyond. DXC is also exploring opportunities for discretionary investment activities, such as business acquisitions, and has the ability to raise capital through debt financing if needed. The company remains committed to its debt reduction strategy and enhancing shareholder value through strategic capital management.
Challenges and Risks
Cybersecurity Risks: The company is increasingly vulnerable to sophisticated cyber-attacks and security breaches, which could lead to service interruptions, financial losses, and reputational damage. The integration of AI into services introduces new cybersecurity risks, as threat actors use advanced tools to circumvent security measures.
Regulatory Compliance: Compliance with evolving privacy and data protection laws, such as GDPR, poses a significant challenge. Non-compliance could result in substantial fines and legal actions. The company also faces increased scrutiny and potential costs related to ESG regulations and sustainability initiatives.
Market and Competitive Risks: The rapid technological changes and competitive pressures in the IT services market require continuous innovation and adaptation. The integration of AI technologies is crucial to maintaining competitiveness, but also presents risks related to potential biases and inaccuracies in AI algorithms.
Operational Risks: The company’s ability to attract and retain skilled personnel is critical, especially in the face of intense competition for talent and potential immigration law changes. Additionally, the company’s restructuring plans may not yield the anticipated benefits, potentially affecting operational efficiency and financial performance.
Financial Risks: The company’s substantial indebtedness could impact its financial flexibility and increase vulnerability to economic downturns. Changes in credit ratings could affect borrowing costs and access to capital markets.
Climate Change and Natural Disasters: The company is exposed to risks from climate change, including extreme weather events that could disrupt operations and supply chains. Compliance with new environmental regulations may increase operational costs.
Supply Chain Disruptions: Global uncertainties, such as trade tensions and geopolitical events, could lead to supply chain disruptions and increased procurement costs, affecting the company’s ability to deliver services and products.
Management acknowledges the challenges posed by these risks and is implementing strategies to mitigate their impact. This includes enhancing cybersecurity measures, investing in AI and technological innovation, and focusing on compliance with regulatory requirements. The company is also working on improving operational efficiencies through restructuring and strategic partnerships.
The company is exposed to market risks, including fluctuations in foreign currency exchange rates, which could adversely affect financial results. The use of hedging strategies is intended to mitigate some of these risks, although effectiveness depends on accurate forecasting of cash flows.
SEC Filing: DXC Technology Co [ DXC ] – 10-K – May. 14, 2025
