DXC Technology: Strategic Priorities and Future Outlook
2024-02-02
DXC Technology, a leading global IT services company, recently held its Q3 earnings call, featuring speakers Raul Fernandez, who was appointed as the president and CEO, and Rob Del Bene, the EVP and CFO. The webcast of the earnings call can be found on DXC's Investor Relations website.
During the call, the speakers discussed various financial measures, including non-GAAP financial measures, and highlighted that certain comments made on the call were forward-looking. They also mentioned that the risks and uncertainties are included in the annual report on Form 10-K and other SEC filings.
In his first 40 days as president and CEO, Raul Fernandez shared his experiences, having met with employees, customers, partners, and investors to gain a deeper understanding of the business and its challenges. He also visited the Madrid office and learned about DXC's capabilities and partnership with Banco Sabadell to improve their business processes.
Fernandez outlined his priorities and near-term actions as CEO, which included focusing on service delivery excellence, sharpening execution and accelerating performance, implementing the operating model, establishing global offerings, sharpening sales execution, highlighting the company's offerings and competitive advantages, staying connected to employees and customers, and achieving financial objectives.
The speakers also discussed various topics covered by important business questions. They highlighted DXC's role in helping the auto industry with digital transformation and the two components of the Applications business, custom application development, and enterprise applications. They mentioned that DXC's strategic business units are centered around SAP, ServiceNow, and Oracle.
DXC's software insurance business unit, which facilitates 80% of Fortune 500 insurance companies, was also discussed. The speakers emphasized the importance of cybersecurity in their security offering and the key to delivery in the Cloud and IT Outsourcing space, leveraging automation and experienced IT professionals.
The impact of AI in the Modern Workplace was also touched upon, enabling greater ticket issue resolution in an automated fashion. The speakers mentioned that employees expect near-zero touch support in the Modern Workplace and that DXC's goal is to provide a distributed, location-agnostic work model with mobility, customer service and support models, and a frictionless IT experience.
In terms of financial performance, the speakers mentioned that the organic revenue growth in the third quarter came in at the midpoint of the guidance range. The free cash flow for the quarter was $585 million, up 26% compared to the prior year. The adjusted EBIT margin in the third quarter was 7.6%, and the non-GAAP EPS was $0.87.
Looking ahead, the speakers provided guidance for the fourth quarter, including a revised guidance for full-year '24 organic revenue growth of minus 4.5% to minus 4.3%. The adjusted EBIT margin guidance for the fourth quarter is expected to be in the range of 7% to 7.5%, and the non-GAAP diluted EPS guidance is $0.80 to $0.85.
Overall, the DXC Technology Q3 earnings call covered various topics related to the company's financial performance, strategic priorities, and future outlook. The speakers provided insights into the company's focus on service delivery excellence, digital transformation in various industries, and the importance of cybersecurity and AI in their offerings.