0001688568-26-000022
SEC filingRevenue declined 1.8% YoY to $12.64B, with adjusted EBIT margin of 7.7%, as GIS contraction outweighed Insurance growth.
DXC Technology Company is a leading enterprise technology and innovation partner that delivers software, services, and solutions to global enterprises and public sector organizations. The company helps clients harness AI to drive outcomes in a time of exponential change, with deep expertise in Managed Infrastructure Services, Application Modernization, and Industry-Specific Software Solutions. DXC modernizes, secures, and operates some of the world’s most complex technology estates. As of the filing, DXC serves a global client base, including many Fortune 500 companies, supported by approximately 115,000 employees across 60 countries. The company was formed on April 1, 2017, through the merger of CSC and HPES.
DXC operates through three reportable segments that align with management’s assessment of performance and resource allocation. The Consulting & Engineering Services (CES) segment helps businesses use AI and data analytics to improve operations, automate tasks, and accelerate digital transformation. It provides software engineering, consulting, and custom/enterprise applications, with strong industry expertise in finance, automotive, manufacturing, healthcare, life sciences, travel, and the public sector. The Global Infrastructure Services (GIS) segment implements and operates the technology underpinning critical systems of global businesses and governments. Services include design, migration, and management of data center, mainframe, cloud, and network environments, emphasizing scalability, security, compliance, and cost efficiency. GIS also delivers cross-industry business process services for finance, HR, procurement, and customer service. The Insurance Software & Services segment provides software and services for Life and Wealth, Property & Casualty, and Reinsurance providers, helping insurers modernize from heritage systems to advanced AI-powered solutions. It also offers comprehensive business process services supporting the full spectrum of insurance operations.
DXC’s approach is anchored in its proprietary Xponential framework, which integrates governance, automation, and human expertise to help clients transition from pilot use cases to scaled, production-level AI deployment. The company has established a Core Track and Fast Track approach to guide portfolio evolution: Core Track enhances existing offerings through AI and automation, while Fast Track develops AI-native and highly AI-infused solutions. Named offerings include DXC Modern Workplace, cloud migration services, and data-driven sustainability services. The company also emphasizes a human-led, AI-driven Intelligent Operations approach in GIS.
DXC markets and sells its services through a global direct sales force operating across multiple locations worldwide. Customers include commercial businesses of various sizes and industries, as well as public sector enterprises. No individual customer exceeded 10% of consolidated revenues for fiscal 2026, 2025, or 2024. Seasonality may affect results due to customer budget cycles, industry trends, and year-end project activity, but these variations are not material to long-term performance.
The IT and professional services markets in which DXC competes are highly competitive. Competitors include large multinational enterprises that offer some or all of DXC’s services, smaller companies offering focused services, offshore service providers in lower-cost locations (particularly India), industry-specific solution providers, and in-house corporate functions. Competitive factors include vision and strategic advisory ability, integrated solutions, performance and reliability, global talent, delivery excellence, responsiveness, competitive pricing, technical and industry expertise, reputation, quality of solutions, and financial stability.
DXC’s strategy is centered on embedding AI, automation, and data-driven capabilities across its services to improve efficiency and client outcomes. The Xponential framework is key to enabling responsible AI deployment at scale. The Core Track and Fast Track portfolio evolution approach focuses on enhancing existing offerings and developing new AI-native solutions. The company also prioritizes sustainability, including a hybrid work model, exiting most data centers, and partnering with customers to achieve climate goals through offerings like DXC Modern Workplace and cloud migration. Additionally, DXC is committed to ESG, being a signatory of the UNGC and having SBTi-validated emissions reduction targets.
DXC employs approximately 115,000 people globally. The company emphasizes employee engagement through regular surveys, rewards, transparent communication, and global recognition. Professional development is a strategic investment, with a global learning management ecosystem, self-directed learning, and career development programs. DXC is committed to human rights, actively monitoring its supply chain for modern slavery risks and maintaining a workplace culture grounded in respect and dignity. The company’s Responsible Supply Chain Principles define expectations for suppliers regarding human rights and environmental stewardship.
For fiscal year 2026, DXC Technology reported total revenues of $12.64 billion, a decline of 1.8% year-over-year (organic decline of 4.8%). The decrease was driven by a 4.8% organic decline, partially offset by a 3.1% favorable foreign currency impact. Gross margin edged down 10 basis points to 24.0%, reflecting higher SG&A costs as a percentage of revenue (up 60 bps to 11.1%). GAAP EBIT was $353 million (2.8% margin), down from $696 million in the prior year, primarily due to a $377 million swing in other expense/income driven by pension actuarial losses ($169M) versus gains in the prior year. Adjusted EBIT declined 4.8% to $970 million (7.7% margin). Net income attributable to common stockholders was just $18 million ($0.10 diluted EPS) compared to $389 million ($2.10) in fiscal 2025, largely due to the pension mark-to-market and higher tax expense (ETR 91.2% vs 37.1%). Free cash flow improved to $713 million from $687 million, as lower capital expenditures ($535M vs $711M) offset lower operating cash flow ($1,248M vs $1,398M).
The new three-segment structure revealed divergent performance. Global Infrastructure Services (GIS), the largest segment at 50% of revenue, saw a 3.9% revenue decline (organic -7.2%) but segment profit edged up 0.2% to $432 million, with margin improving to 6.8% from 6.5% due to cost actions. Consulting & Engineering Services (CES) revenue fell 0.8% (organic -3.8%), and segment profit dropped 10.7% to $518 million, with margin contracting to 10.3% from 11.5%, reflecting lower volumes and mix. Insurance Software & Services was the bright spot, with revenue growth of 5.4% (organic +3.6%), driven by new business wins and expanded services. However, segment profit declined 20.4% to $129 million, and margin fell to 10.1% from 13.4%, as the company invested in growth initiatives and incurred higher costs.
Management emphasized the new segment structure to better align with operational focus. No explicit financial guidance was provided for fiscal 2027. However, the company highlighted strategic priorities including cost optimization (ongoing restructuring), simplification of the portfolio, and investment in high-growth areas like AI and insurance software. The MD&A noted continued focus on free cash flow generation and debt reduction. Key risk factors discussed include ongoing IRS tax litigation with potential cash exposure of up to $655 million, and the impact of foreign currency fluctuations. The company expects to maintain liquidity through its $3.0 billion revolving credit facility and cash from operations.
As of March 31, 2026, DXC held $1.737B in cash and equivalents, down slightly from $1.796B a year earlier. Total debt stood at $3.552B, a net reduction of $324M driven by the redemption of €650M senior notes due 2026 and $300M of $700M notes due 2027, partially offset by the issuance of €650M 4.25% notes due 2031. Total equity was $3.209B, down from $3.490B, reflecting share repurchases and other comprehensive losses.
DXC disclosed $16.4B in remaining performance obligations, with 41% expected to be recognized in fiscal 2027. Contract liabilities (deferred revenue) totaled $1.307B. No other material purchase commitments were noted, consistent with a services-oriented business model.
DXC returned capital via $250M in share repurchases during fiscal 2026 (17.7M shares at avg $14.11), with $342M remaining under the May 2023 authorization. Dividends remain suspended. Capital expenditures were $429M (3.4% of revenue), including $212M for property and equipment and $217M for software. Debt management included $742M in bond proceeds and $1.062B in principal payments, resulting in a net debt reduction.
Segment data from Note 19 was not fully available in the provided text. The new segment structure (CES, GIS, Insurance) was described in Note 1, but financial details were truncated. Geographic revenue breakdown (Note 11): US $3.209B, UK $1.862B, Other Europe $4.249B, Australia $1.093B, Other International $2.231B.
DXC highlights risks from ineffective sales organization and failure to keep pace with technological trends, especially AI. The integration of AI into operations and offerings brings risks of flawed outputs, IP infringement, and regulatory uncertainty under the EU AI Act and U.S. state laws. Talent retention and attraction are challenged by competition for AI expertise and immigration restrictions. Contract profitability is at risk from inaccurate cost estimates and third-party dependencies.
A major risk is security breaches and cyber-attacks, with threat actors using AI to circumvent defenses. Past incidents were not material, but future severe attacks could disrupt IT systems, expose sensitive data, and lead to regulatory fines and litigation. Compliance with GDPR, evolving U.S. laws, and cross-border data transfer restrictions imposes significant costs.
With $3.6B in debt, credit rating downgrades could increase borrowing costs and trigger contract termination rights. Approximately 75% of revenue is in non-USD currencies, exposing DXC to foreign exchange volatility. Prolonged inflation may not be fully offset by contract cost-adjustment mechanisms, squeezing margins. Restructuring plans aimed at cost reduction may not achieve expected savings and could disrupt operations.
DXC faces evolving regulations on AI, data privacy, anti-bribery (FCPA), and trade sanctions. Non-compliance could result in fines, penalties, and reputational damage. Tax risks from completed strategic transactions (HPES, USPS, NPS separations) could lead to substantial liabilities if tax-free treatment is challenged.
Competition is intense, with price pressure and industry consolidation. Supply chain disruptions from trade tensions and tariffs could increase costs. ESG and climate change regulations (e.g., CSRD) require additional compliance investment. Stock price volatility may result from activist campaigns or failure to meet guidance.
The provided document excerpt does not contain the consolidated statements of cash flows. Only the index and balance sheet snippet were included. Therefore, no cash flow analysis can be performed.