Exchange: NYSE | Sector: Technology | Industry: Information Technology Services
Q4 2025
Published: May 15, 2025
Earnings Highlights
Revenue of $3.17B down 6.4% year-over-year
EPS of $1.43 increased by 232.7% from previous year
Net income of 264.00M
""Reversing eight consecutive years of revenue decline remains the highest priority for me..." - Raul Fernandez, President & CEO" - Raul Fernandez
DXC Technology Company (DXC) Q4 2025 Financial Results: Signs of Sustainable Revenue Growth Amid Strategic Rebuilding
Executive Summary
DXC Technology Company reported its fourth-quarter fiscal 2025 results, revealing a total revenue of $3.169 billion, a decline of 4.2% year-over-year. This decline marks a continuation of the company's strategic rebuilding phase, with CEO Raul Fernandez emphasizing a focus on reversing eight years of revenue decline. The company experienced significant momentum in bookings, showcasing over 20% year-over-year growth, resulting in a robust book-to-bill ratio of 1.2, indicating a promising trajectory for future revenue growth. Key operational changes included the onboarding of new leadership and enhanced sales capabilities, bolstering DXC's market position. Management remains focused on investing in innovation and operational efficiencies to create a foundation for sustained profitable growth and a recommitment to shareholder value through a share repurchase program.
**Bookings Growth:** 20% YoY with a book-to-bill ratio of 1.2
Financial Highlights
### Financial Performance Metrics
- Total Revenue: $3.169 billion (down 4.2% YoY)
- Net Income: $264 million (up 232% YoY)
- EPS (Diluted): $1.43 (up 232.73% YoY)
- Adjusted EBIT Margin: 7.3% (down 110 basis points YoY)
- Bookings Growth: 20% YoY with a book-to-bill ratio of 1.2
- Adjusted Non-GAAP EPS: $0.84 (down from $0.97 in Q4 2024)
#### Balance Sheet Highlights
- Total Assets: $13.205 billion
- Cash and Cash Equivalents: $1.796 billion
- Total Debt: $4.547 billion
- Net Debt: $2.751 billion
- Equity: $3.229 billion
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.17B
-6.41%
-1.74%
Net Income
264.00M
232.00%
363.16%
EPS
1.46
232.73%
370.97%
Key Financial Ratios
currentRatio
1.22
netProfitMargin
8.33%
returnOnAssets
2%
returnOnEquity
7.56%
debtEquityRatio
0.44
priceToBookRatio
0.89
priceEarningsRatio
2.92
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Insights and Themes:
1. Revenue Growth and Bookings: Raul Fernandez emphasized the importance of reversing the trend of revenue decline, noting a significant uptick in bookings. "Bookings up more than 20%, resulting in a book-to-bill ratio of 1.2... a clear indication of traction in the market."
2. Operational Rebuilding: Fernandez highlighted the strategic operational improvements made over the year, stating, "The rebuilding of our operational capabilities is deeper and more extensive than I originally appreciated."
3. Customer Acquisition: The success in securing contracts with major players such as Carnival Cruise Lines showcases DXC's strength in operational capabilities. Fernandez noted, "We won across the board on all the key metrics, but it wasn't down on price. It was on capability..."
4. Forward Guidance: Future expectations suggest another decline in revenue, with management projecting an organic decline of 3-5% for fiscal year 2026, but with an adjusted EBIT margin guidance of 7-8%.
"Reversing eight consecutive years of revenue decline remains the highest priority for me..." - Raul Fernandez, President & CEO
— Raul Fernandez
"We have built an early but strong track record of delivering real bottom-line results for our customers..." - Raul Fernandez, President & CEO
— Raul Fernandez
Forward Guidance
Looking ahead, DXC Technology anticipates continued challenges with organic revenue projected to decline 3-5% in fiscal year 2026, influenced by potential economic uncertainty. CEO Raul Fernandez expressed confidence in ongoing investments to support sustainable growth, stating, "We will continue to invest in our business... to drive sustained profitable revenue growth." Furthermore, the introduction of a new segment structure focusing on insurance services, consulting engineering services, and GIS indicates an alignment of reporting with operational efficiency and revenue generation capabilities. Management expects free cash flow of approximately $600 million and has committed to a share repurchase program to return $150 million to shareholders, reflecting a focus on delivering long-term shareholder value.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DXC Focus
0.00%
0.00%
7.56%
2.92%
CACI
33.10%
9.70%
3.83%
17.71%
CDW
22.30%
7.88%
11.20%
21.92%
JKHY
41.50%
22.40%
5.49%
29.47%
BR
35.60%
25.20%
14.90%
17.86%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
DXC Technology’s Q4 2025 results illustrate a pivotal moment for the company as it strives to regain its footing in a competitive landscape. Despite projecting a revenue decline in fiscal 2026, the management's renewed focus on operational efficiency, customer engagement, and strategic investments aimed at innovation in AI technologies positions DXC potentially favorably for long-term growth. Investors should monitor the effectiveness of DXC's restructuring efforts, the realization of its bookings into tangible revenue, and progress towards stabilizing executive leadership as the company aims to turn around its financial performance.
Key Investment Factors
Growth Potential
DXC is positioned for future revenue growth with strategic investments aimed at revitalizing its operational capabilities and expanding market reach in key sectors such as insurance and AI-driven services. Management's strong commitment to improving customer relationships also underpins this potential.
Profitability Risk
The primary risks involve macroeconomic uncertainties that may impact short-term revenue, as well as sustaining leadership stability amid high turnover in executive roles. Additionally, competitive pressures in the information technology services sector could affect DXC's market share.
Financial Position
DXC's balance sheet remains solid with a total equity of $3.229 billion and liquidity facilitated by $1.796 billion in cash. Their total debt at $4.547 billion indicates reliance on financing while managing debt through capital reductions.
SWOT Analysis
Strengths
Strong bookings growth of over 20% indicating market traction
Diverse service offerings across multiple sectors, including insurance and cloud services
Strategic partnerships and large contractual wins establish credibility and client trust
Weaknesses
Continued revenue decline (4.2% YoY) points to underlying operational challenges
High executive turnover raises concerns about stability and long-term strategy execution
Increased operational costs may weigh on profitability
Opportunities
Growing demand for IT services, particularly in AI and digital transformation
Potential for expansion in key verticals such as financial services and insurance
Investment in sales and marketing to enhance cross-selling capabilities
Threats
Macro-economic uncertainties impacting IT spending and project-based services
Intense competition in the technology services sector
Risks associated with transitioning to a new operational structure and segment reporting