Key Factors

• Income (GAAP) reached $3.16 billion for Q1 FY2026, exceeding analyst expectations by $80.9 million (GAAP).

• Non-GAAP earnings per share had been $0.68 for Q1 FY2026, beating non-GAAP EPS estimates by $0.01, however fell 9.3% year-over-year (non-GAAP).

• Bookings elevated 14% to $2.8 billion for Q1 FY2026, marking a 3rd consecutive quarter of double-digit bookings progress.

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DXC Know-how (NYSE:DXC), a world supplier of IT companies and options for big enterprises, reported its monetary outcomes for Q1 FY2026 on July 31, 2025. The corporate introduced GAAP income of $3.16 billion for Q1 FY2026 and non-GAAP earnings per share (EPS) of $0.68, each metrics surpassed analyst expectations, with income (GAAP) forward by $80.9 million and Non-GAAP EPS exceeded estimates by $0.01. Nonetheless, GAAP income declined yr over yr, and Non-GAAP earnings fell by 9.3% year-over-year. The quarter highlighted continued momentum in bookings, ramped investments in expertise and AI integration, and blended outcomes throughout enterprise traces. The interval demonstrated regular operational execution however underscored ongoing challenges with income progress and margin pressures.

Supply: Analyst estimates offered by FactSet. Administration expectations primarily based on administration’s steering, as offered in This fall 2025 earnings report.

About DXC Know-how and Current Areas of Focus

DXC Know-how is a worldwide IT companies firm that gives digital transformation, cloud, and consulting companies for big organizations, together with many Fortune 500 corporations. Its choices vary from digital consulting and engineering to infrastructure administration, cybersecurity, and specialised insurance coverage platforms. DXC operates in over 60 nations and serves purchasers in finance, automotive, and healthcare sectors, amongst others.

The corporate’s current focus areas embrace integrating synthetic intelligence (AI) and superior knowledge analytics into its service portfolio, boosting cybersecurity capabilities, and rising its world expertise base. Execution in these areas, mixed with disciplined human capital administration and a dedication to environmental, social, and governance (ESG) objectives, are key elements in its competitiveness. Administration has emphasised constructing a stronger pipeline of shopper work, streamlining gross sales processes, and growing operational self-discipline.

Quarter Highlights: Monetary and Operational Element

Income (GAAP) for Q1 FY2026 got here in at $3.16 billion, down 2.4% from the prior yr interval (GAAP). Regardless of the drop, this determine (non-GAAP) exceeded analyst estimates. Non-GAAP EPS was $0.68, beating the consensus estimate on a non-GAAP foundation however representing a 9.3% year-over-year decline in non-GAAP diluted earnings per share. On a GAAP foundation, internet revenue was $16 million in Q1 FY2026 in comparison with $26 million in Q1 FY2025, with GAAP diluted EPS falling to $0.09 from $0.14.

Bookings, a measure of latest contract worth signed in the course of the quarter, reached $2.8 billion for Q1 FY2026, up 14% year-over-year. This marks the third consecutive quarter of double-digit bookings progress for DXC Know-how. Phase outcomes had been blended: Consulting and Engineering Providers noticed bookings rise by 32%, however income fell 2.7%, with section revenue margin dropping from 9.6% to eight.4%. International Infrastructure Providers bookings grew 4% year-over-year, whereas income dropped 3.5% year-over-year. Insurance coverage Providers income was a vivid spot, rising 5.4% year-over-year, however section revenue fell considerably by 25%, pushing margin all the way down to 10.5%.

The interval featured stepped-up funding in gross sales expertise and management, mirrored in increased promoting and administrative bills. Free money circulation (non-GAAP), an vital measure of accessible liquidity after working and capital bills, greater than doubled to $97 million in comparison with $45 million within the first quarter of fiscal yr 2025, helped by diminished capital spending. Working money circulation (GAAP) decreased to $186 million from $238 million in Q1 FY2025.

AI and knowledge analytics stay core to the corporate’s worth proposition. Administration highlighted elevated proof-of-concept work and pilots in AI for purchasers. These initiatives, whereas nonetheless small in absolute measurement, are drawing constructive shopper suggestions and constructing a basis for future progress. In infrastructure, the corporate secured a serious contract with Carnival Cruise Line to handle expertise foundations throughout the cruise operator’s whole fleet. $50 million was returned to shareholders by way of repurchases in the course of the quarter.

On the stability sheet, money and money equivalents stood at $1.79 billion, little modified from the earlier quarter. Internet debt rose barely as a consequence of small will increase in each long-term and short-term borrowings. Phase profitability traits various: Consulting and Engineering Providers noticed a decline in section revenue margin, whereas Insurance coverage Providers skilled a pointy revenue contraction regardless of income progress. Phase revenue is a non-GAAP measure as outlined by the corporate.

Trying Forward: Steering and Investor Concerns

Administration raised full-year steering for non-GAAP diluted EPS to a variety of $2.85–$3.35 for FY2026, up from the earlier vary of $2.75–$3.25. Regardless of this, general income (natural, non-GAAP) is predicted to say no between 3.0% and 5.0% for FY2026. The corporate foresees adjusted EBIT margin between 7.0% and eight.0% for FY2026, barely decrease on the midpoint in comparison with final yr, partly reflecting elevated investments in progress areas and expertise. For Q2 FY2026, non-GAAP EPS is forecasted between $0.65 and $0.75, with income projected at roughly $3.15–$3.18 billion.

Buyers ought to monitor the tempo of bookings conversion to income, natural income traits (as outlined by DXC as a non-GAAP measure), and price containment in margin-challenged segments equivalent to Insurance coverage Providers (which reported a 3.6% natural income progress for Q1 FY2026). Administration’s technique consists of deepening AI choices, ongoing transformation of gross sales operations, and sustaining a wholesome stability sheet. The corporate goals for about $600 million in free money circulation (non-GAAP) for FY2026 and reiterated its dedication to returning capital to shareholders by way of ongoing share repurchases. DXC doesn’t at the moment pay a dividend.

Income and internet revenue introduced utilizing U.S. usually accepted accounting ideas (GAAP) until in any other case famous.

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