DXC Technology Q4 FY25: continued revenue decline with improving bookings

DXC Technology has reported its fourth quarter and FY 2025 results, showing continued revenue decline but with encouraging signs in bookings and free cash flow.

Total revenue for Q4 FY25 was $3.17bn, down 6.4% year-over-year (or 4.2% on an organic basis). For the full fiscal year, revenue reached $12.87bn, representing a 5.8% decline (4.6% on an organic basis) compared to FY24.

Despite revenue challenges, DXC posted Q4 EBIT of $350m with a margin of 11.0%, compared to a loss in the prior year quarter. Adjusted EBIT was $230m with a margin of 7.3%, down 19.0% year-over-year.

One bright spot in DXC's performance continues to be its Insurance Software and BPS business (within Global Business Services – see UK Insurance SITS Suppliers, Trends and Forecasts 2024 | TechMarketView and Pieroni joins DXC to lead Insurance strategy | TechMarketView), which grew 2.7% organically in Q4 to $393m. This segment remains one of the company's few growth areas, while GBS’ larger Consulting & Engineering Services unit saw organic revenue decline of 3.9% to $1.24bn. Meanwhile, Global Infrastructure Services’ revenues declined 6.0% organically in Q4 to $1,54bn, but had the strongest book-to-bill ratio at 1.28x.

Indeed, President and CEO Raul Fernandez highlighted improving momentum in bookings, with the company reporting a Q4 book-to-bill ratio of 1.22x, compared to 0.94x in the same period last year. "For the second consecutive quarter, we reported bookings growth of more than 20% and book-to-bill ratios of greater than 1," said Fernandez.

The company's balance sheet showed improvement with total debt of $3.9bn (down $213m year-over-year) and net debt of $2.1bn (down $785m).

Looking ahead, DXC guided FY26, projecting organic revenue decline between 3.0% and 5.0%, with an adjusted EBIT margin of 7.0% to 8.0%. For Q1 FY26, the company expects organic revenue decline between 4.0% and 5.5%.

Since taking over as CEO in December 2023, Fernandez has been focusing on transforming DXC's operations and building "a culture of accountability, collaboration, and urgency" as the company continues to navigate a challenging market environment while pursuing its goal of achieving sustainable, profitable growth.

Posted by: Georgina O'Toole at 09:56

Tags: results   insurance   IT+services