DXC - Earnings call transcript Q4 2020

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Operator

Good day and welcome to the DXC Conference Call. Today's conference is being recorded. At this time, I would like to hand things over to Shailesh Murali. Please go ahead, sir.

Shailesh Murali

Thank you and good afternoon everyone. are XXXX for Earnings you and Fourth that Fiscal Full-Year Call. pleased joining DXC's us Quarter I'm

Our Technology's CEO, update remind of now, speakers Saleh, is will call, on in at Technology's will listeners our I'd the to Officer. believe DXC presented DXC rules, in President our and release. investors. information A These Salvino. introduce to are which subject of measures. that on most filings. that DXC accompany today's actual Report on and includes included call post be information differ these participants dxc.com/investorrelations, and And certain to obligation of our call cause statements measures our will would the These Chief This tables be make on those to Annual Relations our the risks on I Form informs assumes today. includes Investor from Officer; on and can forward-looking. with these we be and reconciliations expressed unknown uncertainties Executive today's required and the materially X call we our like the results financial like slides included X, in On presentation certain you'll to call. except by the and that reconciliation as Mike? and a slides comments SEC XX-K earnings could directly these found will certain see President the and the other these uncertainties, Technology non-GAAP being law. discussion we Slide comparable SEC call, Slide Paul to Mike to risks is no known our discussion website. provided webcast Financial and Chief accordance In measures, section webcast provide Mike measures GAAP that adjustments have Salvino, respective the further to After which we useful their

Mike Salvino

Thank connected sharing context receiving we've This we accomplished going joining appreciate and are our your I will us recognizing customers time then time first we've call to we've the I spoke. you, I'm since crisis, the picture staying feedback and today's I since start last and today. Shailesh, by some well. are you discuss everyone COVID families is the about COVID-XX from performance the operational our what crisis. big been who during hope outstanding

update work. the XX my these of accounts leave three. five, accounts the quarter. Investing as report over in investment to have this we two The call I the the taken challenged provide call I enhance focused work our accounts. are with other decided last also working billion two of consists much these fix to TCV behind highlighted progress the our closing been stronger hand Then I now some relationships and we over is and in share XX on will to journey. Since us. flexibility. for and was customer X.X earnings remarks update pretty our we making The improving financials have Before including I and on up on now an before new an transformation have renewals the I'm we call started customer something then the actions quarter our questions. financial is sold Paul, of happy quarters delivery, opening have liquidity customers. the done pleased we still fixed I'll have during we make also to Paul On good our with will both and delivery this we off, remaining us paying have September, customer first strengthen been I'm to to building have and

previously was and engineering. work work some new in of and areas, put this is like of the on analytics new hold Some

is work On significantly increased we customer building top stronger our turnaround. have a focus relationships, to evidence XXX best New accounts. describe the on our

quarter, numerous was DXC doing gave them and know, on them any making to issues. I customers with times, During them delivering this ever an were update personally these sure in please they asking let by I we on checked how sharing see if focused me

times. to reliable on-prem, the at us see mobility proud and I months has services. our a more It infrastructure, to seven I investment making in Clearly, our unfortunate COVID-XX Like the heightened have and DXC us be IT business customers capabilities, of tough deliver has was in workplace in has over needed most to to could not we've people customer thing past right needs overwhelmingly do. the support how delivered. they way As the that you customers having positive point, for as team for and crisis delivered the minimize been caused when customers allowed and is, secured we don't fully crisis the remember our and when the been our feedback want specifically and

a and that a for how mobility demanding together capabilities, captures our a in customers. and IT The customers innovate the our slide of has infrastructure highlighted our distinctive crisis the the cloud very quotes to of delivered and on-prem have pulled criticality with sampling our finally we've that challenges faced have ability of concerning in services, some during environment. We our stories execute workplace IT

quotes life. Let a these to of me couple bring

to of one home. defense folding one in we enable in in computers For surge image a employees we employees X,XXX contractor, their fielded half from desk a their work XXX% major for day, week. to Also delivered service calls

locations, their delighted delivered across which showing customer. XXX we dashboard a their the devices addition, In

They families, the customers. bot in we thinking, a and leading, improve at reduce see calls working The and work. of got expectations thank nonetheless service our built customer first the by DXC anticipated in one COVID-XX surge the every in new to mobility was customers number during because on time. our desk have the is the This it crisis. collaboration, see call we've want during enabled to a of all job focused is XX% are customers. our box was the a of of us quote. industry, out speed number want highlighted for and this virtually. They moment for a also And For want Over done I employees our and industry tech day. men XXX,XXX home the proactiveness, as customers' this health great work exceed the we a expected from in from deliver and who to taken and recognizing to and us themselves, care meet phenomenal and thank hours you for day taking leading our The but to company, on their the people. I thrilled to I our workplace have enabled performance women XX and have reaching and XX% business the deliver challenging people volume chat actions you'll our is for to our XX% customer delivery we customers our outstanding to take our out which people highlight

and encouraged this financial our about based materialize the position The from to care our Our the payoff work. people progress. been do strategy taking am has always time, will over on DXC customers strategy growth of very detailed but for who I

to been runoff been our to of done calls existing able because say secure everything a With over for be discussed of customers lot runoff. earnings I seven the customers, months, main stem work revenue DXCs and challenge last future our customers, in delivery we've revenue this fundamental study couple from we the estates. our contracts. we doing As existing should has we've last IT improve

the all Here's key work. this from finding

trends to customer away Instead, Our delivery this runoff DXC. due runoff to relationships. from revenue, and prompting not was by was caused suboptimal customer weakening move customers cloud

lose 'XX price As expect a FY lost XX billion X amount FY customers a to made the and decisions result, downs we by of months. 'XX, revenue in similar terminations last from in and XX in roughly to

year. absolutely FY control fundamental within of pronounced good will more fixable. news our impact first is and in be 'XX half the this the is problem For that the The

we're on making to the should new future help customers, stem bringing fact, In DXC revenue which good progress our runoff.

our to Now people. I'd turn like to

serve are account and reward been delivery. hire customers level people within My has talented to to closest to to the our who customers. our continue We both our at focus people

delivering You might that detailed work. have are heard the people we announced increases pay for

by top quarter. to leadership the information fantastic clock situation that town through as people The of and August. our the the this in and acting informed were to We're the the This basis. evolving January daily job supporting around center. from the COVID-XX COVID-XX meeting emails phases a and regular The command guides done health our in I'm we're a crisis. on our for monitor center evolving It team of people first people increases of safely actions from our navigate work has we keeping ensure our on personally our ensures securely. halls works of a throughout My roles me, priority can be the critical to help spread work the these people in to reduce will been done remains people enables final and virus, done safety has and home our our situation. onsite always and customers phase

transformation Now, three cost let customers, consists our optimization, journey, our and market. me on to focused initiatives which of turn the

foundation will help initiatives of for these All the us growth. build

to and the optimize on customer of of Being lot first on it’s cost on delivery well market our I and the cost. building initiatives. relationships, our people, stronger initiative context a seizer focused base you which but our customer taking to given optimization already and our time I've is to which care on now to want focus initiative, time Now clarifying our the spend second securing way customer

eliminating detailed our be account the people management What relationships. deliver size to our have This growth our is and value. on drive and initially It Our be cost revenue will erodes and customers our This the to accelerating calls doing layers, to between countless also optimization causes too shareholder and our able and are the deepen By is focused many optimization our customer unnecessary steps customer our I've cost cost customers meaningful faster, why we people right structure work. learned appropriate by initiative. simplifying people doing confusion. and help revenue. taking profitability we for complexity that will reviews layers

basis annualized year. of this expect an with million on about We cost eliminate about coming million XXX to XXX

advisory initiative. as The we see that estate We that is DXC expect people IT moving that We incredibly I ago tap be communicated us going we this were the This or our us. a demand also concerning reaffirmed before means our is the an capabilities these of four to with DXC past we business. to of continue allow will current XXXX that do mentioned workforce to to insights our into revival initiative a third and actions, roughly will us will at that the the our we which environment IT at cloud. impacted. help clarity, are considering want on-prem to on-prem as X.X% what opportunity continue to and customers virtual to I I've levels seize and along reminder performance has see highlight greater the run better market how is to acquired the cost people company and to unique business strategic to all this needs their is our optimization to that weeks a relevant. of existing this provide estate we This people the we of hire year, exit us changing. customers market, serve our

with the next and our expected the to and our of cloud who key top their shows to half nearly these represent IT our the of two current We customers XX estates evolution assess years. data have The of over move estate on-prem worked two accounts customers to feasibility XX% years; this drops with technical the risk business ability the of analysis after considering to IT careful over to case, current their execute number along the cloud and X%. estate to however, the aspire next

work of always top to changer in These state we years. are on-prem customers. opportunities. customers work eager been customers. highlights home the and both is move plan modernize that their IT now capabilities infrastructure our want run mind for had but the here, have and IT secure on-prem next XX% becoming capitalize and from I on for This touch customers infrastructure, underscore our and wanting IT demand to our next over the for estates essential, thoughtfulness criticality In addition, we and IT do must and of The of trend have that to essential how cloud. they found these we home they're not pieces the mobility concerning reliable the from capabilities estates a the remaining estates businesses, for of to will and these also two game premise on workplace our become these to

the we're re business You will to workplace given business, Paul are the that on the we on of home from from but working so mobility demand. services It our for have in customers, of market is importance hear evaluating currently we in capitalize exactly hard this time to retaining is which the to that to us take focus our strong doing. are we worked now our cross care selling to what customers with

We cross-selling XXX accounts. now to the right are market top in our

analytics offering, engineering and them workplace offering. and have of and capabilities our our We spoken mobility to concerning and XX% IPO our cloud

looking XX% over and cross-selling working revenue am forward created into initiative last All to customers and of enabled this us this our teams market of have opportunity third I increase seize that has this DXC. to to new by these for pipeline with convert months. the couple qualified actions pipeline our

me over to the turn let Now Paul. please call

Paul Saleh

Thank you, Mike, and greetings everyone.

Also had or for in in strategic in $XXX a quarter, I'll accounting our basis we Also our per In fourth an diluted with $X.XX costs usual, million recorded non-cash charge $X.XX on non-GAAP re-measurement the assets transaction liabilities pretax diluted or per of impairment are from Also a associated share share. $X.XX by billion basis gain resulted per goodwill results. and and acquired items quarter, million or share. intangibles have pretax integration review. quarter, that quarter, from on diluted diluted $XX under or costs, related separation we excluded current pension we share. $X.X $X the covering external the the amortization was assets quarter, of a restructuring As $XXX million per a in million. primarily are start pretax annual basis on spend some In the of $XX

pension pension $XX.X of we position have As of an assets billion and $XX.X billion of overfunded million. year-end, for liabilities of $XXX

foreign continuing benefit Excluding non-GAAP million valuation allowance a benefit from operations other well and was of tax release items, $X.XX a driven special the planning initiatives. a the these by from impact taxes as of non-GAAP before as the EPS from $XXX the quarter was income the our in key jurisdiction for tax

on share. diluted a integration basis For costs amounted the $XXX full $X.XX separation transaction, or to year, a and restructuring, pretax per million

$X.XX $XXX For the full year, basis pretax diluted million amortization of acquired per on share. a intangibles a or was

Our losses as full goodwill earnings the non-GAAP also include on year of gain arbitration impact the impairment well award. in QX, HPE as

our operations, year, to move billion full income -- $X.XX. before results detail. $X year was the non-GAAP EPS on our from in and includes a for I taxes the HP more and was arbitration award, So full also non-GAAP which first continuing gain $X.XX not will quarter the

headwind always, year. headwind million was for million the was the will a and compared As currency. I quarter quarter be Currency dollar about up will constant during all comparisons the sequentially fourth with revenue the in $XXX revenue $X.X prior discuss despite a stronger in billion quarter. GAAP $XX

Our that prior were of EPS revenue, revenue X.X% reflects non-GAAP quarter continuing sequential the quarter quarter. and our noteworthy they in full impacted the a million well the EPS. Adjusted particularly two income margin terminations, resolution concessions, the in as onetime represents Adjusted EBIT and quarter was as operations currency. was impact in quarter our from X.X% disputes price of decline The constant In $XX. revenue was our $XXX EBIT million. as in worthy runoffs a fourth from items $XX customer certain of in headwinds the decline

non-GAAP on EPS customer non-GAAP $X.XX. by operations First, the $XX resolution from impacted and taxes income before by million continuing certain dispute of

would as release in have book-to-bill other rate from from bookings planning of in In the the foreign the for hand, benefits the were of quarter with $X.XX. XX% tax a excluding fourth of $X.X quarter billion and disputes, result jurisdiction of EPS rate customer those key a low nine for associated times. benefited evaluation a quarter zero charges the EPS been On a the in a tax other the a of resolution Normalizing for initiatives. allowance tax the and

revenue For headwind currency the year, a $XX.X including over million. year full billion GAAP was $XXX year of

$X.XX For adjusted billion. was XX EBIT fiscal

EBIT and was was non-GAAP adjusted $X.XX. Our margin XX.X% EPS our

bookings of billion For $XX.X year, a the full were X.X book-to-bill for times.

impact the was resolution year, flat revenue In GBS of and been the was up services and one with was segment primarily due GBS now $XXX a the Turning data, engineering stock I'll bookings of margin advisory GBS $X.X engineering, includes current layers human Luxoft well under now GBS quarter, profit billion includes analytics, the a XX%. million to down industry technology of following slippage Luxoft. profit book-to-bill sequentially. deal segment the GBS which would revenue local the analytics the quarter acquisition. sequentially. certain IP X.X primarily enterprise the are fourth $X.X fourth segment, billion start our and business, the results, was large strategic includes the which GBS from for contribution services XX% DPS which quarter customer sign and that the from dispute X.X% of of the application buying to have U.S. The margin quarter. resolution, for due to and in the segment in the a profit the expect and as both the disputes was as state Adjusting we impact for customer of times, and now business horizontal health to review. revenue for were also Year X.X%. Adjusting over

bookings our one-time. billion a year, For of a were was book-to-bill Margin was for the profit and $X.X XX.X% was billion. GBS billion. Segment revenue full $X.X $X

million stack revenue XX.X% runoff layer as a cloud was The decision sequentially and from segment the and the which our strategic to as also year-over-year It GIS GIS our year is billion in GIS includes and profit margin was primarily the Sequentially, technology security impact the mobility a business, the down IPO $X.X profit was over revenue times, well enterprise on segment was GIS consists bookings X.X% $X of in $X.X margin billion year. our basis our points XXX to decline quarter X.X% services. book-to-bill and quarter in X.X business. $XXX of due margin the customers of bookings from GIS review. termination quarter on fourth of under in-source was and down Turning the GIS out segments, the X.X%. fourth was to few for for segment runoff. accounts $XX.X certain a revenue and profit is X.X workplace a billion, X.X billion, of was year, for and was book-to-bill GIS full for and the times. were profit billion

and our security in was the let and X% which year stack billion. taken secure technology increase and last and indication XX starting year-over-year, $X.X the stack this an to price revenue Cloud stack. that me were the early impacted customers the comment the was X.X% was is that revenue of and is the to X.X% for up in quarter, was effort of for stabilize Book-to-bill IPO full down the time revenue on sequentially, the and year-over-year. off has $X was revenue XX.X% cloud pay Now driven to for and layers enterprise terminations was by up to year layer down of of full in solutions. due continued been in X.X This sequentially layer security the revenue one quarter it the times billion. XX modernization the by and was actions performance demand the months. Book-to-bill

Book-to-bill the as cloud sequentially, stack pulled as X.X COVID-XX, demand to layer back a deal IT about solid the business. the of new project well was We're quarter, X.X% large times as for referenced. enterprise just the deployment this industry work, slippage of in customers year-over-year. the obligation application on was I to due and one for flat up of application our Moving stacks and layer seeing

the project softness in full sequentially, down sector delays was the year-over-year. In engineering revenue revenue I'll For reviews. the the and revenue this X.X automotive for analytics down three from full under in year Book-to-bill the stack for the return the of year times. Revenue in billion, generated to strategic primarily billion $X.X X% layer pro businesses X.X% was the layer banking. contribution of Overall, some and of was for was $X.X stack these forma just year. Luxoft. $X in three this billion businesses quarter

Veritas This As the cash. of billion human you sale and continues Capital health to all announced we to our local $X know, state perform and U.S. services well. very business for business in

this for active quarter. diligently to and Our most of working close workplace earlier likely parties we discussions We're through activities businesses. teams second horizontal now and separation the BPS interested transaction than end expect with in expected are our by and mobility the

despite is BPS challenges well, from performing COVID-XX. Our horizontal

employees For we're are the our remotely. of in environment workplace to strong business, seeing a work as demand looking and number customers to their current mobility enable

has pipeline Our since increased the beginning of by $X year. fiscal our billion

workplace of has in customers become As environment. mobility an and for Mike area the strategic current mentioned, importance our

creation potential business, discussions to parties. reevaluating So, time also continue value we the at while same the interested of retaining pursue we're with this

we the year, And in free the for free despite Turning adjusted current $X.XX contract that our to adjusted cash cash financial XXX(k) for of expect or highlights, settlement a of in quarter offloads, insurance match XX% and was free cash fiscal annual net other recover $XXX cash billion large generated or two including payments flow flow million solid coverage net XX% was from We full flow income. fourth the year. adjusted income. to adjusted

$XXX of the Our was the payment in of capital quarter expenditures revenue. X.X% or million including capital lease

CapEx was of or $X.XX full X% the revenue. billion For year,

$X.X we returned of $XXX form million the the During was re-purchases. quarter to we million in fiscal end share in the the million our in for and in at $XXX -- and shareholders $XXX of quarter, the capital $XX million paid Cash of year, whole the dividends during billion. dividends

net total a Our XX.X%. leases total debt to capitalized ratio was $X.X debt of for including capitalization billion

taken to enhance flexibility. action turn our to I’d Now our and were liquidity financial the like

two billion grade we've a one maintain strong investment profile. priorities a of with number our to months, the key cash economic of stated announced we we credit consistent markets financial certain raise position facilities used In our steps down an pay We $X to profile. the down commercial extend our We were able in via balances of of billion is $X.X revolving a strengthen last capital subsequently strategic aggregate $XXX notes steps, in proceeds during March environment position taken billion dollars drew couple credit with XXXX. build As facilities and two and $X to each credit in The senior and bonds our due liquidity in XXXX to a million maturity principle paper. down $X.X April. pay and were We and our billion used financial debt out in to access our position. and

of on April billion sheet. our $X.X cash have of As over we XXth, balance

to We from and We recently of in our financial $X loans revolver subject modified our gross X covenant. for X $X.X enhances and XX EBITDA to times is in months, to billion covenants had also to $XX.X consisting drawn debt capital next debt of billion debts further a billion the leases. which EBITDA our debt, net term flexibility. times

EBITDA. EBITDA less After step human health Our a than 'XX to the for one the debt pro basis X.X this and end U.S times business. forma net services of debt to was down local term and will of state to XX covenant sale months, on and times fiscal net X.XX the at

XX maturity about our the debt loans improving off further completed dollars profile. months your billion also extension term of a We by

now maturing they're as the next we less $XXX months. in result, debt have And million than so XX of

sale services intend pay we state down communicated, previously of local As use the business proceeds to our our from and debt. and to human the health

of are This our appropriate alternatives. in with following The strategic we dividend payout suspending this taking will opportunity investment reevaluate of the uncertain Lastly, decision in aligns dividends. prudent dividend the step policy. also completion environment, our board pause an financial to our grade the the our give

parking. steps flexibility investment summary, taking potential us we're ensure gives dislocations withstand it further a These journey. maintaining the well and in to market that underscore credit execute is is our with profile, steps and to position an transformation commitment positioned the also strong Company able financially but financial So to consistent grade to our

is fiscal a previously XX transition with stated transact Now for year DXC.

executing these transformation position. and our are initiatives as a of number on securing liquidity concurrently. customers, executing We're alternatives our We're optimizing on costs enhancing our journey. working initiatives while We on financial part of and of strategic all our

it we've on COVID sight situation we fiscal COVID-XX results. to the these better We're of on makes our we visibility into the of from further our on clear While line challenging until timing suspending have very XX a financial added the actions impact along these guidance certainly progressed therefore have and full and on initiatives.

We fiscal our first in transformation be journey in the COVID-XX pronounced the to expect half of year.

to could quarter, XX% and with revenue of loss result current price decline business revenue the work concessions the of due X% previously to For sequentially. project terminated combined the impact COVID-XX in our on

thereafter. that sequentially to stabilize revenue expect We

first additional in interest more quarter quarter. reflects as business of the will for impact EPS higher decline in level QX investments the the pronouncing low point of revenue the the a quarter impact at Our as the be expense in a and well of

minimal share includes those in only optimization the EPS for fiscal contribution second we’re undertaking. The optimization actions pops the year of QX will quarter. benefit or beginning of 'XX million cost the $XXX Additionally, accelerate from $X.XX initiatives throughout per

level And the annualized first services debt you I that, and turn indicative local the the quarter of for the and now to state sale for of the will when U.S. call business. the human from factor health of of his with Mike particularly is proceeds the closing pay year, also of the down interest the in Now, remainder in not expense the remarks.

Mike Salvino

all you the done strategic with moment on Thank us transformation. position our we're crisis. recognize a to pleased a the you, which during I I'm should progress enabling allow stronger Paul. for to and success And to work execute have have us making your the sheet to just take to our wanted COVID-XX team that initiatives, great us balance

value As we of strategy, summary, organically either develop the assess will our unlock portfolio journey. In making competitive plans future position business ongoing continue to on progress good transformation part and are of we inorganically. our to or our

the and in are has impacted We relationships 'XX. stem our that delivery us customer FY fixing 'XX that and FY will revenue runoff

is executing plans are to sell position DXC All expertise. finally, capabilities these IT will is enterprise seizing mind of top technology create criticality our where the customers, our estate are allows our And growth. we the eliminating opportunity better the serve set This optimization market cross foundation for cost points us to stack. highlighting the to of across for will which our We that complexity the customers and by confusion.

the opening questions, this Todd, time wish time. best all out call up just families your stay healthy during and questions. call the for and open please the I before want to please for you Now,

Operator

[Operator sir. Peller Darrin question Wolfe with take We'll Research. our Yes, first from instructions]

Darrin Peller

All getting guess, $X you billion has think the helped business. impact are these deeper Glad well having seeing you're give with in safe. right. I what you the then is can in -- us and They doing you're from all capture a you 'XX? would these to overall, And you're you understanding responses you're conversations on the will renewed focus that DXC ITO clients, back say Mike, clients? Thanks, recognized, the hear guys. of getting conservatively that conversations really getting

Mike Salvino

all I've the right And we I to what had people look, is Look, do put thanks. much home. I'm CEOs great bottom I almost pretty estate existing if hitting with And against think from talking customer do the basically estate CIOs working about up right, got what day. the to line my quote now and saying, are that workforce making that entire think my Darrin, why basically because every environment now, you start That's seeing progress. we're is slide. overnight, the together they're

So say, all we've it's think it virtual IT estate start relevant, about to do hey, against some become you from you're when times of, whatever, I talking is call again slow what the I and what experienced have level a trying standpoint. or

important. guys you was communicate for outpouring thing of, folks. key those so of I us can top the senior entire to conversations, finishing normal-type appreciate that's they level making I bring you've thinking beyond it an done. sure them virtually, to really went innovatively, just my really what make the the need workforce is Darrin, be. it call things. above But showing up. How and I and that do that of showed was to duty up, sure And for get the fact we was that with then was So transition it look, are wasn't mind the and where it It was together

and I'm along, for I look all matter And I've and got now we focused us the saying been very, highlight right, Darrin, this we Clarity, customers while these go we the now investment say, that's We the criticality now we supportive been on customers I our and the that Virtual was IT that, cloud. I of number, that about So doing. the I'm analysts But facts going, that, of made wanted quickly, in the for when opportunity. cloud. isn't to Virtual with And all And plan why there the and do enabled all use fact tackle can to what Clarity. that, having And the be is with. estate look, move else always you now to to the customers. over going to that we right, those at what cross-sell of cloud a is look, highlighted because to have go That's analyzed have I just to all begin to I why the discussions got sitting XX% has the very

I is over billion uptick that it of the months. of in of and in that that is couple mentioned, the some pipeline qualified last $X.X And XX% some

Darrin Peller

the just client factors. sounds done good across and impact pricing bottoms-up like seeing a you've pretty a on other on analysis you're comment the It And follow-up made your base around of you Okay. what now.

So we review was around pretty good or do feel your conservatism $X about -- that billion? comprehensive that really how your

Mike Salvino

we Look, time. -- taken I've my Yes.

right. set, hence, transparent We've highlighted the of from the And that, Okay. And I reason are stuff, stuff, very all I good fact environment, that think, I XX in okay special. for -- got again a accounts detailed We're that also And months, here. the that's good COVID-XX Darrin, those doing I challenged the the you and the stabilized highlighted we all fact the accounts, very plan seven we fact is -- and at delivered we've the a And a standpoint know Virtual the in team got level. Clarity okay. majority why

Operator

from Thank question next Ashwin take our Citibank. you. of We'll Shirvaikar

Ashwin Shirvaikar

good from resolved, of clients XX of thanks, Hey, XX hear are take up and on them want you. two to leaving. Thank guys, to you. Mike, I last problem where your comment,

things. quarter is Where that think, see was, million financial impact a understand I in on see terms, the I that or where you. One could if impact comps had couple this seemed of figure impact. cash would $XX would to this. ongoing concessions? mentioned flow to of maybe problem, Is the ongoing? amount give? easier ongoing I wanted The pricing is that I I of various behind out a there Is impact small there relatively of you impact As

Mike Salvino

$X.X of bit billion the What exactly about a talking run-off? talking new you revenue are me about little Are you understand more. billion work? of the that help Ashwin, $X --

Ashwin Shirvaikar

and that are because down be ongoing Get so have so into solution? a given The bit to margin resolve of price taking solution. going these How faced of combination what little quickly the that sort to you with then understand to, might concessions these we lower structurally significant fix the was is? did can things you that the a impact What we problems?

Mike Salvino

three the we did, things right. here's Well, Okay. that

we've First of significant got all, discipline. obviously, moving pricing forward,

that anymore. doing So not we're

what 'XX. revenue first were the the that are those we've not other then there investing in mechanisms -- last now around And and when doing be the place Paul half all customers that and we're right. all thanked discussions is in delivering, the that process get various Ashwin, will last what DXC. our operations, is, did run-off about about thing this delivery also about liquidity next meetings. And only put That's to of make okay. the to make Because having I started I shoot, pushing giving discussions got I'm we've like these sound, in the I'm delivery I'm the of hear majority to little on over over. got second I customers in the XX right they're a run-off, them mentioned, to with have out The of had sitting those didn't why Paul that I I customers the I'm facts to mentioned I competitors any us, go basis. runway thing on a not right. at want we sure these we hear financial potentially but thing but them we saying, thing revenue FY am only what when months, calling are around the that sure happen. make our the flexibility, And I all we've is weekly saying regular bit secured when right, dialogues

Ashwin Shirvaikar

Understood. an important thing. said you Understood. And

impact of do kind incorporated was You things There's Is really from Maybe figure Cloud the kind have said of delivery, in optimal impact. the impact is it price delivery. done. of an downs. kind were so suboptimal to wasn't to of it's possible analysis COVID. you out a terminations, it here price of downs, -- had short-term attribution an cloud. It of way the secular being sorts something

think all terms As of we forward, these going of we should how that in of factors? growth think

Mike Salvino

before shot about other doing When me I important when to in immediate largest we new down is at terms I further two have up we're a what for happens of and at customer, I is making environment in them, for work, what's us what want down we're that will starting thing my doing weeks of a is the forward, savings. a to the that give understand the and always customer, that think deliver any cost had growth I Well, get sure ago the better look, fact does with you what And after cross-sell seen level, these just our for Ashwin, delivering, okay. deliver detailed I you're the the to we're outsourcing moving I -- one going the happening. the up analysis, clients to because and But customers, And is you tell this. it helped us to show of our show get customers was and listening journey. okay. really want voice transformation guidance, market, tell the and then first in what And

have comments but numbers are would the not you? the coming or to else you add only about So Ashwin's anything coming they're to we table. what Paul, to table, on have

Paul Saleh

No, Mike.

you about, you're actually generated got an also ability the Mike, in just that and it's across because what really mentioned build that I pipeline -- Ashwin, I The think we're important, $X just talking seeing it certainly, the to This board. cross-sell to billion know. said, think business. workplace on new by I

of resilient clearer our I slides that business I have think our on my think and I presentation, made it quite should it during uncertainties. -- is one was in economic the actually

it, about our XX% to project exposed business think of you If is only work.

now securing environment ITO the has have to come their just resilient core their need of meet and we them is shifted to back has on-prem as their and Mike sure really mentioned, opportunity, right And need. secure. stabilizing customer So that core the and make

opportunity our really technology gives of stack. offering product -- across showcase the a our to that so the of great us And rest enterprise

Mike Salvino

I've that the need it capabilities. a clients. cloud, move the to as needed they these the we they the cloud. here, is by as described I bottom have saying being up critical us analyze being to into just All and I fabric everything knowledge, going to That way, on when to data And of in do. does except do center. cloud, for Ashwin, part have that move this. is the our the still is our to the believing a what People of of time just been as close is on-prem described stuff when the hard that, thoughtfully walking So at nature, have everything showed moving us line accounts the the heartbeat cloud people since I because

turned the with back discussions them there care in the knowing Ashwin, So those market, and clients is, having out and we tone. look, it's getting

I when new So say is we're up, a doing. what that's showing DXC

Operator

Thank you. Stanley. We'll next question from Morgan our Faucette take James with

James Faucette

you're be you run-offs what that in progress and in new I case kind are back the of a headed as this at footing from wanted making of the your that fiscal the be ask run-offs from as you need the kind happen look confident positive you want so perspective? yourself And will and for you to a firm to that cost referenced, with revenue end customers going Great. Thank 'XX? much. direction the you year and the about you how do see to to -- you can DXC, point get into very financials

Mike Salvino

Okay.

So four things.

for revenue to customers, run-off. continue The first these deliver need to to we is stem one going future because any that's

Second the huge to it build trust I said, customers. minimize build very trust. to right. And don't we for to I environment, a we continue man to want COVID-XX, but heck COVID-XX got like in a all deliver to opportunity got opportunity but is And take seriously, our we had I

a to server, additional now putting key Upgrade just we new updating what And there. -- in network, the need that. is out doing in is day. So that's thing every work potentially existing updating the a environment be patches,

more last and thing analysis an work, getting simplified that's and us that that continue, I that environment. want us. the then is And people trust wasn't The about the the cost. the relationships about to streamlined third me to is on they between the thing going open doing those now and obviously, the our is help we the detailed because cross-selling cross-selling, in to number we've And got of based optimize door meaningful doing layers kidding them and the customer.

So four those see I things, James.

Operator

take from Thank Bergin next our question We'll with Bryan you. Cowen.

Bryan Bergin

Thank guys. optimization good afternoon. ask you, on Hey, cost wanted the to I plan.

net the then cost too, $XXX we following And that make? the it think as to about reinvestment how as relates million a plan fiscal versus So you is $XXX much just of that year? to may million Paul, savings

Paul Saleh

the all in is $XXX line. million of the bottom quarter. cost of optimization mentioned, not to going I net it to as was first be incremental The And much

it quarter. see the throughout to going accelerate we're So

fiscal That's $XXX-million-plus we'll and on to You'll in the in in now we're that effect And as execute have basically to going done, see million. work perspective, that can getting to carry-on way $XXX the and complex the second imagine timing we a way 'XX. of it a our up after from initiatives we're between countries starting the quarter. begin I difference think you these show the them, some

add So actually done to really This the we just run fiscal is the 'XX. optimize. further a that that. we're as exit to continuing not with part just And plan rate of will of

the are example, other footprint, there costs looking that within further real pyramid this new contractor for We're redefined of estate opportunity at course, environment. or we're looking customers. our our Of opportunities example, also at. for how in looking at, work we We're serve

All to be us that progress of we these 'XX. as look to still we fiscal to for going and are top-of-mind are through things start things the year,

Bryan Bergin

the think flexibility in you've Okay. Is But cash changed cash flow anything given from understanding think I'm -- perspective, should model there about forward? in a levels. yourself generation going then, generation a as we about financials. conversion and flow we how just cash here more really absolute

Paul Saleh

is XX% this come what of know industries statistics fact XX%, some in that revenue from customers retail. it one-five, can then are comes or -- like And tell hospitality rest only guidance COVID, of example. One been of will the defer business worry from industries give really to industries that in that industries or to lot our for payment have our COVID, in moderate or I that the point high-risk sector another consumer you that maybe the this thing airline, example, lower exposed risk. time. in XX% is or the You goods about players a And is the customers that at about of hard of for it's of people environment you, interesting to again,

good for now, Right solid. been us. very So our a flow that's sign cash has

we are You the data And from the gave at I continue billion cash you XX I see over April. mentioned flow. April of solid that cash generate to we of that end can of as that $X.X

market being just our the our in cost we're prudent very in our managing so spend. working capital, or And -- carefully, watching

netting able that. how a of to get net cash in of but you terms give flow percent be more number clarity, as a income, as -- in you much bit of I'll can't the I a we So little precise give due time,

Operator

from with Bourgeois We'll Equity you. our next question take Research. DeepDive Thank Rod

Rod Bourgeois

Hey guys.

then So and on follow-up cost the I question a plan. a takeout about have revenues

the commentary on has revenues, the first, So your with enthusiasm clients. about making you're progress conveyed

other motion see are as understand also ask, the earlier affected should in looking near-term started at quarter, run-offs in revenue DXC's of you're are as 'XX? the Mike, the over the the benefits periods. you making the particularly, on by of seemingly you to backdrop, metrics that from the June comment progress can looking fiscal But to hand, hard contract COVID how concerning which, that first were be the it's I On half that those And for with metrics at financials outlook turnaround? we and the is course, what into on of run-off want worst and think the the

Mike Salvino

Okay.

runoff. delivery I way to customer that predict customers every metrics, but the can't tell they've up, single relationships to the what lay of all going call seen have showing three out I I -- DXC one do, is is, Rod, the would I -- to So of that the first you, and my And out going I'll right. of everything because all, make being the that stem that conservative new sure is these gone revenue

any So myself am And the with along and there. first problems personally that out leadership one available team. made hearing I've is I the the delivery are

thing. first the that's So

work is serious folks very many because optimize obviously there's we're about the this between is customers, cost, doing thing all and initiative, which the Second second the the right. too people

So sure that up. we we make need get cleaned to

things I think performance. bucket, -- also that will I help at some to too, around right, look operational just us in I continue deliver. the that basic just

our pipe. have PXs we're I'm measuring I on you about the qualified all now but The to conversion better of all that, of day to we're at we're what that at. gave cross-selling. fact because service my front XX% right. running, glimpse are that every bit down, are the down. would liked be metrics little uptick, Our I'll looking I'm a penalties team I that campaigns all is have at XX%, on a been And the the the then it as end That's And final thing SLA the --

three those things. delivery relationship, and the the So it's It's all customer right.

cross-selling, one second the the optimized The is is Rod. cost, the third and then

Operator

session. concludes This your Thank appreciate you. We question-and-answer today's participation.

Mike Salvino

there? you guys Todd, Hey Are another had Rod on. still hang that question. of piece

Operator

line. Rod, you're back in

Rod Bourgeois

letting in. Great, me thank you. for Thanks

Mike Salvino

sorry Rod, about that.

Rod Bourgeois

problem. No

seen then So there's listen, in revenue takeout firms the sometimes past, trade-off. pursue we've and cost a

question timing my be you substantial if seeing great a sort see ways service with but you sounds also So as the actually and on to take just on to out costs growth? trade-offs smoother how things take growth progress like more customer for laying without the you of avoid pursue is, you that takeout? improvements about the better that cost clients, you're out do It explain costs how may make could it'd groundwork

Mike Salvino

cutting first And is again, Okay. Look, Thanks, over-communicate customers. one the Rod. you got you about the sorry with off. to

what message our top de-layering my doing I third XXX So during were to this accounts. quarter, exactly highlighted in we

or the the had what I've then I've reiterated proactively when virtual meetings I've So with And we're conversations, communicated them. doing.

So up accounts. months, I'm going to go a came that's and review the was concept, of, I'm people can when we give every identify you impact. accounts. when the really an the okay. they Well, it's work, given layers, then shown some go management the seen last kept went I review going that second got isn't they made the the doing all care the of layers. Rod, customer take is these you did to showing seven actually have which get right, the you the up And day, our I've right. right. to thing surprise, these and identified And we recognize examples, and saying some analysis. that the the And have examples, examples and not from person the last part also work. continue them detailed are over to you they but And all of that, so, well, so piece, structure,

started coming right. be with all get of sure So India We the ahead we'll that's in The and we've the doing finish are are folks the and locked world gave that we done we in August. started in raises, make why you I work, folks to in terms I -- that for them -- then those down. that to January then in increases, we industry today in the of will detailed all salary of we highlighted that rest wanted January

is communicating three the those doing then three to or really it's the is proactively of analysis, the things, care customer, So, talking second taking detailed people.

thanks, that Todd, I Todd, with So hey, interrupted sorry, -- you. Rod.

close the call probably You now. can

Operator

Thank your you, sir. concludes call. and Again, this participation. we today's gentlemen, Ladies appreciate

may disconnect. You now

DXC Technology (DXC) 28 May 202020 Q4 Earnings call transcript