Earnings call transcript Q4 2023

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Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the DXC Technology's Fourth Quarter Fiscal Year 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

of you VP conference. begin Investor Sweeney, may Relations, your John

John Sweeney

Year you, I'm DXC for Fiscal everybody. good Technology's Earnings that Quarter Thank afternoon, us pleased and you're joining Fourth XXXX Call. the

President call slides call and the the Relations discussion our be our Ken on speakers that webcast the and CFO. at today. today and This Our CEO; and website, the will being Mike accompany webcast will Salvino, includes Chairman, is EVP Investor Sharp, DXC

financial non-GAAP to directly certain to in and includes in which accordance we SEC can information presentation slides. Today's and webcast provide comparable the measures useful provide measures, These included reconciliations today's of be our with earnings most believe measures. their respective these In found release investors. GAAP tables a in rules, we reconciliation the

on results Form are statements which Certain discussion is other our and uncertainties call comments on subject could annual differ included and on SEC in the and we risks call. to cause expressed materially risks to make forward-looking. will those the uncertainties, report be These filings. XX-K actual of the known A from

I'd now Technology the no except DXC presented listeners like our update call, law. to as remind on the by that information required obligations assumes to

to and DXC President And Mike? with that, I'd like Mike CEO, introduce Salvino. Technology's Chairman,

Mike Salvino

your and I doing are families well. and and today, you John, Thanks, hope appreciate everyone call joining I the

we results agenda another overview Today's QX our quarter where delivered an across will begin financial with strong solid our metrics. of

FYXX. then our for transformation provide more questions. guidance. up FYXX I us how work an in And in the on opening call discuss will detail make positions will closing concerning discuss our our in success the update we some I remarks and journey will results and insights before provide Next, finally, financial for did Ken

organic and We Revenues we QX more $X.XX execute billion in as with X.X%. that FYXX. progress performance was our were shows minus us revenue can and positions are our in FYXX it in and for pleased

have four roughly the level of our us same for constant all in revenue quarters which in improving driven positions in dispositions FYXX. performance continue We FYXX, revenue currency, excluding to

from business invest EBIT our QX. we progression in EBIT in Our and fiscal that our our similar to in the can a deliver year X% to margin goals increased X.X% FYXX. early EBIT continue This margin We on year. in QX margin for in see shows still

over free to the $XXX throughout delivered us flow like in positions year. in margin, We million cash cash increased expand free and, This flow EBIT FYXX. it

XX.X% over of time growing This X in our strategy we've three Our capital a And a allocation another book-to-bill In X. delivered working. of quarter, first shows X.XX. at strong years, X that quarter $X non-GAAP out $X.XX, the increased is the delivered book-to-bill our EPS is exceeded we year-on-year. over quarter to offerings the finally, past which

FYXX. I and Now how turn execution success more for transformation the in will DXC quarter give the position our of concerning details we numbers to in journey our you and drove

is of to talent culture done take able The first our team. a we've good how and strong care DXC, to our changing been team of colleagues. to also the I'm step job executing happy We've is and add we've inspire and a with that built

model our to by leaders. have To our execution, changed enhance offering operating we be our led

into and our example. coaching of details Our actively managing seven our most the differentiation, model focused and places of clarity GBS is people organization our growth, our new leaders on gives a market operating business. experienced great the

revenue. become and and lead differentiation. of offerings main quarters, have been Michael insurance have A&E our who part a GBS Ray consistent in Corcoran A&E, the with reason along growth overall we and driven straight GBS to insurance, for our Our eight continues and August, larger are that went Michael they early X model through our were just of operating of experienced offering-led X. growth leaders live X operating model, April business driving and and now our adopters achieved, our Ray market on new respectively, have the both

The our stability. FYXX, In next on efforts translated transformation focus customers into to revenue is step customers. our journey our focused our on on

Ken will consecutive due our removed. currency we our similar As towards enhanced trending have four stable, feel are show, that quarters have revenue we We of quality and divestitures is is relationships now and delivery customer and more had to developed. once revenue strongly higher our GBS is

near quarter top was range. of the end Net industry Promoter Our XX, is benchmark the the Score for which

positioned we've perception hired have future future give to deeper gives we larger DXC revenue this outstanding last customers. them wanted outside the for into ultimately our been proof essential. customers an of customers has as and what fact consistently of we done. are The the the in survey that of focused concerning working. point change, on technology GBS become exactly confidence view perception, us want now since as that's that they strategy two to us. our for to our because platform at overall insight external us of for DXC and so This part revenues years work external GIS got grown our will them more help continues success GBS, evolve a our firm their that a trust we we and our grow They do which to has to trust What to is arrived back seen an what us over as build We we change and customers us thought I delivering in do is will this our DXC, allow

doing this more even model and focuses be takes more leaders our ago. operating experienced customers to most which strategy. selling, even them change made approach Due on time two with relationship spending expect the sales our we aggressive in our that to new quarters our with was FYXX, In we

is to cost. The step third optimize

initiatives a that high as throughout expansion to a stay year items these cost our margin staff of data on estate optimization with cost optimization you drive FYXX, emphasis The third-party We saw an contractors, margin expand of the driving that in increased to knows have data on FYXX, in and focused and and QX. real centers focused X.X% built centers. was optimization, we how on function EBIT and that contractors team expenses. In of a margin, will

moving does of number shed the what approach produce to cash, will Specifically we ITO means infrastructure-light, we use in quality are pension we call will generate contractors sheet will our deal-making the we us space, These more managing deals, towards and are in the significant do higher balance centers, our for which key in will ITO data shed along not favor full-time a us not margin that managing with of our we of existing our around to employees. FYXX. items, and work. decline These items disciplined income our

of in are X.XX, that The seize over competition a our of which we disciplined area the we doing relationship new work deal-making our to the from book-to-bill approach quarter working approach sales are shows The as one. is have delivered taking GIS selling In GBS market, a book-to-bill more that of we is X.XX. another working. and delivered was of book-to-bill our

GIS them our to GBS business. to the that reputation has which that work to business. want technology are evolve us our essential, future, And do help with our see customers and work as external they to our speaks them seeing to their we speaks for changed We which

moves operating being focus a model. of to the external are continue ability easier will proof we in approach, the Another Gartner we we services X. deliver should positioned that making on FYXX, of and XXXX needs we reputation believe changing moved In trusted the Magic deliver partner We are to right uniquely market the that completeness which of that Outsourced Quadrant, and even Quadrant be vision. our new into an our the a to Services Leaders book-to-bill our market continue where point streamlined is our sales to and with increasing

is final our The step financial foundation.

more strength us higher-quality and we another billion our maintain the placed profile, our margin plan In billion has into to free flow, for EPS million and In do flow our a FYXX. of area revenue able credit $X in our deliver repurchase were repurchase investment-grade the heading commitment year profile, expand financial second on this of $X credit in cash cash free $XXX deliver same: shares. to execution our deliver solid maintain FYXX, position we and to of investment-grade straight shares. FYXX, over of Our our

Ken. And to with let over that, the call turn me

Ken Sharp

Mike. Thank you,

three Let X.X% me margin can make quick progress QX our a the performance. you non-GAAP and cash are million on last in quarter, Free of EBIT generation. at of you flow provide Both team years. organic great rundown level to continues QX cash the the as see, X.X%, adjusted in $X.XX. revenue the highest $XXX EPS declined

expense XX contractor was a margin points positive as points. Other financial of divestitures optimization and to payroll SG&A basis lower impact Fourth lower basis key lower and cost points. resulting lower metrics. gross sales our due decreased due to from XXX Moving from up Depreciation by percent efforts, to XXX basis increased our primarily XX points, income. retail. basis pension income was quarter

from factors. up $X.XX due interest up prior lower a Non-GAAP margin $X.XX were year $X.XX to expense. result, from other a was count, compared by adjusted lower XX EBIT volumes lower points. benefits offset lower share partially rate, from share per a basis margin, from $X.XX and As earnings revenue $X.XX expanded tax was from to: the These $X.XX

Now turning to our segment results.

to continues Our business mix improve.

points revenue, quarter sequentially. now declined consecutive at grew basis total As a GBS year-over-year. points growth. basis GBS of XX X.X% organically, GBS percent of eighth XX XX.X%, The up profit margin our is

XXX initiatives GIS the of so and a Organic of GIS. margin Retail and revenue to at margin, profit up is revenue. cost lower sequentially, was retail lower points Turning improves revenue. the basis revenue revenue lower from declined XXX benefiting increased levels optimization quality points retail X.X%. year-over-year basis

BPS offerings. continued the X.X%. X.X%. X.X%. Analytics Insurance X.X%, quarter's significant declined our from last Applications solid Turning up with Software to Engineering is improvement growth, & a decline and up of

We our good Software business. Insurance continue to momentum see in

upfront in in Insurance basis Modern by points XX.X%, retail XXX quarter $XX revenue perpetual driven to & XXX down points. Security was was approximately business restructuring X.X%. the recognition. Cloud of decrease Our a Infrastructure existing with X.X%. IP benefited Software IT in contracts by customer basis or license million into approximately a largely declined revenue down Outsourcing due Workplace

significant will improvement from that As is prior expect in to we narrow this note, continue a year. performance our will the upcoming you

decline modest currency revenue to key Mike our a and with to from constant excluding team continued will our QX. improvement. sequential a on only be deliver created that Revenues success momentum This divestitures, organic basis,

billion. our achieved $X.X level financial target debt we our to Turning of foundation,

We TSI continue to tightly expense. restructuring manage and

and Our our restructuring for TSI $XXX million the than lower guide. year, $XX million expense was

been of have and kind earnings focused quality on non-GAAP We limiting this adjustment. improving of the

payments lease to DXC labor restructuring gone our for the and This expenses our they facilities nonoperational. approximately will the far accomplish to successful utilize too long. when resulting Going forward, Operating facilities' has restructuring started are formed full our million we and footprint. only as $XX efforts efforts rightsizing was related down from reduce year, were on

lease for Capital originations percentage capital as full year, expenditures a FYXX. down the points were revenue from X.X% XX of basis and

believe an infrastructure-light to cash capital opportunity our to improve model. continue presents flow pursue We a free we intensity as long-term

a rate of X.X%. strong debt DXC debt Almost fixed manageable has low debt interest position an a is maturities and of our and interest rate rate. with stable all with effective

euros Our is XX% approximately dollar XX% operations. and other U.S. debt our match currencies to and better denominated

a access As liquidity. and flexibility a we high significant have degree to financial result, of maintain

net debt strong ratio an profile. demonstrates investment-grade EBITDA to of credit our X.X Our adjusted to commitment

Turning chart XX. to

noncash Let our our how pension impacted has me income touch EBIT adjusted on margin.

has EBIT margin, it we expanded FYXX. FYXX. is margin as nonoperational adjusted as see, noncash expecting XX excluding income pension As income, a noncash from basis-point X.X% further now our earnings. in And We to in pension improvement view you are X.X% can

from our buyout have and The risk are foundation, approximately balance efforts improves. As future the pension sheet plans. buyout plans for larger income comes same quarter requirements. expected country. of our of part in should we the our allow of of funding $XXX of executed DXC's a funding fourth to improve pension our FYXX, removes the fund million other surplus to the plans These one quality financial margin on In as down, the plan to

million. resulted buyout of loss a in The $XXX

are the $XXX addition, primarily in items $X.X the aggregate, to remain due overfunded returns the was plans non-GAAP pension In the excluded our loss In billion assets for UK noncash on Company's by annual from Both our plans. million. pension planned of mark-to-market results. investments of these

over as team And continues have on positive great a two a FYXX. $X.X make of The flow generation. delivered years cash we result, to improvement from consecutive cash million, progress free $XXX billion

$XX we you our divested. free deposits flow As was FYXX lower impacted banks German to bank recall, cash at negatively the million by customer due

would have lower free the cash deposits, of over $XXX impact flow been bank the excluding our So, customer million.

margin they cash on As to about more reshaped core a our positive be generated portfolio and deployable our think have yield asset business our focused you sales, significant and impact.

$XXX past noncore capital for Over of year, fiscal proceeds contributed the of sale than the assets million more from deployment.

discussed, As are asset data incremental $XXX we we sales, an million principally centers. previously targeting

Our reduced DXC outstanding of free XX% significantly. the approximately robust share or significantly our have repurchased our increased trajectory that continue By stock flow capital shares, to deployment shares per since shares our FYXX. beginning cash of expect million has and we FYXX. cash reducing the We XX.X improving and flow outstanding in free

$X completed our to billion We our repurchase Turning of our stock. capital commitment common allocation. prior to

increased authorization by our outstanding Board Our $X.X $X repurchase to billion. share billion

of asset and repurchase progression fluctuations Due in our $X be of asset temporary billion targeting free target level. flows funded new a the to sales, the nature repurchase. We incremental we our debt to are excess expect debt above cash cash quarterly from episodic flow share share cash and by sales. we expect Ultimately,

presents attractive continue to valuation. We believe DXC an

our current would repurchase current of $X Assuming outstanding the billion to share price, about the equate incremental share shares. XX%

follows. Our QX is guidance as

We QX X%. organic minus to X% revenue decline to expect minus

Workplace, in revenues to and specifically and declines ITO FYXX. throughout Adjusted organic Modern revenue expect EBIT margin performance narrowing improving GBS X.X% ultimately higher We of project X%. in

We to the optimization points. is per and margin lower during expect take EBIT offset our efforts year basis margin $X.XX that negatively by diluted hold of adjusted the our income XX to Non-GAAP impacting pension expand earnings share $X.XX. as margin

margin revenue positive of adjusted to to per pension Organic earnings X.X% income headwind; a to of X.X%, guidance. negative incorporating X.X%, EBIT share $X.XX. FYXX basis-point our X% non-GAAP diluted XX of to Turning $X.XX growth

timing $X billion earnings $XXX our repurchase. reflects non-GAAP Our a per and of of tax share the cash XX% expectation flow guidance share rate new for Free million. our of

in FYXX strong year, throughout flow disbursements, expect and to pattern the FYXX. we post like FYXX remainder that of of we generate flow cash achieved QX negative. historical free to be QX is Our and the cash timing Due receipts the we free

on touch me Let the today. announcement

clearly opportunity foundation As at with challenges at Together, DXC. the to team team work X.X many years we solid built I the This on reflect a and my appreciated effort of the I a fixed finance closely his leadership team. DXC, across and DXC. has been Mike, financial

While things look be team and to will the the come transitioning in it I forward personal phase the reasons, and responsibilities sure I my next will Rob, meet the to make future. the of available great to the Mike summer. DXC you to not And best all seamless will on journey will be yet is for wish the who I transition. in be of course, a help I whole

With turn that, Mike. back me call to the let

Mike Salvino

success are all leave to Ken, for the with in and you let positioned well the me we work takeaway. Thanks, Due FYXX, we key in did FYXX.

cash of billion execution and our $X shareholders. stronger investment-grade free and while back team flow, better has credit clear by margins model, journey revenue talented culture, maintained Our profile stability, to our a delivered returning our customer transformation a in sales better relationships, expanded FYXX we've

the and FYXX that operating tell worked and along This I but excited billion about execution returning profile. and I'm confident maintaining this in will happy investment-grade model, that with expanded our cash point. created, get we've with And be excited on to free credit to DXC delivering proud you because are our while execution, my to revenue, delivering challenges in hard is is can and we've higher team another FYXX. shareholders new fixing momentum we and focus EPS, flow our margin not $X quality great

welcome also to Rob Ken our execute all me I look Ken the numbers. solid of drive that and work he's him forward a to we built DXC from with at I of I'm to for against summer. last want Now smooth before you from of challenges to the over forward solid to and have team all the and Rob foundation let Together, and a to a hard X.X the years. his forward Rob many with the up questions, working I me spent transition to open and over for financial time the foundation financial thank introducing looking call DXC. fixed team.

the that, With open please call operator, for questions. up

Operator

first question line comes Your Bank. Keane the of with from Instructions] Bryan [Operator Deutsche

Bryan Keane

growth. ask DXC weakness to the organic the is On improving some I macro in to some other demand right on we're looks at one other services IT about vendors now. on wanted hearing and like it the market weighing hand, demand. But IT hand, guiding is the

can understand how So, us impact seeing just environment guide? your demand what that help in you're you might the and

Mike Salvino

pushed we're my stable. And we that And is what remarks that doing. of for I out look, one are that's we the on our We that that. went have Bryan, incredibly prepared the And we Obviously, competitors what of some and us survey. this in the gave things why was said back survey did hard. see seeing is thanks uncertainty. that, business

see basically without customers us essential, run business us. Our means their they can't as which

those to they And survey the right What's we're to results solution. market first then, technology then us want savings, once their were foremost. and thing that evolve other the and cost position, key is in now that in to customers want

that Second is projects give value. quick they want them will

gone innovation, So, the the experiments. lot a projects gone are are of on

unique I've approach so sales business, seeing both all Ken that our talked since is to been they've And resale been that, hardware in Now very has we've in I been about all GBS we with be deliver focused what that which sticklers right? what strategy money GIS sell revenue. because So, the ever sales, to on about business position new spend honesty, which is on are here, to us and to our some softness, means on and to in we we're that speaks essential a business. could got our GIS

came term. down QX. will FYXX, which in revenue help in all over resale margin in come bit down -- down will the long It our will So, a come the honesty,

But would three say. things I

the The mostly we've we're as all, They're hardware uncertainty sales and got projects. on that see see work spending some project is also we're we of positioning The us. we uncertainty. essential. seen that yes, because we innovative but First stuff and delivering, mostly money in is have ITO

want quite so is evolve, GBS. and can overall make project I'll And GBS book-to-bill. see that book-to-bills, in GIS then the three us the clients, book-to-bill, in that point frankly, the final see book-to-bill we in, they grounding to of You work because that's where all

Bryan, Do flavor what a of Bryan? in have you a that, hopefully, seeing gives question, we're So second the market. you

Bryan Keane

Yes.

Just a bridge follow-up in for evident Ken. free We for $XXX the to guiding about go. cash with is million the $XXX to. were help kind million us And you Ken, this you fiscal just see year sorry guide. to cash at $XXX million we're Maybe could of you're fiscal or this year. free that flow Obviously, improvement flow

Mike Salvino

take to me want it first? you Do

Ken Sharp

Sure, Mike. ahead. Go

Mike Salvino

Okay.

Bryan, million us take coming right? quarter, out So $XXX $XXX we the million gets managing you the took is our remember, $XX CapEx million Fondsdepot, then last $XXX also to all So that's from us million other we bridge is million. $XXX right, margin. plus driving and see million, Where $XX better,

pretty in So, confident feel we number. that

two we now, a miss have there's the QX, in key make free Ken's within vendors. And pay that year. our in our software the And flow, why confident then call we margin cash where now Did you million. we for the something? quite I and and that increased thing of rhythm. What frankly, $XXX increased done and also a lot rhythm in also I There's We feel throughout with Now, QX years. remarks there's DXC of generate same that and in a we flow done prepared We've that's taken is bonuses we've team. pay, a other cash pattern. the our margin is investments from our should

Ken Sharp

back expect is Yes, rest done And down pull just in Mike we've probably years just to that QX approximately the Mike, maybe the real to like that to through add quick, two the other year mentioned. of $XXX we We it. think million. fully coming

Operator

Keith Bachman from Your line comes with next the of BMO. question

Keith Bachman

to off, part Ken, the begrudgingly, you want to I the best, your so leaving, disappointed see do you say journey. First next wish of in I'm

on me all including when AI is work, Two up is coming things maybe with But our does. for think universe, of this in comment just IBM gen what you week. you last coverage think about your

model you gen do drives does that If revenue, times what a your have person of lot for a a that? AI rate

for trends for wanted the booking X to this does sort And understand about to just the quarter. what movement years? just revenues is be second if think the help question as We're towards through you of the over migrate we need year, flat your

how Just that's about and over give us Thank it year, sense me. you expect trend a you. book-to-bill that to for the

Mike Salvino

of you've DXC almost So AI technology mainstream. first because things to ChatGPT, on that's background, one piece the finally on brought an Keith, first the of roughly looked all, one bringing awesome And back four the to that’s I it's of my ago. if years

So, forefront we've the called the business our that and of we're AI X. product on with built Platform using ITO is

the does of years, should client, when built hardware right, is to going we what algorithms of be to Platform Platform have that estate. X is us what is when hardware IT times the three you over use doesn't we hours, is in predictive front get that we all going happen. you sure two when have give case something seven for predict that use will sometimes the years, monitors cases. AI make providers And And analytics. to can lot predict the and four to first tell hardware we tip and accurately our use A up I'll fail. running to years. rate us, X those And And think so

work, doing are you work times project proactive when because project rate AI. we So, of new think hours,

give literally we basically AI is that and because the in the as now we many The X map that algorithm other point, cost need savings we've the me people bots let that cost have. example. example savings don't Platform you to a Now, takes we written failure

we wrong. that goes library deploy can bots of when We have something a

We looks the that's something issue. the So, and which right because human intervention, predicts it, it. of driving implement no the and cost with where at thing understands It bot. the piece we're bot down goes fixed takes our the gets wrong, right when AI again,

I So, on things three would you AI. tell

that understand you to the evolve. the love that the The to first going to lot it's continue because one have fact mainstream I is a algorithms build people we're more fact first.

second to got it that sets is, people we're that of thing and The we is only of look, we then for create XX,XXX Analytics able part we analytics that the data. doing And with algorithms. doing Engineering. data have And thing that is for And not been our number are do people, will ourselves, train clients. these it final

AI. love So,

drive I that we think to can use revenue something and advantage both reduce costs. our it be also to will

Now, got in do I your to what revenue, be? revenue, that's of book-to-bill Keith, the we right, question, stabilize terms think how the the second

Keith Bachman

Yes.

Mike Salvino

Okay.

then that X.X. are in all So absolutely shoot I I would by you our So, goal able quarter on And that then you is important, right? revenue the was is last mean, can saw to deck to X.XX slides always particularly was you're and that X.XX. see year, look, X.XX, quarter is revenue remember very over book-to-bill stable, tell is get what every last I us keep our slide X.XX, we last which have What year what to over you why we believe XX, so a X. book-to-bill our is

be can lumpy. bookings You've seen the that

should that good and shape. as a Hopefully, our good the in long for you gives be entire X.X in flavor we're about year, as around that So, revenue question.

Operator

line the from of comes Bryan question with next TD Bergin Your Cowen.

Bryan Bergin

if organic that year-over-year headwinds remove that have -- to start fiscal revenue to wanted what over, grow growth If business? I you about, just organic the that talk trajectory you path would the headwinds, in about the were so 'XX? can of didn't on to resale of the talked you kind we imply

Mike Salvino

two I'll organic the the over over it what last basically, call let's tell about you when we just -- call last it trajectory the revenues, is flat Look, the look at business of let's quarters. you our

quarter this we minus now minus delivered last minus and X.X% delivered are guiding X.X%, we X% X%. So, we minus to to quarter

going with our are that things two on There's go to revenue.

is first back are turn year. towards thing say I positive, would The going of the to we this what end

see got we thing you GBS of year to exactly going continue were part what driving fiscal dominant is see said will that that do. our in of We that that all that industry, what important because or revenue get will business also And our we deliver growth businesses. in which two throughout change is revenue execution we've allow And that said a done. to in is to thing second said we've -- our look, we this become us to the GIS We've The that is business for the if and key perception XXXX. incredibly larger us the always you customers, us, right, will finally can into more to FYXX.

Ken Sharp

about revenue add XXX in this resale of organic growth. basis to decline to maybe, points just the Mike, quarter was And that,

much services So, the a better. business performed on level

Mike Salvino

of very resale, revenue done So, right, operating resale in on when with hone make one-stop shop the look, because to I this is implementing But our understand clients I want is on understand clients committee the one we more need part a approach really cloud. and ITO our margin dealmaking. little to our it. about that our all we've it. of think things we disciplined

And stuff as come employees, when margin not think when or it that and about to infrastructure-light goodness is margin. then said about Because will generate I about better to balance our our we when removing centers, taking what be think contractors just that will relates using around we back think all want we we not to data important. because sheet, revenue that

we think each will we're did quality year. Bryan, And another year. saying. this a better I for This pretty tackle the have question? what something thing we we be So tackle all, that's about look, -- you you talk much having that revenue it when

Bryan Bergin

Yes.

on us stack range? there on within other any give that guidance. on follow-up performance color embedded 'XX the headline you the underlying outlook growth Can one Just overall growth assumptions that are

Mike Salvino

than will I be will What will in you is did GBS grow Yes. -- it more tell FYXX.

insurance and is what analytics, apps. security And you've a So, go do stuff. the XX stable the business did look more seen will it pretty for of you And in a than security deck, combination based all shrink that of when that means that's on right? at -- ITO Page we mean, is I our FYXX, us. GIS

will we I on now quarter finally and fix And FYXX minus that that saw this will folks quarter. we're to I've ITO you totals. four you with well the What to get X.X%, quarters then our Modern now saying that flat probably expect is Workplace. below see going turn for been next XX.X% to And from that drive minus

So, and will our more less that FYXX. basically GBS, be for mix GIS,

Bryan, hopefully that helps So out.

John Sweeney

the lower will at that GIS correct? rate, Mike, But shrink is a

Mike Salvino

Yes.

Operator

question next comes the from Shirvaikar line with Ashwin Your Citi. of

Ashwin Shirvaikar

on of outlook are kind you go. Applications might impact versus GBS, things see those sorry on with come kind that's concerns see approach about end. for of well same expect concerns a Insurance? you when would And you're taken. start versus GIS. the when the normal the macro Ken, you risk all's that example, I fixed within me abound. you let number mitigating up sort there's to apply that spenders thing below get Analytics talk to one for of your of you guess, Hope do level enterprise providing? that And How How and

Mike Salvino

continue people issues with macroeconomic you the stuff quarters, more revenue like all Well, been two cripple look has not the mostly that stable first how of spend mean, the any looking the just how is, stable start So the enter they all the thing revenue are right? from mean, Ashwin, and to on look to at started look, I as just I'll to is the today, want you in -- I we and way because space it's and right? security themselves the we're that last protect FYXX, along money could cloud ITO right? That, with stability at sort going environment. GIS,

hope can being into thing, Modern all other true, major everybody to much second So we The have not come you all in as as virtually key. a we Workplace. as have And that that the right? office, the support able know, is workforce still GIS you would offering that's is might

that we is demand. what our are there see needs are continuing talking I offerings key two have we they keep essential So, to to and customers' about

savings, in there for us are our in not are the deals coming look competitors they they demand, because demand, right? And delivering from to their to Now, cost that for that at. want market competitive all customers

be to not are made because is in to very we what backwards. progress do take need going we the So, choosy that we've GIS

A&E on we Now, the sell on very value. The and business, GBS, Apps simple. it's based

based sales. sell relationship on on value You based

all our So insurance and taking the seven managing that, them then, forefront seen most of change for And is own. our a And work and its relationship and coaching we model the senior all selling operating GBS, do right? details, pipeline right, part our we right? to of in doing when of people this sticking built-in stands have leaders on

business Ray It's a has we our the software, provide there. think where a savings. great cost value and got a do running to I industry definitely the business in software. We good industry needs that job

we've when coming be resale project called what and off we're Ash, bullish And it said, about why I in revenue, will see any that. like shortcomings that's pretty in maybe will be So it not and the okay? we're if anything, calling the FYXX, work, I look,

last did leave is ago. got what away, year took thing straight on issue we the okay? And the you a ago ourselves the remember we is we work on a I Russia. of out Russian What Now, did year we project will

of that capability because unique that industry So, deliver A&E in Russian the resources. we with work is don't any

also and that position that our in sales terms therefore, stable, unique us a capability. gives of that in makes So revenue delivery marketplace the more

would how business. Ashwin, more you anyhow, give on our So details, I that's some

Ashwin Shirvaikar

appreciate what free drill flow The fiscal Right. more of bridge one you 'XX have to what the performance. that kind you are cash definitely down that? the let No, question. I main from without could here, go bridge, can't you of I if into Ken, steady elements

Ken Sharp

Yes.

banks, We Ashwin, thanks. year, as Mike what $XXX longer million bank so won't have earlier, add that produced lower year, touch just we nonoperational. own which we this characterize still said as deposits, the like would fortunately on I back And right? no next headwind customer

puts us this at year. that million So $XXX

X% now guiding we're and is income income. think less pension it know margin is X.X%, all to includes I we pension noncash. Our basis to And XX by

flow. margin the the that there improvement targeting drive off cash lower with we're the right more will So income certainly pension bat,

we a talk just it's been about then, cash. And working capital, user of

negative X% got working working on We're XX% here, now I to had capital. capital. about we I negative down of think when first revenue

So, we don't to the capital keep working kind business feel down paying of more like we standpoint. to need make a the normal from payable

to of And closer that's group. kind peer the

CapEx profile. come as better as we this out each the we've of proof pretty in earlier, good other a be deal, every basis-point think CapEx, we capital, A that percent good XX and CapEx capital I going revenue. a think is year's working on decline with point side talked we'll been and the a about and Mike feel So, leases working through And consumer forward. then don't

Ashwin Shirvaikar

it. XX% Understood, the out $X thank And is you understood. of share for billion base. that Got buyback pointing your

Operator

from with line Bourgeois comes of the question next Rod DeepDive. Your

Rod Bourgeois

capital-light thanks and cleaner role. the And to welcome, progress definitely of the examples on a financials Rob, CFO a you've couple contributed to you'll for model and Ken, be missed, more moving all just as there.

the Guys, ability to competitive enabling I I you change you in deals an want are ITO terms? to on your the without or intensity to topic. market about balance win a using competitive seeing particular, the guess, to experiencing profitability infrastructure-light that's fruition? sacrificing Are come sheet model in ask

Mike Salvino

work, our a It delivered first definitely, that's So, hands. how meaning foremost. the that for know us with our don't okay? right, of about is we've us I I talking keep all XXX%. that and being market, other answer competitors' any pair safe to that have fact way, to demand see customers in we coming we because of customers.

going guys be you about not that's payment told we're choosy so do to that work. been this we And way I've market terms the that bank take have a very been. is because extended what has

We also energy forth. transitions are increases and in lot of not fund so going a or to the

deals that okay? And in we So, the so that revenue made we get we that to we've and to can to good the still don't because go Rod, margins. want revenue, backwards, on me got sit the we be terms the generate to want that it's us terms, progress all actually we will that's this important really

the thing and also want Because up us is day, partner, that running, being us terms also making So, better moved what in that the to in mean, sure the you get thing estates And but not was getting of Gartner right? happy And Quadrant, third-party those only that's tell totally seen a trusted like final I how of I right we the keeping see penetrated. we CEOs not last world, now. position have, have and the don't viewpoint is at a market to they the on those we're continue sell about relationships about is that going to But we've do be to work. getting headache better it's also to of just is you again, another question work. there Rob, I is on the The going trusted we're that market will top ITO prices. choosy the progress have? end GBS the okay?

Rod Bourgeois

the well? it some or to GIS color prior one? on new follow-up GBS Yes. main flow does into new prompted difference you Can what So background the give operating new model? is that And a the is versus the model on The to just as us the model new there. mostly also background in move more what's you the in model. And just more little about

Mike Salvino

Thanks, Rod.

all, I it get financials So, what driving the to there's by here, basically have through from business so Ken right? the I transparent, analysis also There's running these a and So on no ran what's them really to done in revenue in goes a like on operating make their right, across the financials, the better happening, we to more entire forth. first that collections model spot differentiation. businesses came of each not own. business when and talk and company. about And through operating margin there's And you're right, But good by all region, when no the with offering. that's person region,

model new the past. operating from is I'm it's what does to my So, something used

about keep at them into they our Because get the you have other the are leaders, you driven which But got manage differentiation. out providers the growth service on culture. to drive it the we've get focus by the differentiation. thing an I talking we and top look offering. is If details, is you are can the to Why? literally like to account to account. in the about this What to you’ve that got chosen and level go the major put market I typically, there, you've business, means And

value just seeing actual our into of the ideas meet seeing new their that a Rod, then they're delivery lot anymore. the the literally those because table gets what customers brought them provide on is that not book-to-bill now, with And right it they're customer, we in see providing. It's we're starts relationship it the But can with the the the based value to where and savings cost financial help we performance.

been to it for new definitely that's a entire does. an increased look to step tell So, and IBM then all Ken's margin it. work. EPS free I Rob we've year. and right, about I'm the they're expansion, And you model the revenue this you offering and business, used that flow. with people model his for good the lot that take what will done really at of planning excited will IBM right? next running like cash when Because all background, Accenture, for driving expansion and

I why that's it. and it So shortly. everybody said, we're will about the Like fruits think doing very I see it excited I'm of

Operator

MoffettNathanson. Your next of the Lisa question line comes with Ellis from

Lisa Ellis

how a Hey. fiscal as Ken, you makes this at I you will be us reflecting opted for of not goals missed this you're year, you you sort your new sort any articulate I medium-term longer-term at give starting sense for can think, know guidance, sense, to But give a sort of terribly. of point? new Mike, DXC would into point. which

Mike Salvino

to So go inflection point. what I I say first do that is back thing would would is the

here leadership So team execute. the that got that great can news is a we've

align all our plain have flow. is going we goals, margin, And shown all be services would And IT what simple this implement now to Those revenue can And grow do about about will question? said, trying be to can company propel second that will and, to see we're very for goals I market do years having stable company Those is free a cash EPS that are compete expand company talent. a and FY'XX. that We a what game those to what we Lisa, tell in think in everybody like will I will I have a and to the right? and well that good be I really you you us recruit come. execution.

Lisa Ellis

Yes, sure.

called in the Just additional about maybe in asset out I to you related $XXX prepared know sales. that, million remarks

very done portfolio should additional at divestitures effectively Is side? there anticipating of done the or you. the things be Thank on that years. reshaping potentially, over are either investment you did or point, we of a lot You've this additional sort last few

Mike Salvino

Lisa. Thanks,

to And and place, looking running that is you to what data is I data to don't centers will transformation be used shed on that So the the infrastructure-light, at second those. Our some which a going basically, that about what cost you data to when talked that's focus on infrastructure-light old centers. $XXX right I'm got fixed facilities. centers, And shedding through, call and going now able is piece focused you're that through okay? do we're I own we're our be million

plan that think we we've that handle beat got FYXX. $XXX delivering on And a very delivering million. on and good I So in

Operator

next of Kupferberg Your America. comes question from Jason with Bank

Jason Kupferberg

new, while, mean, going maybe deal sheet has and really there, changing? been got like what's really deals. go-to-market, in deal the talk you're I actually and a topic, since here? like this use a guess, I little I like outsourcing data what terms I centers, wanted -- can topic get the Mike. feel less about to different just we've just talked feel mean, about I for to bit if you sell but some infrastructure-light balance and a Because I pick is up infrastructure-light you terms on I a to what structure, desire of

Mike Salvino

Okay.

landscape. that changed first competitive thing is the the So Jason,

the all you I Jason, here, is our And the doing. we know So, right, today. were not got are we you when what competition cover in position industry,

the us tell people on you first now, would of So that's the put heap against, thing all know I up that that top and right right? that's the we're you You changed.

business off we also we something this proving shaping people been said being we've that do that Now, based the And different ought business. thing thought talking quite I that relationships. in isn't the for position, And out do. strategically, to for to back We've just get of position, all terms. the shape this time. being some to preparing And that can front Many on ask So, because of can business now, start grow able that been for right now we right? and our it's that, that us was wrong rid of thing we're to because those to customer to.

tell I things main focus than cleaner is our on you would the sheet So, balance to a it's been. is point lot ever That's one.

So, we're appropriately. implementing that

contractors. And we last on data the the see thing the folks throughout implement the centers. year You'll is how then,

was focus very allows and So, premium I each a competition, lot up when very, employees to contractors on. got contractor, paying a our here, that And clean will generate on fact, Remember, margin. contractors, to X% margin. more having XX% probably we're DXC, heavy us and in definitely to of those flipping our

thank want all I to that, want efforts. his closing, So the a to appreciate welcome the Look, to He for great of with Jason, Ken addition look, I in I question. Rob. will team. be

deliver Basically FYXX. EPS, shareholders. and definitely to we've been higher-quality looking our $X our forward be flow. to back got doing another the our And investment-grade expect We've in cash incredibly we and while margin, expanding executing that, well. right billion I free profile team, key to the maintain think we're am definitely I will thing and delivering revenue,

call. And operator, close that, the with please

Operator

This Thank attending. you for concludes today's conference.

now may You disconnect.

DXC Technology (DXC) 18 May 232023 Q4 Earnings call transcript