DXC - Earnings call transcript Q4 2024

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Operator

Hello, and welcome to the DXC Technology Q4 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to John Sweeney, Vice President, Investor Relations.

You may begin.

John Sweeney

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

Our speakers our on DXC slides Fernandez, The President that the is Investor call today CEO; call this the Rob will Relations and will website, Del webcast webcast accompany Bene, being EVP and CFO. and and at be includes Raul today. discussion

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

be SEC known results on XX-K our subject in Technology forward-looking. These obligation included Certain is information these we listeners to by that call, those materially discussion comments as law. update statements remind of risks presented cause assumes and required actual uncertainties, risks other annual now DXC no except will to which the on to could differ Form call. A like expressed from uncertainties to the our on make and on the call and are filings. report I'd the

I'd Raul? that, to with like and Fernandez. President And introduce CEO, Raul DXC's

Raul Fernandez

call through also the the before us I guidance. I you. take 'XX are we progress final making discuss make up on fourth financial will for Rob our some remarks with results you will and Thank give offerings, year update a our brief quarter review will questions. opening performance, fiscal our then financial introduction, the

flow declined above basis expectation; the also of has above year million third margin guidance million X.X%, adjusted our currency cash cash a XX a million. our EPS fiscal constant on of was $XXX X% achieved that QX consecutive more down year DXC range. This for total of $X.XX 'XX, Non-GAAP equaled EBIT the flow year. of free total year-over-year. full for Free of points revenue $XXX $XXX In than basis, is

or we we the are beat know we not operate met a QX, level While at expectations and satisfied with current higher in state. can

X-month have team. better my and of dozen globally, have company I our than virtual. very settings, a reenergized thousands I've in-person investors executives team of customers in with along with is met employees X join I and more our effective. In that successfully experienced believe more to large dozens we recruited make engaged have global to tenure, small strong, and the and with

a let our of gotten understanding a units, Insurance. of deeper all business recap so few also starting I've me thoughts, quickly with

the insurance insurance is largest provider globally claims business from process origination and software DXC to of services processing.

leader and specialty, the X reinsurance. software global providing out category We segments: wealth, and in are X of life insurance services and

process and an As X in X transactions property our technology example, and casualty services worldwide.

base the of XX global Our top XX global customer includes carriers. insurance

we technology their key agents, short, with supporting companies employees. insurance global In their and a their partner, are customers, strategic

this makes average reoccurring years, on. percent retention to focus very coupled a of customer and XX-plus recurring strong business tenure The me and revenue, an customer for interesting unit with XX

towards an rotate As total to in revenue, continue more grow our insurance and Rob software build and will comment, services on at a also approximately very services. and quarter. business, SaaS respectable the X/X of revenue grew the representing reoccurring insurance mix It's and to the to strong X.X% foundation incredibly

value services. also highlight plan we business the unit on So of focused of industry are accelerate role and a working further in growth the software leadership its mix reoccurring and the of and actively this its to

general & best with the our & manager. business industry veteran Boville We're Engineering capabilities GBS. Engineering of Applications Analytics Howard with Services Consulting as our and now Continuing together bringing called

and and extensive banking rich globally. operate driving Our manufacturing, some has of Consulting to services, our ingestion automotive involved solutions transformation. & research we provide the deeply driving Within financial biggest numerous efforts data are to history Engineering transformative In we their large change of auto core brands. for in of a the banks autonomous world's on business for development platform, and enabling major their and We digital enable analysis sets. brands Services

We luxury have of systems built the across and run most in-car infotainment brands.

Consulting solutions are our customers, technology average, focused for we While on our of our Services critical improving unit. and profitability business is and our below operations & execution Engineering the are

security. Moving security in on provide of our Modern other business Customers on a many an our rely secure, is resilient of it services. ITO thing and to about A in note to our Workplace way. enabler services to that key is us

do embed clients. teams offerings to our security cooperation that themselves in with those in Our

over across operations We professionals security where provide centers customers. around-the-clock operating we for have X security coverage X,XXX global our

incident. that As by goes by with regulatory cyber security threats day, called as increase teams a The in growing attacks these complexity and with the companies dealing pace our week of a to are requirements the dealing for not assist companies not them. are

to Our focusing enhance of expertise offerings accelerating focus business on security and to our our growth is our services. stand-alone GBS in GIS leverage the continue to also while

With the recent we of addition that expect growth. veterans, several enable to industry

Moving to Cloud ITO. on &

business essential provide For most our ITO the Cloud mission-critical & of workloads. offering, services and world's some we for

of heart organizations, companies, reiterate the customers how government who I systems and is. our the business, with largest the at have institutions, world's time their count financial business. I Many on DXC in work meet along for airlines, more the of As spent critical more energy

the is competency Our around company. operations the to XX/X teams securely. This core keep their and of work globe running a seamlessly

operate the serverless core and Cloud. cutting-edge on environments all Google way domain cloud We mainframes legacy AWS, most technology the Azure, from the through across entire

on style to past, multiple we cloud customers service them is help which software, business revenue profitable, securely positioned more away deals operate the well modernize to the and building on architecture, modern high-quality, our revenue estates, This hardware, heavy at cash-generating outsourcing focus the are as higher profit. of data of we to are across this of moving center our with drove we their the pivot expense our from unit, business As often the and and environments. GBS of help foundation

Continuing with X our is than AI, of with human over mission-critical all and at point nonhuman. of Today, nonhuman believe a every day least globally experience and capacity we operate employees a day. ever. Workplace. combination workforce more support scale. services we by and is Modern million The we reach soon workforce where We employee will Driven XX% at devices

in manage building this are expertise nonhuman demonstrating workforce We how the scale. and at to

across we is In base, customer digital positioned part lead technology of clear, AI central embracing this. well our a dialogue to strategy their message the forward, and are is going

functions. mentioned enhancing to the to missed market efficiency. now, systems, it's past clear more our As go-to-market, and are there before, even entities, rationalize we I position, were undertaking our simplifying and restructuring operational delivery to me legal strengthen and initiative a at opportunities Therefore, processes, aimed in

to our improve We visibility eliminate reduce increase agile management, a will competitive redundancies, drive organization. resource processes, and ultimately simplify streamlined, costs, and more

our One but service anticipate this acquired to office initiative our and is costs our optimizing systems reduction our and business a our improvements consolidating specific of enterprise responsiveness operating X example in material also We not in enterprise back-end delivery only customers. functions.

realignment make to structure support This aligning streamlined competitive. decision-making. more operations and us We are our also will with faster improved organizational

walk you financials. Rob the Now will through

Robert Del Bene

outlook Thank call. for and results our fiscal fourth the our our Raul, Today, quarter then I'll thanks financial you review good full first 'XX. quarter you, and joining with year afternoon, provide of the and for for everyone, and

X.X%. X.X% Total organic GIS flat nearly growth fourth line our declined GBS declined revenue top of guidance. quarter year-to-year, while ahead was revenue

by X.X%, above was margin sequentially, driven of guidance, the basis EBIT Adjusted XX representing initiatives. our top cost our reduction an point improvement end

down fourth 'XX. the driven of quarter was of booked fiscal by points XX income gains pension the Margin impact asset noncash from year-to-year, in sales basis primarily lower and

$X.XX impact EPS impact, fourth a These were $X.XX. and from $X.XX repurchase quarter. down year's $X.XX driven offset from our benefit $X.XX, a Non-GAAP year-to-year taxes was change higher a noncontrolling interest program. by reductions $X.XX The EBIT share was of negative partially adjusted last by of

cash The less due our combination shortfall flow, $XXX about higher-than-anticipated smaller the CapEx, a cash and a cash capital was to of tax quarter to flow from operating $XXX defined Free working expectation million. million benefit equaled compared as of for levels.

our flow performance. million, demonstrating million, generation of third year, year the free cash totaled above $XXX consistency cash $XXX the straight was which For

metrics. optimization and workforce I'll revenue. our in quarter equaled now to turn drive we footprint the declining our estate fourth financial margin XX.X%, Gross real flat key And reduce to year-to-year continued of face as

X.X% insurance reimbursement. of largely $XX ongoing down was driven year-to-year, points spending nonrecurring SG&A and revenue, management by million XX a basis

a and reflecting was as down continued capital year-to-year million, $XX flat percent of Depreciation amortization discipline. revenue,

asset on quarter $XX of pension margin, the a for $XX million, basis million driven point was $XX is XXX lower income of which year-to-year of reduction million. $XX income million, lower impact and to gains EBIT a by Other sales

Now results. turning to segment our

Analytics the nearly GBS basis revenue GBS, higher-margin deceleration more points Engineering of the favorable challenging largely driven revenue. environment XX.X%, with XXX points organic was by For equaled mix up by for and year-to-year profit primarily ongoing & sequentially, basis down margin a XX performance driven but Applications. year-to-year flat market services

largely with performance our year. For GIS, consistent organic revenue declined the X.X%, throughout

income. a of revenue reflected a We points our very and deals GIS than with declined Modern and performance new basis bookings year-to-year and of lower Cloud renewals, have improvements this has and operational Workplace. by both taken ITO financial & margins more in been offset disciplined level pension approach XX with

GBS. in & now on current to detail revenue impacted Analytics me Let the some by our Engineering Both market Applications be individual as environment. offerings, X% organic first declined provide performance continues year-to-year and challenging

that provide longer-term incremental X.X book-to-bill While or the for the were X declined, revenue strong but not activity these short-term does businesses with revenue better stability. revenue renewal ratios provides

this the that revenue strong business insurance quarter services insurance approximately the the services its in our significant X.X% year-to-year. approximately business, of software Embedded and and increased in fourth X/X of in X% last up the quarter. represents grew which Normalizing organic a for year, total, year-to-year. large license is sale Insurance perpetual momentum, X% software continued performance

X.Xx. was book-to-bill insurance The

of As bookings quarter-to-quarter timing this a renewals. vary large on reminder, significantly based the business in can

our we quarter, had was renewals last significant book-to-bill example, X For X.XX. and

deals. a IT organic of segment. an and prior ratio in book-to-bill organic outsourcing X.XXx, new our from to was of declines revenue improvement a infrastructure significant moving resale The market selective on to the basis challenging approach X% ITO delivered year-over-year saw transaction declined double-digit book-to-bill Cloud in Now X.XX. result quarter. and ongoing GIS Security the the to X%, quarters X declined an we due our with a

was by revenue, which organic down to Book-to-bill Workplace mid-teens revenue declined the year-to-year resale quarter due large Modern XX%. renewals. performance in impacted X.XXx this a strong was several

our turning foundation. debt been our by full Now million, sequentially reduced and levels We debt million. year, our for levels to the have total total reduced $XXX financial $XXX by

$XX the million interest on reflecting up was million, short-term Net for quarter environment $X higher year-to-year, rate interest our expense borrowings. the

for the $XXX million, in year, level and fiscal million, and spent Restructuring $XX full it TSI of the was expense 'XX. about half was

Operating million estate payments lease our year-to-year $XX due footprint. management of $X million real to were of the down

expenditures million. The were and capital $XXX fourth million were originations $XX lease quarter

Our year-over-year, than X low. of and a financing lease lease trend continue finance revenue, down originations and X.X%, declined more asset percentage as to and capital expenditures a payments down, to multiyear point representing

to deployment. Turning capital

As at to in shareholders, we shares reduce of capital mentioned, by balance per returned $XXX levels. our million debt to paper deployed retiring commercial cash quarter, fourth of of We the continuing X.X $XX.XX. million weighted I price our lease of this repurchasing million share to approximately decrease average portfolio. our accomplished and a outstanding $XXX We

a million. at fiscal our 'XX, have full outstanding year, by $XXX XX%. repurchased the reduced the XX% of of share cost For of we the than more year total shares Since we count over beginning our

enter would to financial a updated our on we like provide I year, As priorities. new fiscal clarity

revenue largely plan recent improve things: will infrastructure throughout to first, Our restructuring to given to deploy concentrated company our in and X execute accomplish rightsize to performance, excess the is capacity, program GIS, a our address capital our profitability. we

to is reduce minimizing priority significantly second levels, debt finance including lease further The originations.

to turning our guidance. full Now year 'XX

decline We X%. organic expect to to total revenue our X%

growth in In expect our 'XX first of a be fourth GBS, of with with slightly performance fiscal our we half the the quarter year. return second in full the half line positive, and with to year to outlook

full and opening In revenue with to the the double-digit year revenue impact given organic lower range. expected bookings in combined and resulting deal anticipate low continued in decline year's resale selectivity fiscal to we last GIS, backlog, 'XX,

revenue X% primarily drive This making adjusted in EBIT lower is reflects improvements. the guidance X%. for year-to-year the we're business to from Our guidance impact and investments to productivity margin

previously savings 'XX. the on into basis margins with executing be will improve a we to 'XX Additionally, impact restructuring forward, the sustainable largely in action going fiscal late of mentioned materializing fiscal on and the

on is These portfolio. margin. calls, of impact a will sales sales on have cash potential potential continue adjusted loss is market previous of non-GAAP the not with real inflow $X.XX EBIT our free on diluted The year rationalize flow mentioned I've timing levels, full negative is an XX%. As included And this to we these as will adjusted non-GAAP assumed guidance the estate in cash uncertain. our the provide EBIT difficult remains outside but guidance our a to with effective margin and expected tax rate $X EPS

flow Our flow levels main about is fiscal free free the consistent 'XX level, performance. X drivers at $XXX without be would for There fiscal guidance contributing with changes, and 'XX year-over-year cash to these million. lower cash are

approach in a is free funding fiscal our 'XX. As but will will levels significantly I flow. reduce debt we debt finance overall which impacting $XXX levels change mentioned, originations, million 'XX, This of in and reducing be will in lease cash debt previously our strategy reduction expenditures, increase our capital reducing fiscal component our were

cash which impacting of increase million approximately be spending to an free year-to-year. be level related $XXX of Also will increased flow the will restructuring,

Our will expectation in the savings is fiscal flow put 'XX path us of cash free a 'XX. sustainable generation that levels fiscal above on restructuring

payments. reminder, timing half flow the our flow the supplier will cash the bonus of payouts lowest second Consistent strongest of is seasonally a be certain As cash to due in years, and primarily generation with free year. prior QX annual

GIS, digits. in to that the first revenue the range, continue outlook. mid- single-digit And double GIS with our to now will high the in decline GBS, And and revenue quarter decline challenging will reflect we Applications taking market In environment. anticipate in performance current to resale A&E services

X% With we expect to decline these company revenue factors, total organic to X%.

We prior adjusted lower of which in of margins X.X% a revenue first the quarter in EBIT years. consistently results anticipate range the to seasonality, X%, impacted and has function our

finally, EPS of $X.XX. non-GAAP to diluted And $X.XX

turn me Raul the over key takeaways. With for let back that, to call

Raul Fernandez

our a lot the do operate records. track in days. additions a They Thank with XX last industry to you, quite Rob. executive level. happy There veterans the to proven why to so is That's at higher I'm all are team with

We while continuing as possible. will transform to define by better success quarter as every quickly we perform

Operator, attending questions. up for you the it going open we're for Thank call. to

Operator

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

Bryan Keane

had as a years X just could the like different understand lot a CEOs you It in, you of us business it. how and seems be maybe restructuring comes Raul, help restructures that the at many your restructuring than of might came well. before so, CEO every looks that or

different trying few and Just last maybe to of we've than sense the get how now what a over at CSC your plans might DXC. decades look seen

Raul Fernandez

Yes.

not to baseline our looking operationally head at as great restructurings systems, you. entities, who and here been of a short growth. previous our real, in of the of Okay, restructurings. our profitable public processes, fully as did this it's But time lot count, clear Thank mentioned, our distribution there question. integrated history set I have for solid, that me really the clean, a that, you've someone got have previous company, spent just know

still that that look ways: number number other; acquired over were of entities. multiple in place stacked systems each legal on integrated, of deduped; in got top of at business never number never can that time, of processes You

that strong advantage opportunities needed running this organization think bottoms anyone to can so and real a not foundation not we It is that can the fully go really up. to that would it continue in came is we there history a and of is I'm otherwise, know but just tell reset. because the previous is absolutely take at have. carry I from I it, functional that I It from you look work, away the again, a is

Bryan Keane

any the as charges, P&L they're just through follow-up, those the a restructuring looking Got targets it. And in those that of we're outside targets? are margin those the at? so are then Or

GBS confidence GBS, then in in of organic a you a talked And bit half? gives positive about that in for recovery recovery, I second on secondly the second think to just the that, What you of year. growth the little half

Robert Del Bene

Thanks is question. this the Del Rob Bene. Bryan, for

restructuring restructuring. included in the not the flow margin. numbers. Restructuring taken the is since cash with It is obviously company, adjusted the beginning on in the not of free Consistent First is included included. approach EBIT

answer the your to that's So first question.

dynamic, to first of first half 'XX. similar year to half a second difficult the half On the half the fiscal do marketplace, see the with of GBS performance we back

some have encouragement. We

pipelines Our and have been conversion are improving, rates our consistent.

second So with to rates, we half year. that from low improved pipeline conversion us positives in and the see the negatives going single-digit low single-digit of

Raul Fernandez

new leadership life built it's on, again, terms opportunities. new cycle all of management there, And in

in out self-inflicted and, still So better, eliminating, we're way and working pitching cases, issues had smarter, have delivery also pre-proposal, proposal, some frankly, we that some faster, of. our

As lever. little is This a one before, isn't lot mentioned this levers. I've of

I we margins, have if that have is looking and executives show in one great and that cases, say, can conversion at we me given has better. up of getting the I'm meaning the a correctly is encouragement in those better, over world, things average, things et will excellence, looking succeeding line we've top that rocket of think that from it And environment, in on been they do line confirmed that, And be bottom the marketplace additional the correctly cetera. that just that and as show a all I'd opportunity-rich doing experienced it companies and it's team great very science, some again, up gross operational have at we and margins, things to net brought not new lot

people, incentives, right to and like grow from got that it. now So going go-to-market to of But base we're and base, go we've right I a I'm structure got then model way the think the to and and encouraged. the right continue off we've I a to feel to get

Operator

Tien-Tsin Huang line JPMorgan. Your next of comes question of from the

Tien-Tsin Huang

that in side, new versus in and what replenish renewal. detail on the either in or might plays of curious year we a logo more little how came as just here plan fiscal the I'm bit terms bookings out expect

Robert Del Bene

Yes. Tien-Tsin, thanks.

they've So the due and we I growth gave forecast a they year, second it's the And into in do quarter days A&E was second first those bookings don't a and the the strong to for my that in in really, of GBS. the half half. really mentioned little in a they but better foundation that provide been remarks, pretty ago to consistent actually revenue relative last XX translate in were row the renewals strong. solid renewals, And were

better a content expect expected did 'XX, did the we into pipeline, fiscal little and in we anticipated. GBS And the than renewal throughout we as in So 'XX. picture GIS. very and throughout new strong filtering and, based on going content We GIS where then and have new in fiscal both year similar GBS improving in activity a in

Tien-Tsin Huang

maybe, bringing you familiar with thinking of into Just some quickly, new the Raul, then with that additions And roles is management maybe people my quick Are you're team. in some the curious your additions? done I the expect should team? what or Perfect. turnover you other just just some follow-up, know to expand the management from places. Do there.

Raul Fernandez

I've Yes. And working there to of we've have we are publicly, some that over in didn't had but and and here, to opportunity great across right? that the organization. with that win look, lot years some together team XX-plus announced together. releases, many of we've then together, the the you've compete work and the technology. the announce they've executives together, a of come joined journey, my work executives pleasure seen had the So opportunity in And we've the of had others obviously

got few we are yes, a more that coming. So

top where great I've great at fit terms gotten some that's horsepower, on and team that of additional team need feel the XX-plus team adding percent that's people executives for here, need looking roles in here, are the an the building we that execute, place. of we in the the I But to like

Operator

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

Bryan Bergin

free question First on flow. just cash

maybe believe, and capital can the but be the payments seems million otherwise free bridge, restructuring too, line $XXX understanding you talk margin lease for cash And the that amid to ongoing maybe the year-over-year top after flow can free the So have, with about annual headwind talk pressure? associated about biggest I potentially you in outflows flow? levers forward, going cash chunk sustainability also you

Robert Del Bene

Yes.

or And years in $XXX So from a solid fiscal does in the we mentioned, base 'XX. cash two we which lease cash terms that year. that our strength start free into increase And have million, are and row, to flow new free over base of number as X impacting to impacts the a in in of $XXX restructuring moving million significantly million the number of $XXX over curtailment fiscal flow, I the spend curtailing shift in the CapEx, then 'XX. originations,

Now we with leverage capital. operating working do have

in 'XX improvement the taking for room is for going of and EBIT years. into fiscal to that last of We're beyond. fiscal forward, is headwind curtail the up purpose 'XX, And we there capital. of be couple restructuring So faced in again, shore the working moving and to advantage that 'XX that

that's So the plan.

continue to from In range of that XXXs, payments, $XXX million go and then will a terms there. million and the we're 'XX, it In will from down $XXX in down. lease a wind range low to cap

John Sweeney

to the go foot-stomp just X $XXX to in in million FY 'XX. from originations will And 'XX lease this,

Robert Del Bene

number. small very a So

John Sweeney

reduction in And flow. free cash $XXX the that's a million

Robert Del Bene

John. Yes. Thank you,

Bryan Bergin

helpful. very That's Okay.

the unfavorable the guess you're some pieces the that's mindful think try contracts, we any here about you relates I you're not business working to company? you of and be of basis you're a assessing to Anything build of out line, here we that kind actively And looking follow-up, as as the business kind of prune of considered revenue to at as through outlook? also any strategic just 'XX of top factors working to to as Okay. and it guide, unpack whether the retention

Raul Fernandez

reselling and right don't contracts, or ITO relationships. have software. the I contracts, Yes, and isn't of the historically, that this on profitable loss, we're right packaging this of here, profitable we going clear mandate the now that guidance the to there's renewals of with that of changed That to then Workplace products, extent all profitable direction reselling profitability have been into a But footing. and real growth, them put Modern where, at got real in To and get growth a address are is especially growth we costs, less-than-optimal foundation. when growth going them we at as now, is

Robert Del Bene

And revenue, guide Yes. included, selectivity our so along on into that resale. incorporated on that's with Bryan, reduction we've that, just of continued low-margin piggybacking

All of that the GIS is the element into of packed guide.

Bryan Bergin

If out? Okay. piece, missed kind quantify so Did we that it, of I apologize. I parse that can you just

Robert Del Bene

quantify the digits my Didn't be opening high low the in various single But specifically be elements. double resale, remarks, it I digits. double mentioned will negative And negative that with GIS. we'll digits, in

Operator

comes question of next Your from Peller line Research. Wolfe the Darrin with

Paul Obrecht

you're is in go year? for what you just color Darrin. client Can you X broader we some and through your provide the on months you And relates assuming outlook, behavior that ago? fiscal as in built as year improvement 'XX broader macro to and on environment any how demand the This Paul the maybe Obrecht seeing were

Raul Fernandez

new and being business, as able winning as create across model on pricing operating obviously, the that think capturing for I a companies recompetes. existing I of those different correctly, the levels solutioning issue business, correctly, are couple whole being are Look, Sure. there right, it right life effective factors, economic business, our more And of at think our to cycle well is the efficiency. with recompetes of it

of plenty have in the operate opportunity in. universe We we that

paused I and headwind our that has others the that, that go-to-market optimizing than up. some what said I have getting and functions in us for is think do those think less lightened from space spending is standpoint, of echo better. macro sales and a I discretionary a

being in the bigger and compete that to us We term macro get general near opportunities against have will our our destiny environment. be for a that the by in on, better the we factor than hands

Paul Obrecht

in you That's Workplace, a path improve Can as reach of in efficiency? it. could follow-up, now get to see workforce Got you'll Modern where point helpful. business just touch right doing or you the what to a the is and you're XX% And on there then mentioned the you nonhuman.

Raul Fernandez

Sure.

you lot across humans, it's there, companies, about people, resolution countries, If et resolution, a think of work a the of items cetera. lot of small multiple devices,

of AI, large deal look questions, interactively and answer ability language that's to models, precise language use where models, at we're in same specifically a with of focus relying the infusion you a technology If and and really increase for where humans small agents workload, we the Copilot manner the be shift that. going to on more, to can of AI using or an and or models, the for not with greater people proactively real handle

transition roughly and a we As there. from that that, reference ratio you'll percent to I the that's XX-plus made of XX% go

it is every real. experimenting That's of other accounts. speed happening. that's the news We're But It's actionable. with that across X multiple compute AI is of And good the piece months. behind doubling

getting a better, multimodal of and to take So going we're virtual accuracy, and for is really speed, today partner the it. ability to a full these there at and services high great advantage quality agent be a in delivering

Operator

of comes Lee line question the with next Your Guggenheim Jonathan from Securities.

Jonathan Lee

detail I appreciate the level here. of

other or that's help across Can talked levers whether through help contract to you about the working some dynamics profitability, delivery? us profitability. any You resale of pricing you understand have

Robert Del Bene

Yes.

across revenue there's that and as leverage in million of in think of base to the we million reduce the on ITO $XXX $XXX So that I'll business. restructuring We've first. million, and the capacity. that And the on the year-to-year growth will $XXX well. predominantly I reductions just capacity million physical continue is take physical march this a particular, Jonathan, we've board, with been experienced, the between year $XXX

the savings deliver that element will future. one that's So into

The and account is we the are with just efficiency level, restructuring second funding. infrastructure element and at going the after that

accounts the delivery That's to designed have we're that delivery is our execute on to room the the lever that's is we're another firmly our good and the direct us eliminate designed to going help that GBS & gap we've business, competition, levels, high unit. got and competition to how still, margins. improve in restructuring very at So narrow while And the to in NPS restructuring. In our Consulting service have. And that the opposed we're within that track again, we business, us. specifically, below as restructuring to scores, population overhead we business are for Engineering margins the

Jonathan Lee

Great. the unit versus the company And a follow-up, some about a basis you think the on business geographic client realignment there? as just of receptivity can as you of talk about prior,

Raul Fernandez

the intersection, It in the delivery of Because Yes. it's of really the at offering. geography managers coordination with the talent, tight intersection the is the right?

what just of win. pre-bid so deployment better is cycle you better the beginning from the And you're solutioning, solutioning, life getting once better

themselves the the up things trip on, we XXX% timely leads that's completely of not SLAs. something of staffing being in can that or fully won. One companies is That's self-inflicted, and That staffing avoidable. to have, certainly

plan better, you better. If execute you

that's lot know do, we example that impact. and organizations see seeing impact can have be quarter, an that another other of better, will month, little can can every So And I that of every do that. things a we'll and

So go-to-market offering those is and are with in receptive better our think our in I new a talking just days, customers. think we XXX been serving the some the of global which resonates both way this and at very our last really it's a And engaging the thing, and dozen of important why the geography, customer. conversations engaging several with, very the that local through my elements is the most level ultimately, customers,

Operator

Anson Your with next of Spencer from comes the line question Susquehanna.

Spencer Anson

Can any Raul, broader you some there the see callouts insurance strategic with to on insurance tactical opportunities relationship business. you or even had speak the business? just you

Raul Fernandez

Yes. Great.

while with I a services very group help think outsized we're of SaaS and opportunity our it an of maintaining could unit. that hand, growth terms return looked of clear that With early control effort on, mix to we a a accelerate insurance reoccurring business business exploring unit. every have business that I good unit, in small select opportunity us became at me experienced with in and As that partners on

So different process It's a our supporting really with world aspect in every great those we're now. that product marketplace. that in It's across right bring customers the critical of great the a great set history customers, the and customers, foundation. partnership of a to a lines

Operator

Faucette Morgan next Stanley. question the James from of line Your comes with

James Faucette

improving pipeline now. of the assumption should about that deliver, and about that but value to kind start changes in business go-to-market is like some the understand sounds talked I like growth? how customers think the ask you that made, can tightening I wanted back for the rates process it be past process. the conversion may and message and up cetera. But rates like conversations, Raul, that's stable. right to to to how with et DXC to expanding And getting you've improve sales they that even conversion pretty that the about helpful it we the sounds to lot time And are so and a know, of the

Raul Fernandez

Yes.

vertical I'm but know existing customers, it's I relevant replicability in think prepared we're tens, focus in the talking has. to also key and surprised got good another one the and business on always not it's a division, many The leadership Consulting solutions, some cases, of do And ITO a of we've not customers function may that new an in that and millions of that under or to something aware of. And division if be the right? appreciate Modern frankly, fundamentals, discuss our come another do Modern that fundamentals not talent, it's surprise, business in and the unit experience hundreds in the operating a Engineering where ITO or in Workplace, customer Workplace, Services. I of may they

say, happening offerings. in thinking that that collaboration, stories, "Oh we to all it happening before. that incremental orchestration, cross-pollination, our be but Please, in up." So from to let's speak. And is that it's did that. more great relatively And that, good we're accounts beachhead, if a offering see So mentioned to level base great in and that relationship I've other a history should get about gateway, mechanism, able going this? most no, And I wasn't customer I've and with the demand of just the always existing hey, dozen the frankly, many an low-hanging at meetings, a you is, tried cases, existing gateway, of as because, of that to as as we've great opportunity, several that up and one effective a you're fast compete something a as with an is a a be again, got didn't my we this, cross-sale gateway packaging because operationalize know you scale that know follow before, and I then answer time, did effective the

James Faucette

Is you've partnerships, things the like example, add for that mean, going sounds incremental you are all have like sounds majority the be part, cross-sell. some it able assets, you're think there And I and to on other a fair? to the, for then into But it most mix? Or that the that to talked need about to least insurance of like side. you at or feel deliver execute you

Raul Fernandez

No.

what we to have compete. need We

we compete grow. what profitably have We need and to

should We done week, quarter, restructuring, is perform quickly. I streamline been aligned. we're wasn't, and transform got, some get we got have before got work some And but every as both to mentioned to we've going to with day, dedupe, and We've while and have it that earlier, done transformation to do the that do every internal get every speed. systems we've

Operator

of next comes question the line with from Capital Bradley Your Clark BMO Markets.

Bradley Clark

is I Bachman. to your and GIS on thoughts time. growth Keith for market over This about on want ask Brad

thinking You've to of rate, the alluded longer time. implying GIS business? still GIS be of given low that both Is participating term in potential growth how single-digit over broader about this you'll decline the making and/or the perhaps growth you're market changes market sort to

Robert Del Bene

that's think about I Bradley, Yes. right.

selective, the rates, we and market. a and And view growth after is, single-digit have unprofitable in to goal range. to rationalizing very portfolio realistic the negative which get contracts on low market our being We focusing exiting see the of

that we're direction. the where So business pointing in that's

Raul Fernandez

at to than clear, level a just that. operating we're be worse And

and once should then first And comp. our baseline with beat get it. where rate, competitors another and just to where a we term, to as regards is our to today in it to next growth it the goal But be with there, the it is in is other or try So and to to competitors. target "normal" step the obviously get with find is more meet near get line

Operator

I'll This remarks. Fernandez the turn call concludes the for to Raul question-and-answer closing session.

Raul Fernandez

and the I the I'm things and for of investors. very all deliver joining us. and appreciate value Thank services urgency all day to you that done, I frustration customers on. the sense come every also definitely our what focused appreciate great to of XXX% that employees for get is together much

much attending very thank So today. for you

Operator

joining. This concludes today's for call. Thank conference you

You may lines. disconnect your now

DXC Technology (DXC) 16 May 242024 Q4 Earnings call transcript