DXC Technology Company (DXC) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue was $3.2B–$3.24B, down 6% year-over-year (4% organic decline), with GBS up 1% and GIS down 9%.

• Adjusted EBIT margin improved by 40 bps to 6.9%, and non-GAAP diluted EPS rose 17% to $0.74.

• Free cash flow turned positive at $45M, a $120M improvement year-over-year.

• Management raised full-year adjusted EBIT margin, non-GAAP EPS, and free cash flow guidance.

• Ongoing market uncertainty and cautious customer spending continue to impact bookings and short-term project work.

Financial highlights

• Total revenue: $3.2B–$3.24B, down 6% year-over-year (4% organic); GBS $1.67B (1% organic growth), GIS $1.56B (down 9% organic).

• Adjusted EBIT margin: 6.9%; non-GAAP EPS: $0.74, up from $0.63 last year.

• Gross margin: 21.9%, up 80 bps year-over-year, driven by cost management.

• Free cash flow: $45M, compared to a use of $75M in the prior year.

• Book-to-bill ratio: 0.77 for the quarter; trailing twelve-month ratio 0.88.

Outlook and guidance

• FY25 organic revenue expected to decline 6% to 4% year-over-year; revenue guidance $12.74B–$13.02B.

• Adjusted EBIT margin outlook raised to 6.5%–7.0%; non-GAAP diluted EPS outlook increased to $2.75–$3.00.

• FY25 free cash flow guidance raised to ~$450M.

• Q2 organic revenue expected to decline 6.5%–5.5% year-over-year; adjusted EBIT margin 6.5%–7%; non-GAAP EPS $0.70–$0.75.

• No quarterly dividends planned for FY2025 to maintain financial flexibility.