DXC Technology (DXC) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue was $3.2–$3.24 billion, down 5.7% year-over-year, with organic revenue down 5.6%.

• Adjusted EBIT margin rose 130 bps to 8.6%, and non-GAAP diluted EPS increased 32.9% to $0.93.

• GAAP diluted EPS fell to $0.23 from $0.49, while adjusted EPS rose 33%.

• Leadership changes and self-help initiatives are driving early momentum and focus on execution.

• Free cash flow for the first six months was $93 million, up from $16 million last year.

Financial highlights

• Adjusted EBIT for Q2 FY25 was $279 million, up from $251 million; EBIT was $111 million, down 27.5%.

• Gross margin improved to 25.1%, up 1.7 percentage points year-over-year.

• Free cash flow for Q2 FY25 was $48 million, down from $91 million in Q2 FY24.

• Book-to-bill ratio for the quarter was 0.81x, with GBS at 0.90x and GIS at 0.71x.

• Segment profit: GBS $214 million (12.8% margin), GIS $129 million (8.2% margin).

Outlook and guidance

• FY25 organic revenue expected to decline 5.5% to 4.5%; revenue guidance $12.9–$13.1 billion.

• Adjusted EBIT margin outlook raised to 7.0%–7.5%; non-GAAP diluted EPS guidance raised to $3.00–$3.25.

• Free cash flow guidance increased to ~$550 million for the year.

• Q3 FY25 guidance: organic revenue decline of 5.5%–4.5%, adjusted EBIT margin 7.0%–7.5%, non-GAAP EPS $0.75–$0.80.

• Management expects liquidity of $4.4 billion, including $1.2 billion in cash and $3.2 billion in available borrowings.