DXC Technology (DXC) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenue was $3.23 billion, down 5.1% year-over-year (4.2% organic decline), with adjusted EBIT margin rising to 8.9% and non-GAAP diluted EPS up 7% to $0.92, while GAAP diluted EPS fell to $0.31.

• Free cash flow for Q3 was $483 million, with year-to-date free cash flow at $576 million, and cash and cash equivalents at quarter end of $1.72 billion.

• Book-to-bill ratio improved to 1.33x, the highest in eight quarters, reflecting strong bookings momentum from both large and short-cycle projects.

• Leadership and go-to-market changes contributed to improved execution, innovation, and operational performance.

• No share repurchases occurred in the nine months ended December 31, 2024; $592 million remains authorized for repurchase.

Financial highlights

• Adjusted EBIT margin expanded 140 basis points year-over-year to 8.9%, with adjusted EBIT at $286 million, up 11.7% year-over-year.

• Non-GAAP diluted EPS was $0.92, up 7% year-over-year; GAAP net income attributable to common stockholders was $57 million, down from $156 million.

• Gross margin improved to 25.1% in Q3, up 2.7 percentage points year-over-year.

• Free cash flow for Q3 was $483 million; cash from operations was $650 million.

• Total debt at quarter-end was $3.8 billion, down from $4.1 billion at March 31, 2024.

Outlook and guidance

• FY25 revenue expected between $12.80 billion–$12.83 billion, organic decline of 4.9%–4.7%.

• FY25 adjusted EBIT margin raised to ~7.9%; non-GAAP diluted EPS raised to ~$3.35; free cash flow guidance increased to ~$625 million.

• Q4 FY25 revenue expected at $3.10 billion–$3.13 billion, organic decline of 5.5%–4.5%; adjusted EBIT margin ~7.0%; non-GAAP diluted EPS guidance is ~$0.75.

• No quarterly dividends planned for fiscal 2025 to maintain financial flexibility.

• Management expects existing cash and cash equivalents, plus operating cash flow, to be sufficient for normal operating requirements over the next 12 months.