DXC Technology Company (DXC) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenue was $3.2–$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 $1.72 billion at quarter end.

• Book-to-bill ratio improved to 1.33x, the highest in eight quarters, reflecting stronger bookings and improved go-to-market execution.

• Leadership changes and operational improvements are driving better execution and client engagement.

• The company is focused on profitable, sustainable revenue growth, investing in talent, and building a culture of accountability and innovation.

Financial highlights

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

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

• Free cash flow for Q3 was $483 million, down from $585 million in the prior year.

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

• CapEx and lease originations as a percentage of revenue were 5.3% in Q3.

Outlook and guidance

• FY25 revenue expected between $12.80–$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–$3.13 billion, organic decline of 5.5%–4.5%; adjusted EBIT margin ~7.0%; non-GAAP diluted EPS guidance is ~$0.75.

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

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