DXC 10-K & 10-Q changes, risk factors and insider trading
DXC Technology Co · NYSE · Services-Computer Processing & Data Preparation · CIK 1688568 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “If we do not effectively manage and improve our sales organization, we may have difficulty acquiring new customers or increasing sales to existing customers, and our business and results of operations may be adversely affected.”
New heading “We may fail to develop and expand our service offerings to address emerging business demands and technological trends and remain competitive.”
New heading “If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, or if we or third parties fail to deliver on commitments to our customers, the profitability of our contracts may be materially and adversely affected.”
New heading “Systems failures, catastrophic events, and resulting interruptions in the availability of our products or services could harm our business, damage our reputation, and subject us to substantial liability.”
New heading “Prolonged periods of inflation and related economic conditions could adversely affect our profitability, results of operations, and cash flow.”
New heading “We face aggressive competition and may fail to compete effectively in certain markets.”
Removed heading “Product and service quality issues could impact our business, operating results and financial condition.”
Removed heading “Our ability to continue to develop and expand our service offerings to address emerging business demands and technological trends, including our ability to sell differentiated services and compete in the highly competitive markets we serve, may impact our future growth. If we are not successful in meeting these business challenges, our results of operations and cash flows may be materially and adversely affected.”
Removed heading “Our ability to compete in certain markets we serve is dependent on our ability to continue to expand our capacity in certain offshore locations. However, as our presence in these locations increases, we are exposed to risks inherent to these locations which may adversely affect our revenue and profitability.”
Removed heading “If industry or equity research analysts have difficulty in understanding the changes to our business model, or we fail to meet our publicly announced financial guidance, our stock price and trading volume could decline.”
Removed heading “Our business and financial results have been adversely affected and could continue to be materially adversely affected by public health crises.”
Removed heading “We have indebtedness, which could have a material adverse effect on our business, financial condition and results of operations.”
Removed heading “If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected.”
Removed heading “Performance under contracts, including those on which we have partnered with third parties, may be adversely affected if we or the third parties fail to deliver on commitments or otherwise breach obligations to our customers.”
Removed heading “Prolonged periods of inflation have an adverse effect on general economic conditions and consumer budgeting, which could impact our profitability and have a material adverse effect on our business and results of operations, especially for customer contracts where we do not have adequate inflation protections.”
Removed heading “We may be adversely affected by disruptions in the credit markets, including disruptions that reduce our customers' access to credit and increase the costs to our customers of obtaining credit.”
Removed heading “Our hedging program is subject to counterparty default risk.”
Removed heading “We derive significant revenues and profit from contracts awarded through competitive bidding processes, which can impose substantial costs on us and we may not achieve revenue and profit objectives if we fail to bid on these projects effectively.”
Removed heading “If our customers experience financial difficulties, we may not be able to collect our receivables, which would materially and adversely affect our profitability and cash flows from operations.”
Removed heading “If we are unable to maintain and grow our customer relationships over time, our operating results and cash flows will suffer. Failure to comply with customer contracts or government contracting regulations or requirements could adversely affect our business, results of operations and cash flows.”
Removed heading “Changes in U.S. tax legislation may materially affect our financial condition, results of operations and cash flows.”
Removed heading “General Risk Factor”
Largest changes
“Our stock price is subject to changes in financial analysts’ earnings estimates, valuation and recommendations, our credit ratings and other factors beyond our control such as the inflationary pressures, other macroeconomic factors and the impact on customer demand. Speculation and market sentiment over our results of operations, financial condition and implementation of our strategic priorities can also cause changes in our stock price. …”see in full comparison
“We are subject to economic sanctions, export controls, and other trade restrictions imposed by the United States, the European Union, and other jurisdictions in which we operate. These requirements may limit our ability to provide services, deploy technology, or conduct business in certain markets or with certain customers, and may require us to modify our operations or forego business opportunities. These laws and regulations are complex, change frequently, and may be applied or interpreted differently across jurisdictions. …”see in full comparison
“We have implemented several restructuring plans and may continue to implement cost-takeout measures to realign our cost structure with the changing nature of our business and to achieve operating efficiencies to reduce our costs. Our restructuring efforts may involve workforce reductions and increased reliance on automation, AI and other technology-driven solutions to enhance productivity and maintain operational efficiency, and may require additional investments in technology, infrastructure and related capabilities. …”see in full comparison
“Delays and shortages of certain necessary components to the services and solutions we offer our clients, whether caused by natural disasters, pandemics, geopolitical events, armed hostilities, labor strikes, or transportation delays, may increase component delivery lead times and costs to source available components and delay the delivery of our hardware products and services, which may adversely affect our ability to comply with our contracts and our ability to support our existing customers and our growth through sales to new customers. …”see in full comparison
“Delays and shortages of certain necessary components to the services and solutions we offer our clients, whether caused by natural disasters, pandemics, geopolitical events, labor strikes, or transportation delays, may increase component delivery lead times and costs to source available components and delay the delivery of our hardware products and services, which may adversely affect our ability to comply with our contracts and our ability to support our existing customers and our growth through sales to new customers. …”see in full comparison
“AI technologies are increasingly presenting substantially heightened cybersecurity, information security, and data privacy risks. AI systems may be vulnerable to adversarial manipulation, data poisoning, prompt injection, model extraction, or other evolving or novel attack vectors. …”see in full comparison
Full comparison: every changed paragraph (143)
Our operations and financial results are subject to various risks and uncertainties,uncertainties. whichAny mayof materiallythe andfollowing adverselyrisks affectcould have a material adverse effect on our business, financial condition, and results of operations, or prospects, and the actual outcome of matters as to which forward-looking statements are made in this Annual Report on Form 10-K. In such case, the trading price for DXC common stock could decline, and you could lose all or part of your investment. Past performance may not be a reliable indicator of future financial performance and historical trends should not be used to anticipate results or trends in future periods. Future performance and historical trends may be adversely affected by the risks discussed in this section. Other variables and risks and uncertainties not currently known or that are currently expected to be immaterial may also materiallyhave anda adverselymaterial affectadverse effect on our business, financial condition, and results of operationsoperations, or prospects, or on the price of shares of our common stock in the future.
•If we do not effectively manage and improve our sales organization, we may have difficulty acquiring new customers or increasing sales to existing customers.
•We may fail to develop and expand service offerings to address emerging demands and technological trends and remain competitive.
•Our ability to provide customers with competitive services is dependent on our ability to attract and retain qualified personnel.
•Risks associated with artificial intelligence, including our adoption, deployment, and governance of AI technologies, could adversely affect our business.
•If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, or if we or third parties fail to deliver on commitments to our customers, the profitability of our contracts may be adversely affected.
•Systems failures, catastrophic events, and resulting interruptions in the availability of our products or services could harm our business.
•We may not succeed in our strategic objectives.
•We are subjectFailure to comply with obligations arising under new or existing laws, regulations, and customer contracts relating to the privacy, security and handling of personal data.data could adversely affect our business.
•We are vulnerable to product and service quality issues.
•We may fail to continue to develop and expand service offerings to address emerging demands in the highly competitive markets we serve.
•We may fail to compete in certain markets or continue to expand our capacity, and are subject to risks, in certain offshore locations.
•We may fail to maintain our credit rating, manage working capital, refinance and raise additional capital.
•Changes to our business model may be hard to understand by the market and we may fail to meet our guidance.
•Our business and financial results could be materially adversely affected by public health crises.
•Our indebtedness could have a material adverse effect on our financial condition and results of operations.
•We may fail to accurately estimate the cost of services and the timeline for completion of contracts.
•We or our third parties may fail to deliver on commitments or otherwise breach obligations to our customers.
•We are subject to a series of risks relating to climate change and natural disasters; and increased scrutiny of, and evolving expectations for, sustainability and ESG initiatives could also adversely impact our business.
•We may fail to attract and retain qualified personnel.
•Prolonged periods of inflation have an adverse effect on general economic conditions and consumer budgeting, and could adversely impact our profitability and results of operations.
•Our international operations are exposed to risks, including fluctuations in exchange rates.
•FailureOur business operations are subject to complyvarious withand changing federal, state, local and foreign laws and regulations that could result in costs or sanctions that adversely affect our business. Social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands, may adversely affect our relationships with customers and investors.
•Failure to maintain our credit rating, manage our indebtedness, and raise additional capital for future needs could adversely affect our liquidity and financial condition.
•We are exposed to risks inherent to our international operations, including fluctuations in exchange rates and geopolitical conflicts.
•Prolonged periods of inflation and related economic conditions could adversely affect our profitability and results of operations.
•We face aggressive competition and may fail to compete effectively in certain markets.
•We are subject to a series of risks relating to climate change and natural disasters.
•Increased scrutiny of, and evolving expectations for, sustainability and ESG initiatives could increase our costs, harm our reputation, or otherwise adversely impact our business.
•Disruptions in the credit markets may reduce our customers' access to credit and increase the costs to our customers of obtaining credit, and our hedging program is subject to counterparty default risk.
•We may not achieve revenue and profit objectives if we fail to competitively bid on our projects effectively.
•If our customers experience financial difficulties, we may not be able to collect our receivables.
•Changes in tax rates, tax laws, and uncertainty of tax examinations could affect our results of operations.operations and liquidity.
If we do not effectively manage and improve our sales organization, we may have difficulty acquiring new customers or increasing sales to existing customers, and our business and results of operations may be adversely affected.
We depend on our sales organization to obtain new customers, expand relationships with existing customers, and drive revenue growth. There is significant competition for sales personnel with the skills, industry knowledge, and technical expertise that we require, and our ability to achieve revenue growth will depend, in large part, on our success in recruiting, training, and retaining sufficient numbers of qualified sales personnel. We may face structural challenges within our sales organization that could adversely impact our performance, including fragmentation in our sales operating model, inconsistent sales enablement, limited visibility into client relationships and pipeline, and challenges in managing and developing sales talent. If we are unable to address such structural issues effectively, we may experience underperformance across key sales metrics, including win rates, pipeline development, and overall sales productivity, and we may be unable to attract and retain high-performing sales personnel.
If we are unable to structure our sales organization effectively, hire and train sufficient numbers of qualified sales personnel, address existing structural deficiencies, or align our compensation programs with our strategic priorities, or if our sales personnel are not successful in obtaining new customers or increasing sales to our existing customer base, our business, operating results, and prospects may be materially and adversely affected.
We may fail to develop and expand our service offerings to address emerging business demands and technological trends and remain competitive.
Our ability to develop and implement innovative technology solutions that meet evolving customer needs and industry standards in analytics, software engineering, applications, business process services, digital cloud, IT outsourcing and consulting, and in areas such as artificial intelligence ("AI"), automation, Internet of Things and software as-a-service solutions, among others, in a timely or cost-effective manner, will impact our ability to retain and attract customers and our future revenue growth and earnings. The markets we serve are highly competitive and characterized by rapid technological change. If we are unable to continue to execute our strategy or if we are unable to commercialize our services and solutions, expand and scale them with sufficient speed and versatility, our growth, productivity objectives and profit margins could be negatively affected.
Technological developments may materially affect the cost and use of technology by our customers. Some of these technologies have reduced and replaced some of our traditional services and solutions and may continue to do so in the future. Technological developments have caused, and may in the future cause, customers to delay spending under existing contracts and engagements and to delay entering into new contracts while they evaluate new technologies. In addition, markets for new technologies, such as AI, may not develop as we have anticipated. If we do not make the right strategic investments to respond to these developments, our ability to develop and maintain a competitive advantage and to execute our growth strategy could be negatively affected.
WeRisks mayassociated notwith succeedartificial inintelligence, including our strategicadoption, objectives,deployment, whichand governance of AI technologies, could adversely affect our business, reputation, financial condition, and results of operations and cash flows.operations.
We are integrating AI, including generative AI and other advanced or autonomous AI systems, into our internal operations, service offerings, and client solutions. We have made, and expect to continue to make, significant investments in developing, deploying, and supporting AI capabilities, including our Fast Track portfolio of AI-enabled solutions. Our ability to realize the expected benefits of these investments depends on a number of factors, including our ability to develop commercially viable AI‑enabled offerings, attract and retain personnel with relevant expertise, and deploy AI technologies responsibly across the enterprise. If we are unable to develop, adopt, scale, or effectively integrate AI technologies, or if the AI‑enabled solutions we bring to market do not achieve sufficient customer acceptance, our competitive position, growth, and financial performance could be adversely affected.
Our AI‑enabled offerings and internal AI tools may produce inaccurate, incomplete, biased, or otherwise flawed outputs, including as a result of limitations or deficiencies in training data, algorithmic design, system architecture, or implementation. Such outputs could result in operational errors, flawed decision‑making, customer dissatisfaction, reputational harm, or claims of discrimination, bias, or violation of applicable law. We may also face allegations that our use of AI infringes, misappropriates, or otherwise violates third‑party intellectual property rights, or that AI‑generated outputs incorporate protected or proprietary content. The legal framework governing the ownership, use, and protectability of AI‑generated works remains uncertain and continues to evolve across jurisdictions, which could limit the value or usability of our AI‑enabled deliverables and expose us to infringement, misappropriation, or other legal claims.
Many of our AI‑enabled offerings and internal tools rely on third‑party AI platforms, foundation models, cloud‑hosted AI services, or other vendor‑provided technologies. Defects, service interruptions, security vulnerabilities, changes in licensing terms, pricing, or usage restrictions, or the discontinuation or modification of support by these third‑party providers could disrupt our service delivery, degrade the quality or reliability of our offerings, or require us to identify, integrate, or transition to alternative solutions on short notice. In addition, we may have limited visibility into the design, training data, or operational parameters of third‑party AI systems, which may constrain our ability to identify, explain, mitigate, or remediate errors, biases, or other deficiencies in their outputs. Our clients may expect us to assume responsibility for the performance, reliability, and compliance of solutions that incorporate third‑party AI components and may be unwilling to accept contractual limitations or exclusions of liability offered by AI platform providers, which could expose us to risks or liabilities that we cannot fully control or mitigate.
AI technologies are increasingly presenting substantially heightened cybersecurity, information security, and data privacy risks. AI systems may be vulnerable to adversarial manipulation, data poisoning, prompt injection, model extraction, or other evolving or novel attack vectors. The use of AI in connection with personal data, confidential information, or automated decision‑making processes may trigger additional obligations under data protection, consumer protection, employment, or sector‑specific laws relating to transparency, consent, human oversight, data minimization, explainability, and lawful processing. Any failure, or perceived failure, to comply with applicable requirements could result in regulatory scrutiny or enforcement actions, fines or penalties, contractual disputes, litigation, or reputational harm.
The legal and regulatory environment governing AI is rapidly evolving and differs significantly across jurisdictions. Various jurisdictions in which we operate have adopted, proposed, or are considering AI‑specific legislation, regulations, and regulatory guidance, including the EU Artificial Intelligence Act, U.S. executive orders and federal agency initiatives, and various U.S. state laws. These frameworks may impose obligations relating to risk classification, transparency, documentation, human oversight, conformity assessments, record‑keeping, or registration, and may require us to modify our products, services, internal processes, or business practices. Regulatory requirements may develop unevenly, change frequently, or be interpreted inconsistently across jurisdictions, increasing compliance complexity, operational burden, and cost. While we have implemented governance and risk assessment processes intended to monitor and address AI‑related regulatory developments, there can be no assurance that these efforts will be sufficient to address all applicable requirements, anticipate regulatory changes, or mitigate all associated risks.
In addition, the rapid adoption of AI technologies by our clients and competitors may reduce demand for certain of our traditional services. Clients may increasingly use AI‑driven tools to develop, customize, operate, or maintain technology solutions internally, reducing their reliance on third‑party service providers. If a significant number of our existing or prospective clients adopt AI as a substitute for services we currently provide, or if competitors deploy AI‑enabled offerings more effectively or efficiently than we do, our revenues, growth prospects, and results of operations could be materially and adversely affected.
If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, or if we or third parties fail to deliver on commitments to our customers, the profitability of our contracts may be materially and adversely affected.
Our commercial contracts are typically awarded on a competitive basis. Our bids are based upon, among other items, the expected cost to provide the services. We generally provide services under time and materials contracts, unit-price contracts, fixed-price contracts, and consumption-based or resource-unit pricing arrangements, under which customers are billed based on their usage of defined service units. We are dependent on our internal forecasts and predictions about our projects and the marketplace and, to generate an acceptable return on our investment in these contracts, we must be able to accurately estimate our costs to provide the services required by the contract and to complete the contracts in a timely manner. We face a number of risks when pricing and executing our contracts, as many of our projects entail the coordination of operations and workforces in multiple locations and utilizing workforces with different skill sets and competencies across geographically diverse service locations. In addition, revenues from some of our contracts are recognized using the percentage-of-completion method, which requires estimates of total costs at completion, fees earned on the contract, or both. This estimation process, particularly due to the technical nature of the services being performed and the long-term nature of certain contracts, is complex and involves significant judgment. Adjustments to original estimates are often required as work progresses, experience is gained, and additional information becomes known, even though the scope of the work required under the contract may not change. If we fail to accurately estimate our costs or the time required to complete a contract, the profitability of our contracts may be materially and adversely affected.
Some IT service agreements require significant investment in the early stages that is expected to be recovered through billings over the life of the agreement. These agreements often involve the construction of new IT systems and the development and deployment of new technologies. Substantial performance risk exists in each agreement with these characteristics, and some or all elements of service delivery under these agreements are dependent upon successful completion of the development, construction, and deployment phases. Failure to perform satisfactorily under these agreements may expose us to legal liability, result in the loss of customers or harm our reputation, which could harm the financial performance of our IT services business.
Systems failures, catastrophic events, and resulting interruptions in the availability of our products or services could harm our business, damage our reputation, and subject us to substantial liability.
Our systems, operations, and the third-party infrastructure on which we rely, including data center facilities and cloud storage services, are vulnerable to damage or interruption from a variety of sources, including hardware and software defects or malfunctions, cyberattacks, human error, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, criminal acts, sabotage, geopolitical events, public health emergencies, and other catastrophic occurrences. Some of our systems are not fully redundant, and our disaster recovery planning may not be sufficient for all eventualities, and there can be no assurance that our efforts to improve our business continuity and disaster recovery programs will be sufficient to address all potential disruptions. We also rely on third-party service providers, including data center operators and cloud service providers, that could terminate or decline to renew their agreements with us, materially change their terms, experience financial difficulties, or be acquired by our competitors, any of which could result in service interruptions to our customers and difficulty transitioning to alternative providers on short notice. A prolonged interruption in the availability or functionality of our products and services could materially harm our business and reputation. If any system failure or similar event results in damages to our customers or their business partners, these customers or partners could seek compensation from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address. We may not carry business interruption insurance sufficient to compensate us for all losses that may result from such interruptions.
Our strategic priorities are focused on our customers, optimizing costs and seizing the market. We may not be able to implement our strategic priorities in accordance with our expectations for a variety of reasons, including failure to execute on our plans in a timely fashion, lack of adequate skills, ineffective management, inadequate incentives, customer resistance to new initiatives, inability to control costs or maintain competitive offerings. We also cannot be certain that executing on our strategy will generate the benefits we expect. If we fail to execute successfully on our strategic priorities, or if we pursue strategic priorities that prove to be unsuccessful, our business, financial position, results of operations and cash flows may be materially and adversely affected.
We regularly experience cyber events and sometimes have security incidents, including unauthorized effortsaccess to access our IT Systems, and we expect such attacks and incidents to continue in varying degrees. While incidents experienced thus far have not resulted in material disruption to our business, it is possible that we or a critical service provider could suffer a severe attack or incident, with potentially material adverse effects on our business, reputation, customer relations, results of operations or financial condition. There can be no assurance that our cybersecurity risk management strategy and processes will be fully complied with or effective in protecting any IT Systems, data or business operations.
Threat actors are increasingly sophisticated and using tools and techniques, including AI, designed to circumvent security controls, to evade detection and to remove or obfuscate forensic evidence, which makes it more difficult for us to detect, identify, investigate, contain or recover from, future cyberattacks and security incidents. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments increasewill diminish the likelihoodstrength thatof our encryption and other algorithms that we use to protect our data and that of customers, including sensitive customer transaction data, may fail. Computer programmers and hackers have deployed and may continue to develop and deploy ransomware, malware and other malicious software programs through phishing and other methods that attack our products. Given the nature of complex systems, hardware, software and services like ours, and the scanning tools that we deploy across our infrastructure, environment and products, we regularly identify and track security vulnerabilities.data. We cannot guarantee that, in all instances, we can comprehensively apply patches or confirm that measures are in place to mitigate or otherwise manage vulnerabilities before they can be exploited by a threat actor. In other situations, vulnerabilities persist even after we have issued security patches because our customers may fail to apply patches or update their systems to newer software versions. If threat actors are able to exploit critical vulnerabilities before patches are installed or mitigating measures are implemented, compromises could impact our and our customers’ IT Systems and data. From time to time, we also identify security vulnerabilities and deficiencies to our IT Systems from risk assessments, penetration testing, internal audit activities and third-party reports. Remediation of such vulnerabilities and deficiencies is a continuous process, and there is no guarantee that such remediation efforts will be successful. Sophisticated hardware, software and applications produced or procured from third parties, notwithstanding our third-party risk management process and our efforts to test and remediate cyber vulnerabilities before integrating them into our IT systems, may still contain defects in design or manufacture, including “bugs” or other vulnerabilities that may be exploited. We have acquired and may continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to cybersecurity, operational, and financial risks. In addition, continued remote and hybrid working arrangements present potentially increased risk associated with security vulnerabilities present in non-corporate and home networks. And, as we and various third parties continue to explore and integrate AI into various products and services, we are likely exposed to new and unknown cybersecurity risks and threats.
Compliance, or failureFailure to comply,comply with obligations arising under new or existing laws, regulations, and customer contracts relating to the privacy, security and handling of personal data could adversely affect our financial condition, results of operations and cash flows.
Some of our customers have sought, and may continue to seek, to contractually impose certain strict data privacy and information security obligations on us. To the extent our customers are required by laws, rules, or regulations to impose such contractual obligations on us, we may have limited ability to reject them or negotiate them in our favor. Moreover, someSome of our customer contracts may not limit our liability for the loss of confidential information (including personal data), data breaches or other cybersecurity incidents or other business impact. In addition, we rely on third-party service providers, subcontractors, cloud providers and other vendors to support our operations, and failures by such third parties to comply with applicable privacy or security obligations may expose us to regulatory enforcement, contractual claims or reputational harm. If we are unable to adequately address these concerns, our business and results of operations could suffer.
The regulatory landscape in these areas continues to evolve rapidly, varying in requirements, restrictions and potential legal risk, requiring additional investment in compliance programs. This includes evolving requirements relating to the use of AI, automated decision-making and advanced analytics involving personal data, which may impose additional obligations relating to transparency, governance, data minimization and lawful use of data, and could limit or delay our ability to deploy certain solutions or require additional compliance investment. This could impact our strategies regarding the use of new technologies, such as artificial intelligence, and availability of previously collected data. In addition, restrictions on cross-border transfers of personal data, data localization requirements, or changes to international data transfer mechanisms may increase operational complexity, require modifications to our global delivery model, or limit our ability to process data in certain jurisdictions.
We operate in 60 countries in an increasingly complex regulatory environment. Among other things, we provide complex industry-specific insurance processing in the United Kingdom ("U.K."), which is regulated by authorities in the U.K. and elsewhere, such as the U.K.'s Financial Conduct Authority and His Majesty's Treasury and the U.S. Department of Treasury, which increases our exposure to compliance risk.
In addition, businesses in the countries in which we operate are subject to local, legal and political environments and regulations including with respect to employment, tax, statutory supervision and reporting and trade restriction, along with industry regulations such as regulation by bank regulators in the U.S. and Europe. These regulations and environments are also subject to change.
With respect to employment, we are subject to complex and evolving employment and labor laws across the jurisdictions in which we operate, including laws governing wages, hours, overtime, leave entitlements, benefits, payroll practices, and employee classifications. Compliance with these requirements is complicated by the number and variety of legal frameworks and instruments applicable to our workforce, as well as by the use of multiple payroll and timekeeping systems across our operations, particularly following acquisitions or organizational changes. Changes in law, regulation, or judicial interpretation, including with respect to calculation methodologies for employee entitlements, may increase our compliance obligations or retroactively expand our exposure for prior periods. Any failure, or perceived failure, to comply with applicable employment laws could result in claims for back-pay or other remediation, regulatory investigations or enforcement actions, civil penalties, increased compliance costs, and reputational harm, which may individually or in the aggregate have a material impact on our financial performance.
Management's Discussion & Analysis (MD&A)
New heading “Segment Highlights - Fiscal Year 2026”
Removed heading “Reportable Segment Results”
Removed heading “Global Business Services”
Removed heading “(1) Starting in the fiscal quarter ended September 30, 2024, the Company’s reported non-GAAP financial results reflect an adjustment for gains and losses on real estate and facilities dispositions, which the Company’s current management believes are not reflective of the core operating performance of our business. For comparability purposes, historical non-GAAP financial measures set forth herein have been recast to reflect this change, which included gains on dispositions of real property of approximately $7 million for the fiscal year ended March 31, 2024.”
Largest changes
“(1) Starting in the fiscal quarter ended September 30, 2024, the Company’s reported non-GAAP financial results reflect an adjustment for gains and losses on real estate and facilities dispositions, which the Company’s current management believes are not reflective of the core operating performance of our business. For comparability purposes, historical non-GAAP financial measures set forth herein have been recast to reflect this change, which included gains on dispositions of real property of approximately $7 million for the fiscal year ended March 31, 2024.”see in full comparison
•miscellaneous items ($9 million) - the Company recognized asee in full comparisondecrease$14 million impairment of goodwill inotherthemiscellaneousfirst(gains) and lossesquarter of$65fiscalmillion,2026primarilyrelatedfromto the change in operating segments, partially offset by fewer impairment losses recognized in fiscal20252026 andthea gain on the sale of a strategic investment in the second quarter of fiscal2024.2025.
Diluted EPS for fiscalsee in full comparison20252026 includes$0.65$0.51 per share of restructuring costs,$0.11$0.02 per share of transaction, separation and integration-related costs,$1.47$1.56 per share of amortization of acquired intangible assets, $(0.020.19) per share of merger-related indemnification,$0.09$(0.01) per share of gains on real estate, facility sales, and dispositions, $0.01 per share of debt extinguishment costs, $0.07 per share of impairment losses,$(0.05) per share of net gains on dispositions, $0.08 per share of net losses on real estate and facility sales, $(0.89)$0.73 per share of pension and OPEB actuarial and settlementgains,losses, and$(0.09)$0.45 per share of tax adjustments primarily relating to taxadjustmentslitigation matters, to impair or recognize certain deferred taxassetsassets, and adjustments for changes in tax legislation.
Full comparison: every changed paragraph (96)
DXC is a leading enterprise technology and innovation partner delivering software, services, and solutions to global enterprises and public sector organizations — helping them harness AI to drive outcomes at a time of exponential change with speed. With deep expertise in Managed Infrastructure Services, Application Modernization, and Industry-Specific Software Solutions, DXC modernizes, secures, and operates some of the world’s most complex technology estates.
DXC helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. Many of the world’s largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates.
We generate revenue by offering a wide range of information technology services and solutions primarily in North America, Europe, Asia, and Australia. WeEffective operateApril through1, two2025 (fiscal year 2026), we began reporting our financial results under a new segment structure designed to better reflect the Company’s operational structure and the delivery of end-to-end IT services. The new structure includes three reportable segments: GlobalConsulting Business& Engineering Services ("GBSCES") and, Global Infrastructure Services ("GIS"). We market, and sellInsurance ourSoftware services& directlyServices to customers through our direct sales force around the world. Our customers include commercial businesses of many sizes and in many industries and public sector clients.("Insurance").
Key revenue, profitability and cash flow metrics for fiscal 20252026 compared to fiscal 20242025 are included below. We have presented organic revenue, adjusted earnings before income taxes, and adjusted diluted earnings per share on a non-GAAP basis. For more information see “Non-GAAP Financial Measures.”
•Revenues of $12.87$12.64 billion, down 5.8%1.8% comparedyear-over-year to prior year period, and (down 4.6%4.8% on an organic basis);
•EBIT was $353 million with a corresponding margin of 2.8%. Adjusted EBIT was $970 million, down 4.8% year-over-year with a corresponding margin of 7.7%;
•Income before income taxes was $630 million; adjusted earnings before income taxes was $1,019 million, an increase of 1.0% on an adjusted basis;
•Diluted earnings per share of $2.10,$0.10, compared to $0.46$2.10 in fiscal 20242025; adjusted diluted earnings per share of $3.43,$3.23, compared to $3.10$3.43 in fiscal 2024, an increase of 10.6%2025;
•Cash generated from operations was $1,398$1,248 million, less capital expenditures of $711$535 million, resulted in free cash flow of $713 million, compared to free cash flow of $687 million.million in the prior-year
Segment Highlights - Fiscal Year 2026
Consulting & Engineering Services
•Revenue was $5,023 million, down 0.8% year-over-year (down 3.8% on an organic basis).
•Segment profit was $518 million, down 10.7% year-over-year, with a corresponding margin of 10.3%.
•Book-to-bill ratio of 1.10x, compared to 1.08x during fiscal 2025.
•Revenue was $6,342 million, down 3.9% year-over-year (down 7.2% on an organic basis).
•Segment profit was $432 million, up 0.2% year-over-year, with a corresponding margin of 6.8%.
•Book-to-bill ratio of 0.94x, compared to 1.04x during fiscal 2025.
Insurance Software & Services
•Revenue was $1,279 million, up 5.4% year-over-year (up 3.6% on an organic basis).
•Segment profit was $129 million, down 20.4% year-over-year, with a corresponding margin of 10.1%.
•Book-to-bill ratio of 0.76x, compared to 0.77x during fiscal 2025.
(1) Income before income taxes, Net income, Net income attributable to DXC common stockholders, and Diluted earnings per common share include Pension and OPEB actuarial and settlement losses and (gains) and losses that were $(232)$169 million and $445$(232) million for the fiscal years ended March 31, 20252026 and March 31, 2024,2025, respectively.
TotalFor fiscal 2026, our total revenue for fiscal 2025 was $12.9$12.6 billion, a declinedecrease of $796$227 million or 5.8%,1.8%, compared to the prior fiscal year,year. primarilyThe drivendecrease byagainst the comparative period includes a 4.6%4.8% decline in organic revenue andpartially offset by a 1.0%3.1% unfavorablefavorable foreign currency exchange rate impact. Organic revenue is a non-GAAP measure, as discussed in our "Non-GAAP Financial Measures." In addition, for a discussion of risks associated with our foreign operations, see Part I, Item 1A - "Risk Factors."
Reportable Segment Results
Global Business Services
•Revenue was $6.6 billion, down 2.6% year-over-year (down 1.0% on an organic basis).
•Segment profit was $797 million, down 4.6% year-over-year, with a corresponding margin of 12.0%.
•Book-to-bill ratio of 1.03x, compared to 0.96x during fiscal 2024.
•Revenue was $6.2 billion, down 9.1% year-over-year (down 8.2% on an organic basis).
•Segment profit was $451 million, up 4.2% year-over-year, with a corresponding margin of 7.2%.
•Book-to-bill ratio of 1.03x, compared to 0.86x during fiscal 2024.
Costs of services, excluding depreciation and amortization and restructuring costs ("COS"), consist of expenses directly associated with revenue-generating activities. These expenses primarily include payroll and related employee benefit costs, subcontractor costs and other contract-related expenses, as well as technology, facilities, and other supporting infrastructure costs.
CostsCOS ofwas services ("COS") were $9.8$9.6 billion for fiscal 2025,2026, a decrease of $806$157 million (-1.6%) compared to the priorprior-year fiscal year.period. The decrease in expenses against the prior fiscal yeardecline was primarily duedriven toby a declinedecrease in costs from lower revenue levelslevels, the alignment of business development expenses to selling, general and administrative expenses in support of the offering model, and a reduction in professional services and contractor-related expenses from our cost optimization efforts.initiatives, partially offset by an unfavorable foreign currency exchange rate impact. In connection with the Company’s new segment structure in fiscal 2026, certain costs for personnel in non-client facing positions are now included in selling, general and administrative expenses.
Gross margin (Revenues less COS as a percentage of revenue) was 24.1%24.0% for fiscal 2025,2026, ana increasedecline of 15010 basis points against the prior fiscal year.
Selling, general and administrative expense, excluding depreciation and amortization and restructuring costs ("SG&A"), consist of the costs associated with personnel in non-client facing positions. These expenses primarily include payroll and related employee benefit costs, business development efforts, marketing and advertising activities, and other expenses such as information systems and office space.
Selling, general and administrative expense ("SG&A") was $1.3$1,402 billionmillion for fiscal 2025,2026, an increase of $104$54 million (+4.0%) compared to the priorprior-year fiscal year.period. The increase in expenses against the prior fiscal year was primarily duedriven toby anthe alignmentrealignment of business development expensesand certain other costs from COS in support of the offering model andCOS, an increaseunfavorable inforeign transaction,currency separationexchange andrate integration-related (“TSI”) costs, partially offset by lower merger-related indemnification expenses, lower share-based compensationimpact, and a gain from a legal settlement in the second quarter of fiscal 2025.2025, partially offset by lower levels of merger-related indemnification expenses and transaction, separation, and integration ("TSI") costs in fiscal 2026.
Depreciation expenseand amortization was $351$1,160 million for fiscal 2025,2026, a decrease of $82$127 million (-9.9%) compared to the priorprior-year fiscalperiod. year. The decrease in depreciationDepreciation expense wasdecreased primarilyby $57 million due to lower average net property and equipment balances. Amortization expense decreased by $70 million due to lower transition and transformation contract cost balances and lower software amortization.
Amortization expense was $936 million for fiscal 2025, a decrease of $35 million compared to the prior fiscal year. The decrease in amortization expense was primarily due to lower software amortization.
During fiscal 2025,2026, management approved global cost savings initiatives designed to better align our workforce, facility,facility and data center requirements. Total restructuring costs recorded, net of reversals, during fiscal 20252026 were $153$115 million, ana increasedecrease of $42$38 million (-24.8%) compared to the prior fiscal year, primarily from a reduction in workforce-related expenses.
Net interest expense (interest expense less interest income) was $35 million for fiscal 2026, a decrease of $31 million (-47.0%) as compared to the prior-year. The improvement was primarily from higher net interest income from our cash deposits and multi-currency notional pools and lower finance lease and asset financing costs, partially offset by higher interest expense on our Senior notes (see Note 10 - Debt).
For fiscal 2025, net interest expense (interest expense less interest income) was $66 million, a decrease of $18 million as compared to the prior fiscal year.
The decrease in net interest expense against the comparative period was primarily due to decreased interest expense from lower levels of asset financing and commercial paper, and higher net interest income from cash deposits.
During fiscal 2025 and fiscal 2024,2025, the Company sold insignificant businesses and made adjustments to estimated amounts from prior years’ dispositions that resulted in a gain of $7 millionmillion. andThe $79Company million,had respectively.no business dispositions during fiscal 2026.
Other Expense (Income) Expense,, Net
Other expense (income) expense,, net comprisesincludes non-service cost components of net periodic pension income, pension and other post-retirement benefit (“OPEB”) actuarial and settlement losses and (gains) losses,, movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges, losses (gains) on real estate and facility sales, and other miscellaneous losses and (gains) and losses..
The components of otherOther expense (income) expense,, net were as follows:
Other expense (income) expense,, net, wasincreased $(376)$377 million incompared fiscal 2025, a change of $594 million againstto the prior fiscal year. The change against the prior fiscal year wasyear, primarily due to:
•pension income ($12 million) - increase in net periodic pension income increased by $15 millionincome, primarily due to changes in expected returns on assets and other actuarial assumptions;
•pension and OPEB actuarial and settlement losses (gains) losses($401 were $(232million) million- andprimarily $445due million, respectively, a change of $677 million, fromto mark-to-market adjustments and other settlement losses (gains) losses;
•foreign currency gainsimpact decreased($2 $3million) million,- change in foreign currency, primarily due to movements of exchange rates on our foreign currency-denominated assets and liabilities, related hedges including forward contracts to manage our exposure to economic risk, and the cost of our hedging program;
•real estate and facility sales ($23 million) - losses on real estate and facility sales in fiscal 2025, with insignificant net sales in fiscal 2026;
•losses (gains) on real estate and facility were $23 million and $(7) million, respectively, a change of $30 million;
•miscellaneous items ($9 million) - the Company recognized a decrease$14 million impairment of goodwill in otherthe miscellaneousfirst (gains) and lossesquarter of $65fiscal million,2026 primarilyrelated fromto the change in operating segments, partially offset by fewer impairment losses recognized in fiscal 20252026 and thea gain on the sale of a strategic investment in the second quarter of fiscal 2024.2025.
In fiscal 2025, the ETR was primarily impacted by:
•The global mix of income and changes in foreign statutory tax rates, which increased the foreign tax rate differential and the ETR by $145 million and 23.0%, respectively.
•Income tax and foreign tax credits, which decreased income tax expense and the ETR by $84 million and 13.3%, respectively, offset by tax expense on U.S. international tax inclusions, which increased tax expense and the ETR by $59 million and 9.4%, respectively.
•The tax benefit of changes in uncertain tax positions related to the expiration of the statute of limitations and capitalized research and experimental expenditures, offset by the impact of increases in other uncertain tax positions and accrued interest, which decreased income tax expense and the ETR by $52 million and 8.3%, respectively.
In fiscal 2024, the ETR was primarily impacted by:
•Changes in foreign jurisdictional losses that decreased the ETR by $160 million and 146.8%, respectively, with an offsetting increase in the ETR due to an increase in the valuation allowance of the same amount.
•Income tax and foreign tax credits, which decreased income tax expense and decreased the ETR by $101 million and 92.7%, respectively, offset by tax expense on U.S. international tax inclusions, which increased tax expense and increased the ETR by $39 million and 35.8%, respectively.
What changed in the latest 10-Q
Risk Factors
Our operations and financial results are subject to various risks and uncertainties, which may materially and adversely affect our business, financial condition, and results of operations, and the actual outcome of matters as to which forward-looking statements are made in this Quarterly Report on Form 10-Q. In such case, the trading price for DXC common stock could decline, and you could lose all or part of your investment. Past performance may not be a reliable indicator of future financial performance and historical trends should not be used to anticipate results or trends in future periods. Future performance and historical trends may be adversely affected by the aforementioned risks, and other variables and risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect our business, financial condition, and results of operations or the price of our common stock in the future. There have been no material changes in the three months ended June 30, 2026 to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
Full comparison: every changed paragraph (1)
Our operations and financial results are subject to various risks and uncertainties, which may materially and adversely affect our business, financial condition, and results of operations, and the actual outcome of matters as to which forward-looking statements are made in this Quarterly Report on Form 10-Q. In such case, the trading price for DXC common stock could decline, and you could lose all or part of your investment. Past performance may not be a reliable indicator of future financial performance and historical trends should not be used to anticipate results or trends in future periods. Future performance and historical trends may be adversely affected by the aforementioned risks, and other variables and risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect our business, financial condition, and results of operations or the price of our common stock in the future. There have been no material changes in the three months ended DecemberJune 31,30, 20252026 to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.2026.
Management's Discussion & Analysis (MD&A)
New heading “Results of Operations for the Three Months Ended June 30, 2026 and June 30, 2025”
New heading “Interest Income and Interest Expense”
New heading “(1) Calculation is not meaningful ("NM") due to the gain from the TCS litigation judgment, as discussed in Note 18 - “Commitments and Contingencies.”
Removed heading “Results of Operations for the Third Quarter and First Nine Months of Fiscal 2026 and Fiscal 2025”
Removed heading “Financial Highlights”
Removed heading “Segment Highlights - First Nine Months Fiscal 2026”
Removed heading “Interest Expense and Interest Income”
Removed heading “Gain on Disposition of Businesses”
Largest changes
“(1) Calculation is not meaningful ("NM") due to the gain from the TCS litigation judgment, as discussed in Note 18 - “Commitments and Contingencies.”see in full comparison
“•other miscellaneous items increased by $11 million and decreased by $10 million for the third quarter and first nine months, respectively. In the third quarter comparison (+$11 million), the prior year period included an impairment loss. …”see in full comparison
“Diluted EPS for the first nine months of fiscal 2026 includes $0.41 per share of restructuring costs, $0.01 per share of transaction, separation and integration-related costs, $1.17 per share of amortization of acquired intangible assets, $(0.17) per share of merger related indemnification costs, $(0.04) per share of gains on real estate, facility sales, and dispositions, $0.01 per share of debt extinguishment costs, $0.06 per share of impairment losses, $0.05 per share of pension and OPEB actuarial and settlement losses, and $0.09 per share of tax adjustments.”see in full comparison
“•other miscellaneous items ($12 million) - the Company recognized a $14 million impairment of goodwill in the first quarter of fiscal 2026 related to the change in operating segments.”see in full comparison
“Results of Operations for the Third Quarter and First Nine Months of Fiscal 2026 and Fiscal 2025”see in full comparison
“Results of Operations for the Three Months Ended June 30, 2026 and June 30, 2025”see in full comparison
Full comparison: every changed paragraph (97)
The purpose of the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to present information that management believes is relevant to an assessment and understanding of our results of operations and cash flows for the thirdfirst quarter and first nine months of fiscal 20262027 and our financial condition as of DecemberJune 31,30, 2025.2026. The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and accompanying notes.
The following discussion includes a comparison of our results of operations and liquidity and capital resources for the thirdfirst quarters and first nine months of fiscal 20262027 and fiscal 2025.2026. References are made throughout to the numbered Notes to the Condensed Consolidated Financial Statements (“Notes”) in this Quarterly Report on Form 10-Q.
EffectiveWe Aprilgenerate 1,revenue 2025by (fiscaloffering yeara 2026),broad werange beganof reportinginformation ourtechnology services and solutions to customers primarily in North America, Europe, Asia, and Australia. Our financial results underare areported newthrough segmentthree structurereportable designedsegments to betterthat reflect the Company’s operational structure and thehow deliverywe ofdeliver end-to-end IT services. The new structure includes three reportable segmentssolutions: Consulting & Engineering Services ("CES"), Global Infrastructure Services ("GIS"), and Insurance Software & Services ("Insurance").
Key Metrics
Results of Operations for the Third Quarter and First Nine Months of Fiscal 2026 and Fiscal 2025
Financial Highlights
Key revenue, profitability and cash flow metrics for the thirdfirst quarter of fiscal 2027 compared to the first quarter of fiscal 2026 compared to the third quarter of fiscal 2025 as well as year to date cash flow comparisons are included below. WeOrganic haverevenue, presentedadjusted organicearnings revenuebefore income taxes, and adjusted diluted earnings per share on aare non-GAAP basis.financial measures. For more information see “Non-GAAP Financial Measures.”
•Revenues of $3.2$2,999 billion,million, down 1.0%5.1% year-over-year (down 4.3%6.7% on an organic basis);
•EBIT was $207 million, with a corresponding margin of 6.9%. Adjusted EBIT was $150 million, down 30.6% year-over-year with a corresponding margin of 5.0%;
•EBIT was $179 million up 22.6% year-over-year with a corresponding margin of 5.6%. Adjusted EBIT was $263 million, down 8.0% year-over-year with a corresponding margin of 8.2%;
•Year-to-date fiscal 2026 cashCash generated from operations was $1,009$418 million, less capital expenditures of $406$104 million, resulted in free cash flow of $603$314 million, compared to free cash flow of $576$97 million in the prior-year period. Free cash flow in fiscal 2027 includes cash proceeds of $214 million related to the prior-yearlitigation judgment obtained against TCS, as discussed further in Note 18 - “Commitments and Contingencies”;
•Book-to-bill ratio (contract awards divided by quarterly revenue) of 1.12x,0.99x, compared to 1.33x0.90x induring thefiscal prior-year period.2026.
Segment Highlights - Third Quarter Fiscal 2026
•Book-to-bill ratio of 1.20x,0.98x, compared to 1.28x1.19x during the thirdfirst quarter of fiscal 2025.2026.
•Revenue was $1,607 million, down 2.7% year-over-year (down 6.2% on an organic basis).
•Segment profit was $113 million, up 0.9% year-over-year, with a corresponding margin of 7.0%.
•Book-to-bill ratio of 1.09x, compared to 1.43x during the third quarter of fiscal 2025.
Insurance Services
•Revenue was $321 million, up 4.6% year-over-year (up 3.2% on an organic basis).
•Segment profit was $35 million, down 30.0% year-over-year, with a corresponding margin of 10.9%.
•Book-to-bill ratio of 0.93x, compared to 1.04x during the third quarter of fiscal 2025.
Segment Highlights - First Nine Months Fiscal 2026
Consulting & Engineering Services
•Revenue was $3,767 million, down 1.6% year-over-year (down 3.8% on an organic basis).
•Segment profit was $394 million, down 14.7% year-over-year, with a corresponding margin of 10.5%.
Global Infrastructure Services
•Book-to-bill ratio of 1.11x, compared to 0.74x during the first quarter of fiscal 2026.
Insurance Software & Services
•Segment profit was $96$34 million, downup 26.7%3.0% year-over-year, with a corresponding margin of 10.1%.10.7%.
•Book-to-bill ratio of 0.54x, compared to 0.54x during the first quarter of fiscal 2026.
Results of Operations for the Three Months Ended June 30, 2026 and June 30, 2025
(1) Constant currency revenues are a non-GAAP measure calculated by translating current period activity into U.S. dollars using the comparable prior period’s currency conversion rates. This information is consistent with how management views our revenues and evaluates our operating performance and trends. For more information, see "Non-GAAP Financial Measures."
For the thirdfirst quarter of fiscal 2026,2027, our total revenue was $3.2$3.0 billion, a decrease of $31$160 million or 1.0%,5.1%, compared to the same period a year ago. The decrease against the comparative period includes a 4.3%6.7% decline in organic revenue partially offset by a 3.3%1.6% favorable foreign currency exchange rate impact. Organic revenue growth is a non-GAAP measure. For more information, see "Non-GAAP Financial Measures.Measures".
For the first nine months of fiscal 2026, our total revenue was $9.5 billion, a decrease of $188 million or 1.9%, as compared to the same period a year ago. The decrease against the comparative period includes a 4.3% decline in organic revenue partially offset by a 2.5% favorable foreign currency exchange rate impact.
COS was $2.4 billion for the first quarter of fiscal 2027, unchanged from the prior-year period. While the Company’s cost optimization initiatives reduced payroll and related employee benefit costs, professional services, and contractor-related expenses, cost reductions did not keep pace with the decline in revenue. As a result, gross margin was 20.4% for the first quarter of fiscal 2027, a decline of 400 basis points against the prior-year period.
COS was $2.4 billion for the third quarter of fiscal 2026, an increase of $19 million (+0.8%) compared to the prior-year period. The increase was primarily driven by an unfavorable foreign currency exchange rate impact, partially offset by a decrease in costs and payroll-related expenses from lower revenue levels.
COS was $7.2 billion for the first nine months of fiscal 2026, a decrease of $163 million (-2.2%) compared to the prior-year period. The decline was primarily driven by the alignment of business development expenses to selling, general and administrative expenses in support of the offering model, a decrease in costs from lower revenue levels, and a reduction in professional services and contractor-related expenses from our cost optimization initiatives, partially offset by an unfavorable foreign currency exchange rate impact. In connection with the Company’s new segment structure in fiscal 2026, certain costs for personnel in non-client facing positions are now included in selling, general and administrative expenses.
Gross margin (Revenues less COS as a percentage of revenue) was 23.8% and 24.3% for the third quarter and first nine months of fiscal 2026, respectively, a decrease of 1.3% and an an increase of 0.3% against the comparative periods.
SG&A was $328 million for the first quarter of fiscal 2027, a decrease of $66 million (-16.8%) compared to the prior-year period. The decline was primarily driven by lower payroll and related employee benefit costs, as well as reduced professional services and contractor related expenses. SG&A as a percentage of revenue was 10.9% for the first quarter of fiscal 2027, an improvement of 160 basis points against the prior-year period.
SG&A was $309 million for the third quarter of fiscal 2026, a decrease of $26 million (-7.8%) compared to the prior-year period. The decrease was primarily driven by the reversal of a merger-related indemnification payable and lower levels of transaction, separation and integration-related (“TSI”) costs in the current quarter, partially offset by higher stock based compensation related to exits in the third quarter of fiscal 2025 and an unfavorable foreign currency exchange rate impact.
SG&A was $1,069 million for the first nine months of fiscal 2026, an increase of $80 million (+8.1%) compared to the prior-year period. The increase was primarily driven by the realignment of business development and certain other costs from COS, increased investments in marketing and the Company’s information systems, a gain from a legal settlement in the second quarter of fiscal 2025, and an unfavorable foreign currency exchange rate impact, partially offset by by the reversal of a merger-related indemnification payable in the third quarter of fiscal 2026 and lower levels of TSI costs.
SG&A as a percentage of revenue was 9.7% and 11.2% for the third quarter and first nine months of fiscal 2026, respectively, a decrease of 0.7% and an increase of 1.0% against the comparative periods.
Depreciation and amortization was $283$267 million for the thirdfirst quarter of fiscal 2026,2027, a decrease of $37 million (-11.6%-12.2%) compared to the prior-year period. Depreciation expense decreased by $17$12 million due to lower average net property and equipment balances. Amortization expense decreased by $20$25 million due to lower software amortization and transition and transformation contract cost balances and lower software amortization.balances.
Depreciation and amortization was $882 million for the first nine months of fiscal 2026, a decrease of $93 million (-9.5%) compared to the prior-year period. Depreciation expense decreased by $52 million due to lower average net property and equipment balances. Amortization expense decreased by $41 million due to lower transition and transformation contract cost balances and lower software amortization.
.
During fiscal 2026,2027, management approved global cost savings initiatives designed to better align our workforce, facility and data center requirements. During the third quarter and first nine months of fiscal 2026, totalTotal restructuring costs recorded, net of reversals, werewas $20$26 million andfor $92the million,first respectively,quarter aof fiscal 2027, an $11 million decrease of $23 million (-53.5%-29.7%) and $32 million (-25.8%), respectively, as compared to the prior-year periods.period.
Interest Income and Interest Expense
Interest Expense and Interest Income
Net interest expenseincome (interest expense less interest income) was $8 million and $23$34 million for the thirdfirst quarter and first nine months of fiscal 2026,2027, respectively,an a decreaseincrease of $7$42 million (-46.7%) and $31 million (-57.4%), as compared to the prior-year periods.period. The improvementIncluded in boththis periodsamount wasis primarily$46 frommillion higher netof interest income from ourthe cashTCS depositslitigation judgment, as discussed in Note 18 - “Commitments and multi-currency notional pools and lower finance lease and asset financing costs, partially offset by debt extinguishment costs in the quarter.Contingencies.”
Gain on Disposition of Businesses
During the first nine months of fiscal 2025, the Company sold insignificant businesses and made adjustments to estimated amounts from prior years’ dispositions that resulted in a gain of $7 million.
Other income, net includes non-service cost components of net periodic pension income, pension and other post-retirement benefit (“OPEB”) actuarial and settlement losses and (gains) losses,, movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges, losses (gains) on real estate and facility sales, and other miscellaneous losses and (gains) and losses..
The components of Other income, net for the third quarters and first nine months of fiscal 2026 and 2025 were as follows:
Other income, net, increased $4$178 million and $33 million, respectively, compared to the thirdprior-year quarter and first nine months of fiscal 2025,period primarily due to:
•higher pension income (+$2 million and +$8 million) - increase in net periodic pension income, primarily due to changes in expected returns on assets and other actuarial assumptions;
•pension and OPEB actuarial and settlement losses (-$11 million and -$11 million) - in the third quarter of fiscal 2026, the Company recognized net losses of $11 million, primarily reflecting a $15 million mark-to-market adjustment to its project benefit obligations in India following enactment of labor law reforms in November 2025;
•foreign currency impact (-$1 million and +$7$4 million) - change in foreign currency, primarily due to movements of exchange rates on our foreign currency-denominated assets and liabilities, related hedges including forward contracts to manage our exposure to economic risk, and the cost of our hedging program;
•gain on litigation ($168 million) - compensatory and punitive damages from the litigation judgment obtained against TCS; and
•other miscellaneous items ($12 million) - the Company recognized a $14 million impairment of goodwill in the first quarter of fiscal 2026 related to the change in operating segments.
•real estate and facility sales (+$3 million and +$39 million) - losses on real estate and facility sales in the comparative periods, partially offset by gains on real estate and facility sales in the second quarter of fiscal 2026;
DXC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 28,051 shares, about $249.7K) and open-market sales in 0 filings. Net open-market shares: 28,051 (purchases minus sales); net value about $249.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-15 | Taylor Paul James |
Grant/award | 145,914 | — | — |
| 2026-09-15 | Taylor Paul James |
Grant/award | 204,280 | — | — |
| 2026-08-17 | Gray Daniel J |
Grant/award | 100,310 | — | — |
| 2026-08-14 | Venkataraman Ramanathan |
Shares withheld for tax | 14,247 | $10.79 | $153.7K |
| 2026-08-04 | Herzog David L |
Grant/award | 30,900 | — | — |
| 2026-08-04 | Washington Akihiko |
Grant/award | 21,800 | — | — |
| 2026-08-04 | Gonzalez Anthony |
Grant/award | 21,800 | — | — |
| 2026-08-04 | Barnes David A |
Grant/award | 21,800 | — | — |
| 2026-08-04 | Rogers Dawn |
Grant/award | 21,800 | — | — |
| 2026-08-04 | Mayfield Pinkie Dent |
Grant/award | 21,800 | — | — |
| 2026-08-04 | Teffner Carrie W. |
Grant/award | 21,800 | — | — |
| 2026-08-04 | Woods Robert F |
Grant/award | 21,800 | — | — |
| 2026-07-17 | Del Bene Robert F |
Shares withheld for tax | 8,943 | $9.47 | $84.7K |
| 2026-07-17 | Del Bene Robert F |
Shares withheld for tax | 7,939 | $9.47 | $75.2K |
| 2026-06-16 | August Raymond Alexander |
Shares withheld for tax | 21,596 | $9.23 | $199.3K |
| 2026-06-15 | August Raymond Alexander |
Shares withheld for tax | 9,270 | $8.81 | $81.7K |
| 2026-05-22 | Ragone Jennifer |
Shares withheld for tax | 718 | $9.50 | $6.8K |
| 2026-05-22 | Voci Christopher Anthony |
Shares withheld for tax | 1,537 | $9.50 | $14.6K |
| 2026-05-22 | August Raymond Alexander |
Shares withheld for tax | 4,416 | $9.50 | $42.0K |
| 2026-05-22 | Drumgoole Christopher |
Shares withheld for tax | 7,450 | $9.50 | $70.8K |
| 2026-05-21 | Ragone Jennifer |
Shares withheld for tax | 870 | $9.23 | $8.0K |
| 2026-05-21 | Voci Christopher Anthony |
Shares withheld for tax | 2,237 | $9.23 | $20.6K |
| 2026-05-21 | August Raymond Alexander |
Shares withheld for tax | 8,849 | $9.23 | $81.7K |
| 2026-05-21 | Del Bene Robert F |
Shares withheld for tax | 20,379 | $9.23 | $188.1K |
| 2026-05-21 | Fernandez Raul J |
Shares withheld for tax | 28,937 | $9.23 | $267.1K |
| 2026-05-21 | Drumgoole Christopher |
Shares withheld for tax | 15,795 | $9.23 | $145.8K |
| 2026-05-21 | Fawcett Matthew K |
Shares withheld for tax | 8,388 | $9.23 | $77.4K |
| 2026-05-15 | Fernandez Raul J |
Shares withheld for tax | 39,223 | $8.94 | $350.7K |
| 2026-05-15 | August Raymond Alexander |
Shares withheld for tax | 19,870 | $8.94 | $177.6K |
| 2026-05-15 | August Raymond Alexander |
Shares withheld for tax | 11,406 | $8.94 | $102.0K |
| 2026-05-15 | Voci Christopher Anthony |
Shares withheld for tax | 2,383 | $8.94 | $21.3K |
| 2026-05-15 | Voci Christopher Anthony |
Shares withheld for tax | 6,917 | $8.94 | $61.8K |
| 2026-05-15 | Fawcett Matthew K |
Shares withheld for tax | 11,664 | $8.94 | $104.3K |
| 2026-05-15 | Drumgoole Christopher |
Shares withheld for tax | 33,524 | $8.94 | $299.7K |
| 2026-05-15 | Drumgoole Christopher |
Shares withheld for tax | 19,228 | $8.94 | $171.9K |
| 2026-05-15 | Ragone Jennifer |
Shares withheld for tax | 6,482 | $8.94 | $57.9K |
| 2026-05-15 | Ragone Jennifer |
Shares withheld for tax | 3,228 | $8.94 | $28.9K |
| 2026-05-15 | Del Bene Robert F |
Shares withheld for tax | 35,727 | $8.94 | $319.4K |
| 2026-05-15 | Del Bene Robert F |
Shares withheld for tax | 34,174 | $8.94 | $305.5K |
| 2026-05-12 | Voci Christopher Anthony |
Grant/award | 41,516 | — | — |
| 2026-05-12 | Ragone Jennifer |
Grant/award | 82,043 | — | — |
| 2026-05-12 | Fawcett Matthew K |
Grant/award | 135,667 | — | — |
| 2026-05-12 | Venkataraman Ramanathan |
Grant/award | 158,155 | — | — |
| 2026-05-12 | August Raymond Alexander |
Grant/award | 98,023 | — | — |
| 2026-05-12 | Drumgoole Christopher |
Grant/award | 181,878 | — | — |
| 2026-05-11 | Fernandez Raul J |
Open-market purchase | 1 | $9.00 | $8 |
| 2026-05-11 | Fernandez Raul J |
Open-market purchase | 28,050 | $8.90 | $249.6K |
| 2026-04-29 | Del Bene Robert F |
Grant/award | 64,604 | — | — |
| 2026-04-29 | Drumgoole Christopher |
Grant/award | 85,194 | — | — |
| 2026-04-29 | Ragone Jennifer |
Grant/award | 7,156 | — | — |
| 2026-04-29 | Voci Christopher Anthony |
Grant/award | 15,336 | — | — |
| 2026-04-29 | August Raymond Alexander |
Grant/award | 43,814 | — | — |
Well-known investors holding DXC (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 6,535,424 | $57.8M | 0.04% | Added 381% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 6,025,344 | $52.5M | 0.02% | Added 16% |
| D. E. Shaw & Co. | 2026-06-30 | 5,774,326 | $51.1M | 0.03% | Added 110% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 3,304,262 | $29.2M | 0.02% | Added 40% |
| Two Sigma Investments | 2026-06-30 | 1,932,428 | $17.1M | 0.01% | Added 354% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 200,811 | $1.8M | 0.0% | Added 1096% |