DXC Technology’s fourth quarter results were met with a negative market response, reflecting investor concerns despite stable headline revenue and a significant non-GAAP earnings per share surprise. Management pointed to strategic progress, particularly in launching a refreshed brand identity and implementing centralized sales enablement, as key drivers in customer engagement during the quarter. CEO Raul Fernandez emphasized that the company’s dual-track strategy—stabilizing legacy operations while accelerating AI-native offerings—has begun to gain traction, with notable wins like the London Metropolitan Police contract attributed to improved go-to-market efforts. However, ongoing flat sales and the continuing decline in organic revenue signaled persistent challenges, especially in the U.S. market.
Is now the time to buy DXC? Find out in our full research report (it’s free for active Edge members).
DXC (DXC) Q4 CY2025 Highlights:
- Revenue: $3.19 billion vs analyst estimates of $3.20 billion (flat year on year, in line)
- Adjusted EPS: $0.96 vs analyst estimates of $0.83 (16.2% beat)
- Adjusted EBITDA: $459 million vs analyst estimates of $459.6 million (14.4% margin, in line)
- Revenue Guidance for Q1 CY2026 is $3.18 billion at the midpoint, below analyst estimates of $3.21 billion
- Management raised its full-year Adjusted EPS guidance to $3.15 at the midpoint, a 1.6% increase
- Operating Margin: 7.3%, up from 6.1% in the same quarter last year
- Organic Revenue fell 4.3% year on year (beat)
- Market Capitalization: $2.42 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From DXC’s Q4 Earnings Call
- James Friedman (Susquehanna): Asked CEO Raul Fernandez about the scalability of Fast Track offerings. Fernandez explained these products target existing legacy platforms with new AI overlays and are priced on value and transaction volume, not traditional service hours.
- Bryan Bergin (TD Cowen): Inquired about segment growth assumptions in the guidance. CFO Rob Del Bene clarified that longer-term bookings are strong but short-term project softness is delaying revenue recovery, especially in CES and insurance.
- Yu Lee (Guggenheim Partners): Queried about client spending intentions and pipeline conversion. Fernandez noted increased opportunities from corporate spinouts and restructuring, while Del Bene emphasized stable win rates for long-term projects but persistent delays in short-term work.
- Antonio Jaramillo (Morgan Stanley): Asked about pricing trends across segments. Del Bene said pricing remained stable, but each business—GIS, CES, insurance—has unique pricing models depending on contract duration and service type.
- Keith Bachman (BMO Capital Markets): Questioned the balance between investing in new products and margin expectations. Fernandez highlighted the capital-light nature of AI solutions, supported by the scale of the existing organization, enabling both innovation and cost control.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of adoption and monetization for DXC’s new AI-powered Fast Track offerings, (2) progress in rolling out the refreshed sales enablement and branding across global markets, and (3) signs of stabilization or improvement in U.S. and short-term project demand. Execution on targeted public sector wins and the ability to convert a robust long-term pipeline into revenue will also be core indicators of success.
DXC currently trades at $14.15, down from $14.41 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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