Second Quarter Fiscal Year 2027
Filed Oct 29, 2026DXC reported Q2 FY27 revenue of $3.03 billion, down 4.0% year-over-year, with adjusted EBIT margin of 6.2%, non-GAAP diluted EPS of $0.67, and first-half free cash flow of $405 million.
Insurance delivered reported growth, higher segment profit, and higher bookings, while CES and GIS revenue and bookings declined. Total revenue, EBIT, adjusted EBIT, non-GAAP diluted EPS, quarterly cash generated from operations, and quarterly free cash flow were lower year-over-year.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, three months ended September 30, 2026GAAP | $3.03B | – | down 4.0% |
| Organic revenue growth, three months ended September 30, 2026non-GAAP | (4.0)% | – | – |
| EBIT, three months ended September 30, 2026non-GAAP | $66M | – | down 52.2% |
| EBIT margin, three months ended September 30, 2026non-GAAP | 2.2% | – | – |
| Adjusted EBIT, three months ended September 30, 2026non-GAAP | $187M | – | down 26.4% |
| Adjusted EBIT margin, three months ended September 30, 2026non-GAAP | 6.2% | – | – |
| Net income, three months ended September 30, 2026GAAP | $13M | – | – |
| Net income attributable to DXC common stockholders, three months ended September 30, 2026GAAP | $24M | – | – |
| Diluted earnings per share, three months ended September 30, 2026GAAP | $0.15 | – | – |
| Non-GAAP diluted EPS from continuing operations, three months ended September 30, 2026non-GAAP | $0.67 | – | down 20.2% |
| Cash generated from operations, three months ended September 30, 2026GAAP | $217M | – | down 46.9% |
| Free cash flow, three months ended September 30, 2026non-GAAP | $91M | – | – |
| Bookings, three months ended September 30, 2026other | $2.4B | – | declined 10% |
| Book to bill ratio, three months ended September 30, 2026other | 0.80x | – | – |
| Total revenue, six months ended September 30, 2026GAAP | $6.03B | – | (4.5)% |
| Organic revenue growth, six months ended September 30, 2026non-GAAP | (5.3)% | – | – |
| EBIT, six months ended September 30, 2026non-GAAP | $273M | – | – |
| EBIT margin, six months ended September 30, 2026non-GAAP | 4.5% | – | – |
| Adjusted EBIT, six months ended September 30, 2026non-GAAP | $337M | – | – |
| Adjusted EBIT margin, six months ended September 30, 2026non-GAAP | 5.6% | – | – |
| Net income, six months ended September 30, 2026GAAP | $139M | – | – |
| Net income attributable to DXC common stockholders, six months ended September 30, 2026GAAP | $146M | – | – |
| Diluted earnings per share, six months ended September 30, 2026GAAP | $0.89 | – | – |
| Non-GAAP diluted EPS from continuing operations, six months ended September 30, 2026non-GAAP | $1.06 | – | – |
| Cash flows from operating activities, six months ended September 30, 2026GAAP | $635M | – | – |
| Free cash flow, first half of FY27non-GAAP | $405M | – | – |
| CES segment profit, three months ended September 30, 2026other | $125M | – | down 13.8% |
| GIS segment profit, three months ended September 30, 2026other | $66M | – | down 45.9% |
| Insurance segment profit, three months ended September 30, 2026other | $45M | – | up 60.7% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Consulting and Engineering Services (CES)Bookings declined 17.0% year-over-year, with a book to bill ratio of 0.79x. Segment profit was $125 million, with a corresponding margin of 10.3%. | $1.21B | – | down 3.3% year-over-year (down 3.3% on an organic basis) |
| Global Infrastructure Services (GIS)Bookings declined 12.7% year-over-year, with a book to bill ratio of 0.80x. Segment profit was $66 million, with a corresponding margin of 4.6%. | $1.43B | – | down 10.0% year-over-year (down 10.0% on an organic basis) |
| Insurance Software & Services (Insurance)Organic revenue growth includes a favorable contract modification entered into during the second quarter of fiscal 2027. Bookings increased 43.5% year-over-year, with a book to bill ratio of 0.79x. Segment profit was $45 million, with a corresponding margin of 11.4%. | $394M | – | up 23.1% year-over-year (up 23.1% on an organic basis) |
Third Quarter Fiscal 2027 and Full Fiscal Year 2027 outlook
- RevenueQ3 FY27: ~$2.98 billion, a decline of ~6.0% year-over-year on an organic basis. FY27: $11.91 billion and $11.98 billion, a decline of 5.5% to 5.0% year-over-year on an organic basis.
- Tax rateQ3 FY27: ~44%. FY27: ~42%.
- NoteAdjusted EBIT margin: Q3 FY27 ~6.0%; FY27 5.75% to 6.25%.
- NoteNon-GAAP diluted EPS: Q3 FY27 ~$0.55; FY27 $2.25 to $2.50.
- NoteFree Cash Flow: FY27 ~$600 million.
- NoteNon-GAAP Net Interest Expense ($M): Q3 FY27 ~$15; FY27 ~$54.
- NoteForeign exchange impact on revenues: Q3 FY27 (0.8)%; FY27 (0.3)%.
- Note$/Euro exchange rate: Q3 FY27 $1.12; FY27 $1.14.
- Note$/GBP exchange rate: Q3 FY27 $1.32; FY27 $1.33.
- Note$/AUD exchange rate: Q3 FY27 $0.70; FY27 $0.70.
- NoteFY27 non-GAAP net interest expense excludes $46 million of interest income from the full year for the TCS litigation judgment.
Capital returns
- Returned $60 million of capital to shareholders by repurchasing approximately 5.7 million shares during Q2 FY27.
- Repurchase of common stock was $132 million for the six months ended September 30, 2026, compared to $124 million for the six months ended September 30, 2025.
What drove it
- Insurance revenue increased 23.1% year-over-year and segment profit increased 60.7% year-over-year; the company said organic revenue growth includes a favorable contract modification entered into during Q2 FY27.
- The company cited progress with agentic and AI-based solutions and said the revenue ramp is becoming clearer in average deal size, close-cycle timing, and pace of follow-on work.
- The first half included a $214 million gain on litigation award adjustment in the reconciliation from reported income before income taxes to non-GAAP results.
- Selling, general and administrative expense was $319 million for Q2 FY27, compared to $366 million in Q2 FY26.
Concerns
- Total revenue declined 4.0% year-over-year, including a 4.0% organic decline.
- GIS revenue declined 10.0% year-over-year and GIS segment profit declined 45.9% year-over-year.
- CES bookings declined 17.0% year-over-year and GIS bookings declined 12.7% year-over-year.
- Total Q2 bookings declined 10% year-over-year and the book to bill ratio was 0.80x.
- Adjusted EBIT margin was 6.2%, compared to 8.0% in the prior-year quarter, while EBIT margin was 2.2%, compared to 4.4%.
- The company acknowledged ongoing discussions regarding a possible sale of its insurance business.
What to watch
- Q3 FY27 guidance calls for total revenue of ~$2.98 billion and an organic revenue decline of ~6.0%.
- Q3 FY27 guidance calls for adjusted EBIT margin of ~6.0% and non-GAAP diluted EPS of ~$0.55.
- FY27 guidance calls for revenue of $11.91 billion and $11.98 billion, adjusted EBIT margin of 5.75% to 6.25%, non-GAAP diluted EPS of $2.25 to $2.50, and free cash flow of ~$600 million.
- The pace of agentic and AI-based solution revenue, including deal size, close-cycle timing, and follow-on work.
- Whether the favorable contract modification cited in Insurance continues to affect reported organic growth.
- Developments in the possible sale of the insurance business.
Balance sheet and cash flow
- Cash and cash equivalents were $1,599 million as of September 30, 2026, compared to $1,737 million as of March 31, 2026.
- Short-term debt and current maturities of long-term debt were $935 million as of September 30, 2026, compared to $520 million as of March 31, 2026.
- Long-term debt, net of current maturities, was $2,124 million as of September 30, 2026, compared to $3,032 million as of March 31, 2026.
- Net cash provided by operating activities was $635 million for the six months ended September 30, 2026, compared to $595 million for the six months ended September 30, 2025.
- Purchases of property and equipment were $133 million, payments for transition and transformation contract costs were $49 million, and software purchased and developed was $48 million for the six months ended September 30, 2026.
- Principal payments on long-term debt were $400 million for the six months ended September 30, 2026.
- Net cash used in financing activities was $618 million for the six months ended September 30, 2026, compared to $246 million for the six months ended September 30, 2025.
Analysis
DXC reported Q2 FY27 revenue of $3,034 million, down 4.0% year-over-year, with organic revenue growth of (4.0)%. The decline was concentrated in GIS, where revenue fell 10.0%, and CES, where revenue fell 3.3%. Insurance was the offset, with revenue up 23.1%; DXC said this organic growth included a favorable contract modification entered into during the second quarter of fiscal 2027.
Profitability declined from the prior-year quarter. EBIT was $66 million, down 52.2% year-over-year, and EBIT margin was 2.2%, compared with 4.4%. Adjusted EBIT was $187 million, down 26.4%, with adjusted EBIT margin of 6.2%, compared with 8.0%. CES segment profit declined 13.8% to $125 million, GIS segment profit declined 45.9% to $66 million, and Insurance segment profit increased 60.7% to $45 million. GAAP diluted EPS was $0.15 and non-GAAP diluted EPS was $0.67, down 20.2% year-over-year.
Demand indicators remained soft outside Insurance. Total bookings were $2.4 billion, down 10% year-over-year, and the book to bill ratio was 0.80x. CES bookings declined 17.0% and GIS bookings declined 12.7%, while Insurance bookings increased 43.5%. DXC also said its core revenue recovery will take time, while describing increased clarity around the revenue ramp for agentic solutions.
Cash generation presented a mixed picture. Q2 cash generated from operations was $217 million, down 46.9% year-over-year, and Q2 free cash flow was $91 million compared with $240 million in the prior-year quarter. First-half free cash flow increased to $405 million from $337 million, while six-month operating cash flow was $635 million compared with $595 million. The company returned $60 million through repurchases of approximately 5.7 million shares in Q2 and reported $132 million of common-stock repurchases for the first half.
The guide calls for a further organic revenue decline in Q3 FY27 of ~6.0%, with adjusted EBIT margin of ~6.0% and non-GAAP diluted EPS of ~$0.55. Full-year guidance calls for revenue of $11.91 billion and $11.98 billion, 5.5% to 5.0% organic revenue decline, adjusted EBIT margin of 5.75% to 6.25%, non-GAAP diluted EPS of $2.25 to $2.50, and free cash flow of ~$600 million. DXC also acknowledged ongoing discussions regarding a possible sale of its insurance business.
Management, verbatim
On the quarter, we delivered revenue, adjusted EBIT, and Non-GAAP diluted EPS above our expectations, while making progress with the agentic and AI-based solutions that we expect will contribute to future growth. The revenue ramp for agentic solutions is more clear in terms of average deal size, close cycle timing, and pace of follow-on work.
Raul Fernandez, CEO of DXC Technology
While our core revenue recovery will take time, I am confident that our role operating mission-critical systems gives DXC a differentiated position as enterprises look to deploy AI at scale.
Raul Fernandez, CEO of DXC Technology
Not in the filing
stated, not guessed- Gross margin was not reported.
- No operating-expense guidance was reported.
- No previous-release outlook was provided, so comparison with prior guidance is unavailable.
- Prior-quarter values and sequential comparisons were not reported for the presented key metrics.
- No dividend declaration or dividend payment was reported.
- A prior-year dollar value for Q2 cash generated from operations was not printed in the financial highlights.
- GAAP gross profit was not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.