DXC’s first quarter saw a sharp negative market reaction, as the company posted a year-on-year revenue decline and missed expectations for organic growth. Management attributed performance softness to continued pressure on discretionary project-based services, particularly within its core GIS segment, and admitted execution challenges in closing large deals. CEO Raul Fernandez acknowledged, “We didn’t get [the win rate]...I personally expected higher,” signaling a self-critical view of DXC’s competitive positioning and sales process effectiveness. Early internal AI adoption and investments in new platform offerings were highlighted as partial offsets.
Is now the time to buy DXC? Find out in our full research report (it’s free for active Edge members).
DXC (DXC) Q1 CY2026 Highlights:
- Revenue: $3.13 billion vs analyst estimates of $3.14 billion (1.2% year-on-year decline, in line)
- Adjusted EPS: $0.77 vs analyst estimates of $0.70 (9.5% beat)
- Adjusted EBITDA: $428 million vs analyst estimates of $425 million (13.7% margin, 0.7% beat)
- Revenue Guidance for Q2 CY2026 is $2.99 billion at the midpoint, below analyst estimates of $3.09 billion
- Adjusted EPS guidance for the upcoming financial year 2027 is $2.65 at the midpoint, missing analyst estimates by 19.2%
- Operating Margin: -2.2%, down from 11.7% in the same quarter last year
- Organic Revenue fell 6.6% year on year (miss)
- Market Capitalization: $1.34 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 Q1 Earnings Call
- Gates Schwarzmann (TD Cowen) asked about the macroeconomic assumptions underlying guidance and what would drive results to the high or low end. CFO Rob Del Bene clarified that guidance assumes no change in macro, with improvement or deterioration directly affecting the range.
- Yu Lee (Guggenheim) questioned whether pricing pressure was contributing to weak bookings. CEO Raul Fernandez responded that pricing remains stable, and the main challenge has been demonstrating industry-specific capabilities, not cost.
- Yu Lee (Guggenheim) followed up on large deal losses, probing whether execution or perception issues were at play. Fernandez admitted disappointment in final-stage losses and explained the importance of closing gaps in solutioning and positioning.
- Bradley Clark (Bank of Montreal) asked about sources of long-term growth beyond fiscal 2027. Fernandez pointed to Fast Track offerings and a balanced portfolio of large, medium, and small deals as key to stabilizing and eventually improving performance.
- Rod Bourgeois (DeepDive Equity Research) inquired about the net impact of AI adoption on revenue and competitive positioning. Fernandez described AI as both a long-term opportunity for efficiency and a source of near-term customer hesitation, but saw the company well-positioned to benefit as adoption grows.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be monitoring (1) the pace of adoption and commercial traction for DXC’s new AI-native Fast Track products, (2) signs of stabilization or turnaround in the GIS and CES segments, and (3) sustained growth in the insurance software business. Progress on deal win rates and the execution of internal AI initiatives will also be key markers in assessing the company’s turnaround efforts.
DXC currently trades at $8.31, down from $12.01 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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