DXC DXC Technology

Jonathan Ford Head, IR
Mike Lawrie Chairman, President & CEO
Paul Saleh CFO
Jim Schneider Goldman Sachs
Joseph Foresi Cantor Fitzgerald
Rod Bourgeois DeepDive Equity Research
Jason Kupferberg Bank of America Merrill Lynch
Bryan Keane Deutsche Bank
Darrin Peller Wolfe Research
James Friedman Susquehanna
Call transcript
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Good day, everyone, and welcome to the DXC Technology Third Quarter Conference Call. A reminder that today's call is being recorded. And at this time, I'd like to turn the conference over to Jonathan Ford, Head of Investor Relations. Please go ahead, sir.

Jonathan Ford

Thank you and good afternoon, everyone. us Technology's joining XXXX quarter you're call. earnings pleased for third DXC fiscal I'm

and I'd that Lawrie. introduce remind the call, on law. listeners Technology's annual Both we unknown update slides. X, now, could like certain certain measures and to today's certain be website, informs Saleh, these to DXC on statements call and XX-K Chairman, the on and that Technology subject Form investors. the provide section accordance obligation uncertainties, risks in Mike on earnings President Relations our today's posted Slide SEC and being DXC speakers of have to and Our call will see to and you'll X and required our On except expressed other Investor accompany I non-GAAP useful comparable measures. Chief information these well with our is report as Officer. call presentation we comments our are we've Officer; the most website. supplemental Technology's release believe adjustments the included to which webcast Financial today. by at the we presented President cause respective GAAP those to call. Mike that Executive on of These and be Chairman, like uncertainties filings. of further actual will Chief would measures, on forward-looking. Slide our the Paul rules, to our included assumes known financial reconciliation to participants In will provided And materially as our in These are CEO, reconciliations tables information in in slides which as The includes results differ their directly risks found make to is documents measures DXC which and available from our can Lawrie, A discussion our discussion no a SEC be

Mike Lawrie

and Okay. good Thank everyone. afternoon, you

As usual, and plenty then have and make any then questions. your over five have four, to of my I I'll time of to this turn for Paul we'll points

was $XXX adjusted in was $XXX EBIT EPS million the million and Adjusted adjusted flow third $X.XX. and we was XX.X% EBIT in third quarter. non-GAAP quarter of margin free cash the First, generated

down revenue of $X.XXX the terms sequentially. up billion The quarter, basis. X.X% was XX% up and X% in was for and were of GAAP Bookings In a was book-to-bill X.Xx. on year-over-year revenue X.X% third constant sequentially currency, a year-over-year revenue up

capabilities. very strong the digital, to in offering and Fourth, IP The XX% cloud. Digital digital X.X% in Industry cloud first digital book-to-bill year-over-year Bookings assets and a revenue a third and by IP-BPS point BPS X.Xx. families sequentially, around bookings grew in quarter in across make quarter. and constant year-over-year the strong driven sequentially, were bookings was digital year, we had the particularly year-over-year investments of X.Xx. and for were currency, all of X% and the half our the was up in strategic X.Xx in X.X% continue revenue book-to-bill up industry book-to-bill XX.X%

million and workforce. double-digit Luxoft Luxoft, announced has rates. growing know, talent at-scale been over digital in vertical at acquire innovator recently As and world-class plan platforms, a a differentiated with to revenue strong and global we digital you expertise offerings has our $XXX deep

$X.XX. billion billion raising Northern range Dynamics XXX to of of Services We $X.XX integrators in and of range target to also Europe. the the our XXXX, announced EG, we're finally in acquire our to of EPS for a of fiscal $XX.X to revenue then And to the Microsoft one $XX.X target we plan leading non-GAAP continue division

of I those each let So turn Paul. detail over to it me go points just more before on into little

As tax I rate effective XX.X%. was EPS $X.XX. the third said, quarter was The non-GAAP

margin and discussed. EBIT previously year-over-year margin basis up basis levers making XX.X%, the which the reflects adjusted execution have and $XXX reflects margin few was segment, sequentially. was XXX million of of by points $XXX our a XX.X%, net of some sequentially. This GIS achievements our improvement Third capabilities. expansion XX% million XXX profit that final up sequentially. center flow milestone deployment was points Bionix, GBS was our adjusted we segment was XX The and continued basis and EBIT the expand investments points basis for hiring global benefit transformation income. profit digital And margin cash of quarter adjusted XX or In delivery points was contracts. XX on ongoing margin GIS free points down was basis basis digital XX.X%, year-over-year we're accelerate driven the XXX points to rationalization This and year-over-year of and quarter the adjusted

revenue. to let go Now, me

a revenue quarter end sequentially X.X% up basis. up year-over-year book-to-bill In currency, on we've October, digital $X.XXX Since X.X% a up were third was over down and X.Xx. was GAAP was for and of said, X,XXX employees. in I hired Bookings XX% year-over-year the billion As X% revenue the sequentially. constant of

and on AWS also digital others. roles the DevOps to and hiring efforts we These As a architects, we X,XXX support hiring accelerate of centralized include We've scientists training re-skilled and will employees the that efforts focus additional transformation to discussed, and fastest-growing in in discussed current continue previously an our digital Azure delays with digital technologies. capabilities. We're in data and hiring our identified engineers DXC strong second correcting we quarter be rapidly centers.

This several the DXC client established efforts headwinds improve fulfill down hiring for projects demand capabilities. the reduce with our up the in cyber cloud in X.X% workplace acquisition sequential quarter Overall, digital was up down to continued believe security offering. and a in will digital XX% services we've the infrastructure, up Now, in $X book-to-bill clients. sequentially. ongoing GBS was of the we bookings reflects growth time year-over-year and DXC's constant quarter quarter, as of the digital book-to-bill associated In digital legacy The third allow will as the digital revenue made footprint The GIS many in sequentially $X.XX revenue large was our offerings Luxoft's business, including currency our quarter were them. digital billion, was transformation of its workplace X.X% driven to cloud X.Xx. and proximity X.X% bookings also revenue Luxoft accelerate and discussed. and strength Xx. in bookings and GIS reflects sequentially. was digital for in year-over-year and good was previously application were for also well X.X% in constant billion. the delivery by the that the GBS GIS X% revenue the sequentially currency completion decline the year-over-year up progress

year-over-year. Now, IP by very constant up let digital revenue offerings. XX.X% to industry book-to-bill said I with our workplace In and strong be to as digital cloud BPS. and currency, a bookings me was turn driven infrastructure our Digital continue digital X.Xx X-to-X,

the Our pipeline for digital solutions. is XX% demand reflects than more digital year-over-year, strong also seeing we're up which

with the ability automotive the deliver to for capabilities learning deal and business we cloud a example, the highlighted. quarter deals security. and accelerate provider R&D the in again We're includes grew X.Xx, was large the expanded just our these who cloud and analytics during analytics, autonomous was including infrastructure designed includes year. cloud European and our deep automotive XX% to currency, multi-platform For constant the I in with up at-scale. infrastructure solution manufacturer a half of and strength vehicles. bank reflecting demonstrate quarter a European the the that the sequentially, In only manufacturer of platforms The XX.X% bookings first Book-to-bill simulation major signed could

X% large grew also a XX% by sequentially, year-over-year Northern and increased We're in solutions and the demand security deal grew a managed services. was and US and platform migrate partnering the currency our and services in their Bookings X.Xx, and book-to-bill solution included will IT Our processes X.X% existing quarter energy with DXC to constant year-over-year with driven Book-to-bill Wins ServiceNow the is ServiceNow strong and food quarter endpoint strong in apps cloud platform. with leverages were deal Asia. management and operational financial the threat sectors. major services X.Xx. DXC was including in X.X% The where Enterprise on manufacturer. a security in for seeing consulting a CrowdStrike sequentially. growth provider, detection manufacturing response provide in the quarter Europe technology a business to

adds and and a our We our and agencies BPS SAP a multinational constant deals IP S/XHANA business healthcare reflecting portfolio. administration also In Medicaid X.X% Molina of operator in which Medicaid state year-over-year company. technology health currency, the and overall of the acquisition solutions, was X% satellite revenue IP European programs sequentially, industry expanded supporting won with to

make fourth point, to in and investments digital to moving assets Now, capabilities. my continue we

we digital key in discussed consultancy Austin. at-scale. interface which user we based experience, developing Argodesign will are As and in in enhance delivering DXC's design and design capabilities transformation elements solutions a argodesign, November, digital acquired in

also further practice. quarter, third industry-leading the TESM, completed of acquisitions expand we our the During and will BusinessNow which ServiceNow

skilled create to recently Holding. track through talent digital of fourth and the DXC before We're Microsoft said, scale We're is we we we IoT by of $XX.X centers. their close has quarter. in point opportunity strong XXX transaction by range and final Luxoft Luxoft's Luxoft million Eclipse additional be 'XX. leadership talent and outsourced my will Nordic business. DXC's also with a with EG. in geographies over analytics DXC's platforms degree plan trending $XX.X the expand than we the people housed respective I DXC's Masters Luxoft's revenue some also delivery is an will wallet that planned. revenue high-growth Paul on industries. to our to the And has of into user to digital of a in million planned half demand market sequential of targets clients. rate And significant provides This will of currently we The of including established company's to the talent. there's million of offerings Dynamics workforce acquisition the it clients. As more integrator of primarily digital enhance highly range billion access Eastern the a has to DXC's announced EPS recruiting transaction synergies $XXX global of headwinds billion, we'll extend and as our turn very capabilities engineering intelligence, $XXX than in toward capabilities as increasing an source that with workforce a to still Luxoft Further, we targeting revenue combination then value region. although $XXX from a and digital in proven expect digital talent. on combined earlier are a growth incremental $X.XX, or significant greatly lower digital to We're June. EG to said of of We acquire And announced areas, January, pace Dynamics pool originally given end share expand and I experience, remain to capabilities More the additional existing the non-GAAP broader strengthens -- believe we Luxoft XX,XXX XX% tax capitalize revenue and see. accelerate our digital of and of than repurchases currency range, and business engine. of reflecting We in ability $X.XX Luxoft's practice to the lower this to a systems Central of for blockchain. accelerated will Ph.D. portfolio engineering fiscal $XXX each estimating acquisition able a company believe European share million year Luxoft

we'll I'll for Paul and So it over turn to questions. then be back

Paul Saleh

and greetings, everyone. you, Thank Mike,

pretax per also or pretax was $X.XX Molina. costs As complex of we some costs restructuring, share. acquisition In by of million non-GAAP diluted in and costs are center including quarter, $XX $XXX a pretax third on to share. optimization These results. million rationalization. per the transaction countries particularly severance related usual, diluted our pretax excluded In million had share integration-related amounted $XXX of costs, we restructuring basis associated or expenses million $XXX facilities and the with share. intangibles data acquired $X.XX that separation and items of represent I'll from the $X.XX quarter, quarter, Also, workforce the $X.XX per diluted diluted in programs, start separation per covering or and had amortization or integration transaction, Year-to-date to

taxes impact items, income and the these Excluding was of $X.XX. was $XXX operations special non-GAAP non-GAAP EPS from before million continuing

out point In free its flow quarter facility expanded third results to the and DXC net to resulted like correction in excluded a the our been I'd our flow. flow. reflect of impact press million detail, expansion cash the the regarding has year-to-date. use section turn free in adjusted release cash I benefit the $XXX that second should before revised and now more that adjusted non-GAAP the Year-to-date, in that facility from Now, to adjusted of reduction receivable quarter, included we have accurately of cumulative net free cash receivables a of

correction, As a result for months adjusted the nine adjusted of was cash $X.X net that free or XX% first billion flow income. of

margin reflecting quarter the to a third plans. $X.XXX detail. making sequential million. of more increase quarter $XXX the improvement GAAP margin in our we're Adjusted revenue Now, our in in billion, was was let me EBIT in results third progress move Adjusted EBIT XX.X%, X.X%. the on was quarter

to For the target. cost million our takeout remain deliver track fiscal $XXX on year, we

optimize driving During headcount We that efficiencies, sub our total including the drive and for during roughly is and reduced efforts, consumption-based continued excluding including Bionix software. of by increased the efficiencies. procurement workforce headcount XX,XXX and the X,XXX quarter, chain, In quarter purchase to Molina by we're [indiscernible] our acquisition. procurement infrastructure Year-over-year, people [ph] we over automation agreements our ongoing productivity program. supply use and driven

our We suppliers management leverage our to and expanded consolidate strategic category vendors. have also better capabilities

two acceleration estate, year. feet centers attributes an Microsoft three this reinvesting quarter. during hiring, fiscal the also to the reflecting mix changes our the fiscal and quarter, solutions. in certain foreign X.X income of including of we've data tax We're this XX.X%, the continued digital global non-GAAP centers digital year, Turning we seven real and in to of data Azure jurisdictions. rate are additional continued of key million closed our also and business on our expansion eliminated track Bionix, key And deployment of exit the and square the centers additional in transformation was tax including timing In EPS build-out to offerings, of AWS

billion, at slightly For the a of billion quarter. Year-to-date, book-to-bill that [indiscernible] be the time. XX.X% was of lower now and in expect implies rate a the fourth booking were was X year, full tax above we to $X.X the to rate EBIT XX% XX% of was for end previous range and tax billion XX% revenue $XX.X adjusted our $XX.X of

was $X.X was $X.X up Profit quarter, bookings GIS currency the was and for was a increase Xx. in third In XX.X%. was was XX.X% segment segment million X.X%. GBS the GBS billion was the our sequentially. third $X.XX was results. is our segment GBS of in third GIS were revenue to Turning the XX.X% revenue $XXX quarter profit profit $X.XX we're quarter, revenue billion in and in margin $X.X quarter, billion, book-to-bill the sequential margins in X.X% digital million. billion, $XXX profit capabilities. constant segment was making including a Year-to-date, expanding of profit billion and margin that investment

Now, impact delivery data for of GIS operating benefit actions milestone well segment billion the taking and the billion, the we're margin XX.X% greater segment Year-to-date, rationalization few billion, $X.X $X.X final times. efficiencies, profit profit margin a contracts. on including were was was as was booking of revenue as X.X and for book-to-bill to a drive center achievement GIS $X of reflect

quarter in was Now, $XXX of Adjusted cash net let highlights. XX% income. adjusted free financial or third to flow me the turn other million

outstanding, free large free day $X.X by extended billion. driven contracts. impacted an performance payment in five covered, of previously terms adjusted six was on year-to-date days increase traditional As by to primarily I flow cash is cash Year-to-date flow sales

and focused collections. our on [indiscernible] our improve efforts be have we performance more working underway to even incentivize Now, capital to

However, our to for given remaining we're this target adjusted flow year, time free of income. revising the year cash to fiscal net XX% the XX% adjusted

was revenue, CapEx end the million quarter including $X.X of quarter X.X% million in of CapEx benefit the at asset of $XXX was revenue. Our $XXX the billion. dispositions. was or Year-to-date the of or X% Cash

$X.XX debt total net to a capital total debt ratio was XX.X%. leases capital billion, for Our of including

announcement rating of reaffirmed DXC's three and the rating Luxoft outlook. all Following the acquisition, agencies

in of repurchases. $XX.X in to and paid returned of continue returned at we the to pace. form billion dividend in and of billion. expect shareholders. we've in In million we shares shareholders in-cash $X.X a In capital to our million the the return $XXX the repurchased $X.X to million to dividends target capital billion $XX $XX.X to quarter, share in we've total closing, during of shareholders, third continue in but more $XXX we moderate fourth range for Now, capital quarter, revenue to billion a Year-to-date,

toward we're $X.XX, for -- back EPS of range. the call range that session. our of end lower now lower Although, raised seeing, our and repurchases to We've trending trending to that operator headwinds pace target our the given reflecting our toward to rate we're current hand currency that's a the Q&A targeted $X.XX share of half tax the range. the I'll the


[Operator Goldman Instructions] we'll go Sachs. to Schneider Jim at And first

Jim Schneider

taking quarters you get you've fully Paul, of afternoon. all position want about get talk what to about where It could and in out, be? kind a rate if for is fill-in. that hiring I when one, like Good that you traction run question. or can to be kind kind maybe or it booked? normalized of was staffed the two feel maybe talk already you'll wondering a Thanks And get on digital talk progressing like point, of you Mike digital work three about is to maybe sounds my bit the at labor well, more you but it little you

Mike Lawrie


and we've the as the first second what much the clearly will the the to year, think better on signal. a about And and get early to half. of that of made processes the we've We at better demand the We've part And you big probably level. tools in turn behind there quarter. machine gives get that a us and can't little investment in tell hiring. processes are discipline account at our of done. the much planning frankly able in we I because -- fell made this does that think the talked we end fiscal I hiring next then

Jim, to of lot have thing hiring. is we, tell a other this The centralized digital

up a the put people a people together digital our skills and deploying by thorough hiring get projects signed taxonomy firmed we've into these we're as very and account also seeing do than delivery the process improvement centers significant bringing of We're So the a this the the by then customer. we're in. those and and whole trying That's that account. people to we're different in quality skills

to next think hired we've I on side of it's a but I as as new I people net into continue that fiscal of this in that's is more re-skilling of true, the to time. terms workforce sort of a people get out, first reduction, the the in hiring we'll about but steady to half Paul state long to remix remix of the mean, going workforce. think of continue these we'll year, of XX,XXX thousands So new well other both businesses. that existing for And bringing of talked

see in answer probably one well. their the And than they discipline look medium longer-term. So longer really think brand their as that's has really I centers, they it's looking attracting, digital The I career see processes, mean in to terms for, people as we're that space the the over out We're I of point, candidates. us. getting digital these the digital and better of tools in good and delivery helped opportunities next frankly reputation think Luxoft but helped you're to

signal or don't were was quarter. a So to to I jump-starting prior space our want if anything? really were a and second Paul, than that into we about catapulting this where slightly you us the know different I we think strong add skills serious

Paul Saleh

pipeline are and Also, No, growing it. as bookings a this, rapidly. is on Mike, I growing basis think do demand the you captured we also actually, -- year-over-year XX% our our

Jim Schneider

color. good That's

much can booking a current on bookings. see potential be GIS bit near-term same little is Can with, the maybe we to quarters up very of about, which new we recovery logos wanted can you next quarter on bookings spend talk that you good lumpy, left sustain of anything what follow bookings say digital pipeline, And Maybe your of saw you see to just playing always about I visibility? the this you So the based although that level know couple kind you Clearly, kind then near-term. especially very of can or relative of environment? any talk into into to the how there.

Mike Lawrie

going little don't working Yeah. Yes, exactly I I listen. The to are lot lumpy. not a going deals know, we big When of on deals? GIS in a close? gets are mean, change. -- to that we That's big I are. they're lumpy.

it I'll the shorter quarter And I and on based in quarter underneath trend continue important duration that the see we think first what into call But can is is pipeline. in fourth more the even what that. work. the project

projects, I this delivery people quickly what mentioned people many are delivery-led shorter-term These our we and of where before, think we sign revenue. are generate call very incremental in I've now organization can we but growth. compensating for

digital out shorter and They usually and Our smaller over duration. are tend to largely projects of then time. expand scale start

digital our is TCV shift beginning the deals. to reliance experience of business to consider big good. big in bookings deals, portfolio we to That dynamics volume a that our When higher and begins move into the we're to on reliance that same projects. diminish of our the changing as of Luxoft's it's much profile model higher total are business, our looked book as So We portfolio beginning business. we number, exact

I that as forward. we bodes So think go well


to And Cantor Foresi Joseph Fitzgerald. we'll at move next,

Joseph Foresi


as who been known shareholder had can I kind Mike, unlocking you've value. as somebody has of So good at as -- very to well, I straightforward be, be a been

you digital more unlocking short buy thought to us other acquisition cutting? ways market over to to long-term? into continue some your what stuff, shareholder divestitures, you between can more taking value, give the in likely cost the on or the balance of for Are potentially at is you and that doing look insight divestitures be process maybe As around acquisitions,

Mike Lawrie


to you looking always for shareholder you that. value, we're think know I ways said enhance that,

options all acquisitions, Candidly, lot of couple all tuck-in type the of I as we dramatically in years. the remixed the have over look see we'll because portfolio divestitures particularly see last smaller digital think out I time. the table some We do have quite a space. really the on more I don't

as -- smaller transaction get the series So business to of assuming added that model. we there's completed, Luxoft a can be opportunities whole that

We our at really to we continue to for ServiceNow, where areas, very can look as strong made healthcare. IP Molina practices portfolio, well in XXX we with position like did where Microsoft our strengthen look Dynamics significant We're continuing other as in we've to investments. strengthen

So then, $X into as our a we've well. that course, billion, shareholders obviously And will money continued thought done, that returned as model of mix -- a returning very stock part money I'd we've plow about and talked capital our buy to our share we continue. the good allocation we've to have say returning that of over of was

as extend don't major those thing. day We sales we try ITO to Paul model difficult our I any particularly pretty because on working forward. management, there's capital to said, large our and changes go a So got as strong another push terms outstanding That's see these capital on particularly the in contracts. allocation up, that's -- tighten to

many these of capital shorter-term working ITO propensity moving pay contracts. out large look cycle longer, see than in we projects a to our favor. have The much a As in quicker we

at answer to a the acquisition is as we're be we'll stick we fair we're and think able that transaction, things got I allocation Does that how there'll that, going your it very Luxoft platform going to it's with go quality we think pleased a we've thinking add forward. model, be a on that that's So capital about with we're forward price question? to

Joseph Foresi

a It And just me. then does. second from one

get is to advantage accelerate shift sort the Or you trying as of us as try can everyone piece to digital, around displace help we what just of maybe what have you thoughts the On this merely catch-up, to in? that understand massive puzzle an participate trying in play can to a I'm you your start is the crucial it. Accenture?

Mike Lawrie

question. a -- that's that's listen, question. Yeah, That's good a a good

around, with to get, partners Luxoft unique they these the on along into And and proposition to a lot there results really market space, to many many First look think at a the those very of what bring projects have That thing plenty our work journey. I smaller the our value And relatively was but think of all, came to for everyone of play. see in the of they're is I strong. you players me all and ultimately have is that life and this and is all, clients digital is acquisition, partners going -- table digital sets, And again, and of that application our to of journey. that's And room in to think if the transformative particular, that I the these projects. brand rapidly integrated get for in that benefits they we're our of I'll digital to Luxoft taking on expanding really kinds change. The things. this the staying all big infrastructures what all came executive really business order then our we in projects much They to are space, the candidly, space in because the mainstream the on different considered Different many see underlying with really in. around and able Luxoft DXC is thing and are of run places in, call, so IT weren't digital all that here. cases are that didn't with that's one, more digital partners reputation have is of being journey, important

many many, of addressable participate shift said market So right everyone in I as generational and is plenty there times, now. this for is to a


Rod next Moving at Research. Equity DeepDive to Bourgeois

Rod Bourgeois

margin here. off where your It wondering, now I'm caused digital making year you a can how dimension Hey, you were digital guys. if taper extra compared somewhat GBS appears have you're to Hey. expansion investments perhaps kind be that to engine? much your much also help digital you gauge making the investment to you're as this that if ramp And prone extraordinary up of of digital now investment talent how ago? an versus you that of could new normal investment is investment

Mike Lawrie

points talked much like as XX margin basis we're Well, about something we or and listen, the not that.

quarter So we skills in before. yes, of these slightly Rod to as the answer the exited hiring your that investment than digital we us became of And are those a question, have larger issues. very second apparent we to making some

I new normal. So this have up. would that we ramped call a

we'll earlier as a get remix said I continue question, get think to our we we much of as will on steady-state a previous to I more, to more workforce.

cases many here in GIS of because see lot Company slight margins. deterioration margins seeing margins of you're taking GBS place to Overall, a you're some of where a in the expansion you're what is for seeing the continue expand. the frankly remix that's the is in continuing to the and an So

picture. data do software continue digital many going think ourselves scrum it's demand bootstrap I don't lot projects individuals hiring, require hiring that remix. teams scientists, require a because a of forward So think we're I to cases, that. broader engineers. I in we'll this continue people, And a just going require have in we leaders, It's effort they extraordinary we to the they what not these digital long-term hope honestly sort to of be but the of

remix get workforce as business managing And of we that as get a teams portfolio, to applied more that's there skills different aren't and more that solution. well. business a your these digital So this way are individual applied,

Rod Bourgeois

part any demand on capital seeing project-based your or that's Got decision-making any spending in discretionary on all? hesitation reliant spending, more client you And and the the in are demand business pattern, change in of on at it. hey, then, pullback side

Mike Lawrie

mean, a and this. our strong. -- a to operating how quite mean, There trips I pretty knows estate. -- in to they value everyone we demand am existing got I do few I remains the isn't of back a just met Again, we clients one my CEOs, figure of and proposition out with IP reduce not. from the help is digital got I their come expenses

to can which is like our And it's get of call, ideation in this things And isn't I've clients we many start usually those isn't what it. And with the of in that where that together, there a I why in we've DXC, is made out just Bionix, it's And and is want the interested this say high go met be to Okay? CEO and participate us we things client process, architecture digital projects. simple, Center. partners, Transformation in sky. these our all we that do. that's not then this mean, to the a we Digital platform we our we able investment with

that or so move the solve. usually more does may and see I results be of project go week, that's day, dollars, of month. some step hundreds some in frankly, more as occurring every these involve measured So of we centers we forward. we not how that go yes, business the we And of it's And forward. margin of and much then sort delivery statement teams going that people demonstrate huge, thousands take but healthier But are every so and we works investment go And the work overall profile of every and some not you that Company and problem in mix impact think not it scale. and you of you as that millions. But next you forth, in, a digital begin that's prototype that, rapidly these you to and to in and on


to go Merrill of at Kupferberg will next Jason we America Bank And Lynch.

Jason Kupferberg

afternoon, Good guys.

certainly the in So the growth. to nice see digital re-acceleration revenue

as where scales? expecting So Are do just we go some the that acceleration from you XX% here? near-term number, hiring further

Mike Lawrie

listen, I'm pleased I very strong to really terms want we that. while good margin But the performance with I'm expansion. pretty drive in in revenue progress with digital, sequential this more. do continued very even continuing to Yeah. -- growth, made of I pleased quarter

not I I'm going to really until be the XX%, growing happy XX%. see So digital business XX%,

I think happen. it can

Now, these market I I differently, source that to as question, go Rod's think continue will hire with it require just and to opportunities then us to to continue differently, demand. into explained

through first as steam internally, this the we metric I ready some quarter. gone we off of it's fairly we build yet time internally. As for second have prime as of not annual audibility, in quarter, use this mean, I in of an picked said, year. we start we've the a we slow got revenue up acceleration use -- this to seen it but first terms the And in a sort

digital internal sales. is quarter our Third the we've first made objectives around actually our quarter

see steam. to we're up pick beginning So that

as little Now, people a as got out sourcing caught said, demand we ability teams. we got is more little fully individuals, got the it's a caught short And people. we our because admitted, front of short bit I source in to not the then

until up also scientists get the any software it's engineering have to you data with if as And started whole Doesn't projects just a analytics, do for require these sometimes good team. well. show can't you

the that's is tick there. up. revenue we bit. the see We're making demand are gap beginning little But We're to tick the beginning a closing. see acquisitions. We're We're investments. think making a I that So up to generational that is sales shift. This

promise model some here are it's turns always go we're in as and those business straight there's the road, but to a So twists with beginning really to not be can But we that's encouraging forward, you, line be going signs. comfortable to I emerge. going the

Jason Kupferberg


So the on side follow up just supply that. of to

the X,XXX you since the I beyond already said you of So think hired October. plus, end

personnel headcount? of through essentially If retraining need come as the hire backfill to think to to you process, how I said you of kind 'XX, about of what the you new and existing additional net fiscal is first you still complete much some that versus think hiring going half try DXC be

Mike Lawrie

want thousand a we over just thousand. couple hire the retrain to say digital people to months, of I'd I'd like couple in next another and couple

we and hiring. Luxoft the our reskilling we once also insight platform right skills. So how mix we'll better think And as have hiring other now, I that thing as well say of new on it's dimension I'd that begin works, digital the a and closed to even get to transaction will is little understand then a a that between bring somewhat that


Bank. to we'll Keane Deutsche next And go Bryan at

Bryan Keane

Hi, guys.

the wanted of XX% Just adjusted adjusted income. of new cash guidance about to free XX% flow ask to

going was conversion before XX% plus guidance previous think I towards XXX%.

So just versus get want previous flow to then future? understand the conversion differences to how back free do now from XX% today cash the in plus we model the and

Paul Saleh


saw that I of in days. an We we DSOs roughly represent go probably just increase That $XXX five what we the and about sense about outstanding. in -- is attack. day need the sales six million think plus of usage to cash to it

a on us trying going doesn't to a were that get the I just and their -- think said is also it's really just and past the it's job drive having we to particularly the usually XXXX. always bit -- done but quarter purposes. capital for fourth working we We the again, balance best must XX% due things, just pause and we're receivables marshaled to little cash entire job better better hangs also. a all collection point these are change we past the that But organization, just of sheet out expecting their ASAP. the due at everybody guidance rectified my the Longer-term, of by on now and have XXX% and year-end, we is calendar not to on and here, year-end bit all given the saw have little it targets of have do of really around much CFOs really world on or

Mike Lawrie

a -- in it holding thing market you lot more their on had did if the guys standpoint. know a same will. In And from we we is December. as is see the short this operational volatility We you people we to little the payable by is model well a see what did And way issue. in tightly, than cash more of did

think So It again, the this change more sales is around fixable. outstanding. doesn't operational day model long-term. I That's

Bryan Keane

as fold at fourth other model? bit Molina the And just of revenue that Thanks. to in will that completed, Okay. And some been be that follow-up, about quarter little or into looking and then and help acquisitions a the the beyond? a have completed how will

Paul Saleh

think I fourth not quarter. the in much

Some showed quarter. in of the up it third

we I you think to bit in with very now, were X% million, it but contributed from overall that what a top in side what consistent to from from before to a off acquisition. about part given Luxoft, which gave Molina for model right a quarter. quarter second the came do in terms this of about the bit line and business X% we of was you of all it our coming little a revenue we in was acquisition, little expecting aside of $XX that was the standpoint it again, better the the third we was had and


Darrin And we'll go next to Peller Wolfe at Research.

Darrin Peller

guys. Thanks Hey.

to to a give trends digital that obviously are additive the about lot in the past, the now the at it the trending we're as been just talked about, have of you with talked us guys recently the the and seeing as curious more you that's accelerating look talked to conversion sourcing and partnership you color model in hear digital that terms about some I'm a how on regard bookings to lot of we've we when that Just can revenue?

Mike Lawrie


we are that and our couple and it's to overly but of beginning sell one meaning partnering we're year I a here. actually WIP, sales this first complex sell-through we where an want we co-sell of we things don't through sort track every stuff Our sell of or to directly -- sales partners, through go-to-market see a seen increase year it, then but get they in with together, I've us categories, or bookings those too. where them through out. And sell playing is and

get dramatically, before in we stapled accounts, integrated points XX talking we presentation. And finding sit deeply AT&T I do So lobby seeing like joint more win I or in I'm up say the is we're we what with down that, rates going the partner and two Microsoft down when about to that. sit we'll the an AWS and with like we separate together we're I'm proposals, mean talking account. about an we'll that work we proposal. do sit partner, where And select dramatically, will we're make an not proposals with go when down together will and when that

becoming clearer that not to but and only us, to Now, clearer it's is obvious our also partners.

do some a work of able that been from all of opportunities. framework we've we through hundreds kinds construct within partners of I Our see again within dollars opportunities regulatory we we of what with I Luxoft, source already, millions can after. just do the incremental standpoint, could we've already, mean, we that the regulatory And what identified saw -- go the of do just can joint in before. never opportunities that to do of working

these services I think of the the acquisitions partners contributing to yes, with us about we and So driving of past, And these are only need seeing to the and begin not hiring, doing, our sales the at all together. PwC the because more sales the force our increasing are that's opportunities. force we've same now in some think we've qualify proposals and people to put help then you all our sales done that -- talked we're some that the I of also things because time but

is we're that. we talk see digital DXC our increasing about same increasing in time, first the other to have we done with So opportunity skills sales we certification because time meaningful all them deploy our the to partners force. retrain that we're are hiring, programs the around This at opportunities. and we We are this we've people, and years -- but the

Darrin Peller

how look, just mentioned and terms had it? again. guys. your But mean, And to they to again chance Thanks Luxoft clients you have you either Luxoft quickly, clients feedback any announcement further speak I your of All great That's since feel or right. to about just hear. in

Mike Lawrie

done that tell the Las bit -- are quite see the fact. at the it's that Luxoft. behind to this a I it. of in I DXC keep got out Yeah, as They I feedback time separate -- view a projects and to been out serious I as it really matter of more trying Show reasons. I They never to the Most the this. as very spent we rationale Consumer of to bit as obvious quite I for years there customer about I've positive. on it's -- the Vegas, have, We're in have mean, Electronics perception you, was change just with five that doing possible working business went amazed we're brand and a

Luxoft and from from we've positive yes, positive feedback gotten feedback So our certainly gotten clients We've partners. clients. our

much Now, wait-and-see, now. a not there's having that, that there's do we can right said

certainly talk transaction all than actual And that planning of the But get more synergies with right it the is we getting that process revenue we So in all are once to prepared and now, the closed. go close the the get other action. we transaction. along now will into things it's

Jonathan Ford

sorry, And one then, close operator, we'll -- take one And we'll question. more more call.


James you. you. that's from And Thank Thank Friedman Susquehanna. at

James Friedman

for to about ask Jamie. I Thanks QX the wanted assumptions. Hi. sneaking and me just it's

anticipating realize if we should question midpoint word above even Mike, You or how but that milestones in I So QX a Are $XXX will the couple at remarks. the times revenue? you're the QX, prepared be that look lot Paul of consensus. of the is, you're talking you're about still of above. thinking the on of at in there the lower midpoint you I million about some plus cadence? like some that it's your of implication FX And my both the challenges, half, talked used a milestones, about

Mike Lawrie

Then ITO occur I'm digital that, That's in. and at where and see carefully No. in those sequential looking our be quarter-over-quarter. with looking at when what to sales downs are market. that pipeline want revenue, What at I'm the underneath also carefully downs quite we what to performance this looking the is is what sequentially continued runoff very then business looks I'm like, price and grow growth. price our very continue to I'm interested I candid

fairly, the trying continued the the complex, continued drive thing a digital important and strong I'm growth most is but reasonably the of sequential performance across to it's end day, a Company And at So involved not underneath that. it's formula.

portfolio to grow, beginning but it That is grow. IP growing as also our grow. is beginning as not is Now, needs it to much to

sequential continued I'm what that's go forward. Jamie, So looking growth is for as we

James Friedman

look you on was in especially the Just days. the about. at I'm cash follow-up to one like about slide is? of I you. ask rate should CapEx thinking know since percentage that theme we but sustainable it, flow, I'm forward revenue, what talking what the a as a low, But be free just Thank big that XX, X% you about our this run CSC of have that is how conversation the because seems going was just wondering, don't wondering

Paul Saleh

We X%, our indicated, if was percentage be you longer-term as revenue. in to X% of the remember, that goal a

use. more was a I a helped to somewhere because X%, good dispositions little the had be -- that would the would you say asset X%, the quarter This some to it number but unusual offset to bit we CapEx, in


our And that conclude turn session. I'll to question-and-answer speakers. the program does the back

Mike Lawrie

Thank guys. Thank Okay. you, you.

Jonathan Ford

operator. you, We'll now. Thank close the call


I'd joining Thank like again, everyone that once today. thank does Again, you. conclude us today's And conference. to for