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DXC DXC Technology

Participants
Jonathan Ford Head, IR
Mike Lawrie Chairman, President and CEO
Paul Saleh CFO
James Friedman Susquehanna
Lisa Ellis MoffettNathanson
Bryan Bergin Cowen and Company
Rayna Kumar Evercore ISI
Darrin Peller Wolfe Research
Rod Bourgeois DeepDive Equity Research
Call transcript
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Operator

Good day, and welcome to the DXC Technology Fourth Quarter Earnings Call. Today's call is being recorded. 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 earnings Technology's call. joining year-end quarter you're XXXX fiscal pleased for fourth DXC and I'm

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

Mike Lawrie

Thanks Welcome, today. for thanks taking Jonathan, everyone. very time much. Okay.

more a those, detail it over go for I've we'll is to four, As Q&A. and I'll then into time Paul. my five turn got go of points, And little through habit here, plenty then have

quarter was fourth non-GAAP First, $X.XX. EPS

non-GAAP fiscal $XXX EBIT EPS was EBIT margin in XXXX, quarter Adjusted the For the was adjusted was XX.X%. and $X.XX. million

adjusted XXXX, margin was flow flow in $XXX of And Xx revenue was in fiscal currency, quarter; cash had and adjusted the and was generated Revenue XX.X%. year. fiscal of XX% million in on currency, GAAP XX.X% we EBIT In a the was was XXXX, X.X%, sequentially. grew cash We billion, adjusted XXXX, quarter. the and adjusted quarter and a up X.Xx constant free book-to-bill year-over-year, down the revenue for the fiscal billion. For billion In in was EBIT year-over-year, fourth $X.XX fourth sequentially $X.XX quarter and was $XX.XX billion for digital X% constant and basis. $X.X the revenue free for

fiscal was And digital book-to-bill BPS revenue BPS strategic revenue grew hiring digital I For BPS in and book-to-bill and digital efforts talked to before. X.X% In fiscal revenue and IP XXXX, And fourth down XXXX, was the and XX.X%. was roughly industry for down IP quarter, sequentially. flat the X.X%. my industry capabilities, X.Xx fourth our and X.Xx. and IP point, was accelerated about make the continue we quarter, assets our including was in On industry fourth year-over-year investments

of acquisition June. We end also Luxoft the the expect to complete by of

our little a go fiscal these Paul. I'll into and for over to of XXXX and I'll more Now, targets turn cover detail, each then it points in

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

EBIT million to roughly was rate quarter and the EPS XXXX, upfront effective was and help XX full digital the accelerate fiscal that the as to the XX.X%, clients was For for talent non-GAAP margin adjusted in sequentially, EBIT we’ve adjusted year transformations. well Fourth we’re was down previously year-over-year discussed, flat digital $X.XX basis the $XXX investments their tax XX.X%. as and providing points reflecting savings

just basis XXX% In segment this this the was that basis XX.X%, adjusted segment payments adjusted and XXX of margin prior points capital. as income. fiscal EBIT and free was profit EBIT And our working reflects points $X.X I margin ongoing of $X.XX the in in last achievement which reflecting key seasonality for the quarter. The milestone cost-saving were XXXX, adjusted GBS ‘XX XXX $XXX execution XXXX, reflecting was fiscal from was points. And down discussed margin up GIS net this fiscal investments billion, and fiscal XXX and improvement year-over-year the the XXX was highlighted year. was XX% points discussed, business. adjusted GBS or against was was margin the levers, as optimization that I of $XX.X%, sequentially. XX.X%, from points quarter basis profit for basis For XX.X%, XXXX, points the XXXX, margin and GIS, flow ongoing up And income, This our margin XXX was net free and reflects points adjusted we've basis workforce year. flow for fiscal XX before. in Adjusted cash was XXX prior for was billion line or basis and up was cash well savings the improvements year-over-year an basis with sequentially, XX.X% targets million down the improvement

traditional revenue. $X.XX In and in was a said, up constant to was was the quarter, X.X% X% year-over-year Digital billion offset our business. in up down the I GAAP year-over-year sequentially. were turning fourth as and digital And offset revenue sequentially, X.Xx. in bases. on Revenue revenue the Bookings a to currency, traditional than XX.X% fourth for quarter the Now, decline business. more decline in continues growth sequentially more the X.X% of of book-to-bill

will growth through the that ultimately lumpy before growth Now, be But, next go we continue we traditional long-term that the talked and support will revenue decline year. between this this digital about for balance as the to is dynamic Company.

was up X.X% in a book-to-bill fourth sequentially. GBS addition on in of and in the accelerated cloud was business this several was the quarter, applications The and adoption. For currency completion year-over-year was year-over-year $XX.XX of Xx. impact billion, contracts X.X% XXXX, reflects fiscal the including decline headwinds revenue down constant $X.X In and revenue to GAAP traditional basis the billion

billion, the was up drivers a billion, for workloads, in a were cloud increased year-over-year of $X.XX GIS was up quarter eliminates was in a year-over-year rationalizing One $X.XX lift book-to-bill by represent existing our book-to-bill fourth bookings with sequentially, X.X% and Overall, billion and strong the with associated is $XX.XX adoption book-to-bill In X.Xx. of sequentially to GBS driven year-over-year, often mobility up X.Xx. of was which XXXX, for and XX% $X.XX the in up fiscal constant and revenue X.Xx. country GBS for shift the were up GIS X.X% revenue revenue XX% the and which XXXX, billion of and workplace a quarter, bookings fiscal of refactoring business. ability And X.X% of services book-to-bill Xx. GIS applications. growth And and of

pipeline, and book-to-bill and up XXXX, be strength Digital IP continued driven said and constant up by Now, cloud and reflected in turning XX% very workplace digital enterprise grew more our revenue by more demand year-over-year, and our cloud I infrastructure sequentially. digital continue in grew was BPS both as revenue our in growth we're which are workplace. digital businesses year-over-year. strong All for a in the was applications, currency, infrastructure, to year-over-year. fiscal to digital bookings than capabilities XX.X%. XX.X% The quarter and seeing also X.Xx XX% for results. with digital cloud In XX% up quarter, digital these strong Digital three was is it the bookings. than of bookings driven and And

reduces transformation us to and time. is spend, example share digital of allows traditional and savings large over to our many In signed we digital from operating generate we're to In grow help accelerate with clients the contract profit costs many lower return, a the secure to fourth installed which expand leveraging revenue fund these account. digital a the services, good airline. provide revenue client and our global on A with on partnering DXC’s where during quarter to major we transformations. profit base we wallet commitments which savings through cases, initially We’re future

on growth with in building signed the of is over return, the fund we the deal to profit for results savings client, bottom-line lifecycle to savings digital client drives transformation the upfront long-standing with And initial DXC. provides seven-year the this and clients those and that in leverage transformation full reduction revenue Now, and top-line our operating account contract. costs relationship the committed reduce but to work in on

XXXX, by XX% the cloud combined quarter We’ve These as deal currency, from to And apps talked enterprise and institution. consulting robotic in develop vehicles. the signed believe well the in deals BMW about office the momentum offering a a families We're cost algorithmic Now, streamlined with I digital. financial XX.X% revenue was a large the adoption the year-over-year oil X.X% strong sequentially. this quarter infrastructure sequential, currency. X.Xx. in up cloud up airline a was were leveraging data and quarter in driven book-to-bill compelling of And large let and talk up and tax and about. year-over-year sequentially. momentum cloud recently the deal South signed bookings X.Xx solutions SAP for quarter X.X% time in And as was Luxoft’s and continued Australian automotive Analytics build of XX% and a a the gas were the with on utility consulting a company particularly cloud in included drive XX.X% was we constant complementary American recently Salesforce.com generation fiscal CRM currency. in with in in deal X.Xx. and book-to-bill fiscal next apps transformation drive space. grew company. infrastructure XX% solutions. DXC’s has and XXXX, to DXC's grew a Enterprise autonomous good grew to analysis leveraging Bookings this solution cloud offerings. for deal grew currency the down European and In the me including Wins to constant services the large proposition accelerated and robotic value Book-to-bill for constant training X.X% the with business, XX% Group, quarter reduce in very are Bookings provider year-over-year sector. the program, automotive just constant within in seeing

vehicle program, the amounts data digital achieve DXC's significantly BMW's fleet. of development road We’re R&D cycles. will teams test BMW’s global Using solution, drive supporting BMW gathering massive travel from autonomous autonomous development faster,

done areas not well. digital Now have as of all

business as Northern and and year-over-year UK and Industry X.X% constant Europe. security strong at and sequentially In partially fiscal currency was in down growth is Europe was X%, in in Our BPS Book-to-bill flat point BPS currency, down and X.X% Southern in quarter revenue the down decline roughly down X.Xx. flat Asia offset roughly IP X.X% constant was sequentially. year-over-year was the Industry was for XXXX. IP the

of UK We of Health Care ramp and large generic the continue of BPS in business, BPS including were revenue about I large in-sourced our the some the offsetting in to a fourth is talked the few seeing The contracts in declines a work. particularly Service. more Bookings we're on This XX% before. year-over-year, some Europe Department deal quarter insurance with where up clients that California

quickly turning to Now, point four.

AWS, with to continue digital expansion the growing partners out accelerated including capabilities, ongoing significant Microsoft digital build as of hiring our talent, fastest make practices and and centers transformation our such capabilities, in in Azure. We our our of and joint investments

the During hired model scientists on investments We're ops I've discussed. people software making X,XXX with the these engineers, to digital SAP previously additional emphasis capabilities security engineers, an digital quarter, dev data our and we scaling engineers. consultants, in go-to-market continue fourth an

digital DreamWorks, Luxoft Luxoft’s talent a capabilities. access example, to apply talent content DXC platform security relationship Eastern digital presence and digital digital into also DXC’s cloud, shaping expand in and our solutions. and Animation of an develop We're for through leveraging to to jointly leverage established engineering solution in acquisition talent DXC entered support We'll key acquisition. the Europe attract with will the creation. cloud-based analytics has pipeline broader management will For such our Luxoft’s DreamWorks markets with

engine, of builds expect strengthens leader acquisition end-to-end and protect Luxoft Company's new bring depth We DXC established capabilities offerings. for will value clients at by growth. and engineering, its in a broader verticals scale. acquisition proposition we digital as key capabilities June. addition to and to brand DXC's design an And deploy recruiting services and strong on drive additional of business this entity to apply changes operate solutions IT unique in the and our to end expanded And clients help to an digital the separate digital will mainstream strengths of the ability Luxoft undertake while quickly as digital as complete market to continue portfolio transformative and discussed, The Luxoft’s I several Luxoft

DXC to other and and First, verticals will expertise including companies industry also both we're innovate major industry the market-leading global serve two and the than services. existing America verticals to significant Luxoft has a solutions teams and work Europe. These the of XX automotive the automotive will in together in half sectors OEMs institutions and more healthcare. financial from business than in cross-sell where combining company top base insurance create financial and of more go-to-market

for to XXXX. before Now, my point to Paul fifth fiscal turn it over I

discussed. impact the between previously the revenue we're adjusted of as be We to targeting target of as I assumes EPS digital the $X.XX billion, revenue And net and and as free dynamic currency closes, well to reflecting adjusted June. billion of I Luxoft expect range in of of This that more traditional, the $XX.X said, $X.XX, income. cash XX% flow or end $XX.X non-GAAP to at

to Paul? Paul. me turn this let Now, over

Paul Saleh

everyone. And Mike. greetings, you, Thank

costs usual, programs that These pre-tax related data results. non-GAAP some represent and restructuring or covering facilities share our I are from after-tax. of per costs As expenses In quarter, $X.XX we to the rationalization. a excluded start diluted with optimization on by workforce current basis $XX associated items severance and center million will had

million The quarter, separation per or related with as pre-tax to and Molina, on recent acquisition related we also transaction, basis $X.XX integration after-tax. Now, acquisition. in well share associated $XX diluted as such Luxoft costs as the had activities a the

million the higher complex exiting exiting the basis, or in of a resources costs the per For environment transaction, than $XXX with the and and IT of on full separation by year, cost costs driven to restructuring, $X.XX pre-tax share after integration diluted amounted shared countries, more expected tax, HPE.

costs In diluted quarter, $XXX share per additional transactions was In associated with acquired acquisitions. amortization addition, our basis, pre-tax digital intangibles a $X.XX on we had of the after-tax. fourth million or

assets an the full-year, the of was a or $XXX For million after-tax. our charge diluted amortization re-measurement $X.XX of $XXX pension acquired and annual quarter, Also pre-tax million. on per liabilities share in of accounting intangibles in basis, resulted

$XXX an of year-end, billion billion we $XX.X pension position pension million. As of pension had $XX overfunded and for assets liabilities of of

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

For billion $X.XX. the was income from non-GAAP before taxes full-year, operations continuing $X.XX was and non-GAAP EPS

acquiring business, in flat investments making centers, new digital relatively the year-over-year to in Now additional XX was $XXX our fourth Platform transformation in XX.X%, full and our year revenue Adjusted Bionix. more and DXC GAAP points the reflects full down EBIT to EBIT was move quarter basis EBIT results in talents the quarter margin quarter we and sequentially. are and digital additional billion in million. Adjusted for enhancements detail. year. on fourth the was $XX.XX billion quarter digital and $X.XX Adjusted including

base as X% was consolidating to continued people managing renegotiate labor our EBIT XXXX and billion; with our our adjusted year-over-year of by in and points compared the we digital basis restructure redeployment more program, our supply scale EBIT targets work reduce supplier our demand, combined $X.XX for or to us year. was up a on margin shifting of we're our plans, Bionix our allowed leveraging our prior shift a margin other workforce The the workforce XX.X%, on balance strategic chain, progress our accelerated cost automation the vendors. In with adjusted improvement year. which we line net base, Throughout the levers, capabilities. agreements, ‘XX, to fiscal fiscal basis, XXX optimization roughly with to of XX,XXX takeout reflects continue to For

more million facilities. and to additional merger, Since Turning footprint rationalized we data this facility’s reduced X.X than We eliminated have by centers. nine year, XX%. our feet an the we square also

non-GAAP $X.X ‘XX, primarily savings, and roughly jurisdictions. in went reflecting of were those over delivered our year, line for as tax XX.X%, attributes full-year quarter, for previously and with our rate book-to-bill a $XX.X tax we the for In bookings the the foreign summary, In full million XX.X% discussed, year, X.X full tax time, fourth in-year reinvested book-to-bill investment in million quarter, Xx. net was non-GAAP throughout rate we was those of certain the which we roughly of fiscal the digital the And capabilities. benefit So, and into up of bookings were a of for savings target. $XXX billion half in is

In segment billion profitability of to the The profit turn and revenue quarter. reflects and the improvement segment $XXX margin let's optimization Now, in workforce business. results. million GBS GBS fourth the that XX.X%. $X.XX was ongoing was fourth seasonality quarter, was profit our in

profit GBS quarter book-to-bill $X.X for were in GIS revenue million margin segment profit booking XX.X%. full-year, fourth was was $X.X profit $XXX was the a billion, For quarter. billion in billion, was was segment revenue of was GIS the and XX.X%, fourth the $X.XX the $X.X X.X. margin billion

profit the making in exiting of Bionix margin of Platform well as timing digital our talent in we're acceleration. as some complex also margin Now, markets. investments reflects resources the reflects DXC, GIS

full-year, the billion and XX.X% segment $X.X bookings margin book-to-bill were revenue $XX.X was billion, for for $XX.X GIS of was billion, profit a was XX Now, times.

cash a income, XXX% free the million, Adjusted management. of flow quarter was capital $XXX highlights. working tighter financial net other adjusted to reflecting Turning in fourth that’s

line target net flow full or income, was adjusted $X.X For is the the XX% which billion year. full in original with cash for year, adjusted of free our

with receivables performance flow impact our an facility, these though cash DXC. receivables to outright of even Now, no represent our recourse the of exclude continues to sale transactions

full of of the revenue; Cash billion was in million or at end quarter $XXX at the or of was end fourth quarter the $X.XX year X% revenue. was year, and CapEx CapEx the $X.X and of the the for Our billion. X.X%

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

we dividends returned $X.XX $XXmillion billion for a and total shareholders billion share the shareholders. of in of million form $XXX in we $XX dividends fiscal And for of the million During quarter, and paid to returned in repurchased to capital the repurchase. $X.XX $XXX in of shares million our in year, capital

adoptions revenue revenue to year cloud that greater me revenue ‘XX their accelerate by billion actions will to which covering We're close and $XXX June. upfront assumes traditional businesses. we gain $XX.X working be traditional of profits offering fiscal share let on We're these of our we but range in by and of compared in the to The in the transaction IT in Luxoft provide. return, of from target, the time. digital with targeting to includes fiscal the those close billion, our Now, profit Near-term, by transformation translate fiscal should platform clients our on savings efforts the application end services headwinds their impact stronger target accounts, over which accelerated expect a a spend dollar higher with into a digital, ‘XX. and of roughly currency that million $XX.X and revenue reflects for reduce

accelerate ‘XX well incremental the digital to impacts near-term fiscal our we our Our to clients’ business, $X.XX of as as the are reflecting making for investments EPS is target digital transformations. efforts $X.XX, in

jurisdictions, assumes delays tax attributes EPS planning target of implementation the reflecting the strategies. mix foreign of a for in also changing our fiscal ‘XX of and higher a XX% to in tax rate XX%, Now, tax

reform U.S. clarification further of Now, regulations. that is tax pending

Now, however, XXth. of XX-K filing the tax impact May not working diligently these that our our like of to would also complete are we by to I long-term mention to XX%. targets do delays, for XX%

the adjusted of And the for However, allowed net we tax regulations, SEC. June, to in period audit the within income. fiscal may because adjusted extension U.S. our XX% by certain cash the ‘XX target lastly, file free of early XX-K flow reform updates regarding procedures is

Now, the the operator I'll turn for call to back session. the Q&A

Operator

from And Susquehanna. Thank James come Instructions] question [Operator will first you. from Friedman our

James Friedman

we from the and Paul, here. assumptions you. are cadence adjusting EPS you fairly be But, results were. where Hi. Yes. we how should from I about wanted margin tax here? guidance. It’s Jamie thinking Susquehanna, about good considerably that to at ask I the Thank your see just

we should what forward? about thinking So, margin be going

Paul Saleh

optimizing are these we're the fiscal we'll as strategies. just all, of we a result, First than coming XX% some Until regulations to our because relating bit more as into had implement mentioned, risk ‘XX, XX% clarified, tax anticipated to be of taxes. to uncertainty of a the once or taking able then, little And I our higher clarification. not is they and

margins, I the to impact first we'll in on acceleration usually upfront, we'll us our XX% starting contribution the is the particularly for there's least from at second the business. at revenue be of compared contribution that the quarter will In impact just of prior some Luxoft second this terms see to on and on of again, a see the look -- much first impact on comes I not from is we're quarter, in if but the doing margin think, dip the a GIS the it -- year, of see going -- transformation side. the giving with clients margin Luxoft a so quarter. the But we our or transformation, in This of and that the cloud a digital the also the quarter every also the the And should year. improvement to end them assuming we’re out point of upfront the that see that savings until progression, we'll

James Friedman

saying regard to terms June, of end contemplated revenue but is the Luxoft, with the you're for realize what contribution in I year? And of

Paul Saleh

about $XXX it relatively I right $XXX million now, and somewhere be quarter, really to per equal $XXX around the million. would million I just to think expect

James Friedman

so hires. the talked on are about some made that like staffing increase you of great seems doing know it you yes, digital you Where last I in prepared side, side then, the journey? But, how that demand? Mike, in And hiring. your Okay. are one. the in remarks, can you you fulfill

Mike Lawrie

is think I issue us. the behind hiring

expect pretty significant We're commitment people DTCs. here problems X,XXX demonstrated so a to made with So, any hire can planning I quarter. to hire. We've that. per we I don't or these probably think we've

may little bit. other analytic some we may As skills so to some a and in In go need other less skills we'll areas, some forward, the customers additional we them, of to remix continue this we've they or in assigned that. with of We're place process also We come whole these put statements get to combine really centers. proof-of-concepts. words, work with comfortable ideate where

So, I really what feel we've done to very been here about the able skills. good on digital get

having not forward. in some positively them people, we're to So the finding growth contribute the current or saw beginning to problems also and really reskill that they’re people, on-boarding reported. that recruiting go We're hundreds business as continuing We we we DXC to of employees. of

So, have other them off to run-off, on we offerings move retraining increasingly so and -- can we're opportunities. the of continue deploy we reskilling, where we're to able we people revenue as

Operator

go we'll Next, Ellis, MoffettNathanson. Lisa to

Lisa Ellis

more of what it go initially? you in down How does of just sort color? last? just on Can and I like little this your some know much Does profile is rates offering could large does how about seeing now point with making front clients, growth looks gain you're to savings investments their meaning how some them you an positive, work clients, with doing one success At -- just Thanks. talk these you're like of base Clearly, up some eventually about both digital, give a the you're spending. you bit it flatten little with spoke win out? in illustration what get the that bit with your a proactively of to order now long revenue digital

Mike Lawrie

Sure.

would provide in on $XX fact, example we you. would we $XX color That service to move provide so would of and we in be would a won't million me the year, X operational as matter of I’d the months, that in some operational but million would be first in optimization. probably some savings. cybersecurity names in get would any I And provider of a use call, some this million neighborhood what of in additional, Let the applications provide this neighborhood million somewhere week, operational revenue. we for here, return, would to cloud, $XX the be $XX months additional I proposal where additional be after we little worth was somewhere an savings through extend analytics, year, a the working XX to specific will incremental

So, more customer this commits and projects comfortable provide and operational to workload. we're getting and what to more we're those doing, specific then the savings is with model,

of little are to delayed on bit, the now comfortable be be by encouraged those that little part a into our XX a we're process, from starting standard some the revenue XXX days, days, than new Now, of projects admittedly model, get and a could be longer butwe're could really more we're could this this to the receptivity get approach. of clients this that,

reposition recognition is of is a trusted and infrastructure operator in also of can grow lot to view we a and through And business basically with little the partner. to they can some growth our and a savings fund the we do use So, future take we then only great digital can programs asset but the revenue DXC traditional got that these, deferred these that not operational fund a as this to give. of as profitability. all an we've to When digital of live willing account be

Lisa Ellis

also And more -- proactively? doing is sole is that allowing work digital that because you're you source too, then to the this

Mike Lawrie

Yes.

of around to But revenue you’re what we Now, getting it to the in projects. going amount this. money you spend do is, which or migration commitments, be okay? other So, will spend with does digital, x provide what on you is different we're going commitments cloud say, are not it okay says projects do could doing doesn't to we're that commit digital

Lisa Ellis

it. Got

just one… last one then And Okay.

Mike Lawrie

this partners of lot A thing. other one Lisa, as And well. done our is with

to from really to this a us get set So, helps standpoint more clients a and together will access us say these a partners, increasingly, skills. it skill with going broader our we which we are gives to but credibility, lot do of

traction So and this. year to we're I I here going I've a to be talking tell beginning And on a thing been you, this next that's scale to and we've been this this. half year all scaling about think what starting real see about talking for about is saying this some is thing,

Lisa Ellis

stand-alone One to very into about you your the and that of last you're IP the sort BPS then one who deep for other me. I how is BPO Board, added saw on Mike Can X-K thinking you Industry Salvino just comment an acquisition space. about Is just make an of up on thinking maybe, the that that where to, one to be or sort vice in might business? area how versa, you update look of fit you're an space of players that.

Mike Lawrie

the the a business, make yes, some space. year, within space, the this healthcare know, acquire capabilities particularly, particularly I'll gave healthcare BPS we as on But and us the additional some BPS in acquisitions. past Molina real comment states Yes. which did you

As some you of process in that are around BPS. we now significant we've scaling wins the insurance very know, had

So where only a Board skill I through to but a And expertise not has your see it and how helpful it's the through think to brings actually someone person Mike you direction. set in off the who that. that is that legacy business business lived very gone some and have transformations Board, drive also of run in to that he to reinvent and who these brings new significant

Mike that are joined the we pleased So, very Board.

Operator

from a take we'll Cowen and Bryan question Company. next, Bergin with And

Bryan Bergin

you here wondering revenue to expected does of your the to in upfront -- or you that the then any happen? think where revenue about extend on -- the timing margin? ramp program, outlook changes seeing your as point on the that medium-term outlook, savings Just stabilization your And any on

Mike Lawrie

I rough numbers. actually, these are mean, Well,

But So, fundamentally, over the these this are audited Deloitte. -- quarter. we not by crossed

business. sequential decline growth in greater traditional than in digital sequential So our our was the

now basis, quarter like happened that And think $XX $XX it's a that year-over-year is just -- at million, this point. fundamentally which I quarter. this million So or on we

I'm year what And that differ. be next saying the reason is go slightly lumpy through we Now, will is as each that lumpy. quarter is

it Some quarters okay, little have down, Therefore, in it's you or you discontinuance here this revenue so a quarter. you fourth crossed gee, No, great. have -- or a is over. run more is no, a can't say, you the price have

dramatically this last narrowed gap a in and have last We dramatically, year, year half. the

seasonality typical we makes and as and quarter sense, the Bryan? ups Does unique some go see the the to going layout we're downs of that through stream. revenue Now

Bryan Bergin

on way Yes, the you've Did targets? the those changes it articulated in did. any past

Mike Lawrie

No.

Bryan Bergin

Okay. should repurchases at 'XX, just reverting thinking be and levels? your allocation about in cash free as And as there, current how progression target generation far we then, share flow capital

Mike Lawrie

be We business shares we the past, well very as in the the as have have opportunistic to in will the last in deploy to shown -- done back as we reinvest to we and year. do buy market capital have to continue in as the opportunity

Operator

from has question. our Rayna Kumar ISI next Evercore

Rayna Kumar

wage sets, aggressively you might inflation be you skill new digital sets? that this help can As that with up quantify ramp seeing you skill

Mike Lawrie

missed you said? What I the part last sorry. I'm of it.

Rayna Kumar

quantify Could you up inflation as wage skill continue ramp to on sets? digital you

Mike Lawrie

Okay.

skills lot their inflation. earlier also augmenting who wage We graduate that digital much haven't We're career. in these of this A with seen are much are people programs.

We are some things. with very experimenting unique

way. what business particularly around graduation. we tape we've then really And really We digital, example, and For this bit our graduate these people, students, and some of some and costs in us years projects. having this agreed BMW And three driving autonomous scientists I'd that program. have about. stay This on skills, little a the worked show attracting are students, minutes are they play we important forward. two are video then we to to they of on doing actually to get about is really, effort talking helping we exactly some after tell curriculum newer for to they're with really very with early of pay success going some kind quite of and analytic you, skills, because these we in-career other of interesting skills some data universities tuition a

wage question, of your lot a we're no, seeing inflation. not answer to So

Rayna Kumar

or was That's progression margin a just one year-over-year? very follow-up quarter? down in helpful. it. to the that question from And margin that the previously. the just And much you Is quantify asked point you first EBIT adjusted margin expect year? the EBIT commentary throughout increase sequential margin, Got surrounding then Could how be the

Paul Saleh

perspective it's the quarter where first sequential. at on fourth to EBIT down be type we of from were a XX.X%. the quarter And an XX I will probably think, closer margin percent

Operator

Our come with from next question Peller Research. Darrin Wolfe will

Darrin Peller

okay? It Can guys. is line me, just that hear Thanks, you said open…

Mike Lawrie

and loud hear clear. can We

Darrin Peller

Mike. Thanks,

about? the easier I and IP you we're digital clearly mean revenues. currency it's it's we I any considering maybe should us on year think, against X% your it's items guidance, conservatism element want to underlying in whether for organic think And book-to-bill little constant of negative you pieces, constant you're around, now out can when then, to negative -- one-time outlook embedded of Just what's than color if in for comparing mean, also, give calculating I better rate would and any strong but in backdrop is currency great? seeing expertise seems legacy expected growth BPS last visibility be to pretty X% just the your and there the what or Industry be you're just or that maybe year, or good the the so call digital be a X.Xx.

Mike Lawrie

No.

get of you, unusual I giving nothing we accelerating the of customers we Digital. share and greater so that I mentioned our can IT a think the as them working program on their -- to to except with get spend are overall upfront savings,

that's been about you the upfront expect have see -- we some seasonality, example, was -- a you in as recover then -- throughout recall, and QX. so, $XXX the just it you may million. QX if year, of That's we last year. from to to really the decline pronounced for that to usually And alone to And first some start in bit little the quarter and more why

for of that QX, throughout that we incremental would working first board progression So as from that in a progression, see print this then, as earlier, we the a a than that, we're that it But about the on you I that And then on the from will digital QX. margin QX after I little first top quarter. point a to with and bit is transformation. again accelerate off perspective, mentioned, mentioned a be Luxoft comes sequentially of revenue where year the higher given plans those and quarter

Darrin Peller

it's I'm the as are BPNS digital see That IP there well side Industry and downside able verticals as quick certain Just I business, there BPNS we going to IP just of a is, hear, Thanks, taking and to something little maybe you is side going curious side, be. that's than Is there, be guys. tad a to follow-up would the -- is so the the what that accelerate? you're Industry on there? on it or you expected. to color on lighter think surprising a again, really help I thought the just mean more doing it seems like

Mike Lawrie

Yes.

at shot a take me Let this.

the that our invested as don't months last, to different what Platform. know, is fundamentally, in and I as a Insurance call our Platform. year, we're referring of we XX over have a we from Digital this put portfolio IP taking some as a we had what the IP We on And, that partners Digital well Insurance into components

couple now a have large to sold this insurance We a companies.

of was of As a and in visiting we're India. I centers India a went whole matter last approach of couple this in through fact, just week that with customers one our

in months. It has been the coming fiscal We to begin to market to only that are year. really some this traction three four expecting get

lengthy, lead the these significant because So quite transformation projects. things times they're on are

insight, to to I of don't implementing to with be platform be customer don't that But that. traction, see can't to share see don't and -- just the so how of done We've some with play healthcare our encouraged beginning enough you we're enough -- what also and same this some -- get don't also have -- I So, there going I things visibility don't we begin know I out then quite have enough to year. that's but experience will an platforms to new yet have and that. how investment are give into this wins model have candid I that to off. more you, pay more getting We able in

by over last the been we IP performance So disappointed the year. have

As We're back going invest continue this got get we investment of play points a I to of begins but to us see we're holding is really growth we've now, flat. definitely out... and bit, it's how the we'll that to platforms little couple said, roughly hoping the have to a and made

Paul Saleh

there going [Multiple us. we expected. And one add is actually not -- -- in-source can we is be couple year this in should of showing growth that Yes. work were showing things But, that's Speakers]. also is up Mike, that the of a forward this I the why behind hopefully would that Yes. something the otherwise contracts to that that will that the that's numbers had segment decided be customer for where that

Mike Lawrie

one do we’ll Operator, more.

Operator

from Research. That you. Equity Thank DeepDive Rod Bourgeois come more? will One question from

Rod Bourgeois

in expansion. you to if share your digital fiscal have wallet wondering room in plans I’m ‘XX significantly earnings invest So, substantial and your guidance for

wallet way upfront the amount being the Is presumably quantify guess of to fiscal investments if you're with to I deals, client And ‘XX. investment any if that making of investment some magnitude also planning you you're expanding these So digital there idea ask the you I savings provide in of specifically wanted for of dimensioning share. can made could there? much quantify how

Mike Lawrie

roughly within in per have incremental I of share, Pull, probably roughly. what this problem. No. a $XXX these thinking spent or may that million this. $X.XX, past it. to numbers, to Roughly, we and of the is No but aren't exact as model, probably got $X.XX add I this think

Rod Bourgeois

Okay.

Paul Saleh

And I think...

Rod Bourgeois

level year? loaded And the through fairly

Mike Lawrie

we're making would these say, now. Yes. investments I

Platform DXC. invest We in continue to

view we're mainstream mean digital making an standpoint I we're integrated these two The biggest digital yes, wow projects investors. critical So, able investments Platform continuing IP workload, into be to is to be DXC, as we to with from IP. which

this brand working rebranded the we with Now, DXC, branded ex-company platform. customers Platform differently, are

So platform, others. like that technology and it's because and not ServiceNow it's built very partners' -- it's our a proprietary open on

and DXC them and pretty invest to We of continue So, investment Platform invest offerings Bionix. to we got into a out make yield taking in Bionix. we significant own that continue in very our to and integrating then continue we good in digital

along lean Bionix well it's as know, that. is advanced with analytics, the that tooling goes As you as

the I skills digital, sort then and investments. demand. are So and whole our the making We're cut hiring of those in across portfolio investments generic in mentioned particularly a two the that we are head cases acquisition in some for the making

had and it's the One want be months weeks, in a ITO these or are it it's of months more bench work, this digital end of contract XX eight the digital were respond. not like world, why six later, these you to transition and lot DTCs where things, to not monthly you projects a time People in world, of wanted Rod, that's or in to the skills world. perishable. months a is old wasn't days able and building the A measured of there's -- very of to that, we're

not actual minimally projects to The are part process which really people they other to a ideation that actually then get product of large viable process, is, project. prescribed digital offerings. or the assigned results requires issue an run the proof-of-concept, as It and a also

about So the we the DXC, the healthcare like up and bulk But talked in make Digital, investments and Bionix investing that. I insurance then Platform are of more.

and are growth the go and with we more We we're getting we the forward. opportunity as the because investing see model more, comfortable

Rod Bourgeois

All right. the in progress different a answer talent. Hey, from question hear let hiring your Mike, angle. me encouraging It's to digital

way attract about if you're articulate talent unique wonder proposition? to your to to talent, digital this As explain what's you from position can new I than When you coming DXC? market you have other value different and your value at for approach players, the the talent a unique proposition market a

Mike Lawrie

we a BMW is, project. client of we very around we base. question. One extremely differentiate client Rod an like Two, What good are couple the some variable. working projects do That's base, is, we a innovative have on Yes. incredible incredible

with have We partners. an relationship our unbelievable

kids comment, fairly a are how digital we which opportunity grow path a global doing clients, and I to And see footprint, then, only in XXX, audience center. people not career through diverse are -- we are in -- couple AWS others. standpoint make just will, entering in down if I doing it's centers. access value DXC you, our center from Town it's grow Hall propositions. So our space said, we're lot having and at partners finally, I'll and digital a that access learn world. but a like wanted Orleans people. difficulty was New now. one you XXX Meeting delivery what in have transformation and tell there other gives I a group as have new from Microsoft an of are not question. then down I and what Those just standpoint. this and of out And, I just did a who these the of also our was recruits, these since looked last such to I Luxoft probably mean, them our they to like compelling entering the we're with recruiting. I engineering

these operationally Just with so -- opportunities mean, different. innovation. really and And them that, the have ideation capabilities great which whole and co-create is clients that you about more exciting. that help we revenue our to opportunity is it's attitude -- unbelievable just application and the a world, like is it are backgrounds different all I'd a kinds like. combine our new rooms, around with business, it's so of And looks becomes walk business, with I clients. to we as of it's -- more there's and and with ITO this with there company the talking whiteboards more that the just drive our tools digital what continue to if

Jonathan Ford

will And operator, you. close we Thank call now. the

Operator

today. Thank for conference our you for your conclude does That participation. you. Thank

You now disconnect. may