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DXC DXC Technology

Participants
Jonathan Ford Head, IR
Mike Salvino President & CEO
Paul Saleh EVP & CFO
Rod Bourgeois DeepDive Equity Research
Darrin Peller Wolfe Research
Lisa Ellis MoffettNathanson
Joseph Foresi Cantor Fitzgerald
Call transcript
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Operator

Good day, and welcome to the DXC Conference Call. Today's call is being recorded. And at this time, I'd like to turn the conference over to Mr. Jonathan Ford, Head of Investor Relations. Please go ahead, sir.

Jonathan Ford

afternoon, good and you, everyone. Thank joining I'm Quarter DXC Second for XXXX pleased Earnings you're Fiscal Call. Technology's us

Our of speakers accompany post our the on President today's includes we webcast call will be will the And today. our Executive The is Relations webcast and Investor After at Officer. call, dxc.com/investorrelations. and that Mike on Officer; Paul discussion Financial these Saleh, will website. slides Chief slides call section being the Chief Salvino, our the

subject Technology's believe DXC rules, and investors. in These measures. that most includes information participants certain to of measures be our call informs can with on we reconciliations X, risks our financial presentation certain reconciliation and a actual in directly these these uncertainties non-GAAP on differ Slide our comparable earnings A forward-looking. tables SEC These to provided accordance release. other and we comments from results On make Form on are the known found included risks In SEC measures, provide measures of included GAAP Slide adjustments discussion filings. have annual certain respective today's call. further to which is X, will expressed in could those we useful their cause be that materially uncertainties XX-K which see to and the the to you'll and statements report and unknown

of current moving to like and Relations Head DXC's also take will I'd M&A Murali, also announce this to leading Shailesh Strategy opportunity forward. Investor be that

required on the obligation our by Finally, as I presented update DXC to like the listeners Technology that except information law. no remind to would call, assumes

Mike? CEO, DXC Mike introduce And now to I'd Technology's Salvino. President like and

Mike Salvino

outlook. provide one and After for afternoon, on moving style the to during everyone few the DXC's through this quarter that, over call full-year strategy the technology begin the covering Paul I'll to I'll what a and I'll hand forward, business, second from highlights clarity, focus stack. Jonathan, results of my the discuss to by we and walk My observations then joining plan is thanks. specifically the call. Good call enterprise thanks today. which is

cover priorities. color results our close of review I'll our additional on by Next, of the the providing assets. we will strategic Then

extremely Over the our of quality many and talent experienced partners our largest of with more months, each has global of the people around our since had I've been to DXC I've met taking than two meet that past with XX the the base these the opportunity strategic impressed role customers, XX,XXX talent. I've our people and world. loyal of of and

the customers. very Our DXC with the people personally our scale has reach significant customers global and operations offerings. talent, Company every than who I to DXC to XX our who people have are numerous global a across work and more met technology with years. been for loyal day,

we security example, billion over For have revenue. $X of cloud and

systems. $X.X revenue companies digital where mission-critical of in of a and Building loyal base many has have also in on that the We billion run we DXC engineering. point, includes largest world customer the that data their analytics

the many opportunities in wallet. these of share accounts have We of increase to

look as applications at been well our taken as includes solutions. DXC's I've fresh I've core ITO capabilities. As pleased a This and very digital with businesses,

insurance, and and on. a very I've DXC's key healthcare transportation. foundation IP solutions have differentiated travel with strong in such build and industries We to also been automotive, pleased as

DXC enhance I've also needs Bluleader for seen Clarity enhancing enable transformation the Virtual improvement and innovative to our record Company's will with strengthen capabilities address through and areas of in that and our to Virtual including to our and roadmaps growth. capabilities delivering capabilities, cloud assessments several customers. strategic Clarity. track impressed will been acquisitions, like application SAP recently Bluleader I've Luxoft, Finally, assets targeted

phase complicated teams with operational improvements, operational and pyramid our Sigma more along automation delivery our Bionix, cost proposition. more to people employee optimization, called the on excellence focus We of execute value the Six DXC's deployment this strengthening able program broader First, were of areas leveraging not like our includes principles. to need

Our be at new work also and path clear DXC, rescaling career opportunities retraining. with to their the people need to about for the and opportunities clients,

these create Being which items satisfaction clear about are an improve will increase and people environment where recognized retention. employee will rewarded, help acknowledged, and

focus to need integrated also We selling on solutions. more

integrated from industry offerings opportunity capabilities. providing many multiple We DXC customers our an individual to services and shift solutions, have for of leveraging to

Next, the as have some bookings margins, negatively on impacted lower which delayed have our in execution challenges revenue actions work delivery placed additional recent customers results and from of large customers, hold.

for We have we running to footprint but to this, customers. right operations. need will the earn By a accounts, recovery job doing our these we underway do expand plans better with

current unclear operating model complex, The resulting as decision accountabilities as slow is in well making.

on be emphasis regions greater will We this with simplifying our structure and industries.

we VP Kristin, Corporate deliver the largest technology regions providing are are scaling believe to Delivery the on as five business of to our and Finally, of mission-critical we to Six hires Vinod augment senior has on points I've we're is been growth operating our leadership will case. this Transformation. challenges. and DXC underemphasized, Mary we the U.K., EMEA. two ITO. of Doing will as I of focus our pure these make model on Steven on our each this when people customer future and that will in of running will to simplifying these our to CHRO. invest customers, services to opportunity David focused made have of a Overall, focus our amity, enhanced of customers. existing of and service business. team the fixable EVP this innovation each delivery Sigma global as already on on Global provides well Americas, to will voice an our focus customers services our accounts with the specifically provide With listening strengthen for particularly many foundation Operations. focus our sure

businesses is there we Again, while forward also run these more effectively, business value. unlocking to believe an path - exciting

left key that will we them strategies. help stabilize meeting earn accounts running people, focus On Doing involves delivery expectations. work the ensure is business and to side, On a to execution. the right we'll that customers, customers, the as halls think our this additional their with walk ensure invest and operational on the stronger and clients' we our through they

On to people, which employee acknowledge people, value investments strengthen make proposition. and we will our reward our recognize will

and have outstanding we As enhance sales, areas to of will invest started I adding discussed, On we continue delivery. execution, add management, our will in to leadership operational to delivery. DXC we team account the talent and

to going which and re-emphasize our also We our we forward, will accountability simplify business drive the ITO way we will critical together to is increased work success.

as as On slide, of evaluating a of goals. includes the value strategic well the right outlook, execution new unlocking strategy a side clear

execute customers. on what I a strategy enterprise our will industry focused call technology and the focus will existing We stack, around we solutions sell

three also alternatives current for that fit our will strategic be not pursuing XX% We in of These revenue. roughly strategy. our businesses focused do comprised of businesses

to Additionally, while investment-grade a pursue maintaining allocation approach our balanced we credit capital will continue profile.

quarter our Paul will second and outlook. second-half now cover our update around results,

Paul Saleh

greetings thank everyone. Mike, Well, you, and

are of primarily workforce pre-tax integration diluted million in $XX diluted covering quarter, we to of non-GAAP I'll or $X.XX As transaction-related second In related some pre-tax restructuring items $XX start optimization. share, our by quarter, million had the share Also and cost that the per excluded $X.XX we costs. from usual, or results. per had

intangible amortization second in the of capitalization. was goodwill per the quarter, was market which quarter, pre-tax million share. we decline triggered diluted a In $XXX by Also our $X.XX acquired or recorded in impairment, the

billion sheet the value of part $XX.XX carrying values, of impairment non-cash market per to units balance share. a the $X.X reconciliation recorded diluted As our or reported charge of we

the $XXX tax the portions a million share. share lease quarter, HPE of prior related a the arbitration charges In had from in or diluted second We results 'XX, this period of per excluded the received million fiscal a reconciliation million $XXX During for damaged or to $X.XX we back per the quarter, related $X.XX restructuring we specific dispute. our to and award adjustment to represents the award. the capital from $XX diluted

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

benefit of connection and his made of award in $X.XX with from interest the arbitration of $X.XX Lawrie HPE includes related Mike to payments the this retirement. to a expense Now portion

Digital Adjusted Now, quarter was in European contracts, second let the in we of basis. more Luxoft, billion revenue a quarter, in XX.X%. the XX% million what a year-over-year on continued currency. revenue second XX.X% revenue turn and actions, Traditional cost of cost was quarter, second billion, contributed and few $XXX down was EBIT Revenue Luxoft. up X.X% our quarter In In was was EBIT adjusted $X.XX IP points revenue was up $XXX from lower performance. delays quarter on quarter our migrations. our results I'll million, cloud anticipated. to to GAAP second year-over-year, me XX% well expected driven was was the discuss transformation continued as revenue overruns as the and in which down few the billion, detail. a profit comparisons in in by All than constant delivery X.X%. impact the off Industry $X.X excluding including $X.XX up BPS had acceleration margin the be will

we've in traditional IP of our book-to-bill XX.X%, the global the initiatives. was times, X.X mix X.X planning and of In times, and book-to-bill BPS times reflecting X.X was ongoing on was as income was times. our deals. large seen was further tax several Digital delays benefit the quarter, rate Book-to-bill and X.X quarter non-GAAP tax book-to-bill Industry

XX.X% segment our up to turn let's GBS Now, revenue $X.XX year-over-year. was billion, results.

up profit was revenue segment margin and segment that was year-over-year. Excluding $XXX GBS profit Luxoft, for million X.X% GBS XX.X%. was

the margin than cost as making bookings BPS. quarter and complex slower times, X.X countries. of and book-to-bill in the reflects expected the in we're well industry primarily as hiring lower driven training by GBS IP digital Now our in talent, was in pace investment takeout GBS

with stranded in profit deals billion, year-over-year. reflected profit than takeout GIS down was pipeline well conversion GIS we as reflects a improve in million book-to-bill cost as ITO segment decline work to quarter the X.X of GIS revenue and in our to opportunities. was slowdown related our delayed X.X% traditional margins the of the Our times, $X.XX expected business, X.X%. customers service. delivery lower select were impact GIS was margin actions costs as and $XXX

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

reflects facility the management $XXX by in use receivable expanded and of improved million Now, our capital quarter. this working

Now, this true facility facility. non-recourse sale a is

Our capex revenue. the or was $XXX quarter million X.X% in of

$XXX million of we our $XXX returned dividends. paid During shareholders. we capital million in shares and million quarter, total, to the in In repurchased $XX

to very the capital expect close look to during XX.X%. ongoing for in CEO was at the at now the several strategic We of the quarter, to so we be have because of shareholders, debt ratio end our returning our opportunistic quarter billion and but total net limited leases, opportunities maintain total more our end investment alternatives transition of to billion, Cash our capital of a repurchase including the the businesses. of more was shares will and $X.X evaluation our and profile. capitalized was credit at debt $X.X quarter We

the primary more turn let now provide factors. on new driven for $XX.X in is We're fiscal year. revenue and guidance revised targeting by Now, our revenue $XX.X three billion. details range of billion to This me financial the targets

that First, U.K. was we've particularly close during second large deals several in in delays additional the that to expected and the had and Americas quarter seen the we

included the during a in year. And less deals few that we $XXX quarter a previously expect our million second about now, lost plans. as half this were revenue also result, revenue We

due year. due Second, certain placing recent million revenue opportunities this revenue million due to existing delivery now that issues. to execution $XXX This on customers we hold. is was execution $XX amount of customers, expect less at to

recovery underway these have accounts. service levels improve we to Now on plans

given to disruptions We outlook alternatives announcement pursuing we are the strategic that $XXX also businesses. for three our million adjusted revenue by our reflect of potential

an investing mitigate Now aggressive our to focus less these environments. on a now and on and opportunities third, our of customer modernization ITO business in million of the declines pipeline expect application revenue in we We're with capitalize $XXX businesses. traditional infrastructure

$XX.X for revised assume billion billion the $XX.X the increase slight of year, second to half half. a compared outlook in revenue with first revenue Now the the

adjusted targeting range now are to $X.XX we per EPS; to share. the of $X.XX in EPS Turning

Let of cover drivers outlook. of the revised me key this some

the revenue to reduced translate or of strategic for share including roughly million to impact disruptions EBIT year this forecast announcements. potential First, per the $X.XX less related $XXX the alternatives will

cost Second, we $XXX share. expect from benefit now year actions this takeout $X.XX million or less per

in well a deployment move we've seen talent as delivery We've $X.XX EPS. for the license need including delays engagement a Now global pace consolidation, which into enterprise phase as of this our we and such into impacting greater rationalization, operational optimization customer cost translate initiatives and complex per more more of is in an experienced maintenance those additional center as as the improvements, several of Bionix, share takeout. broader experienced also

to to planned. originally longer cost is We actions execute believe that are continue taking these we but it had achievable, than

we This on also includes plans accounts. $X.XX infrastructure and key and $X.XX fiscal to second complex per EPS overruns share customer Third, investment is such than operations in of account to revised strengthen a $XX expect or few expect key augment we few million our cost sales. our European This on half in areas investments outlook large within this a and - talent core issue a $XXX recovery concentrated higher additional from EPS issues our includes or million as contracts, transformation programs. resolve this to industry these year. Fourth, of expected management services to

The per the second half $X.XX revised to the of half for margin half. the the versus versus in to assumes year. our a year the of target EBIT share of first between X.X% EPS the in XX.X% of XX.X% $X.XX and $X.XX $X.XX And $X.XX range first

that cash of that capital coverage. settlement working target second from or XX the of timing for as now for year conservative more contract make year, payment assumptions half will insurance flow full this the a the reflects fiscal to net expect in we this is and but income, Our as we XX% well more amount recover adjusted

turn call the Now, and to to Mike strategic discuss priorities planned our actions. back I'll

Mike Salvino

Paul. Thanks,

with execution against this We guidance are cost pleased our revised the not clearly and poor plans.

taking are execution. with improve and to a customers, operational steps We performance our focus on People,

be believe to focused value able that a will We due strategy. also unlock we to

DXC, business Customers Going technology focused traditional business. one will two. forward, a the digital as stack one enterprise on DXC will not the versus company run and see

mimics slide So of it view stack. and The left enterprise the how journey thinking this stack of enterprise I technology customers refer with to our technology technology what is is the strategic the the reflects those buying and security starts that includes services an are The is second level services, none. installed DXC to cloud the ITO. foundation bundled. that fact with has This customers is base next which their

capabilities ultimately customers. stack insights business Moving layer to rationalize critical harvest up customer application deliver engineering Then data to services modernize its workloads. and we cannot leverage and own. the the stack, and manage on is where can provide technology analytics our We generate we the for

integrated have will also and provide We to industry to deep expertise industry solutions customers. we do this by providing our

some these from silently expect the on need of runs upgrade their me assets customers public not and they environments this are all support of DXC slide. of workloads trust. can Also, run who Let you they customers, operations systems the is as Many to for heard that private customers. with understanding the and someone as experience customers these scale. feedback to which of be want to side migrate our a provider mission-critical at They environments. our systems our to right executing and cloud. share deep to effectively. I've can our need with requires partner on-premise with well They and cloud This recognize trust a demonstrated the going

Security customers also top them to in expect bring is deep a expertise area. and this us to concern

current and produces grow Overall to they DXC scale. the that looking message are customers customers. need provider key include with position who these service technology strengthen opportunities businesses of well the has scale focused to our customer is conducted want We forward with a enterprise show strategy. that insights analytics growth. capabilities missing in understand our reinvestment review aligned portfolio that their how we've stack that and DXC is business digital to mind, DXC's to and opportunities for capture Our to our the against With moving visible confidence,

see to pleased capabilities enterprise stack. DXC each very of was at I layer the scale First, that technology has against

applications $X.X $XXX $X.X the and We and services, roughly ITO analytics business billion engineering Advisory have security, including million and and billion of in in and Luxoft revenue. revenue, in X.X $X.X billion cloud in data Industry IP, billion

of to DXC's businesses. the Now, discuss review of current I'd outcome the like

evaluated our technology to to alternatives potential each the about We the strategic criteria, stack; two, create to total DXC's one the solutions; XX% business. importance Out three, three against strong. that businesses services pursue and unlock of wanted; are and customers BPS value. U.S. workplace businesses, these ability business to for These our have Health enterprise of revenue. analysis, the four, State decided human what the businesses and Industry and following represent or our horizontal businesses mobility Combined, local we of business and

human state services in horizontal meaningful and leaders, U.S. health are BPS we local and our our and businesses have and IP workplace business. Our market

When value ensuring a or spin-off our alternatives closely or actions could that I including financial transactions. unlock Throughout meeting both. range we are people, potential strategic customers other this we remain of commitments say strategic our to involve process, to with to our and buyers, divestitures a will engaged

based our now financial provide on plans. these some will color on expectations Paul longer-term

Paul Saleh

just will portfolio, grow By alternatives on to value. strengthen executing those discussed unlock a more ability strategic Mike focused DXC's and create

three excluding than the we to revenue of Now more businesses coming half with those Company at $XX fiscal from have expect by 'XX, of offerings. the digital billion revenue, least would

global for XX% perform margin to while on margins be We're conservative more cash We industry taking level accounting a peers. after at or industry continuing even conversion to consistent investments. also expect also above flow This view with benchmarks. is

we of these to be roughly $X that generate three able will proceeds billion capital also from We net assume businesses.

to dividends or and shares next pay quarters. deploy $X.XX more expect repurchase to over XX the We billion

this of market our XX% about current represents Now, cap.

billion $X.X In that share least X expect EBITDA investment-grade allocation credit moderate times the of as debt to approach costs we and adjusted capital 'XX, integration $X We these and over This with to by a and reflects debt less. at or plan will profile pursue outlook our reduce we of EPS least our target restructuring, balanced of couple to years. after than also continue $X.XX at protect transaction to more expect fiscal of next EPS our per costs. the

I'll now turn to the back Mike. call

Mike Salvino

Thanks, Paul.

conclusion, DXC in in excited So lead point here I'm time. particular why at this to is

industry large mission-critical the due are all XX cost-efficient reduced unique compete, in where DXC's DXC's has being an has clear and opportunity who ways deep have years, Three, DXC recent three has experience. different structure with positions facing has scope Two, service can history customers. DXC factors. firms to cost that the your enterprise they in for it's are significant in need of very in capabilities along me services at technology someone scale compete. IT seen and and to to lived As a stack, customers over ITO its industry across ability the challenges transformation boosts and One,

optimize inter-goal and from We're our layer, service, across strategy a need Customers bar core help raise technology transforming to - expertise them our will customers' clouds. enterprise modernize architectures, stack. investing by equipped the and and IT thrust focused main DXC and to that and private much-improved stack, like that needs. a away ITO customer data in our and to, to our going DXC's structure to leverage it plus make their in IPO orchestrated we're cost the help the focused people across be customers This partner all their secure our we're the hybrid on public, going strategy our to are now and focus to are the not enterprise move technology with in

up open for With please the that, operator, questions. call

Operator

Rod ahead. Please at our Instructions] go first Bourgeois take from DeepDive [Operator Research. Equity question Let's

Rod Bourgeois

Okay, guys.

quick Mike a for Paul. have a for follow-up So I strategy and question about

infrastructure that your So, in will strategy stressing Mike, reemphasize business. your you're comments outsourcing your

is is, a question of today in to erosion on ITO why light the in focus strategy my sound that's that business? occurring So that

Mike Salvino

layer, And also simply we've through emphasizing you put position good the customers unique in deliver the to your By is, right? get and business. expertise when way bottom the customers, un-emphasized - Rod, heard look, the hear industry a see all my clearly ITO. from for that We is experience it what of have more is, line again ITO you. strength I got I and from you

ability the layer. not stack, the get You move stay to up the just ITO in

strategy. digital applications. is about what strategy is along So this both and with an It's ITO and all

are had you not I The other of put hold. this market - had in looking Paul going meaning, that going away, that work the right, will the on it's to but go the is hold. not is what or today's workloads of put continue workloads XXXX. we said growth and also say private to And underperformance thing in understand we've heard validated cloud. on-prem XX% that be decreasing all because clouds on the We've to is

stack. the that us alternative I strategy So, we put will our and line around allow said that Anything us needs all itself to should going to look, look together enterprise not basically strategic on focus help to strategy put - lend Rod bucket. grow. to bottom the is be focused that, in the is and the technology But

Rod Bourgeois

that All the the very of then revenue right. business execution. in Mike, attributable numbers, is implies And sort it - just particular to in challenges in GIS revenue the heavily breakdown

You some the secular in What's on how execution? GIS clearly much also secular the your problem versus is of take business headwinds. had

Mike Salvino

you Rod be - on know moderation with that think I decline. will our of, revenue the focus So, negative look, re-emphasis

roughly majority away, X% what maybe market seen. were we there majority Certainly, of than around studying. I much I movements because is to is what the the higher market that think think I've XX%, is is were from But that a and declining of execution the execution that's some that.

Rod Bourgeois

So what's And look number out then be as in at get scenario you've that revenue level And estimate you're get modeled fiscal case estimate 'XX? appreciate side to then would expected for how are viewing that estimate. the this a is the P&L more 'XX, some fiscal fiscal that or helpful. on to stage color color 'XX you that of to more 'XX? a revenue the Paul, conservative on I P&L modeled, out like how you've trajectory revenue like particularly right. to I'd on all Okay,

Paul Saleh

That's question. thank for you very - the

making also the the continue - as a those and above business be mentioned, to Mike maybe that to 'XX, outlook at to for we as the we're assuming As the going grow And ITO traditional re-emphasizing in stack the market in our for business. rates, have or business. of our particularly an in application investments result And across to results. But are well fiscal which decline businesses showing already a rest the the through moderation of high-single-digit. as we been businesses

assumptions on we that's what that the you're to the So that basically the are near-term. going And we outlook able here are achieve. putting be is, to confident are

of going alternatives plan page. to work for fact, lot that's of as have pluses that be now, to than as businesses. try up more In far months. and trajectory coming ahead our as we right are the internal of actually really that now would mentioned, better whole we we'll you're showing strategic the Mike of have just you the is right aren't - learn And looking the to do why And Company, XX% be across revenue over us at a three there the the that,

know you we we're headed So, to 'XX. we're the thing can by one fiscal near-term, where going in we that say is know we where

up. will So visibility of time, shaping with - provide you be into the, fiscal will due how 'XX a in we some greater

Rod Bourgeois

guys. you, Thank right. All

Operator

[Operator from Instructions] We'll Please Wolfe question next Darrin take Research. Peller at go now our ahead.

Darrin Peller

the double about cuts after also guys of review. guess how about which bothering even be could I'm I you revenue just basis. okay that lead cost on and I being margin meant we're to low that be was that curious from you pace. payback now talking great in would lower? now I prior profile investments even that Thanks, to about inflection. made some would We have really Mike are think plans, with hearing it Shouldn't the that still guess, a the different came coming just potentially a given and is you target at But call is obviously, do in some net a probably talk right. be why digits, if that we All now a guys. of your on business investments it the just hear, a you investors heard

we a the I talk investing cutting now you're you you where more XX% than have about costs? margin lot could are on a one And then low basis? double-digit profile is that So that and just just range. net right Are follow. And

Mike Salvino

Okay.

it there for look, and to from still in. the opportunities me, cost of is let more Paul problem us then to also way are takeout. for invest can we get But there going definitely The take costs. rest XXXX rate So the

to So as optimization, at be When those. cost it much have right. gearing we we after is operational sure to the right, as look structure, then want up at as are go make mot excellence. Bionix strong sure to the tool, look I And that to I pyramid I have, all I but right an the a tool scaled regions. cutting across that we needs want when refining make we've got organization all is that

and customers, towards also thing The very on our investments, operational second investments execution. are towards targeted people is, the the our the

after building teams to compete our the And and all than more we structure customers. cost piece should space. cost with enterprise this right around technology a with continue to things, to augmenting my on are comments I that part is focused with investment it's when back right the to you be that's coming I'm and And I operational the come I right it structure to to cost. to the I I new right that at capabilities think the would that in that. in said I'm you areas lot that grow. So think excited continue But of able where stack, the got look I we're strategy, focused say about execution is, mean, leave definitely

Darrin Peller

Okay.

Mike Salvino

Paul, on board numbers the those and revenue The on listen say EPS. I on the across are to is other thing relatively when would numbers flat you

Darrin Peller

okay. Right,

Let [indiscernible]. touch me that just

Paul Saleh

No. Yes. about margins - near Darrin 'XX your fiscal the asking the question, or answer you for were I just about you term? think for said

Darrin Peller

number right longer-term of more really even your is - potentially - terms the in what whether we lower. in More XX% minds versus versus that

Paul Saleh

reason on also only, We a few we not we XX% with And then the continue to on the have felt a Yes. extract why team Mike the building particularly plus to the XX% does the as help business it. page for efficiencies next years execute from mentioned, that. greater over put to because opportunity and

loaded some at of the two it, You businesses the corporate particularly have alternatives, to average. margins see looking fully our don't strategic one margins mentioned that of we're but the above there we them dilutive that that for because are

And also, will thing. see our is then long EPS term one you that's also up. that the So going in

Darrin Peller

That - right. really helpful. Thanks. really is actually that's All

the one quick around is Just but those follow-up strategic - alternatives.

you us 'XX. that around growth And prior you of I a the total of divest. thinking timing that billion fair? assuming like by the guess questions, you're about on perhaps? don't assumptions, help talking And revenue flat then billion that to follow - everything $X as the Is those maintain in divest, maybe assuming $XX is can just it about assets the understand Just and parameter that that's a sounds that revenues you everything of then profile

Paul Saleh

Yes. No.

months, businesses. is about lot to about first each the to - of provide the effort, hedge how teams. of within think I one going not our those we Timing, XX provide would is getting what a those for of say next one don't details lot businesses; I we're a that's

to that we lined - Rod assumed able that we've maybe mentioned get with growth, And to go to we'll is get have tomorrow to growth And as consistent revenue the we coming from well as also up overall, going are firstly X% X% I additional done think we've to acquisitions. over soon some about what a that we're so ago, as before assumed grow. that thing from going And minutes timeframe, acquisition done. be and

So allocation that that's the timeframe. of part capital over

Darrin Peller

All right. Thanks, guys.

Operator

We will next now Lisa at take Ellis from Please the MoffettNathanson. go question ahead.

Lisa Ellis

Thanks, afternoon. good guys. Hi,

of down the Another to see you follow-up pathway. on alternatives, strategic this good kind moving

in the bit aggressively you. using kind $X making debt talk or share two? and of little How kind reduction, of financial the how acquisition to in another Thank say the and of you're weigh another larger did returning repurchases you growth? could maintain or billion you health expecting proceeds about just for a those proceeds, weigh With versus more of decision DXC the investing you Luxoft

Paul Saleh

quite and We factors, bit weighed then been a I these and have of all time. Mike of

Mike Salvino

Yes.

right? layer, - I there together of debt. we're flavors is balanced is the opportunities, So strategies Clarity. structured shareholders. at is of is looking up the value Clarity right, it clients of the love looking to guys and IPO asset management at and and He saw Virtual to saying Virtual that mean, very move Bluleader, starting we I'm at I looking hopefully, program terms you why Paul - returning a looking a focused both some specifically that's in Lisa, the putting Clarity. approach, Virtual stack. way said, But and and stack, at in

be tuck-ins, the at start call to So obviously, when we're maintaining, tactical we while grade. our we it balanced, but proceeds, looking investment will all continue will all do I right, right, what

Lisa Ellis

you maybe Mike. then, And just with my follow-up; Okay.

- are a three XX-day clients, your a how with top say of the of, over you've lot working with Thanks. that lot of out priorities? you sort are months out three been - You on? or areas personal you the what four next to what six look are focused partners months, mentioned you like personally As are

Mike Salvino

it our customers, people The I've many operational the days. XX last people I execution. over and mine is times mean around said so to

want them of contracts they customers, because think bit XX, need around some I these to five, years. we more right an a opportunity, contracts have have right, from little we XX delight these just when a adjust, And standpoint to we even been do about to listen need customers. So to what

I customers. we're the of to want listening to make So voice the sure

do management. bit me a quite around account see you'll So

and then all people; [ph] is all key, the people, the write-off is before. that's And our people. lose say, [indiscernible]; you operational execution of that first standpoint, business, in the employee you right, lose the operator, terms right. my I value right, second proposition in heart. by The from an mentioned I'm what that And

you some the at just looking we inefficiencies the put execution. out I'm like what get of around manual break. And done. that right, sure because you we technology, pyramids. the And technology I'd last that's to the is the then in use, around avoid one you anytime at looking operational I'm hand-offs, make a So take

put, simply people, Lisa. So and operational customers, execution,

Lisa Ellis

appreciate moving clearly pretty lot, last Terrific, been Thanks thank the for I a decisively And over guys. you've thanks that. of you. months. here couple

Mike Salvino

Lisa. you, Thank

Operator

Bryan take next I'll question Please Cowen. go our at from [ph] ahead.

Unidentified Analyst

curious ask Hi, issues in to were? thesis on? there do proposed some pipeline, on then can you how going some color of the kind what plans shape? give it I'm for - is Can delays. think execution has or take really on soon Wanted of the And client-side afternoon. good predominantly you the bookings, are left still sense what been the guys, the the deal recovery us a factors all client of

Mike Salvino

on that our highlighted on that we've you put right, the been and deals, guys matters. in hold So of largest for some accounts, right, I

And believe potentially nothing than so in before more we better actually were when be get client they fix get you back. business. I There's to to those than a better can

Go ahead, Paul.

Paul Saleh

not deal billion I'll example, had for And Remember didn't make we XX%. response are strong because lost saw quarter, that worth the of takeouts then somebody and the lose those XX%. to we because of add. talked the first a decisions. And from from came have Yes. price They at we through are people and book. quarter quarter $X we right of didn't more were then from to to in competitive about to we and were we moving second the ready a not We able slipped to would else those that offering, customers deals willing different match. some those the

fiscal the early had quarter, 'XX into year So we've move in this we second and the originally than than anticipated in some to more are seen the being right - - fiscal of deals 'XX, now. part slipping for half maybe fourth XX%

Unidentified Analyst

Okay.

here. a So - it sounds wide a mix like pretty

as far that that early to is it too in on give Can determine? As success sense the Any trade-off seeing strategy still traditional us a cases cannibalization action. Is business, that's the early occurring? here? how you're been you

Paul Saleh

in look percent that entire XX%, I and up even If some showing you're board up XX across qualified are plus at we pipeline about of the seeing positive is seeing think our I pipeline. the digital momentum. revenue going up

we're issues early that it, that by that of the other and some seeing of just highlighted have it's of had the masks the things but signs we impact on So we has some term it near also I meaning it - execution the delivery encountered think business.

Mike Salvino

Yes.

still that and to So, Bryan, I away. I - has I got I here all keep there's going of is, right the of apps, by business ours interesting ITO on-prem the looking go customers, at all everything around is is IT good And at they Not need going to data. debate, should thing the facts specific been is, content is the move taking. the we XXXX. talk they're mean will those this are thing the saying to go cloud, our will I modernization right. that's workload still looking to the a market And right, looking sudden, for when business XX% and get, be today's to that's be that

is it's and we've done to seen If year share. this to is, three in I've The the end with emphasis market be look second my able seen why the done I've we're our grow to what look said, at per is on get And fair point X% you digital market aligned we've our moderate, we should numbers years. ITO, the at going XX%. continues when in the when strategy. able right, to I next I that's down decline, X% digital, between business be And grow. for what business with ITO, the to thing that all anywhere

I bit where it that's on to at but my for time, will to take that make a sure plan just got we've place of done get the looking everything that. in it and Now, rest XXXX of little head

Unidentified Analyst

color. the for Thanks Okay.

Operator

Foresi ahead. question Cantor Fitzgerald. Joseph I'll Please at take next from the go

Joseph Foresi

wondering questions of was here. X% just X% I or kind

First, they all kind that? with feedback what in shortfall I'm leading to curious it, client? But been different quarter. of this in happened particular The business was going Mike, competitors, has the. this sort of kind the road, in I the Why some of around the the of lumpiness quarter bumps all associated are to is? it one quarter a Was execution? I'm and the number on wondering accounts, there the up know just the timing it why and of

Mike Salvino

Okay.

all very sit all That's know, go, like. delighted and service. make looks do on we work we're I on look all a first sure how beginning, can accounts were XXXX different in I I lens I in about there And the clients, mean, good mentioned these I things XX these focused focused I be the more accounts when to the cost right, our I of been on that. you want a on - up XX investing we accounts, definitely ITO different the to layer, So of profile. look, we see get don't take cost-to-date terms on take push and what so. but our want that very when look, has focus in right, stag. at right. the widespread you you you roughly enterprise assuming move

next your was What question?

Joseph Foresi

Yes. that competitors it I'm or accounts just execution? curious, of went a mixed couple was batch to it a was of - like

Mike Salvino

No.

Joseph Foresi

to think cost it? sense and by delays has caused trying the what of about should get how just a I'm like we

Mike Salvino

all us and the have to into I All created in us, from some with looking dealing with This clients, This And okay. us us in additional okay. customer service movement at that or happy, terms grow the call ITO, right. trusted focusing, happens, for they layer of on IPO work. cloud. level right, is said is what want IPO right, refocusing de-emphasizing the And customers competitors, issues. not to All accounts, And of our it's aren't people they go right. in I an my their trust not an comments, clients put When hold they've years. - like obviously terms

in and up all this there de-emphasized right, will relationship, then bit, we've basically again, that us to grow. we've help that sure business a fact back that the So get got and

So logic that's there. the

Joseph Foresi

secondly [indiscernible] taking sometimes, that's place bought long confidence right? you've Got give handle it, you've on the degree do time, that, some you derisk feel just of mean of and sort what the out, to feel you And taken are you this like then outlook business that level at like we And got on a point? bleed I provided, that numbers sometimes us a are the good and would able guide to appropriately? some okay. Because

Mike Salvino

mean, on get of a very around, I experience put it. top it. I confidence and with I we I've my right. along look, got undertook that, Yes, right, And detailed process

numbers. think in numbers The I our in relates FY the is revenue XXXX, strategy Our again on model. highlight to Paul saying that approach with, 'XX we've in would as margin. it conservative our and you Along terms in signs highlighted the for detailed plus of I a that taken

Joseph Foresi

is one than last to able answer better very be My it. you'll anybody. and Got

they've worked over their so, Do compete Thanks. you've you feel can you've if against missing what gap DXC done. execution, seen that there Accenture, you that saw you're seen closes And like You at what here? them? that

Mike Salvino

with you team space. Right. thing. we part that look, going, I We've scope thrilled looking at of to the and and about scale that, along know a can it's I confidence that when when gives forward right the we're right in me win. and enterprise, all where right, our think And got be I'm So look to strategy. DXC, right. technology this I'm competing stack

an my So, to and in I'm And will years. at the that's totally grow. team if of brought I the you not back table. a businesses and I look you customers, I've customers, I the went I what of hearts operational execution, That's if developed Accenture you close to the people playbook, get that a and number think with And right, from to standpoint, And all in playbook of to terms minds starting right. people over playbook right. operate, that along bring all win

the of a just part out. what and we So but I strategy thrilled be appreciate laid DXC to question

Jonathan Ford

close operator, and the And at call. ahead this you. Thank we go will point,

Operator

Perfect, Thank call. you disconnect. for thank This you. today's participation, concludes may now you now your