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DXC Technology (DXC)

Participants
John Sweeney Head of Marketing and Investor Relations
Mike Salvino Chairman, President and Chief Executive Officer
Ken Sharp Executive Vice President and Chief Financial Officer
Bryan Bergin Cowen
Bryan Keane Deutsche Bank
Rod Bourgeois DeepDive Equity Research
Jamie Friedman Susquehanna
Brad Clark BMO
Lisa Ellis MoffettNathanson
Call transcript
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Operator

Good day everyone. My name is Kellyanne, and I will be your conference operator for today. At this time, I would like to welcome everyone to the DXC Technology Q1 2023 earnings conference call. Today’s call is being recorded. All lines have been placed on mute to prevent any background noise. there a remarks session. speakers the will question-and-answer be After [Operator Instructions]. I At turn would the time, conference to like this Mr. over to John Investor and of Head Relations. Sweeney, Marketing Please sir. go ahead,

John Sweeney

us I'm Thank afternoon, Call. Fiscal pleased for Earnings DXC that Year you, XXXX Technology's everybody. you're good Quarter First joining

which that President the included And presented other and DXC the today Salvino. actual Mike? Certain speakers XX-Q slides cause Form information obligation CFO. are includes today. webcast call. of report is required risks to that, and call, and webcast could CEO, at Chairman, This a Chairman, Mike our DXC like included to Relations, discussion reconciliations update except comments which on found call and we and President Ken make includes in I'd those DXC remind to with Technology's reconciliation Mike materially release accordance today's and provide listeners webcast law. comparable on Salvino, now will measures, that by respective call the accompany uncertainties, we like provide expressed annual Our with is and these SEC call will measures can to to the from filings. and CEO; be I'd no be Technology Sharp, introduce Investor Today's discussion slides. known as the earnings subject uncertainties these non-GAAP the the forward-looking. certain to uncertain our directly believe in differ statements on These results this our A These be on and their risks will our to useful EVP our being investors. in presentation financial and measures. tables of we the in and information SEC the rules, most In GAAP on assumes

Mike Salvino

will begin appreciate results. hope families our of doing with I agenda QX I you the an call everyone are And well. John. your and Today's overview Thanks, joining today and

our finally, transformation financial more some I the Next, questions. update And call on the for will our will I detail opening Ken you updated in journey. are before with and guidance. up our will make then making remarks closing discuss progress we results

But shortfalls Our the is quarter, can see, better. with we value. right do transformation as plan good need for to creating XX. you news journey in FY have the we The the is

We our is that focused work laser accelerated with team executing be needs operators. are on control. plan And within this my to of the

debt that generation, produced We flow to of company quality nice highlight is being managed. our capital reputation we has have done a investing talk I quality that we are, cash I improve positively that have company a and industry. deeper stronger job well customer free in the our business relationships to about allocation our in of When continue the want changed and

higher communicate we improved that And relationships we The customer We moving have have these shows now narrowed strategy. finally, to are during towards our deep mix We've were the our consistently revenue while portfolio governance GIS, our we customer Concerning and and shaped NPS [sawed-off] GBS declines we've distractions of [ph] relationships. of significantly. the value GBS. delivering. that grown calls, score that business businesses because

of systems. Our evidenced is And higher us the which GBS customers with mission by their us critical our value their needs, trust growth business now with business. trust consistent

for that we and turning quality their deliver us to workplace existing the ITO have built Because and customers. modern our for and customers of reputation company are our we New of needs.

to you the quarter, lower As for year. 'XX with FY plan the and throughout increase last was our heard begin year to them margins

XXX negative areas I on is million out and finally, optimization of is the want book-to-bill am management a end year. everyone negative was and Not team to cost Workplace was We to focused I. QX. remind accelerating roughly Quarter. EBIT XXX X.XX took back be organic; reduce improvement X%, year. being my operators that that the and to cost same of only team but the we our pushed in XXX million we book-to-bill produced are follows 'XX X.X% are by and that was so can clearly the again. and million, deals this, cash expect delivering The QX shortfall do while margin revenue X.XX we Adjusted free was in Modern And are significant our we this purposely it economics. over X which out annualized poor expanding million All control. colleagues that our to currently a our due in trailing of results one at EPS minus XX-month gives customers $X.XX. both in within for experience was cost This FY the XX as billion confidence We that flow ITO said, in the X.X us of was margin. and last from of It's

let some our give around additional Now, color journey. me you transformation

XX, was industry market. higher our their high-end And our the example have in performed engineering score and colleagues. The by be value business on clear of I of of Russia of range. great take used and where offering and us It taken have our well issue in very an first NPS the that pleased customers, the our benchmark most Concerning is which that the DXC, to people the to people with very analytics step and COVID-XX. Ukraine which want now by we care are needs. is care customers way a recent market. we mentioned is conflict trusting is inspire the impacted I'm to join our consistently earlier

way company and loyalty of So we changing works enable their retailers, revenues leading the world's are the one increase the decrease costs. program to to

their loyalty, loyalty use and loyalty their This which can customers This they are manage points is more led so and has where the that technology most data. all increased has better and grow. We across transformation spending the helped delivering right data offers, channels. retailer to are ingest data transforming they their personalized impactful

offering QX, data. versus has consecutive the and to engineering narrowed in to strategy the improvement in step. our is growth. Analytics us by And is growth managing In the GIS transformation have helped addition, with which quarter the the due is grow fifth right In Workplace. declines we grown cost lowered negative an Optimized X.X% growth of that double-digit, is consistently of the GBS. the we in costs the next GBS producing all data X.X% Modern

to stated and for position easier to our colleagues the for have As with us our make cost we DXC margins confidence work work that future. and us I well will our easier for earlier, customers our high improve optimization here,

offshoring, to to conversions, hardware is continue seize network the million including delivery we to like management continue the with want This office space, global the following areas I our telecommunications data center discussed software. market. comprised expect third-party areas; team for will and to of fourth my XXX the businesses means we the that We hire of and that to presence of eliminate also along step and network. is optimization, reminder GBS The productivity actions, and offshore spend the run growing these scale I cost. that business. and staff will highlight with increasing and This in a contractor of are

Our dealmaking healthy a disciplined book-to-bill XX-month book-to-bill and is X.XX. our result still trailing X.XX QX of more was direct of a

were and quarter New work for XX% the renewables was XX%.

we our debt our our expect we the customers to dealmaking in have are past these and we are QX and they economics financially results XXX will has a nice help it make and the we and pleased market quality good shareholders also us making. although be providers million a The are before, have very said we were program, free is and want And with producing job of trend. our areas manage that the hopes aggressive improved hard being that said We've doing customers. Workplace customers grade economically old over industry. we'll that us while is couple improved ITO to below I helped improving level. and in target the better all book-to-bill, debt flow, stable, that let coming on of focused in is safe below Deals the that from finally, demand new know DXC these corporate economics. We're deals DXC that discipline improved that can a We And points, pair are significantly of doing why over can to The allocation being governance. years. short-term capital the ITO and All reputation deliver the was the last that we this with Modern work. Ken. deliver X number way have improve far there. And deals over over and may have we DXC and finally, a Providers call our deals turn financial one. to in DXC the As longer that the through changed the business And delivered has our part that, due margins out I'm deal the investment our And now is because me now impact start. with is of disciplined our And billion. believe term cash Modern on hands. how being we our now, to pushed foundation given back time of believe Workplace get deals for we in

Ken Sharp

Mike. you, Thank

the basis our X QX million. of free end Turning or points million transformation gave cash the QX improved Adjusted better declined journey, bottom EBIT the expectation of performance we our of move to margin to guide. flow we call. continue revenue by on below the flow cash progress than organic guide. XX key was $XXX basis X% forward the our bottom on initiatives, end XX Year-over-year, free was below X.X%, points, XX our million on we

incentive As the end range. cash impacted, including and share is a software bottom QX seasonally the below vendor payments. of payments diluted Non-GAAP earnings $X.XX of per EPS $X.XX, reminder,

Slide optimize network the compared to direct improve margin FX global and to and prior basis order income unfavorable due in to increased We Moving delivery invested year, on our ultimately to to the XX of statement as quarter revenue gross us XX, a cost first delivery costs. points allow primarily in percent declined our movements.

the it costs. higher knowledge and making these transfer While doing is are to leading investments we

In addition, GBS to Russia. well demand made in we marketplace, as deal to as exit investments the with

to income. of points points to corporate Other decreased percent Finally, costs income drive optimize investments made due GIS. XX basis higher as lower SG&A non-cash pension in basis to certain we margins sales in functions. XX we increased a need as

a move pension towards Our balance preference is stronger exposure. by reducing the sheet

margins XXX points. adjusted declined EBIT result, basis a As

Net movements, interest efforts from from and year anticipated, Our impacted is lower lower as down have share cost $X.XX rate interest higher were optimization margins These EPS $X.XX count. higher was rate. favorable, building slower a plan. by unfavorable $X.XX $X.XX benefiting to expense and impacts were tax and the partially a than expense income. from offset prior due pace expense to moved our from interest we compared thoughtfully lower lower was $X.XX interest at by FX

is to by impact a of additional For on XXX revenue an additional an continued XX our due guidance. higher is approximately negatively cost FX our prior the billion FX or the Year-over-year or in guidance. resulting dollar U.S. dollars. points in margins of margin having points meaningful EBIT margin impacting impact prior strengthening concentration million a basis adjusted X XX basis on more of from is U.S. of headwinds

segment let's to turn results. our Next,

in We the a becomes see to business. the continue business GBS as of mix improvement portion larger

analytics continue offset by improvement demand. improvements X.X% XX.X% GBS cost for cost intensity. to lower points five benefiting to and second XX grow basis FX. see and continues by the X.X% GIS margin basis The an profit total assets, business from of increased gain GBS profit in points is XX. to in FX. year For the higher margins grown on of to the our GBS quarter engineering organically consecutively by will was with expect lower driven XXX strong a points With sale margin capital revenue. higher our costs, XX.X% that up margins has down X.X%, of higher efforts, of FY quarters basis we half impacted and partially optimization organic that was value GBS through GIS segment XXX revenues and declined

analytics BPS GBS, Turning a that and GBS of to XX.X%, and declined with offerings our fixed million starting comprise revenue strong applications growth of continued generated insurance X.X%. XXX engineering GIS, up software X%, organic and

from in performing was X.X%, negative improvement was XX.X% point down outsourcing Moving XX.X%. down was fourth declines infrastructure is quarter to our and down at Modern IT with our and security moderating line GIS With cloud the offerings, X.X%. Workplace expectations.

continued book-to-bill discipline see expect earlier. our workplace by increased throughout FY We been modern pricing GIS to The impacted improvement has XX. mentioned in Mike

We cover the have taken market end we of the ensure safe our realizes our achieve reasonable capital. we more of disciplined economics large cost work more be to that competition forced day, pair infrastructure We for to a believe is scale approach IT the hands. believe DXC the has At rational. been of type appropriately

target our As is level denominated denominated. about to At a impacts Slide its euro in decline, X.X $X debt. Debt with be on to to euro continues benefit of FX we due we outstanding the billion. of below XX work debt primarily billion debt, result, Currently, DXC debt are from expect XX% financial economics. demonstrates to sign how continued able foundation. better to

continue totaled prior from capital XX These in quarter restructuring cash of from reduce year. and percentage the We our FY QX the expenses a as to in in significantly Capital revenue lease outflows. expenditures originations TSI-related 'XX. quarter XX.X% down were million X.X% down in

presents capital examine capital our and leasing our flow. cash opportunity intensity to continue improve capital significant expenditures a to We thoughtfully as

deployment, in we debt capital via to and of available to to let about we of FY reducing better asset generation on As finance debt. for interplay approximately borrowings of capital we manage capital and or cash capital XX think to expect XX, fixed lease discuss to lease leasing, XXX expect take moment our repay XXX leases reductions, reduce available capital allocation. million million a capital the FY In purchases for me cash Based originations. efforts

originations to capital be our provides for debt capital would at XXX staying target So or of or $XXX allocation further between borrow lower level the our an borrowings, capital flexibility by debt approximately million. lease lease reduced the repayments million and debt either The by reduction delever.

X cash capital hold our Our billion target XXX yielding allocation expectation debt level, million. is to of available for

Slide capital our our repurchase to is believe best given XX, to Moving valuation, current the we decision allocation stock.

$XXX XX.X shares our XX% returned of million shares. FY since the have start We XX. shareholders to repurchasing We're outstanding of by million over our

we repurchase halfway of of our complete are share reporting achieve are recent XXX are on end portfolio As track through fiscal Further, to cash proceeds we our discussed the prior June, our initiative. results. this track million to $X and previously to program on our to billion shaping year of due

to percent guidance our of second higher to revenue growth X.X% to to X.X%, earnings two is for $X.XX. revenue X.X%. expected million. a headwind as or year-over-year. share EBIT key to $XX and minus of Turning our of billion continue X.XX minus about we cost as to guidance, Organic $X.XX face the to Adjusted X.X% diluted by revenue non-GAAP, margin headwinds produce foreign from X% of billion, to are quarter a almost X.XX expected million FX, revenue of per Divestitures items addressed in be revenue currency XXX

and We X million. a are unchanged prior margin is the at FY XXX of expect decline to percentage revenue FX billion be of than X.X%, as headwind. This basis increase of higher of a expected revenues billion currency XXX X% anticipated Adjusted Divestitures year-over-year of about Guidance remains by billion. Organic of to foreign Our guidance. reflects to revenue X% XX about over this XX.X XX.XX a a revenue now range costs EBIT to X%. impact to as million points. updated in comparative XX. reduce an

guidance. of cash $X.XX, by execute reduced the from the to second We expect $X.XX as cost XXX Non-GAAP of down of efforts. per we $X.XX Free on to diluted million our flow our XXX through share improve optimization million. margins prior year earnings half

guidance FY our reaffirming 'XX. confidence are execute. our our We This for reflects and to ability

have more our we with to progress make While margins.

Let's put it perspective. in

income, terminations, couple last margins our of large of to business, headwinds, divesting restructuring have due revenue Over lower the while a legacy including declined pension improved reducing and we portion TSI. years, significantly our and offsetting

cost turn than back thoughts. me accelerate let the initiatives slower margins. to his the have ran call our anticipated, that, the right believe While optimization Mike right for plan to we operators final With our with we

Mike Salvino

leave Thanks, few points. let And with me you a key Ken.

we're also term. transformation that we in right success become our our in pleased improved in the growth the that pleased and I'm of are the allocation DXC journey change free the with governance to cash sound confident focused, industry set Our for steps is And will customers profile, our investment our for with taking pair I'm GBS. DXC work of with company done generation us the up value. hands. operators consistent team short-term and flow creating reputation become deliver for the grade longer stable has debt, strategy, of quality has to capital safe our

is on will We to I laser our Workplace the like focused our benefit plan. cost to win And with have up economics operator, deliver. good that questions. call term. DXC ITO margins. work to the the are at that, it's finally, us our improve market longer we open optimization way. Modern new a and we breaking accelerating And up for And And the way please And

Operator

Cowen. first Bryan will Thank Instructions] We [Operator from you. Bergin hear with today

Bryan Bergin

wanted to Hi, demand guys. question. Good just Thank start you. on first afternoon. I

talk you are ex seeing any between are your conversations clients that conversion? behavior push you've to relates progressing? in conversion? break in cycle macro talked change own, there? you're anything it cycles how and So or are us down maybe if And if timing, decisions, just difference can there U.S. any but conscious that you seeing client causing U.S. about Just outs as some uncertainty? the can in just Is about you Understanding, deal this

Mike Salvino

Okay.

your thanks Bryan, the good question. So And to for voice. hear

the real saying start difference between we're not and Europe APAC. first by seeing U.S. and a me Let

aside. that So let's put

let's by demand demand analytics XX.X%. and second GBS The at our and X.XX, we're there the if look there. is, because by book-to-bill demand it results GIS. now The have wasn't of And is also can’t the the engineering and seeing business you grow thing definitely GBS in the

point You the margin a is to and to But doorstep, we this on comment for literally a call. at that will call QX some did environment me the I'll on made, market I we up right again is this skilled market bench that is they when in is the the time through that of on And if also the skills. skills see investments made really, client's see build that at want in that we But think GBS, investment going you everybody demand really hot. show the can the with you're work. first, people, the knows win for the one the

invested built we we So a bench.

seeing issues. we're we're there. the laser insurance insurance see broken those any good love focused demand more I out. doing And companies. business we've So the for that I And now don't way work on

GIS, and contrast, would in demand see GIS, Now, I tell also the we is you, there.

quality I second financially customers And grade so ITO your trying my what okay? or are And also with talked you'll doing customers you customers our investment I talked hands. company. that do figure Workplace that's at about prepared about forward? made look the referenceable? And about you is they out Then your do script. of the talked to That's much work safe in marketplace, thing the pair in why their segments my third Modern of If I customers are comments the for that see there focused why And do moving go and profile. are in on, the deliver they're we I is, our

the seeing we're So come way. definitely our deals

the deal around, customers have talked in forward. we turn upfront, been to those the doing where have we're here's And that invested the have deal. about said, providers then given discipline, Now, economics better I our not them making, and hope anymore. when moving get deals to only Traditionally,

good we the So customer be want to for us and the deal both the right-off bat.

got four it quarter we Because that didn't just like we three a we and out. we wasn't couple in economics, to pushed of look, we this deals the or So the had economics. -- was got terms, the to deals,

we because believe deliver. are no, those think customers the that that we are lost, those now ones deals I know So will that

said look, back and over that So that book-to-bill call, I in I our expect come will QX. one the in

with see is So for I demand don't decent demand. issues us. any the environment

Bryan Bergin

for appreciate answering I Okay. my question.

Mike Salvino

looking? that is Was color the that looking? color Bryan, the you're you're

Bryan Bergin

was. it Yes,

And But kind risk appreciate you the So for was of that. I to me. answered ask of about of deals. going that loss those

the up ask flow. I'll Follow maybe cash here. So free

reduction to free Ken, comparable cash is this Just cadence of kind of million, rest projecting the you of how over course the flow are half of operational. the year? half FX margin XXX And that

Mike Salvino

Hey, Brian.

deals now So those just not with like real All a pricing we we to that pricing. no. do And was actively them do the they're not pushed right that why expect out. lost, large the One, me that it's are right. Fair because enough? pivot I'll deals; fast two, working them let show I gave the right we're

Bryan Bergin

Yes. Understood.

Mike Salvino

Okay. free flow. cash

Ken Sharp

Yes.

quick two maybe things. just So

down So to was XXX to We it's front some take but quarters XXX% cash expect expect the in margin. it the us. million, throughout a or of off, of margin thought bit, guide good and have and fully really then sensible year that build probably round that to

Bryan Bergin

right, thanks, guys. All

Operator

We will Deutsche Bryan question Bank. take Keane from with our

Bryan Keane

I'll Hi, ask guess Good afternoon. guys. about the margins. I

quarter see months too, you you I'm when you two just GBS. were months I'm I for in surprised quarter, surprised to And two that way I the guidance it guidance. since it just you little first were already the And the think you the gave quarter. first a surprised for guys shortfall into in already gave almost did the guess margin

on? the it long So how a little maybe to going Why fix? just take to is color and surprise

Mike Salvino

so I'm surprise. it's not (sic) a [Darren] sure Well, Bryan,

Okay.

quick. margin onshore from based pretty means delivery All look, of the with that our one means mix doing global the job automation. people because So staffing right. the right, in look investing you investing fixing that can knowledge also we're we're terms centers, of The is we transfer we're when did what in what we had bubble. have We're which two the our a fact In we've when doing on What which I at we the offshore. is, basically company. you in investment, offshore of the this investment. All network. But onshore look make to done is at

also We scaled Romania. Russia, we look we Serbia, you Poland, right, scaled when at we scaled

increased wouldn't a standpoint, that stuff, I surprise. and whether we it that months it months, call month, increased and one massive from two three So or we

The second investment the GBS, part at of when bench GBS. prudent. the was And for think I demand the for that's look I

calls, incredibly to So we're are some well. longer us making short-term think we serve that term going

Ken Sharp

And [Darren] moving I would (sic) Bryan, add, also I QX. of mean, in there's a pieces lot

So that you dealing move was think about it, the pension Mike about with the in unprecedented talking impact Russia, FX.

to would I in our off and a then, with bit capability a just side, scripts, our out to make little on appropriate. cost would optimization, knowledge as And we and dollars, cost offshore on sure transfer it to we work trying maybe about concentration side moved the this, little of building on say been And did the we working and certainly we've we like. FX we're So the back. up the which us build it, the slower U.S. be move it that than catch really talked finally thoughtful and guard that

of just in, our guide, missed I put moving think but your pieces it's there's in lot a point say QX. months your about two safe to get the into all we year, we I that

Mike Salvino

And Bryan, not correct. that's Darren

Bryan Keane

It's sorry. Bryan. Yes,

Mike Salvino

calling Bryan, Darren, about good. sorry you not that's

Sorry that. about

Bryan Keane

the to are was dropped, in then with But margin confidence one still right confident and are you you margins to going confidence follow-up have up other the That's going can some to I investors questions. how doesn't if down? to that outlook reiterated, think that that the be hit XX% adjusted right. long-term is XX%. target? I'm XX in my come I the that Darren outlook, margin come Hopefully, And is think key year lose which can't is, fiscal the of and are EBIT Why of eventually sure.

Ken Sharp

mean, the structurally bottom line Bryan. No, we this is, two business. we things, fixing are -- have I

margins have there, offshore that's machine. look once get better then, we will So when business. onshore the you in piece, at GIS the basically we And a

two So in then called eyes roughly when years and again. we million you that, in believe our in, let at I all And we to on of out we colleagues. XXX it terms our current based the annualized. of why XXX out we're took we customers of going look, through the cost look knew make looking decisions I take that's million, bed then, out year And ago, this

So look when enough. right, at all I fair that,

bubble. we move XX So why quick a position but end with should we the day, didn't be very We XX, the and FY as staffing our good reiterated as that at we done have once at of should on the get that's we numbers them.

Bryan Keane

for Thanks Great. the color, guys.

Mike Salvino

See Bryan. you,

Sorry, again.

Kellyanne, do who we next? Okay, have

Operator

Research. [Operator next hear from Rod Equity Bourgeois Instructions] We'll with DeepDive

Rod Bourgeois

Hey, guys.

So about your I journey. overall have a question turnaround

reason Also, for turnaround margin as encounter would that good there you could showed that concern March growth. some saw through June then clearly we bumps You better trade-offs progress and the be the you quarter, quarter. some June during some some the quarter, you hit pursue here in

the that's you in journey, are margin long-term reach targeting? long-term to that targets, turnaround of a seemingly you question forward So an bumps your you're get the overcome get your do in is number mean, recent to to how near-term appropriate road to my say how target? drive I go in revenue the trade if accurate growth And portrayal, past that margin hitting that is, to order off you're Thanks. it do trade-offs required the the

Mike Salvino

Okay.

break margin. let's the let's margin. Rod, and with start this into up And revenue So

GDN, Serbia, we to the margin Ukraine half could back the so into knowledge QX, situation in the to of get the hire and in work. decision the Romania, see to machine going the because doing offshore, you've invest was through QX and the the then, right, and the guide increases margin. transfer literally be on that, we folks through you're And because got short-term, that the and in look, made good basically going year, that the that's And we we're we're that the transfer, look to So and at when put I Poland, shape, working.

short-term long-term. both So say that's that the way I would

of terms going two revenue, on. we In have things short-term long-term,

we our solid. thing and is can First, you'll we the GBS Then other the that we can see, all. very we bench, look, in the still built you GBS in pipeline see book-to-bill the up, is, bench with clear invested very been see I've

we market. that those out we're the sorting Anytime only we're are pricing there usually command want to are more market, had there XX%. XX% We but aka they're the our kind And in in deals, are with not. increased outsourcing not think when at And that market and the recession look bigger customers a more they're this in cost long-term, in we're is margins we whether to really we deals can you how GIS they're and of think or consistent bigger. be reductions,

I a never the not when get or anyhow, of when with example XXX. as Great last talk started Nobody Rod, company. to minus right? to line. said we straight we line at a going So straight were cash it, about free thought this we're being But year, where thing also going be flow that's was that three we four you way basically see a to

look create plan, other a in continue folks have growing quality people the good the we're star. right my taken is, lot of a value. GBS good shining debt, short-term, improved the making heart, is the that we're look, it's area the making we've governance good of company, view will So hope everything a investments, score, and struggling we've whether are to consistently done it's of in confidence when else high decision continue allocation, then to and at whether to in got the terms I capital I

Rod Bourgeois

so quick let up Okay, ask this. me a great. follow on then And just

there's business the deals? competitors, up trying something invest to struggling. seeing you some be a infrastructure clients better? problem move a into pay modern and a seeing they're the willing client more and of with in where out digital contract infrastructure infrastructure the these -- got can to business, solve? to really sort a to service to a are it clients to you willing of historical of call legacy messy it pay And approach And Are contracts that historically. lot that willing in Are in get that premium messy messy You've legacy to out particularly of

Mike Salvino

question And So that's on. yes. we're the your short focused what answer is

you around give me let some color So that.

go these to terms they're have large item, item why line deals, up, by paying that's you've get of these appropriate. Rod, where you when in literally got So we points to through line and

whether of meaning stuff, delivering. we're whether sure model to Rod, the way we meaning we it's should whether the that or have walk the be All look, And constructed the right, not it's deal of, make hey, the here's be of using. that here's some using, it's here's times been just inflationary XXX% costs, So will is last costs with, not past will begin offshore not answer. lot to a right with this point model or let's

mix a offshore. of have onshore got to you've So nice

forward. takes are the literally, it So they've understand market. and a the going while to about not little actually, they're moving that to the And having to those conversations good price delivery get in we're the to demand with got them worry a have

that you're Rod gives that hopefully you color looking the for. So

Rod Bourgeois

Now that's helpful. guys. Thanks,

Mike Salvino

the who's Rod. next Kellyanne Thanks, question?

Operator

will was We Jamie next Friedman from Susquehanna. hear

Jamie Friedman

The as engineering juggernaut that think almost because was business was well would still discretionary. was analytics just I somewhat year-over-year. Hi. of XX% I curious, a But up performed here. and it

So in performing give that well us be see how why may going just context you if this forward. it some about and environment you

Mike Salvino

Jamie. Thanks,

to seeing we're client So we deliver growth, I'll What engineering just with basically, during helping example their increased revenues analytics is, and script. you then we're able or increase go decrease cost. and back a gave both to the their the

of with the we're of gave the the created data, And a sense with down. points can retailer, situation more nice to a deal gone data. that lot is, in used data, that technology specific the dealing the you trying loyalty, and example, with so what's the all at imagine, specifically program, you this both retailer, of has during really their the the script and for right loyalty they've with the have moment, literally there's then instead I there on demand, costs data. as And the seen dealing loyalty So be really when can going and

that's have And what you because data the get discretionary, analytics it's place. of this cloud. And it a to now of and all in both and have So with, these that deal they're their categorized lot technology with more is trying does. what dealt as put they've business out infrastructure interesting customers engineering our times,

that in we're been continue it's because, proud going it's we to doing about now. to quarters that's perform expect digits, XX.X, double several So what for

So question. thanks that for

Jamie Friedman

You quarter for of terms but that you right. the Thanks of seasonality did we flow say outs the any cash free else year? aware for I All cash anything terms Mike. quarter, should wondering into flow. was the call And of Ken, good the then, in cadence be for mention heard in QX? for cash flows, but next that, free

Ken Sharp

be rest think flow Yes, year there cash Jamie. I should quarter I of think don't a good as the the think mean, no, the anything, well. was second quarter I and I

So kind of more heading going I forward. think into generation we're cash

Jamie Friedman

drop queue. it. Got I'll you. back Thank in the

Mike Salvino

next Jamie. Kellyanne question? Thanks,

Operator

BMO. That with will be from Brad

Brad Clark

sort wanted of expected where asking Hi. Thank a to out of business to trajectory you the about GBS start my could application to on taking sort the perhaps off it sort detriment flat of for I and flatten being question. growth. growth within It versus there.

it mentioned broader your view fits business within in that what GPS and demand on engineering, how obviously, the analytics and is you could but in for of within hone You strategically? sort and

Mike Salvino

of Oracle ServiceNow. seeing There custom do well those from is Well, doing we that stuff piece, part it's we're an again, then the four a all is, really what which build we demand there's we're up at. strategically do service and just break enterprise we're apps, SAP was there ground that we is good GBS and there's that's to what for The clients. pieces, right, an there's SAP clients application, custom apart, a particularly piece, a in and four in now what key business for of and really

that And leaning So typically, as the do And into infrastructure for year reason negative build out business the once engineers X so applications put build develop we're but you're good we're and what all the custom throughout with custom a good why is, the X see that really the that good right, can the that's -- again, because well. flattening stuff. infrastructure, is at our us. they running is negative that last was quarter, we

have be for good you the business So of just Don't lose that us. sight of that that's fine. another is Brad, performance the do a question? going to fact

Brad Clark

Yes, the guess margin just talk the cash quick in of free follow-up Can on for a Ken flow. its for region a you I the difference. put $XXX believe perhaps the said million cash should you reflective to that flow? and that margins mentioned revenue the more about sure you. we on thinking want be impact You extreme understanding. and portfolio Thank about just FX make have free how to and cadence I

Ken Sharp

the Brad. Yes. question, I appreciate

basis. a more a it of kind million than $XXX on kind look about have U.S. dollars, rata in at ballpark We you when pro cost of

And so not in down, therefore, impacting has, as to when come it the revenue it's what's margin that's caused well strengthens, only coming profit caused like down. the dollars to margin just addition the dollars compression it's the dollar really and and dollars

Mike Salvino

Kellyanne, question. let's take the next

Operator

you. Thank Lisa with MoffettNathanson. from come Ellis That will

Lisa Ellis

Or do in very realizing you you and what Are deals sell you're to value, Or kind just different quarter sort view literally it on bookings is investments and you're model you're perhaps able be is of a off in guys. pricing more bit good sales or get proposition shift of value to the I there than they've and investment? temporary races? talking sort just closed dynamic, once you afternoon, this, need Mike, the that more it to different selling follow-up to the go-to-market to way. are of requires to team this this ask you a about a make your or that to those Hey, a way this making, something wanted the with is done before? job like

Mike Salvino

something in look, systemic we're that putting is in terms of DXC. that's place mean, it I Well,

for about happen, folks, to mean I reviews of years not that and price we right sales that's us, instead are all those as the the Lisa several it's now, right, price with that now. in to a deals things expectation, know, because okay? deals hit certain to got or hoping about paying some they've you several going we And of future clear our been and come can be it's deals those margins, So, those the

times As a years five, ten, you know, folks those things. that these been lot those fifteen have deals running are old, of

taking that a going for So we're stack and it it the been company up sounds but inquiries. company leading are their from because how of I enough now. references us doing that is with deliver, we're to references the and can is those the folks too had are what that's with what's dealing built, hear much relates fun those deliver scope, why market them in with, they we on I there's taking these with that is coming down why and obviously, clients with know price that keep happen to here here and we've that so the then uncertainty it have sitting cliché we to and back that's take going quality through, was where bid do us the new then specific at that's coming and so to They've forth back. people you as scope we that the they've under a them to through for back that probably

not X.XX need the much on like and team calls hey, don't on really I I established, I book-to-bill especially the the those the like to So these at that margin not the sales backwards, a literally operating get No, that? if what to so new doing. to I do say, going is but committee and work. It's was when right, also And all it's do do reviewing making going them lower deals we're is have sure price.

in us that we to XX% see, fixing can making sure FY shutting you the 'XX. as margin should model, delivery coming that we're are deals off also not funnel help the XX% the get but So Lisa, only to in we're

Lisa Ellis

quarters still so. or you initially set outlook, seven XXXX maybe flattish the expectation at then, down to GIS it wrong, when modestly three in get follow-up your I running was or so GIS recollection and my of is is this And my -- and out memory, have Okay. that but your doing for might out it my minus to on apologies, I'm it's

us the next us bit humming very bridging to is GBS get of help GIS can sort or just year we you've so XXXX as should bit you think how number? a on with a but can the nicely, So that help along highlighted over over to about you

Mike Salvino

obviously the heading in comments thanks narrowing happy basis stacked too. minus X. literally right the GBS starting direction Lisa, with up just that because it's because quarters X, last business X.X, taking very or the we minus points, you're by the minus Look to GIS XX three on I'm Okay. have see of for decline of the

has down modern and not on So one and through that's and okay? of it's performance XX of to an equation, focused that hard I business quarter, it was the thing quarter it that solely that workplace, around. is one minus number thing only, we has very literally that from modern expect this that is turned to gone XX workplace And last been clear breaking push we've starting think minus

GIS. gets literally workplace on. seeing does work as the We're come coming that We have so simple. work modern new on It's fixed,

Lisa Ellis

Thank Great. Okay. you.

Mike Salvino

Thanks Lisa. Kellyanne, other any questions?

Operator

At closing this you remarks. to time, to for back like I'd turn Mike, things

Mike Salvino

we've take the laser comment this again. operators we've built. that and we a confidence making you of very cost we those high the short-term is that focused tell good the good closing customer made got very the some that future. quality going got sure very investing of company in quality We relationships are in DXC. well Look, will so FY take proud the $XXX And right, and of we've closing, million, Kellyanne, we've I did that much. we to out on 'XX are is think in position is what and thanks around out us of in the decisions All we I'm like would team

everybody to we'll that, the updating fall you close forward can call call. QX. Kellyanne, So I the look with the on close in and

Operator

you all disconnect. This participation does your Thank today's you may now for again, and you. Thank conclude conference.