A global IT services firm, DXC Technology helps businesses run their data centers, cloud, and software, and sells insurance platforms to carriers worldwide. It was formed in 2017 when Computer Sciences Corporation merged with Hewlett Packard Enterprise's services arm, inheriting the legacy of the old Electronic Data Systems. The name "DXC" isn't an acronym — the "DX" nods to "digital transformation" and the "X" to being a "force multiplier," a nickname its founders cooked up to signal a fresh start.
Q1 FY2027 revenue fell 5.1% to $3.0B and adjusted EBIT dropped 30.6% to $150M
Adjusted profit fell sharply this quarter as kept declining. Revenue dropped 5.1% to $3.0B, contracted 4.0 points to 20.4%, and fell 30.6% to $150M on lower and CES profit, while a $214M lifted to $314M and to $0.73. The underlying business is still shrinking, but a one-off court award masks the operating decline in the cash and earnings lines.
Key takeaways
fell 30.6% to $150M as profit dropped 60.8% and CES profit fell 4.8%, partially offset by a 3.0% increase in Insurance profit, with down 5.1% (6.7% organic) to $2,999M on GIS down 9.4% and CES down 1.2% and Insurance up 1.9%.
rose to $314M from $97M a year earlier, driven by $214M in cash proceeds from a litigation judgment against TCS and lower outflows — a one-off court award, not operating recovery.
contracted 400 to 20.4% as cost reductions did not keep pace with the decline, while improved 160 basis points to 10.9% of revenue.
Section summaries
Management's Discussion and Analysis
Q1 FY2027 revenue fell 5.1% to $3.0B; adjusted EBIT dropped 30.6% to $150M, while free cash flow surged to $314M driven by a $214M litigation gain.
⌄
Total declined 5.1% (6.7% organic) to $2,999 million, with GIS down 9.4% and CES down 1.2%, partially offset by a 1.9% increase in Insurance.
Diluted was $0.73, up from $0.09, boosted by the ; adjusted declined to $0.40 from $0.68.
The company suspended its quarterly for fiscal 2027 and repurchased shares, maintaining $5.0B in total liquidity.
What changed
Q1 FY2026 trend: the prior annual report flagged whether the 3.9% annual GIS decline would narrow; instead Q1 FY2027 GIS fell 9.4%, a re-acceleration of contraction versus the 4.3% organic total decline a year earlier.
sustainability: Q1 FY2026 printed $97M and the prior flag watched the $687M FY2026 full-year pace; Q1 FY2027 free cash flow was $314M, aided by the $214M rather than operations.
Total debt trajectory: FY2026 closed at $3.6B with reduction via repayments; Q1 FY2027 was $3,003M, down 3.1% and 1.0% quarter over quarter.
Insurance profit: FY2026 flagged margin pressure after quarterly drops; Q1 FY2027 Insurance rose 1.9% and segment profit rose 3.0%, the one bright spot in .
: FY2026 closed at 24.0% and Q1 FY2026 was 24.4%; Q1 FY2027 margin fell 4.0 points to 20.4%, breaking the prior 21-24% range to the downside.
What to watch
Q2 FY2027 to see if the 9.4% decline narrows after this quarter's re-acceleration
Q2 FY2027 after the drop to 20.4% to confirm whether cost optimization recovers above the prior range
Resolution or payment timing in the IRS dispute carrying up to $655M cash tax exposure from the FY2026 adverse judgment
Q2 FY2027 margin after the drop to 5.0% this quarter from 6.8% in Q2 FY2026
contracted 400 to 20.4% as cost reductions did not keep pace with the decline, while SG&A improved 160 basis points to 10.9% of revenue.
fell 30.6% to $150 million, driven by lower profit in GIS (down 60.8%) and CES (down 4.8%), partially offset by a 3.0% increase in Insurance.
increased to $314 million from $97 million, primarily due to $214 million in cash proceeds from a litigation judgment against TCS and lower outflows.
Diluted was $0.73, up from $0.09, boosted by the litigation gain; adjusted declined to $0.40 from $0.68.
The company suspended its quarterly for fiscal 2027 and repurchased shares, while maintaining $5.0 billion in total liquidity.
Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk affecting DXC, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026. Our exposure to market risk has not chan…
⌄
For quantitative and qualitative disclosures about market risk affecting DXC, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026. Our exposure to market risk has not changed materially since March 31, 2026.
See Note 18 – “Commitments and Contingencies” to the financial statements in this Quarterly Report on Form 10-Q under the caption “Contingencies” for information regarding legal proceedings in which we are involved.
⌄
See Note 18 – “Commitments and Contingencies” to the financial statements in this Quarterly Report on Form 10-Q under the caption “Contingencies” for information regarding legal proceedings in which we are involved.
Our operations and financial results are subject to various risks and uncertainties, which may materially and adversely affect our business, financial condition, and results of operations, and the actual outcome of matters as to which forward-looking statements are made in this…
⌄
Our operations and financial results are subject to various risks and uncertainties, which may materially and adversely affect our business, financial condition, and results of operations, and the actual outcome of matters as to which forward-looking statements are made in this Quarterly Report on Form 10-Q. In such case, the trading price for DXC common stock could decline, and you could lose all or part of your investment. Past performance may not be a reliable indicator of future financial performance and historical trends should not be used to anticipate results or trends in future periods. Future performance and historical trends may be adversely affected by the aforementioned risks, and other variables and risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect our business, financial condition, and results of operations or the price of our common stock in the future. There have been no material changes in the three months ended June 30, 2026 to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
42