DXC Stock Gains 4% as Q1 Earnings and Revenues Crush Estimates

DXC Technology, Inc. DXC shares gained 4% during Thursday’s extended trading session after the company reported better-than-expected financial results for the first quarter of fiscal 2026. The company reported non-GAAP earnings of 68 cents per share, beating the Zacks Consensus Estimate by 6.3%. However, the bottom line decreased 10.5% year over year.

DXC Technology has an impressive history of beating earnings estimates. The stock surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 22.3%.

DXC reported revenues of $3.16 billion for the fiscal first quarter, which beat the Zacks Consensus Estimate by 2.9% but decreased 2.5% year over year. On an organic basis, revenues declined 4.3% year over year.

DXC’s Q1 Results in Detail

DXC Technology has changed its reporting segment structure, effective April 1, 2025, for the fiscal year 2026. The new structure includes three segments — Consulting & Engineering Services (“CES”), Global Infrastructure Services (“GIS”) and Insurance Services. This change aims to align financial disclosures with the company's operational organization and how management runs the business.

Revenues from CES declined 2.7% on a year-over-year basis to $1.25 billion. On an organic basis, the division’s revenues decreased 4.4% year over year. GIS revenues were $1.6 billion in the fiscal first quarter, down 3.5% year over year. On an organic basis, the division’s revenues dropped 5.7% year over year. Revenues from Insurance Services rose 5.4% on a year-over-year basis to $313 million. On an organic basis, the division’s revenues grew 3.6% year over year.

The company’s non-GAAP gross margin increased 140 basis points.

DXC’s non-GAAP operating income (Adjusted EBIT) was $216 million in the fiscal first quarter, down 3.6% year over year. The non-GAAP operating margin contracted 10 basis points to 6.8%.

DXC’s Balance Sheet & Cash Flow Details

DXC exited the fiscal first quarter with $1.79 billion in cash and cash equivalents compared with $1.8 billion in the previous quarter. The long-term debt balance (net of current maturities) was $3.1 billion as of June 30, 2025, up from $3 billion as of March 31.

In the fiscal first quarter, DXC generated operating cash flow of $186 million and free cash flow of $97 million. During the first quarter, it repurchased shares worth $48 million.

DXC Updates Guidance for FY26 & Q2

DXC Technology updated the outlook for fiscal 2026. For the fiscal year, it now expects revenues between $12.61 billion and $12.87 billion compared with the previous guidance of $12.18-$12.44 billion. The Zacks Consensus Estimate for the top line is pegged at $12.29 billion, indicating a decline of 4.5%.

DXC still projects the adjusted EBIT margin to be in the range of 7%-8%. It now forecasts adjusted EPS in the range of $2.85-$3.35 compared with the previous guidance of $2.75-$3.25. The consensus mark for fiscal 2025 earnings per share is pegged at $3.05, calling for an increase of 11.1%.

For the fiscal second quarter, the company anticipates revenues between $3.15 billion and $3.18 billion. The adjusted EBIT margin is expected to be approximately 6.5% to 7.5%. DXC projects adjusted earnings per share of 65 cents to 75 cents for the fiscal second quarter.

The Zacks Consensus Estimate for second-quarter revenues and earnings is pegged at $3.07 billion and 77 cents per share, respectively.

DXC’s Zacks Rank & Other Stocks to Consider

Currently, DXC Technology carries a Zacks Rank #2 (Buy).

Arista Networks ANET, Bumble BMBL and MongoDB MDB are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Arista Networks and Bumble sport a Zacks Rank #1 (Strong Buy) each at present, while MongoDB carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arista Networks’ 2025 earnings has been revised upward by a penny to $2.58 per share over the past 30 days and suggests a year-over-year increase of 13.7%. Arista Networks shares have soared 11.5% year to date.

The Zacks Consensus Estimate for Bumble’s 2025 earnings has been revised upward by a penny to $1.05 per share in the past 30 days, implying a strong improvement from the loss of $4.61 reported in 2024. Bumble shares have declined 4.5% year to date.

The Zacks Consensus Estimate for MongoDB’s fiscal 2026 earnings has been revised upward 20.4% to $3.07 per share in the past 60 days, calling for a 16.1% year-over-year decline. MongoDB shares have risen 2.2% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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