5 Must-Read Analyst Questions From DXC's Q2 Earnings Call

DXC’s second quarter results were met with a negative market reaction, despite the company surpassing Wall Street’s revenue and profit expectations. Management cited persistent revenue declines in core segments as well as ongoing pressure in short-cycle custom application projects. CEO Raul Fernandez acknowledged that while organic revenue fell, “bookings increased 14% year-over-year, our third consecutive quarter of double-digit growth,” reflecting progress in new go-to-market initiatives. The quarter’s performance was also shaped by strong deal flow in Europe and Asia Pacific, which partially offset softness in other areas.

Is now the time to buy DXC? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From DXC’s Q2 Earnings Call

• Bryan C. Bergin (TD Cowen) asked about factors influencing free cash flow outlook and confidence in guidance. CFO Rob Del Bene responded that working capital improvements and potential tax benefits provide levers for cash generation.

• Yu Wai Lee (Guggenheim Partners) questioned the macro assumptions underpinning revenue guidance and segment outlook. Del Bene stated that the guidance range leaves room for economic uncertainty, with insurance expected to perform better in the second half.

• Keith Frances Bachman (BMO) inquired about bookings trends needed to return to revenue stability by next year. Del Bene explained that a sustained trailing 12-month book-to-bill above 1.05 is necessary, with proactive solutioning expected to drive higher win rates.

• Unidentified Analyst (Morgan Stanley) focused on the approach to low-margin contract renewals. Del Bene noted that DXC seeks mutually beneficial terms upon renewal to improve margins rather than exiting contracts outright.

• Tien-Tsin Huang (JPMorgan) asked how AI is influencing client engagement and bookings. CEO Raul Fernandez stated that AI-centric solutions are additive and that clients are increasingly receptive to scalable, replicable frameworks with tangible bottom-line impact.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) whether large bookings in CES and GIS begin to translate into higher reported revenue, (2) measurable progress in internal operational efficiency from AI-driven automation, and (3) further evidence that proactive AI-centric solutions are gaining traction with new and existing clients. The pace of improvement in segmental revenue trends and sustained free cash flow will also be important indicators of execution.

DXC currently trades at $13.26, down from $13.63 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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