DXC Technology Company

Good afternoon and good evening. My name is Aaron and I will be your conference operator for today. At this time, I would like to welcome everyone to the DXC Technology Q2 FY25 earnings call. All lines have been placed on mute to prevent any background noise and after the speaker's remarks, there will be a question and answer session. At that time, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question at any time, simply press star followed by the number one again. Thank you. And with that, I would like to begin our call, and I would like to turn it over to Roger Sachs, VP of Investor Relations.

Thank you, Operator. Good afternoon, everybody, and welcome to DXC Technologies' second quarter earnings conference call. We hope you've had a chance to review our earnings release posted to the IR section of DXC's website. Speakers on today's call are Raul Fernandez, our president and CEO, and Rob Delveny, our chief financial officer. Our agenda will be as follows. Raul will provide an overview of our results and update on our strategic initiatives. Rob will then walk you through our financial performance for the quarter, as well as update you on our full-year outlook and provide some thoughts on our fiscal third quarter. Raul and Rob will then take your questions. Certain comments we make on today's call will be forward-looking. These statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed on the call. You can find the discussion of these risks and uncertainties in our annual report on Form 10-K and other SEC filings. We do not commit to updating any forward-looking statements made during today's call. Additionally, during this call, we will be discussing non-GAAP financial measures that we believe provide useful information to our investors. Reconciliations to the most comparable GAAP measures are included in the tables included in today's earnings release. With that, let me turn the call over to Raul.

Thank you, Roger. Good afternoon, everyone, and thank you for joining us today for our second quarter fiscal 2025 earnings call. I'm pleased to report a solid quarter with adjusted EBIT margin and non-GAAP EPS exceeding our guidance and revenue coming in towards the high end of our range. Given this performance, we are raising our full year guidance for adjusted EBIT margin and non-GAAP EPS. I'm proud of how our new leadership team has come together and the early momentum we've seen from our initiatives this year. While there's more work ahead, particularly in our go-to-market initiatives, we're focused on execution and building a solid foundation to support even stronger performance going forward. Specifically, during the quarter, total revenue declined 5.6% year over year on an organic basis. Adjusted EBIT margin equaled 8.6%, expanding 130 basis points year over year. Non-GAAP diluted EPS was $0.93, up 33% year over year. And we generated free cash flow of $48 million for a year-to-date total of $93 million compared to $16 million during the same period last year. While corporate spending on discretionary projects remains under pressure, we continue to believe our biggest near-term opportunities lie in our self-help initiatives. that will drive a more significant impact on results. Our bookings remain an area of intense focus, and I feel we will make the progress needed in the upcoming quarters. We expect our book-to-bill ratio to improve in the third quarter. Our global delivery and sales footprint complemented by a deep local presence is a competitive advantage to serving clients. Being global and local allows us to understand and respond to regional dynamics by delivering tailored solutions that meet specific market needs while leveraging global expertise and resources. To drive improved sales discipline and execution, we implemented several new initiatives during the second quarter to augment our revamped go-to-market approach. These include a new client relationship training program with nearly 150 team members now certified, a regular cadence of sales team performance reviews, including detailed assessments of the value of the solutions we provide, and a new executive client sponsorship program to drive deeper client relationships. Additionally, during the second quarter, we initiated several tactical actions in our offerings to build on our progress. In our global business services segment, where we help clients accelerate digital transformations, we continue to refine our delivery models and drive more scalable and standardized solutions. Specifically, in consulting and engineering services, we hired a new global delivery leader to sharpen operations, keep projects on track, and ensure contract requirements are met. We are building more enterprise application capabilities, leveraging DXC FastRise with SAP service so clients can accelerate in their SAP S4 HANA cloud implementations, and we are expanding our GenAI offerings using a center of excellence model scale beyond proof of concepts to production. Let me highlight two examples of recent GenAI engagements. For Equitable Holdings, a leading financial services client, we built and deployed a GenAI-powered virtual service agent. This solution quickly analyzes thousands of documents, enabling customer representatives to respond 80% faster and freeing them to focus on more value-added activities, such as complex financial planning. The success of this solution led to the creation of a Gen AI Center of Excellence for the client, which has developed several more Gen AI-based applications, growing the relationship by more than 10x. We are also helping a large global bank accelerate time to market for new credit card products. Our Gen AI powered solution automates the conversion of hundreds of thousands of lines of legacy code into Java 50% faster with less errors. Expediting the time to market better positions the bank to capture market share in a highly competitive industry. By embedding AI across many of our solutions, we're sharpening our competitive edge. We are identifying numerous opportunities to help clients manage the full lifecycle of GenAI, from initial deployments to building complete solutions that grow with their businesses in a secure way. This includes matching the latest language models to meet client needs and ensuring GenAI solutions access data that is clean, current, and reliable. This approach is providing momentum in our data and AI practice within CES. We continue to invest in our insurance business to grow our software and reoccurring services mix, as well as to expand geographically. We are being very thoughtful and deliberate in evaluating the range of opportunities we have to accelerate performance to deliver greater value for our clients, and all stakeholders. To help drive long-term sales and improve profitability across our global infrastructure services segment, which represents our portfolio of technology solutions, we took several actions during the quarter. We rolled out a new workforce management system to better manage resources. We brought in leaders to drive innovation in our software platforms. grow our public sector presence and enhance our security and modern place capabilities. And we streamline cloud and ITO security and modern workplace delivery under a single leader to improve consistency and accountability. We are realizing a notable improvement in our delivery metrics and overall quality of service. leading to a record net promoter score. As a result, we have seen meaningful reduction in contract terminations. Our global shared services model is now fully implemented, consolidating, standardizing, and eliminating redundant processes across sales, business, and account operations. This increases our agility to better serve clients and optimize our costs. Our ERP consolidation plan remains on track, and we have successfully initiated the first migration wave from our legacy systems. We expect all these initiatives to lay the groundwork for margin expansion and revenue growth over time. With our partner ecosystem and top tier engineering capabilities, we are well positioned to capture opportunities, including migrating clients to cost-effective platforms to reduce software expenses, and maximizing returns on cloud migrations through cloud-native applications. Over the past 11 months, I've witnessed our global team's capability, resilience, and shared commitment to clients. We are not only capable but also worthy of winning. Now our focus is on doing so consistently and at scale. Our journey to realizing this vision will involve tactical execution, a firm commitment to accountability, and rewards tied to measurable success. To support this, we have recruited a talented group of proven, hungry, and innovative leaders with deep industry expertise, complementing our re-energized workforce and essential IT services portfolio. I am confident this combination is the right formula for success. As we execute our enhanced operating model, I firmly believe we are on the path to delivering stronger results as we move forward. Embracing each opportunity with the passion of a first-time entrepreneur and executing with the precision of an experienced global leader We are building a solid foundation for enduring success. Now let me turn the call over to Rob for a detailed review of our second quarter results.