DXC Technology Company

Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the DXC Technology Services first quarter fiscal 2027 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press start and the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Roger Sachs, Vice President of Investor Relations. Roger, please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to DXC Technologies' first quarter fiscal 2027 earnings conference call. We hope you had an opportunity to review our earnings release, which is available in the IR section of DXC's website. Speaking on today's call are Raul Fernandez, our President and CEO, and Rob Del Bene, our Chief Financial Officer. Here's today's agenda. First, Raul will update you on our strategic initiatives. Rob will then review our quarterly financial performance, as well as provide thoughts on our second quarter and fiscal full year 2027 guidance. Raul and Rob will then take your questions. Please note certain comments made during today's call are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially. Details of these risks and uncertainties are in our annual report on Form 10-K and other SEC filings. We undertake no obligation to update any forward-looking statements. Unless otherwise noted, year-over-year or quarter-over-quarter revenue growth rates discussed on today's call refer to organic revenue growth on a non-GAAP basis, which exclude the impact of foreign exchange and inorganic activity. You will also be discussing certain other non-GAAP financial measures that we believe provide useful information to investors. Reconciliations to the most comparable GAAP measures are included in today's earnings release. And with that, let me turn the call over to Raul.

Thank you, Roger. On June 11th, we held our Investor Day. where we put our strategy on the table and demonstrated the agentic solutions we have built and deployed. We also announced our global partnership with Anthropic. Since then, we have continued to move from strategy to execution. And what is becoming increasingly clear to me is that the opportunity in front of DXE is not simply to use AI to make our existing business more efficient, It is to use agentic AI to change how we build, sell, and deliver technology and ultimately return DXE to growth. People and leadership have always mattered, but they matter even more as we enter this next phase. An agentic company operates differently. It needs to move faster, make decisions closer to the customer, build and deploy solutions more quickly, and continuously learn. That requires leaders with deep customer understanding, commercial discipline, entrepreneurial thinking, and the ability to bring people together to deliver better outcomes for customers. That is why I am very pleased to announce that Paul Taylor is joining DXC as president. Paul brings more than 30 years of technology and commercial leadership experience, spanning financial markets, enterprise technology, and entrepreneurship. He was a partner at IHS Market through a period of significant profitable growth and scale, culminating in its approximately $44 billion acquisition by S&P Global. Most recently, he founded and led Hub, an AI-driven technology business acquired by Astra, where AI agents and workflow automation were central to the company's operating model. Paul brings the combination of commercial leadership, entrepreneurial thinking, and operational expertise needed to leverage world-class technology, great teams, and deep customer relationships to help customers transform their businesses. Together, Rob, Paul, and I will streamline how DXC operates, bring our markets, offerings, and delivery teams closer together, and execute an aggressive agentic playbook that helps our customers move faster. We are also making a leadership change at GIS. This morning we announced Dan Gray will take over leadership of GIS from Chris Strungle. Dan has co-led the development of OASIS and our agentic SOC solutions. So he brings both the technical understanding and the operating mindset that we need to accelerate the transformation of GIS. I want to thank Chris for his service to DXE and wish him the very best in his next chapter. Chris will remain connected to DXE through my CEO Council of Advisors. Earlier this week, we also announced the promotion of Holly Grant to President of AI Innovation, Strategy, and LabX. Together, these changes reflect a single principle, placing the strongest leaders in the areas where we see the greatest opportunity to create value for customers and shareholders. The most important thing we can demonstrate today is not our vision for AI, it's proof. Over the last year, DXE has adopted a simple philosophy we call Customer Zero. Build it, run it in our own environment, prove it works, measure the results, and then take it to our customers. This approach is producing tangible results. In our own security operations, our agentic SOC has transformed how we detect and respond to threats. With traditional software and manual processes, mean time to intrusion detection was approximately 21 minutes. With our agentic SOC solution, we are seeing that reduced to approximately six seconds. This is not incremental improvement. This is a fundamentally different operating model for our cybersecurity. We are seeing similar outcomes for DXC OASIS, which is now deployed across 57 customer environments. OASIS is helping organizations improve the speed, consistency, and intelligence of mission critical IT operations. In measured use cases, we have seen significant reductions in resolution time, and Ticket Backlogs while maintaining high diagnostic accuracy. What matters is not simply that these technologies work together. What matters is that they are creating customer demand, shortening time to value, and expanding the set of opportunities where DXE can lead. As I meet with CEOs, CIOs, and business leaders around the world, one theme comes up consistently. Organizations are excited about the potential and promise of AI, but they want to adopt it responsibly. They want innovation, but they also want trust. We believe enterprises will not deploy agentic AI at scale unless they can trust the architecture underneath it. That means protecting customer data, preserving governance, maintaining auditability, and ensuring accountability for business outcomes. This is where DXC is uniquely positioned. For decades, our customers have trusted us to operate some of the most critical systems, applications and infrastructure. As AI adoption accelerates, we believe that trust becomes even more valuable. Another principle that differentiates DXC is what we describe as connect, don't convert strategy. We do not believe enterprises should have to discard decades of business logic, institutional knowledge and technology investment in order to benefit from AI. Instead, we connect new intelligence to existing environments. We help customers preserve the systems that run their businesses while unlocking new levels of automation, insight and productivity. Their legacy investments are not liabilities. They are strategic assets. By combining AI with the technologies customers already depend on, DXE can accelerate modernization while reducing risk, cost, and disruption. And because our architecture is designed around flexibility and portability, customers retain the ability to adopt new models and technologies as the market evolves. We believe this flexibility will become increasingly important as enterprises seek to avoid becoming dependent on any single AI provider or technology stack. And this brings me to the most important point. The return to growth at DXC will be fueled increasingly by products and solutions that we can build in a capital light way. This is not an M&A strategy. It's not about buying growth. It is about taking the assets we already have, our customer relationships, our industry expertise, our heritage platforms, our proprietary IP, and our 113,000 colleagues, and using AI to build products around them faster with less capital and less dependency on incremental labor. Since Investor Day, we are already seeing evidence of this in how customers move. Where traditional enterprise technology sales cycles have historically taken six to 12 months, we are now seeing evaluation, proof of value, and contracting in six weeks or less. For OASIS, prospects are completing full evaluations and reaching contract stage in under six weeks. With our agentic SOC offering, a leading global entertainment and technology company completed their technical evaluation in just over four weeks and went on to sign a multi-year, multi-million dollar engagement. That acceleration matters because speed compounds. Faster innovation creates faster adoption. Faster adoption creates more proof points. More proof points create more demand. One of the clearest examples of how we are moving from AI strategy to execution is the launch of our forward deployed engineer model. FDEs are a new class of hybrid AI builders who work directly inside customer environments, turning AI concepts into deployed outcomes and then capturing the reusable patterns that allow us to scale. In mid-July, we began certifying DXC engineers with Anthropic through hands-on base camps in San Francisco and London. This brings together some of the best technical talent from DXC and Anthropic and creates a new class of forward deployed engineers who take these capabilities directly into customer environments. We are seeing early momentum with our first 86 trained, giving us an initial deployment ready bench. As we shared last month, together with Anthropic, our goal is to certify tens of thousands of Forward Deployed Cloud Certified Engineers and Builders. We are taking that one step further. DXC is developing a multilingual Forward Deployed Engineer certification model that combines Amazon QuickSuite, Anthropic, Microsoft Copilot, 7AI, and 11Labs, whose FD partnership we announced earlier this week with our proprietary Discover Build Scale Methodology. Historically, technology services grew largely through labor expansion. Revenue growth generally required proportional increases in headcount. AI changed that equation. It allows us to build faster, operate more efficiently, support more customers, and increasingly deliver outcomes that are measured by value rather than effort. At the same time, the economics of AI continue to improve. As models become more capable and operating costs continue to decline, the number of economically viable use cases continues to expand. This creates opportunities to introduce new products, new pricing models, and new sources of recurring and consumption-based revenue. Combined with our scale, We believe this represents a meaningful opportunity to improve both growth and profitability over time. Most importantly, we can pursue this opportunity while remaining disciplined with capital and focused on free cash flow generation. When I compare DXC today with where we were a year ago, I see a company that is increasingly turning strategy into execution. We have clearer priorities. We have stronger leadership. We have built and deployed real agentic solutions with measurable results. We have trusted partnerships and we are creating a new generation of AI enabled talent and capabilities. Importantly, we are seeing customers respond. The strategy remains unchanged. We will continue to stabilize and improve the core business while building AI native sources of growth. What has changed is the evidence. We are proving our technology, we are proving our operating model, and we are proving that AI can help create a stronger, more profitable, and more sustainable DXC. Now our focus is on execution, scaling what works, creating value for customers, and delivering long-term growth for shareholders. Through 11 labs, my script will be available in six languages immediately following this call. Thank you.