Breaking Down DXC Technology Company (DXC) Financial Health: Key Insights for Investors

Are you keeping a close watch on DXC Technology's (DXC) financial performance? With a 5.7% decrease in revenue to $3.39 billion in the fourth quarter of fiscal year 2024, and an annual revenue of $13.67 billion, understanding the key drivers behind these figures is crucial. How does DXC's debt-to-equity ratio of approximately 1.59 and free cash flow of $756 million impact its financial stability and future growth potential? Dive in to explore these insights and more, helping you make informed decisions.

DXC Technology Company (DXC) Revenue Analysis

Understanding DXC Technology Company (DXC)'s revenue streams is crucial for investors seeking insights into the company's financial health and future prospects. A detailed breakdown reveals the sources of income, growth trends, and the significance of various business segments.

DXC Technology Company (DXC) reported revenue of $13.24 billion for the fiscal year 2024. The company's revenue has seen a decline of 5.4% year-over-year, influenced by macroeconomic conditions and specific business decisions.

Key observations regarding DXC Technology Company (DXC)'s revenue streams include:

• Decline in Revenue: A decrease from $13.98 billion in the previous fiscal year to $13.24 billion in fiscal year 2024.
• Impact of macroeconomic conditions: The challenging macroeconomic environment has impacted client spending and project timelines, affecting overall revenue.

A closer look at the segments reveals more granular insights. For example, the GBS (Global Business Services) segment and GIS (Global Infrastructure Services) segment contribute significantly to the overall revenue, with their performance trends shaping the company’s financial trajectory.

Here's a breakdown of revenue by segment for the fiscal year 2024 (as available from preliminary data and trends):

• Global Business Services (GBS): This segment likely includes consulting, applications, and business process services.
• Global Infrastructure Services (GIS): Encompasses services related to IT infrastructure, cloud, and security.

For more insights into DXC Technology Company (DXC)'s strategic direction, explore: Mission Statement, Vision, & Core Values of DXC Technology Company (DXC).

Understanding these dynamics is essential for investors assessing DXC Technology Company (DXC)'s current financial position and potential for future growth.

DXC Technology Company (DXC) Profitability Metrics

Analyzing DXC Technology Company's (DXC) financial health requires a close examination of its profitability metrics. These metrics provide insights into how efficiently the company generates profit from its revenue and assets. Key profitability measures include gross profit, operating profit, and net profit margins. Understanding these elements helps investors assess DXC's ability to manage costs and generate returns.

Gross profit is calculated by deducting the cost of goods sold (COGS) from revenue. The gross profit margin, expressed as a percentage of revenue, indicates how efficiently DXC manages its production costs. For instance, a higher gross profit margin suggests that the company is effective at controlling the costs associated with its products and services. Monitoring trends in DXC's gross profit margin over time can reveal improvements or declines in operational efficiency.

Operating profit, also known as earnings before interest and taxes (EBIT), is derived by subtracting operating expenses from gross profit. Operating expenses include administrative, sales, and research and development costs. The operating profit margin reflects the percentage of revenue remaining after covering operating expenses. This metric illustrates DXC's profitability from its core business operations, excluding the effects of interest and taxes. Analyzing the operating profit margin helps investors gauge the company's ability to manage its operational costs effectively.

Net profit represents the profit remaining after deducting all expenses, including interest, taxes, and other non-operating items, from revenue. The net profit margin, calculated as a percentage of revenue, provides a comprehensive view of DXC's overall profitability. A higher net profit margin indicates that the company is efficient at managing all aspects of its income statement. Investors often use the net profit margin to assess the bottom-line profitability of DXC and compare it to industry peers.

Trends in DXC's profitability over time offer valuable insights into the company's financial performance. Consistent improvement in profit margins suggests effective management strategies and operational efficiencies. Conversely, declining profit margins may signal challenges such as increasing costs, competitive pressures, or inefficiencies in operations. Investors should analyze these trends in conjunction with industry benchmarks to gain a comprehensive understanding.

Comparing DXC's profitability ratios with industry averages is crucial for assessing its relative performance. Industry averages provide a benchmark for evaluating whether DXC's profit margins are competitive. If DXC's profitability ratios are significantly below the industry average, it may indicate areas where the company needs to improve its efficiency or cost management. Conversely, if DXC's ratios are above average, it suggests a competitive advantage or superior operational performance.

Analysis of operational efficiency involves examining how well DXC manages its costs and resources to generate profits. Key areas to consider include cost management practices, gross margin trends, and expense control measures. Effective cost management can lead to higher profit margins and improved financial performance. Monitoring trends in gross margins helps investors assess the company's ability to maintain profitability in its core operations. Additionally, evaluating expense control measures provides insights into DXC's discipline in managing its overall spending.

For additional insights into DXC's core values and strategic direction, consider exploring: Mission Statement, Vision, & Core Values of DXC Technology Company (DXC).

DXC Technology Company (DXC) Debt vs. Equity Structure

Understanding how DXC Technology Company (DXC) finances its operations and growth is crucial for investors. This involves analyzing its debt levels, debt-to-equity ratio, and recent financing activities. DXC, like many large companies, uses a combination of debt and equity to fund its business.

As of the fiscal year 2024, DXC's debt profile includes both short-term and long-term obligations. Examining the most recent 10-K filing can provide exact figures. For example, as of March 31, 2023, DXC reported total debt of $3.865 billion, compared to $4.228 billion the previous year. This debt includes senior notes due in various years, with interest rates ranging from 4.750% to 8.000%. A breakdown includes:

• Senior Notes due 2024: $750 million at 4.750%
• Senior Notes due 2025: $500 million at 5.125%
• Senior Notes due 2028: $750 million at 5.950%
• Senior Notes due 2029: $600 million at 6.875%
• Senior Notes due 2030: $650 million at 8.000%

The debt-to-equity ratio is a key metric for assessing financial leverage. It indicates the proportion of equity and debt a company uses to finance its assets. A lower ratio generally suggests less risk. DXC’s debt-to-equity ratio can be calculated using the total debt and shareholders' equity figures from its balance sheet. As of March 31, 2023, DXC's shareholders' equity was $2.119 billion. Using the total debt of $3.865 billion, the debt-to-equity ratio is approximately 1.82. This ratio can then be compared to industry averages to gauge DXC's relative leverage.

Recent activities such as debt issuances, credit ratings, and refinancing play a significant role in shaping DXC's financial health. In fiscal year 2023, DXC repurchased $400 million aggregate principal amount of its Senior Notes due 2024. Rating agencies like S&P and Moody’s provide credit ratings that reflect DXC's ability to meet its debt obligations. These ratings influence the interest rates DXC pays on its debt and its overall financial flexibility.

Balancing debt and equity is crucial for sustainable growth. While debt can provide capital for investments and expansion, excessive debt can increase financial risk. DXC's strategy involves managing its debt levels to maintain financial stability while pursuing growth opportunities. This balance is evident in their approach to:

• Repurchasing senior notes to reduce overall debt.
• Maintaining a mix of short-term and long-term debt to manage obligations.
• Strategically using equity to fund specific projects and initiatives.

For more in-depth insights, read the full analysis here: Breaking Down DXC Technology Company (DXC) Financial Health: Key Insights for Investors

DXC Technology Company (DXC) Liquidity and Solvency

When evaluating DXC Technology Company (DXC), understanding its liquidity and solvency is crucial for investors. Liquidity refers to DXC's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations. Let's delve into key financial metrics and trends to assess DXC's financial health.

Assessing DXC's Liquidity:

Analyzing DXC's liquidity involves examining its current and quick ratios, working capital trends, and cash flow statements.

• Current and Quick Ratios: These ratios provide insights into DXC's ability to cover its short-term liabilities with its short-term assets. The current ratio is calculated by dividing current assets by current liabilities, while the quick ratio excludes inventories from current assets to provide a more conservative measure.
• Analysis of Working Capital Trends: Monitoring changes in DXC's working capital (current assets minus current liabilities) helps identify potential liquidity issues. A declining working capital balance may indicate difficulties in managing short-term obligations.
• Cash Flow Statements Overview: Examining DXC's cash flow statements reveals trends in operating, investing, and financing activities. Positive operating cash flow indicates DXC's ability to generate cash from its core business operations, while investing and financing activities reflect its capital expenditures and funding strategies.

Cash Flow Statement Overview (Operating, Investing, and Financing Cash Flow Trends):

An overview of DXC's cash flow statements reveals the trends in its operating, investing, and financing activities. Positive operating cash flow indicates the company's ability to generate cash from its core business operations. Investing activities reflect capital expenditures and strategic investments, while financing activities show how the company is funding its operations through debt and equity.

Potential Liquidity Concerns or Strengths:

Based on the analysis of these metrics, investors can identify potential liquidity concerns or strengths for DXC. Factors such as declining cash reserves, increasing short-term debt, or negative operating cash flow may raise concerns about DXC's ability to meet its short-term obligations. Conversely, a strong current ratio, positive working capital, and consistent operating cash flow may indicate a healthy liquidity position.

Here is a sample table illustrating how key liquidity ratios might be tracked (Note: This is for illustrative purposes; real-world data should be used):

Keep in mind that analyzing these figures in isolation is not enough. Always compare DXC's ratios with industry averages and its main competitors to get a sense of whether DXC is underperforming or outperforming its peers. A trend of declining liquidity ratios should prompt further investigation into the company's financial management and strategic decisions.

To gain a deeper understanding of DXC's strategic direction, refer to the Mission Statement, Vision, & Core Values of DXC Technology Company (DXC).

DXC Technology Company (DXC) Valuation Analysis

Assessing whether DXC Technology Company (DXC) is overvalued or undervalued requires analyzing several key financial metrics and market indicators.

Here's a breakdown of important valuation ratios:

• Price-to-Earnings (P/E) Ratio: As of April 2025, DXC has a negative P/E ratio of -5.84. A negative P/E ratio suggests that the company currently has negative earnings.
• Price-to-Book (P/B) Ratio: As of April 17, 2025, the P/B ratio for DXC is 0.90. This indicates that the market values the company's equity close to its book value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: DXC's latest twelve months EV/EBITDA is 4.4x. Historically, DXC's EV/EBITDA ratio has averaged 7.0x from fiscal years ending March 2020 to 2024, with a median of 4.8x.

Analyzing DXC Technology Company (DXC) stock price trends provides additional insights:

• Current Price: As of April 17, 2025, DXC's stock price is $14.46.
• 52-Week Range: The stock has traded between $13.44 and $24.83 over the past 52 weeks.
• 12-Month Performance: The stock price has fallen by 27.07% over the last 12 months.

DXC does not currently offer a dividend. Therefore, dividend yield and payout ratios are 0.00%.

Here's what analysts have to say regarding DXC Technology Company (DXC) stock:

• Consensus Rating: DXC has a consensus rating of Hold.
• In the current month, DXC has received 0 Buy Ratings, 8 Hold Ratings, and 0 Sell Ratings.
• Average Price Target: The average analyst price target for DXC is $23.20.

Here is a summary of analyst ratings for DXC Technology Company (DXC):

Explore more about DXC Technology Company (DXC) financial health: Breaking Down DXC Technology Company (DXC) Financial Health: Key Insights for Investors

DXC Technology Company (DXC) Risk Factors

Several factors, both internal and external, could significantly impact DXC Technology Company's financial health. These risks span industry competition, regulatory changes, market conditions, and the company's operational and strategic execution. Understanding these risks is crucial for investors assessing DXC's stability and future prospects. Here's an overview:

Industry Competition: The IT services market is intensely competitive. DXC faces competition from global giants, niche players, and emerging technology firms. This competition can pressure pricing, reduce profit margins, and impact DXC's ability to win and retain contracts. Staying ahead requires continuous innovation and cost management.

Regulatory Changes: DXC operates in numerous countries, each with its own set of regulations concerning data privacy, cybersecurity, and trade. Changes in these regulations can increase compliance costs and affect DXC's service offerings. For example, stricter data protection laws may require significant investments in security infrastructure.

Market Conditions: Economic downturns or shifts in technology spending can directly affect DXC's revenue. During recessions, businesses often cut back on IT investments, which can lead to decreased demand for DXC's services. Conversely, rapid technological advancements may require DXC to invest heavily in new skills and technologies to remain competitive.

Operational Risks: DXC's operations are complex, involving large-scale IT projects and services for clients worldwide. Project delays, cost overruns, or service disruptions can negatively impact financial results and damage client relationships. Effective project management and service delivery are essential to mitigate these risks.

Financial Risks: DXC's financial health is also subject to risks related to debt, liquidity, and currency fluctuations. High levels of debt can increase interest expenses and limit financial flexibility. Fluctuations in exchange rates can affect revenue and earnings, especially from international operations. Prudent financial management is necessary to navigate these challenges.

Strategic Risks: Strategic decisions, such as acquisitions or divestitures, carry inherent risks. Integrating acquired companies or divesting underperforming assets can be complex and may not always yield the expected benefits. DXC must carefully evaluate and execute its strategic initiatives to maximize shareholder value.

Mitigation strategies are crucial for DXC to address these risks effectively. These may include:

• Investing in cybersecurity to protect client data and maintain trust.
• Diversifying service offerings to reduce reliance on specific industries or technologies.
• Implementing robust project management practices to ensure on-time and on-budget project delivery.
• Maintaining a strong balance sheet with sufficient liquidity to weather economic downturns.
• Continuously monitoring and adapting to changes in the regulatory landscape.

By proactively managing these risks, DXC can enhance its financial stability and improve its long-term prospects. Investors should closely monitor DXC's risk management efforts and assess how effectively the company addresses these challenges.

Here's a comprehensive table summarizing key risk areas and potential mitigation strategies:

For more insights into DXC Technology Company's financial health, you can explore: Breaking Down DXC Technology Company (DXC) Financial Health: Key Insights for Investors

DXC Technology Company (DXC) Growth Opportunities

DXC Technology Company (DXC) faces a dynamic landscape of growth opportunities driven by technological advancements, strategic partnerships, and evolving market demands. An analysis of these key factors provides insights into the company's potential for future expansion and enhanced financial performance.

Key growth drivers for DXC include:

• Product Innovations: DXC's commitment to innovation is evident in its development of new solutions and services tailored to meet the evolving needs of its clients.
• Market Expansions: DXC strategically targets emerging markets and industries to broaden its customer base and revenue streams.
• Acquisitions: DXC leverages acquisitions to enhance its capabilities, expand its market presence, and gain access to new technologies.

Future revenue growth projections and earnings estimates for DXC are influenced by several factors. According to the Q3 2024 earnings call, DXC is focused on:

• Delivering profitable growth.
• Expanding margins.
• Increasing cash flow.

These objectives are underpinned by strategic initiatives aimed at streamlining operations, optimizing resource allocation, and enhancing customer satisfaction.

Strategic initiatives and partnerships that may drive future growth:

• Cloud Computing: DXC is investing heavily in cloud-based solutions and services, capitalizing on the growing demand for cloud migration, management, and security.
• Digital Transformation: DXC assists clients in their digital transformation journeys, offering services such as data analytics, artificial intelligence, and automation.
• Cybersecurity: With the increasing threat of cyberattacks, DXC provides cybersecurity solutions to protect clients' critical assets and data.

DXC's competitive advantages position the company for sustained growth. These advantages include:

• Global Reach: DXC operates in numerous countries, serving a diverse range of clients across industries.
• Deep Industry Expertise: DXC possesses extensive knowledge and experience in various industries, enabling it to deliver tailored solutions that address specific client needs.
• Strong Partner Ecosystem: DXC collaborates with leading technology providers to offer comprehensive solutions and services.

For more insights into the company's mission, vision, and core values, refer to: Mission Statement, Vision, & Core Values of DXC Technology Company (DXC).

To provide a clearer picture, here's a summary of DXC's financial performance and future estimates:

These projections are based on current market conditions, industry trends, and DXC's strategic initiatives. However, they are subject to change based on various factors, including economic conditions, competitive pressures, and technological advancements.