DXC Q2 Organic Revenue Falls 4% as Insurance Grows

DXC Technology reported a 4.0% year-over-year decline in organic revenue for its fiscal second quarter of 2027, a smaller contraction than the 5.5% to 6.5% decline contemplated in its quarterly guidance. Growth in the Insurance business partly offset continued weakness in Global Infrastructure Services, while adjusted profitability and non-GAAP earnings per share also came in above the company’s indicated levels.

Revenue totaled $3.03 billion, compared with $3.16 billion a year earlier. Adjusted EBIT was $187 million, producing a 6.2% margin, versus $254 million and 8.0% in the prior-year quarter. DXC had guided to an adjusted EBIT margin of about 6.0%.

Non-GAAP diluted EPS was $0.67, above the company’s approximately $0.55 guidance but down from $0.84 a year earlier. On a GAAP basis, net income fell to $13 million from $40 million, while diluted EPS decreased to $0.15 from $0.20.

Insurance growth contrasts with infrastructure declines

Global Infrastructure Services remained the largest drag on revenue. GIS generated $1.43 billion, down 10.0% on both a reported and organic basis. Bookings declined 13%, and the segment recorded a quarterly book-to-bill ratio of 0.80.

Consulting and Engineering Services revenue fell 3.3% organically to $1.21 billion. CES bookings decreased 17%, with book-to-bill at 0.79.

Insurance revenue rose 23.1% organically to $394 million, marking the company’s strongest segment growth during the quarter. Insurance bookings increased 44%, although its quarterly book-to-bill ratio was 0.79.

Across DXC, quarterly book-to-bill was 0.80, indicating that bookings remained below recognized revenue during the period.

Cash flow and capital allocation

DXC generated $91 million of free cash flow in the second quarter, compared with $240 million a year earlier. Operating cash flow was $217 million, while total capital expenditures were $126 million. The company said operational free cash flow was $213 million before a $122 million IRS deposit.

First-half free cash flow totaled $405 million. During the second quarter, DXC retired $400 million of U.S. dollar-denominated bonds and repurchased $60 million of shares.

Fiscal 2027 outlook

For the full fiscal year, DXC expects organic revenue to decline between 5.0% and 5.5%. The company projects an adjusted EBIT margin of 5.75% to 6.25%, non-GAAP diluted EPS of $2.25 to $2.50 and free cash flow of about $600 million.

For the fiscal third quarter, management expects organic revenue to fall approximately 6.0%, with an adjusted EBIT margin of about 6.0% and non-GAAP diluted EPS of roughly $0.55.

AI initiatives move toward commercialization

DXC highlighted expanding adoption of its agentic and artificial-intelligence offerings. The company won its first large GrowthX deal with a leading global bank to modernize core banking systems and support a cloud migration using AI.

Utilization of the DXC Oasis platform increased sixfold from the previous quarter as more agentic workflows moved into production, with patch management emerging as a leading use case. Adoption of the Assure platform exceeded 275 customers, while the pipeline for AI-enabled Smart Apps grew more than 20% sequentially.

The company also identified commercialization as the next step in its partnership with Anthropic. DXC said more than 500 professionals have been certified since June and highlighted planned or productized offerings including DXC Frontier Code Assurance, Anthropic’s Trusted Cyber Defense Program and Claude Mythos.

DXC’s outlook remains subject to risks including execution in its sales organization, reduced customer spending, competitive pressure, contract delivery and cost estimation, cybersecurity incidents, foreign-exchange movements and geopolitical conflicts. The company also cited uncertainties tied to AI adoption, governance, regulation, third-party platforms and its ability to attract and retain technical specialists.