Yahoo Finance DXC Technology (DXC) Q4 Earnings Meet Estimates, Revenues Miss
DXC Technology Company DXC reported mixed results in the fourth quarter of fiscal 2023, wherein adjusted earnings matched the Zacks Consensus Estimate, while revenues fell short of the same. The company reported fourth-quarter non-GAAP earnings of $1.02 per share, in line with the Zacks Consensus Estimate.
The bottom line increased 21.4% from the prior-year quarter’s earnings of 84 cents per share. The year-over-year improvement was primarily driven by lower interest expenses and a reduction in share counts, partially offset by lower sales volumes and foreign exchange headwinds.
DXC reported revenues of $3.59 billion, which marginally fell short of the consensus mark of $3.62 billion and declined 10.4% year over year. The top line was negatively impacted by a tough year-over-year comparison related to the lower resale and lower-than-anticipated levels of project revenues in the reported quarter.
DXC Technology Company. Price, Consensus and EPS Surprise
DXC Technology Company. price-consensus-eps-surprise-chart | DXC Technology Company. Quote
Quarterly Details
DXC’s bookings in the fiscal fourth quarter were $3.7 billion, reflecting the book-to-bill ratio of 1.04. The trailing 12-month book-to-bill ratio for the company was 1.02 at the fourth-quarter fiscal 2023 end.
Segment-wise, revenues from Global Business Services decreased 7.5% on a year-over-year basis to $1.75 billion. On an organic basis, the division’s revenues improved 3.3% year over year. The upside was primarily aided by the strong performance of Analytics and Engineering offerings, where revenues increased 8.5% on an organic basis.
Global Infrastructure Services revenues were $1.84 billion in the fiscal fourth quarter, down 13% year over year. On an organic basis, the division’s revenues decreased 8.5% year over year. The decline was primarily due to lower Modern Workplace and Cloud Infrastructure & ITO revenues.
The company’s adjusted operating income declined to $320 million in the fourth quarter from $342 million in the year-ago quarter. However, the adjusted operating margin improved to 8.9% from 8.5%.
Balance Sheet and Cash Flow
DXC exited the fiscal fourth quarter with $1.86 billion in cash and cash equivalents compared with the $2.09 billion witnessed in the previous quarter. The long-term debt balance (net of current maturities) increased to $3.9 billion as of Mar 31, 2023 from $3.85 billion as of Dec 31, 2022.
In the fourth quarter, DXC generated operating cash flow of $415 million and free cash flow of $269 million. In fiscal 2023, the company generated operating and free cash flows of $1.42 billion and $737 million, respectively.
In fiscal 2023, DXC repurchased shares worth $669 million. Moreover, the company revealed that it completed its $1 billion share repurchase initiative in April 2023, and concurrent with its fourth-quarter fiscal 2023 earnings release, it announced a new share repurchase authorization of $1 billion.
Guidance
DXC initiated guidance for the first quarter and full-fiscal 2024. For the first quarter of fiscal 2024, the company anticipates revenues between $3.45 billion and $3.58 billion. The adjusted EBIT margin is expected in the range of 7.5%-8%. DXC projects adjusted earnings between 80 cents and 85 cents per share for the first quarter.
For fiscal 2024, DXC estimates revenues in the band of $14.40-$14.55 billion. It projects the adjusted EBIT margin and EPS in the ranges of 8%-8.5% and $3.80-$4.05, respectively.
Zacks Rank & Stocks to Consider
Currently, DXC carries a Zacks Rank #3 (Hold). Shares of DXC have declined 10.1% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Meta Platforms META, Manhattan Associates MANH and Wix.com WIX. While Meta and Manhattan Associates each sport a Zacks Rank #1 (Strong Buy), Wix.com carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 43 cents northward to $2.87 per share in the past 30 days. For 2023, earnings estimates have been revised 15.2% upward to $12.04 per share in the past 30 days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 104.9% YTD.
The Zacks Consensus Estimate for Manhattan Associates' second-quarter 2023 earnings has been revised upward by a couple of cents to 72 cents per share for the past 30 days. For 2023, earnings estimates have moved upward by 17 cents to $2.87 per share in the past 30 days.
Manhattan Associates' earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 33.6%. Shares of MANH have soared 45.1% YTD.
The Zacks Consensus Estimate for Wix.com’s second-quarter 2023 earnings has remained unchanged at 36 cents per share over the past 60 days. For 2023, earnings estimates have been unchanged at $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 302%. Shares of WIX have increased 5% YTD.
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