2024 Annual Report

To the shareholders of DXC Technology,

It is my privilege to write to you as DXC’s new president and chief executive officer.

During my first months as CEO, I have focused on assessing the strengths, opportunities and challenges across DXC. I have met with customers, partners, employees and investors across the world to hear their insights, perceptions and feedback.

These discussions have provided me with a deeper and richer understanding and appreciation of this outstanding company, and they have helped me formulate our path forward for creating long-term shareholder value.

We have an impressive portfolio of assets and technologies; however, it is clear that there are many compelling attributes of DXC that are underappreciated outside of the company.

My leadership team is relentlessly focused on unlocking that value through operational discipline, integration, flawless execution and a series of strategic initiatives. We are improving our sales execution by employing an enhanced operating model that better highlights our differentiated offerings and aligns our sales organization by geographic markets. While the path ahead is not without challenges, and it will take some time to achieve our intended results, I am confident you will note our steady progress in the coming quarters. I believe we have the right team and capabilities in place to capitalize on the many opportunities ahead and continue delivering impactful outcomes for our customers.

In Global Business Services (GBS):

• We are merging Analytics & Engineering and Applications into a combined Consulting & Engineering Services business to improve our customer experience and employee engagement while removing areas of duplication to drive better profitability. This business has an extensive history of driving change for some of the world’s biggest brands. Our deep domain expertise in areas including financial services, automotive and manufacturing, and the public sector, coupled with our rich analytics, AI and software development capabilities, equips us to lead our customers through their digital transformation journeys.
• In our Insurance Software & Business Process Services (BPS) business, we are the category leader in software and services for life and wealth, global specialty, and reinsurance providers. Our technology and services process 1 in 5 property and casualty transactions worldwide, and our customer base includes 21 of the top 25 global insurance carriers. This business boasts strong recurring and reoccurring revenue, along with very strong customer retention and an average customer tenure of 18 years, and we see opportunities to explore new geographic markets and revenue mix with our innovative software products.

In Global Infrastructure Services (GIS):

• Our Cloud Infrastructure & IT Outsourcing (ITO) offering helps many of the world’s most recognized brands modernize their technology stack. As one of the largest service providers in the industry with a strong customer NPS, we are well positioned to help customers securely operate the systems their businesses rely on. Many of the world’s largest airlines, energy companies and financial institutions, as well as large government organizations, count on DXC for the systems at the heart of their business. We are helping our customers modernize securely for the future and operate confidently across a wide range of environments, from legacy core mainframes to cutting edge serverless cloud environments such as Microsoft Azure, Google Cloud Platform and Amazon Web Services, for which we have more than 30,000 overall cloud certifications. Building on this foundation, we are increasing our focus on delivering as-a-service offerings across multiple platforms.
• In Modern Workplace, our solutions play a pivotal role in providing easy access to the services our customers’ employees need. The employee experience is more important than ever, and we support more than 7 million devices for our customers’ employees, all day, every day. In support of our customers’ digital strategies, we are driving more AI embedded solutions aimed at delivering near-touchless support for quick resolution of problems, enabling greater productivity and enhanced levels of engagement.
• Cybersecurity is a top C-suite concern and a core competency for DXC. Our Security offering equips customers with essential solutions that help them assess risks and fortify resilience in their IT infrastructure and operations. Around the world, more than 3,000 DXC security professionals work in eight security operations centers to provide around-the-clock coverage for our customers. As the pace and complexity of cybersecurity incidents increase, we are extending our focus beyond integration with DXC’s other offerings to better support the changing needs of our customers and to enable growth.

Fiscal year 2024 performance

Our fiscal year 2024 results were impacted by the challenges related to macroeconomic uncertainty and geopolitical risks affecting the markets of the customers we serve. Despite this difficult operating environment, DXC continued to distinguish itself as a provider of critical and transformational services and solutions for our customers and was able to generate significant cash flow and return capital to shareholders. Financial results for the year include the following:*

• Total revenue was $13.7 billion, representing a 5.3% year-over-year decline, or a decline of 4.1% on an organic basis.
• GBS revenue declined 2.0% year over year, or was up 1.4% on an organic basis.
• GIS revenue declined 8.3% year over year, or declined 9.3% on an organic basis.
• EBIT was $193 million, with a corresponding margin of 1.4%, and adjusted EBIT was $1.0 billion, with a corresponding margin of 7.4%.
• Diluted earnings per share (EPS) was $0.46, increased from $(2.48) in the prior year, and non-GAAP diluted EPS was $3.13, down 10% year over year.
• Operating cash flow of $1,361 million, less capital expenditures of $605 million, resulted in free cash flow of $756 million, representing the third consecutive year where DXC generated more than $700 million in free cash flow.
• We returned more than $880 million of capital to shareholders, repurchasing approximately 18% of our outstanding shares in fiscal year 2024.

In conclusion, it is an honor to lead this renowned global IT services company that is dedicated to delivering excellence for our customers and colleagues. Our global teams are committed to helping our customers run their mission-critical systems and operations, which is why we are a trusted partner to more than 200 companies in the Fortune 500.

We are embarking on a journey to simplify and improve our operational efficiency. By doing so, we will create a more streamlined, agile and competitive organization. To lead these changes, we have assembled an accomplished team of leaders with proven records of success. I am confident that our strategy will position us on a path toward sustainable and profitable growth in the coming years, and I am excited to lead DXC at this pivotal time in its history. Our success will be defined by our ability to execute, and I am determined to drive the transformation of our company as quickly as possible.

Lastly, I would like to thank our global teams, whose dedication and tireless efforts enable us to deliver the mission-critical services our customers entrust to us.

Regards,

Raul Fernandez
President and Chief Executive Officer

*Please see non-GAAP reconciliations of EBIT margin and adjusted EBIT margin to GAAP net income margin provided at the end of this annual report. Please see non-GAAP reconciliations of organic revenue growth, EBIT, adjusted EBIT and non-GAAP diluted EPS to their respective most directly comparable GAAP measures in the Form 10-K for the year ended March 31, 2024 (the “Form 10-K”), included as part of this annual report.

All statements in this annual report that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” For more information, please see “Cautionary Statement Regarding Forward-Looking Statements” included in the Form 10-K.