DXC Confirms 'Ongoing Discussions' On Sale Of Insurance Business, Cuts Full-Year Revenue Outlook
CEO Raul Fernandez opened the call by confirming talks, while revenue guidance fell to a 5% to 5.5% decline.
DXC Technology is in talks over a possible sale of its insurance business, CEO Raul Fernandez said on the company's second-quarter earnings call Thursday, and he told analysts management would not answer further questions on it. The company, which provides IT services and software to large global companies and public sector organizations, also lowered its full-year revenue outlook.
Talks confirmed, details withheld
Fernandez addressed what he called market speculation up front. "I can confirm that we are currently in ongoing discussions," he said, adding that he did not want to get into specifics.
He cast a sale as one path among several. Management and the board are committed to exploring all avenues to create shareholder value, he said, including improving the core business, scaling agentic and AI-based solutions, and evaluating strategic actions across the portfolio.
Later, an analyst raised Guidewire's purchase of hyper-exponential earlier this week at 20 times revenue, stressing the question was not about DXC's own process. Fernandez said he would not comment on the insurance unit, but that sticky customers, recurring revenue and regulatory moats make for a "fantastic valuation by any measure." He added that DXC has those ingredients in its insurance business.
Insurance up 23%, core business weaker
Chief Financial Officer Rob Del Bene said insurance revenue grew 23% from a year earlier, driven by a one-time contract modification that was not in guidance. Excluding it, he said, underlying insurance revenue was consistent with the prior quarter. He raised full-year insurance growth guidance to mid single digits from low single digits.
The insurance unit's Assure software platform has more than 275 enterprise insurance accounts, Fernandez said, and DXC sold its first AI-enabled smart apps in the quarter, with that pipeline up more than 20% from last quarter.
Elsewhere, the picture was softer. Total revenue was $3 billion, down 4%, above the high end of guidance, and non-GAAP earnings per share were $0.67 against $0.84 a year earlier. Bookings fell 10% and the book-to-bill ratio was 0.8. Del Bene blamed large-deal timing and weaker conversion of project-based pipeline, most pronounced in the Americas and the UK and Ireland.
Guidance cut for the core
DXC now expects full-year organic revenue to fall 5% to 5.5%, adjusted EBIT margin of 5.75% to 6.25%, adjusted earnings per share of $2.25 to $2.50 and free cash flow of about $600 million. Del Bene said half the cut comes from each of the consulting and infrastructure segments.
For the third quarter, it expects organic revenue to decline about 6%, with adjusted EPS of about 55 cents.
Fernandez acknowledged the core business is not performing as he wants. "We're not satisfied with our current performance," he said, citing sales execution and stabilizing revenue as priorities.
DXC's market value stood at $2.6 billion as of the report, and Fernandez said new President Paul Taylor will join the next call to discuss his initiatives.
Sources
- DXC Technology Company. (DXC) Q2 Earnings and Revenues Beat Estimates — Yahoo Finance
- DXC Technology Company Non-GAAP EPS of $0.67 beats by $0.12, revenue of $3.03B beats by $30M (DXC:NYSE) — seekingalpha.com
- DXC Technology Company (DXC) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
- Sime Darby sells global services centre to DXC Technology — The Edge Malaysia
- DXC Technology Reports Second Quarter Fiscal Year 2027 Results — prnewswire.com
