DXC Confirms Talks To Sell Insurance Unit, Its Only Growing Segment, As Infrastructure Sales Fall 10%

DXC Technology, which provides IT services and software to large companies and public sector organizations, said Thursday it is in talks about a possible sale of its insurance business, the one segment that grew in the quarter. The disclosure came with second-quarter revenue of $3.03 billion, down 4.0% from a year earlier, according to an 8-K filing.

Infrastructure drags, insurance climbs

Global Infrastructure Services, which runs clients' technology systems, saw revenue drop 10.0% to $1,427 million. Its segment profit fell 45.9% to $66 million, a 4.6% margin versus 7.7% a year earlier.

Consulting and Engineering Services revenue slipped 3.3% to $1,213 million, with segment profit down 13.8% to $125 million.

Insurance Software & Services revenue rose 23.1% to $394 million, and its profit rose 60.7% to $45 million. The company said that growth includes a favorable contract modification signed during the quarter. DXC also said it "acknowledges ongoing discussions regarding a possible sale of its insurance business."

Earnings and bookings both slip

Adjusted earnings before interest and taxes fell 26.4% to $187 million, a 6.2% margin. Adjusted earnings per share were $0.67, down 20.2%, while standard diluted earnings per share were $0.15.

Bookings, or new contract orders, were $2.4 billion, down 10%, for a book-to-bill ratio of 0.80x, meaning orders trailed revenue. On a trailing twelve-month basis the ratio was 1.0x.

Free cash flow was $91 million in the quarter against $240 million a year earlier. For the first half it reached $405 million, up from $337 million. DXC bought back about 5.7 million shares for $60 million.

Guidance and the CEO's view

For the full fiscal year, DXC forecasts revenue of $11.91 billion to $11.98 billion, a decline of 5.5% to 5.0% on an organic basis, and adjusted earnings of $2.25 to $2.50 per share. It targets free cash flow of about $600 million. For the third quarter it guides to revenue of about $2.98 billion and adjusted earnings of about $0.55 per share.

CEO Raul Fernandez said the quarter beat the company's own expectations, and added: "While our core revenue recovery will take time, I am confident that our role operating mission-critical systems gives DXC a differentiated position as enterprises look to deploy AI at scale."

DXC held its results call at 5:00 p.m. ET on Thursday.

Sources

• 8-K Filing — DXC Technology Co (DXC) — SEC EDGAR
• Exhibit dxcfy27q2pressrelease.htm — DXC Technology Co 8-K exhibit — SEC EDGAR
• DXC Technology Reports Second Quarter Fiscal Year 2027 Results — prnewswire.com