NEW YORK, May 8, 2026, 15:05 (ET)
DXC Technology shares dropped Friday, with the IT services company projecting another year of organic revenue losses—casting more uncertainty on the pace of its AI-driven turnaround as clients keep tightening budgets.
Shares were changing hands at $9.20 in the afternoon, a drop of roughly 23% from Thursday’s $12.01 close, putting the company’s market cap close to $1.56 billion. DXC reported its results after markets shut on May 7.
DXC trimmed costs enough to top its adjusted earnings target, but sales just didn’t measure up. Management flagged softer demand for short-term project work, hitting hardest in its biggest unit, Global Infrastructure Services. Now, DXC projects first-quarter organic revenue will drop between 6.5% and 7.5%.
DXC turned in fourth-quarter revenue of $3.13 billion, slipping 1.2% year over year and dropping 6.6% organically—which strips out changes from currency, acquisitions, and divestitures. The company swung to a GAAP loss of 84 cents per share. On a non-GAAP diluted basis, EPS came in at 77 cents, topping guidance that had ranged from $0.65 to $0.75. Adjusted EBIT margin landed at 7.6%.
DXC president and CEO Raul Fernandez pointed to robust free cash flow and margins, but conceded, “top line performance fell short.” He didn’t mince words on the earnings call, calling the miss “not just the pipeline and demand issue, it’s execution.” DXC Technology Investor Relations
Bookings slid about 14% year-over-year. The book-to-bill ratio landed at 1.07, so new contracts just edged out revenue for the quarter. Chief Financial Officer Robert Del Bene pointed to softer discretionary spending as a drag, with short-term services work in the U.S. and Europe—especially infrastructure—taking the brunt.
Breaking down the results: Global Infrastructure Services pulled in $1.55 billion, dropping 10.6% on an organic basis. Consulting and Engineering Services brought in $1.26 billion, also slipping—down 3.9% organically. The much smaller Insurance Software & Services segment—$325 million—was a rare bright spot, climbing 4.0% organically.
DXC is projecting fiscal 2027 revenue between $12.11 billion and $12.35 billion, which works out to an organic drop of 3% to 5%. The company is targeting an adjusted EBIT margin in the 6% to 7% range, with non-GAAP diluted EPS seen at $2.40 to $2.90. Free cash flow — the amount remaining after capital expenditures — is expected to land near $600 million.
DXC isn’t the only one feeling the squeeze. Over at Kyndryl, the enterprise infrastructure firm said on May 6 its fourth-quarter revenue slipped 5% in constant currency, even as consulting and hyperscaler-related segments moved higher. But for DXC, the miss stands out—management went further, blaming part of the gap on sales execution.
DXC is working to flip that narrative, leaning on new AI-driven offerings. Fernandez pointed to OASIS, the company’s agentic orchestration platform—which leverages AI agents to resolve service problems—saying it launched April 28 with ten customers, and that it played a key role in landing a major European insurer. For now, he said, pricing remains steady, though competitors are ramping up “additional aggressiveness” in some longer-term contracts. The Motley Fool
Still, there’s a chance project setbacks drag on beyond what management anticipates, potentially leaving AI offerings too modest to shore up revenue any time soon. DXC itself flagged a host of risks — sales execution, competition, ongoing macroeconomic headwinds, the pace of AI adoption, and security issues — all of which could affect outcomes.
DXC is sticking with its plan to buy back $250 million in shares during fiscal 2027 and intends to pay off the last $400 million in senior notes maturing September 2026. That move frees up some options for how management can use capital. Still, it leaves the nagging revenue issue—the one investors hammered last Friday—squarely unaddressed.
