DXC Technology Q3 Revenue Dips 1% to $3.19B as EPS Rises to $0.96
DXC Technology reported Q3 fiscal 2026 revenue of $3.19 billion, down 1.0% YoY, with $3.6 billion in bookings and a 1.12x book-to-bill ratio. The company posted non-GAAP EPS of $0.96 (up 4.3%), an 8.2% adjusted EBIT margin, free cash flow of $266 million, and returned $65 million via buybacks and redeemed $300 million of debt.
1. Q3 Financial Summary
DXC Technology reported third quarter fiscal 2026 revenue of $3.19 billion, a 1.0% decline year-over-year and a 4.3% decline on an organic basis. GAAP operating income (EBIT) rose 22.6% to $179 million, representing a 5.6% margin, while adjusted EBIT was $263 million with an 8.2% margin. GAAP diluted earnings per share jumped 96.8% to $0.61, and non-GAAP diluted EPS increased 4.3% to $0.96, beating consensus estimates by more than 12%. Bookings totaled $3.6 billion, yielding a book-to-bill ratio of 1.12x, and the trailing twelve-month ratio stood at 1.02x.
2. Cash Flow and Capital Return
Cash generated from operations in the quarter was $414 million, down $236 million year-over-year. Free cash flow came in at $266 million, contributing to a year-to-date total of $603 million, up 4.7% from the prior period. During the quarter, DXC repurchased $65 million of its own shares and redeemed $300 million of senior notes originally due in September 2026, reflecting a continued focus on returning capital to shareholders and optimizing the balance sheet.
3. Segment Performance
Consulting and Engineering Services (CES) revenue was $1.266 billion, down 0.1% year-over-year (3.6% organically), with segment profit of $144 million and an 11.4% margin; bookings declined 6% with a 1.20x book-to-bill ratio. Global Infrastructure Services (GIS) revenue fell 2.7% to $1.607 billion (6.2% organically), segment profit rose 0.9% to $113 million for a 7.0% margin; bookings dropped 26% with a 1.09x ratio. Insurance Services revenue grew 4.6% to $321 million (3.2% organically), while segment profit declined 30.0% to $35 million, delivering a 10.9% margin and a 0.93x book-to-bill ratio.
4. Guidance Outlook
For fourth quarter fiscal 2026, DXC expects total revenue between $3.16 billion and $3.19 billion, a 5.0% to 4.0% organic decline, adjusted EBIT margin of 6.5% to 7.5%, and non-GAAP diluted EPS of $0.65 to $0.75. Full year fiscal 2026 guidance calls for approximately $12.69 billion in revenue (down 4.3% organically), an adjusted EBIT margin near 7.5%, non-GAAP diluted EPS around $3.15, and free cash flow of about $650 million.