DXC Technology Co 10-Q

ITEM 1. FINANCIAL STATEMENTS Index to Condensed Consolidated Financial Statements Page Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2025 and June 30, 2024 (unaudited) 2 Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended June 30, 2025 and June 30, 2024 (unaudited) 3 Condensed Consolidated Balance Sheets as of June 30, 2025 and March 31, 2025 (unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2025, and June 30, 2024 (unaudited) 5 Condensed Consolidated Statements of Changes in Equity for the Three Months Ended June 30, 2025 and June 30, 2024 (unaudited) 6 Notes to Condensed Consolidated Financial Statements (unaudited) Note 1–Summary of Significant Accounting Policies 7 Note 2–Earnings Per Share 10 Note 3–Receivables 10 Note 4–Leases 11 Note 5–Derivative Instruments 13 Note 6–Intangible Assets 15 Note 7–Goodwill 16 Note 8–Debt 17 Note 9–Revenue 18 Note 10–Restructuring Costs 19 Note 11–Pension and Other Benefit Plans 20 Note 12–Income Taxes 20 Note 13–Stockholders’ Equity 22 Note 14–Stock Incentive Plans 23 Note 15–Cash Flows 24 Note 16–Segment Information 24 Note 17–Commitments and Contingencies 26 1 DXC TECHNOLOGY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended (in millions, except per-share amounts) June 30, 2025 June 30, 2024 Revenues $ 3,159 $ 3,236 Costs of services (excludes depreciation and amortization and restructuring costs) 2,388 2,526 Selling, general and administrative (excludes depreciation and amortization and restructuring costs) 394 301 Depreciation and amortization 304 326 Restructuring costs 37 39 Interest expense 54 72 Interest income ( 46 ) ( 51 ) Other income, net ( 39 ) ( 45 ) Total costs and expenses 3,092 3,168 Income before income taxes 67 68 Income tax expense 49 43 Net income 18 25 Less: net income (loss) attributable to non-controlling interest, net of tax 2 ( 1 ) Net income attributable to DXC common stockholders $ 16 $ 26 Income per common share: Basic $ 0.09 $ 0.14 Diluted $ 0.09 $ 0.14 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 DXC TECHNOLOGY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited) Three Months Ended (in millions) June 30, 2025 June 30, 2024 Net income $ 18 $ 25 Other comprehensive (loss) income, net of taxes: Foreign currency translation adjustments, net of tax (benefit) expense of $( 15 ) and $ 1 ( 32 ) 3 Cash flow hedges adjustments, net of tax (benefit) expense of $( 2 ) and $ 1 ( 7 ) 3 Pension and other post-retirement benefit plans, net of tax: Amortization of prior service cost, net of tax benefit of $ 0 and $ 0 — ( 1 ) Pension and other post-retirement benefit plans, net of tax — ( 1 ) Other comprehensive (loss) income, net of taxes ( 39 ) 5 Comprehensive (loss) income ( 21 ) 30 Less: comprehensive income (loss) attributable to non-controlling interest 2 ( 1 ) Comprehensive (loss) income attributable to DXC common stockholders $ ( 23 ) $ 31 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 DXC TECHNOLOGY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) As of (in millions, except per-share and share amounts) June 30, 2025 March 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 1,792 $ 1,796 Receivables and contract assets, net of allowance of $ 30 and $ 32 3,056 2,972 Prepaid expenses 530 477 Other current assets 98 118 Total current assets 5,476 5,363 Intangible assets, net of accumulated amortization of $ 6,524 and $ 6,241 1,511 1,642 Operating right-of-use assets, net 735 635 Goodwill 532 526 Deferred income taxes, net 878 819 Property and equipment, net of accumulated depreciation of $ 3,513 and $ 3,409 1,247 1,253 Other assets 3,059 2,967 Total Assets $ 13,438 $ 13,205 LIABILITIES and EQUITY Current liabilities: Short-term debt and current maturities of long-term debt 929 880 Accounts payable 650 549 Accrued payroll and related costs 639 571 Operating lease liabilities 252 227 Accrued expenses and other current liabilities 1,265 1,358 Deferred revenue and advance contract payments 722 762 Income taxes payable 40 64 Total current liabilities 4,497 4,411 Long-term debt, net of current maturities 3,100 2,996 Non-current deferred revenue 631 635 Non-current operating lease liabilities 518 444 Non-current income tax liabilities and deferred tax liabilities 499 495 Other long-term liabilities 763 734 Total Liabilities 10,008 9,715 Commitments and contingencies DXC stockholders’ equity: Preferred stock, par value $ 0.01 per share; authorized 1,000,000 shares; none issued as of June 30, 2025 and March 31, 2025 — — Common stock, par value $ 0.01 per share; authorized 750,000,000 shares; issued 185,978,363 as of June 30, 2025 and 186,856,421 as of March 31, 2025 2 2 Additional paid-in capital 7,561 7,677 Accumulated deficit ( 3,347 ) ( 3,451 ) Accumulated other comprehensive loss ( 801 ) ( 762 ) Treasury stock, at cost, 6,364,907 and 5,653,666 shares as of June 30, 2025 and March 31, 2025 ( 247 ) ( 237 ) Total DXC stockholders’ equity 3,168 3,229 Non-controlling interest in subsidiaries 262 261 Total Equity 3,430 3,490 Total Liabilities and Equity $ 13,438 $ 13,205 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 DXC TECHNOLOGY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended (in millions) June 30, 2025 June 30, 2024 Cash flows from operating activities: Net income $ 18 $ 25 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 309 333 Goodwill impairment losses 14 — Operating right-of-use expense 76 80 Share-based compensation 22 23 Deferred taxes ( 12 ) ( 50 ) Gain on dispositions ( 1 ) ( 1 ) Provision for losses on accounts receivable — 7 Unrealized foreign currency exchange gain ( 47 ) — Impairment losses and contract write-offs 1 4 Other non-cash charges, net ( 3 ) 5 Changes in assets and liabilities, net of effects of acquisitions and dispositions: Decrease in assets 90 161 Decrease in operating lease liability ( 76 ) ( 80 ) Decrease in other liabilities ( 205 ) ( 269 ) Net cash provided by operating activities 186 238 Cash flows from investing activities: Purchases of property and equipment ( 43 ) ( 48 ) Payments for transition and transformation contract costs ( 30 ) ( 38 ) Software purchased and developed ( 16 ) ( 107 ) Proceeds from sale of assets 10 5 Other investing activities, net 2 — Net cash used in investing activities ( 77 ) ( 188 ) Cash flows from financing activities: Borrowings of commercial paper — 323 Repayments of commercial paper — ( 172 ) Payments on finance leases and borrowings for asset financing ( 49 ) ( 91 ) Taxes paid related to net share settlements of share-based compensation awards ( 12 ) ( 17 ) Repurchase of common stock ( 48 ) ( 2 ) Other financing activities, net ( 1 ) — Net cash (used in) provided by financing activities ( 110 ) 41 Effect of exchange rate changes on cash and cash equivalents ( 3 ) 2 Net (decrease) increase in cash and cash equivalents ( 4 ) 93 Cash and cash equivalents at beginning of year 1,796 1,224 Cash and cash equivalents at end of period $ 1,792 $ 1,317 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 DXC TECHNOLOGY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited) Three Months Ended June 30, 2025 (in millions, except shares in thousands) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Treasury Stock (1) Total DXC Equity Non- Controlling Interest Total Equity Shares Amount Balance at March 31, 2025 186,856 $ 2 $ 7,677 $ ( 3,451 ) $ ( 762 ) $ ( 237 ) $ 3,229 $ 261 $ 3,490 Net income 16 16 2 18 Other comprehensive loss ( 39 ) ( 39 ) ( 39 ) Share-based compensation expense 22 22 22 Acquisition of treasury stock ( 10 ) ( 10 ) ( 10 ) Share repurchase program (2) ( 3,275 ) ( 138 ) 88 ( 50 ) ( 50 ) Stock option exercises and other common stock transactions 2,397 — — Non-controlling interest distributions and other — — ( 1 ) ( 1 ) Balance at June 30, 2025 185,978 $ 2 $ 7,561 $ ( 3,347 ) $ ( 801 ) $ ( 247 ) $ 3,168 $ 262 $ 3,430 Three Months Ended June 30, 2024 (in millions, except shares in thousands) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Treasury Stock Total DXC Equity Non- Controlling Interest Total Equity Shares Amount Balance at March 31, 2024 183,431 $ 2 $ 7,599 $ ( 3,839 ) $ ( 732 ) $ ( 219 ) $ 2,811 $ 255 $ 3,066 Net income 26 26 ( 1 ) 25 Other comprehensive income 5 5 5 Share-based compensation expense 23 23 23 Acquisition of treasury stock ( 14 ) ( 14 ) ( 14 ) Stock option exercises and other common stock transactions 2,836 — — Non-controlling interest distributions and other ( 1 ) ( 1 ) ( 1 ) ( 2 ) Balance at June 30, 2024 186,267 $ 2 $ 7,622 $ ( 3,814 ) $ ( 727 ) $ ( 233 ) $ 2,850 $ 253 $ 3,103 (1) 6,364,907 treasury shares as of June 30, 2025. (2) On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (the "IRA") into law. The IRA imposes a 1% excise tax on share repurchases completed after December 31, 2022. We reflect the excise tax within equity as part of the repurchase of the common stock. The accompanying notes are an integral part of these condensed consolidated financial statements. 6 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1 – Summary of Significant Accounting Policies Business DXC Technology Company (“DXC,” the “Company,” “we,” “us,” or “our”) is a leading global provider of IT services. We are a trusted partner to many of the world’s most innovative organizations, building solutions that move industries and companies forward. Our engineering, consulting, and technology experts help clients simplify, optimize, and modernize their systems and processes, manage their most critical workloads, integrate AI-powered intelligence into their operations, and put security and trust at the forefront. Through innovative solutions, we help clients achieve competitive advantages in the marketplace. New Segment Structure During the first quarter of fiscal 2026, the Company began reporting its financial results under a new segment structure designed to better reflect the Company’s operational structure and the delivery of end-to-end IT services. The new structure includes three reportable segments that align with how management assesses performance of the business and allocates resources: Consulting & Engineering Services ("CES"), Global Infrastructure Services ("GIS"), and Insurance Services ("Insurance"). See Note 16 - "Segment Information" for more information. Descriptions for each segment are provided below: • Consulting & Engineering Services – Helps businesses use AI and data analytics to improve operations, automate tasks, and speed up their digital transformation. We provide software engineering, consulting, and custom and enterprise applications solutions that help companies manage essential functions, modernize processes, and drive innovation. We have strong expertise in industries like finance, automotive, manufacturing, healthcare, life sciences, travel, and the public sector. Our solutions help businesses stay competitive by improving efficiency, launching new products faster, expanding into new markets, and achieving their strategic goals. • Global Infrastructure Services – Implements and operates the technology underpinning the critical systems of global businesses and governments. Clients trust us to secure, modernize, and operate their critical systems and improve workplace experience to support business growth. Services include the design, migration, and management of complex data center, mainframe, cloud, and network environments, with an emphasis on scalability, security, compliance, and cost efficiency. By leveraging a human-led, AI-driven Intelligent Operations approach, we deliver secure, reliable IT operations that clients trust. We also provide cross-industry business process services, which streamline clients’ core enterprise functions such as finance, HR, procurement, and customer service. The implementation of secure, reliable technology improves employee experiences and productivity by streamlining daily operations—such as device management, helpdesk support, and AI-powered automation—enabling seamless collaboration, reducing IT support demands, and lowering costs through intuitive, self-service tools. • Insurance Services – Provides software and services for Life and Wealth, Property & Casualty and Reinsurance providers, helping them optimize, run and digitally transform their operations. We help insurers modernize their technology landscape from heritage systems to advanced AI-powered solutions that enhances operational efficiency, improves customer experiences, and enables insurers to adopt a digital-first approach. Complementing our software solutions, we provide comprehensive business process services, leveraging deep industry expertise to support the full spectrum of insurance operations. 7 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Basis of Presentation In order to make this report easier to read, DXC refers throughout to (i) the interim unaudited Condensed Consolidated Financial Statements as the “financial statements,” (ii) the Condensed Consolidated Statements of Operations as the “statements of operations,” (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income as the “statements of comprehensive (loss) income,” (iv) the Condensed Consolidated Balance Sheets as the “balance sheets,” and (v) the Condensed Consolidated Statements of Cash Flows as the “statements of cash flows.” In addition, references are made throughout to the numbered Notes to the Condensed Consolidated Financial Statements (“Notes”) in this Quarterly Report on Form 10-Q. The accompanying financial statements include the accounts of DXC, its consolidated subsidiaries, and those business entities in which DXC maintains a controlling interest. Investments in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies, are accounted for by the equity method. Other investments are accounted for by the cost method. Non-controlling interests are presented as a separate component within equity in the balance sheets. Net earnings attributable to the non-controlling interests are presented separately in the statements of operations and comprehensive income (loss) attributable to non-controlling interests are presented separately in the statements of comprehensive (loss) income. All intercompany transactions and balances have been eliminated. The financial statements of the Company have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports and accounting principles generally accepted in the United States (“GAAP”). Certain disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules. These financial statements should therefore be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (“fiscal 2025”). 8 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Use of Estimates The preparation of the financial statements, in accordance with GAAP, requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on assumptions regarding historical experience, currently available information, and anticipated developments that it believes are reasonable and appropriate. However, because the use of estimates involves an inherent degree of uncertainty, actual results could differ from those estimates. Estimates are used for, but are not limited to, contracts accounted for using the percentage-of-completion method, cash flows used in the evaluation of impairment of goodwill and other long-lived assets, reserves for uncertain tax positions, valuation allowances on deferred tax assets, loss accruals for litigation, and obligations related to our pension plans. In the opinion of the Company’s management, the accompanying financial statements contain all adjustments necessary, including those of a normal recurring nature, to fairly present the financial statements. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. Recent Accounting Pronouncements During fiscal 2025, the following Accounting Standards Updates ("ASU") were issued by the Financial Accounting Standards Board but have not yet been adopted by DXC: Date Issued and ASU DXC Effective Date Description Impact December 2023 ASU 2023-09, “Improvements to Income Tax Disclosures” Fiscal 2026 The update requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. Early adoption of this update is permitted. The Company is in the process of assessing the impacts and method of adoption. This ASU will impact the Company’s financial statement disclosures, but not its consolidated financial statements. November 2024 ASU 2024-03, “Disaggregation of Income Statement Expenses” Fiscal 2028 The update requires disclosure, in the notes to financial statements, of specified quantitative information about certain costs and expenses presented in the income statement and certain qualitative information about costs that are not disaggregated. Early adoption of this update is permitted. The Company is in the process of assessing the impacts and method of adoption. This ASU will impact the Company’s financial statement disclosures, but not its consolidated financial statements. Other recently issued ASUs that have not yet been adopted are not expected to have a material effect on DXC’s condensed consolidated financial statements. 9 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2 – Earnings per Share Basic earnings per share (“EPS”) is computed using the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the incremental shares issuable upon the assumed exercise of stock options and equity awards. The following table reflects the calculation of basic and diluted EPS: Three Months Ended (in millions, except per-share amounts) June 30, 2025 June 30, 2024 Net income attributable to DXC common shareholders: $ 16 $ 26 Common share information: Weighted average common shares outstanding for basic EPS 181.10 179.66 Dilutive effect of stock options and equity awards 3.86 3.27 Weighted average common shares outstanding for diluted EPS 184.96 182.93 Earnings per share: Basic $ 0.09 $ 0.14 Diluted $ 0.09 $ 0.14 Certain share-based equity awards were excluded from the dilutive EPS calculation because they would have an anti-dilutive effect. The number of awards excluded were as follows: Three Months Ended June 30, 2025 June 30, 2024 Stock Options 407,095 927,909 Restricted Stock Units 2,272,376 1,930,605 Performance Stock Units 144,891 160,461 Note 3 – Receivables Allowance for Doubtful Accounts The following table presents the change in balance for the allowance for doubtful accounts: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Beginning balance $ 32 $ 35 Provisions for losses on accounts receivable — 7 Other adjustments to allowance and write-offs ( 2 ) ( 2 ) Ending balance $ 30 $ 40 Receivables Facility The Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified, the “Receivables Facility”) with certain unaffiliated financial institutions (the “Purchasers”) for the sale of commercial accounts receivable in the United States up to a maximum amount of $ 400 million. The Receivables Facility was amended on July 25, 2025, extending the termination date to July 24, 2026. 10 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) As of June 30, 2025, the total availability under the Receivables Facility was $ 380 million and the amount sold to the Purchasers was $ 373 million, which was derecognized from the Company’s balance sheet. As of June 30, 2025, the Company recorded a $ 7 million asset within accounts receivable because the amount of cash proceeds received by the Company under the Receivables Facility was less than the total availability. The fair value of the sold receivables approximated book value due to the short-term nature, and as a result, no gain or loss on sale of receivables was recorded. Note 4 – Leases The Company has operating and finance leases for data centers, corporate offices, and certain equipment. Its leases have remaining lease terms of one to ten years, some of which include options to extend the leases for up to ten years , and some of which include options to terminate the leases within one to three years . Operating Leases The components of operating lease expense were as follows: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Operating lease cost $ 76 $ 80 Short-term lease cost 5 6 Variable lease cost 15 13 Sublease income ( 3 ) ( 5 ) Total operating costs $ 93 $ 94 Cash payments made for variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and as such, are excluded from the supplemental cash flow information below. Three Months Ended (in millions) June 30, 2025 June 30, 2024 Cash paid for amounts included in the measurement of operating lease liabilities – operating cash flows $ 76 $ 80 ROU assets obtained in exchange for operating lease liabilities (1) $ 142 $ 35 (1) Net of $ 214 million and $ 237 million in lease modifications and terminations for the three months ended June 30, 2025 and June 30, 2024, respectively. See Note 15 – “Cash Flows” for further information on non-cash activities affecting cash flows. The following table presents operating lease balances: As of (in millions) Balance Sheet Line Item June 30, 2025 March 31, 2025 ROU operating lease assets Operating right-of-use assets, net $ 735 $ 635 Operating lease liabilities Current operating lease liabilities $ 252 $ 227 Operating lease liabilities Non-current operating lease liabilities 518 444 Total operating lease liabilities $ 770 $ 671 11 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The weighted-average operating lease term was 3.7 years and 3.8 years as of June 30, 2025 and March 31, 2025, respectively. The weighted-average operating lease discount rate was 4.8 % and 4.9 % as of June 30, 2025 and March 31, 2025, respectively. The following maturity analysis presents expected undiscounted cash payments for operating leases as of June 30, 2025: Fiscal Year (in millions) Remainder of 2026 2027 2028 2029 2030 Thereafter Total Operating lease payments $ 221 $ 221 $ 190 $ 128 $ 37 $ 34 $ 831 Less: imputed interest ( 61 ) Total operating lease liabilities $ 770 Finance Leases The components of finance lease expense were as follows: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Amortization of right-of-use assets $ 15 $ 25 Interest on lease liabilities 3 4 Total finance lease cost $ 18 $ 29 The following table provides supplemental cash flow information related to the Company’s finance leases: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Interest paid for finance lease liabilities – Operating cash flows $ 3 $ 4 Cash paid for amounts included in the measurement of finance lease obligations – financing cash flows 38 55 Total cash paid in the measurement of finance lease obligations $ 41 $ 59 Capital expenditures through finance lease obligations (1) $ 1 $ 7 (1) See Note 15 – ”Cash Flows” for further information on non-cash activities affecting cash flows. The following table presents finance lease balances: As of (in millions) Balance Sheet Line Item June 30, 2025 March 31, 2025 ROU finance lease assets Property and Equipment, net $ 119 $ 145 Finance lease Short-term debt and current maturities of long-term debt $ 117 $ 123 Finance lease Long-term debt, net of current maturities 137 155 Total finance lease liabilities (1) $ 254 $ 278 (1) See Note 8 – “Debt” for further information on finance lease liabilities. 12 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The weighted-average finance lease term was 2.6 years and 2.7 years as of June 30, 2025 and March 31, 2025, respectively. The weighted-average finance lease discount rate was 5.6 % as of both June 30, 2025 and March 31, 2025, respectively. The following maturity analysis presents expected undiscounted cash payments for finance leases as of June 30, 2025: Fiscal Year (in millions) Remainder of 2026 2027 2028 2029 2030 Thereafter Total Finance lease payments $ 101 $ 97 $ 53 $ 20 $ 2 $ 3 $ 276 Less: imputed interest ( 22 ) Total finance lease liabilities $ 254 Note 5 – Derivative Instruments In the normal course of business, the Company is exposed to interest rate and foreign exchange rate fluctuations. As part of its risk management strategy, the Company uses derivative instruments, primarily foreign currency forward contracts and interest rate swaps, to hedge certain foreign currency and interest rate exposures. The Company’s objective is to reduce earnings volatility by offsetting gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them. The Company does not use derivative instruments for trading or any speculative purposes. Derivatives Designated for Hedge Accounting Cash flow hedges The Company has designated certain foreign currency forward contracts as cash flow hedges to reduce foreign currency risk related to certain Indian Rupee-denominated obligations and forecasted transactions. The notional amounts of foreign currency forward contracts designated as cash flow hedges as of June 30, 2025 and March 31, 2025 were $ 546 million and $ 668 million, respectively. As of June 30, 2025, the related forecasted transactions extend through December 2026. During the three months ended June 30, 2025 and June 30, 2024, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur. See Note 13 – “Stockholders’ Equity” for changes in accumulated other comprehensive loss, net of taxes, related to the Company’s derivatives designated for hedge accounting. As of June 30, 2025, $ 15 million of loss related to cash flow hedges reported in accumulated other comprehensive loss is expected to be reclassified into earnings within the next 12 months. Derivatives Not Designated for Hedge Accounting The derivative instruments not designated as hedges for purposes of hedge accounting include certain short-term foreign currency forward contracts. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. Foreign currency forward contracts The Company manages the exposure to fluctuations in foreign currencies by using primarily short-term foreign currency forward contracts to hedge certain foreign currency denominated assets and liabilities, including intercompany accounts and forecasted transactions. The net notional amounts of the foreign currency forward contracts outstanding as of June 30, 2025 and March 31, 2025 were $ 1.7 billion and $ 1.9 billion, respectively. 13 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following table presents the pretax foreign currency (gain) loss to Other income, net: For the Three Months Ended (in millions) June 30, 2025 June 30, 2024 Foreign currency remeasurement (1) $ ( 59 ) $ 7 Undesignated foreign currency forward contracts (2) 54 ( 6 ) Total - Foreign currency (gain) loss $ ( 5 ) $ 1 (1) Movements from exchange rates on the Company’s foreign currency-denominated assets and liabilities. (2) Movements from hedges used to manage the Company’s foreign currency remeasurement exposure, and the associated costs of the hedging program. Other Risks for Derivative Instruments The Company is exposed to the risk of losses in the event of non-performance by the counterparties to its derivative contracts. The amount subject to credit risk related to derivative instruments is generally limited to the amount, if any, by which a counterparty’s obligations exceed the obligations of the Company with that counterparty. To mitigate counterparty credit risk, the Company regularly reviews its credit exposure and the creditworthiness of the counterparties. With respect to its foreign currency derivatives, as of June 30, 2025, there were three counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $ 2 million. The Company also enters into enforceable master netting arrangements with some of its counterparties. However, for financial reporting purposes, it is the Company’s policy not to offset derivative assets and liabilities despite the existence of enforceable master netting arrangements. The potential effect of such netting arrangements on the Company’s balance sheets is not material for the periods presented. Non-Derivative Financial Instruments Designated for Hedge Accounting The Company applies hedge accounting for foreign currency-denominated debt used to manage foreign currency exposures on its net investments in certain non-U.S. operations. To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged. Net Investment Hedges DXC seeks to reduce the impact of fluctuations in foreign exchange rates on its net investments in certain non-U.S. operations with foreign currency-denominated debt. For foreign currency-denominated debt designated as a hedge, the effectiveness of the hedge is assessed based on changes in spot rates. For qualifying net investment hedges, all gains or losses on the hedging instruments are included in currency translation. Gains or losses on individual net investments in non-U.S. operations are reclassified to earnings from accumulated other comprehensive loss when such net investments are sold or substantially liquidated. As of June 30, 2025 and March 31, 2025, DXC had $ 763 million and $ 702 million, respectively, of foreign currency-denominated debt designated as hedges of net investments in non-U.S. subsidiaries. For the three months ended June 30, 2025, the pre-tax impact of loss on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive (loss) income was $ 61 million. 14 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 6 – Intangible Assets Intangible assets consisted of the following: As of June 30, 2025 As of March 31, 2025 (in millions) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Software $ 3,764 $ 3,279 $ 485 $ 3,713 $ 3,166 $ 547 Customer related intangible assets 3,980 3,091 889 3,886 2,933 953 Other intangible assets 291 154 137 284 142 142 Total intangible assets $ 8,035 $ 6,524 $ 1,511 $ 7,883 $ 6,241 $ 1,642 The components of amortization expense were as follows: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Intangible asset amortization $ 180 $ 179 Transition and transformation contract cost amortization (1) 45 53 Total amortization expense $ 225 $ 232 (1) Transaction and transformation contract costs are included within other assets on the balance sheets. Estimated future amortization related to intangible assets as of June 30, 2025 is as follows: Fiscal Year (in millions) Remainder of 2026 $ 519 2027 501 2028 228 2029 109 2030 61 Thereafter 93 Total $ 1,511 15 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7 – Goodwill During the first quarter of fiscal 2026, the Company began reporting its financial results under a new segment structure that includes three operating and reportable segments: 1) CES, 2) GIS, and 3) Insurance. These segments align with how management assesses performance of the business and allocates resources. See Note 16 - "Segment Information" for more information. The change to the Company’s operating segments resulted in a change to the Company’s reporting units, which are aligned to the Company’s operating and reportable segments. As a result of the realignment, the Company reallocated goodwill to the new reporting units on a relative fair value basis. In connection with the goodwill reallocation described above, the Company assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of any of its reporting units below their carrying amount and require goodwill to be tested for impairment. As a result, the Company concluded that the goodwill balance reallocated to the GIS segment was fully impaired in the first quarter of fiscal 2026. The following table summarizes the changes in the carrying amount of goodwill by segment for the three months ended June 30, 2025. (in millions) Global Business Solutions Consulting & Engineering Services Global Infrastructure Services Insurance Services Total Balance as of March 31, 2025, net $ 526 $ — $ — $ — $ 526 Reallocation of goodwill ( 526 ) 367 14 145 — Impairment losses (1) — — ( 14 ) — ( 14 ) Foreign currency translation (2) — 14 — 6 20 Balance as of June 30, 2025, net $ — $ 381 $ — $ 151 $ 532 Goodwill, gross 3,600 5,080 1,422 10,102 Accumulated impairment losses ( 3,219 ) ( 5,080 ) ( 1,271 ) ( 9,570 ) Balance as of June 30, 2025, net $ 381 $ — $ 151 $ 532 (1) Impairment losses are included within Other income, net on the statements of operations. (2) The foreign currency translation amount reflects the impact of currency movements on non-U.S. dollar-denominated goodwill balances. 16 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8 – Debt The following is a summary of the Company’s debt: (in millions) Interest Rates Fiscal Year Maturities June 30, 2025 (1) March 31, 2025 (1) Short-term debt and current maturities of long-term debt € 650 million Senior notes 1.75 % 2026 763 702 Current maturities of finance lease liabilities 0.51 % - 14.59 % 2026 - 2027 117 123 Current maturities of long-term debt Various 2026 - 2027 49 55 Short-term debt and current maturities of long-term debt $ 929 $ 880 Long-term debt, net of current maturities $ 700 million Senior notes 1.80 % 2027 698 698 € 750 million Senior notes 0.45 % 2028 878 808 $ 650 million Senior notes 2.375 % 2029 647 647 € 600 million Senior notes 0.95 % 2032 700 644 Finance lease liabilities 0.51 % - 14.59 % 2027 - 2035 137 155 Borrowings for assets acquired under long-term financing 0.00 % - 9.78 % 2027 - 2029 24 28 Other borrowings Various 2027 - 2035 16 16 Long-term debt, net of current maturities 3,100 2,996 Total debt $ 4,029 $ 3,876 (1) The carrying amounts of the senior notes as of June 30, 2025 and March 31, 2025, include the remaining principal outstanding of $ 3,698 million and $ 3,510 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $ 12 million and $ 11 million, respectively. Fair Value of Debt The estimated fair value of the Company’s long-term debt excluding finance lease liabilities was $ 3.5 billion and 3.3 billion as of June 30, 2025 and March 31, 2025, respectively, compared with carrying value of $ 3.8 billion and $ 3.6 billion as of June 30, 2025 and March 31, 2025, respectively. Long-term debt excluding finance lease liabilities are classified as Level 1 or Level 2 within the fair value hierarchy. 17 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 9 – Revenue Revenue Recognition The following table presents DXC’s revenues disaggregated by geography, based on the location of incorporation of the DXC entity providing the related goods or services: Three Months Ended (in millions) June 30, 2025 June 30, 2024 United States $ 828 $ 897 United Kingdom 480 448 Other Europe 1,038 1,030 Australia 259 299 Other International 554 562 Total Revenues $ 3,159 $ 3,236 The revenue by geography pertains to both of the Company’s reportable segments. Refer to Note 16 – “Segment Information” for the Company’s segment disclosures. Remaining Performance Obligations As of June 30, 2025, approximately $ 16.7 billion of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 32 % of these remaining performance obligations in fiscal 2026, with the remainder of the balance recognized thereafter. Contract Balances The following table provides information about the balances of the Company’s trade receivables, contract assets and contract liabilities: As of (in millions) Balance Sheet Line Item June 30, 2025 March 31, 2025 Trade receivables, net Receivables and contract assets, net of allowance for doubtful accounts $ 2,045 $ 2,041 Contract assets Receivables and contract assets, net of allowance for doubtful accounts $ 367 $ 338 Contract liabilities Deferred revenue and advance contract payments and Non-current deferred revenue $ 1,353 $ 1,397 Change in contract liabilities were as follows: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Balance, beginning of period $ 1,397 $ 1,537 Deferred revenue 382 370 Recognition of deferred revenue ( 479 ) ( 456 ) Currency translation adjustment 59 ( 3 ) Other ( 6 ) ( 67 ) Balance, end of period $ 1,353 $ 1,381 18 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 10 – Restructuring Costs The composition of restructuring liabilities by financial statement line items is as follows: As of (in millions) June 30, 2025 March 31, 2025 Accrued expenses and other current liabilities $ 35 $ 33 Other long-term liabilities 5 6 Total $ 40 $ 39 Summary of Restructuring Plans Fiscal 2026 Plan During fiscal 2026, management approved global cost savings initiatives designed to better align the Company’s workforce, facility and data center requirements (the “Fiscal 2026 Plan ” ) . Restructuring Liability Reconciliations by Plan Restructuring Liability as of March 31, 2025 Costs Expensed, Net of Reversals Costs Not Affecting Restructuring Liability (1) Cash Paid Restructuring Liability as of June 30, 2025 Fiscal 2026 Plan Workforce Reductions $ — $ 25 $ — $ ( 11 ) $ 14 Facilities Costs — 1 ( 1 ) — — — 26 ( 1 ) ( 11 ) 14 Fiscal 2025 Plan Workforce Reductions $ 26 $ 3 $ 1 $ ( 15 ) $ 15 Facilities Costs — 6 ( 1 ) ( 5 ) — 26 9 — ( 20 ) 15 Other Prior Year and Acquired Plans Workforce Reductions $ 12 $ — $ — $ ( 2 ) $ 10 Facilities Costs 1 2 ( 1 ) ( 1 ) 1 13 2 ( 1 ) ( 3 ) 11 Total $ 39 $ 37 $ ( 2 ) $ ( 34 ) $ 40 (1) Restructuring costs associated with right-of-use assets. Restructuring costs for the first quarter of fiscal 2026 includes $ 2 million related to amortization of the right-of-use asset and interest expense for leased facilities that have been vacated but are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases. 19 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 11 – Pension and Other Benefit Plans Defined Benefit Plans The components of net periodic pension income were: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Service cost $ 13 $ 13 Interest cost 75 74 Expected return on assets ( 117 ) ( 113 ) Amortization of prior service credit ( 1 ) ( 1 ) Net periodic pension income $ ( 30 ) $ ( 27 ) The service cost component of net periodic pension income is presented in costs of services, and selling, general and administrative and the other components of net periodic pension income are presented in Other income, net. Note 12 – Income Taxes The Company’s effective tax rate (“ETR”) was 73.1 % and 63.2 % for the three months ended June 30, 2025, and June 30, 2024, respectively. For the three months ended June 30, 2025, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, the tax benefit of a worthless stock deduction under section 165(g) of the Internal Revenue Code related to DXC’s investment in a wholly owned subsidiary, and a reduction in a deferred tax asset for stock based compensation. For the three months ended June 30, 2024, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, a reduction in a deferred tax asset for stock based compensation, and a decrease in a deferred tax liability for estimated taxes associated with the repatriation of foreign earnings. As of June 30, 2025, the Company had undistributed earnings from foreign subsidiaries that were not indefinitely reinvested and had a deferred tax liability of $ 28 million for the estimated taxes associated with the repatriation of these earnings. The Company also had undistributed earnings and other outside basis differences in foreign subsidiaries that were indefinitely reinvested for which no taxes have been provided and the quantification of the deferred tax liability, if any, was not practicable. If future events, including material changes in estimates of cash, working capital and long-term investment requirements, necessitate that these earnings be distributed, an additional provision for taxes may apply, which could materially affect our future effective tax rate. In connection with the merger of Computer Sciences Corporation (“CSC”) and the Enterprise Services business of Hewlett Packard Enterprise Company (the “HPES Merger”), the Company entered into a tax matters agreement with Hewlett Packard Enterprise Company (“HPE”). HPE generally will be responsible for tax liabilities arising prior to the HPES Merger, and DXC is liable to HPE for income tax receivables it receives related to pre-HPES Merger periods. Pursuant to the tax matters agreement, the Company recorded a $ 13 million tax indemnification receivable related to uncertain tax positions, a $ 38 million tax indemnification receivable related to other tax payables, and a $ 95 million tax indemnification payable related to other tax receivables. In connection with the spin-off of the Company’s former U.S. public sector business (the “USPS Separation”), the Company entered into a tax matters agreement with Perspecta Inc. (including its successors and permitted assigns, “Perspecta”). The Company generally will be responsible for tax liabilities arising prior to the USPS Separation, and Perspecta is liable to the Company for income tax receivables related to pre-spin-off periods. Income tax liabilities transferred to Perspecta primarily relate to pre-HPES Merger periods, for which the Company is indemnified by HPE pursuant to the tax matters agreement between the Company and HPE. The Company remains liable to HPE for tax receivables transferred to Perspecta related to pre-HPES Merger periods. Pursuant to the tax matters agreement, the Company recorded a $ 13 million tax indemnification receivable from Perspecta related to other tax receivables and a $ 1 million tax indemnification payable to Perspecta related to income tax and other tax payables. 20 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) In connection with the sale of its healthcare provider software business (“HPS”), the Company entered into a tax matters agreement with Dedalus. Pursuant to the tax matters agreement, the Company generally will be responsible for tax liabilities arising prior to the sale of the HPS business. The Internal Revenue Service (the “IRS”) has examined, or is examining, the Company’s federal income tax returns for fiscal years 2009 through the tax year ended October 31, 2018. With respect to CSC’s fiscal years 2009 through 2017 federal tax returns, the Company participated in settlement negotiations with the IRS Office of Appeals. The IRS examined several issues for these tax years that resulted in various audit adjustments. The Company and the IRS Office of Appeals have settled various audit adjustments, and we disagree with the IRS’ disallowance of certain losses and deductions resulting from restructuring costs, foreign exchange losses, and a third-party financing transaction in previous years. We have received notices of deficiency and a final partnership administrative adjustment with respect to fiscal years 2009, 2010, 2011 and 2013 and have timely filed petitions with the U.S. Tax Court. The U.S. Tax Court cases generally involve three primary issues. The first issue pertains to a capital loss the Company claimed in fiscal year 2013 in the amount of $ 651 million, which the IRS subsequently disallowed, and for which it proposed a substantial understatement penalty. The total cash tax payment the IRS is seeking is approximately $ 477 million, inclusive of penalties and interest, which continues to accrue. The matter is currently scheduled for trial in August 2025. The second issue pertains to the Company’s deduction for restructuring expenses in fiscal year 2013 in the amount of $ 146 million, which the IRS has disputed. The total cash tax payment the IRS is seeking is approximately $ 103 million, inclusive of penalties and interest, which continues to accrue. In January 2025, the Court denied the IRS’s motion for summary judgment. A trial date is pending. The third issue primarily pertains to foreign currency losses from 2009 that the Company claimed in fiscal years 2010 and 2011 in the amount of $ 165 million, resulting from the depreciation of the U.S. dollar against the Euro over an eight-year period (from 2001 to 2009) upon termination of a partnership interest involving two entities with different functional currencies. The total cash tax payment the IRS is seeking is approximately $ 126 million, inclusive of penalties and interest, which continues to accrue. The IRS has filed a motion for summary judgment. A decision on the motion is pending. As we believe we will ultimately prevail on the technical merits of the disagreed items and are challenging them in the U.S. Tax Court, the above matters are not fully reserved and would result in incremental federal and state tax expense of approximately $ 552 million (including estimated interest and penalties) for the unreserved portion of these items and cash tax payments of approximately $ 632 million if we do not prevail. These amounts are net of an expected $ 74 million interest deduction tax benefit. During fiscal 2024, the Company determined there were inadvertent omissions on previously filed tax returns related to gain recognition agreements and certain related tax forms and disclosures. The Company notified the IRS promptly and filed for relief under Treas. Reg. Sec. 1.367(a)-8(p) to correct the issue. The Company’s fiscal years 2009, 2010, and 2013 are in the U.S. Tax Court, and consequently these years will remain open until such proceedings have concluded. The Company has agreed to extend the statute of limitations for fiscal and tax return years 2014 through 2021 to December 31, 2026. The Company expects to reach resolution for fiscal and tax return years 2009 through 2011 no earlier than fiscal year 2027. The Company expects to reach resolution for fiscal and tax return years 2012 and 2013 no earlier than fiscal year 2028. The Company expects to reach resolution for fiscal and tax return years 2014 through 2021 no earlier than fiscal year 2027. The Company may settle certain other tax examinations for different amounts than the Company has accrued as uncertain tax positions. Consequently, the Company may need to accrue and ultimately pay additional amounts or pay lower amounts than previously estimated and accrued when positions are settled in the future. For the three months ended June 30, 2025, the Company’s liability for uncertain tax positions increased by $ 2 million (excluding interest and penalties and related tax attributes). 21 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 13 – Stockholders’ Equity Share Repurchase Program During the first quarter of fiscal 2026, there were 3,275,268 shares repurchased under our Share Repurchase Program. There were no share repurchases during the first quarter of fiscal 2025. Fiscal 2026 Fiscal Period Number of Shares Repurchased Average Price Per Share Amount (in millions) 1st Quarter Open market purchases 3,275,268 $ 15.27 $ 50 Total 3,275,268 $ 15.27 $ 50 Accumulated Other Comprehensive Loss The following table shows the changes in accumulated other comprehensive loss, net of taxes: (in millions) Foreign Currency Translation Adjustments Cash Flow Hedges Pension and Other Post-retirement Benefit Plans Accumulated Other Comprehensive Loss Balance at March 31, 2025 $ ( 948 ) $ ( 7 ) $ 193 $ ( 762 ) Other comprehensive loss before reclassifications ( 32 ) ( 10 ) — ( 42 ) Amounts reclassified from accumulated other comprehensive loss — 3 — 3 Balance at June 30, 2025 $ ( 980 ) $ ( 14 ) $ 193 $ ( 801 ) (in millions) Foreign Currency Translation Adjustments Cash Flow Hedges Pension and Other Post-retirement Benefit Plans Accumulated Other Comprehensive Loss Balance at March 31, 2024 $ ( 939 ) $ — $ 207 $ ( 732 ) Other comprehensive income before reclassifications 3 3 — 6 Amounts reclassified from accumulated other comprehensive loss — — ( 1 ) ( 1 ) Balance at June 30, 2024 $ ( 936 ) $ 3 $ 206 $ ( 727 ) 22 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 14 – Stock Incentive Plans Restricted Stock Units and Performance-Based Restricted Stock Units Restricted stock units ("RSUs") represent the right to receive one share of DXC common stock upon a future settlement date, subject to vesting and other terms and conditions of the award, plus any dividend equivalents accrued during the award period. The RSUs vest one-third ratably over a three-year period. In general, if the employees’ status as a full-time employee is terminated prior to the vesting of the RSU grant in full, then the RSU grant is automatically canceled on the termination date and any unvested shares and dividend equivalents are forfeited. The Company also grants performance-based restricted stock units (“PSUs”), which generally vest at the end of a three-year period. The number of PSUs that ultimately vest is dependent upon the Company’s achievement of certain specified financial performance criteria over a three-year period. If the specified performance criteria are met, awards are settled for shares of DXC common stock and dividend equivalents shortly subsequent to the end of the performance period, subject to continued employment through the last day of the third fiscal year. DXC also issued PSU awards that are considered to have a market condition. Settlement of shares for these PSU awards will be made shortly subsequent to the end of third fiscal year, subject to certain market conditions and continued employment through the last day of the third fiscal year. The fair value of RSUs and PSUs is based on the Company’s common stock closing price on the grant date. For PSUs with a market-based condition, DXC uses a Monte Carlo simulation model to value the grants. Employee Equity Plan Director Equity Plan Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Outstanding as of March 31, 2025 9,073,741 $ 22.23 201,017 $ 26.63 Granted 9,791,778 $ 16.30 — $ — Settled ( 2,420,869 ) $ 25.47 — $ — Canceled/Forfeited ( 795,153 ) $ 40.48 — $ — Outstanding as of June 30, 2025 15,649,497 $ 17.43 201,017 $ 26.63 Share-Based Compensation Three Months Ended (in millions) June 30, 2025 June 30, 2024 Total share-based compensation cost $ 22 $ 23 Related income tax benefit $ 3 $ 3 23 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 15 – Cash Flows Cash payments for interest on indebtedness and income taxes and other select non-cash activities are as follows: Three Months Ended (in millions) June 30, 2025 June 30, 2024 Cash paid for: Interest $ 40 $ 57 Taxes on income, net of refunds (1) $ 87 $ 52 Non-cash activities: Operating: ROU assets obtained in exchange for lease, net (2) $ 142 $ 35 Investing: Capital expenditures in accounts payable and accrued expenses $ 4 $ 3 Capital expenditures through finance lease obligations $ 1 $ 7 Financing: Shares repurchased but not settled in cash (3) $ 2 $ — (1) Income tax refunds were $ 4 million and $ 16 million for the three months ended June 30, 2025 and June 30, 2024, respectively. (2) Net of $ 214 million and $ 237 million in lease modifications and terminations for the three months ended June 30, 2025 and June 30, 2024, respectively. (3) On August 16, 2022, the U.S. government enacted the IRA into law. The IRA imposes a 1% excise tax on share repurchases completed after December 31, 2022. In our cash flow statement, we reflect the excise tax as a financing activity relating to the repurchase of common stock. Note 16 – Segment Information DXC has a matrix form of organization and is managed in several different and overlapping groupings including services, industries and geographic regions. As a result, and in accordance with accounting standards, operating segments are organized by the type of services provided. Our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") serve as our Chief Operating Decision Makers ("CODM") and are responsible for obtaining, reviewing, and managing the Company’s financial performance based on these segments. During the first quarter of fiscal 2026, the Company began reporting its financial results under a new segment structure designed to better reflect the Company’s operational structure and the delivery of end-to-end IT services. The new structure includes three reportable segments that align with how management assesses performance of the business and allocates resources: CES, GIS, and Insurance, as previously described above in Note 1 - “Summary of Significant Accounting Policies.” In connection with our segment reporting change, we have recast previously reported amounts across all reportable segments to conform to current segment presentation. The Company's CODM uses segment profit to measure operational strength and performance, assist in evaluation of underlying trends, and allocate resources through periodic budget and forecasting processes. Segment profit is defined as segment revenues less costs of services, selling, general and administrative, depreciation and amortization, and other segment items. 24 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The Company allocates certain costs such as real estate costs, information technology costs and costs for certain other shared corporate functions to its segments using a proportional share of either revenue or headcount for each segment. The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated expenses generally include certain corporate function costs, pension and other post-retirement benefit (“OPEB”) actuarial and settlement gains and losses, restructuring costs, transaction, separation, and integration-related costs, amortization of acquired intangible assets, impairment losses, gains/(losses) on dispositions of businesses, gains/(losses) on real estate and facility sales, and other costs that do not reflect ongoing segment operating performance. As part of the transition to the new segment structure, the Company updated the assumptions that define which expenses remain in corporate post allocation. The tables below reflect those revised assumptions. Segment Measures The following table summarizes operating results regularly provided to the CODM by reportable segment and a reconciliation to the financial statements: (in millions) CES GIS Insurance Total Reportable Segments Three Months Ended June 30, 2025 Revenues $ 1,246 $ 1,600 $ 313 $ 3,159 Costs of services ( 976 ) ( 1,212 ) ( 218 ) ( 2,406 ) Selling, general and administrative ( 163 ) ( 150 ) ( 44 ) ( 357 ) Depreciation and amortization (1) ( 24 ) ( 169 ) ( 23 ) ( 216 ) Other segment items (2) 22 28 5 55 Segment profit $ 105 $ 97 $ 33 $ 235 Three Months Ended June 30, 2024 Revenues $ 1,281 $ 1,658 $ 297 $ 3,236 Costs of services ( 1,016 ) ( 1,269 ) ( 209 ) ( 2,494 ) Selling, general and administrative ( 137 ) ( 122 ) ( 28 ) ( 287 ) Depreciation and amortization (1) ( 25 ) ( 191 ) ( 21 ) ( 237 ) Other segment items (2) 20 25 5 50 Segment profit $ 123 $ 101 $ 44 $ 268 (1) Depreciation and amortization as presented excludes amortization of acquired intangible assets. (2) Other segment items as presented includes non-service cost components of net periodic pension income and other miscellaneous segment gains/(losses). 25 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Reconciliation of Reportable Segment Profit to Consolidated Total Three Months Ended (in millions) June 30, 2025 June 30, 2024 Total profit for reportable segments $ 235 $ 268 Corporate expenses ( 19 ) ( 44 ) Subtotal $ 216 $ 224 Restructuring costs ( 37 ) ( 39 ) Transaction, separation and integration-related costs ( 1 ) ( 7 ) Amortization of acquired intangible assets ( 87 ) ( 87 ) Merger related indemnification ( 2 ) — Losses on real estate and facility sales — ( 2 ) Impairment losses ( 14 ) — Interest income 46 51 Interest expense ( 54 ) ( 72 ) Income before income taxes $ 67 $ 68 Management does not use total assets by segment to evaluate segment performance or allocate resources. As a result, assets are not tracked by segment, and therefore, total assets by segment are not disclosed. 26 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 17 – Commitments and Contingencies Commitments Minimum purchase commitments as of June 30, 2025 were as follows: Fiscal year Minimum Purchase Commitment (in millions) Remainder of 2026 $ 506 2027 308 2028 150 2029 64 2030 25 Thereafter 1 Total $ 1,054 Contingencies Securities Litigation: On August 20, 2019, a purported class action lawsuit was filed in the Superior Court of the State of California, County of Santa Clara, against the Company, directors of the Company, and a former officer of the Company, among other defendants. The action asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, as amended, and is premised on allegedly false and/or misleading statements, and alleged non-disclosure of material facts, regarding the Company’s prospects and expected performance. The putative class of plaintiffs includes former shareholders of Computer Sciences Corporation (“CSC”) who exchanged their CSC shares for the Company’s common stock pursuant to the offering documents filed with the Securities and Exchange Commission in connection with the April 2017 transaction that formed DXC. The State of California action had been stayed pending the outcome of the substantially similar federal action filed in the United States District Court for the Northern District of California. The federal action was dismissed with prejudice in December 2021. Thereafter, the state court lifted the stay and entered an order permitting additional briefing by the parties. In March 2022, Plaintiffs filed an amended complaint, which the Company moved to dismiss. In August 2022, the Court granted the Company’s motion to dismiss, but permitted Plaintiffs to amend and refile their complaint. In September 2022, Plaintiffs filed a second amended complaint, which the Company moved to dismiss. In January 2023, the Court issued an order denying the Company’s motion to dismiss the second amended complaint. In March 2023, the Court entered a scheduling order setting a trial date for September 2025. The trial date has since been extended to May 2026. In May 2024, the Court entered an order granting Plaintiffs’ motion for class certification. In July 2024, notice was provided to potential class members. In June 2025, the Company reached an agreement in principle to resolve all claims in the action. The Company’s share of the settlement will be funded by its insurance carriers. The Company expects the settlement to be finalized in the coming weeks and submitted to the Court for approval. On August 2, 2024, a purported class action lawsuit was filed in the United States District Court for the Eastern District of Virginia against the Company and certain of its current and former officers. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and is premised on allegedly false and/or misleading statements regarding the Company’s transformation journey. The putative class of plaintiffs includes investors who acquired DXC stock during the period of May 26, 2021 to May 16, 2024. In March 2025, the Court entered an order granting the Company’s motion to dismiss the lawsuit and closing the case. In April 2025, the deadline to file an appeal passed and no appeal was filed. The matter is now closed. 27 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) After the filing of the August 2024 securities class action, five shareholder derivative suits were filed against the Company’s Board of Directors and certain of its current and former officers, alleging a breach of fiduciary duties arising from the claims asserted in the August 2024 securities class action. Three derivative suits were filed in the United States District Court for the Eastern District of Virginia, and two derivative suits were filed in the District Court of the State of Nevada, Clark County. All of the derivative suits had been temporarily stayed, pending an outcome in the August 2024 securities class action. Following the dismissal of the securities class action, the Company secured the voluntary dismissal of all shareholder derivative suits. The matter is now closed. Tax Examinations: The Company is under IRS examination in the U.S. on its federal income tax returns for certain fiscal years and is in disagreement with the IRS on certain tax positions, which are currently being contested in the U.S. Tax Court. For more detail, see Note 12 – “Income Taxes.” TCS Litigation: In April 2019, the Company filed a lawsuit against Tata Consultancy Services Limited (“TCS”) and Tata America International Corporation alleging misappropriation of certain of the Company’s trade secrets. In November 2023, a trial was held in the United States District Court for the Northern District of Texas, and a jury found TCS liable for misappropriating the Company’s trade secrets and awarded the Company $ 70 million in compensatory damages and $ 140 million in punitive damages, for a total award of $ 210 million. In June 2024, the Court entered a final order in the case, affirming the jury’s verdict in the Company’s favor and revising the monetary award to $ 56 million in compensatory damages and $ 112 million in punitive damages. The Court also awarded the Company $ 26 million in prejudgment interest, post-judgment interest at an annual rate of 4.824 %, and its attorney’s fees and costs, in an amount to be determined in a later order. The total award to the Company is $ 194 million, plus its attorney’s fees and costs. The Court also issued a permanent injunction enjoining TCS from, among other things, possessing, accessing, or using any of the Company’s trade secrets that were at issue in the case, and appointing a monitor to confirm, among other things, that TCS does not do so. In August 2024, TCS filed a Notice of Appeal to the U.S. Court of Appeals for the Fifth Circuit. In April 2025, the Court of Appeals heard oral argument on the appeal. A decision from the Court of Appeals is pending. The Company has not recognized any portion of the award in its financial statements and will continue to monitor the progress of the case. In addition to the matters noted above, the Company is currently subject in the normal course of business to various claims and contingencies arising from, among other things, disputes with customers, vendors, employees, contract counterparties and other parties, as well as securities matters, environmental matters, matters concerning the licensing and use of intellectual property, and inquiries and investigations by regulatory authorities and government agencies. Some of these disputes involve or may involve litigation. The financial statements reflect the treatment of claims and contingencies based on management’s view of the expected outcome. DXC consults with outside legal counsel on issues related to litigation and regulatory compliance and seeks input from other experts and advisors with respect to matters in the ordinary course of business. Although the outcome of these and other matters cannot be predicted with certainty, and the impact of the final resolution of these and other matters on the Company’s results of operations in a particular subsequent reporting period could be material and adverse, management does not believe based on information currently available to the Company, that the resolution of any of the matters currently pending against the Company will have a material adverse effect on the financial position of the Company or the ability of the Company to meet its financial obligations as they become due. Unless otherwise noted, the Company is unable to determine at this time a reasonable estimate of a possible loss or range of losses associated with the foregoing disclosed contingent matters. 28 DXC TECHNOLOGY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS All statements and assumptions contained in this Quarterly Report on Form 10-Q and in the documents incorporated by reference that do not directly and exclusively relate to historical facts constitute “forward-looking statements” that involve numerous assumptions, risks and uncertainties. Forward-looking statements often include words such as “anticipates,” “believes,” “estimates,” “expects,” “forecast,” “goal,” “intends,” “objective,” “plans,” “projects,” “strategy,” “target,” and “will” and words and terms of similar substance in discussions of future operating or financial performance. We may also make forward-looking statements in other reports filed with the Securities and Exchange Commission (“SEC”), in materials delivered to stockholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Forward-looking statements represent current expectations and beliefs, and no assurance can be given that the results, goals or plans described in such statements can or will be achieved, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law. Forward-looking statements include, among other things, statements with respect to our future financial condition, results of operations, cash flows, business strategies, operating efficiencies or synergies, potential acquisitions and divestitures, competitive position, growth opportunities, effective tax rates, liquidity and capital resources, capital return strategy, plans and objectives of management, the outcome of and costs associated with regulatory and litigation matters, and other matters. Important factors that could cause actual results to differ materially from those described in forward-looking statements, many of which are outside of our control, include, but are not limited to: • our inability to succeed in our strategic objectives; • the risk of liability, reputational damages or adverse impact to business due to service interruptions, from security breaches, cyber-attacks, other security incidents or disclosure of confidential information or personal data; • compliance, or failure to comply with obligations arising under new or existing laws, regulations, and customer contracts relating to the privacy, security and handling of personal data; • our product and service quality issues; • our inability to develop and expand our service offerings to address emerging business demands and technological trends, including our inability to sell differentiated services amongst our offerings and the competitive pressures faced by our business; • our inability to compete in certain markets and expand our capacity in certain offshore locations; • failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs; • difficulty in understanding the changes to our business model by equity research or industry analysts or our failure to meet our publicly announced financial guidance; • public health crises; • our indebtedness and potential material adverse effect on our financial condition and results of operations; • our inability to accurately estimate the cost of services, and the completion timeline of contracts; • failure by us or third party partners to deliver on commitments or otherwise breach obligations to our customers; • the risks associated with climate change and natural disasters; • increased scrutiny of, and evolving expectations for, sustainability and environmental, social and governance (“ESG”) initiatives; • our inability to attract and retain key personnel and maintain relationships with key partners; • the risks associated with prolonged periods of inflation or current macroeconomic conditions, including the possibility of reduced spending by customers in the areas we serve, the uncertainty related to our cost-takeout efforts, and our ability to close new deals in the event of an economic slowdown; • the risks associated with our international operations, such as risks related to currency exchange rates; 29 • our inability to comply with existing and new laws and regulations, including social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands; • our inability to achieve the expected benefits of our restructuring plans; • our inadvertent infringement of third-party intellectual property rights or infringement of our intellectual property rights by third parties; • our inability to procure third-party licenses required for the operation of our products and service offerings; • risks associated with disruption of our supply chain or increases in procurement costs, including as a result of ongoing trade tensions and tariff charges; • our inability to maintain effective disclosure controls and internal control over financial reporting; • potential losses due to asset impairment charges; • our inability to pay dividends or repurchase shares of our common stock; • pending investigations, claims and disputes and any adverse impact on our profitability and liquidity; • disruptions in the credit markets, including disruptions that reduce our customers’ access to credit and increase the costs to our customers of obtaining credit; • counterparty default risk in our hedging program; • our failure to bid on projects effectively; • financial difficulties of our customers and our inability to collect receivables; • our inability to maintain and grow our customer relationships over time and to comply with customer contracts or government contracting regulations or requirements; • our inability to succeed in our strategic transactions; • changes in tax rates, tax laws, and the timing and outcome of tax examinations; • risks following the merger of Computer Sciences Corporation (“CSC”) and Enterprise Services business of Hewlett Packard Enterprise Company’s (“HPES”) businesses, including anticipated tax treatment, unforeseen liabilities, and future capital expenditures; • risks following the spin-off of our former U.S. Public Sector business (the “USPS”) and its related mergers with Vencore Holding Corp. and KeyPoint Government Solutions in June 2018 to form Perspecta Inc. (including its successors and permitted assigns, “Perspecta”) (collectively, the “USPS Separation and Mergers”); • volatility of the price of our securities, which is subject to market and other conditions; and • the other factors described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 and subsequent SEC filings, including Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q. 30