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Item 2. Management’s Discussion and Analysis

2025-10-31 compared with 2025-08-01 · 203 added, 106 removed, 248 unchanged (55% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to present information that management believes is relevant to an assessment and understanding of our results of operations and cash flows for the first quarter of fiscal 2026 and our financial condition as of June 30, 2025.

The purpose of the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to present information that management believes is relevant to an assessment and understanding of our results of operations and cash flows for the second quarter and first six months of fiscal 2026 and our financial condition as of September 30, 2025.

The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and accompanying notes.

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• Critical Accounting Estimates

The following discussion includes a comparison of our results of operations and liquidity and capital resources for the first quarters of fiscal 2026 and fiscal 2025.

The following discussion includes a comparison of our results of operations and liquidity and capital resources for the second quarters and first six months of fiscal 2026 and fiscal 2025.

References are made throughout to the numbered Notes to the Condensed Consolidated Financial Statements (“Notes”) in this Quarterly Report on Form 10-Q.

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Consulting & Engineering Services ("CES"), Global Infrastructure Services ("GIS"), and Insurance Services ("Insurance").

Results of Operations for the Three Months Ended June 30, 2025 and June 30, 2024

Results of Operations for the Second Quarter and First Six Months of Fiscal 2026 and Fiscal 2025

Financial Highlights

Key metrics for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 are included below.

We have presented organic revenue, adjusted earnings before interest and taxes (“EBIT”), and diluted earnings per share on a non-GAAP basis.

Key metrics for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 as well as year to date cash flow comparisons are included below.

We have presented organic revenue and diluted earnings per share on a non-GAAP basis.

For more information see “Non-GAAP Financial Measures.”

• Revenues of $3,159 million, down 2.4% year-over-year (down 4.3% on an organic basis);

• EBIT was $75 million, down 15.7% year-over-year with a corresponding margin of 2.4%.

• Revenues of $3.2 billion, down 2.5% year-over-year (down 4.2% on an organic basis);

• EBIT was $138 million, up 24.3% year-over-year with a corresponding margin of 4.4%.

Adjusted EBIT was $254 million, down 9.0% year-over-year with a corresponding margin of 8.0%;

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adjusted diluted earnings per share of $0.84, compared to $0.93 in the same period a year ago;

• Cash generated from operations was $186 million, less capital expenditures of $89 million, resulted in free cash flow of $97 million, compared to free cash flow of $45 million in the prior-year period;

• Book-to-bill ratio (contract awards divided by quarterly revenue) of 0.90x, compared to 0.77x during fiscal 2025.

Segment Highlights

• Year-to-date fiscal 2026 cash generated from operations was $595 million, less capital expenditures of $258 million, resulted in free cash flow of $337 million, compared to free cash flow of $93 million in the in the prior-year;

• Book-to-bill ratio (contract awards divided by quarterly revenue) of 0.85x, compared to 0.81x in the prior-year period.

Segment Highlights - Second Quarter Fiscal 2026

Consulting & Engineering Services

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• Segment profit was $145 million, down 17.1% year-over-year, with a corresponding margin of 11.6%.

• Book-to-bill ratio of 1.19x, compared to 0.88x during the first quarter of fiscal 2025.

• Book-to-bill ratio of 0.92x, compared to 0.93x during the second quarter of fiscal 2025.

Global Infrastructure Services

• Revenue was $1,586 million, down 4.2% year-over-year (down 6.3% on an organic basis).

• Segment profit was $122 million, up 1.7% year-over-year, with a corresponding margin of 7.7%.

• Book-to-bill ratio of 0.82x, compared to 0.76x during the second quarter of fiscal 2025.

Insurance Services

• Revenue was $320 million, up 4.6% year-over-year (up 3.6% on an organic basis).

• Segment profit was $28 million, down 24.3% year-over-year, with a corresponding margin of 8.8%.

• Book-to-bill ratio of 0.74x, compared to 0.69x during the first quarter of fiscal 2025.

• Book-to-bill ratio of 0.68x, compared to 0.57x during the second quarter of fiscal 2025.

Segment Highlights - First Six Months Fiscal 2026

Consulting & Engineering Services

• Revenue was $2,501 million, down 2.3% year-over-year (down 3.9% on an organic basis).

• Segment profit was $250 million, down 16.1% year-over-year, with a corresponding margin of 10.0%.

Global Infrastructure Services

• Revenue was $3,186 million, down 3.9% year-over-year (down 6.0% on an organic basis).

• Segment profit was $219 million, down 0.9% year-over-year, with a corresponding margin of 6.9%.

Insurance Services

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• Segment profit was $61 million, down 24.7% year-over-year, with a corresponding margin of 9.6%.

• Book-to-bill ratio of 0.54x, compared to 0.70x during the first quarter of fiscal 2025.

Our revenues by geography and operating segment are provided below:

Three Months Ended Percentage Change

Percentage of Revenue for the Three Months Ended

(in millions) June 30, 2025 June 30, 2024 U.S.

Percentage of Revenue

for the Three Months Ended

(in millions) September 30, 2025 September 30, 2024 U.S.

Constant Currency (1)

June 30, 2025 June 30, 2024

September 30, 2025 September 30, 2024

Geographic Market

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Total Revenues $ 3,161 $ 3,241 (2.5) % (4.4) % 100.0 % 100.0 %

Reportable Segments

$ 1,246 $ 1,281 (2.7) % (4.7) % 39.4 % 39.6 %

1,600 1,658 (3.5) % (5.7) % 50.6 % 51.2 %

Operating Segments

CES $ 1,255 $ 1,279 (1.9) % (3.8) % 39.7 % 39.5 %

GIS 1,586 1,656 (4.2) % (6.3) % 50.2 % 51.1 %

Insurance 320 306 4.6 % 3.6 % 10.1 % 9.4 %

Total Revenues $ 3,161 $ 3,241 (2.5) % (4.4) % 100.0 % 100.0 %

Six Months Ended Percentage Change

Percentage of Revenue

for the Six Months Ended

(in millions) September 30, 2025 September 30, 2024 U.S.

Constant Currency (1)

September 30, 2025 September 30, 2024

Geographic Market

United States $ 1,649 $ 1,786 (7.7) % (7.7) % 26.1 % 27.6 %

United Kingdom

944 899 5.0 % 0.2 % 14.9 % 13.9 %

Other Europe 2,078 2,065 0.6 % (4.3) % 32.9 % 31.9 %

Australia 534 608 (12.2) % (9.9) % 8.4 % 9.4 %

Other International 1,115 1,119 (0.4) % (0.4) % 17.6 % 17.3 %

Total Revenues $ 6,320 $ 6,477 (2.4) % (4.4) % 100.0 % 100.0 %

Operating Segments

CES $ 2,501 $ 2,560 (2.3) % (4.3) % 39.6 % 39.5 %

GIS 3,186 3,314 (3.9) % (6.0) % 50.4 % 51.2 %

Insurance 633 603 5.0 % 3.6 % 10.0 % 9.3 %

Total Revenues $ 6,320 $ 6,477 (2.4) % (4.4) % 100.0 % 100.0 %

_____________

(1) Constant currency revenues are a non-GAAP measure calculated by translating current period activity into U.S.

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For more information, see "Non-GAAP Financial Measures."

For the first quarter of fiscal 2026, our total revenue was $3.2 billion, a decrease of $77 million or 2.4%, compared to the same period a year ago.

For the second quarter of fiscal 2026, our total revenue was $3.2 billion, a decrease of $80 million or 2.5%, compared to the same period a year ago.

The decrease against the comparative period includes a 4.2% decline in organic revenue partially offset by a 1.9% favorable foreign currency exchange rate impact.

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For more information, see "Non-GAAP Financial Measures."

For the first six months of fiscal 2026, our total revenue was $6.3 billion, a decrease of $157 million or 2.4%, as compared to the same period a year ago.

The decrease against the comparative period includes a 4.3% decline in organic revenue partially offset by a 2.0% favorable foreign currency exchange rate impact.

For the discussion of risks associated with our foreign operations, see Part 1, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

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Our total costs and expenses are provided below:

Dollar Amount

Three Months Ended June 30, Change

(in millions)

2025 2024 Dollar Percent

Costs of services (excludes depreciation and amortization and restructuring costs) $ 2,388 $ 2,526 $ (138) (5.5) %

Selling, general and administrative (excludes depreciation and amortization and restructuring costs) 394 301 93 30.9 %

Three Months Ended September 30, Change Six Months Ended September 30, Change

(in millions) 2025 2024 Dollar Percent 2025 2024 Dollar Percent

Costs of services $ 2,383 $ 2,427 $ (44) (1.8) % $ 4,771 $ 4,953 $ (182) (3.7) %

Selling, general and administrative 366 353 13 3.7 % 760 654 106 16.2 %

Depreciation and amortization 295 329 (34) (10.3) % 599 655 (56) (8.5) %

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These expenses primarily include payroll and related employee benefit costs, subcontractor costs and other contract-related expenses, as well as technology, facilities, and other supporting infrastructure costs.

COS was $2.4 billion for the first quarter of fiscal 2026, a decrease of $138 million (-5.5%) compared to the prior-year period.

The decline was primarily driven by the alignment of business development expenses to selling, general and administrative expenses in support of the offering model, a decrease in costs from lower revenue levels, and a reduction in professional services and contractor-related expenses from our cost optimization initiatives, partially offset by an unfavorable foreign currency exchange rate impact.

COS was $2.4 billion for the second quarter of fiscal 2026, a decrease of $44 million (-1.8%) compared to the prior-year period.

COS was $4.8 billion for the first six months of fiscal 2026, a decrease of $182 million (-3.7%) compared to the prior-year period.

The decline in both periods was primarily driven by the alignment of business development expenses to selling, general and administrative expenses in support of the offering model, a decrease in costs from lower revenue levels, and a reduction in professional services and contractor-related expenses from our cost optimization initiatives, partially offset by an unfavorable foreign currency exchange rate impact.

In connection with the Company’s new segment structure in fiscal 2026, certain costs for personnel in non-client facing positions are now included in selling, general and administrative expenses.

Gross margin (Revenues less COS as a percentage of revenue) was 24.4% and 21.9% for the first quarters of fiscal 2026 and 2025, respectively.

Gross margin (Revenues less COS as a percentage of revenue) was 24.6% and 24.5% for the second quarter and first six months of fiscal 2026, respectively, a decrease of 0.5% and an increase of 1.0% against the comparative periods.

Selling, General and Administrative

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These expenses primarily include payroll and related employee benefit costs, business development efforts, marketing and advertising activities, and other expenses such as information systems and office space.

SG&A was $394 million for the first quarter of fiscal 2026, an increase of $93 million (+30.9%) compared to the prior-year period.

The increase in SG&A was primarily driven by higher expenses from the realignment of business development and other costs from COS as referenced above, and investments in marketing, advertising and the Company’s information systems, partially offset by lower levels of transaction, separation and integration-related (“TSI”) costs.

SG&A as a percentage of revenue was 12.5% and 9.3% for the first quarters of fiscal 2026 and fiscal 2025, respectively.

SG&A was $366 million for the second quarter of fiscal 2026, an increase of $13 million (+3.7%) compared to the prior year period.

SG&A was $760 million for the first six months of fiscal 2026, an increase of $106 million (+16.2%) compared to the prior-year period.

The increase in both periods was primarily driven by higher expenses from the realignment of business development and other costs from COS as referenced above, certain investments in marketing and the Company’s information systems, a gain from a legal settlement in the second quarter of fiscal 2025, and an unfavorable foreign currency exchange rate impact, partially offset by lower levels of transaction, separation and integration-related (“TSI”) costs.

SG&A as a percentage of revenue was 11.6% and 12.0% for the second quarter and first six months of fiscal 2026, respectively, an increase of 0.7% and 1.9% against the comparative periods.

Depreciation and Amortization

Depreciation and amortization was $304 million for the first quarter of fiscal 2026, a decrease of $22 million (-6.7%) compared to the prior-year period.

Depreciation and amortization was $295 million for the second quarter of fiscal 2026, a decrease of $34 million (-10.3%) compared to the prior-year period.

Depreciation expense decreased by $20 million due to lower average net property and equipment balances.

Amortization expense decreased by $7 million due to lower transition and transformation contract cost balances.

Amortization expense decreased by $14 million due to lower transition and transformation contract cost balances and lower software amortization.

Depreciation and amortization was $599 million for the first six months of fiscal 2026, a decrease of $56 million (-8.5%) compared to the prior-year period.

Depreciation expense decreased by $35 million due to lower average net property and equipment balances.

Amortization expense decreased by $21 million due to lower transition and transformation contract cost balances and lower software amortization.

Restructuring Costs

During fiscal 2026, management approved global cost savings initiatives designed to better align our workforce, facility and data center requirements.

Total restructuring costs recorded, net of reversals, was $37 million for the first quarter of fiscal 2026, a $2 million decrease (-5.1%) compared to the prior-year period.

During fiscal 2026, management approved global cost savings initiatives designed to better align our facility and data center requirements.

During the second quarter and first six months of fiscal 2026, total restructuring costs recorded, net of reversals, were $35 million and $72 million, respectively, a decrease of $7 million (-16.7%) and $9 million (-11.1%), respectively, as compared to the prior-year periods.

See Note 10 – “Restructuring Costs” for additional information about our restructuring actions.

Interest Expense and Interest Income

Net interest expense (interest expense less interest income) was $8 million for the first quarter of fiscal 2026, a $13 million improvement compared to the prior-year period primarily due to increased net interest income from higher global cash balances.

Net interest expense (interest expense less interest income) was $7 million and $15 million for the second quarter and first six months of fiscal 2026, respectively, a decrease of $11 million (-61.1%) and $24 million (-61.5%), as compared to the prior-year periods.

The improvement in both periods was primarily from higher net interest income from our cash deposits and multi-currency notional pools.

Other Income, Net

Other income, net comprises non-service cost components of net periodic pension income, pension and other post-retirement benefit (“OPEB”) actuarial and settlement (gains) losses, movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges, losses (gains) on real estate and facility sales, and other miscellaneous (gains) and losses.

The components of Other income, net for the first quarters of fiscal 2026 and 2025 were as follows:

Three Months Ended

(in millions) June 30, 2025 June 30, 2024 Dollar Change

Other income, net includes non-service cost components of net periodic pension income, pension and other post-retirement benefit (“OPEB”) actuarial and settlement (gains) losses, movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges, losses (gains) on real estate and facility sales, and other miscellaneous (gains) and losses.

The components of Other income, net for the second quarters and first six months of fiscal 2026 and 2025 were as follows:

Three Months Ended September 30, Six Months Ended September 30,

(in millions) 2025 2024 Dollar Change 2025 2024 Dollar Change

Non-service cost components of net periodic pension income $ (43) $ (40) $ (3) $ (86) $ (80) $ (6)

Foreign currency (gain) loss (2) — (2) (7) 1 (8)

Loss on real estate and facility sales

Other miscellaneous loss (gain)

Loss (gain) on real estate and facility sales (7) 27 (34) (7) 29 (36)

Other (gain) loss

(4) (8) 4 5 (16) 21

Total $ (56) $ (21) $ (35) $ (95) $ (66) $ (29)

Other income, net, was $39 million and $45 million during the first quarters of fiscal 2026 and fiscal 2025, respectively, a decrease of $6 million (-13.3%) in other income compared to the same period a year ago that was primarily due to:

Other income, net, increased $35 million, compared to the second quarter of fiscal 2025, primarily due to:

• higher pension income (+$3 million) - increase in net periodic pension income, primarily due to changes in expected returns on assets and other actuarial assumptions;

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• real estate and facility sales (+$34 million) - losses on real estate and facility sales in the comparative period;

• other miscellaneous items (-$17 million) - primarily from the $14 million impairment of goodwill in the current quarter related to the change in operating segments.

Our effective tax rate (“ETR”) was 73.1% and 63.2% for the first quarter of fiscal 2026 and the first quarter of fiscal 2025, respectively.

For the first quarter of fiscal 2026, 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 first quarter of fiscal 2025, 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.

The One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

on July 4, 2025, after the close of our first quarter.

offset by gains on real estate and facility sales in the second quarter of fiscal 2026.

• other miscellaneous items (-$4 million) - primarily from a gain on the sale of a strategic investment in the second quarter of fiscal 2025.

Other income, net, increased $29 million, compared to the first six months of fiscal 2025, primarily due to:

• higher pension income (+$6 million) - increase in net periodic pension income, primarily due to changes in expected returns on assets and other actuarial assumptions;

• foreign currency impact (+$8 million) - change in foreign currency, primarily due to movements of exchange rates on our foreign currency-denominated assets and liabilities, related hedges including forward contracts to manage our exposure to economic risk, and the cost of our hedging program;

• real estate and facility sales (+$36 million) - losses on real estate and facility sales in the comparative period;

offset by gains on real estate and facility sales during the first six months of fiscal 2026.

• other miscellaneous items (-$21 million) - primarily from the $14 million impairment of goodwill in the first quarter of fiscal 2026 related to the change in operating segments and from a gain on the sale of a strategic investment in the second quarter of fiscal 2025.

Our effective tax rate (“ETR”) was 69.5% and 51.6% for the three months ended September 30, 2025, and September 30, 2024, respectively, and 70.7% and 56.5% for the six months ended September 30, 2025, and September 30, 2024, respectively.

For the three months ended September 30, 2025, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, and the tax benefit of a worthless stock deduction under section 165(g) of the Internal Revenue Code related to the Company's investment in a wholly owned subsidiary.

For the six months ended September 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 the Company’s investment in a wholly owned subsidiary, and a decrease in a deferred tax asset for stock based compensation.

For the three months ended September 30, 2024, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, the foreign tax credit, and an increase in interest receivables due from tax authorities.

For the six months ended September 30, 2024, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, the foreign tax credit, an increase in interest receivables due from tax authorities, and a decrease in a deferred tax asset for stock based compensation.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes a broad range of tax reform provisions affecting businesses.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

We are currently assessing its impact on our consolidated financial statements.

We anticipate remitting less federal and state income taxes during fiscal year 2026 as a result of OBBBA.

Earnings Per Share

Diluted EPS for the first quarter of fiscal 2026 was $0.09, compared to $0.14 in the first quarter of fiscal 2025.

The decrease in earnings per share was primarily due to lower net income and higher weighted average common shares outstanding.

Diluted EPS for the first quarter of fiscal 2026 includes $0.15 per share of restructuring costs, $0.01 per share of transaction, separation and integration-related costs, $0.36 per share of amortization of acquired intangible assets, $0.01 per share of merger related indemnification, $0.05 per share of impairment losses, and $0.01 per share of tax adjustments.

Diluted EPS for the second quarter and first six months of fiscal 2026 was $0.20 and $0.29, respectively, a decrease of $0.03 and $0.08 compared with the prior-year periods primarily due to lower net income attributable to DXC common stockholders, partially offset by a lower weighted average share count from the Company’s share repurchases.

Diluted EPS for the second quarter of fiscal 2026 includes $0.16 per share of restructuring costs, $0.01 per share of transaction, separation and integration-related costs, $0.41 per share of amortization of acquired intangible assets, $0.01 per share of merger related indemnification costs, $(0.04) per share of gains on real estate, facility sales, and dispositions, and $0.09 per share of tax adjustments.

Diluted EPS for the first six months of fiscal 2026 includes $0.31 per share of restructuring costs, $0.01 per share of transaction, separation and integration-related costs, $0.77 per share of amortization of acquired intangible assets, $0.02 per share of merger related indemnification costs, $(0.04) per share of gains on real estate, facility sales, and dispositions, $0.06 per share of impairment losses, and $0.10 per share of tax adjustments.

Non-GAAP Financial Measures

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Certain non-GAAP financial measures and the respective most directly comparable financial measures calculated and presented in accordance with GAAP include:

Dollar Amount

Three Months Ended June 30, Change

(in millions) 2025 2024 Dollar Percent

Three Months Ended September 30, Change Six Months Ended September 30, Change

(in millions) 2025 2024 Dollar Percent 2025 2024 Dollar Percent

Income before income taxes

$ 131 $ 93 $ 38 40.9 % $ 198 $ 161 $ 37 23.0 %

Non-GAAP income before income taxes $ 247 $ 261 $ (14) (5.4) % $ 455 $ 464 $ (9) (1.9) %

Net income $ 18 $ 25 $ (7) (28.0) %

$ 40 $ 45 $ (5) (11.1) % $ 58 $ 70 $ (12) (17.1) %

Adjusted EBIT $ 254 $ 279 $ (25) (9.0) % $ 470 $ 503 $ (33) (6.6) %

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• Merger-related indemnification – represents the Company’s estimate of potential net liability to HPE for tax related indemnifications.

• Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities.

• Gains and losses on real estate and facility sales – gains and losses related to dispositions of real property.

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Future discrete reversals of valuation allowances are likewise excluded.

• Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets, adjustments for changes in tax legislation and the impact of merger and divestitures.

• Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets, adjustments for changes in tax legislation and the impact of mergers and divestitures.

Income tax expense of all other (non-discrete) non-GAAP adjustments is based on the difference in the GAAP annual effective tax rate (AETR) and overall non-GAAP provision (consistent with the GAAP methodology).

A reconciliation of reported results to non-GAAP results is as follows:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

(in millions, except per-share amounts) As

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Assets Merger Related

Indemnification Impairment Losses Tax

Adjustments Non-GAAP

Indemnification (Gains) and Losses on Real Estate, Facility Sales and Dispositions Tax Adjustment Non-GAAP

Income before income taxes $ 131 $ 35 $ 1 $ 88 $ — $ (8) $ — $ 247

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net income attributable to non-controlling interest, net of tax 4 — — — — — — 4

2 — — — — — — 2

Net income attributable to DXC common stockholders $ 36 $ 29 $ 1 $ 73 $ 2 $ (7) $ 16 $ 150

Effective Tax Rate 69.5 % 37.7 %

Basic EPS from continuing operations $ 0.20 $ 0.16 $ 0.01 $ 0.41 $ 0.01 $ (0.04) $ 0.09 $ 0.85

Diluted EPS from continuing operations $ 0.20 $ 0.16 $ 0.01 $ 0.41 $ 0.01 $ (0.04) $ 0.09 $ 0.84

Weighted average common shares outstanding for:

Basic EPS 177.43 177.43 177.43 177.43 177.43 177.43 177.43 177.43

Diluted EPS 179.15 179.15 179.15 179.15 179.15 179.15 179.15 179.15

Six Months Ended September 30, 2025

(in millions, except per-share amounts) As

Reported Restructuring

Costs Transaction,

Separation and

Integration-Related Costs Amortization

Assets Merger Related

Indemnification (Gains) and Losses on Real Estate, Facility Sales and Dispositions Impairment Losses Tax Adjustment Non-GAAP

Income before income taxes $ 198 $ 72 $ 2 $ 175 $ 2 $ (8) $ 14 $ — $ 455

Income tax expense 140 15 — 35 (2) (1) 4 (18) 173

Net income 58 57 2 140 4 (7) 10 18 282

net income attributable to non-controlling interest, net of tax 6 — — — — — — — 6

Net income attributable to DXC common stockholders $ 52 $ 57 $ 2 $ 140 $ 4 $ (7) $ 10 $ 18 $ 276

Effective Tax Rate 70.7 % 38.0 %

Basic EPS from continuing operations $ 0.29 $ 0.32 $ 0.01 $ 0.78 $ 0.02 $ (0.04) $ 0.06 $ 0.10 $ 1.54

Diluted EPS from continuing operations $ 0.29 $ 0.31 $ 0.01 $ 0.77 $ 0.02 $ (0.04) $ 0.06 $ 0.10 $ 1.52

Weighted average common shares outstanding for:

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Diluted EPS 181.76 181.76 181.76 181.76 181.76 181.76 181.76 181.76 181.76

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

(in millions, except per-share amounts) As

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Integration-Related Costs Amortization

Assets Gains and losses on sale of real estate Non-GAAP

Assets Merger Related

Indemnification (Gains) and Losses on Real Estate, Facility Sales and Dispositions Tax Adjustment Non-GAAP

Income before income taxes $ 93 $ 42 $ 15 $ 89 $ — $ 22 $ — $ 261

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Net income 45 33 12 69 (5) 15 5 174

net loss attributable to non-controlling interest, net of tax

(1) — — — — (1)

net income attributable to non-controlling interest, net of tax 3 — — — — — — 3

Net income attributable to DXC common stockholders $ 42 $ 33 $ 12 $ 69 $ (5) $ 15 $ 5 $ 171

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Diluted EPS 183.88 183.88 183.88 183.88 183.88 183.88 183.88 183.88

Six Months Ended September 30, 2024

(in millions, except per-share amounts) As

Reported Restructuring

Costs Transaction,

Separation and

Integration-Related Costs Amortization

Assets Merger Related

Indemnification (Gains) and Losses on Real Estate, Facility Sales and Dispositions Tax Adjustment Non-GAAP

Income before income taxes $ 161 $ 81 $ 22 $ 176 $ — $ 24 $ — $ 464

Income tax expense 91 16 4 35 5 8 (5) 154

Net income 70 65 18 141 (5) 16 5 310

net income attributable to non-controlling interest, net of tax 2 — — — — — — 2

Net income attributable to DXC common stockholders $ 68 $ 65 $ 18 $ 141 $ (5) $ 16 $ 5 $ 308

Effective Tax Rate 56.5 % 33.2 %

Basic EPS $ 0.38 $ 0.36 $ 0.10 $ 0.78 $ (0.03) $ 0.09 $ 0.03 $ 1.71

Diluted EPS $ 0.37 $ 0.35 $ 0.10 $ 0.77 $ (0.03) $ 0.09 $ 0.03 $ 1.67

Weighted average common shares outstanding for:

Basic EPS 180.30 180.30 180.30 180.30 180.30 180.30 180.30 180.30

Diluted EPS 184.01 184.01 184.01 184.01 184.01 184.01 184.01 184.01

Reconciliations of revenue growth to organic revenue growth are as follows:

Three Months Ended

June 30, 2025 June 30, 2024

Three Months Ended Six Months Ended

(in millions) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Total revenue growth (2.5) % (5.7) % (2.4) % (5.9) %

Foreign currency (1.9) % — % (2.0) % 0.7 %

Acquisition and divestitures 0.1 % 0.3 %

Acquisitions and Divestitures 0.2 % 0.1 % 0.1 % 0.2 %

Organic revenue growth (4.2) % (5.6) % (4.3) % (5.0) %

CES revenue growth (1.9) % (3.3) % (2.3) % (3.1) %

(2.7) % (3.0) %

Foreign currency (1.9) % (0.1) % (2.0) % 0.7 %

Acquisition and divestitures 0.3 % 0.4 %

Acquisitions and Divestitures 0.4 % — % 0.4 % 0.2 %

CES organic revenue growth (3.4) % (3.4) % (3.9) % (2.2) %

(4.4) % (0.9) %

GIS revenue growth (4.2) % (9.2) % (3.9) % (9.7) %

Foreign currency (2.1) % 0.1 % (2.1) % 0.7 %

Acquisition and divestitures — % 0.2 %

Acquisitions and Divestitures — % 0.1 % — % 0.2 %

GIS organic revenue growth (6.3) % (9.0) % (6.0) % (8.8) %

1 unchanged sentence

Foreign currency (1.0) % (0.2) % (1.4) % 0.4 %

Acquisition and divestitures — % — %

Acquisitions and Divestitures — % — % — % — %

Insurance organic revenue growth 3.6 % 5.3 % 3.6 % 5.8 %

Reconciliations of segment profit and adjusted EBIT to net income are as follows:

Three Months Ended

(in millions) June 30, 2025 June 30, 2024

Three Months Ended Six Months Ended

(in millions) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Total profit for reportable segments $ 295 $ 332 $ 530 $ 600

Corporate expenses

(41) (53) (60) (97)

Adjusted EBIT

254 279 470 503

Restructuring costs (35) (42) (72) (81)

Transaction, separation and integration-related costs (1) (15) (2) (22)

Amortization of acquired intangibles (87) (87)

Amortization of acquired intangible assets (88) (89) (175) (176)

Merger related indemnification — — (2) —

Losses on real estate and facility sales

Gains on dispositions 1 5 1 5

Gains (losses) on real estate and facility sales

7 (27) 7 (29)

Impairment losses — — (14) —

138 111 213 200

Interest income 46 51 92 102

Interest expense

(53) (69) (107) (141)

Income before income tax

131 93 198 161

Income tax expense (91) (48) (140) (91)

2 unchanged sentences

Cash and Cash Equivalents and Cash Flows

As of June 30, 2025, our cash and cash equivalents (“cash”) were $1.8 billion, of which $0.8 billion was held outside of the U.S.

We maintain various multi-currency, multi-entity, cross-border, physical and notional cash pool arrangements with various counterparties to manage liquidity efficiently that enable participating subsidiaries to draw on the Company’s pooled resources to meet liquidity needs.

As of September 30, 2025, our cash and cash equivalents (“cash”) were $1.9 billion, of which $1.1 billion was held outside of the U.S.

We maintain various multi-currency, multi-entity, cross-border, physical and notional cash and pool arrangements with various counterparties to manage liquidity efficiently that enable participating subsidiaries to draw on the Company’s pooled resources to meet liquidity needs.

A significant portion of the cash held by our foreign subsidiaries is not expected to be impacted by U.S.

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The following table summarizes our cash flow activity:

Three Months Ended

(in millions) June 30, 2025 June 30, 2024 Change

Six Months Ended

(in millions) September 30, 2025 September 30, 2024 Change

Net cash provided by (used in):

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents (35) 38 (73)

Net (decrease) increase in cash and cash equivalents $ (4) $ 93 $ (97)

Cash classified within current assets held for sale — (3) 3

Net increase in cash and cash equivalents $ 92 $ 21 $ 71

Cash and cash equivalents at beginning of year 1,796 1,224

1 unchanged sentence

Operating cash flow

Net cash provided by operating activities was $186 million and $238 million, respectively, during the first quarters of fiscal 2026 and fiscal 2025, reflecting a year-over-year decrease of $52 million.

The decrease was primarily due to:

• a decrease in net income, net of adjustments of $49 million and an unfavorable change in working capital.

Net cash provided by operating activities was $595 million and $433 million, respectively, during the first six months of fiscal 2026 and fiscal 2025, reflecting a year-over year increase of $162 million.

The increase in operating cash flows compared with the prior-year period was primarily from:

• a $197 million favorable change in working capital, largely driven by improvements in our cash conversion cycle;

partially offset by

• a $35 million decrease in net income, net of adjustments.

The following table contains certain key working capital metrics:

Three Months Ended

June 30, 2025 June 30, 2024

September 30, 2025 September 30, 2024

Days of sales outstanding in accounts receivable 66 71

2 unchanged sentences

Investing cash flow

Net cash used in investing activities was $77 million and $188 million, respectively, during the first quarters of fiscal 2026 and fiscal 2025, reflecting a year-over-year change of $111 million.

The change was primarily due to:

• a $104 million decrease in capital expenditures primarily from lower levels of software purchased and developed, and

• a $7 million increase in cash inflows from other net investing activities.

Net cash used in investing activities was $222 million and $258 million, respectively, during the first six months of fiscal 2026 and fiscal 2025, reflecting a year-over-year decline of $36 million.

The decline in investing cash flows compared with the prior-year period was primarily from:

• a reduction of $82 million in capital expenditures;

partially offset by

• a $47 million decline in proceeds from sales of assets.

Financing cash flow

Net cash (used in) provided by financing activities was $(110) million and $41 million, respectively, during the first quarters of fiscal 2026 and fiscal 2025, reflecting a year-over-year change of $151 million.

The change was primarily due to:

• $151 million from commercial paper borrowings, net of repayments in the first quarter of fiscal 2025 that did not occur in the first quarter of 2026;

• a $41 million increase in share repurchase activity and related taxes paid on net share settlements in fiscal 2026;

Net cash used in financing activities was $246 million and $189 million, respectively, during the first six months of fiscal 2026 and fiscal 2025, reflecting a year-over-year increase of $57 million.

The increase in financing cash flows compared with the prior-year period was primarily from:

• a $117 million increase in cash used for share repurchases and related tax payments on net share settlements;

partially offset by

• a $42 million decrease in payments on capital leases and borrowings for asset financing, as the Company continues reducing the volume of these financing arrangements.

• a $58 million reduction in payments on capital leases and asset financing arrangements, as the Company continues reducing the volume of these financing activities.

Debt Financing

The following table summarizes our total debt:

(in millions) June 30, 2025 March 31, 2025 Change

(in millions) September 30, 2025 March 31, 2025 Change

Short-term debt and current maturities of long-term debt $ 1,612 $ 880 $ 732

1 unchanged sentence

Total debt $ 3,982 $ 3,876 $ 106

The $153 million increase in total debt during the first quarter of fiscal 2026 was primarily attributable to the unfavorable foreign currency exchange rate of U.S.

dollar against the Euro, partially offset by decreases in finance leases and borrowings for asset financing attributable to payments exceeding additions.

We were in compliance with all financial covenants associated with our borrowings as of June 30, 2025 and June 30, 2024.

The $106 million increase in total debt during the first six months of fiscal 2026 was primarily attributable to an unfavorable foreign currency exchange rate of U.S.

dollar against the Euro, partially offset by decreases in finance leases and borrowings for asset financing attributable to payments exceeding minimal additions.

We were in compliance with all financial covenants associated with our borrowings as of September 30, 2025.

Our credit ratings are as follows:

Rating Agency Long Term Ratings Short Term Ratings Outlook

Fitch BBB F-2 Negative

Moody’s Baa2 P-2 Negative

8 unchanged sentences

The recovery of these investments is over the life of the contracts and is dependent upon our performance as well as customer acceptance.

Our total liquidity of $5.0 billion as of June 30, 2025, includes $1.8 billion of cash and cash equivalents and $3.2 billion of available borrowings under our revolving credit facility.

Our total liquidity of $5.1 billion as of September 30, 2025, includes $1.9 billion of cash and cash equivalents and $3.2 billion of available borrowings under our revolving credit facility.

On October 23, 2025, the Company amended its revolving credit facility, extending the maturity date to November 1, 2030 and reducing the total available borrowings to $3.0 billion as a result of rationalizing its bank group.

The Company believes this revised facility continues to provide ample financial flexibility to support our operating and strategic objectives.

Share Repurchases

18 unchanged sentences

We have discussed the selection of our critical accounting policies and the effect of estimates with the Audit Committee of our Board of Directors.

During the three months ended June 30, 2025, there were no changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 except as mentioned in Note 1 – “Summary of Significant Accounting Policies.”

During the three months ended September 30, 2025, there were no changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 except as mentioned in Note 1 – “Summary of Significant Accounting Policies.”

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk affecting DXC, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

Our exposure to market risk has not changed materially since March 31, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis