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Item 7. Management’s Discussion and Analysis

2026-05-08 compared with 2025-05-15 · 144 added, 124 removed, 379 unchanged (41% of the section changed)

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” on Form 10-K filed with the Securities and Exchange Commission on May 15, 2025.

DXC helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds.

Many of the world’s largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates.

DXC is a leading enterprise technology and innovation partner delivering software, services, and solutions to global enterprises and public sector organizations — helping them harness AI to drive outcomes at a time of exponential change with speed.

With deep expertise in Managed Infrastructure Services, Application Modernization, and Industry-Specific Software Solutions, DXC modernizes, secures, and operates some of the world’s most complex technology estates.

We generate revenue by offering a wide range of information technology services and solutions primarily in North America, Europe, Asia, and Australia.

We operate through two segments:

Global Business Services ("GBS") and Global Infrastructure Services ("GIS").

We market and sell our services directly to customers through our direct sales force around the world.

Our customers include commercial businesses of many sizes and in many industries and public sector clients.

Key profitability and cash flow metrics for fiscal 2025 compared to fiscal 2024 are included below.

Effective April 1, 2025 (fiscal year 2026), we began reporting our 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:

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

Key revenue, profitability and cash flow metrics for fiscal 2026 compared to fiscal 2025 are included below.

We have presented organic revenue, adjusted earnings before income taxes, and adjusted diluted earnings per share on a non-GAAP basis.

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

• Revenues of $12.87 billion, down 5.8% compared to prior year period, and down 4.6% on an organic basis;

• Income before income taxes was $630 million;

adjusted earnings before income taxes was $1,019 million, an increase of 1.0% on an adjusted basis;

• Revenues of $12.64 billion, down 1.8% year-over-year (down 4.8% on an organic basis);

• EBIT was $353 million with a corresponding margin of 2.8%.

Adjusted EBIT was $970 million, down 4.8% year-over-year with a corresponding margin of 7.7%;

• Diluted earnings per share of $0.10, compared to $2.10 in fiscal 2025;

adjusted diluted earnings per share of $3.43, compared to $3.10 in fiscal 2024, an increase of 10.6%;

• Cash generated from operations was $1,398 million, less capital expenditures of $711 million, resulted in free cash flow of $687 million.

adjusted diluted earnings per share of $3.23, compared to $3.43 in fiscal 2025;

• Cash generated from operations was $1,248 million, less capital expenditures of $535 million, resulted in free cash flow of $713 million, compared to free cash flow of $687 million in the prior-year

• Book-to-bill ratio (contract awards divided by annual revenue) of 0.98x, compared to 1.03x during fiscal 2025.

Segment Highlights - Fiscal Year 2026

Consulting & Engineering Services

• Revenue was $5,023 million, down 0.8% year-over-year (down 3.8% on an organic basis).

• Segment profit was $518 million, down 10.7% year-over-year, with a corresponding margin of 10.3%.

• Book-to-bill ratio of 1.10x, compared to 1.08x during fiscal 2025.

Global Infrastructure Services

• Revenue was $6,342 million, down 3.9% year-over-year (down 7.2% on an organic basis).

• Segment profit was $432 million, up 0.2% year-over-year, with a corresponding margin of 6.8%.

• Book-to-bill ratio of 0.94x, compared to 1.04x during fiscal 2025.

Insurance Software & Services

• Revenue was $1,279 million, up 5.4% year-over-year (up 3.6% on an organic basis).

• Segment profit was $129 million, down 20.4% year-over-year, with a corresponding margin of 10.1%.

• Book-to-bill ratio of 0.76x, compared to 0.77x during fiscal 2025.

Results of Operations

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Net income (1)

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

Net income attributable to DXC common stockholders (1)

Diluted earnings per common share:

$ 0.10 $ 2.10

(1) Income before income taxes, Net income, and Diluted earnings per common share include Pension and OPEB actuarial and settlement (gains) and losses that were $(232) million and $445 million for the fiscal years ended March 31, 2025 and March 31, 2024, respectively.

(1) Income before income taxes, Net income, Net income attributable to DXC common stockholders, and Diluted earnings per common share include Pension and OPEB actuarial and settlement losses and (gains) that were $169 million and $(232) million for the fiscal years ended March 31, 2026 and March 31, 2025, respectively.

Our revenues by geography and operating segments are provided below:

Fiscal Years Ended Fiscal Year Ended

(in millions) March 31, 2025 March 31, 2024 Percentage Change Constant Currency March 31, 2025 (1)

Percentage Change in Constant Currency (1)

Fiscal Years Ended Percentage Change Percentage of Revenue

for the Fiscal Year Ended

(in millions) March 31, 2026 March 31, 2025 U.S.

Constant Currency (1)

March 31, 2026 March 31, 2025

Geographic Market

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Reportable Segments

GBS $ 6,646 $ 6,820 (2.6) % $ 6,727 (1.4) %

GIS 6,225 6,847 (9.1) % 6,287 (8.2) %

$ 5,023 $ 5,062 (0.8) % (4.0) % 39.7 % 39.3 %

6,342 6,596 (3.9) % (7.2) % 50.2 % 51.2 %

1,279 1,213 5.4 % 3.6 % 10.1 % 9.4 %

Total Revenues $ 12,644 $ 12,871 (1.8) % (4.9) % 100.0 % 100.0 %

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

Total revenue for fiscal 2025 was $12.9 billion, a decline of $796 million or 5.8%, compared to the prior fiscal year, primarily driven by a 4.6% decline in organic revenue and a 1.0% unfavorable foreign currency exchange rate impact.

For fiscal 2026, our total revenue was $12.6 billion, a decrease of $227 million or 1.8%, compared to the prior fiscal year.

The decrease against the comparative period includes a 4.8% decline in organic revenue partially offset by a 3.1% favorable foreign currency exchange rate impact.

Organic revenue is a non-GAAP measure, as discussed in our "Non-GAAP Financial Measures." In addition, for a discussion of risks associated with our foreign operations, see Part I, Item 1A - "Risk Factors."

Reportable Segment Results

Global Business Services

• Revenue was $6.6 billion, down 2.6% year-over-year (down 1.0% on an organic basis).

• Segment profit was $797 million, down 4.6% year-over-year, with a corresponding margin of 12.0%.

• Book-to-bill ratio of 1.03x, compared to 0.96x during fiscal 2024.

Global Infrastructure Services

• Revenue was $6.2 billion, down 9.1% year-over-year (down 8.2% on an organic basis).

• Segment profit was $451 million, up 4.2% year-over-year, with a corresponding margin of 7.2%.

• Book-to-bill ratio of 1.03x, compared to 0.86x during fiscal 2024.

Costs and Expenses

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(in millions) March 31, 2026 March 31, 2025 Dollar Percent

Costs of services (excludes depreciation and amortization and restructuring costs) $ 9,770 $ 10,576 $ (806) (7.6) %

Selling, general and administrative (excludes depreciation and amortization and restructuring costs) 1,348 1,244 104 8.4

Costs of services

$ 9,613 $ 9,770 $ (157) (1.6) %

Selling, general and administrative

1,402 1,348 54 4.0

Depreciation and amortization 1,160 1,287 (127) (9.9)

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Gain on disposition of businesses — (7) 7 (100.0)

Other (income) expense, net (376) 218 (594) (272.5)

Other expense (income), net 1 (376) 377 (100.3)

Total costs and expenses $ 12,326 $ 12,241 $ 85 0.7 %

Costs of Services

Costs of services ("COS") were $9.8 billion for fiscal 2025, a decrease of $806 million compared to the prior fiscal year.

The decrease in expenses against the prior fiscal year was primarily due to a decline in costs from lower revenue levels and a reduction in professional services and contractor-related expenses from our cost optimization efforts.

Gross margin (Revenues less COS as a percentage of revenue) was 24.1% for fiscal 2025, an increase of 150 basis points against the prior fiscal year.

Costs of services, excluding depreciation and amortization and restructuring costs ("COS"), consist of expenses directly associated with revenue-generating activities.

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 $9.6 billion for fiscal 2026, a decrease of $157 million (-1.6%) compared to the prior-year period.

The decline was primarily driven by a decrease in costs from lower revenue levels, the alignment of business development expenses to selling, general and administrative expenses in support of the offering model, 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 24.0% for fiscal 2026, a decline of 10 basis points against the prior fiscal year.

Selling, General and Administrative

Selling, general and administrative expense ("SG&A") was $1.3 billion for fiscal 2025, an increase of $104 million compared to the prior fiscal year.

The increase in expenses against the prior fiscal year was primarily due to an alignment of business development expenses from COS in support of the offering model and an increase in transaction, separation and integration-related (“TSI”) costs, partially offset by lower merger-related indemnification expenses, lower share-based compensation and a gain from a legal settlement in fiscal 2025.

Selling, general and administrative expense, excluding depreciation and amortization and restructuring costs ("SG&A"), consist of the costs associated with personnel in non-client facing positions.

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 $1,402 million for fiscal 2026, an increase of $54 million (+4.0%) compared to the prior-year period.

The increase was primarily driven by the realignment of business development and certain other costs from COS, an unfavorable foreign currency exchange rate impact, and a gain from a legal settlement in the second quarter of fiscal 2025, partially offset by lower levels of merger-related indemnification expenses and transaction, separation, and integration ("TSI") costs in fiscal 2026.

SG&A as a percentage of revenue was 11.1% for fiscal 2026, an increase of 60 basis points against the prior fiscal year.

Depreciation and Amortization

Depreciation expense was $351 million for fiscal 2025, a decrease of $82 million compared to the prior fiscal year.

The decrease in depreciation expense was primarily due to lower average net property and equipment balances.

Amortization expense was $936 million for fiscal 2025, a decrease of $35 million compared to the prior fiscal year.

The decrease in amortization expense was primarily due to lower software amortization.

Depreciation and amortization was $1,160 million for fiscal 2026, a decrease of $127 million (-9.9%) compared to the prior-year period.

Depreciation expense decreased by $57 million due to lower average net property and equipment balances.

Amortization expense decreased by $70 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, during fiscal 2025 were $153 million, an increase of $42 million compared to the prior fiscal year, primarily from a reduction in workforce-related expenses.

Total restructuring costs recorded, net of reversals, during fiscal 2026 were $115 million, a decrease of $38 million (-24.8%) compared to the prior fiscal year, primarily from a reduction in workforce-related expenses.

See Note 12 - "Restructuring Costs" for additional information about our restructuring actions.

Interest Expense and Interest Income

For fiscal 2025, net interest expense (interest expense less interest income) was $66 million, a decrease of $18 million as compared to the prior fiscal year.

The decrease in net interest expense against the comparative period was primarily due to decreased interest expense from lower levels of asset financing and commercial paper, and higher net interest income from cash deposits.

Net interest expense (interest expense less interest income) was $35 million for fiscal 2026, a decrease of $31 million (-47.0%) as compared to the prior-year.

The improvement was primarily from higher net interest income from our cash deposits and multi-currency notional pools and lower finance lease and asset financing costs, partially offset by higher interest expense on our Senior notes (see Note 10 - Debt).

Gain on Disposition of Businesses

During fiscal 2025 and fiscal 2024, the Company sold insignificant businesses and made adjustments to estimated amounts from prior years’ dispositions that resulted in a gain of $7 million and $79 million, respectively.

Other (Income) Expense, Net

Other (income) expense, net comprises non-service cost components of net periodic pension income, pension and 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) expense, net were as follows:

During fiscal 2025, the Company sold insignificant businesses and made adjustments to estimated amounts from prior years’ dispositions that resulted in a gain of $7 million.

The Company had no business dispositions during fiscal 2026.

Other Expense (Income), Net

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

The components of Other expense (income), net were as follows:

Fiscal Years Ended

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Non-service cost components of net periodic pension income $ (172) $ (160) $ (12)

Pension and OPEB actuarial and settlement (gains) losses (232) 445 (677)

Pension and OPEB actuarial and settlement losses (gains) 169 (232) 401

Foreign currency gains (2) (4) 2

Loss (gain) on real estate and facility sales 23 (7) 30

Other miscellaneous (gains) and losses (3) (68) 65

Losses on real estate and facility sales

Other miscellaneous losses (gains) 6 (3) 9

Total $ 1 $ (376) $ 377

Other (income) expense, net, was $(376) million in fiscal 2025, a change of $594 million against the prior fiscal year.

The change against the prior fiscal year was primarily due to:

• net periodic pension income increased by $15 million primarily due to changes in expected returns on assets and other actuarial assumptions;

• pension and OPEB actuarial and settlement (gains) losses were $(232) million and $445 million, respectively, a change of $677 million, from mark-to-market adjustments and other settlement (gains) losses;

• foreign currency gains decreased $3 million, 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;

• losses (gains) on real estate and facility were $23 million and $(7) million, respectively, a change of $30 million;

• a decrease in other miscellaneous (gains) and losses of $65 million, primarily from impairment losses in fiscal 2025 and the gain on the sale of a strategic investment in fiscal 2024.

Other expense (income), net, increased $377 million compared to the prior fiscal year, primarily due to:

• pension income ($12 million) - increase in net periodic pension income, primarily due to changes in expected returns on assets and other actuarial assumptions;

• pension and OPEB actuarial and settlement losses (gains) ($401 million) - primarily due to mark-to-market adjustments and other settlement losses (gains);

• foreign currency impact ($2 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 ($23 million) - losses on real estate and facility sales in fiscal 2025, with insignificant net sales in fiscal 2026;

• miscellaneous items ($9 million) - the Company recognized a $14 million impairment of goodwill in the first quarter of fiscal 2026 related to the change in operating segments, partially offset by fewer impairment losses recognized in fiscal 2026 and a gain on the sale of a strategic investment in the second quarter of fiscal 2025.

Our effective tax rate ("ETR") on income (loss) from continuing operations, before taxes, for fiscal 2026 and 2025 was 91.2% and 37.1%, respectively.

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federal statutory rate and the ETR, as well as other information about our income tax provision, is provided in Note 14 - "Income Taxes."

In fiscal 2025, the ETR was primarily impacted by:

• The global mix of income and changes in foreign statutory tax rates, which increased the foreign tax rate differential and the ETR by $145 million and 23.0%, respectively.

• Income tax and foreign tax credits, which decreased income tax expense and the ETR by $84 million and 13.3%, respectively, offset by tax expense on U.S.

international tax inclusions, which increased tax expense and the ETR by $59 million and 9.4%, respectively.

• The tax benefit of changes in uncertain tax positions related to the expiration of the statute of limitations and capitalized research and experimental expenditures, offset by the impact of increases in other uncertain tax positions and accrued interest, which decreased income tax expense and the ETR by $52 million and 8.3%, respectively.

In fiscal 2024, the ETR was primarily impacted by:

• Changes in foreign jurisdictional losses that decreased the ETR by $160 million and 146.8%, respectively, with an offsetting increase in the ETR due to an increase in the valuation allowance of the same amount.

• Income tax and foreign tax credits, which decreased income tax expense and decreased the ETR by $101 million and 92.7%, respectively, offset by tax expense on U.S.

international tax inclusions, which increased tax expense and increased the ETR by $39 million and 35.8%, respectively.

• Foreign withholding taxes, which increased income tax expense and increased the ETR by $64 million and 58.7%, respectively.

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.

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The total cash tax payment the IRS is seeking is approximately $503 million, inclusive of penalties and interest, which continues to accrue.

The matter is currently scheduled for trial in August 2025.

Tax Court held a trial on this matter in two sessions in August and October 2025.

Post-trial briefing concluded in April 2026.

A decision from the court is now pending.

The second issue pertains to the Company’s deduction for restructuring expenses in fiscal year 2013 in the amount of $139 million, which the IRS has disputed.

The total cash tax payment the IRS is seeking is approximately $108 million, inclusive of penalties and interest, which continues to accrue.

In January 2025, the Court denied the IRS’s motion for summary judgment.

In January 2025, the Court denied the IRS’ motion for summary judgment.

A trial date is pending.

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The total cash tax payment the IRS is seeking is approximately $125 million, inclusive of penalties and interest, which continues to accrue.

This matter is currently pending a summary judgment motion from the IRS.

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 $544 million (including estimated interest and penalties) for the unreserved portion of these items and cash tax payments of approximately $623 million if we do not prevail.

In March 2026, the Court granted the IRS’ motion for summary judgment.

A final decision on the Company’s tax liability is pending.

During the current year, the Company increased its accrual to fully reserve the net amount of its expected tax liability in this matter.

As we believe we will ultimately prevail on the technical merits of the first and second issues above and are continuing to challenge them in the U.S.

Tax Court, the first and second issues are not fully reserved and would result in incremental federal and state tax expense of approximately $523 million (including estimated interest and penalties) for the unreserved portion of these items, if we do not prevail.

The total cash tax exposure across all three issues above is approximately $655 million.

These amounts are net of an expected $81 million interest deduction tax benefit.

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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.

The Company believes the outcomes that are reasonably possible within the next 12 months to result in a reduction in its liability for uncertain tax positions, excluding interest, penalties, and tax carryforwards, would be approximately $2 million.

Earnings Per Share (EPS)

Diluted EPS for fiscal 2025 was $2.10, an increase of $1.64 compared to the prior fiscal year.

The increase in diluted EPS against the prior fiscal year was primarily due to an increase in net income attributable to DXC common stockholders and a lower weighted average share count from the Company’s share repurchases.

Diluted EPS for fiscal 2025 includes $0.65 per share of restructuring costs, $0.11 per share of transaction, separation and integration-related costs, $1.47 per share of amortization of acquired intangible assets, $(0.02) per share of merger-related indemnification, $0.09 per share of impairment losses, $(0.05) per share of net gains on dispositions, $0.08 per share of net losses on real estate and facility sales, $(0.89) per share of pension and OPEB actuarial and settlement gains, and $(0.09) per share of tax adjustments primarily relating to tax adjustments to impair or recognize certain deferred tax assets and adjustments for changes in tax legislation.

Diluted EPS for fiscal 2026 was $0.10, a decrease of $2.00 compared to the prior fiscal year.

The decrease in diluted EPS against the prior fiscal year was primarily due to the Company's decrease in 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 fiscal 2026 includes $0.51 per share of restructuring costs, $0.02 per share of transaction, separation and integration-related costs, $1.56 per share of amortization of acquired intangible assets, $(0.19) per share of merger-related indemnification, $(0.01) per share of gains on real estate, facility sales, and dispositions, $0.01 per share of debt extinguishment costs, $0.07 per share of impairment losses, $0.73 per share of pension and OPEB actuarial and settlement losses, and $0.45 per share of tax adjustments primarily relating to tax litigation matters, to impair or recognize certain deferred tax assets, and adjustments for changes in tax legislation.

Non-GAAP Financial Measures

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Adjusted EBIT $ 970 $ 1,019 $ (49) (4.8) %

(1) The dollar and percent change for Income before income taxes and Net income include Pension and OPEB actuarial and settlement (gains) and losses that were $(232) million and $445 million for the fiscal years ended March 31, 2025 and March 31, 2024, respectively.

(2) Calculation is not meaningful ("NM") due to inclusion of Pension and OPEB actuarial and settlement gains and losses.

(1) The dollar and percent change for Income before income taxes and Net income include Pension and OPEB actuarial and settlement losses and (gains) that were $169 million and $(232) million for the fiscal years ended March 31, 2026 and March 31, 2025, respectively.

(2) Calculation is not meaningful ("NM") due to inclusion of Pension and OPEB actuarial and settlement losses and (gains).

Reconciliation of Non-GAAP Financial Measures

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• Restructuring costs – includes costs, net of reversals, related to workforce and real estate optimization and other similar charges.

• Transaction, separation and integration-related (“TSI”) costs – includes costs related to integration, separation, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions incurred within one year of such transactions closing, except for costs associated with related disputes, which may arise more than one year after closing.

• Transaction, separation and integration-related (“TSI”) costs – includes third party costs related to integration, separation, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions incurred within one year of such transactions closing, except for costs associated with related disputes, which may arise more than one year after closing.

• Amortization of acquired intangible assets – includes amortization of intangible assets acquired through business combinations.

• Pension and OPEB actuarial and settlement gains and losses – pension and OPEB actuarial mark to market adjustments and settlement gains and losses.

• Merger related indemnification – in fiscal 2025 and fiscal 2024, represents the Company’s estimate of potential net liability to HPE for tax related indemnifications.

• Merger related indemnification – represents the Company’s estimate of potential net liability 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.

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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 adjustments to transition tax.

• Debt extinguishment costs – costs associated with early retirement, redemption, repayment or repurchase of debt and debt-like items including any breakage, make-whole premium, prepayment penalty or similar costs as well as solicitation and other legal and advisory expenses.

• Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets, adjustments for changes in tax legislation, tax litigation matters, and adjustments to transition tax.

Income tax expense (benefit) from the impact of mergers and divestitures is separately computed based on the underlying transaction.

Income tax expense of all other (non-discrete) non-GAAP adjustments is computed by applying the jurisdictional tax rate to the pre-tax adjustments on a jurisdictional basis.

(1) Starting in the fiscal quarter ended September 30, 2024, the Company’s reported non-GAAP financial results reflect an adjustment for gains and losses on real estate and facilities dispositions, which the Company’s current management believes are not reflective of the core operating performance of our business.

For comparability purposes, historical non-GAAP financial measures set forth herein have been recast to reflect this change, which included gains on dispositions of real property of approximately $7 million for the fiscal year ended March 31, 2024.

In fiscal 2026, includes the unfavorable summary judgment in a tax matter relating to a foreign exchange tax case.

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

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Separation and

Integration-Related Costs Amortization

Assets Merger Related Indemnification Impairment

Losses Gains and

Dispositions Gains and Losses on Real Estate and Facility Sales Pension and

Related Costs Amortization

Assets Merger Related Indemnification (Gains) and Losses on

Real Estate, Facility Sales

and Dispositions Debt Extinguishment

Costs Impairment

Losses Pension and

OPEB Actuarial

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Income before income taxes 318 115 3 349 (35) (1) 1 17 169 — 936

630 153 25 348 2 17 (13) 23 (232) — 953

Income tax expense 290 24 — 71 (1) 1 — 5 37 (80) 347

234 33 5 77 6 1 (3) 9 (66) 17 313

396 120 20 271 (4) 16 (10) 14 (166) (17) 640

Net income 28 91 3 278 (34) (2) 1 12 132 80 589

net income attributable to non-controlling interest, net of tax 10 — — — — — — — 2 — 12

7 — — — — — — — (1) — 6

Net income attributable to DXC common stockholders

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Related Costs Amortization

Intangible Assets Merger Related Indemnification Impairment Losses Gains and

Dispositions Gains and Losses on Real Estate and Facility Sales Pension and

Assets Merger Related Indemnification (Gains) and Losses on

Real Estate, Facility Sales

and Dispositions Impairment

Losses Pension and

OPEB Actuarial

and Settlement

Adjustment Non-GAAP

Losses Tax Adjustment Non-GAAP

Income before income taxes 630 153 25 348 2 10 17 (232) — 953

109 111 7 354 16 5 (115) (7) 445 — 925

Income tax expense

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396 120 20 271 (4) 4 16 (166) (17) 640

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

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

7 — — — — — — (1) — 6

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Organic revenue growth (4.8) % (4.6) %

GBS revenue growth (2.6) % (2.0) %

CES revenue growth

(0.8) % (4.0) %

Foreign currency (3.2) % 1.1 %

Acquisitions and divestitures 0.2 % 0.3 %

GBS organic revenue growth (1.0) % 1.4 %

CES organic revenue growth

(3.8) % (2.6) %

GIS revenue growth

(3.9) % (8.8) %

Foreign currency (3.3) % 1.1 %

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GIS organic revenue growth

(7.2) % (7.5) %

Insurance revenue growth

Foreign currency (1.8) % 0.4 %

Acquisitions and divestitures — % — %

Insurance organic revenue growth

Reconciliations of net income to adjusted EBIT are as follows:

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(in millions) March 31, 2026 March 31, 2025

Income tax expense

Interest income (199) (214)

Interest expense 265 298

Total profit for reportable segments

$ 1,079 $ 1,173

Corporate expenses

Adjusted EBIT

Restructuring costs (115) (153)

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Gains on dispositions 1 13

Losses (gains) on real estate and facility sales 23 (7)

Losses on real estate and facility sales

Impairment losses (17) (17)

Pension and OPEB actuarial and settlement (gains) losses

Adjusted EBIT $ 1,019 $ 1,009

Pension and OPEB actuarial and settlement (losses) gains

Interest income

Interest expense

Income before income tax

Income tax expense

Liquidity and Capital Resources

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Operating cash flow

Net cash provided by operating activities was $1,398 million and $1,361 million, respectively, in fiscal 2025 and fiscal 2024, reflecting a year-over-year increase of $37 million.

Net cash provided by operating activities was $1,248 million and $1,398 million, respectively, in fiscal 2026 and fiscal 2025, reflecting a year-over-year decrease of $150 million.

Operating cash flow against the comparative period included:

• an increase in net income, net of adjustments of $48 million;

partially offset by

• a decrease in net income, net of adjustments of $132 million;

• a $18 million unfavorable change in working capital due to higher working capital outflows during fiscal 2026.

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The change was primarily due to:

• a $106 million year-over-year increase in cash outflows from capital expenditures primarily from software purchased and developed;

• a $176 million decrease in capital expenditures primarily from lower levels of software purchased and developed;

partially offset by

• an increase in proceeds from sale of assets of $86 million.

• a decrease in proceeds from sale of assets of $126 million, and

• $26 million in cash inflows from business dispositions in fiscal 2025 that did not occur in fiscal 2026.

Financing cash flow

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The change was primarily due to:

• an $899 million decrease in cash used for share repurchase activity and related taxes paid on net share settlements;

• principal payments on long term debt, net of proceeds from bond issuance in fiscal 2026 of $320 million,

• a $229 million increase in cash used for share repurchase activity and related taxes paid on net share settlements, and

• a $22 million decrease in cash inflows from other financing activities;

partially offset by

• a $110 million decrease in payments on capital leases and borrowings for asset financings, as the Company continues reducing the volume of these financing arrangements.

• a $101 million decrease in cash outflows from commercial paper payments, net of borrowings;

• a $38 million increase in cash inflows from other financing activities.

Debt Financing

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Total debt $ 3,552 $ 3,876

The $213 million decrease in total debt during fiscal 2025 was primarily due to the net decreases in finance lease liabilities and borrowings for asset financing.

The $609 million increase in short-term debt and current maturities of long-term debt reflects the fiscal year 2026 maturity of the €650 million senior note.

The $324 million decrease in total debt during fiscal 2026 was primarily attributable to principal payments on long-term debt, net of proceeds from our bond issuance in fiscal 2026 (see Note 10 - "Debt”), decreases in finance lease liabilities and borrowings for asset financing attributable to payments exceeding minimal additions, partially offset by the impact of the foreign currency exchange rate of U.S.

dollar against the Euro.

We were in compliance with all financial covenants associated with our borrowings as of March 31, 2026 and March 31, 2025.

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Rating Agency Long Term Ratings Short Term Ratings Outlook

Fitch BBB F-2 Negative

Moody's Baa2 P-2 Negative

S&P BBB- - Stable

For information on the risk s of ratings downgrades, see Part I, Item 1A - "Risk Factors" subsection titled " Failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs could adversely affect our liquidity, capital position, borrowing cost, and access to capital markets .

For information on the risk s of ratings downgrades, see Part I, Item 1A - "Risk Factors" subsection titled "Failure to maintain our credit rating, manage our indebtedness, and raise additional capital for future needs could adversely affect our liquidity, capital position, borrowing cost, and access to capital markets."

We expect our existing cash and cash equivalents, together with cash generated from operations, will be sufficient to meet our normal operating requirements for the next 12 months and beyond.

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however, should we require funds greater than that generated from our operations to fund discretionary investment activities, such as business acquisitions, we have the ability to raise capital through debt financing, including the issuance of capital market debt instruments such as commercial paper and bonds.

In addition, we currently utilize and will further utilize accounts receivable sales facilities, and our cross-currency cash pool for liquidity needs.

In addition, we currently utilize and will further utilize an accounts receivable sales facility, and our cross-currency cash pool for liquidity needs.

There is no guarantee that we will be able to obtain debt financing, if required, on terms and conditions acceptable to us, if at all, in the future.

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Our liquidity of $4.7 billion as of March 31, 2026, includes $1.7 billion of cash and cash equivalents and $3.0 billion of available borrowings under our revolving credit facility.

On November 1, 2024, the Company extended the term of our revolving credit facility to November 1, 2029.

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

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As of March 31, 2026, the Company had undistributed earnings from foreign subsidiaries that were not indefinitely reinvested and had a deferred tax liability of $16 million for the estimated taxes associated with the repatriation of these earnings.

The Company also had undistributed earnings of approximately $1.4 billion and other outside basis differences in foreign subsidiaries that were indefinitely reinvested in foreign operations.

No taxes have been provided on the undistributed foreign earnings and outside basis differences that are indefinitely reinvested.

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.

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We may be required to change our provision for income taxes when the ultimate outcome of a tax position is agreed to by taxing authorities or otherwise effectively settled.

In the U.S., the IRA was signed into law on August 16, 2022.

We do not currently expect the IRA to have a material impact on our Consolidated Financial Statements.

Defined Benefit Plans

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Two of the most significant assumptions are the expected long-term rate of return on plan assets and the discount rate.

Our weighted average rates used were:

Our weighted average rates used for determining net periodic pension cost were:

For Fiscal Years Ended

March 31, 2026 March 31, 2025

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The assumption for the expected long-term rate of return on plan assets is impacted by the expected asset mix of the plan;

judgments regarding the correlation between historical excess returns and future excess returns and expected investment expenses.

judgments regarding the correlation between historical and future outperformance due to active management of the investments and expected investment expenses.

The discount rate assumption is based on current market rates for high-quality, fixed income debt instruments with maturities similar to the expected duration of the benefit payment period.

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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-K

Item 7. Management’s Discussion and Analysis