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DXC Technology (NYSE: DXC) is a technology solutions company that provides mission -critical (IT) services that are transforming businesses. With its workforce of over 130,000 in 70 countries, DXC services companies in many industries. Some of the company’s enterprise stack includes Data Analytics and Engineering, Enterprise Application and Modernization, Cloud Services, IT Security, and Outsourcing. DXC Technology is a leading Fortune 500 global technology service provider and enjoys solid partnerships with several high -value companies and a large group of customers around the world.
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Formed in April 2017 through the merger of CSC (Computer Sciences Corporation) and (HPE) (Hewlett Packard Enterprise), DXC Technology recorded quarterly sequential revenue generation in the previous financial year as the company started the current financial year with a strong partnership with Lloyd’s and London Insurance Market to transform its paper-based and analogy operation into a digital and automated operating system. The IT solutions company headquartered in Ashburn, Virginia, stands on a solid foundation. DXC Technology has maintained financially healthy over the past financial year, and its recent growth is a pointer to a bullish signal in the med-term.
Performance Overview
FY 2021 witnessed the continuation of DXC’s strategic transformation. In the past financial year, DXC Technology has streamlined its strategic change, cleaned up its financial status, strengthened the company for profitable FY 2022, and set it up for long-term growth. DXC Technology underwent a steady financial and operational change before the company’s management believed it was a profitable future. The company was able to lower its operating costs and reduce its debt profile from over $ 5 billion at the beginning of Q3 FY 2020 to $ 1.35 billion by the end of Q4 FY 2021. DXC is also reducing its real estate footprint by of increasing the percentage of remote staff and use a more virtual method of operation. DXC Technology had a strong start to the last financial year, where the company achieved a book-to-bill ratio of 1.2x, which is healthy for the company’s growth. The company recorded revenue of $ 4.5 billion in Q1 2021 and a positive sales growth of 2.26%. However, revenue was $ 300 million less than the company’s revenue for the same quarter in 2020, which was $ 4.8 billion. However, the DXC report for Q1 2021 is a testament to the company’s stability after the COVID 19 pandemic and the result of its partnership with Saber Retail Intelligence to use the technology solution to redefine the global travel industry, which is a significant indicator of the company’s ability to forge strategic partnerships for its long -term purpose.
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In Q2 2021, DXC Technology Company continued to grow its cost optimizations with cumulative revenue of $ 4.5 billion and a book-to-bill ratio of 1.1x, with half of the bookings being new bookings and half was renewed. However, this figure is also slightly lower than realized in Q2 2020. DXC recorded $ 4.8 billion in Q2 2020, which is $ 287 million higher than Q2 2021. However, the company recorded 50% new bookings which was significant. in its expansion. Furthermore, DXC recorded $ 4.288 billion in aggregate revenue in Q3 2021, which is $ 732 million less than in Q3 2020 ($ 5.021 billion). However, the company has a book-to-bill ratio of 1.13x, making it the third quarter in a row with 1x book-to-bill bookings. Moreover, DXC paid $ 3.5 billion in debt repayments in the quarter under review. In Q4 2021, DXC recorded $ 4.39 billion in consolidated revenue and a book-to-bill ratio of 1.08x with 53% new bookings and 47% renewals.
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By the end of FY 2021, DXC Technology had achieved $ 550 million in cost savings and paid $ 6.5 billion in debt repayment to guarantee a healthy balance. A total revenue of $ 17.7 billion was achieved for FY 2021 and a total revenue of $ 3.6 billion.
Aggregates In FY 2021
DXC Technology began the 2021 financial year with enthusiasm and determination to increase revenue flow and expand through strategic partnerships. The company is now set to capitalize on the advantages of the insurance market by developing advanced tech and processing software for insurance companies. This is one of the tech company’s strategic plans to consolidate its benefits into 2020. On March 7, 2022, DXC Technology announced the appointment of Raymond August as President, Insurance Software and Business Process Solutions. Because of the importance of his role, Raymond will report directly to CEO Mike Salvino. Raymond will also use his position and expertise as a veteran in the technology industry and his years of experience in the insurance industry to develop software for banks and horizontal business process services (BPS).
Notably, DXC Technology has signed a multi-year agreement with Lloyd’s to transform the London Insurance Market. The London Insurance Market is the largest insurance center in the world, with 7.6% of the global commercial insurance market. This provides an exceptional capital opportunity for DXC to expand its operations and increase its revenue as the London Insurance Market is worth more than $ 100 billion and has more than 47,000 employees.
Furthermore, DXC Technology has also expanded its partnership with ServiceNow, an American software company based in California. Both companies have partnered with DXC Platform X, a smart automated platform to help identify, prevent and address issues before they occur within IT estates. This product and partnership will deliver a new marketplace and revenue stream for DXC. Continuing, DXC Technology has been selected as the Master System Integrator for Western Sydney International Airport. The airport, which is set to open in 2026 and is valued at $ 5.3 billion, is another significant revenue and long -term partnership opportunity for DXC. DXC was tasked to develop its foundational technology platforms in preparation for its opening and subsequent operations.
In another development, in February 2022, DXC signed a Multi-year agreement with the University of Newcastle to manage the University’s Campus Solution, which includes database management, Amazon Web Service, and Middleware Support. With over 37,000 students and more than 1000 academic staff, this deal gives DXC the authority to manage the University’s IT infrastructure in its entirety. Undoubtedly, a deal of that size would greatly stabilize DXC repositioning.
Outlook for the future
DXC Technology as a mission-critical IT services provider, has been in a position of restructuring and expansion for the past two years. Although founded in 2017, the company has achieved a milestone within the IT industry. The Ashburn company has many high value companies as customers and has partnerships with many multinational corporations.
It’s very clear that DXC Technology has solid fundamentals, and the metrics surrounding the company make it bullish. With the successful completion of its strategic repositioning and the partnerships it has acquired in just six years of existence, there is no doubt that this is a good bet for savvy investors. It is interesting to note that many hedge funds and institutional investors have taken long positions in DXC. A closer look at form 13F in Q3 and Q4 2021 shows how hedge funds have bullish sentiment in the company. Glenview Capital is the largest of these shareholders of DXC Technology, with a stake worth $ 188.3 million. Furthermore, other hedge funds added to their positions in the last quarter of 2021 include Point72 with $ 48 million and TwinBeech Capital with $ 5.6 million. The combination of various key factors, including the company’s various strategic plans and partnerships to strengthen its operational efficiency, makes DXC a solid choice that investors may want to add to their portfolios.