Global systems integrator and solution provider DXC Technology on Wednesday made a bullish case for its future, citing growth in key components of its business and the continued fall of reductions in others.
Ashburn, Va.-Based DXC, formed in 2017 by merging former CSC solution provider and Hewlett Packard Enterprise’s Enterprise Services division, is seeking growth by removing itself in non -core parts of its business while providing a mixed message about potential future acquisitions.
Mike Salvino, DXC president and CEO, told financial analysts Wednesday at the company’s quarterly financial conference call that DXC is moving forward on what he calls a “transformation journey.”
[Related: DXC Technology’s Most Highly Compensated Executives In 2021]
In the third quarter of fiscal 2022, which ended Dec. 31, DXC increased its head count by approximately 3 percent and increased project employment by 13 percent, Salvino said.
“We continue to see our people-first approach and our virtual-first model resonate in the market and assist us in our recruitment efforts. … In addition, I am pleased with how we continue to serve for our people through the COVID pandemic. It is because of all these points that our attrition to DXC has become stable and it remains below the industry average, ”he said.
The growth strategy for DXC, which is ranked No. 4 on CRN’s Solution Provider 500 list, calls for greater operation of systems critical to its customers ’mission especially through its Global Infrastructure Services, or GIS, business, and ultimately get new jobs from those customers, Salvino said.
“Operating these mission-critical systems builds trust with our customers,” he said. “This approach is becoming more successful because we are able to win more jobs from our customers in both GIS and GBS. [Global Business Services], and our revenues are clearly not declining. … In other words, leveraging the trust we build with our customers by running their mission-critical systems is how we consolidate our revenues and set ourselves up for growth. ”
DXC is also investing in growth, as seen by the expansion of its relationship with ServiceNow announced last month, Salvino said.
“We use our proprietary technology called Platform X, which is a data-driven, intelligent automation platform that helps us identify, prevent and address issues before they happen in the cloud and on-prem IT estate of our customers. … We believe that the ServiceNow partnership will help us realize a unique opportunity to drive growth in the enterprise service management market due to our capabilities in Platform X, ”he said.
DXC is also on a cost optimization push, which includes selling some of its noncore businesses, Salvino said.
“Managing our costs includes taking portfolio shaping initiatives,” he said. “We have identified businesses with approximately $ 500 million in revenues that are not strategic and will not help us grow. Selling these businesses will improve our organic revenue growth and our overall margin. We look forward to it. to sell these businesses to result in an additional $ 500 million in proceeds over the next 12 months.
In the DXC investor presentation, the company stressed that it will not temporarily engage in acquisitions. When asked by an analyst about whether that really means no acquisitions, Salvino replied that DXC is focused on building a solid foundation and that there is work to be done ,. He also said that looking at the company’s business prospects, it feels the best use of cash in the next 20 months is to return it to shareholders.
“And we’re not going to say never,” he said. “I know there’s a big red X on that slide, but we’re looking at things all the time, and if we think it’s the right thing to do, and we can fully take it as part of our growth agenda, then we really ‘will do. “
In the first two hours of after-hours trading, DXC shares rose approximately 2.7 percent to $ 31.52 per share. That compares to a 10 cent drop in share prices on the trading day.
For its third fiscal quarter in 2022, DXC reported total revenue of $ 4.09 billion, down approximately 4.6 percent from the $ 4.29 billion the company reported for the third quarter of its finances in 2021.
That’s $ 10 million less than analysts expected, according to Seeking Alpha.
Net revenue on a GAAP basis reached $ 102 million, or 38 cents per share, a substantial decrease from $ 1.10 billion, or $ 4.29 per share, the company reported for the same period last year. On a non-GAAP basis, DXC reported earnings of 92 cents per share, up from last year’s 84 cents per share. Analysts are expecting 91 cents per share, according to Seeking Alpha.
On a business segment basis, DXC reported revenue of $ 1.95 billion from its Global Business Services business, up 1.3 percent compared to last year. That business had revenue of $ 315 million, up 15.4 percent from last year. Its revenue in Global Infrastructure Services dropped 9.5 percent to $ 2.14 billion. Revenue for the business, however, rose 15.9 percent to $ 102 million.
When DXC’s revenue was broken down by technology, the company reported third fiscal 2022 analytics and engineering revenue of $ 545 million, up from last year’s $ 462 million; application revenue of $ 1.27 billion, up from $ 1.13 billion; business process services revenue of $ 116 million, down from $ 128 million; cloud and security revenue of $ 471 million, down from $ 543 million; IT outsourcing revenue of $ 1.11 billion, down from $ 1.14 billion; and modern workplace revenue of $ 561 million, down from $ 676 million.
DXC expects fourth fiscal 2022 revenue of $ 4.11 billion to $ 4.15 billion, which is 1.2 percent to 1.7 percent lower than last year’s revenue. The company also expects non -GAAP revenues of 98 cents to $ 1.03 per share.
For all fiscal year 2022, the company lowered its previously offered revenue guidance to $ 16.4 billion, which will be 2.2 percent to 2.3 percent lower than fiscal 2021. Non -GAAP revenues are expected to be $ 3.64 to $ 3.69 per share on a non-GAAP basis.
.