DXC Technology Reports Second Quarter Fiscal 2021 Results.
'We delivered strong second quarter results as the 'new DXC', exceeding our revenue and non-GAAP diluted EPS targets. We also improved margins sequentially, and achieved a book-to-bill of 1.1x. We are making good progress on the three key areas of our transformation journey, which are: focus on customers, optimize costs, and seize the market,' said
'We recently closed the sale of our
Financial Highlights - Second Quarter Fiscal 2021
Revenue in the second quarter was
Net loss was
Non-GAAP net income was
Diluted earnings per share was
Net cash provided by operating activities was
Adjusted free cash flow was
Financial Information by Segment
Global Business Services (GBS)
GBS bookings for the quarter totaled
GBS revenue was
In constant currency, GBS revenues decreased 3.4% year-over-year and increased 0.5% sequentially.
GBS profit margin in the quarter was 14.1%, an increase of 4.2% vs. the prior quarter. Year-over-year, margins were down 1.6%, reflecting prior terminations and price-downs along with customer settlements that were actioned in the quarter, offset by the timing of cost take out initiatives.
Global Infrastructure Services (GIS)
GIS bookings for the quarter was
GIS revenue was
In constant currency, GIS revenues decreased 11.6% year-over-year and decreased 4.0% sequentially.
GIS profit margin in the quarter was 1.6%, an increase of 0.6% vs. the prior quarter. Year-over-year, margins were down 7.9% due to the impact of prior terminations and price-downs along with customer settlements that were actioned in the quarter.
Earnings
EBIT and adjusted EBIT in the quarter were
Diluted EPS and non-GAAP diluted EPS were
Cash Flow
Net cash provided by operating activities was
Earnings Conference Call and Webcast
A replay of the conference call will be available from approximately two hours after the conclusion of the call until
About
Forward-Looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute 'forward-looking statements.' These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the recent outbreak of the novel coronavirus ('COVID-19') pandemic and the impact of varying private and governmental responses that affect our customers, employees, vendors and the economies and communities where they operate. For a written description of these factors, see the section titled 'Risk Factors' in DXC's Annual Report on Form 10-K for the fiscal year ended
About Non-GAAP Measures
In an effort to provide investors with supplemental financial information, in addition to the preliminary and unaudited financial information presented on a GAAP basis, we have also disclosed in this press release preliminary non-GAAP information including: constant currency, earnings before interest and taxes ('EBIT'), adjusted EBIT, adjusted EBIT margin, adjusted free cash flow, and non-GAAP results including non-GAAP income from continuing operations before taxes, non-GAAP income from continuing operations and non-GAAP EPS from continuing operations.
We present these non-GAAP financial measures of performance which are derived from the statements of operations of DXC. These non-GAAP financial measures include earnings before interest and taxes ('EBIT'), EBIT margin, adjusted EBIT, adjusted EBIT margin, non-GAAP income before income taxes, non-GAAP net income, non-GAAP EPS and adjusted free cash flow.
We present these non-GAAP financial measures to provide investors with meaningful supplemental financial information, in addition to the financial information presented on a GAAP basis. Non-GAAP financial measures exclude certain items from GAAP results which DXC management believes are not indicative of core operating performance. DXC management believes these non-GAAP measures allow investors to better understand the financial performance of DXC exclusive of the impacts of corporate-wide strategic decisions. DXC management believes that adjusting for these items provides investors with additional measures to evaluate the financial performance of our core business operations on a comparable basis from period to period. DXC management believes the non-GAAP measures provided are also considered important measures by financial analysts covering DXC, as equity research analysts continue to publish estimates and research notes based on our non-GAAP commentary, including our guidance around diluted non-GAAP EPS targets.
Non-GAAP financial measures exclude certain items from GAAP results which DXC management believes are not indicative of operating performance such as the amortization of acquired intangible assets and transaction, separation and integration-related costs.
Incremental amortization of intangible assets acquired through business combinations may result in a significant difference in period over period amortization expense on a GAAP basis. We exclude amortization of certain acquired intangible assets as these non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Although DXC management excludes amortization of acquired intangible assets, primarily customer related intangible assets from its non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and support revenue generation. Any future transactions may result in a change to the acquired intangible asset balances and associated amortization expense.
There are limitations to the use of the non-GAAP financial measures presented in this report. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Additionally, other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes between companies.
Selected references are made on a 'constant currency basis' so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby providing comparisons of operating performance from period to period. Financial results on a 'constant currency basis' are non-GAAP measures calculated by translating current period activity into
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