DXC Technology Co

Previous wording

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 third quarter and first nine months of fiscal 2026 and our financial condition as of December 31, 2025. The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and accompanying notes.

Current wording

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 2027 and our financial condition as of June 30, 2026. The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and accompanying notes.

Previous wording

The following discussion includes a comparison of our results of operations and liquidity and capital resources for the third quarters and first nine 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.

Current wording

The following discussion includes a comparison of our results of operations and liquidity and capital resources for the first quarters of fiscal 2027 and fiscal 2026. References are made throughout to the numbered Notes to the Condensed Consolidated Financial Statements (“Notes”) in this Quarterly Report on Form 10-Q.

Previous wording

Key metrics for the third quarter of fiscal 2026 compared to the third 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.”

Current wording

Key revenue, profitability and cash flow metrics for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 are included below. Organic revenue, adjusted earnings before income taxes, and adjusted diluted earnings per share are non-GAAP financial measures. For more information see “Non-GAAP Financial Measures.”

Previous wording

•Diluted earnings per share of $0.61, compared to $0.31 in the same period a year ago; adjusted diluted earnings per share of $0.96, compared to $0.92 in the same period a year ago;

Current wording

•Diluted earnings per share of $0.73, compared to $0.09 in the same period a year ago; adjusted diluted earnings per share of $0.40, compared to $0.68 in the same period a year ago;

Previous wording

•Year-to-date fiscal 2026 cash generated from operations was $1,009 million, less capital expenditures of $406 million, resulted in free cash flow of $603 million, compared to free cash flow of $576 million in the in the prior-year;

Current wording

•Cash generated from operations was $418 million, less capital expenditures of $104 million, resulted in free cash flow of $314 million, compared to free cash flow of $97 million in the prior-year period. Free cash flow in fiscal 2027 includes cash proceeds of $214 million related to the litigation judgment obtained against TCS, as discussed further in Note 18 - “Commitments and Contingencies”;

Previous wording

•Book-to-bill ratio (contract awards divided by quarterly revenue) of 1.12x, compared to 1.33x in the prior-year period.

Current wording

•Book-to-bill ratio (contract awards divided by quarterly revenue) of 0.99x, compared to 0.90x during fiscal 2026.

Previous wording

Results of Operations for the Third Quarter and First Nine Months of Fiscal 2026 and Fiscal 2025

Current wording

Results of Operations for the Three Months Ended June 30, 2026 and June 30, 2025

Previous wording

For the third quarter of fiscal 2026, our total revenue was $3.2 billion, a decrease of $31 million or 1.0%, 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 3.3% favorable foreign currency exchange rate impact. Organic revenue growth is a non-GAAP measure. For more information, see "Non-GAAP Financial Measures."

Current wording

For the first quarter of fiscal 2027, our total revenue was $3.0 billion, a decrease of $160 million or 5.1%, compared to the same period a year ago. The decrease against the comparative period includes a 6.7% decline in organic revenue partially offset by a 1.6% favorable foreign currency exchange rate impact. Organic revenue growth is a non-GAAP measure. For more information, see "Non-GAAP Financial Measures".

Previous wording

Depreciation and amortization was $283 million for the third quarter of fiscal 2026, a decrease of $37 million (-11.6%) compared to the prior-year period. Depreciation expense decreased by $17 million due to lower average net property and equipment balances. Amortization expense decreased by $20 million due to lower transition and transformation contract cost balances and lower software amortization.

Current wording

Depreciation and amortization was $267 million for the first quarter of fiscal 2027, a decrease of $37 million (-12.2%) compared to the prior-year period. Depreciation expense decreased by $12 million due to lower average net property and equipment balances. Amortization expense decreased by $25 million due to lower software amortization and transition and transformation contract cost balances.

Previous wording

During fiscal 2026, management approved global cost savings initiatives designed to better align our facility and data center requirements. During the third quarter and first nine months of fiscal 2026, total restructuring costs recorded, net of reversals, were $20 million and $92 million, respectively, a decrease of $23 million (-53.5%) and $32 million (-25.8%), respectively, as compared to the prior-year periods.

Current wording

During fiscal 2027, 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 $26 million for the first quarter of fiscal 2027, an $11 million decrease (-29.7%) compared to the prior-year period.

Previous wording

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.

Current wording

Other 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).

Previous wording

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

Current wording

The components of Other income, net were as follows:

Previous wording

•higher pension income (+$2 million and +$8 million) - increase in net periodic pension income, primarily due to changes in expected returns on assets and other actuarial assumptions;

Current wording

•pension income ($2 million) - increase in net periodic pension income, primarily due to changes in expected returns on assets and other actuarial assumptions;

Previous wording

•foreign currency impact (-$1 million and +$7 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;

Current wording

•foreign currency impact ($4 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;

Previous wording

•other miscellaneous items increased by $11 million and decreased by $10 million for the third quarter and first nine months, respectively. In the third quarter comparison (+$11 million), the prior year period included an impairment loss. For the nine months ended comparison (-$10 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 an impairment loss recognized in the third quarter of fiscal 2025 and a gain on the sale of a strategic investment in the second quarter of fiscal 2025.

Current wording

•other miscellaneous items ($12 million) - the Company recognized a $14 million impairment of goodwill in the first quarter of fiscal 2026 related to the change in operating segments.

Previous wording

Our effective tax rate (“ETR”) was 35.7% and 51.9% for the three months ended December 31, 2025, and December 31, 2024, respectively, and 54.5% and 54.5% for the nine months ended December 31, 2025, and December 31, 2024, respectively. For the three months ended December 31, 2025, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, and tax benefits resulting from the expiration of the statute of limitations relating to uncertain tax positions. For the nine months ended December 31, 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 December 31, 2024, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, and the foreign tax credit. For the nine months ended December 31, 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.

Current wording

Our effective tax rate (“ETR”) was 47.7% and 73.1% for the first quarter of fiscal 2027 and the first quarter of fiscal 2026, respectively. For the first quarter of fiscal 2027, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, and a reduction in a deferred tax asset for stock based compensation. 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.

Previous wording

Diluted EPS for the third quarter and first nine months of fiscal 2026 was $0.61 and $0.88, respectively, an increase of $0.30 and $0.20 compared with the prior-year periods primarily due to higher net income attributable to DXC common stockholders and a lower weighted average share count from the Company’s share repurchases.

Current wording

Diluted EPS for the first quarter of fiscal 2027 was $0.73, compared to $0.09 in the first quarter of fiscal 2026. The increase in earnings per share was primarily due to the Company's increase in net income attributable to DXC common stockholders and a lower weighted average share count from the Company’s share repurchases.

Previous wording

Diluted EPS for the third quarter of fiscal 2026 includes $0.09 per share of restructuring costs, $0.40 per share of amortization of acquired intangible assets, $(0.19) per share of merger related indemnification costs, $0.01 per share of debt extinguishment costs, $0.05 per share of pension and OPEB actuarial and settlement losses, and $(0.01) per share of tax adjustments.

Current wording

Diluted EPS for the first quarter of fiscal 2027 includes $0.08 per share of restructuring costs, $0.28 per share of amortization of acquired intangible assets, $(0.69) per share of gain on litigation award, and $(0.01) per share of gains on dispositions.

Previous wording

•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).

Current wording

•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. 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).

Previous wording

As of December 31, 2025, our cash and cash equivalents (“cash”) were $1.7 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.

Current wording

As of June 30, 2026, our cash and cash equivalents (“cash”) were $2.0 billion, of which $0.7 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.

Previous wording

We have $0.2 billion in cash held by foreign subsidiaries used for local operations that is subject to country-specific limitations which may restrict or result in increased costs in the repatriation of these funds. In addition, other practical considerations may limit our use of consolidated cash. This includes cash of $0.2 billion held by majority-owned consolidated subsidiaries where third-parties or public shareholders hold minority interests.

Current wording

We have $0.1 billion in cash held by foreign subsidiaries used for local operations that is subject to country-specific limitations, which may restrict or result in increased costs in the repatriation of these funds. In addition, other practical considerations may limit our use of consolidated cash. This includes cash of $0.2 billion held by majority-owned consolidated subsidiaries where third-parties or public shareholders hold minority interests.

Previous wording

Net cash provided by operating activities was $1,009 million and $1,083 million, respectively, during the first nine months of fiscal 2026 and fiscal 2025, reflecting a year-over year decrease of $74 million. Operating cash flow against the comparative period included:

Current wording

Net cash provided by operating activities was $418 million and $186 million, respectively, during the first quarters of fiscal 2027 and fiscal 2026, reflecting a year-over-year increase of $232 million. The increase was primarily due to:

Previous wording

•an increase in net income, net of adjustments of $60 million.

Current wording

•a $147 million favorable change in net income, net of adjustments, primarily driven by the $214 million TCS litigation judgment; and

Previous wording

Net cash used in investing activities was $365 million and $343 million, respectively, during the first nine months of fiscal 2026 and fiscal 2025, reflecting a year-over-year increase of $22 million. The change against the comparative period was primarily due to:

Current wording

Net cash used in investing activities was $99 million and $77 million, respectively, during the first quarters of fiscal 2027 and fiscal 2026, reflecting a year-over-year change of $22 million. The change was primarily due to:

Previous wording

Net cash used in financing activities was $674 million and $257 million, respectively, during the first nine months of fiscal 2026 and fiscal 2025, reflecting a year-over-year increase of $417 million. The change against the comparative period was primarily due to:

Current wording

Net cash used in financing activities was $120 million and $110 million, respectively, during the first quarters of fiscal 2027 and fiscal 2026, reflecting a year-over-year change of $10 million. The change was primarily due to:

Previous wording

•a $169 million increase in cash used for share repurchases and related taxes paid on net share settlements; and

Current wording

•a $21 million increase in share repurchase activity and related taxes paid on net share settlements; partially offset by

Previous wording

•an $88 million decrease in payments on capital leases and borrowings for asset financing, as the Company continues reducing the volume of these financing arrangements.

Current wording

•an $11 million decrease in payments on capital leases and borrowings for asset financing, as the Company continues reducing the volume of these financing arrangements.

Previous wording

The $252 million decrease in total debt during the first nine months of fiscal 2026 was primarily attributable to principal payments on long-term debt, net of proceeds from our bond issuance in fiscal 2026 (see Note 9 - "Debt”), decreases in finance leases 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.

Current wording

The $48 million decrease in total debt during the first quarter of fiscal 2027 was driven by cash payments for finance leases and borrowings for asset financing exceeding new additions and the impact of the foreign currency exchange rate of U.S. dollar against the Euro.

Previous wording

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

Current wording

We were in compliance with all financial covenants associated with our borrowings as of June 30, 2026 and June 30, 2025.

Previous wording

Our total liquidity of $4.7 billion as of December 31, 2025, includes $1.7 billion of cash and cash equivalents and $3.0 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.

Current wording

Our total liquidity of $5.0 billion as of June 30, 2026, includes $2.0 billion of cash and cash equivalents and $3.0 billion of available borrowings under our revolving credit facility.

Previous wording

For further information see “Cash Commitments” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

Current wording

There have been no material changes, outside the ordinary course of business, to our cash commitments since March 31, 2026. For further information see “Cash Commitments” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.