DXC Technology reports mixed Q1 2026 results: order growth contrasts with revenue decline
Published on October 15, 2025
In its financial disclosure for the first quarter of fiscal year 2026, DXC Technology (NYSE: DXC) reported a complex performance marked by a notable rise in new orders alongside a decline in revenue. The IT services provider revealed on July 31, 2025, that despite ongoing challenges affecting its top line, it continues to strengthen its order book, signaling potential future stability.
Key Financial Highlights
DXC’s Q1 results showed a 14% year-on-year increase in orders, marking the company’s third straight quarter of double-digit bookings growth. This positive trend in orders contrasts with a 4.3% organic revenue decrease, falling within the company’s forecasted range of a 4.0% to 5.5% decline.
The company’s shares closed at €13.22 on the announcement day, reflecting a modest gain of 0.72%. Over the past 52 weeks, DXC’s stock price has experienced significant volatility, trading between €12.24 and €24.83. Profitability measures revealed encouraging signs despite revenue pressures. DXC delivered an adjusted EBIT margin of 6.8%, comfortably inside its guidance band of 6.0% to 7.0%. Additionally, the non-GAAP diluted earnings per share (EPS) of €0.68 exceeded analysts’ expectations, topping the forecast range of €0.55 to €0.65. This robust earnings performance points to effective cost management amid the revenue headwinds.
Order Intake and Outlook
The expanding order intake is a notable bright spot. After increases of 27% and 21% in the two prior quarters, a 14% surge in Q1 orders underscores robust demand. The company’s book-to-bill ratio, a metric comparing orders received to revenue recognized, rose to 1.06 for the trailing twelve months, up from 0.88 one year ago. This improvement suggests a pipeline that may help stabilize or lift revenue in upcoming quarters.
Segment Performance Analysis
DXC Technology has recently restructured its reporting into three distinct segments:
- Consulting and Engineering Services (CES)
- Global Infrastructure Services (GIS)
- Insurance Software and Services (Insurance)
Revenue and order trends varied by division:
- Insurance: The sole segment to achieve organic revenue growth, increasing 3.6% year-over-year, though new orders declined 19%.
- CES: Contributed 39% of total revenue but faced a 4.4% revenue decrease despite a sharp 32% increase in orders. The segment maintains a healthy book-to-bill ratio of 1.2.
- GIS: The largest segment accounting for 51% of revenues, experienced a 5.7% fall in organic revenue alongside modest 4% growth in bookings.
Strategic Focus on Generative AI
DXC has signaled its commitment to leveraging generative artificial intelligence (GenAI) as a core growth driver. The company was recognized by Gartner as an “Emerging Leader” in its Magic Quadrant for AI Consulting and Implementation Services, fortifying its position in this rapidly evolving sector.
Investment in AI capabilities is substantial. Over 50,000 engineers at DXC have been trained in GenAI technologies, with 92% of teams certified as AI-ready. President and CEO Raul Fernandez emphasized AI’s transformative impact, noting that “AI is redefining every business process and customer interaction.”
In leadership updates, DXC appointed Ramnath Venkataraman as President of CES, bringing extensive expertise expected to bolster growth in consulting and engineering offerings.
Despite short-term revenue challenges, DXC Technology’s strong order momentum and strategic positioning in AI signal potential for recovery and growth in future periods. Investors and industry watchers will be closely monitoring the company’s capability to translate its growing order book into sustained revenue gains while maintaining profitability.
