DXC Technology Company (NYSE:DXC) Q3 2023 Earnings Call Transcript

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Mike Salvino: Okay. So look, in terms of the visibility, there’s nothing better than seeing that that revenue being stable. So we’re not fighting a lot of the challenges around customers, around terminations around that sort of stuff. That’s why I give you all the NPS number each quarter, which again is at 27. And we’re doing that on the back of also continuing to expand our margins. So when I look at that stability, that means step one should be completed, meaning we’re not going backwards anymore. So now it’s time to go forward. So we feel pretty comfortable that the revenues will be stable. Love the fact that that book to bill came in at 1.34x, we didn’t deplete the pipeline. I expect to continue momentum into Q4 and you start stacking up a few more quarters and Ash when I think we’re going to be right where we wanted to be. So that’s how I would answer that question.

Ashwin Shirvaikar: Great. Thank you.

Mike Salvino: Brent, next question.

Operator: Your next question is from the line of Bryan Keane with Deutsche Bank. Your line is open.

Mike Salvino: Hey, Bryan.

Bryan Keane: Hey, guys. How you doing? I kind of had a follow up on that one on Ashwin’s question there. Because I guess in its history, Mike, DXC had trouble getting to that inflection point. And we’ve heard it from multiple management teams over the years that we’re going to see the inflection point and it just has never come. Maybe you can just talk about

Mike Salvino: You’ve never heard that from me. So the fact that I’m mouthing that is a pretty big deal.

Bryan Keane: Yes, and that’s what I’m trying to get at here because it feels a little more real this time. Because in it’s history it hasn’t been able to do it. But it sounds like maybe with fixing the troubled contracts and fixing the mix of business, that we’re finally at a point that the visibility is strong enough that you feel confident this can be a positive organic growth, not only next year, but just from years to come.

Mike Salvino: Yes. I mean, Bryan, look, here’s what I see. Again, we went €“ we focused on putting 15 in for a reason, okay? And you guys can see all the adjustments that Ken and I talk about in terms of FX and disposition and so forth. But when you look at 23, the biggest thing we will have achieved is customers that count on us, stable revenue that is not declining and the change of mix. We’re almost at 50%, which is all stuff that when Ken talked about how we envisioned the business two years ago, this is where we wanted to be. So the reason why we kept saying that, hey, we’re also guiding towards a fourth quarter at about the same revenue, that’s a clear indication that as we flip to next year, if we continue to keep the book to bill, and when I look at book to bill, again, I know we had a great quarter, 1.34x.

But the trailing 12 month book to bill is what I’m looking at that 1.06x that increased that’s good stuff. The other thing that’s good stuff is literally looking at the individual offerings. Okay? So if I go to the businesses first, GBS and GIS. GBS grew for the seven consecutive quarter. The point too, there was a tough compare there. We did do a perpetual software sale of about $36 million last quarter. I totally expect that business to be back up around 3% in Q4. Then when you look at our strategy for GIS, it’s awesome. The fact that we are literally taking our time with these deals, the deals are out there. I can now stop talking about them. We could show you guys the results. $800 million is a big basket of deals at better economics. So when I talk about the clarity and the excitement at DXC, you’re leaning into what you should feel now because I meant what I said.

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