DXC Technology Aktie

Please welcome to the stage Vice President, Investor Relations, Roger Sachs.

Good morning, good morning, and welcome. I'm Roger Sachs from Investor Relations at DXC. And on behalf of all of our global team members, I'd like to welcome those who are here with us in New York and those who are listening to our live webcast to our 2026 Investor Day. We know it's been a few years since DXC last met with this community in a forum such as this. So we thank you very, very much for coming down today to spend some time with us.

We have a great program planned. First up, you're going to hear from Raul, Rob and Holly, who is our Strategy and Innovation Officer. They'll take you through our strategy. They'll talk to you about how we innovate and bring new solutions to market and also provide a longer-term financial framework for your consideration. Next up, you will hear from each of our segment leaders, and they're going to walk you through the steps that they are taking to drive their businesses forward. And then we'll wrap up the day with a Q&A session to answer all of your questions.

And for those of you who are here with us in New York, after the Q&A, we strongly encourage you to spend some time in networking with our leadership and also taking a stop at some of our demonstration sections. So you can see how some of our new AI-based fast-track solutions create value for our clients. And some of those we're going to talk about during the presentations today as well.

Now before we do begin our presentations, let me remind you that during today's discussions, there will be some forward-looking statements. And as you know, these statements include uncertainties and risks that are detailed in our SEC documents. We'll also be referencing certain non-GAAP financial metrics and reconciliations to the most comparable GAAP related measures that'll be found in the appendix of our materials today, and that's also going to be posted to the IR section of our website. And before we begin the presentations, let's start the day with a quick video. Thank you.

[Presentation]

Thank you so much. Good morning, everybody. And way to go Knicks. Come on. Let's give it up for the Knicks. Incredible. What a comeback. It's such a pleasure to be here today. There's a tremendous amount of content that we've been working on for over 2 years, 2.5 years since I started. And I am so excited to highlight the great work of great people that have brought their talents and created some -- what I feel some innovative product breakouts for our customers and some opportunities, some great opportunities for what makes us run every day, which is the great talent that we have in this company.

This morning, we made an announcement, and I'm going to just highlight a couple of them, and then I'm going to invite my friend, Michael from Anthropic up here to talk a little bit about what we're doing together. But the release this morning announced that DXC is a global premier partner in the cloud partner network. that we have a workforce plan to train and certify forward deployed engineers in a very structured way, and we're working together to launch the first session to teach them, train them, certify them in July. And that really, we are taking what is authentic and organic in the use of Claude and Claude Code.

As you go to these different areas, you'll see that we've been developing innovative AI solutions with an exponential impact that Claude allows us to have in coding, in testing and deploying. As an example, DXC OASIS, which is a joint Claude product that we've got and that we'll talk a little bit about here with Anthropic, could not have been built in the time that we built it if we did not have the 10x exponential throughput in coding. So I am super excited, and I want to welcome to the stage, Michael, but let's hear a little bit about Michael in the opening here.

[Presentation]

Thank you so much, Michael. We're so excited for this partnership.

Same here. Very excited about what's transpired and what's going to transpire between our companies.

We're -- we talked a little bit earlier this week about how authentic and natural the relationship was because we began working on many of these products -- with your products without having a corporate affiliation just using the great code that was available and the great models that were available. I think that's a great foundation for an authentic relationship that can scale and scale very quickly. So I just would love to hear your thoughts about how we came together and how you think about services partners.

Yes. I mean it's a really great phrase to use about the authenticity of how this all came together. So Raul and I did meet this week. And what's special about that is so much happened from the ground up prior to this meeting, right? This isn't a top-down initiative that we've got to figure out from an executive level and pushing down. This was a bottoms-up initiative built by your team in conjunction with us, built on Claude, which is amazing in and of itself. And then what I love most about the story is that it is real live production.

The partner ecosystem is a massive opportunity for us. As a company with 4,000 employees and an exponential amount of revenue, scale is not going to be something where we are going to continue to add massive amount of headcount into our organization. We're going to continue to grow at a pace that we need to. But the partner ecosystem is going to be one that gives us a little of the exponential growth. And there are obviously a lot of partners that are spending time trying to work with us.

What you guys did that is different is just you built in and you have live production over 50 customers on OASIS. And so when that happens naturally, that just makes the relationship and what we can do together for our joint customers that much more meaningful. And it's going to cause our organization to lean in to Oasis and to partnering with DXC a lot more because of the fact that we're doing this together, and we have success behind it.

A lot of -- there's a lot of conversations right now, hey, we want to do something, can we announce it? And I always talk about -- I don't like hollow press releases. I like announcements that are made based on success and value, and that's why we're really excited about DXC because we have that day 1, and it's infused already.

So 57 joint customers today, you see a few logos and growing. It's a great go-to-market, which, again, came authentically from working together for many, many years. One of the keys to success when I think about how to be successful in this era, it's speed, agility, talent and tokens. Those are like kind of key ingredients here. Talent is huge. It's huge for us. We're a people business where people create the value that we bring to our customers. Can you just talk a little bit about the forward deployed engineer certification process and how you're helping us scale in that way?

Yes. I mean, for us to scale, we need our partners to scale. So we've got to be a part of that. And we have a pretty extensive and exhaustive program where we are making sure that DXC forward deployed engineers and others are just certified properly. And that opens up a couple of things. We feel comfortable that we have the right people out there speaking on our behalf and understand what success looks like and how to do things, and that gives us a comfort zone. And at the same time, we get to build relationships together at the engineering level, the people really doing the work are building relationships at that level. So that will start to permeate into more customer success. As the comfort level grows, the more certifications that we have, the closer the organizations start to partner and enable, we're going to just see a lot more success as a result.

One of the things that I've noticed in working with customers, our teams, the teams that our customers have deployed to reimagine their workflows is we work and the team here will talk about the highly regulated industries that we operate in. So we can bring technology, but they have to be married with a deep understanding of the industry-specific domains and specific workflows that are critical and can't fail. I mean we're for banks, insurance companies, airlines where you have to have 99.9% availability and uptime across everything. That is an area where I think we have a lot of upside together where we can bring the best of our knowledge of the industry, our knowledge of the solution as is and then deliver a new solution with our joint technology.

One of the things that we'll talk about a little bit later is the stunning statistics. You'll see a slide in the Oasis presentation, where we take some tasks that we have that traditionally have taken a number of hours, in some cases, a number of days, and they're normal tasks. And as we've now rolled out Oasis, you've got things that used to take 18 hours taking 6 minutes, things that used to take 2 hours taking 6 seconds. It's an unbelievable amount of throughput. Can you just talk a little bit about how you've seen it? And you have an incredible distinguished career, bringing great technology partners to enterprises. But how is this moment different?

Well, there's a couple of things I want to pull on there. The one thing that you mentioned is building Oasis from the ground up with Claude and how that helped accelerate that. And that is extremely powerful. What I also love is DXC as an organization is going to be rolling out Claude to the over 120,000 employees, where you will see and the employees will begin to see how Claude can augment the work that they do. So productivity levels across the organization, no matter what role you're in, whether you're developing and engineering or you're just knowledge workers, the lift from that, I think, will also be magical for DXC.

I think when -- what I also love about this, I've spent over 25 years in technology. My business right now is every single industry. My core has always been in regulated spaces. I've spent over 25 years with technology and financial services firms. I spent about 7 doing health care and life sciences, a little over 4 with public sector. So I understand how important that regulated space is safety, security being paramount. And it's core for us, too, because it is a massive total addressable market. And I think the focus on safety and security dovetails very well into our focus on responsible, safe and secure AI.

And so understanding what regulated customers need, understanding your focus and knowledge on the regulated industries, the relationship that you have, the success that you've built powered by and helping with us who are really focused on making sure that AI as it's infused across the enterprises is done the right way. I think that's a magical combination that we are going to unlock together. We are building that. We have industry experts, and we have a lot of focus on our regulated industries, but it doesn't take away the context that you have, the relationships that you have, the knowledge that you have. That powerful combination is just going to be magical for the regulated space going forward.

No, that's fantastic. How have you seen teams change? You've deployed enterprise software for decades now, and things are different. There are no more junior players. Everyone can have a superpower with AI. Just talk to -- as someone that's been looking at how things are deployed and how things are being deployed today, I would just love some thoughts on what's different.

What's really amazing is how quickly the employees are adopting AI tools. Everybody is using it in their day-to-day life, right? ChatGPT changed the world in 2022. Everybody started diving in. You got different levels of using ChatGPT, Claude, whatever your personal consumer. And so knowing that, it's just when you come into the workforce, you're just like, I need that. And then when you integrate it with the context of the enterprise data and third-party data that is relevant, what you find is when they really dive in and they start to build skills and plug-ins that make them more productive, they dive in and they understand we -- the companies that are really going wall-to-wall are understanding that putting the tools in the hands of all your employees, no matter what the role is, it demystifies it.

It's not here to replace your job. It's to augment the work that you do. And what you're seeing is a lot more productive employees. And with productive employees, a lot can happen, growth can happen. You can put them against more productive projects. So you're seeing that whole evolution going on. So the adoption rate has been really staggering.

Even in the regulated space, we all know, right, very thoughtful in the approach to adopt technology, making sure that we clear all the regulatory things that we need to, but the ability to dive in and dive in quick, knowing security is taken care of and understanding that the tools are going to help everybody, whether you're a dev or an engineer or a knowledge worker across any business, that's been really, really interesting to see. It's an adoption rate that I haven't seen in any of my previous stops. And so it's pretty exciting.

I think the other thing that I've noticed is as you think about the new inventions and innovations, the bar has been lowered as a risk taker, right, as a risk taker in an organization. As an entrepreneur that's starting a company, you can literally think about it, vibe code a prototype, take it to launch, bring a site up to sell it, all within a few days or hours.

Ideation can come from anywhere in your organization. We've all worked at these large organizations, very hierarchical, where there's a lot of different layers and you're an entry-level person or you've been there a couple of years. And how do you kind of stand out from 120,000 employees. But now when the tools are in the hands of everybody, you watch organizations that are larger flatten, ideas come from anywhere. They're empowered to do it. One of our best people at Anthropic started as a start-up AE. He had really just gotten in, and he built some amazing things that we said, wait, we have to take what he's doing at this level and elevate him.

And so now he runs enablement for us. He helps everybody onboard, like the ability to make impact in the organization now can come from anywhere and can come quickly and can be shared and built into skills and plug-ins that permeate through an organization very quickly to make that organization as productive as possible.

No, it's incredible. I think it's the largest unlock in modern human history, and it's very democratic, small-d democratic in the sense that everyone has access to it. And we are so excited to be partners and to take our authentic natural relationship to a new level. So thank you for joining us this morning.

And thank you, Raul. I got to say the partnership started very authentically, bottoms up. We formalized it into the next generation last night. What I appreciate most is that you all use that NICs game as a compelling event to formalize it before tip-off. So thank you. Thank you. We are really excited about everything.

Thanks, Michael. Thanks for joining us. Thank you, Michael. Rob is joining us now on stage. Thank you. Thanks, Rob.

[Presentation]

Okay. Thank you, Raul, and good morning, everyone, and thank you for being here. We really appreciate your time. So I joined DXC 3 years -- for those of you who don't know me, I joined 3 years ago as CFO. Before that with IBM, I had many financial roles and general management roles during my career and I'm thrilled to be here. I'm going to start the morning by grounding us in our financial targets and what we released today were a 3-year view of the business. So you'll see that in all the materials and in my presentation. And that takes us through the fiscal '29 time period.

Then I'll pass it over to the business leaders who are going to give you the how in more detail segment by segment. But first, I want to start with the foundation of our story, of the DXC story. It's a large -- we are a large diversified company with real scale, a broad geographic mix and we span multiple revenue streams, business lines and very importantly, industries. The diversity matters because it gives us relevance across a wide range of technology environments, and it also gives our portfolio resilience.

At our core, we're a company with deep technical skills across mission-critical domains, deep customer knowledge and relationships built by running critical business processes over many years. And very importantly, we have a very strong track record of delivering high-quality services at scale. Another strong attribute are the platforms we own, and you'll hear more about that throughout the day in each of our 3 businesses. The attributes have created a meaningful competitive advantage, which we're currently -- we have been and we will continue to build on.

So the organization. We're organized into 3 businesses, which also represent our reportable segments as they should. Later today, you'll hear more in depth from each of the 3 business leaders, but a quick summary introduction. GIS stands for Global Infrastructure Services. It includes our cloud and ITO business, workplace, IT security and horizontal business process outsourcing. CES stands for our Consulting and Engineering Services business, includes our consulting practices, our application services and our engineering services. And finally, our Insurance Software and Services business is an industry vertical focused on 3 main lines of business in the insurance industry: Property and Casualty, Life and Annuity and Commercial Specialty.

So a little bit of history. It's important to recognize what has occurred in the past. So for a period of time, too much of our offering portfolio, our skill base and our sales focus were aligned to parts of the market that were structurally declining. We saw off-premise -- on-premise rather, infrastructure shifting to the cloud. We saw traditional workplace delivery shift toward automation, custom applications were moving to enterprise applications and parts of the insurance BPS business were shifting to software.

That market transition created persistent headwinds to our top line. Revenues have declined and prior customer terminations related to these shifts continue to affect reported performance well beyond the point when those initial decisions were made. So our historical revenue trend is largely, not entirely, but largely the result of a changing technology landscape and us being overexposed to the parts of the market that were shrinking. It was clear to us that we needed to charter a new path. We needed to stabilize and grow -- in order to stabilize and grow the company into the future.

So about 2 years ago, we began a significant refresh of both leadership, talent in the company, adding both operational and technical skills to the leadership team. We began to invest in developing new offerings squarely focused on where the market was going. We built -- and all of those new offerings are built on a foundation of existing capabilities in all 3 business segments, and that's an important point. We've also taken a new approach to product development, which we call Fast Track, which you've heard. It allows us to move faster and more nimbly in the development, testing and rollout of new products.

Our internal incubator called LabX is another way we explore new opportunities outside of our traditional segments. And you'll learn more about all of the new AI-enabled offerings later today from Raul and the leadership team. And around the room, we have demo stations, and I encourage you to stay at the end of the day and soak in the demos. They're really good. Also of note, we've invested in our relationships with partners and third-party advisers and in our brand and marketing, positioning DXC as a technology partner of the future. And we're starting to see positive feedback from that positioning.

Our strategic deal pipeline is growing as a result of being invited to participate in deals that in the past, we had not been considered for, and that's very encouraging. So I think it's important to mention that this transition has been enabled by our financial discipline, and we've maintained that discipline throughout the last few years. We've held profit margins steady through disciplined cost reductions. We've generated strong free cash flows with $2.2 billion over the last 3 years, and we've strengthened our balance sheet, reducing net debt by $1.1 billion over that time frame.

Protecting the financial core of the company has enabled us to invest in building the new DXC. I now want to walk you through our financial projections for the future, confirming our full year fiscal '27 guidance and how we expect our new modernized offerings to boost revenue and profitability in the future in both our core offerings and new product introductions.

I'll take you through each of the 3 segments, and then we'll cover DXC in total. First, with GIS. As we discussed in our recent earnings call, we expect mid-single-digit revenue declines in fiscal '27, with performance improving in the second half of the year. There are 2 factors driving the improvement that I just mentioned. First, it's important to understand the in-year revenue dynamics of our GIS business. 75% of our revenue in any given year typically comes from the opening backlog. Those are deals that we signed in prior years flowing through the P&L in the current year, which means only 1/4 of our in-year revenues are from new bookings in the current year.

In fiscal '27, our revenue from backlog dynamic, which we can see, significantly improves in the second half of the year, driven by contracts which terminated long ago and are winding down in our portfolio. So that headwind is largely behind us as we enter the second half of this year. Secondly, as I just mentioned, we're being invited to more opportunities, and we have a strong first half pipeline of large deals that we expect to deliver in-year revenue, especially in the back half of the year.

The execution of these deals, combined with the backlog dynamics will allow us to significantly improve performance through the second half of the year, in particular, in the fourth quarter. So finally, we're assuming that the macro headwinds that we faced in smaller discretionary projects continues in fiscal 2027, although it's an opportunity for further improvement. As we look forward beyond '27, we expect to see the benefits of the product investments we've made and will continue to make in the GIS portfolio.

We recently introduced DXC OASIS, our AI-enabled service delivery platform, which will deliver to our customers what we believe are market-leading capabilities. And Chris and Lisa will cover the attributes of OASIS a little later. Financially, it's important to note that the base OASIS offering is being rolled out to our current installed base, delivering significant improved capabilities as part of their current contracts. We believe this is going to strengthen our relationships, helping us have even stronger retention and customer loyalty and open the doors to further opportunities in those accounts, and that's very important to us.

We'll also have OASIS in all of our technical solutions for new bids going forward, which we believe will increase our win rates. And we're seeing some results in the near term on that as well. And we're not going to stop there. We have new product capability, which will be introduced for our workplace offerings and our security offerings in the near future. The result is a longer-term improved revenue core for GIS in fiscal '29 and beyond.

Now in addition, we're going to bring to market OASIS-tiered upgrades, separately priced SaaS offerings that we believe will add incremental revenue, bringing the total GIS revenue targets to flat or a little better over the plan horizon. Okay. So now let's transition to CES. And first, I'll take you through the '27 projections, and then we'll look into how the new offerings will help us return to growth in CES. Similar to GIS, we see backlog improvements that favorably impact our fiscal '27 revenue performance in CES.

The improvements were driven by strong bookings and enterprise application project sales in fiscal '26. Now in CES, the revenue from opening backlog was 75% in GIS, it's 60% in CES, just to give you some perspective. And as we discussed in recent earnings calls, the remaining in-year revenue generation continues to be impacted by macro headwinds in the short-term discretionary custom application product area, very similar to the headwinds we experienced throughout 2026. And because of that, we expect revenue performance to be similar to fiscal '26 for CES with mid-single-digit declines. And again, if the macro environment strengthens, then we expect it's an upside opportunity to that projection.

Going forward, we're targeting improvement to the core business of CES driven by 2 primary factors. First, we'll continue to execute on a growth plan in engineering services, which is based on proprietary IP and platform assets in the automotive and manufacturing industries. Secondly, we will improve performance in our secular growth engines and strengthen strategic partnerships in both enterprise applications, data and AI. And Ramnath is going to give you the details of those actions in his presentations.

So these actions are expected to drive the core to low-single-digit growth in fiscal '29. And in addition, we've been making investments in GrowthX which is a product suite currently focused on the banking industry, which will begin to add high-value revenues to our portfolio. And our current view, albeit early, is that this will add 2 points of growth, incremental growth to CES in the plan horizon. And you can see that on the chart. And you're going to hear more about CoreIgnite, which is an important element of GrowthX later as well.

Okay. Finally, ISB. Our insurance team has been working very hard over the last few years modernizing our traditional on-prem software portfolio for the cloud, including newly introduced AI smart apps on the cloud software stack. So let's take the insurance portfolio into 2 -- in 2 pieces. First is our traditional business process services and our on-prem heritage license software. Second is our SaaS offerings, which include our Horizon cloud-based software, our Assure Gateway and the newly introduced AI-based smart apps. Ray is going to give you more detail on all of that.

Looking forward, we project stability in BPS and license software with revenue flat to low-single-digit growth. And we expect the SaaS offerings to drive growth at a 60% CGR over the plan horizon. So that brings total insurance targeted revenue growth to 5% to 7% over the plan horizon. Now the common thread across all 3 of the segments is that we're modernizing our portfolio.

We've been making investments. We're modernizing the portfolio. They're now coming -- those modernized portfolio assets are now coming to market, and that will stabilize the core base of business. And then we're introducing new higher-value offerings that will drive accelerated growth. And our AI capabilities are the foundation of that accelerated growth.

Okay. Now shifting to cost takeout. An important element of our 3-year plan is implementation of our AI capabilities internally with DXC as customer zero. Through these efforts, we're targeting reduced spending in the range of $1 billion to $1.5 billion with agentic productivity improvements in our delivery operations and in our support organizations. Examples of deployment include OASIS and Agentic SOC in our GIS business and our Converge platform in CES. And you'll hear more about both from Chris and Ramnath.

We also plan to use the best of our in-house and third-party AI tools to support to -- apply to our support organization to drive efficiencies. The spending reductions will be an important element of our margin improvements and pricing competitiveness in an increasingly AI-based market. So let me pull all 3 together and show you the total company financial profile during the plan horizon. As I communicated in the May earnings call, our expectation is that revenue will be in the range of minus 3% to minus 5% in fiscal '27.

Today, we're confirming the guide for the year with the dynamics that we covered within each business segment. Based on future trajectories of the segments, our core will be in the flat to low single-digit range by fiscal '29. And when adding the new product content and AI-enabled growth we discussed, total DXC revenue performance will increase by approximately 2 points of growth. As we build and nurture our portfolio of LabX solutions, we'll have the opportunity to add incremental revenue streams to this projection.

With this improved revenue performance, combined with our customer zero strategy of deploying AI capability internally, we're going to drive margin improvement from our current guidance for fiscal '27, which is 6% to 7% to an acceleration of 8% to 10% within the plan horizon. The margin improvement will come from both improvements within the business units and structural improvements within our support functions. And as we continue to evaluate our processes with an Agentic AI lens, there'll be opportunity for continuous improvement from those levels.

So with the achievement of the revenue and margin ranges and with continued investments in the business, we're targeting stable free cash flows throughout the strategic plan horizon, generating approximately $1.8 billion over the 3-year period. When it comes to our capital allocation, we remain consistent with our 3 priorities. First, we'll continue to invest in the business, including attracting and keeping talent with the right technical skills, developing the next generation of product offerings across our portfolio and improving -- continue to improve our sales and marketing capabilities.

Secondly, we'll continue to reduce our debt levels and maintain our investment-grade credit ratios. And lastly, as we've demonstrated last year, we'll continue to return capital to our shareholders as our free cash flow allows in the form of share repurchases. So as we step back, I'll leave you with 4 key points. First, this is a company built on a solid foundation. We have deep technical skills, strong industry expertise and a track record of delivering high-quality mission-critical services. Secondly, we're building on that foundation with new AI-enabled offerings that strengthen our core businesses and deepen our competitive moats.

Third, we have a clear and credible path to stabilizing the business and generating growth as these initiatives scale. And lastly, we're doing all of this with disciplined execution, generating consistent free cash flows and maintaining a strong financial profile. And taken together, we believe this puts DXC on a path to growth in the future. Now I've shown you the trajectory. And for the rest of the morning, our business leaders will take you through the how, showing you more about the products and the growth plans behind them. And I encourage you to stay until the end. We have a Q&A session, and you could pepper us with all of your great questions. So with that, I thank you, and I'm going to turn it back over to Raul.

Thanks, Rob. Appreciate it. What you're seeing today is over 2.5 years in the making. And part of what's key to our success going forward beyond today are the people that have joined us in this journey in that 2.5-year period. I want to bring Holly Grant up to the stage so we can roll her introduction video so that we can have a chat about some of our most internal initiatives.

[Presentation]

Great. Holly? Thank you. Welcome. All right. Good. Good, good, good. Holly is running LabX. And as many of you know, about 9 months in, I realized that we had kind of 2 hurdles or 2 ways of approaching reaccelerating growth into DXC. One was fixing kind of our core part of our business. And one was trying to take high-impact, high-velocity ideas and turn them into product solutions and offerings with key partners.

And as we decided what was the most efficient way to do that, we came up with both an exponential framework in terms of how we do it and then an internal fast-track capability on how we're able to make decisions at a much quicker pace than we did in the past. Those are key ingredients for success. Holly, you've been an incredible leader building what we've launched today. So can you talk a little bit about talent? Talent is so important for all of our companies and how talent today needs to continue to transform itself and how this partnership gives us an incredible advantage around talent internally and then taking that talent jointly to our customers with Anthropic.

Absolutely. So LabX is essentially a place where we can make new bets on AI with small high-impact teams. And there's a model that we're using, which is a pod. So we think about it as a triad of practitioners who are amplified by AI and pointed at a common customer objective. So in our case, we look a lot at time to revenue. We look at reduced time to resolution. So those are some key outcomes that we're driving as DXC for our customers today and key outcomes that we can drive with these high-impact practitioner teams. So there's both the actual technical prowess. Can we have builders who can actually use the tools that are available, but there's also a very important cultural element in this time.

So humility, curiosity, adaptability, we're seeing a tremendous pace in terms of the rate of change in everything that we're focused on. And so we need people who are really clear about what they know and what they don't know and who are excited to be part of that future. And so all of LabX and all of DXC is really reorienting around that profile of talent, and we think it has tremendous impact. So it's an exciting time to be here.

That's awesome. One of the things that we've talked a lot about is how this technology is moving at a speed that we've never seen it before. And we've had the opportunity to work together in other companies, early computer vision, machine learning companies as well. you have been working on a project, which you'll see over there, where multimodal, super complex where you're bringing images and voice and data and you need to curate it in a very special way. I think it's been fascinating to see how that technology, how models have leapfrogged each other over time. Can you talk a little bit about that?

Yes. So we have been working in an area that we call knowledge personification. And this is all about making bodies of work conversational, real-time, personalized for the end user. And a part of that is actually how we create digital representations of historical persons, living persons or even fictional branded characters and bring them to life. And so if you think about avatar rendering, for example, that's one part of the stack that allows us to do this.

So over a 9-month period that we've been really looking at and investing in this platform, we saw 50 instances of change, and that represents new launches or integrations or end-of-life moments. And so if you think about that, it's essentially one event every 5 to 6 days, which is wild.

And that's where our integrator roots and this composable architecture that we work with as a principle is really important because we want to be using the state-of-the-art technologies to make sure we can deliver those outcomes to our customers, and that allows us to actually move at pace and not be locked into one tool because I have actually a visual here that I'll bring up, and it's -- we saw the end-of-life moment with Sora, which if we were only using Sora as part of our Avatar rendering, we would have been dead in the water and had to transition very quickly, but we've been able to be really nimble in our approach. And so it's a fun time. It's a wild time to be doing this work, but this is what energizes our team.

I think one of the things that you said that really highlights the experience as technology practitioners is that you've got to always be in it to win it. You also have to be experimenting every day. I don't believe there are any failures in any AI pilots because there are lessons learned, there are experiences even if they didn't get to scale. In this example, these multimodal models literally were jumping over each other. So I think you started with Runway ML, which is kind of this very, very high-end model for almost on-demand moviemaking, if you will.

And then Sora came along and all of a sudden, everybody is like, wow, and then I think in the last iteration, you're using CDAN. So those are huge models that you had to adapt to. But as a technologist, as an architect that understands these parts are moving, that skill set, which is uniquely ours in the sense of we build things for a living, that skill set came to life in your journey.

Yes. And for us what's really important is the delivery of an outcome to a customer at the end of the day. So we will work with the state-of-the-art tooling to make that happen and measure our success in terms of are we moving the needle for those clients. So...

That's wonderful. Well, thank you for your leadership. Thank you for joining. We're going to take a quick break, and then we're going to bring the rest of the team on. So appreciate you. Please stand by. Thank you.

[Break]

Okay. Welcome back, everybody. I hope you had a good break. We're going to carry on with our presentations. We're now going to -- for the next 90 minutes or so, we're going to hear from our 3 segment leaders and a couple of their chief lieutenants. And again, they're going to walk you through the steps they're taking to drive the business forward. You'll also hear a little bit more detail about some of our new Fast Track initiatives. So first up will be Ramnath and Sandeep from CES, followed by Ray August, who runs our Insurance business. And then you're going to hear from Chris and Lisa on GIS.

And before we have Ramnath come up, a couple of quick housekeeping items. After Ray's presentation, we are going to take a second break. When we return, then Chris and Lisa will continue. And that will follow by Raul coming back on stage for a few wrap-up comments, and then we'll close the day with our Q&A. So with that, let me introduce Ramnath.

[Presentation]

Thank you. Thank you very much. I always find it really exciting when somebody can pronounce my last name, and he did a pretty good job. This building -- first of all, I thought the Anthropic announcement was absolutely brilliant. It was a great way to start the day, and it brought in a lot of energy and what the future holds for us. Let me -- if you indulge me, I want to tell you a little bit of a story on why I'm here. And this building has a lot to do with it. I don't know if I can see our Chief Revenue Officer, he's somewhere in the room. He actually met me for the first time in this building almost a year back, asking me to talk about DXC. And I was hugely reluctant.

I came in with a 3-decade history of working in an organization that drives large-scale growth at pace, at scale. And in my mind, why would I go and do something very different in an organization that has a very different trajectory. And I don't see T.R. in the room. He's our Chief -- there he is. You can't miss him. He's close to 7 feet tall. He met me, he made a compelling argument and he asked me to come and meet Raul, who's our CEO. You heard from him. He paints a compelling vision. You heard him talk about it on stage. He did a -- from somebody who was not really convinced about DXC to being extremely convinced about wanting to be part of this growth story, it took him 45 minutes.

It took you 45 minutes, Raul. And it was a vision that he painted. He comes with a completely different mindset, disruptive mindset, investment-oriented, thinking about change, and he's introduced a number of different things, including bringing people like me in to drive this change. So I felt very, very confident. This building continues to remain very close to my heart. But in the last 11 months, since I joined, the conviction that we've got a great story has only been reinforced.

We've got some great ingredients, and we've made a number of changes in the last 11 months that I'm going to take you through, which convinces me that we are on the right trajectory to get this business on to an extraordinarily good growth path, and that's what I'm going to take you through. If you think about what is CES, it's a very awkward term, Consulting and Engineering Services. A very good way to demystify this is how many of you travel on United? If you take a look at the app, that app was designed, built and maintained and run by DXC.

So if you think about DXC, what the CES does, that's what CES does. Identifies the requirement, converts that into a specific functional design, converts that functional design into a technical design and then help build that system and run it for all of you to use. So that's one example. How many of you use an infotainment system in a car? Very high chance that it was built by somebody who's in CES, a DXC engineer. So that's what Consulting and Engineering Services is.

So just a little bit of demystify what consulting and engineering is, advising clients on what good looks like, what their clients need and helping build, engineer and create those systems that generates the value. That's CES in a little bit of a nutshell. Let me take you through what our numbers look like. Rob took you through these numbers. It's a pretty large organization, $5 billion, about 40% of DXC, has the muscle to grow very, very quickly if we put in all the right ingredients in place.

It's got a diverse distributed book of business that gives a lot of resilience. And the secret sauce of DXC, and that's what I've realized after having met 25 of our largest clients. These are client names, but I've probably met close to 80, 100 clients within those organizations. I've met a lot of our analysts. Some of you are in the room, I've met you multiple times. I've met all the analysts that actually rate DXC as a service provider. I've met up with all the third-party advisers and most importantly, I've met up with all of our ecosystem partners. You heard Anthropic on stage, but I've also met up with all of our other ecosystem partners that help drive our business.

And one thing has come out very, very clearly. DXC has the execution muscle that is absolutely unparalleled. You heard Rob talk about it. That's the strength that DXC has built its business on for the last 40 years. What it lacks is creating the growth muscle on top of the execution muscle, and we've laid a number of foundational elements in place that's going to help drive that. So scale business, diversified extraordinarily strong growth muscle, fantastic client portfolio, very good recognition from everybody about our execution strength. We are building on top of that, making a bunch of changes to create the engine that's going to energize the growth agenda going forward.

Now why do I believe that this is the moment for DXC? And you might ask, okay, it's not done well until now. What has changed? And I don't know how many of you follow Formula One. The last race was in Monaco. There was a very big restart. Did anybody watch the Monaco Grand Prix? Yes. So there was a pretty large restart, right? It reset the race and a lot of things changed. Now think about our business like that, and AI is that reset. And if DXC was middle of the pack Formula One car that was getting passed, AI has put us at the front of the pack, not in all places, in a very specific set of areas, and I'm going to take you through what those areas are and why I believe that this is the moment for DXC.

There are specific industry segments. I'll take you through that and some specific platform-based. You heard Rob talk about it, platform-based services that no other player in this industry can replicate that we are extraordinarily well positioned. And you heard Anthropic on stage, AI is going to be that reset point that's going to help us really drive growth back.

What are the industries? Let me start with banking. Some of the largest banks, and you're going to hear from my friend, Sandeep, come in and talk about that in a little more detail, but a summary highlight. Some of the largest banks in the world run on DXC software. We have a 45-year heritage of working with some of the most complex systems that drive the banking software industry, gives us a huge amount of advantage because we are present as a significant player running their core banking platform. You're going to hear Ray come in and talk, and he'll speak a lot more eloquently than I do.

We are absolutely a leader in the insurance industry. There is nobody better than DXC to come in and talk about whether it's personal lines or commercial lines. We have the access, we have the platform and we have the industry muscle and understanding of what it takes to succeed in this industry to drive growth, second industry. The third industry that we're very strong in 50 million cars, 50 million cars today on the road run on software built by DXC engineers.

There's almost no other engineering company that can stand up and say that. And we have the ability to drive significant differentiation in the automotive and discrete manufacturing industry. Another industry where we are very strong is -- and I'll use the word trust. If you go to any public sector government agency across the globe, we work with some of the largest, most complex governments across the globe. We are trusted. And if there's one word that you remember about DXC, trust is a big word, and that's a huge opportunity for us to use as we look at the AI-driven world going forward.

Likewise, in aerospace and defense, there is absolutely nobody better equipped because we are pretty much working with all the major aerospace and defense organizations across the globe. And the last piece that I'll talk to you about is airlines and including airlines, airports. If you open your phone and search for Perth Airport, we just announced yesterday. We didn't announce it. Perth Airport announced it of being the transformation partner for them on everything to do with modernizing their operations from advising to executing the applications.

And Chris is going to come and talk about what we're doing in the infrastructure space, and that's the strength of DXC. So these 6 industries lots of depth, not breadth, that's where we'll focus on. And we have the right to play in these industries and have the right credentials, assets and client base to be able to go and drive growth. Now if you think about what does DXC do in CES, how do we execute this work for our clients? You heard Rob talk about core part of the business.

Let me talk about the core. These are the offerings. The first part is AdvisoryX that tells our clients in the new world of AI, what good looks like. How do you generate the right ROI, returns on your investment and create the right set of initiatives that they need to invest on. And the AI-led application services is the place where we execute that for our clients. That's the largest part of our business. That constitutes the core that Rob spoke about. And we are putting in a number of different elements to reenergize the core, including the partnership that you heard with Anthropic and similar ones with others that's going to be leading-edge partners of tomorrow, along with building on the strong foundation that we have today.

The third part that I'm really excited about, which is a unique differentiator for DXC is our engineering capability, and I'll talk about that in a bit. We just launched last week DXC Engineering as a separate business to give it the right momentum, putting the right investments, the right leadership and make sure that we are getting that back to growth. That's a unique differentiator that pretty much no other competitor in this space can replicate. And the last piece, which Sandeep will cover, we have created an exponential organization within DXC to really drive the platform-led growth on the back of the banking software that we have, and he's coming with a mindset of driving exponential growth, and he's going to talk about that. So if you think about CES, industries and the building blocks that we execute for our clients, advice, AI-led application services, core differentiator with engineering and an exponential organization with GrowthX.

Now we're not doing all of this alone. You heard me talk about partners repeatedly. Again, we're doing it in depth, not breadth. We are selecting a few specific set of partners. And I have met with the CEOs of most of these partners, whether it's in the enterprise space, whether it's in the data space or whether it's in AI, we are picking and choosing specific partnerships and making sure that this is engineered for future growth. And all of this wrapped around with a proprietary platform that helps drive an agentic enterprise for our clients by bringing in best of breed from DXC, best of breed from our clients and best of breed from our ecosystem partners and help execute the agenda for them.

This -- I'm going to talk about that in a bit. So if you think about CES in a big picture, this is what CES is all about. Now I'm going to double-click on each one of these and take you through what this means. Let's talk about AdvisoryX. AdvisoryX is really the consulting business that you saw at the beginning of Rob's presentation that basically advises clients on what good looks like, works with the C-suite and really determines what should be their future road map.

Let me take 2 examples. One is working with the French railway network. There are 15,000 trains that run every day in France on an eco-friendly mobile network that is program managed, driven, run by DXC AdvisoryX teams. It takes a lot for you to understand what it takes to run those trains, work with the business and help program manage and execute. That's one good example. Second one, which is I spoke about trust and working with critical agencies across the world. With the German naval mission network, we are driving software-driven defense systems and working very closely with them.

Again, AdvisoryX requires an understanding of deep defense expertise, combine that with what's happening with software. All of you are familiar with the new world of defense. It's more and more driven by software. We are at the heart of making that difference. That's AdvisoryX in really being able to work with the business, diagnose and help execute at scale. Now we are packaging all of that in the industries that we have to create an asset that rapidly creates opportunities for driving AI-driven ROI, which is the diagnostic asset. And then as we build the right solutions, go and execute that at scale.

So if you think about AdvisoryX, this is high-end consulting work that works with the C-suite of our clients, tells them what good looks like, helps rapidly prototype and create the ROI for them and then execute it at scale. So that's AdvisoryX. It's a pretty unique business. Again, depth, not breadth, focused on specific industries with asset-driven ability to create a difference. So that's AdvisoryX.

Let me -- before I transition to the next section, which is the scale execution part, I'm going to have a video play from a client. And I want you to really focus on who that client is. His name is Matthias. He's the CFO, not the CIO, not the CTO, but he's the CFO of the organization of a multibillion-dollar organization, talking about how DXC helped deliver value. So if we can play the video, please.

[Presentation]

So if I was to summarize maybe 3 or 4 takeaways from that video. One, this is the CFO of the company. This is not the CIO. This is not the CTO. This is really the business leader standing up and talking about the value that DXC has delivered. Second, huge transformation with SAP, a very big ecosystem partner. Raul and I met up with the CEO of SAP, and we're working on specifically scaling each one of these components into a larger set of clients. And the third piece, towards the end, it's not just about the transformation, but also looking at opportunities in AI. That's where a partnership with Anthropic comes in. We're going to leverage that, build the use cases on the backbone that they have, which is the enterprise platform.

How do you leverage that data and create the right use cases that delivers rapid value for them. So there are 3 things that you take away from that: one, working with the business, strong functional business knowledge that we have; second, a huge partnership with SAP; and third, the future opportunity that it presents with AI and with the partnership that we've built with partners like Anthropic, what it means for the future because it gives us the access.

Now this is one story. I can give you 50 such stories where clients are standing up and talking about how DXC has helped them. My job is to package all of this, use my experience over the last 30 years, build a team that's going to help harness the potential and scale this 50x over because the opportunity exists, the capability exists, we are building the growth muscle, and it's well on its way.

Let me touch a little bit on the broader set of ecosystem partners. You saw the SAP story. We're being very deliberate on the enterprise side. We're working with 5 partners, not 20 partners, 5 partners. I work with the CEOs of each one of these companies, and we're building a joint go-to-market and what this means for us. Likewise, with data, not 20 partners, 3 partners with a lot of focus. And on the AI side, which is what I'm most excited about, you saw Anthropic, they came on stage, spoke with us, and I'm going to give you a little bit of flavor on where we are seeing traction with Anthropic already. We're doing something similar with Amazon, with Amazon Quick. We're working with Microsoft, and this is going to be the set that we work with as far as the AI engine is concerned.

All of these, I explained to you, how do you execute this at scale. Clients are getting a number of things thrown at them from different angles. There needs to be an orchestrator that brings all of these elements together, and that is Converge, our proprietary platform that takes agents that are built by our platform partners, agents that are built by our clients, agents that are built by us based on our 40 years of experience, combine all of that and rapidly execute. And we've now implemented Converge at 25 clients, and we are seeing both velocity improvement and efficiency gains, both. So it's a 50% to 80% velocity gain. You saw Michael talk about that on stage.

You saw Raul talk about that on stage, and we're getting some significant efficiency gains that makes my CFO very happy. So that's on the enterprise platform. So a little bit of color on Anthropic. It was an eye-popping moment for me when I saw what the art of the possible was. There is a team that we have that built -- all of us have put in questions in our Gen AI tool that we use. And every time we ask the question, it gives you a little bit of a slightly variant of an answer, right? It hallucinates a little bit.

Now clients can't afford that. My team went in and said, okay, how do we build an engine that's going to help sit on top of this and create a governance that's going to help clients execute this with confidence. What would have taken in my old world, number of people, not 1, not 2, probably upwards of 10, 12 people, a number of months. Using Claude code, the power of Claude code is phenomenal. Using Claude code, one of our engineers built an application that has now gone for patent filing. We're now talking with 3 clients on how to execute this in 2 days.

He built it in 2 days over the weekend alone, just one person. So that's the power of Claude code. And we're going to accelerate that using the partnership with Anthropic and making sure that we are taking this to clients. It's not just us. We're also delivering this for clients. And we've built scale. You heard Holly talk about FDEs and how we are building that capability. We've got a strong foundation on the back of which we're going to build this.

Let me spend a little bit of time on the last building block before I pass it on to Sandeep, is on engineering. It's probably the most well-kept secret of DXC that we need to unleash. I have launched DXC Engineering as a separate business last week. We are bringing in a huge amount of investments. We've got a software product in the automotive space that started with infotainment, which is expanding to autonomous driving. And in autonomous driving, we're doing a very exciting partnership with a company called Loxo.

And you can go and search it. It's a Swiss start-up. We're going to work in a financial stake. We're going to take a financial stake in that organization. If you think about autonomous driving, there is Level 1 and Level 2 autonomous driving. There is Level 3 and Level 4, which is yet to come. Right from inception, DXC engineers have been working on Level 1, Level 2, Level 3 and Level 4 autonomous driving. If you think about why is Ramnath saying there is software engineering and there is engineering, what's the difference? This is the difference.

If you do SDK testing, if you drive engineering capability with autonomous driving, it's a whole different unique skill set that DXC possesses. We have 11,000 engineers who are deeply skilled and ready for the next world of AI, and we are striking some exciting partnerships with partners like Loxo, who are the only provider licensed to do L4 autonomous driving in Switzerland and we're going to partner with them and bring that to the market and build it to scale.

So that's -- this is an exciting hidden part that we're going to continue to focus, and I'm expecting this to drive a very good chunk of the core part of the growth that Rob showed you in the numbers. The last part is GrowthX, which is really the platform-based business that we are scaling with a start-up mindset, and we've got a leader who's come from the start-up world. He's going to talk to you about it. There are 3 distinct components to this. All our clients are looking to modernize their legacy applications into the new world with AI.

We've built a platform, and we are taking that as a service. It's called modernization as a service. The second part is to take core banking and bring it into the new world. We've got Hogan, which is a core banking platform. And the third part is to build a new age application that's going to help monetize in the banking space. That's called CoreIgnite. Sandeep is going to cover one part of it, but there's more than one, and this is the exponential organization that's going to give us the additional growth that Rob showed you in his graph. With that, I'm going to pass the baton on to Sandeep to take you through CoreIgnite. Sandeep?

Good morning. Thank you. My name is Sandeep Bhanote, and I run GrowthX, as Ramnath had pointed out. I've got about 25 years of experience in building companies and building teams, particularly those teams at scale platforms for large enterprise organizations. I've been here for about 15 months. I'm one of the newest members of the DXC team, and I'm super proud to be here. So let's talk about enterprise banking at scale. So before I kind of get into it, I think it'd be good to kind of level set what core banking actually is. I'm sure many of you, if not all of you have actually been to a coffee shop, and I'm sure you've seen a little white payment device on the counter.

That's usually a Clover device or a Square device. Those devices are called point-of-sale systems. Those point-of-sale systems run the coffee shop, right? That processes their transactions, maybe manages their menus. It allows them to schedule employees. So it's the lifeline of that coffee shop. So what Clover or Square is to that coffee shop, we are that to an enterprise bank. So think about your relationship, your personal relationship with your bank. Think about your debit card, thinking about the checks you write, think about the money you receive, the money you send. That's got to flow through some system. That is us.

That's what we do for enterprise banks, and we've been doing that for the past 45 years across some of the largest banks in the world. So let's talk about the Hogan business. So it is a business that, unfortunately, for whatever reason, we didn't really spend any time with that business. We didn't really invest in that business. And as a result, we let that business kind of go by the wayside. It was really more of a BAU business, business as usual, really more maintenance mode.

So when I took over this business and my team and I, along with Brad, what we did was we started looking at some of our customers. We talked to -- first of all, we talked to all of our customers. And the first thing we did was listen and actually understand what they were trying to do, understand what their business objectives were, what their challenges were and process that. The result of that turned into a highly optimized version of the Hogan business. So we introduced operational discipline. We actually looked at how we deploy our enterprise teams. And what we also did was we actually put together a pretty robust and impactful product roadmap.

So I think the result of these 3 things is turning around a customer base that was once forgotten and now brought to the forefront and they're helping us innovate. So we're turning it around quite nicely. In fact, what I suggest you do is not listen to me, but take -- listen to my customer. So I'm going to play a video that highlights one of our customers, Nexi. They are probably one of the largest payment processors in Mainland Europe. And why don't we roll the tape?

[Presentation]

So I think what you heard -- you should have heard 3 things from this customer: one, they're happy; two, they're growing; and three, they're going to be adopting more of our capability. You heard them mention Hogan AI and some of our Gen AI capabilities. That's exactly right. And Nexi is not alone. We've got a cadre of customers that have all raised their hand and all saying the exact same thing. So let's actually talk about our product and our product roadmap and where we're going. I think what's happening is a lot of these traditional banks are facing a significant amount of pressure from fintechs that are raising ungodly amounts of money and they could innovate super fast.

These fintechs or these -- I should say, these financial services companies that are Hogan customers and non-Hogan customers have legacy cores that are in play. These legacy cores do a lot of work. But the problem with these legacy cores is that it's built on old mainframe systems. They don't have the agility that they need, which is the reason why we built CoreIgnite. CoreIgnite is a platform that is meant to work not only with Hogan customers, but also non-hogan customers that will create and activate brand-new revenue streams and opportunities for the bank, like having the bank participate in digital assets or being able to deliver agentic banking or even deliver new core modernization capabilities.

Now by doing that, by CoreIgnite unlocking that for the bank, what that inadvertently does is unlocks revenue streams for DXC. So what we're able to do here is unlock -- it's not a P x Q model anymore. It's a platform revenue model. It's all about scaling based on recurring revenue. It's all about scaling on transaction revenue. And the great news and the amazing thing about this is that we're not doing this alone. We're actually doing this with our growing list of ecosystem partners. So here's why this matters. So similar to if I was going to open up an e-commerce business and I was going to sign up on shopify.com as an e-commerce owner, what I would be able to do is log in and say, you know what, I need a new payment service provider. I need a new loyalty provider. I need a new omnichannel provider.

What that would enable me to do is look at Shopify's pre-vetted ecosystem of integrated partners, and I can activate that really easily to my e-commerce site. We're doing that exact same thing for banks. Banks that have been highly regulated and they've been very limited in their movement, we can now give them the agility of a start-up, but the product promise of stability of a financial services institution. Here's an example of what that looks like. So in this example, here's a simple payment flow where a traditional bank wants to offer a new capability, let's say, buy, sell, hold crypto to their installed base.

So in this example, consumer logs in through her banking portal. She sees an opportunity to actually buy, sell, hold crypto. So from her perspective, she's a winner because she is from the comfort and the trust of her bank, she's able to do something that she ordinarily wouldn't do. From a bank's perspective, phenomenal for the bank. I just offered a new product capability to my consumer base without ripping out my core. I'm staying true to who I am. I'm staying true to my legacy core or I should say, my stability in my regulated environment, but I'm able to offer a brand-new capability that didn't require a rip and replace.

We win because we're facilitating this entire transaction. We're bringing a cadre of brand-new ecosystem partners, and we're benefiting by generating transaction revenue. And of course, our ecosystem partner wins because they're now getting dedicated access of customers they ordinarily wouldn't get. So in the end, we are transforming. We got in our hands a legacy business that was handed to us. Nobody did anything with that business at all. We identified growth opportunities. We're turning this into a flywheel effect, and we're going to grow. So we have a whole vision on how we're going to grow with this business, and we have a whole amazing roadmap that's going to take us there. Thank you.

Thank you, Sandeep. That was great. As you heard, if there are 3 or 4 things that you take away from this session, which is 40% of DXC, a lot of our clients are going to spend money in this space. We are extraordinarily well positioned with a lot of focus, industry focus. We have the right ecosystem partnerships. We have made the right investments, including in talent like Sandeep, he's focusing -- he's saying things that I would never be able to do. We are unleashing the potential of him taking a product to the market and scaling this, and we are taking some specific bets. It's not just him. I've brought in a number of new leaders and there is a lot of goodness within the existing team.

We have harnessed the potential of the existing leaders by simplifying the operating model and creating the enabling mechanism to drive growth. And last but not the least, we've got the partnerships, including the partnership with the AI piece with Anthropic. We're doing that with Amazon Quick, building on top of what we have with enterprise partners and data partners. And it's well on its way with the right foundational elements to get this business to a very, very good growth trajectory. Thank you. I'll be around for questions, but that was my section.

[Presentation]

Well, good morning, everybody. I'm Ray August. I'm responsible for software and BPS at DXC. I have spent my career leading global technology businesses, but I've spent the last 3 years focused exclusively on the insurance industry. ISB provides a software that runs the brains of an insurance company. It could be the core systems that carriers use to process policies, process claims, bill their customers and most importantly, manage the risk of the insurance company itself. BPS is business process services. We don't just sell our software. In many cases, we run the entire insurance company's operations with both our people and the software that we create.

As a business, we have driven revenue growth, but we're now layering in AI to unlock new economics without ripping out the foundation of these insurance companies. ISB serves over 1,000 insurance companies. We do it with 21 of the top 25 insurers in the world, and these companies run on our overall software. We operate in 70 different countries, and we process over 1 billion insurance policies on behalf of all of our insurance companies. We do this with 15,000 people who have deep insurance domain knowledge, and they've been doing this in some cases, for many, many decades.

That experience has made us the largest insurance software and BPS provider in the world, and we measure that by both the revenue and the number of policies we have running on our system every day. We serve 3 different businesses in insurance: Life and Wealth; Commercial and Specialty; and Property and Casualty. Four years ago, we made a decision. We were primarily a services-led business, and we made the decision to pivot to recurring software, SaaS and AI revenue. The result is we've had 4 years of revenue growth and a significant growth in our recurring license and software revenue.

You'll also see that we have 150-plus customers running on our Assure platform utilizing AWS. That's very important now, but it's extremely important for where we're going into the future. Of the 3 segments that we serve, we are the industry's largest providers in 2 of those 3 segments. On the left, you see the Life and Wealth segments. We have 9 major software products. We process over 1 billion life policies for our customers. 1 in 10 life insurance policy written in the world is actually processed on a DXC insurance policy.

We serve 462 insurers in 70 different countries. We have deep and rich penetration in both North America and the APAC markets. Business process services in the U.S., we're paying out $11 billion in claims and processing $17 billion in premium annually for -- on behalf of our customers. If we were a life insurance company in the U.S., we would be the third largest life insurer in entire North America. London market on the right, is the large -- is a commercial and specialty center for us. We're the #1 producer in London market. We have 11 major software products.

In fact, 52% of all the broking transactions that occur in London Market actually starts in a DXC system. For background, London Market is a world center for complex insurance, products like aviation, marine, cyber and energy. London Market through the Lloyd's of London actually ensures the entire global economy. From a BPS perspective, we process all billings and claims for Lloyd's of London. That's $120 billion of transactions, which roughly equates to 2% of the GDP of all of the United Kingdom. In the 2 of the 3 segments we serve, -- we are #1 and nobody comes close.

This leadership has helped us create a competitive moat for 3 big reasons. Number one, it's the depth of our customer relationships. We're embedded in daily operations of these insurance companies. We are simply not just a vendor. We are a deep rich partner. Number two, the technology that we're handling and the complexity of that technology, we have competitors who have never had to solve that. We process multi-decade policies, cross-border regulatory stacks and claims workflows that nobody else can handle. And number three, it's a complex and very deep rich switching costs. Replacing a policy system of record is not an IT project. It's an existential risk for an insurance company. And this is why the average tenure of a DXC customer is well over 20 years.

One of the more interesting things about us in our overall business, we have over $1 billion in revenue from the 2 segments where we are the industry leader. If you look at our total revenue, we had $1.28 billion in FY '26 revenue. Americas, that's our largest region, well over 56% of our revenue. But we also have majority market share for both life customers in both the Americas as well as in Canada. EMEA, that business is anchored by our London Market business. APAC, that has our largest runway. It's our fastest-growing region by logo count, and it's also the place we're making the most significant investments in expanding distribution to take full advantage of that emerging market.

Our overall software leadership drives our BPS software. We are very unique in the software that we build is also the exact same software that we use in our BPS operation. And being our own largest user of our software creates deep insights into how we can improve it and make it more effective for all of our customers. You see we're #1 in Americas Life software. We're running -- also running with that exact same software, the largest life BPS in the Americas. We're #1 in commercial and Specialty. That software is also the exact same software we're using to process BPS for Lloyd's of London, the $120 billion I talked about earlier.

We're #1 in APAC Life software. So across the board, over 1 billion policies on DXC software, 50 years embedded in their core operations. But what I'm most excited about is the future and where this business is going. Agentic AI in the BPS operation drives significant cost efficiencies, expands margins and it delivers a very, very strong customer ROI into the future. But also ultimately, it's going to deliver a more effective BPS model by expanding our TAM and making it much more affordable for a broader audience.

The last 4 years for us has been a very significant journey. We took a business that was declining and turned it into a profitable grower. You see the total ISB growth of 5%. The line I want you to look at, though, is a shift from a services-led to recurring software AI-driven business, and it's showing up in our growth metrics. This is growing at 24%. Almost all this growth is converting our installed base to SaaS and license revenue and helping our existing base of customers on their monetization journey. We expect this growth to accelerate based on our already sold business and our current pipeline.

This is a key shift that is driving our overall growth. It's our stable base, the growth is coming from the higher-margin SaaS and license revenue into the future. I'd like to show you how this looks in action. Wilton Re is what we call a virtual insurance company. DXC provides the entire back-office operations for Wilton Re, policy billings and claims using both our software and our people. Their strategy is to acquire blocks of existing business from other carriers and absorb it into the DXC platform.

What they need from a software partner: number one, they need scalability to absorb whatever businesses they acquire; they need flexibility across all insurance policy types; and third, operational stability as they bring on large-scale operations, the ability to operate those in a very seamless and efficient fashion. Let's take a quick look.

[Presentation]

The Wilton Re story is very similar to many of the customers we have around the world. We have a 20-year relationship with them. As you heard, we've done 28 legacy conversions. We've migrated 2.5 million insurance policies on time, on budget, every single conversion. And from a Wilton Re perspective, with the partnership they've had with DXC, they grew from $1 million to $55 billion in AUM, all powered by the DXC partnership with ISB. So one of the questions I often get is how are you going to monetize AI on top of your installed base?

Well, the answer is Assure Smart Apps. Assure Smart Apps are focused, agentic and workflow-driven applications that help insurers move smarter and faster. There's 5 things to know about Smart Apps. Number one, it's powered by the insurer's existing policy system. There's no need to rip and replace those systems. In fact, it's not even required. Number two, it has insurance-specific workflows. It's not just simply generic AI bolted on to an insurance system, and that's where we leverage that deep rich domain knowledge we have across our organization. And under the hood, there's modular agentic orchestration agents, LLMs, guardrails, all working together to provide the information and the system to these insurers to allow them to enter the Agentic era.

It's also incremental modernization. Our customers can turn this on app by app, one workflow at a time at the speed that they want to operate in. And perhaps the most important, it's proven at scale by our over 500 BPS customers. We are customer zero. We run and optimize smart apps in our own BPS before we ship it to any of our customers. This is the overall architecture on how we monetize the base. At the bottom is our insurance layer. It's our foundation. It's both next-generation policy systems and our heritage systems. It's 1,000 customers large and it's the installed base that drives repeatable expansion pipeline. And this is a software today that powers the overall insurance industry.

In the middle layer, it's our platform layer. That's the Assure Digital Foundation. It's API, security, insurance services, cloud, SaaS. It's where our 150 customers run our overall operations. And this is a platform that extends our current customers' long-term investment. And at the top, it's Assure Smart Apps. These are insurance-specific agentic workflows. And since announcing this just a few months ago, we have very quickly from a standing start, amassed $100 million pipeline with over 100 different target customers. You see customers want AI that understands insurance, connects to their core systems and has been validated in production.

DXC is the only provider that does all 3 of those for our customers. With our market position and our installed base, this is going to create a very strong foundation of growth for us as we go into the future. So let's take a look at what this looks like in action. This demo is set in Klang Valley, Malaysia. And this is very intentional as APAC is our fastest-growing region. Let's take a look.

[Presentation]

What you just saw is our claims assistant smart app, the majority of it is written with Claude code, but very, very important, it's built on top of a current policy administration system that has been running literally for decades in our customers. It's the same data. It's the same workflows. It's just new technology on top of these existing systems, making for a very easy conversion path for our customers where they can take advantage of incremental modernization. Assure Smart Apps is led by Jenna Colman. Jenna is our global leader for this product, and she'll be available for demos and Q&As after this session. Well, DXC owns the control points of global insurance. Our installed base converts innovation into repeatable expansion, as you've seen every quarter in every single region.

Yes, we have a competitive moat that's 50 years in the making. But the most exciting part of it is we're shifting it to AI-driven SaaS economics. We have a very robust pipeline of $3 billion, as we discussed, $100 million of it in smart apps, and we have a proven track record of performing over 600 different conversions for our customers. As AI concentrates the value of the insurance operating layer, control of the system of record in highly regulated industries is very important. And this is going to transfer into recurring revenue and expanding margins plus higher quality revenue.

We're focused on our growth acceleration levers. Number one, proven agentic AI with our smart apps, transforming our entire installed base of over 1,000 customers, automating the life and wealth and commercial and specialty industries and driving geographic expansion, particularly into APAC. No one matches our depth from the installed base to our insurance back-office operations to running virtual insurance companies. We are extremely well positioned to transform the future of insurance. Thank you very much, and I'll see you during Q&A.

Thank you, Ray. Thank you, Ramnath. Thank you, Sandeep. As we said earlier, we're going to take another short break right now, get up and stretch your legs. There is coffee and snacks in the hallway. And for those that need, there is a restroom in the back of the room to your right. I'll see you in about 10 minutes, we'll hear from Chris and Lisa. Thank you.

[Break]

Hi, everyone. Let's wrap the day here with GIS. So as the video mentioned, my name is Chris, and I'm here to talk to you a little bit about the GIS business here at DXC. By way of personal background, I've been at DXC for several years now running this business for a little over 2. But I have the unique position of prior to coming here, I was a global CIO for General Electric. So I have this unique perspective having both been a customer of DXC and its competitors as well as the provider. And I think you're going to see that we brought that perspective to the team that we've put together at GIS to build the solutions for the future.

But before I start, let me just ground you on what GIS is. One of the things we think about with technology today is it feels magical. As I look out in the audience, everybody is on their laptop, you're on your phone. It just kind of works. And it's very easy to forget that behind that technology working is actually a tremendous amount of labor. We typically don't see it as end users in the world. But as you're working and I'm sitting on those systems, those systems are being attacked, they're being patched, they're breaking. There is a lot of labor, automation, software and effort that needs to go into running core systems that keep everything running, and that fundamentally is GIS.

So our job is to make that technology transparent for you. So where you see us work is typically when you don't see us. When something goes wrong at 10:00 in the morning on Thursday as we sit here behind one of the apps that you're using right now or at 3:00 in the morning on New Year's Eve, it is DXC engineers that respond to that incident, fix the issue, defend against the attack, whatever it may be. That's where we make our difference, and that is fundamentally what our customers in the GIS business pay us for.

We break that down into a couple of services, and that's how we organize ourselves. So we have infrastructure, think traditional big iron in data centers, mainframe all the way up to modern server infrastructure and private AI, cloud, the hyperscalers, our workplace, the tech you use yourself, BPS which is all the processes and administration that has -- that goes around running a large technology estate and then cyber, defending our customers against the attacks.

So I hope that just helps baseline around what we actually do because it's often very hard to visualize it because on our best days, you don't see that we exist. We do this at a scale that is relatively unmatched. And in this business, in this operation, scale matters a lot. So we have $6.3 billion of revenue, 1,300 customers around 62 countries with about 45,000 employees worldwide. But more importantly, that means that we run about 9 million individual discrete systems as we stand here today, which means we handle about 20 million individual events a day that happen without our customers ever seeing or knowing about them.

So that means when I come to scale, the 1 in a million problem happens to us 20 times a day. And our team has the expertise to respond to that. And that scale is part of the value we bring to our customers because an event that they may see once in a lifetime, once in a decade, once in a week, we've seen 19 times earlier today. And part of that expertise and that institutional knowledge is how we deliver high reliability. And in this industry, customers are buying reliability.

When our customers come to make a decision and we find ourselves either in a buying process or an RFP or a renewal situation, the #1 thing that starts all the conversations before anything else is operational excellence. Because by definition, we are the engine room that our customers rely on. And if it doesn't work, their business doesn't work. So the modern CIO can't do all the amazing AI things that you heard my colleagues talk about or that you can do with Claude if the fundamental systems aren't working. So our customers buy operational excellence from us.

We take that operational excellence, we combine it with that depth that I spoke about for the decades of experience and building a knowledge base of running the systems that run the world to understand these very unique nuanced problems that only happen once in a blue moon, but that can take a company down. Then we bring our scale, as you're going to see later, to invest in the tools, technology and training as we're about to do with Anthropic, to make sure that the folks operating those tools can deliver the reliability.

When you combine those together, you end up with why customers buy from us. It is a level of trust. Confidence that the surgeon is going to be able to operate, the government is going to be able to defend its citizens, the bank is going to be able to process a credit card charge. That is how the value of DXC GIS is measured in our customers' mind. Again, when you don't see us, is our very best day. It's also really important because once you move to us, it is very difficult to leave us. The amount of work that needs to happen to change a core system, think about a bank or a hospital or an airline to change their mainframe, their midrange, their cloud midstream is a very difficult, hard undertaking, which is very beneficial to us. It makes us quite sticky.

But the reality is if you can't deliver that uptime, they will have no choice to leave. And once they decide to leave, they will go. So that's why delivering that important -- that uptime is so critical to us. And that's why CIOs buy from us. Now if we're honest, as Rob shared with you earlier, though, we haven't always delivered on that in the past. And that is why you've seen some of the decline you've seen in the GIS numbers. Now I'm happy to share, though, that we have spent -- we started a process when Raul came in and then I took the role of really investing in the quality of our operational delivery for the last 2 years. And quality takes time, but we are now seeing the results of that.

And the way we measure the result of that is actually quite simple. Net promoter score, NPS. We use the standard industry methodology. It's a very clean metric. We currently sit at 47, which we believe to be industry-leading. These numbers aren't published, but we have good intelligence and we're right at the top of the pile. That is a 35-point increase since the last time this group was together. We've made significant investments in improving the customer experience at DXC. Our customers feel it, they report it. But more importantly, that translates to our customers staying and renewing their business with us with a 98% customer renewal rate.

So when Rob spoke earlier today about the inflection point and how we have a high backlog coming into the year, and that's why we have confidence in being able to turn the GIS results, this is what gives us that confidence. We are sitting on a book of business that is actively choosing to renew, building backlog and staying with us because they are happy and comfortable with the services. Now we still, as Rob mentioned, have a couple long-standing contracts that terminated years ago that we have to flush through the system. But once they're behind us, we have great visibility and clarity into our renewals, a great retention rate and a net promoter score that's going to keep those customers with us.

Again, leaving is painful. The last thing we want to do is give our customers a reason to leave, and the high net promoter score and high uptime is how we do that. But it's one thing for me to say that, it's one thing to show you a net promoter score. I think it's more important to hear from a customer. Ramnath earlier today mentioned one of our favorite customers here, which is United Airlines. And this is a great one because not only did we write the app that you've all probably used at some point in your time, but we also run it. So this is the perfect example of how GIS delivers for our businesses.

You think of all the cool things that you can do in the app, you can redo your flight, you can change your seat. But what you often don't think about is what would happen if you were on your way to Newark Airport and you couldn't check in. What that gate would look like when you got there and if none of the kiosks and the app wasn't working, it would be a mess. That's where GIS shines. And I'd love you to hear it directly from our customer, Grant himself, who runs technology at United Airlines.

[Presentation]

So we're amazingly proud of the work that we've done with United across all of DXC and we're amazingly proud of the reliability and uptime that we provide to them for 35 years and provide to all of you as their customer. So I've spent the better part of my time so far talking about the existing business, why you should have confidence in the numbers we've provided and how we've stabilized it and seen it in the data we see from our customers around our renewal retention and growth rates.

Now I want to shift a little bit and talk about what we started the morning with and that's Anthropic and AI. AI is fundamentally reshaping the business of delivering the services that GIS delivers. For a brief history, this industry started almost completely focused on people, where companies took their people, outsourced them to move them to someone like us. Then we spent or the industry spent tons of money investing in tools to make those people more productive. And that's essentially where we sit right now.

But we are at the precipice of an industry-changing moment that is going to shift from the large inputs to this business being labor-based to agent-based. The entire industry is shifting from a labor arbitrage industry to an agent industry. We are going into a world that we are no longer going to be constrained by our ability to attack, attract and retain people and deploy them at will. If you think about it today, we have -- anyone in our business has to deploy smart people and then manage those people for events.

So I mentioned 20 million events. If we have 35 events on a given day for a team and the 36th event comes in and there's no one there to handle it, it sits in the queue. In an agent-based world, we now can have agents handling those events and scale them up or scale them down, and we have now limitless ability to access talent without the typical constraints and costs that come with us around people. The entire industry is about to change. And we saw this coming about 18 months ago, 24 months ago. And we put to the side a small Tiger team of some of our best people, and we brought in great leadership from the outside, one of which you're about to meet, to lead this team.

And we looked at the frontier models at the time, LLMs, which 18 months ago, we were in a very different place than they are now, harnesses, tools, agents, all the technology that we thought was going to reframe the business. And we put this Tiger team off to the side, separated it from the rest of DXC's business and said reinvent our platform for delivering services into the future. And as you've probably seen, we launched that platform just over 6 weeks ago in the form of DXC OASIS powered by Claude. This base level DXC OASIS tool is the tool that lets us deliver on the transformation, lets us lead the transformation that I just spoke about.

It is how we take the business of running the world's cloud, infrastructure, AI, network and workplace and use Agentic technology to deliver the reliability and uptime that our customers depend on. It takes the cutting-edge technology from Anthropic and other models, combines it with literally the literal knowledge base of 50 years of experience and control and governance and contextual knowledge around running environments and combines them together and gives us a platform to build an agent that can operate infrastructure and cloud estates into the future at an entirely new paradigm of operating.

Now this is in its first initiation, instantiation, OASIS is being deployed for our customers. But the next step of it, and it already works is being able to deploy that for our customers themselves. So they're no longer limited to just the work that OASIS delivers. This is part of that upsell opportunity that Rob mentioned to you earlier today, where we're coming in and being able to deliver and transform our own business, but now give our customers access to a software platform where they can take that transformation and execute it on pieces of their infrastructure or systems that they run themselves or that our competitors or partners run for them.

It is a game-changing moment. And it was built, as we mentioned earlier today, with Anthropic at 1/3 of the cost that it would have historically taken. All senior developers, all senior tools, 95% of the code was not touched by or seen by a human until it was already written. Lisa is going to tell you more about that today. But the proof is -- where is it, there we go. Proof is in the pudding. So we have a great idea. We have a great team. We built an amazing tool. The first thing we had to do when you operate in the trust environment that you do with our customers is try it on ourselves first. So what we've done is taken Agentic infrastructure, Agentic operations and deployed it in our own SOC or security operations center.

Now this is the operations center that we use to defend DXC itself. We also do this work for our customers as well, but we started with the one where we defend ourselves. And the results were amazing. DXC no longer employs a Tier 1 analyst in our internal SOC.

Every single incoming event is triaged, looked at and dealt with agentically and then prioritize if a human needs to come in. 99% of our tickets, attacks, these are things that come in are now being handled agentically with 95% accuracy.

Now if you don't know the business, you probably look at 95% and say this is security that feels what about the other 5%. Well, here's the human part of it. When we start a well-trained human, who's certified and comes out of school, they start at roughly 88% accuracy.

So by moving to Agentic technology, we actually improved 700 basis points the accuracy of an individual agent that's operating. And the key difference to think about as you think about scaling this business going forward is that every human starts roughly at 88%.

Every agent starts at 95%. And as the agents get better, the next agent starts at 95%, 96%, 97%. So we perpetually get better. So we've delivered speed up, cost down, accuracy up. And now we are taking it to our customers. So I'm going to ask Lisa to join me on stage here, and we're going to show you a little bit around what Oasis actually looks like and then talk to you about how we built it.

[Presentation]

Lisa Beaudoin is Vice President of Platform Innovation and Automation for DXC's Global Infrastructure Services, driving the product strategy behind the company's AI-powered enterprise platforms. Please welcome Lisa Beaudoin.

Good morning. Hello, everyone. Great to be here. It's great to see it up on screen. I'm Lisa Beaudoin. I am here to talk about Oasis, but just a little bit about myself first. I spent my career as a designer, designing and building software. Prior to joining DXC, I founded and led a software company. I ran the company for 14 years before I led it through a successful exit and then joined the team here to build Oasis.

So when I think about -- and we talk a lot of -- we've talked a lot about it today, I want to walk you a little -- I want to take you a little back. I want to talk to you and walk you through a bit of how we got here. So before we wrote a single line of code for Oasis, we made a deliberate choice. We wanted to understand how people work before deciding what to build for them.

So that meant a 5-phase 1,400-person research program, the kind of human-centered design process and rigor that's typically reserved for the world's top product companies. Then we applied it to our enterprise platform here at DXC. Chris talks about the 1,300 customers and our 45,000 operators. That's how we got to building the highest value for both our customers and our operators.

And once we understood the problems we were solving for them and the opportunity in front of us, then we built differently. So I'm also very proud to say that we were really early, early, early adopters of Claude code. So last summer, we were all talking about it, and we've got global teams who are working, small global teams that are working on the beginnings of requirements and design for Oasis and someone brought up Claude and I said, of course, let's try to use it and see what -- where it would go.

And by late summer, we -- all of our engineers were enabled. And we really -- it really became -- it wasn't really an experiment. It quickly became our true primary development environment. So 95% -- 90% to 95% of the code written for Oasis is written by Claude and reviewed now by that small trusted team of engineers who made that selection of Claude in the first place, which is great.

Now especially as a designer with Claude design, I'm seeing the walls of designer, product manager and engineer collapse. So our teams are really focused on builders and you have one builder who can deliver from concept to production. And nowhere do I see that more than agent development. So agents are our key differentiator.

They are our trusted governed partners and they are in the hands -- building them are in the hands of our operational subject-matter experts. These are the people across the globe that know these environments better than anyone else. So they're using Claude code every single day to build them directly.

I've been building software for 25 years, and I've never seen anything move like this. It's a very exciting time to be building anything. And I'm thrilled to be part of a mission-critical team, mission-critical operations team that acts like founders. We ship like a start-up. And I feel like it's the perfect combination. It's really what landed us here today.

So you said proof is in the pudding.

Correct.

I say proof always beats promise. So I'm going to turn it back to you to walk through some early metrics and what we're seeing with Oasis.

Thank you, Lisa. It's absolutely amazing what Lisa and the team have built and how fast they built it. And I have to tell you that as we sit here now with the product live having launched just 6 weeks ago and having real production data of what it looks like in the field, the initial results of Oasis and Agentic operations have far exceeded every intent we had leading into the product.

When we sat down 18 months ago, we could have never imagined just how game-changing the productivity that would be delivered by Oasis would be for our customers. What we've got here are just a few selected incidents that we deal with, a subset of those 9 million incidents that 20 million incidents that we deal with every day.

The before column is we've gone through all of DXC's data over the last years, looked at all the ticket data and recorded on average how long it takes our engineering teams to resolve this incident. The first one of file system incident is actually what you saw in the demo. So this is real data based on customer -- industry-leading Net Promoter Score times of how long it takes humans to historically deal with some of these incidents.

And you have some that are 53 minutes and complex problems that can take 2 to 6 days. After is how long an agent operating in the Oasis framework takes on average to resolve the same problem. The numbers speak for themselves. There is a dramatic industry-changing paradigm-shifting move going on in the way we are going to be able to deliver for our customers.

And as we roll this technology out across our customer base, this is how we are going to change the cost basis of the business, delivering over $500 million of the $1 billion to $1.5 billion of operational cost reduction that Rob shared with you earlier today. That's not a guess. That's not a bet.

That is a proven metric that we now have from our ability to operate and do the work we do with an entirely new platform of cost of delivering it. I said earlier and remind you that we're deploying Oasis first across our own estates to achieve the benefits for ourselves and for our customers, but there is no reason to stop within just the infrastructure we run or just the applications we run for our customers.

There are tiers of additional Oasis deployment, which our customers can consume that we can upsell them, which then can allow them to take the additional capabilities to build additional agents into Oasis and work across the estate with both our own services and across their other services. This is not just an automation tool.

This is not just, oh, we've deployed some new software, Oasis and the AI shift that is happening that we are driving, partnering with Anthropic and the industry is going to fundamentally change the cost basis and the way that services industries operate.

There's no other way to say it. Most importantly, this isn't vaporware. This isn't an idea. Oasis is live. It is deployed across over 50 customers today, 57 is the exact number as we stand here this morning with one of those being DXC itself, and we operate those. Folks like Toyota, Duracell, Otis, Mondelez, Alstom, Carrefour, Philips, many others are already starting to reap the benefits of existing DXC customers of the paradigm-shifting improvement that we can see in the industry.

We believe that this positions the GIS business in DXC to execute the change that you saw reflected in Rob's numbers. Better positions us to win new business, delivering an entirely new cost model and having an upsell opportunity to markets that we've never been able to enter with our customers before. This is the core of the fundamental transaction at DXC.

We take a phenomenal long-established sticky customer base and combine it with AI technology that we've built and partnered with Claude to build to deliver a transformative experience that differentiates us from, frankly, anyone else in the market at this point in time.

We've got the head start, and we're running with it. This is the DXC of the future. Thank you all for your time on this today. I'm going to ask Raul to join us up here to lead our Q&A session.

Well, thank you. I'm so glad that we're at the part where we get to be a little bit interactive as we're setting ourselves up here for the chairs for the Q&A session, I just wanted to just point out a couple of things.

We can go back to that 1 -- days-and-hours-to-minute slide. I think for me, one of the things that's been most impressive, and again, we're deploying these and we're getting real data. First of all, it's blown away our initial models, okay? People ask me, well how are you pricing? Guess what, we will figure this out because part of what we're getting as we deploy this stuff in the field is looking at the real economic impact that these very complex solutions have on our customers.

So it's going to be an ongoing process. What I can tell you is that this is the most compelling thing. I was in Europe, and I was kind of preselling some of the stuff last week. This is the only chart I was bringing up. I have another set of charts around Agentic security operations centers where a very good stat is 21 minutes to detect an intrusion in a certain instance, we're down to 6 seconds from hours and days to minutes and seconds. That's the impact here. And we are living it day 1 as a customer.

We are powered by Claude. The whole company is digging in and figuring out how to bring this kind of impact across all of our industries, and we've got a great partnership. So some things that are different from an investment standpoint, new products, new services. Many of those new products and services, especially the FTE Anthropic-certified engineers, are going to be able to be deployed within a quarter.

For many of you have heard questions about, well, how are you going to change the revenue trajectory. One of the things we needed is new stuff that's hot that we could sell, deploy in a limited time frame. Guess what, we have it.

And one of the things that we have that is so critical is customers, customers that have been with us for many, many years. And being able to now go back to those customers and just share a few of these stories, super compelling, and it's really a new day for us and our customers and Anthropic.

So I'm very, very fortunate to have a great team. I want to thank first the production team that spent many days and nights here, the whole team that put this together. I also want to remind you in case I forget at the end, we have a parting gift for you a book, July 250 Freedom 250 celebration book written by Bret Baier about a Case for America, where America is today, where America was, where it's going, please pick one up on the way out. But with that, let me bring up the rest of my teammates. And actually, let's bring up Roger first. Thank you.

Thank you, Raul. Thank you to all the presenters today. It's a wonderful job. Thank you so much.

All right. Great job.

While they're standing up for the Q&A, just a quick recap of the directions. You've all done this, real many times. [Operator Instructions]

And then myself and my colleague, Tiffany Horvath, who you all know very well, will curate the questions and we'll present them to the panel. So if everybody is ready to come up and start the Q&A. Thank you. All right. Go ahead, James.

James Faucette from Morgan Stanley. I appreciate all the input today. I thought it was noteworthy to me like how many different places you seem to be introducing new software or software-like products within the portfolio across the different groups. And Raul, I know there at the end, you kind of alluded to some of the Oasis-type solutions, still kind of figuring out pricing and pricing strategy, et cetera.

But I'm wondering if we tie it back to the financial targets given at the beginning of the presentation this morning, how much impact is built in from software, software transition into those financial targets? It didn't seem like a lot, but I obviously, you would expect that we'd have different margin structures, different go-to-market, et cetera. So you can just kind of walk through how we should think through that transition and then the impact on your medium-term outlook.

Rob, why don't you start on how we've got it modeled and then I'll comment at the end.

Yes, I'll start with just kind of walking through for each of the business units. So our insurance business led by Ray has a fairly robust set of assumptions on SaaS growth. We already have a really strong on-prem software business, and we will now add the SaaS component to that.

And you saw from the charts a lot the accelerated growth going from 5% to 7% -- to the range of 5% to 7% is driven by SaaS. So that's in our insurance model. In Ramnath's business, we're going to have SaaS-like pricing for a lot of the GrowthX offerings.

So while it's not a large proportion of the portfolio built into the current set of projections, it will grow over time. And the same with Oasis in our GIS segment, the couple of points of incremental growth over time is going to be Oasis Tier 1, Tier 2 upgrades hitting the marketplace. And the really good thing is that with our LabX innovation, which will continue over time, much of the revenue that comes from LabX will be SaaS-like revenues.

Yes, that's right. And I think the bottom line is fairly conservative in this period of performance, this period of performance being this fiscal year because we're just launching these. These are now offerings that can be bought in a quicker turn that we've got limited experience in positioning them, pitching them and getting them closed, but very confident that these new engines of growth will contribute at a much higher level over the next 2 years.

Bryan Bergin, TD Cowen. I appreciate the detail. So my question is on the growth solutions that you've developed that you may plan to develop and how that does tie into the growth outlook over the next 3 years. So can you just talk about when you think about the incremental value you're projecting in the fast track solutions, what you already have in hand versus what you're assuming you're going to develop to get to that growth trajectory?

So we've got 2 great examples. We have Oasis. We've got Agentic security operations center that we'll be making some more announcements around in terms of the partner there, some early wins that are super impressive.

We've got the FTE teams that are coming in. And then we've got some others that you'll see around the room. Personification of knowledge, I think, is one of the most powerful things out of this revolution. And you'll see an example of that with a historical kind of context to it.

But the purpose of LabX is to take great ideas that we know have market traction with our customer base and to put them in an accelerated mode and really bring them to life super quickly.

And that's a learning process where the next time around, and you're seeing the results of doing this the first time, the next time around, we're even going to be faster and better. But you want to talk a little bit about how we're incubating kind of the next generation of these internally?

Yes, absolutely. So we're absolutely focused on subscription and consumption-based models coming out of LabX. None of that is currently baked into the financial guidance that Raul and Rob have put forward. So that would be incremental upside to our plan.

Yes. I can confirm that, Bryan, what we're bringing to market now is what's in the projections.

Yes. That's right. Yes, please. Go ahead.

Jonathan Lee from Guggenheim. Rob, this one is for you. Can you help us bridge the cash flow generation here? I mean you're expecting to do $600 million of free cash flow this year, cumulative free cash flow generation of $1.8 billion, and that implies that annual free cash flow is static. So -- and that's despite improvement around revenue growth and margins down the road. So I want to understand why we may not necessarily be seeing better cash flow generation down the road.

Yes. So what we'll see over time is EBIT and EBITDA growing. So you're correct. There will be more cash generated, but we've left room for investments along the way. And as we shift from a declining revenue base to stability and accelerating revenue base, we clearly left room there for investment.

And it will come in the form of like software investments over time that we need as revenue accelerates as an example. So there's room for the investment we need to power the growth through '29 and beyond.

It's Tien-Tsin Huang from JPMorgan. Just want to add two questions. Just thinking about as you push more into software and incremental value, two things. One, what's the impact or the collateral impact of some of your ecosystem partners on the software side? How should we consider that?

I know you do that already in consulting in general, but just trying to understand what the knock-on effects of that would be. And then also, as you're thinking about the curve of the incremental value and then the core, as more AI content is introduced overall, are you considering that the core curve itself could also bend and that might look differently? Then I have a follow-up, if that's okay.

Sure. Yes, please. So look, I think if you step back a second, every single interface that every one of us interact with in our -- where we live, work and play will have to be changed, okay? And that means a lot of that -- those products that we use today are powered by traditional companies that are great companies, ERP companies, et cetera.

They're evolving very quickly. They're bringing Agentic solutions natively into their stack. They're going to be players. I think as you think about how to -- what's the framework to evaluate winners and losers because I think at the end of the day, that's kind of what you're saying. I think about that all the time as an investor, I've got investments across various types of companies. Some have great moats.

Some are less customized, less complex, easier to replace. Those clearly are the ones that are in most danger from this incredible wave of new innovation, technology and ease of use. So I think for us, we can have the best of both worlds.

We can work with our existing enterprise partners, especially those that are moving their AI agenda forward and meet with where our customers are, but we can also bring brand-new, net new ways of solving a business problem.

And I think one of the things that differentiates this team is we're in businesses that have really complex workflows. Those complex workflows require thought in terms of how to reengineer them with an AI point of view. And they require a business knowledge, right? It's not just, oh, I'm here and I have a certain tech stack expertise. But I need to know how an insurance claim moves differently in one type of policy versus another.

That level of knowledge, that level of understanding gives us, I think, an unfair advantage in a good way to be able to identify and use AI to change that. So I think we can have, for a period of time, the best of both worlds, traditional players. And look, I think players that have highly specialized industry-specific, they've got moats, they've got time.

There's so much to do that if you turn around and put yourself in a customer's point of view, there's so much to change, and they're still trying to figure out the areas of highest impact.

So where do I spend the money to get the highest impact? And what's different about today than yesterday is that the cycle to impact, the cycle to revenue, the cycle to new customers, the cycle to new products has dramatically been cut.

And as operators that have built this internally and now they're bringing it to our customers, we have kind of, I think, a very balanced point of view on how to do this.

So I think some will definitely get impacted. I think it's all going to depend on how they adopt and how they infuse more completely AI into their stacks. And we're going to continue to push the envelope with both our traditional players and our partners as well as our new ones.

Yes. I respect the approach. I think the depth versus breadth, I think, is important. And I'm glad you went through how regulated and the context that you have. I think that I had a better appreciation of that. So thanks for going through that.

My quick follow-up is just thinking about the cost savings, the $1 billion to $1.5 billion and I know you said yourself, Rob, you're still in discovery with some of the pricing and things like that. But just maybe the visibility on that $1 billion, $1.5 billion. There's a lot of questions around inference costs and things like that and the labor side of it. But what's the visibility is really?

So I feel super confident in that range because it's been a bottoms-up using the solutions that we've built for ourselves, and we know how an agent-based offering, especially in Chris' group, works versus a human and software-based offering that exists today. So I feel super confident that, that range has been validated both bottom up and top down. But Rob, do you want to give a little more color...

No, I agree, Tien-Tsin. The way -- one way to think about it is we're going to count on about 75% to 80% of that cost takeout range to be achieved with the 3 business leaders, 3 business units. And they have line of sight detailed plans to that component.

The other 20% to 25% is in the support organizations. And again, we are actively within each function of the support teams going through implementation of best-of-breed AI tools, in-house developed tools and starting to roll out the deployment and productivity gains. So like Raul, I feel good about the line of sight that we have to that range. And I think each of the leaders could echo that point for their piece of it.

Brad Clark, Bank of Montreal. I want to ask about the partnership strategy. Great to see Anthropic on the stage today. But how do you view DXC's like partnership strategy evolving in the future as obviously more of these larger AI companies continue to grow and innovate with new solutions and specifically have sort of a service force of their own? Were DXC able to really differentiate and add value to these partnerships over time that may be -- may look a little differently than some of your partnership strategies in the past?

Yes, it's great. And I think you heard Michael say partners like us that both have customers and a large base of great employees that are like perfectly positioned to become certified Anthropic engineers, they need that to be successful. This -- and they also want to remain focused in their area, which is incredible innovation with AI models and tools that are now getting more and more verticalized.

So I think it is a very positive symbiotic relationship where they will build up a very small base of service professionals that will be helping all of us and our customers, but a majority of the success of bringing this to enterprise is going to be on companies like DXC and being able to position ourselves with our customers as a thought and implementation leader here. And everything you heard today validates that.

So I think there's been a lot of negative, right, around SaaS, around services. I think the reality or the sentiment is that people realize you need knowledge, domain expertise and technology help. And plus the -- you have to be in this to fully appreciate how fast it goes.

And I am a true believer that there are no failed AI projects, right? Because you learn from every pilot, whether it went into full deployment or not. If you're not learning, you don't understand where you can go.

And that's been, I think, one of the coolest things that's happened with the projects that we've built internally is that just idea that you've got to learn and things change overnight. Models come and go. Business plans change in a lot of these companies. So having a great experienced and modern kind of approach to all of this, I think, is critical.

But I think it's all upside for our company and for other service companies that make the investment in key partnerships. And as you said, we'll have some other key partnerships that we'll be announcing around AI and specific AI tools because obviously, we've talked about Anthropic and all of the things they do. But then there are smaller niche players that we've used in different places, and we'll be talking more about that in the coming weeks and months.

Raul can add a point to what you just...

Jump in.

It's going to be -- if you look at the dial, the dial is going to continue to rotate. It's going to rotate much faster. In my 30 years, it's never rotated out fast. Raul, you didn't use the phrase that you use with us regularly. What do you say? You say...

It will never -- it's never moved as quickly as it's moving today, and it will be -- it will not be as slow as it is today. I mean the speed is unbelievable, but yet the speed is exponential, and you really do have to be playing the game every day in order to appreciate that.

So that's a key element, right? So we have to be -- we can't be too far ahead because that means you're building in inventory that's redundant. You can't be too slow, you're getting disrupted. And moving the dial at the right pace with the right set of partners, again, depth, not breadth, picking and choosing the right winners.

And there are going to be a number of winners. We need to make sure that we are picking those selectively, you saw a list in my presentation on depth over breadth, both on the enterprise side, data side and on the AI side.

And we're going to be very, very deliberate about how we work with them. You heard Michael said, I'm 4,000 people, and we're building an organization of this size and scale. I need partners and DXC is a premier partner working with us, and that's going to be the model.

And we'll make sure that we are timing it both from a talent point of view and from which partners we work with and be very deliberate about it.

I have a question coming in from the webcast. A person wanted to know when clients migrate to a platform like Oasis, is that accretive to our cash flow and earnings? Or is it cannibalistic to the existing revenue streams?

You guys want to...

Yes. So from a financial standpoint, I mentioned in my remarks that we're deploying the base Oasis product to our installed base with the current contractual terms, right? So it's not accretive in the near term, and it's not cannibalizing our revenue in the near term for those existing contracts.

So it's kind of neutral, but it opens the door for many other opportunities once they see the capabilities that we're delivering with Oasis. So in that respect, we expect it to be accretive to the relationship and drive -- help us drive more revenues. But on the contracts that we have today, the contracts themselves, it's neutral.

And I would just add that in addition, every new proposal that's going out the door for a net new customer is based on Oasis at this point. So our ability to differentiate and be more aggressive in the market and increase win rates.

So I think if you look at installed base, we've switched them over. They're now Oasis. We've got a path to upgrade what their original package is. So there's upside there.

And now we have a way not just of competing in the recompete, the renewal and being better positioned in the renewal. But now we have a way to come in and say, okay, you may have your network operations center, security operations center with another group, let us come in with 4 or 5 certified FTEs, walk you through how you should reimagine your process and then you can license Oasis separately.

We have something now that's modular that it can be sold with our services and our support, which is great, but we can also come in over the top with a strike team and they can actually take over -- others can take over the maintenance. So that's where the product set has net new revenue impact. Obviously, you start with what you got, which is great customers.

So we're deploying them first. But I'm excited about taking like a subset of that and pitching it to new opportunities because I do think it gives us a unique opportunity today, and we all have to work hard to stay in the game and stay ahead. It gives us great new content to go talk to CEOs about.

It's Jamie at Susquehanna. I had a question about insurance, maybe for Ray and Raul. How much is insurance run as a separate entity versus how much is it a shared service solution internally? You shared head count by both dimensions. Do you have your own sales force, sales quota, sales engineers? Just trying to tease out the overlap of the subset and superset.

Yes. No, great question. So of the 3 business units, the one that has the most complete or holistic go-to-market from presales, sales, delivery and operations. So if you were to rank like which one kind of goes and can pull it definitely can pull and push opportunities to the other 2 business units, the answer is yes, but also has the most stand-alone kind of capability as well. Ray?

Yes. No, that's absolutely right. If you look at the insurance business, as Raul said, we -- everything from presales to how we build our products to how we do our business process services to how we follow up with the customers to the customer relationship, that's all done within the insurance operation.

Of course, we use things like Chris' mainframe capacity and other things to serve those customers. We use the DXC partnership team to take advantage of that. But it's largely self-contained in how we operate.

But for me, he is a brilliant source of access to some of the most premier insurance customers that we're going to leverage and make sure that we are driving growth in the engineering side of the house.

Great. Right here.

So a follow-up for me is on the cost side and internal adoption of AI solutions. As you think about more AI adopted internally by your workforce as you shift to more of a platform-based business, how are you thinking about the head count intensity required at DXC?

And as you think about that 3-year plan, you obviously have 100,000-plus people today. How may that evolve just given the headlines day by day that we see across technology companies and the impact that AI is having on their workforce?

Yes. I think if you step back a second and you say, what things are not as complex, not customized, but highly repeatable. If you're doing work in that category I just defined, agents will be part of that. And part of our job is to take that talent that does have domain expertise, does have workflow expertise and give them tools to do other things.

And so by bringing in Agentic capacity, it does free up the ability for us to take those great professionals and transition them to another role, but definitely has an impact on does that role still exist. Many of those roles will go away, but there'll be new opportunities that are going to be created.

And it's a push and pull, right? There are different levels of people that have different levels of curiosity and leaning in. I think one thing you see from Michael's comments this morning, you've got to be passionately in this to be a great player.

And maybe you can talk a little bit about how you've seen that and taking the team that you've assembled to build Oasis is kind of the attributes of the type of person that may be doing something today in a more highly manual way and are now transitioning their roles.

Yes. So the more remedial task, right? I don't get a lot of complaints from engineers anymore about, oh, I have to do this or I have to work through a bunch of bugs, like the things that have to clean up this are that the conversations now are -- exist at a higher level.

And the conversations that we're having around product and our customers and the value that we bring with the product that we build are, again, elevated because of AI, just leaves more room to have those higher-level discussions.

I look to engineers now, not so much on their -- yes, we look at the code that they've written. But are they curious, right? Are they asking the right questions? Are they using logic? Do they understand the customer? Do they understand the business and the domain?

It frees up someone who was just heads down writing code to really understand, I probably more -- I probably know more about mainframe than I did ever because I have the time, right, to -- and our engineers have the time to really understand the domain. So I think curiosity is number one, good logic, asking the right questions and really understanding the business and underneath the business is knowledge and data.

And I think the appreciation as I talk to young engineers, I talk to other portfolio companies that I've invested in, the attributes that both Holly and Lisa mentioned on kind of what it takes to win an AI world. There are the tools available for you to become a super player of some kind and to find your superpower and to use it.

But you have to be curious, you have to try it. I also think there are no more junior players in the world because you can really elevate anything that you're doing if you spend the time, the money and the attention to take yourself to that next level.

So a lot of it is us in terms of the opportunities we create, but a lot of it is also on the employees and our partners and our colleagues all over the world. So it's a 2-way street, and things will evolve over time.

But it really does, I think, create a lower bar to start companies, launch new products, and that is really empowering if you take advantage of that power.

All right. This is also from the webcast. You mentioned the plan to invest. Over the next 3 years, could you place some of your investments into M&A? And if so, what are the areas you would invest in?

Look, we're in the market looking at where we can augment our capabilities. I feel really good about continuing to invest in our teams and in partnerships that are breakout partnerships. And you've heard me before in the past talk about being a little bit cautious about M&A.

I think I'm even more cautious because things are moving so quickly. What is valuable, right? As an investor, I remember not that long ago, like 6 months ago, 9 months ago, looking at teams and saying, okay, if you're looking at a great team like the company that you started and we funded, great people that can understand the customer and the spec.

A great team of developers, a great team of UX/UI. But these were expertise that were siloed in people and teams. Now you can get everything that I just said, you can be kind of entry level and get all those UI skills, coding skills, testing skills, deployment skills, acceleration of coding, all that has gone away as a differentiator.

So I think from an M&A standpoint, one of the risks you have is buying yesterday's technology and yesterday's business model. And so that's why I'd rather invest in creating tomorrow's technology and tomorrow's business model here rather than spending some dollars that may or may not work out.

We're going to continue to invest in partnerships. We're going to continue to invest in the things that make us better and obviously, opportunistically looking everywhere at where we could do some tuck-ins. But right now, it's a focus on homegrown organic authentic growth.

Other questions? Anything else from the web?

Yes. I have one more. The person wants to know about capital allocation. Rob, as we go forward, what would change your view on a balanced approach to capital allocation? Is there anything that may sway you to move more to debt repurchase or share buyback as we think about our results?

Yes. I think our current view of capital allocation is balanced and appropriate. What would change that picture in the future is as we continue to invest and continue to gain traction in terms of accelerated revenue growth over time, that would certainly free up more funding for additional capital allocation in all 3 categories, investment and return to shareholders and accelerated debt repayment. But I think we have a very prudent balanced plan today based on our current view of free cash flows.

Great. Well, good. Please. Yes.

Just sneak a last one in -- thanks so much, team, for the presentation today. On the engineering business spin out last week from CES, that seems exciting. If you could just share early learnings or what we should track over the coming quarters and years to kind of see how the plan is unfolding?

Great question. I said this in my presentation because it's a pretty large portion of my book of business, about $800 million of revenues. It's an acquisition that DXC made in 2019 of a company called Luxoft.

And it's a company that is growing very well, had some very deep engineering capabilities. And in the last 4 or 5 years, we lost some of that magic. We have reinvigorated that magic by putting in DXC engineering in place. We put in a leadership team in place.

We've unleashed -- that model was based on deep engineering skills and having the flexibility and nimbleness to react to client needs. And we brought that into the DXC ecosystem and let some of that atrophy, we brought that back. So the signs that you should see for is, one, are we making the right investments?

We've made the investments with announcing that as a separate practice. We've built a software called AMBER. It's heavily built on automotive and discrete manufacturing capability and banking and financial services, some pieces in other industries. So we're investing. We've got -- if you go and see what we launched as a software, it started with in-car infotainment. Somebody asked about SaaS kind of product.

That's a SaaS kind of platform. It's now getting into autonomous driving. We are investing in a partnership with a company called Luxoft. We're going to make an investment in that company, and that's going to be doing Level 3, Level 4 autonomous driving.

So signs and signals that you should look for is how things are changing from a trajectory point of view and the investments that we're making to bring some of the secret sauce of Luxoft that was a very, very credible high-growth business. And we are absolutely doubling down and bringing that magic back.

Great. Thank you. Well, with that, I want to thank everybody for being here today. So happy that you were able to hear some of the story. I'm so happy that my colleagues were able to share a little bit of what they work on.

And I think you saw the passion, the excitement and how excited we are about the trajectory and the direction that we're going. So thank you very much. Please get your book on the way out, and I appreciate your time and attention. Thank you.

Good afternoon, ladies and gentlemen, and thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time, I would like to welcome everyone to DXC Technologies Fourth Quarter and Fiscal year 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Roger Sachs, Head of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everybody, and welcome to DXC Technology's fourth quarter and fiscal year-end 2026 earnings conference call. We hope you've had a chance to review our earnings release, which is available on the IR section of DXC's website.

Speaking on today's call are Raul Fernandez, our President and CEO; and Rob Del Bene, our Chief Financial Officer. Here's today's agenda. First, Raul will update you on our strategic initiatives. Rob will then cover our quarterly financial performance as well as provide thoughts on our first quarter and fiscal full year 2027 guidance. Raul and Rob will then take your questions.

Please note Certain comments on today's call are forward-looking and subject to the risks and uncertainties that could cause actual results to differ materially from those expressed on this call. Details of these risks and uncertainties are in our annual report on Form 10-K and other SEC filings. We do not commit to updating any forward-looking statements during today's call. In addition, when we refer to year-over-year or quarter-over-quarter revenue growth rates, we will be discussing organic revenue changes on a non-GAAP basis, which excludes the impact of foreign exchange and any inorganic activity. We will also be discussing certain other non-GAAP financial measures that we believe provide useful information to our investors. Reconciliations to the most comparable GAAP measures are included in the tables included in today's earnings release.

And with that, let me turn the call over to Raul.

Thank you, Roger.

In Q4, we delivered a strong quarter on profitability with adjusted EBIT margin and free cash flow ahead of guidance. That balance of expanding margin and free cash flow, while transforming DXC into an AI-led company is central to how we're operating the business. On revenue, we delivered just over $3.1 billion missing our organic guide by approximately $75 million or 2 points. When you break that down, closing the gap required less than $1 million per day. That's not just the pipeline and demand issue, it's execution, and we continue to work on both.

And the focus going forward is also tightening in quarter conversion, smaller, faster start opportunities that can land and deliver within the period. As we close FY '26, one of the clear positives is our ability to reach the final stages of large competitive pursuits. As an example, across the globe, we pursued 13 large opportunities in this quarter that we expected to close before fiscal year-end. This represented more than $2 billion of potential total contract value that could have been booked in Q4.

On a dollar weighted basis, DXC won 32% of that $2 billion, we lost 40% and roughly 28% remains outstanding. With that level of advancement in the competitive process, I personally expected higher win rate. We didn't get it. But the learnings we take from those losses and wins are being applied to our sales process, and we will continue to make progress here. And like anything else in this business, once you understand precisely where you're falling short, you can fix it. That's exactly what we're doing now. Getting to those finals wasn't accidental. It reflects the work we've been doing over the past year, better qualification, clearer positioning and more discipline in where we choose to compete.

You saw part of that transformation in Q3 with our brand and storytelling refresh. AI is advancing every workflow in every business. We view our AI transformation as a way to be more competitive. Inside DXC, we're moving with intent on AI enablement and we're applying the customer 0 principle using ourselves as the first proven ground for what we deliver to customers.

Every DXC employee now has full access to enterprise-grade AI tools supported by a company-wide knowledge hub, AI playgrounds for safe experimentation and internal agents that help employees apply AI responsibly. We are measuring this work with the same discipline we'd expect for our customers. Tracking adoption and productivity and embedding governance from the start. What we learn inside is sharpening what we deliver outside.

One example of how this is taking shape, we recently ran a 4-week internal AI challenge inside one of our corporate organizations designed not as a one-off event, but as a blueprint, we could test, learn from and scale. More than 100 teams formed on their own, built nearly 1,300 working AI agents and started solving problems that had been sitting on backlogs for months. But the real signal was what happened after, other parts of the company has to launch similar initiatives. That organic and viral pull tells you adoption is real, not mandated.

We continue to launch additional AI challenges across DXC applying what we learned and extending the model enterprise-wide.

This is what customer 0 looks like in practice. We test inside, we measure what works and we scale what earns the right to scale. The impact is showing up across the business. In sales, we're automating the end-to-end cycle, increasing capacity, accuracy and consistency. In legal, we're compressing contract cycles while improving quality. In HR and marketing, we're driving both efficiency and better outcomes.

The result is not just cost takeout, it's reimagined capacity and that reimagined capacity driven by AI is what allows us to move faster and engage more deeply with clients. Fast Track is about building AI native products and services at a much faster pace. We built our initial Fast Track offerings around moats that are unique to DXC, deep knowledge of complex workflows, data that must remain secure and critical business functions that have to operate at 99.9% uptime in highly regulated industries where systems cannot fail.

These carry a margin profile that looks nothing like traditional services. Their AI services delivered as software, recurring, scalable and platform-agnostic. Let me preview 2 of them. you'll hear much more about these and other AI offerings at Investor Day on June 11. Core Ignite allows banks to modernize and innovate without touching the core connecting capabilities like buy now, pay later, stablecoin and modern remittance into legacy environments like Hogan. So banks can move at fintech speed without core banking risk.

Oasis is our agentic orchestration platform that is rewriting how we deliver managed services. it moves beyond monitoring and incident correlation to autonomous remediation and service optimization, orchestrating across a client's full ecosystem. At its base, oasis replaces a legacy product set with a modern platform layer that sits on top of every managed services contract, creating a recurring, scalable revenue stream with structurally higher margins.

We launched Oasis with 10 customers on April 28, and the early traction is real. It's already contributing to new business, including a large new logo win with a major European insurer where it was a deciding factor in how we won the deal. In parallel, our core track is about execution, pricing discipline, utilization, delivery quality, running a better services company consistently and at scale.

That foundation matters even more as we layer AI into the business. What's becoming clear is that the differentiator in AI is not just technology, it's how quickly organizations adopt and deploy it that's a focus area for us as we scale these capabilities across DXC. You're also seeing a shift in how these services are priced away from time and materials and toward outcome-based and consumption models.

At DXC, about 80% of our revenue already sits in outcome-based categories with only 20% in time and materials. That's a real advantage for us. It allows us to apply AI-driven productivity in a way that expands margin, while also evolving how we deliver value to clients. We'll go much deeper on all of this at Investor Day, on June 11 in New York City, we'll walk through the strategy, the products, the metrics and the road map over the next 12 to 24 months with live demos and direct engagement with the teams building these offerings.

We're looking forward to that conversation. For the third quarter in a row, this script was written by me, Raul Fernandez and delivered using my custom AI voice model built with ElevenLabs and shared simultaneously in 6 languages. This is customer 0 in practice. We build it, we use it and then we bring it to clients.

And now let me turn it over to Rob to review FY '26 results.

Thank you, Raul, and good afternoon, everyone. Today, I'll go over our fourth quarter results, touch upon our full year performance and provide guidance for the full fiscal year 2027 as well as for the first quarter.

Now starting with our fourth quarter results. Total revenue was $3.1 billion, declining 6.6% year-to-year. This is below our expectations as we experienced increased weakening of discretionary spending on short-term services projects, particularly within GIS, where revenue was impacted in both the U.S. and Europe.

Both CES and insurance were in line with our expectations and consistent with recent performance. Our book-to-bill ratio for the quarter was 1.07 with bookings down approximately 14% year-to-year, driven by 2 factors: first being a tough comparison to last year's fourth quarter, which included large renewals; and secondly, the impact of a decline in short-term project-based services, which was the case for both GIS and CES.

Adjusted EBIT margin was 7.6%, slightly above our guidance range and up 30 basis points on a year-to-year basis. This performance was driven by spending management at a point of discrete nonrecurring items in the quarter, largely offset by the impact of declining revenues. Non-GAAP EPS was $0.77 at the high end of our guidance range, consistent with our adjusted EBIT performance.

Now turning to our segment results. The CES book-to-bill ratio for the quarter was 1.07, bringing our trailing 12-month book-to-bill to 1.10. Bookings were down 11% year-to-year with the largest driver being the decline in project-based services. CES, which represents 40% of total revenue, declined 3.9% year-to-year with performance consistent with the prior quarters of fiscal 2026. Enterprise applications grew in 4Q with sequential revenue performance improvements throughout the year, while custom applications continue to weaken in the fourth quarter. This is where we've experienced the most significant impact in short-term discretionary project delays.

The quarterly GIS book-to-bill ratio was 1.11 with a year-to-year bookings reduction of 19%. This year-to-year decline is the result of large renewals in the fourth quarter of last year that made for a difficult compare. GIS, which represents approximately 50% of total revenue declined 10.6% year-over-year and came in below our expectations.

The shorter-term project-based services pressure we've seen all year continued and worsened in the quarter and for the first time this year, the weakness extended to resale based discretionary projects. Insurance, which represents approximately 10% of total revenue, grew 4% year-over-year driven by continued strong performance in our software business, which delivered high teens growth in the quarter.

We expect that momentum to continue, supported by strategic customer migrations to our cloud-based Assured platform and growing adoption of our recently introduced AI-enabled smart apps.

Now let me briefly touch upon our full fiscal year 2026 results. Total revenue was $12.6 billion, down 4.8% year-to-year. This reflected a 3.8% decline in CES and a 7.2% decline in GIS, partially offset by continued growth in insurance, which increased 3.6% for the year. Overall performance was consistent with the themes we've discussed throughout the year, including macro uncertainty leading to pressure on discretionary spend and specifically project-based services.

Full year bookings declined approximately 6% year-to-year, reflecting a more challenging comparison in the second half of the year due to several large prior year renewals in GIS. The full year book-to-bill ratio was slightly below what. The GIS full year book-to-bill ratio was 0.94. And in CES, where we had robust bookings of larger, longer-duration strategic deals the book-to-bill ratio was 1.1.

Adjusted EBIT margin declined 20 basis points year-to-year to 7.7%, largely driven by our investments to support future revenue growth in the form of offering development, sales and marketing. Our teams executed on spending reductions to largely offset the margin impact of revenue declines. Non-GAAP diluted EPS was $3.23, down 6% year-to-year, driven by the year-to-year decline in adjusted EBIT and an increased tax rate partially offset by a lower share count from share repurchases.

Now turning to cash flow and balance sheet. We generated $110 million of free cash flow during the quarter bringing our full year total to $713 million, which was ahead of our expectation and up from $687 million last year. The year-to-year free cash flow performance was largely driven by lower cash taxes and lower capital expenditures, offsetting the decline to adjusted EBIT.

As planned, we repurchased $60 million worth of shares in the fourth quarter. For the full year, we bought back 25 million worth of shares, which was nearly 18 million shares, representing almost 10% of our outstanding shares. In the fourth quarter, we continued to reduce capital leases paying down a total of $34 million. We remain focused on maintaining a strong balance sheet with appropriate levels of debt.

Since the beginning of fiscal year 2025, we have reduced debt through cash payments of $808 million, a combination of prepaying $300 million of bonds maturing in September of 2026 and our ongoing capital lease reductions. The combination of these cash payments, which were partially offset by the impact of tax, reduced our debt balance by $537 million. These actions, along with an increase in our cash balance resulted in a net debt reduction of $1.1 billion over that same 2-year period.

Before turning to guidance, let me briefly outline our capital allocation priorities for fiscal 2027. First, we will continue to prioritize investments in the business as we build the foundation for future revenue growth. Second, we remain committed to strengthening the balance sheet, including deploying approximately $400 million to retire the remaining U.S. dollar bonds maturing in September and further reducing our capital lease obligations. And third, we plan to repurchase $250 million of shares in fiscal 2027, which we now expect to execute more evenly throughout the year to maintain flexibility in how we deploy capital.

Now let me provide you with our full year fiscal 2027 guidance. We expect total organic revenue to decline 3% to 5% year-over-year with a 3- to 4-point improvement in the rate of decline in the second half of the year. The drivers of our top line trajectory for the year are reflected in our segment outlook as follows: in GIS, we expect a mid-single-digit revenue decline for the year, with performance improving in the second half. The first half is expected to be broadly consistent with the full year fiscal 2026 performance. As the year progresses, there will be reduced headwinds related to contract losses that occurred in previous years.

In CES, we expect revenue to decline at a mid-single-digit range consistently throughout the year, reflecting similar year-to-year performance in project-based services. And insurance, we expect revenue growth to be in line with fiscal 2026 with performance improving progressively throughout the year, driven by expected new customer contracts and a ramp of our AI-based software solutions. Our guidance for all 3 segments does not assume any change in the current macro environment.

We anticipate adjusted EBIT margin in the range of 6% to 7%, reflecting revenue performance, continued investments in offering development and go-to-market capabilities and normalizing for the onetime benefits incurred during fiscal 2026. We expect non-GAAP diluted EPS to be between $2.40 to $2.90. The anticipated year-to-year decline is largely driven by lower adjusted EBIT and the higher tax rate partially offset by lower outstanding shares.

We expect free cash flow for fiscal 2027 to be about $600 million, largely reflecting our adjusted EBIT guidance. For the first quarter of fiscal 2027, we expect total organic revenue to decline between 6.5% to 7.5% year-to-year, reflecting 4Q bookings performance and continued pressure on project-based services.

At the segment level, we expect CES to decline mid-single digits, GIS is anticipated to decline at a similar rate to the fourth quarter, and insurance is expected to grow at a low single-digit pace. We expect adjusted EBIT margin to be approximately 5%, a function of the lower first quarter revenue and normal seasonality. We expect non-GAAP diluted EPS to be approximately $0.40.

And with that, let me turn the call back over to Roger. SP27915630 Thank you, Rob. We'd now like to open the call for your questions. Operator, would you please provide the instructions?

[Operator Instructions] Your first question comes from the line of Kate [ Schwartz ] of TD Cowen.

I wanted to quickly touch on the 2027 guide. So was curious a little bit about what your assumptions are at the top and bottom end of the range. I know you mentioned that macro was seemed to be the same throughout the guide. But I was curious, generally, like how would changes in macro impact your ability to fall within that guide? What happens if the macro worsens, what happens if the macro improves? And just generally curious on what gives you confidence on that second half inflection that you guys have mentioned in growth.

Yes. Thanks. This is Rob. I'll take that one. So the comment in my remarks about consistent with current macroeconomic environment, is related to the midpoint of the guide. And that's -- so there's some room for improvement to hit the -- if macroeconomics improve, will steer toward the high end of the guide if they further deteriorate to the lower end of the guide.

But let me just go through the dynamics of the guide business unit by business unit for a moment, if you will. Generally, across all 3 of our segments, we're assuming similar project-based services, macroeconomics year-to-year. In GIS, we have -- I mentioned that we had terminations from prior years, some of them date back 3 years or more. and it takes a really long time for customers to roll off of those contracts. And we've really begun to see the decreases in the latter half of they impact us in the first half of '27. But then we wrap.

And so we'll get the benefit of that wrap in the second half of the year. So there's no -- in GIS, there's no underlying assumption of a pickup in project-based services going forward. The dynamic is entirely from the backlog. In our insurance business, we have several contracts, new contracts in the pipeline, which we are confident in signing and booking and generating revenue in the back half of the year.

And we're also making great progress with our smart apps, our AI-based smart apps and the pipeline is very robust. So we've weathered in some increases for that also in the second half of the year. So the insurance dynamic is improvements in the back half of the year through organic business growth.

In CES, where there's a bigger proportion of revenue in year based on project-based services we have applied the same macroeconomics year-to-year. So we have -- we don't assume any pickup in the activity throughout the year. So I view it as a relatively conservative guide for CES. And if the macros improve, that's where we'll experience our biggest pickup is in CES.

Yes. And this is Raul. Let me add to that. The fast track initiatives that we've been building for over a year are literally just getting to market we took a very conservative approach with regards to the revenue pickup of those products. We will update, obviously, as we enter quarter-after-quarter, that we've taken a very, very conservative approach as to their contribution in this fiscal year.

Okay. That's useful color. And just sticking to the guidance, the free cash flow guidance $600 million. Can you walk through some of your expectations there as well as expectations around new lease originations. I know you guys have been trading that down and you guys are expecting to continue that next year. Just curious about how to close into free cash flow and back in to those assumptions?

Yes. So the -- think of the year-to-year free cash flow, drop year-to-year is directly related to the revenue decline -- revenue and the EBIT margin declines. And we have some working capital benefits baked in year-to-year. We will continue to deploy capital to pay off our capital leases and focus on debt reduction, as I mentioned in my remarks, but the main dynamic from a free cash flow perspective is the revenue and EBIT year-on-year dynamic.

Your next question comes from the line of Jonathan Lee, Guggenheim.

Are there any areas where you're seeing or expecting rate car compression? I mean, pricing has been described as stable for several quarters. Is that still the case across all 3 segments? And how do you combat competitive pricing pressure in the market?

I think that the pricing for today and tomorrow is definitely stable. In these longer-term projects, you are seeing assumptions built into multiyear projects where they may not know exactly how they're going to deliver at a lower cost and keep their margin but there is additional aggressive in those multiyear pricing. We're all using AI tools every day. We all see the impact. We all see the productivity. We all see all of that. So I think it's a work in progress. As we get more experience as we get more confidence in the throughput of efficiency as again, we reengineer these solutions, and we bring to market new solutions that are AI centric.

But I think we're well positioned to gain efficiency out of more AI in our solutioning. And then from a macro standpoint, I think all the comments that Rob made before hold for that question as well.

Got it. And Raul, in your prepared remarks, you talked about win rates and missed opportunities. Where exactly are you falling short versus your peer group? And can you help us understand if your perhaps losing on price on capabilities, client confidence in DXC, sales execution or a combination of these. And how do you intend to address these?

Yes. So I think you should think about it in 2 buckets. The really large multi year ones where you've got international teams, multiple offerings coming together to put a proposal together and you've got a high level of executive impact and involvement.

We got to a level of finals and when I meant finals, I mean, 1 other competitor in most of the cases that I referenced in my prepared remarks. And we are very confident. I was very confident. I was involved in each and every one of them, that we have a better, I thought, better than 50-50 shot at winning those. We won our share of them, and we lost 1 or 2 more than I thought we should have at that moment in time.

It was definitely not pricing, it was -- and again, I've debriefed on all of these losses. It was very, very close, but pricing was not an issue. It was not being able to show the right type of capability maybe down to not just the technology level, but the technology applied to the specific industry or the specific type of company.

There are areas where we now get feedback and insight where we know that we can plug those holes. But I think what I felt good about is that we got into the very final rounds not happy that we didn't get 1 or 2 extra wins. We still have some outstanding wins there. But we're going to take the lessons learned from the wins, which were all great, and then also where we fell short. And then we're going to apply that in our solutioning and our positioning.

And now that we've got, again, the new homegrown solutions that are fast track those are definitely going to impact the positioning of the company, how the company is viewed from an innovation standpoint and how we're graded. So I see it as a good step forward in getting that close. I see it obviously is extremely disappointing and losing them. But also, I see the ability to close the gap on where we lost them and have a different win rate going forward.

Your next question comes from the line of Bradley Clark of Bank of Montreal.

I guess I want to focus on the other side of that coin and like what is DXC seeing success in the market, like what offering or services do you then have the potential not FY '27, but maybe in FY '28 and beyond, getting you closer towards something like a flat growth or at least continue to improve the rate of decline.

Yes, great question. Many of our Fast Track offerings are both defensive in nature, meaning they make our own operations and services that we deliver more efficient, better margin, easier to scale and grow. And they also come with an ability to sell as we've sold before and then sold separately. One of the things that is key to stabilizing the core is the right combination of large, medium and small. And what I mean by that is large deals that we win and they get burned and executed and recognized over time.

Medium deals that we have some visibility, and those are closed and burned in or get burned from a revenue standpoint or recognition standpoint in kind of a 6- to 12- to 18-month time frame and then small, smaller projects under $5 million, in many cases, under $1 million that get booked and burned within the quarter or within 2 quarters.

The area -- all 3 matter to win. It's like playing at sport. You can't just win on offense, you've got to win on defense as well. But the area where we have an ability through these new fast Track offerings to add small and medium incremental revenue is in the pipeline now in terms of what we offer. So I think all of the offerings in all of the markets benefit from the innovation that we're driving. they help win across every weight class that I just mentioned.

And then in particular, kind of core areas where our development capabilities need to continue to improve in time and speed and accuracy using AI development tools, our ability to scale delivery efforts, again, using literally capabilities that are available this quarter and last quarter, delivering against the people base that we have at a higher throughput and a higher margin. So it's a combination.

There isn't a magic bullet in one. It's really working across those 3. And I think we've laid the foundation in terms of what we've built to support and augment those 3 in our fast track to have a kind of new set of capabilities that allow us to not only win longer term, bigger deals, but also shorter and medium-term deals as well.

That's helpful. And then you mentioned, I think, higher margins on some [indiscernible] services AI only. And as you look forward, is it possible like to get back to margin expansion or just through cost efficiency AI? Or does the top line need just around and grow in order to get back to longer term margin expansion.

Yes, Brad, look, I think -- narrowing of the revenue declines will relieve a lot of the pressure on margins and allow us to expand margins. So with the current project-based services softness in the industry, that's what is dragging our margins down in the guide for fiscal '27. And I think as we make progress with that part of the business as we continue to roll out capabilities in -- AI capabilities internally and open us up to further cost reductions. And as fast track revenues over time begin to take hold, we'll be in a position to expand margins. But -- we've got to get that revenue number narrow. The revenue decline narrowed.

Your next question comes from the line of Tien-Tsin Huang of JPMorgan.

Just to build on the last one. Just thinking about the margin then the starting point for Q1 and moving from there. Any call-outs on cadence? And just maybe you talked about it earlier and I may have missed it, but just thinking about the factors, the volume deleveraging, you got the investment, you got some one-timers that you're normalizing. What are the big puts and takes we have to consider here?

Yes. So first quarter is the low point -- in the first quarter is a combination of the revenue declines in the onetime or some onetime or is that hit us in the -- that helped us in the first quarter of last year. And then from there, our expectation is continued margin improvement. So you will see improvements in the second and third quarter.

And we -- there's some seasonality that normally helps us in the second quarter. So we expect that plus natural margin improvement that we're driving. That will continue into the third quarter. And fourth quarter is normally moderates a little bit from the third quarter. So I think you'll see the same type of quarter-to-quarter dynamics that you've seen in previous years.

Okay. Thanks for going through that Rob. And maybe just a simple high-level question, if that's okay, Raul, maybe not so simple actually. But just thinking about some of the comments you've made and how you guys have answered some of these questions. I mean this concept of maybe getting bigger about getting smaller, whether it be on the project side or the fast track side, just what about just on the resource side as well? Is that something to consider beyond the norm, just thinking about things dramatically?

Yes. Look, I think, again, as we think about the opportunities to operate just better, every company, and we definitely had an unfortunate history and legacy of having a lot of acquisition and a lot of buildup of duplicative systems and people, et cetera. The ability to now continue to take a look at those pools, those costs, those inefficiencies. But to do them in a reimagined way using AI that will absolutely drive kind of more efficiency, cost take out than kind of before this year where the reimagining of work streams just wasn't there because you just didn't have the stability of the models.

So I think there's ongoing capability for all companies and ours included, to gain efficiency across all operations, back office as well as delivery facing, and we're very, very focused on that, and we'll actually go into more details about that on Investor Day.

[Operator Instructions] Your next question comes from the line of Rod Bourgeois of DeepDive Equity Research.

I have to ask about AI. If you could give your perspective on the net impact that AI is having on your revenue growth trajectory? And if you could share anything about what the mix of your business is that's being driven by AI-related services. And to the extent that there's AI positive and AI negatives, how is that equation starting to change as AI adoption starts to scale?

Yes, that's a great question. One of the things we'll discuss at Investor Day is kind of a framework on how we evaluate all of our offerings, our 3 offerings with regards to AI as an opportunity as a growth enhancer as an accelerate. And also, frankly, as a threat. One of the themes that I mentioned in this earnings call and then we're going to go into detail in the Investor Day presentations, is that if you think back and you think about kind of some of the themes that investors in both our category and then, obviously, in SaaS, they think about and it's become a hot theme is outcome-based pricing.

And outcome-based pricing really falls into 2 categories for us: 1 fixed price and to volumetric pricing. An example of biometric pricing could be getting paid x to process and ensure its claim from point A to point B. And that we get a price and we're responsible for that delivery. When you step back and you go, 80% of my business today because we just did the analysis is outcome-based you have an opportunity to control the point A to point B and make it much more efficient.

So we view AI as a huge opportunity on a very large existing contract base, put aside any net new work to gain efficiency, speed, throughput and margin. That is a multiyear effort that is being started now, but that will happen and that will show up, and we'll have much more clarity as we execute that through this year and enter next year and beyond.

From a demand side, I think what you've heard from everybody is accurate. Pilots, have happened. A lot of them have not gone into production, but that is very similar to this stage of any major technology wave and this is the largest technology wave in modern time in modern history. This is the beginning of the beginning for AI. I can point to many things that I've been looking at both as an investor and operator with regards to the third and fourth quarter of last year, token usage, token pricing, accuracy, lack of illucinations. We are now at the beginning of the beginning.

Everything that people did before, I hear some negative commentary that pilots didn't go anywhere. That's normal. In new technology and new trends in new eras you have a period of experimentation. Things work, they don't work. You figure out where you can get the most bang for your buck and then you focus it on that. It's exactly what's happening here today. We're taking advantage of it internally from an operating model standpoint and an operation standpoint.

And as you'll hear at Investor Day, we have a whole bunch of new very disruptive AI-centric capability solutions that are in the marketplace right now, the one we just mentioned on the call, we literally launched at April 28. So it's been literally less than a couple of weeks, but feel very good about its positioning, how we've priced it and the initial demand signals that we're seeing in the marketplace.

Great. And just a quick follow-up that's related. You mentioned the shortfall in kind of the revenue trajectory in the apps business. Do you attribute that purely to macro factors? Or is AI playing a role there as well? What's your take on that?

Look, macro definitely in terms of spending discretionary, we entered this year, if you just step back for all of us as investors as consumers, we entered this year with a far different outlook than the reality of the first 2 quarters, expecting a stable environment without big increases in input costs, obviously, oil because of the war has increased everybody's cost of operations, regardless of what industry you're in. That then throws plans up in the air.

And there is a level of pause and I've spoken to big customers where executive boards, where senior management is making sure that the large technology decisions that are being made today are being made with a modern frame of mind. And so questions like, should we upgrade to this new ERP system? Are you sure you can't do it igenically. Those questions are smart. They're very accurate in terms of happening and they should happen, but they are causing, in some cases, a delay in the final decision-making. And I think everybody is experiencing that.

But again, that's part of the normal cycle of a new wave of technologies being introduced that will definitely disrupt the existing players and you've seen that obviously in the turbulence in the SaaS space.

There are no further questions at this time. And with that, I will now turn the call back over to Roger Sachs for final closing remarks. Please go ahead.

Well, thank you, everybody, for joining us today. We look forward to seeing you in June at our Investor Day and speaking with you next quarter. Thank you much.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.

With DXC, the senior management team, we have Raul Fernandez, CEO; and Rob Del Bene, CFO.

But before we get started, let me just say, first, I've got an important disclosure to read. Please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley rep.

So Raul, I'm always excited to see you always -- how do I put this? You always have so many things going on that are really interesting. And so I'm glad that you've taken time...

Thank you.

To be here with us today to talk about DXC, et cetera. So maybe I'll just start, can you just give us a progress report on the time line as you're thinking about this work in process of turning the business as you work to return to flat growth? And help us understand what has happened and what you still feel like needs to be done? And in particular, what are the remaining progress -- how much of the remaining progress is going to be driven by your own actions versus the environment and the world out there?

Great. Great. Well, thank you. Great conference, and you got a great lineup all weeks, so congratulations. I wish I could stay longer. The -- so we defined our journey in 2 tracks, Core Track and Fast Track. Core Track is -- as a professional service company, if we're all going to start something that rates times hours, there's -- whether it's a law firm or a tech services company, there are certain things you do at a certain level that make you good and some make you great and some make you less than good. And that is billing the right amount against a cost basis, having the right forward visibility on utilization, having the right solutioning so you don't have mistakes in what you said you could do versus what you delivered. Those are basics of professional services.

And if you looked at the metrics across the board, and I did as a Board member and I did as an interim CEO, and it was one of the things that convinced me to do this full time is that I saw upside. We were below average. There's upside to operating at average. And that's before AI. So operating the business in a better way, having more deals to chase, having the conversion of those deals hit being able to estimate those time of conversion, not losing your business that you already have, so your NPS scores and all the satisfaction scores and performance scores are good. So we're -- that is our day job is to constantly get better at the basics of delivering services, whether it's rates times hours, outcome-based, so I get paid the process of an insurance claim in one of my businesses or in the fixed delivery of a solution against the cost.

But at the end of the day, the math behind that is still rates times hours. So working on that, new people, 26 months in, restructured a lot of people, have some openings at a lower level, but making good progress on the basics of the business pre-AI or pre-huge infusion of AI.

Then the Fast Track businesses are taking an agentic approach. It will be no question when you come to Investor Day in June, why it's a Fast Track project versus just another tech project. It will have different metrics in terms of gross margin, net margin. They'll be bought differently, so it will be more outcome-based, compute-based, et cetera. And those projects, we started building and time to product has been faster. Time to revenue will be faster than I initially predicted. And really, the holdup in trying to do more, do it faster is the right product teams because this is a new DNA to work with these new tool sets to develop these agentic solutions. But some of what they have in common is that they work and build upon a moat that we have.

So one of the things we're building is built upon the extension of a core banking system that is still being used in the world called Hogan. It was built in the '70s and '80s. Wells Fargo still uses it, a whole bunch of other banks still use it. It's public information. 300 million accounts are still on it. Many people have tried to get off of it. The previous administrations here have not invested in it. We said, okay, let's create a way to bring Hogan back to life with an agentic light layer where we can offer new financial products to that old base of code and extend what a bank can offer you and I as consumers.

So buy now, pay later that can be enabled on a transaction split fee basis. Remittance, stablecoin, all these things that we're lining up. And you'll see some of if you go back to our press releases, you'll see some of the array of partners that we're putting on that side of the equation. That product is being finalized. We're preselling that product. That's coming to life. And then I've got other Fast Tracks that we'll be showing there. Those are...

Showing? When you say showing them -- at the Analyst Day?

Yes, June 11. Those are smaller teams, faster teams, teams that are using code generation across the board. That doesn't mean, though, that in my traditional service delivery, I'm not measuring how much agentic code support you're getting to write the code, document the code, test the code, deploy the code. Everyone's got a bar in their line of work to be better with AI. And I personally have a more glass half full, and I get asked this question around the world, is AI going to replace your job? If you don't do anything, yes, it will replace. It will replace my job. But if you use the skills that got you here, you're curious, you are leaning in, you seek down information. And if you take advantage of the opportunities I give you in the company to use any tool you want in our sandboxes. They're like protected little sandboxes. I want people to use that.

The other thing about building these products that are pretty complex, compute cost is tiny. I mean we kind of know that because we use things all over the place to do some research for us or build something for us and you're like, oh, that costs me like $1.25. It's unbelievable how small the tab is for the compute. So it's really about the staging of the product plan or the product idea, the business plan, then testing the product and building the product, deploying the product, servicing the product and answering Q&A on the product as you've launched the product. So you just have a different way of engaging in this.

And that's going to require a different human being or the same human being that just acts in a different way. I think it's a super power. I think AI gives each and every one of us the ability, and I'm old enough to use this analogy, the bionic man. It used to be a $6 million man, probably the $27 million man today with inflation. But you can have that. We can all have that with almost no cost, but you have to lean in. And by the way, people go, well, aren't you putting classes? I'm not going to put a class together.

Anything I put up today that I structure is stale tomorrow. You have to go out and find sources, podcasts, TikTok, Insta, X. You have to follow people that are doing this and being disrupted that are credible and you have to learn yourself. And by the way, I also provide you sandbox to learn yourself. So it's a cultural shift. It's a business shift. It's a product shift. But at the end of the day, I have a company that is super low valued by any metric. We're at the bottom of the heap. There's not a lot of downside to what we're doing. We generate cash in a normal way that's not questioned, and I don't have to do things like unfortunately, our partner had to do.

And we've got incredibly sticky, complex regulated clients. You're not going to go grab some anthropic salt and just throw it on a server and go, okay, it's AI tomorrow. It's not going to happen. I'll tell you that. I'm still making money on stuff that hasn't been touched since the '80s. And I'm trying desperately to change that. So defensible for great attitude, great direction, great trajectory and great set of new innovative partners that are starting to put some stuff up.

And part of the challenge now is, frankly, to make sure that the market, meaning the buy side is -- and I'm saying solution buy side is educated, that our sellers are educated. And just an example from a couple of weeks ago, I had an A class seller, somebody who I would rate as an all-star, helped win a huge account, maintains that huge account, introduced the new product that we're developing because we wanted them to potentially be a light house.

One executive said to another don't pitch it that way. I don't think they're going to buy it that way. So this is an all-star that I would have never questioned kind of giving another all-star that I brought in to build the product direction. Started with this point of view in line, it wasn't selling, reverted back and then they sold it with the other point of view. But it showed me that I have to be educating and evangelizing even the best of my people to sell the new stuff. Before that incident, I would have said, I can sell anything. That's given the content. Now it's not true. So that -- those little things uncover as you only know how good you are until you play the game. You don't know how good you are until the game is over. We're starting to play the game. We're good, and I know that we're going to win when the game is over.

So let me ask you, why did it sounds like at least the first announcement was around the banking software piece. Like why kind of start there? And what's the extensibility into the other platforms?

So a, easy to create this lightweight layer; b, my contracts on Hogan and give the credit to back into the '80s and '90s and 2000s when they started writing this contract have legal moats. You can't -- like bank X can't have company C touch that code. I'm the only one that can touch the code. So I have a moat like, a, I'm the only one that knows how those hooks work; and b, I'm the only one that can touch the code. So it gives -- so those -- our first wave are going to be completely structured to be disproportionately beneficial to where we are strategically or tactically in that account and product set.

Right. Got it. Got it. So let's talk about kind of -- so if that's where your product is, et cetera, how are clients and customers responding? Like what's the spending intentions? How does that vary right now from geography? And in particular, where are you seeing movement in terms of willingness to spend?

Yes. Okay. So agentic AI clearly has mind share at the boardroom, at the divisional level at every level, it is not ready for prime time in every situation. A lot of our clients are highly regulated businesses that have to run 99.9% of the time. So even if we could all vibe code a solution and get it to 85%, you're not going to get -- you're not going to switch out an insurance system that's working today and making you money for something that, yes, may be cheaper because you made your own code and doesn't work. So that's going to -- the promise is there, and that will happen that in complex regulated or complex workflow or data-sensitive businesses, which we operate highly in and we're highly concentrated in, it will take a while and you will need a partner. And we're a partner because we're so close to it that can be best positioned, if we're honest on the AI side, what tools to use today and tomorrow.

And I think the other thing, and when I started, I put up these 10 rules of AI and then I stopped using it because I used it at the beginning of the Internet, and it was good and then nobody was paying attention to it. And -- but one of my rules was portability. Like I've seen the movie where somebody you rely on to build your business changes how they do what they do.

And I'll give you a perfect example. Google, ad tech, Metadata, they decided 10 years ago, I forget when it was, to switch the algorithm and to take a little bit of what others were getting paid on and get paid on it themselves. And if you built your whole solution around that, there was no portability or no other way out, your business got hurt. So I've seen this before.

So one of the big things that we -- that architecturally we talk about is portability. Does that mean agnostic? No, it means pick the best thing, but also be ready in case your partner turns out to be your competitor. And by the way, you're spending all this money. These guys have to make money. So I don't blame them to look for pockets where people make money.

But another example that I wouldn't have predicted Friday night, Defense Department says, cloud can't be used by anybody in the government. And even though I don't have any U.S. government business because we exited that business, I still do work for people that do work for the government, Boeing, Raytheon, Collins, others. So now I have to go back and say, hey, guys, anything you're working on that's cloud-based? First of all, make a, was it portable because it's got to have to be. And b, let's make sure that we have that in our thinking and our architecture because things can change. Never would have predicted that, but our approach protects you. And to have a partner that is working in with multiple clients and multiple technologies, the stuff moves so fast, even your best teams, they're handling their day jobs, which is keeping the systems up and running. They have limited ability to figure out what's next, and that's the opportunity we have.

Got it. So when you think about like those customer engagements, and you talked a little bit a few weeks ago when you reported earnings on what was happening from a revenue and bookings perspective, and it seems like people are kind of going through extended decision processing, et cetera, because of all the things you're talking about, where are you identifying those bottlenecks and bottlenecks that you can address?

So having been on a lot of boards and a little different companies and having talked to Board members and executives in these companies, I can tell you that there's no big ticket item, $50 million, $100 million, $150 million, $200 million massive software and services purchase that today isn't being questioned a little bit more. Everyone is saying before they sign off at the approval level in the executive stack, and in some cases, this has to go to the Board for a sign-off. Are you sure that we can't do this agentically because it's in the headlines. So guess what? At the end of the day, SAP will still get that deal. I'll still get the deal to implement it, but it may take 3 or 4 or 5 more weeks for the internal people to say, yes, I looked at it, and here's my PowerPoint on what this can do and why we decided to go this way versus this way. It does introduce some time, ultimately beneficial, but near term, more volatility.

Got it. Got it. And is that something that we're -- you feel like that, that process can become more standardized, like evaluating, okay, what are our best alternatives to this deal? Or is this just going to be the new way that every project is evaluated like, okay, we've got this project coming up. It's either for renewal or it's a new project. But let's evaluate it, like you said, against the very dynamic backdrop of agentic solutions sets, et cetera?

I'm planning things in 12, 24 and 36 months. In the -- my longest time period, 36 months, I think that dynamic stays in there because things are changing so fast, but yet there's such a base. And then you also have to see what the larger players, like I think the world of monolithic products that do everything that maybe only use a subset of those things, over time, that will end because you can build smaller, tighter things and smaller, tighter teams. So over time, that will end.

But the other thing, don't forget, it's the sell side, me, but it's the buy side. The procurement people have to be ready to buy this way. And a subset are -- and a subset are good and smart and creative and curious and risk-taking enough to do it. But these organizations, thousands of people, thousands of man years processes, procedures are all built around buying P times Q and getting the best out of me at P times Q. So I can be ready to sell an outcome. I can be ready to sell something and it works and it costs less and I'm making more money and maybe it costs -- maybe the top line is a little less, but I'm making more money, you're going to pay less money. But they have to be ready to buy that way. And if you've talked to some of these procurement people, it's not exactly the fastest-moving groups in the organization. And unless there's pressure from the top in their side of the organization to change how they buy, I'll be ready, but will they all be ready at the same time? That's accrete.

From a strategic relationship perspective, what we are seeing, and it's reflected in our pipeline is that while the decision process could be elongated, customers are going to pick partners and vendors who could take them into the future, right? They're going to want to know that you have what it takes to take them to an agentic future or cloud migrations or whatever it may be. So being proactive and having the capability visible externally, which is what we're trying to do and especially on Investor Day is to advance that for DXC. And we're starting to see that resonate, albeit on a smaller scale now and in selective engagements, but we see it resonating in engagements.

Raul, I want to ask you kind of more of a macro question on the back of this is that one of the things that I grapple with is that, generally speaking, like we do a quarterly CIO survey. And our most recent CIO survey has indicated that the growth in IT budget this year will be similar to last year, maybe even down slightly. And like I can talk about the factors maybe why that should not be surprising. The flip side of it is, is that if we were seeing kind of improving returns on agentic projects or incremental projects generally, I would think that people would find ways to expand the budget faster because the returns are there. So how do you think about like this budget allocation question in your customers? Like how are they deciding between how much to spend on traditional road map versus say, AI-driven? And what does that mean for their overall budget trajectory?

Yes. Large corporations usually have an annual and maybe at best twice a year massive capital expenditure because they have to also report on what they're doing, right? This is moving so quickly that it's going to miss a lot. Those -- the on and off ramp in that type of cadence is not going to give the feedback loop to make the uptick, I think, as quick as it should be, but that's not a function of the capability or what can be done. It's a function of how they're buying and how to plan...

The process [indiscernible] internally.

So I think for us, we're counting on 2 things. One, we're better, faster. We can get things done using agentic, both in Core and then obviously, in Fast Track. And that because we now are more modular, our TAM increases. We can go after things that we didn't or we couldn't go after before. So our TAM actually gets bigger, which is going to fight the deflationary impact of the headline numbers.

I think one of the things I was looking at the investment memo for anthropic a couple of weeks ago, and they touted as a very big deal that they had 500 customers, 500 customers that were paying $1 million, okay? That's one of the leading companies in the space that are touting a headline number of only 500 customers. I have a lot more customers paying $1 million. They don't pay me $1 million for the agentic stuff, and I am out worth $380 million. But my point is you can get a lot done.

Even in the solutions that I'm prototyping and they're all multimodal. So I'm using ChatGPT, Claude, Hogan, ElevenLabs, a combo of things that you're buying tokens on. I am stunned at how cheap that part of the build is. Like I'm just stunned. It's like the electric. It's not that high. And frankly, we're all being subsidized by a lot of expenditure here for sure in the world, but it is stunning. Which I often think about like if they're going to subsidize me, I need to find more ways to take advantage of the subsidization, right?

Yes. I want to make sure if there are any questions in the audience, please raise your hand, we'll get you a mic. I want to go to your Core Track versus Fast Track. And that construct, in my mind, seems pretty strategically compelling. For Fast Track, you describe it or at least the way I characterize your description of it is that it's replicable high-margin AI-based SaaS solutions. Can you give us a sense of what the unit economics of these types of engagements might be and how your fast track offerings are differentiated from Gen AI offerings from some of your peers or competitors?

Yes. Again, we are picking pockets of protection to -- so these are things where we own the -- we're either managing the proprietary data flow. We're managing an outcome like the processing of a premium. We're managing the data or the customer data behind that, and we have either a system or people that are critical in that workflow. So a, we have a unique point of view to certain things that you need to get right to make the agentic solution work. So risk of our agentic failures because we're so close to that stuff is lower because literally, we're the primary responsible. So that's one.

B, like I mentioned with Hogan, no one else can touch Hogan in most of our contracts. So it's an easier one to greenlight. And then C, on some of the stuff that's net new, we have approached the build of the product in agentic way, and it looks different. It's consumed differently, but yet it's built on the back of delivering X results and let's just say it's an orchestration tool for SOX and NOX. We have a point of view having operated SOX and NOX for 30 years, 40 years that now as we take an AI approach to it and don't have any legacy issues. So I don't have to -- I'm not worried in that scenario about cannibalizing any product that I have.

I will have displacement of people. We are doing everything we can to train and retrain our people to use them somewhere else. But I've told -- I've been very honest, like my job is going to change, your job is going to change. Some jobs will get eliminated. You saw what Dorsey did last week, and that's an extreme. But it's also a moment in time where I think people are feeling more vulnerable than they ever had in their careers in the [indiscernible].

Right. Yes, for sure. For sure. Let's talk about specific vertical insurance. You've discussed investing to expand the SaaS portfolio and accelerate growth there. What is the proof or at least the clearest proof points to you that those investments are paying off? And where is competitive intensity the highest in insurance?

So we -- originally, when I got here, I looked at the insurance business, I looked at some comps. I thought, obviously, the sum of the parts, you can get a point of view that we should be valued more than we are as we trade today. And my initial objective was to just get a partner to own a little piece of that, and then we would ride the upside together. When we ran the process, people were like, great, we love the business, but we want to own the whole thing. So we kind of finished it.

And what happened to us is we realized, hey, there's a punch list of 10 things to make this business better, many of which we knew and some of which we got through the potential partner process sale process. I've been taking that list, and I've been jamming through it. So the creation of new lightweight apps to extend and expand what an insurance company can offer their end customers to reduce the cost of processing within customers. I do a lot of B2B. I run the Lloyd's marketplace. So there's a lot of B2B stuff. It's not just the initiation of a life insurance policy for them, but it's also the reinsuring of that in that whole complex highly regulated world.

So I think for us, it's picking spots where we've got some competitive moat around us and executing quickly on that, building trust and credibility. And look, I believe that we -- there are great companies that have great internal teams, and they'll continue to do well. But the things are changing so fast that you need a player that's in the game, working with many different customers because I have some really cool things that I'm doing in a semi B2C side that clearly has a B2B impact. And it's kind of the AI personification of knowledge, taking a lot of data sets, creating a user interface that's more avatar-like and having a very easy back and forth that makes me smarter and get an answer faster.

That is interesting in the context of history and history books and teaching, but it's also interesting in the context of a broker in London wanting to know the exposure for their oil tanker policies that are underwritten and potentially what if this, what if that. The ability to use AI to extract better, deeper information at a faster rate is a killer app here, and we're in the middle of that.

100%. A couple of financial questions here. First, in the last few minutes. First, you've indicated share repurchases are likely to increase this coming year and are on pace to match your fiscal year '26 levels here in the first half of fiscal year '27. How are you thinking about the decision to step up buybacks? And how are you balancing that against other capital uses such as investment, priorities, debt reduction or even M&A?

Yes. So the good news is in AI, you can do more with less and you have tighter teams. And also, you have teams that are more full stack, so they're less specialists and more full stack. And so having that profile and background is super important, and I've worked with many of those teams in the past, and I've recruited a lot of them. But you don't need a lot of them to make a lot of impact. So a, from investing in ourselves organically to get this growth got that covered.

As I look across the landscape, I question what value there is in adding anything that is an M&A because I have so much opportunity in my existing base. I have so much opportunity in my existing geographies. And I'm probably more motivated to do a decent [indiscernible] of killer or superheroes than I am about buying something that cost a lot of money because I think I can get more out of a small team than I can out of an infrastructure, that's overdone. So that's a quick answer.

And then buybacks will continue, invest will continue, pay down some debt will continue. And then frankly, we're all -- every company here is going to have some level of restructuring of people. People are going to change. That's going to cost some money. So we got to factor all that in.

You got to be prepared for that. So conversely, are you evaluating any strategic alternatives and such as monetizing specific assets or the broader business? And what kind of conditions would you be looking for to make that happen?

Great question. So goal is, as a combined unit with all of the units working together, get it to another level of valuation. I believe we're undervalued. I think that we -- fair value is a higher level from now. We've been doing all the groundwork to make that happen. Hopefully, we can deliver the quantification of the message and sell the message and get the message received and people buy the stock and the stock goes up. If that doesn't happen, I know there's breakup value here that's above and beyond where we have today. And it's been public. We've had different suitors and they've leaked stuff.

The breakup value is there today. I'd like to get it to a different level. I'm not saying never, but I am saying today, I've got great assets, great footprint, great people, great trajectory, great direction, and I want to give our people a chance, and we're generating cash. we're going to stabilize the revenue profile. And I think Investor Day will be a great day to show how that picture really frames out. But I'm also a realist. If the play doesn't work, we're going to change the play and how to get value for all of us as investors if we have to change the play.

So I know it's still a few months away, but how do you think about the key things that you would like investors to take away from that June analyst meeting? Like what are the top 2 or 3 messages?

I want you to say, wow, at least once. So that's one thing. Two, I want you to see just how innovative a big company can be and how disruptive in a creative way a big company can be. And then how select we were in our first wave and then also believe that, that same team cannot just execute the first wave, but can execute the second and third wave.

Well, Raul and Rob, thank you very much for being here at the Morgan Stanley TM&T Conference. It's been great to have you.

Great conference. Thank you. Thanks so much. Appreciate it.

Thank you.

Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the DXC Technology Third Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] Thank you. And I would now like to turn the conference over to Roger Sachs, Vice President, Investor Relations. You may begin.

Thank you, operator. Good afternoon, everybody, and welcome to DXC Technology's Third Quarter Fiscal 2026 Earnings Conference Call. We hope you have had a chance to review our earnings release, which is available in the IR section of DXC's website. Speaking on today's call are Raul Fernandez, our President and CEO; and Rob Del Bene, our Chief Financial Officer. Here's today's agenda. First, Raul will update you on our strategic initiatives. Rob will then cover our quarterly financial performance as well as provide thoughts on our fourth quarter and fiscal full year guidance. Raul and Rob will then take your questions. Please note, certain comments on today's call are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially from those expressed on the call. Details of these risks and uncertainties are in our annual report on Form 10-K and other SEC filings.

We do not commit to updating any forward-looking statements during today's call. In addition, when we refer to year-over-year or quarter-over-quarter revenue growth rates, we will be discussing organic revenue changes on a non-GAAP basis, which exclude the impact of foreign exchange and any inorganic activity. We will also be discussing certain other non-GAAP financial measures that we believe provide useful information to our investors. Reconciliations to the most comparable GAAP measures are included in the tables included in today's earnings release. And with that, let me turn the call over to Raul.

Thank you, Roger. Last quarter, we committed to a dual-track strategy to stabilize our heritage businesses while building new AI native revenue streams. For the first time, DXC has a clear unified strategy and the infrastructure to deliver it. This quarter, we moved from design to deployment, launching our refreshed brand, standing up our first centralized sales enablement function and advancing our Fast Track initiatives. On the core track, we launched a refreshed brand in Q3, a clear story and new visual identity that articulates why customers choose DXC and stay with us. This wasn't cosmetic.

We retooled our solutions positioning, rebuilt our sales materials and created a consistent message across every customer touch point. The early signals are encouraging, where our teams are using these new tools and leading with our differentiated message, we're seeing it resonate. Customers and influencers respond positively when we lead with clarity and confidence about what makes DXC distinct. To scale that message across the organization, we've established a high-impact sales enablement team, the first centralized function of its kind at DXC.

They've rebuilt our onboarding process, created integrated sales plays for priority offerings and established baseline metrics we're now tracking across regions. That said, we are a company of considerable scale and driving consistent execution across a global sales organization takes time and discipline. But where we've deployed the new approach, it works. At a recent ISG Provider Summit, third-party advisers told us DXC showed up differently than expected, clear story, strong presence, memorable and distinct from competitors. Our focus now is making that consistent across the organization. What's not changing is what our customers consistently tell us, DXC delivers. Our delivery excellence remains a competitive advantage and the foundation we're building upon. The opportunity in front of us is helping our sellers translate that operational credibility into more transformative conversations, moving from trusted partner to strategic adviser in our customers' AI innovation agendas.

A good example of how our go-to-market strategy is working is a significant new logo win with the London Metropolitan Police, a master vendor engagement to lead their enterprise transformation. We're replacing core ERP and resource management platforms, integrating modern SaaS and AI into mission-critical operations. We won this engagement because of deep public sector expertise, disciplined execution and a repeatable blueprint we can scale across U.K. police forces. We're closing the gap between our best performers and the broader organization through these targeted talent and enablement investments, and I'm confident we'll generate results from these initiatives. Conversely, our Fast Track initiatives are progressing well with development time lines and early client interest tracking ahead of our initial plans.

Fast Track is about acceleration. It's focused on AI-infused solutions, repeatable IP and productized offerings that deliver higher growth, higher margins and durable differentiation. Fast Track is possible because of how we've architected AI inside DXC. Our approach starts with a fundamental insight. Legacy systems aren't liabilities. They're assets. They contain decades of battle-tested business logic and institutional knowledge. Rather than ripping them out, we connect them to AI through an intelligent orchestration layer that roots work across multiple providers, enforces security and governance and maintains complete audit trails. We built this approach for ourselves first. We've deployed AI at scale across all 115,000 employees, integrating every major AI provider and routing work to the best model for each task, giving us full technical portability, and we're putting 60 years of institutional knowledge to work, pricing, contract intelligence, competitive insights, project data, all surface through roll-aware platforms that deliver the right information to the right people at the right time.

This approach lets us move from idea to production in weeks, not months, and we're applying the same architecture we're building for clients to accelerate our own product development. As customer zero, we prove it works inside DXC before we offer it to the market. Here's how that customer zero experience is translating into fast-track offerings. In security, our agentic security operations center powered by 7AI protects DXC from 4.5 million threats daily with over 90% resolved automatically. We're now offering this proven capability to banking, health care and government clients who are overwhelmed by alert volume. They see our operational results as proof it works. In banking, we own and operate Hogan, one of the most trusted core banking platforms in the world. It processes over $2.5 trillion in transactions per day across 300 million accounts.

Rather than forcing customers into risky multiyear core replacement projects, we built Core Ignite. Core Ignite embodies our enterprise AI philosophy, connect, don't convert. Core Ignite allows banks to connect to fintechs, launch new digital products and modernize customer experiences while preserving the security and performance of the mainframe underneath. We know our banking customers want to innovate, but when the stakes are this high, they cannot risk their core ledgers. We are bringing the innovation to them through a curated ecosystem of partners. We partnered with Ripple to integrate enterprise-grade blockchain digital asset custody and real-time global payments directly into Hogan. We partnered with Euronet to bring the Ren payments platform to our clients, enabling instant card issuing and payments. We partnered with Aptys to give our banking partners immediate access to FedNow and real-time payments, and we partnered with Splitit to allow banks to offer buy now, pay later options.

We believe our Fast Track initiatives can achieve 10% of our run rate revenue by the end of Q2 fiscal 2029. We are deliberately structuring our Fast Track products and contracts to preserve strategic flexibility that gives us multiple paths to create shareholder value as these businesses mature, including scaling them inside DXC, partnering or pursuing other value-enhancing outcomes. The focus is straightforward, build high potential businesses and retain the flexibility and choose the option that delivers the strongest return for shareholders. For decades, this industry operated on a linear equation. To grow revenue, you had to grow headcount. That era is ending. AI allows us to build and deploy solutions faster with lower incremental capital and less dependency on labor growth. Our strong free cash flow allows us to self-fund these initiatives while maintaining balance sheet discipline.

We're excited to share more about these opportunities at our upcoming Investor Day in New York City, the second week of June. Specific details will be announced shortly. The strategy is clear. The architecture is in place. The work ahead is delivery, and that's exactly what DXC does best. One final note, this script was written by me, but delivered using my custom AI voice model built with ElevenLabs. We can now share translated versions in Spanish, French, German, Portuguese and Arabic instantly. This is exponential in action, AI that amplifies human capability and it's a preview of what we're bringing to clients. Let me turn it over to Rob to review the third quarter results.

Thank you, Raul, and good afternoon, everyone. Today, I'll go over our third quarter results and provide guidance for the fourth quarter and our updated full year fiscal 2026 outlook. Now starting with the third quarter results. Total revenue was $3.2 billion, declining 4.3% year-to-year within our guidance range with all 3 business segments performing consistently with the first half of the year. From a geographic perspective, we experienced declining performance in the U.S. with the rest of the world improving from the first half of the year. As expected, our bookings improved from the levels we saw in the first half with a book-to-bill ratio of 1.12, which brings our trailing 12-month book-to-bill to 1.02. This marks the fourth consecutive quarter with our trailing 12-month ratio above 1. As a reminder, last year's third quarter bookings were our strongest in several years at $4.3 billion, which creates a more challenging year-to-year comparison.

As we mentioned last quarter, we had a robust list of new large opportunities in the pipeline, 3 of which closed in the quarter, and we have good line of sight for others to close in the months ahead. We attribute the building pipeline of opportunities to our foundation of delivery excellence and deep engineering skills, coupled with our investments in new offerings and AI-based solutions, deepening our relationships with third-party advisers and our new brand positioning. All of these factors are repositioning DXC as a strategic partner to the market. Adjusted EBIT margin was 8.2%, coming in slightly above the high end of our guidance range, driven by continued disciplined spending management and the timing of onetime benefits that were not included in our guide. On a year-to-year basis, adjusted EBIT margin declined 70 basis points, primarily reflecting planned higher investment levels in offering development and marketing initiatives to support future revenue growth.

Non-GAAP EPS was $0.96, above the high end of our guidance range, consistent with our adjusted EBIT performance and up from $0.92 in the third quarter of last year, largely driven by a lower share count, net interest expense and taxes and partially offset by lower adjusted EBIT. Now turning to our segment results. The CES book-to-bill for the quarter was 1.2, which brought the trailing 12-month book-to-bill to 1.13. Bookings continue to be strong in long-term strategic projects with continued pressure on short-term discretionary engagements. CES revenues, which represent 40% of total revenue, declined 3.6% year-to-year. This reflects the discretionary booking dynamic I just mentioned, which has been impacting revenue for the last several quarters. Our expectation is that the strength of the longer-term bookings will lead to improved CES revenue performance in fiscal 2027.

In addition, as we have mentioned, we are investing in building AI-based offerings such as Core Ignite, AMBER and our new AdvisoryX consultancy. As these new offerings scale, they will contribute to the performance of CES. Driven by large deal wins, the quarterly GIS book-to-bill ratio improved to 1.09, up from the first half of the year. The trailing 12-month book-to-bill is now just below 1. GIS, which represents 50% of total revenue, declined 6.2% year-to-year, which is in line with our full year expectation. Insurance, which represents 10% of total revenue, grew 3.2% year-to-year, largely due to growth in our software business. This growth has been driven by strategic customer migrations to our cloud-based Assure software platform and associated offerings. We are also continuing to invest in our software capabilities. For example, we have introduced a suite of AI-enabled smart apps that help insurers drive revenue growth and productivity without changing their core systems.

While these investments have near-term margin impacts, they will drive incremental revenue growth over the long term. In addition, in 3Q, we anticipated closing a couple of large BPS opportunities that have now been delayed to 4Q and will impact our 4Q revenue forecast for insurance. Now turning to our cash flow and balance sheet. We generated $266 million of free cash flow during the quarter, bringing our year-to-date total to $603 million, up from $576 million during the same period last year. We're on pace to deliver our full year guide of approximately $650 million. During the quarter, we took proactive steps to further strengthen our balance sheet. We refinanced our EUR 650 million bond that was scheduled to mature in January of 2026. In addition, we prepaid $300 million of our $700 million bond due to mature in September, consistent with our commitment to maintain a strong balance sheet with the appropriate debt levels.

While continuing to strengthen our balance sheet and fund investments for long-term growth, we have been returning capital to shareholders following a disciplined and balanced approach. Year-to-date through the third quarter of fiscal '26, we repurchased $190 million worth of our shares, including $65 million in Q3. We also remain focused on our commitment to lower our capital lease liability. During the quarter, we paid down $47 million, which brings total reductions to more than $450 million since the start of fiscal 2025, which is when we amended our financial practice to significantly reduce new lease originations. In that time frame, we held new originations to $33 million. With these efforts and after accounting for currency movements on our euro-denominated bonds, our total debt declined by $465 million to approximately $3.6 billion. Our ability to consistently generate strong free cash flow enabled us to increase our cash balance by more than $500 million since the start of fiscal 2025, bringing it to $1.7 billion. As a result, we have reduced our net debt by approximately $970 million.

Looking ahead to Q4, we expect to repurchase $60 million worth of shares, bringing our full year total to approximately $250 million, up from our initial guide for the year of $150 million. With strong free cash flow and expected proceeds from asset sales, we anticipate exiting 2026 with approximately $1.7 billion in cash. Given this projected cash position, we are providing an early perspective on capital allocation for the first half of fiscal 2027. Along with continuing to make growth investments in our business, we expect to deploy $400 million to retire the remaining U.S. dollar bonds that come due in September. We also plan to repurchase $250 million worth of shares in the first half of the upcoming fiscal year, which is equal to our total projected share repurchase in fiscal 2026.

I'll provide further details on our full year fiscal 2027 capital allocation expectations during our year-end call in May. Now let me provide you with our fiscal 2026 fourth quarter guidance. We expect total organic revenue to decline 4% to 5%. From a segment perspective, we expect CES revenue to decline year-to-year at a similar rate to the past couple of quarters. Previously, I had commented that we would see slight improvements in CES revenue performance in the fourth quarter. While our bookings for the quarter were strong, short-term project bookings were below expectations and have delayed revenue improvements to fiscal 2027. For GIS, we expect revenue to decline mid-single digits, in line with prior quarters. And finally, insurance revenue growth is expected to be consistent with the prior quarter results, which is a reflection of continued software growth and flat insurance business process services performance impacted by the delay of bookings we experienced in 3Q.

We anticipate adjusted EBIT margin in the range of 6.5% to 7.5%. And finally, our non-GAAP diluted EPS of $0.65 to $0.75. This fourth quarter outlook implies updated full year fiscal 2026 guidance as follows: total organic revenue decline of approximately 4.3% and at a segment level, we expect CES to decline at a low single-digit rate. GIS is anticipated to decline at a mid-single-digit rate and insurance is expected to grow at a low single-digit rate. We expect adjusted EBIT margin to be approximately 7.5%, and we expect non-GAAP diluted EPS to be approximately $3.15. Our full year free cash flow expectation remains at approximately $650 million. And with that, let me turn the call back over to Roger.

Thank you, Rob. We'd now like to open the call for your questions. Operator, would you please provide the instructions?

[Operator Instructions] And our first question comes from the line of Jamie Friedman with Susquehanna.

Clearly, a lot of creativity and work going on here, and it is welcome by the investment community. I'd like to get your perspective, Raul, about the fast-track attributes that you're contemplating. So if you look at one of the engagements you currently have or prospectively have, when you say things like repeatable, scalable IP, could you go in a little bit to what sorts of services it is that you're providing or how the platform works? I know it's early, but I feel like at this point, some sort of more detail about what it is that you're doing would be helpful.

Yes. No, great question. So let me just start that the key to doing this is obviously being in a position to understand where we have some value, existing value in the work that we do with our customers. So Hogan is a great example. It's been around for a long time from the '80s, really wasn't invested in, cared for, nourished. And our customers, some of them stayed on, some of them left, but there's still a tremendous amount of a user base there. And so as I've brought in new product teams, these are more entrepreneurial focused teams that have an ability to quickly look at an opportunity and now with AI scale from Sandbox to MVP in a fraction of the time that it was before. We've been targeting the areas that we want to invest in because, again, I think the biggest limiter I have is product teams that can execute.

So we've chosen where we have some legacy leverage, where there is something in what we do and what we did that provides some sort of defensible moat on the defense side and then gives us some offensive capability that somebody just can't enter and leapfrog us. So Hogan is a great legacy platform. This CoreIgnite is a great light layer, call it a gateway that connects new products that banks want in a very technology, easy, friendly way to connect. And then from a standpoint of value, we are creating value and we are sharing that value in a nontraditional way. So this is not rates times hours. This is not services. This is -- in this case, it will be sharing transaction fees. And in this scenario, transaction fees are at a high rate, click rate, right, per day, per customer per item that we are bringing to the table, meaning financial product that we're bringing to the table.

And so the attributes are replicability, scalability, IP, some defensive and offensive IP and architecture. And then frankly, having the right team with the right background to quickly build and prototype and launch. And I think this is a great example where we have started building, we've started talking to our customers. We've started engaging with partnerships. We've started announcing those partnerships before the product is ready to go. But we're talking quarters, not years. We're talking months, again, not years. And so the attributes across the board, and that's one in CES. There's another offering within GIS called Oasis that we're going to launch. Our June Investor Day will be a day that we go into heavy detail. We will have demos there. We will have product teams there. We'll have customers there. And then Rob and I, in June, we will have a much more detailed look at the next 24 months or 28 months, whatever is left in the 36-month time line and be able to give you a better sense as to the revenue ramp.

Personally, as I look back and I look at the development schedules that I originally approved and funded and I look at where they are today, a, they're running ahead of schedule from a development standpoint, again, use of AI tools to get things done. and b, their time to revenue is faster than I originally thought. And so the time between now and June will let us fine-tune the model, let us look at what the ramp-up is going to be. But I think everything that you see in terms of the AI high fliers of incredible fast penetration and growth, we have an ability if we select, if we invest and if we build the right AI products to benefit from that much stronger rise in revenue and adoption. And again, I think we've targeted really well. We've got 6 right now. There's another probably 3 to 4 that are in the queue. Again, the biggest issue I have is the right teams to execute on this and picking the right projects, right? So we're going to -- they all have a shot at being super successful. As long as 4 out of 6 are successful, it's a win for us. And even if some aren't, we're going to learn along the way.

Okay. I'll drop back in queue. I'm going to come back if there's room at the end.

Yes. And I'm happy to go into -- this is a higher gross margin or net margin profile, how we're pricing it. So happy to follow up on questions there as well.

And our next question comes from the line of Bryan Bergin with TD Cowen.

Maybe start on the guide. Just curious on the underlying drivers and assumptions you made on the growth rate within the underlying segments and businesses as far as CES, GIS and insurance. Just how much of the CES improvement is in hand already? And then just talk about as far as the insurance side of the equation, just what may have changed there in some of those ramps?

Yes. Brian, it's Rob. Thanks for the question. So our guide for all 3 segments, pretty consistent from a quarter-to-quarter perspective. Now we did -- I mentioned last quarter that we were expecting a little bit of an improvement in CES in the fourth quarter. The booking dynamics, as I said in the recorded remarks, the booking dynamics in CES were strong in strategic longer-term projects, different duration profile than the short-term projects. And that -- based on the beginning pipeline for 3Q, we expected to do a little better there. And the pattern of the first half of the year continued into the third quarter. So that delays the improvement.

In the insurance business, where software is growing nicely consistently all year, the business process services segment of insurance is about flattish range in terms of revenue for fourth quarter. That's the prediction. Now we -- again, coming into the quarter, we had a robust pipeline. A couple of deals we expected to close that would have driven incremental revenue in Q4 has got pushed to booking in Q4 instead of booking in Q3. So that is also a bit of a delay, which dampens the growth rate we had previously expected in insurance for Q4.

Okay. Understood. My follow-up just on the margin side. So maybe talk about the performance in 3Q and the guide for the 4Q. Is there any kind of expense timing shifts there? And as you think about drivers for margin improvement and cost takeout and maybe even beyond the 4Q, just as you ramp deals that you do win, how should we be thinking about that as you get into the early part of next fiscal, too?

Yes. So we -- in the quarter, we did a little better than we had expected. We had good resource management and savings from that. And then we had some onetime pennies that we didn't exactly know the timing. We didn't have it in our guide and they hit in 3Q. So that is the part of the decline from quarter-to-quarter going into fourth quarter. And then the absolute revenue comes down a little bit quarter-to-quarter, and that's the remainder of the quarter-to-quarter underpinning of the guide. Now we have -- extending out into fiscal '27, the 4Q guide is a good launching point heading into '27. And we are going to be pulling together all of our cost takeout as we normally would do, all of our cost takeout plans heading into the new year during the next 60 days or so. And we'll have a much better picture of the cost takeout detailed plans in 60 days.

But I would say that we have plenty of room for cost improvement and spending management. We are utilizing our AI capabilities internally, which will help us drive cost reductions next year and into the future. So we feel confident in our margin profile heading into next year, but the particulars, we'll know more in 90 days.

And our next question comes from the line of Jonathan Lee with Guggenheim Partners.

What have you seen across your client conversations in January as it relates to calendar '26 spending intentions? And how does that compare to last year? And in those conversations, what gives you confidence around any potential improvement in pipeline conversion going forward given some of the deal delays you've highlighted?

Yes. Let me hit it first, and then I'll let Rob comment. One thing that has been a factor that we've noticed in the last quarter is that we are getting a lot of opportunities that are driven by corporate spinouts, restructurings and breakups. We have existing customers and new customers that are going through the business rationale and then the actual execution of those spinouts. Those spinouts require a tremendous amount of support from a system standpoint. And we are getting a good amount of opportunities, both existing clients and new clients. And again, that is a step-up that I think is reflected by the macro environment where it's easier now to potentially do deals and get things approved in various governments around the world.

If you remember, April last year, the tariff, we started the year with a lot of hope and promise. Then we had the tariff issue. I think those have been internalized as kind of a normal operating mode where people understand that their tariff situation is what it is, and it will change over time, but it is almost like a volatile factor that is now factored in as part of a normal planning. That definitely provided some pause last year in the spring and summer. We're beyond that. I think that the realization that AI has a huge unlock of economic value and potential far beyond anything that we've been through before is absolutely resonating across C-suites. And -- but they're also being thoughtful about how to take the right approach with the right parts of the business with the right partners.

So while I think in some instances, it may delay some decision-making, the delay isn't about stopping any sort of investment in innovation. not that whatsoever. It's really about thinking how big their AI agendas will be rolled out and at what pace and sequence.

And just, Jonathan, to add to what Raul just described, just looking at the data, our pipeline for 4Q is robust. The win rates we experienced in the third quarter were very stable with the rest of the year. Pricing is -- I'll describe that as stable as well. So indicators are pretty consistent for the 3 quarters of this year. There was definitely this mix impact of longer-term projects versus shorter-term projects, which the longer-term projects are -- I think the close rates have been pretty stable. So the shorter-term projects, they haven't. The closed, there's been more delays and there's been more carrying over from one quarter to the next in the pipeline. So that pattern, which has existed for all 3 quarters, we see it -- I see it continuing into the fourth quarter, and that's what's baked into the guide.

That's really helpful context. And just as a follow-up, I want to dig into the Connect and Converge strategy. On that and sort of connecting the AI and solutions, how do we think about any risks or potential client hesitancy there? And how do you convince clients around the benefit of essentially not modernizing their tech stacks?

I think it's about optionality. Many clients have tried to do big lifts and shifts and have failed. I think a lot of factors are now coming together. One, much better AI-based tool sets for code conversion, which does 2 things. One, allows you to revisit the old legacy systems. And of course, we could be players in that scenario. But more importantly, being able to build lightweight offerings that are AI-based that can be delivered very quickly that can also be priced from our standpoint in a more disruptive and value-based way. I think it's a win-win. I think that the era of rates times hours is ending, and now we're moving into a new era of value-based pricing. It will take longer than we all think because we have huge organizations, purchasing organizations, procurement organizations that have grown up doing that.

So I think it's less of a tech challenge than it is a bid process challenge and a procurement and thinking challenge in terms of who do you want your partner to be and how do you want their business model to work side-by-side with your business model. But we're taking a very creative, innovative and disruptive approach to all of this. As you know, we've had a history and we own it of having since these companies came together, a decline in revenue. We are committed to solving that issue to getting it to 0 and then to growing again. And we think AI is an incredible tailwind for us to do that if we position ourselves correctly. And the investment that we're doing in Fast Track is exactly that to position us as great partners in their AI journey.

And our next question comes from the line of Brendan Biles with JPMorgan.

Thanks for sharing the results with us today. I love the refreshed look and the branding in the slides. It looks awesome. Question for me is on free cash flow. It seems like you outperformed versus at least what we had penciled in for free cash flow in the quarter. So I just want to confirm, is that consistent with your expectations? Or did you outperform your expectations as well? And then what's the thinking on the full year number staying at $650 million, I take it to the extent you outperform, is that just going -- allocating that cash flow into these kind of these fast-track initiatives to the extent there was outperformance?

Yes. Thanks, Brendan. I'll take that one. So we did a little bit better than we anticipated in the quarter. And just to step back, for the full year, our pattern of quarterly free cash flow this year is different than the last several years in that we normally would have flat free cash flow in the first half and produce 90% of our free cash flow in the second half of the year. We pulled -- and that was because of working capital dynamics. This year, we pulled forward the benefits of working capital into the first half of the year. So it changed our normal SKU. In the third quarter, we did -- also did a little better than we anticipated in a couple of areas, not materially. And I do think that is more of a pull forward from 4Q into 3Q rather than adding to our full year guide. Now we always try to do better, right? So we will keep working all elements of free cash flow and try to outperform.

But right now, what I can see is we'll be on our original guide. And the deployment -- to answer your question on deployment, we were really clear in our script where we're deploying our cash in the first half for the fiscal year. So we gave color on both repurchase and debt repayments.

And our next question comes from the line of Antonio Jaramillo with Morgan Stanley.

I want to go back to your comments on the pricing environment. How does pricing vary for like each of the business segments? And where do you see like the most change?

Our pricing dynamics are different in each segment depending on the profile of the engagement. So let me just take it step by step here. In GIS, where there are longer-term commitments, including at some engagements have capital, some engagements don't. So the pricing would vary depending on the level of upfront commitment being made by DXC. Some engagements require more transition and transformation. So the pricing structure of those contracts would look very different than a consulting contract, right, where it's people related and skills related and the value you're bringing to that engagement. So really, the -- and the same the insurance business is different even within insurance, you have a software component to insurance, which is priced as typical software providers price their products. And there's a BPS component to insurance that's priced more typically like an outsourcing contract.

So each of the 3 segments have different dynamics and the level of upfront investment will determine part of those pricing dynamics. I will say that for all 3, this year, our pricing has been stable for all 3 segments.

Got it. That's helpful. And then I wanted to follow up on the cap allocation priorities. It looks like the share buybacks will be ramping up in the first half of fiscal year '27, which is matching what you guys are going to do for this fiscal year. Yes. Like how do you balance that with investment as well?

Yes. So our first priority is investing to grow the business. So that is our #1 priority. We've also -- the other 2 priorities are equally important to us, maintaining the right debt profile, strong balance sheet and return to shareholders. So we -- once we set our investment levels that we require and determine how much incremental cash we have to deploy to the other 2 priorities, we will balance the right debt profile with what we feel like is the appropriate return to shareholders. So it's judgment. So you could see from all the actions we've taken for the last 2 years that we've been applying judgment along the way. And we -- with our cash balances we currently have and project to have through the end of the year -- fiscal year, we feel confident in those -- in the cash generation and the cash projections. So we thought it was appropriate this year to give guidance for the first half of next year, which is a little unusual for us, but that should be a signal of confidence in our cash projections.

And let me just give a little bit of color. As investors and builders of AI products and services that we're bringing to market, we are benefiting from the incredible amount of compute that is available to us. I think what's happened in the last 2 years is that you've got a democratization, small D of compute and an ability to have access to that -- for anybody to have access to that as a user, as a consumer and as an enterprise. We clearly see the benefit and value and the fact that you can build incredible solutions in a fraction of the time at a fraction of the cost. And so we are super confident in our ability to continue to invest.

And as I said before, the issue isn't the ability to invest in these, the issue is about having the right number of teams ready to go out and build them, sell them and deliver them. So I think it's just the backdrop of the environment today as a big company building solutions or as an entrepreneur and a start-up building solutions in an AI world, it's an incredibly faster, cheaper way of bringing value to market.

And our next question comes from the line of Keith Bachman with BMO Capital Markets.

I wanted to go back to some of the initiatives to try to stimulate growth. And a couple of questions. One is, how do you think about promoting Core Ignite and others while also balancing margin expectations. And as you mentioned, you have to build it, you have to promote it, and that usually means an investment profile. And I think it is the right thing to do to try to stimulate the top line. But how do you balance those initiatives? And I think, Rob, you started to address some of these new initiatives. How are you pricing them? Are you moving into consumption-based models? And then I have a follow-up, if I could.

Yes. So I think, first and foremost, the ability to build these, again, in a very quick and capital-light and investment-light way kind of underpins our financial flexibility in terms of how we price and how we capture value. I think we're moving towards value-based pricing. We're moving towards an ability, and we are absolutely going to be doing that. The other thing to not forget is that these start-ups inside of DXC have the benefit of a $12 billion company with 115,000 colleagues around the world with fully spun up marketing and sales organizations. So we are investing in product. We are investing in solutions that are new and AI-centric, but then they get to benefit from the new branding, the new positioning, all the human capital that we've built around it.

So those shared services that are here to support the corporation as a whole also support these new initiatives. So we're benefiting from being large and from being legacy, but we're also benefiting from being fast and then the ability to go and use these tools to quickly build solutions and bring them to the marketplace. And frankly, it gives us an ability to be more disruptive versus our competitors in pricing and to think about this as long-term value capture for ourselves and for our customers.

And then as you think about -- you guys have done an admirable job certainly on lowering your net debt and some trade-offs have existed. And at this juncture, I think part of it was also you wanted to clean up the business. But at this juncture, I appreciate the capital allocation description you've given in the slide deck. But how do you think about M&A to try to also use as a source to spur growth within that context of capital allocation?

So we've said that we'd be open if we have the infrastructure that's ready to be able to have an accretive acquisition of a company that would help accelerate the business goals of 1 of our 3 offerings, we would absolutely look at it. We are looking at it. But the ability to create products and services inside of our organization and bring those to market, a, we control more of it. There's less risk, there's less friction, and we just have more control on all sides of the equation. To the extent we can find a company with a solution or value proposition that clearly adds value to one of our offerings and clearly adds value to where we want to double down and invest in, we will absolutely look at that anywhere in the world, and we have active teammates that are working on that every day.

But I'm -- a, I want to make sure that the foundation that we bring anything into is solid and good and accretive and it will grow faster than it did independently. I'd say we're probably 80% of the way in that journey from an organizational structure standpoint. And b, we have an ability to create new offerings. we should continue to fully do that and then selectively look at where M&A can help us accelerate our business [Audio Gap].

Okay. And I'm going to get in trouble with Roger, but I'm going to ask a third question in terms of asset dispositions, you guys did make a comment on during the course of the prepared remarks. Is there -- are these smaller type of things or anything more material that you would think about? I know you don't want to get specific, but just broadly speaking.

Yes, Keith, they're small. It's older data centers, office space that we -- that are -- everything that's underutilized, we put on the market and try to sell. So it's -- they're really small problems.

Nonstrategic.

Yes, nonstrategic, yes.

And our next question comes from the line of Darrin Peller with Wolfe Research.

This is Paul Obrecht on for Darrin. Rob, you mentioned the improvements in the rest of the world, but declining performance in the U.S. Can you just provide a bit more color on what you're seeing geographically?

Yes. Yes. The results in the U.S. are -- have decelerated a bit, and you could see that in our Q. So you could see that over the course of the year. The rest of the world has been on an improving trajectory across the board. And so that is true of all 3 segments improving, again, on an improving trajectory in the rest of the world. So we're very encouraged by that. The phenomena of longer-term projects being the focus is more pronounced in the U.S. So the short-term projects have been slower in the U.S. And so it's partly the market, partly execution on our part. But there is a pronounced difference in performance between the U.S. and the rest of the world. And by rest of the world, I should add that Europe and our APAC region are both on the right trajectory, have both done better.

That's really helpful. And then as a follow-up, you've discussed the continued discipline around cost management. Can you provide a bit more detail on the productivity and cost savings you've seen over the last year as you've increasingly embedded AI internally?

Yes. And that -- and Paul, that -- we have seen benefits internally. Our resource reductions, our headcount reductions have kept pace with the revenue profile of the company. So good discipline management that we've had in prior years has continued. I'd describe AI as an enabler to let us continue that good profile and disciplined management. And we see that accelerating in the future, not slowing down because specifically because of AI, we will see that trajectory accelerate.

Our next question comes from the line of Jamie Friedman with Susquehanna.

So if you were to look, Raul, at Hogan engagement before and after the AI say Core Ignite migration or do you think of this as an add-on to the current installation, like a totally new de novo type work? Or is it more a new delivery or engagement mechanism? How should we be thinking about the before and after as this initiative evolves?

So I think you should think about it is we have an installed base of customers, and there's a kind of run rate set of professional services and limited other services that we provide for them around the Hogan product. This is all net new. This is all additive. This is all accretive. This is absolutely no negative impact to anything that we're doing today. The other thing I want to point out, as I said, we're building on some legacy assets. We also have some very favorable IP rights and contract rights in many of these instances where not only do we know the code, do we have proprietary hooks and APIs, et cetera. But in many cases, we're the only ones that can touch the code. So it's a great position to be in. You keep all the business you have, you create a new set of products and services on top of that old legacy and you create new revenue opportunities for DXC in a more value-based way, and you create new products and offerings for our bank partners, our bank customers that have invested and have been with this product for many, many years, and you're giving them more things to sell. So it's an absolute win-win.

In terms of the architecture of Hogan, my assumption, correct me if I'm wrong, is that probably a lot of that is still either mainframe or client server on-prem. And if that's wrong, just stop me. But is that an obstacle to an AI transformation? Like don't you need to modernize it before you apply it?

No. No, that's the beauty of this, that it's a light layer gateway that sits on top of the existing infrastructure regardless of where it's housed, on-prem, off-prem, hybrid cloud or any combination. The way we've architected the ability to add new products to our bank customers. Essentially, what we're doing is we're creating a gateway where on one side, we connect to our bank customers, 300 DDAs. On the other side, we sign up new products and offerings that people -- that the bank wants to offer to its consumers, you name, stablecoin, buy now, pay later. And by enabling it without having to touch that core infrastructure, it's a total win-win, win-win for us and a win-win for the bank customer.

All right. All right. I'll back in the queue because this covers -- I'm sure you have a lot to talk about.

I'm looking forward for you to come to demo day because you'll see it all there on our Investor Day, and we can go as deep as you want.

Yes, me too.

[Operator Instructions] And our next question comes from the line of Rod Bourgeois with DeepDive Equity Research.

You mentioned earlier that AI can help you drive better revenue growth. I just wanted to see if you could point us to what are your main AI solutions that you're currently driving revenue at clients? And if you can give us any sense of what your overall AI revenue mix is at this point?

Yes. So look, there's AI revenue that is infused, and I'll use insurance as an example. A lot of the applications and capability that we are building for our insurance customers are built on top of a ServiceNow AI infrastructure that we can add more value by adding business process, business flows, business logic to that underlying AI code. In other cases, we're using other language models and putting those in place. So if you think about it as a layered cake, we play at all layers of the cake. -- and we have an ability to do so. Each offering is different. So Core Ignite within CES is, again, a lightweight layer that sits on top of a legacy system.

We are building within GIS an ability to have an orchestration and visibility platform that we call Oasis that we're just about to start in pilot phase with a few lighthouse customers. So we will monitor and we will report on our Fast Track metrics, and we'll give more color on that in the June Investor Day. But today, throughout all of the organization, we are using AI to do many different things to port code, to write code, to check code. So the ability to go, okay, what part of this bill is AI and what part is not, that becomes more and more difficult as you're using AI for every part of the life cycle. But specifically, what we want to call out and especially on the 10% reference that I had before, those are going to be tied directly back to these very specific offerings that are branded, that you'll read a lot about and that the offerings and all of those project teams will have a chance to discuss in further detail in our June Investor Day.

And that concludes our question-and-answer session. I'll now turn the conference back over to Mr. Roger Sachs for closing remarks.

Thank you, everybody, for joining us today, and we look forward to speaking with you again next quarter and at our June Investor Day.

Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Okay. I think we can get started, right?

Terrific.

Terrific. Yes. Yes, my name is Tien-Tsin Huang. I follow the payments and IT services sector at JPMorgan. And one of the companies I've covered over 20 years, DXC through a lot of different forms and companies coming together. So excited to have the DXC team with us: Rob Del Bene, CFO; Raul Fernandez, President and CEO. Thank you both for being here. And of course, wanted to pick Raul's brain on a lot of the things that are happening in the world. But I always have to lead with this, right?

So Raul, you from a -- touching me in different ways personally thinking about, right, you're a vice chair, co-owner of the Monumental Sports & Entertainment world, which is my childhood the wizards or bullet. So I always have to call that out, but you also founded Proxicom, systems integrator that was being an e-com when I was working in banking that was a client. And then you guys took that public and was acquired by Dimension Data right around the time I transitioned to IT services. So in my head, I always think about that and that's why it's so important, I think, to be able to pick your brain and because you've been through a lot, including, right, a lot of different boards you've been on, including DXC back in 2020 and then you became the CEO in Feb '24, as I worked down?

In December, yes.

You've seen a lot. And so I did want to start with that, if that's okay. Just thinking about state of the union or how you see the world? I know you're making a lot of changes at DXC. I want to go through that, but anything to start with?

Yes. I think, look, if I step back and I look at 2025, I really do think it's -- people ask me like what period are we in? Are we in the first half, the second half of the AI game? I think we were still in training camp. 2026 is the beginning of the real game. Everything before 2026, the maturity of the tools, the number of tools, the subgranular nature of tools and the quality before, let's say, the middle of this year. I think an aha moment for me was Sora 2 and all the multimodal stuff that it could do that literally leapfrogged something that a week ago was like #1.

And so the intensity, the speed, and frankly, the massive amounts of money that are going in here. I think one of the coolest things for us is enterprises and for entrepreneurs is the compute that you pay for, for whatever it is that you're asking for, a business plan, a code spec, the code, the code testing, a website to actually sell that product, you are not paying nearly what it cost. And so there's this massive subsidy going on where someone else is flipping the bill for making dreams come true. And so I think the cost -- total cost of ownership from being a risk taker has come down, the speed at which you can turn idea into something and then see if that something sells, has come down and sped up.

And we're trying to take advantage of all those things internally as we find pockets of great legacy work that we have and we'll continue to have and find opportunities to use legacy as leverage to build something new. And that's how we came up with kind of a 2-track way of managing our business. Core track is the base business. Of course, it has a lot of AI in it every day. but they're not AI native products. They're not AI highly infused products. And they're -- and in the historical core business, it was more rates times hours or fixed price type of work. These are going to be SaaS-like recurring or reoccurring revenue streams.

So we've organized ourselves differently. The governance structure for the fast track is very different than the core track. Each offering has picked with a very high bar. We're using this exponential framework, which is how we help our clients go from idea to massive scale and AI. And we've used it internally. Now we're using it in client engagements, and we're -- it's helping position us differently than our competitors. But in picking what goes in the fast track, we're making a bunch of bets that we think over the next 36 months will lead to about 10% of our revenue. And I still feel great about the portfolio. Like I said before, they're not all going to make it. But if a subset make it, it's a great foundation. And as we learn from that subset, we'll stack up the next set of offerings to bring out.

Okay. Well, that's a great intro. But before we dig into that, I had to ask. So you sort of mentioned AI in '26 and this overbuild. Is there any analogy or think back to Proxicom and e-com and how fiber was such a big CapEx in investment. Obviously, that evolved, but it opened up e-com and a lot of these great fun companies that piggybacked off of that shift. Is there anything to learn from that?

Yes. I think very similar dynamics where the massive infrastructure players were underwriting other things at that time, right, back to the beginning of the Internet. My company got paid by MCI to go build a secure marketplace, the first secure e-com space on the Internet. And they weren't building -- they weren't paying us to build it because there was a presumed value in that digital presence. They're paying us because they wanted the pipes to keep filling up and they wanted the pipes to continue to have more demand from these corporate clients. So things -- when these cycles kick off, there are weird economics, weird dynamics. We're living through that right now. But the bottom line is that the speed and pace in which innovation happens today is at an unprecedented level, literally days. And that's shocking in a couple of ways.

It's shocking to an employee base where almost every job will get impacted. My job as a CEO will get impacted. I actually had my script that I wrote, and I used a digital twin voice AI product to record it. And my script was like one of the first AI products to do a public company earnings announcement. Now I'm taking in a step further. I've got a small model that I've built that has everything that I've done in the quarter, new products released, new assignments that I can reference and I'm going to see if we can write a better script than we can write. So I mean it does change every job, whether you're someone who's coding, whether you're someone who's building a business plan, whether you're someone that's reviewing a contract in law, a 1,000% impacting on every category.

Fun. So you introduced fast track. So let's get into some of the changes that you've made. I think you entered it really, really well. I always like learning through examples. And so I think Core Ignite was the one that you guys specifically called out. And I think for those that are less familiar, right, Hogan has been around for a bit. A lot of companies we cover are built on Hogan. So you described it as an extension of Hogan and not a replacement. So can you just elaborate on that for the...

Yes, just so that people realize like this was an incredibly powerful piece of software that DXC owned, I think, back in the '80s. And it currently -- 1 in 2 U.S. households have deposit accounts that rely on Hogan, 2 in 3 U.S. card transactions are processed on Hogan. There are 300 million customer deposit accounts on Hogan, 6 out of the top 10 U.S. banks are on Hogan, and we have 275 million cards processed daily for 475 banks. So an incredible existing legacy old system, where adding new products or features, if you're a financial institution and you want to get into the business of issuing stable coins, well, it's hard to do on a really old infrastructure. So my guys came in, brought guys in from Fiserv and other places and they said, "Look, this is a -- we have a unique advantage here because we have technical hooks into the core Hogan product. We can expose things through APIs that no one else can do. Let's build a thin layer that allows banks to not have to change any of the infrastructure, but to add incremental next-gen services and be able to do that kind of on a menu-based system."

So looked at an existing base of business had been ignored, had not been upgraded. In many cases, the banks already have derivative right uses on IP, but we still get paid some maintenance. And we said, let's build on top of it. And again, the cost of building this light layer is literally not in the tens of millions. It's in the single-digit millions. So the ability to get the right team that can move fast, they can write the product spec, they can test that with existing customers that can get a pilot at MVP really fast and then can scale it. That's part of the power of bringing in kind of new talent on top of legacy work that we're doing for existing customers.

And how long did it take to develop Core Ignite into what it is today and ready for deployment?

March to summer in terms of tightening up the offering and what it looks like from a product standpoint, summer to now and build and then in the beginning of the new year, we should be able to deploy on the first versions.

Okay. Yes. So we'll be able to track some of the performance there and attach on that. So how replicable -- you have some other assets. I know with insurance, you've got a big amount of share as a systems or record there. So what other Core Ignites are being developed?

I think, DXC, that's one where we have like multilayers of kind of proprietary hooks that all of us, whether it's DXC or any of our competitors, we sit in the middle of every workflow. We either help the workflow that exists today or we're modernizing an existing workflow. Workflow is the key to the AI future and understanding how it works today and then understanding the power of the tools that are available to you and how you can do an AI-led, but agentic team like solution and then ultimately a full agentic solution. It all comes down to knowing 2 things: workload and data. And we are super close to both and so our competitors.

So I think we are winners in the long term in the AI world. Someone has to do this work. And an upstart that maybe has younger, fresher talent. They don't have the advantage I have, which is understanding how the existing customer does what they do. So that's a huge moat for us, if you can add new technology to it. In the past, we were known as a safe pair of hands for old technology. Today, because we have these new innovative super AI-centric lightweight solutions going to market, people are going, "Oh, that's not the same DXC." And that's also coming around with a whole new branding and marketing and positioning and color pallet and all that sort of stuff.

So it's been kind of a buildup of content and then the look and feel and then the positioning. And then frankly, the people at the end of the day, it's having new people to energize the core base and the core business and really put us on an offensive front to create more pipeline opportunities. At the end of the day, our biggest issue is just turning around the revenue decline. And the biggest -- the easiest way to do that is to go after more things that are qualified. And for those more things that are qualified to convert into a pipeline that gives you positive growth. I mean we're getting to flat as our first goal, but then positive growth.

Right. So you own the core, you understand the workflows, which is really hard, I think, for the agents and others to really understand. So we've seen some consolidation for companies to solve that, but then you're building these extensions to bring it into something that's...

And we're using them as customer zero first here. So we're trying everything first. We're then documenting that. We're sharing best practices for me. It's a great opener, if I'm talking to a CEO, let me tell you what I did with my SOC and agentic solution that got me 67% better accuracy, better throughput in terms of speed and allowed me to redeploy the human capital into other places. So lowering of cost.

So thinking for both you or for either of you, maybe, Rob, for you as well, just thinking about the incremental margins to get in 36 months, I think you said 10% of revenue is what you're aiming for. How about funding that? I mean can you do it at a reasonable incremental margin? I would imagine the model is actually accretive, but you still have to fund it to get there. So how does that work out?

Yes. So our -- so I'll take that one, Raul. I'll start. So the fund -- the products have been in development for some time, mentioning Core Ignite, but there in the GIS business. We have our new service delivery platform, we're calling Oasis. That's been -- could be considered a fast track initiative. We've got AI capability that's been built and will continue to be built in the insurance business. So in our run rate, we have a lot of the investment spending already. Incrementally, there may be more incrementally, but it's not going to be outsized or material in terms of free cash flow impact. So it's in the base. We'll continue to build on that. So as we gain traction in the market, it should be accretive.

Okay. Good. Anything I'm missing on fast track? Or should we...

No. No. I think if you -- look, you've got to work on the fast track, but then the core part of the business has to operate better. So a good example, we have the fifth largest -- we're the fifth largest in terms of certified SAP engineers, and we are not the fifth in terms of revenue generated by said number of engineers. So it's a very simple. We have to get the rates up. We got to get the fixed price terms up. We've got to get deal flow up. We have to be better coordinated with SAP, which we are being from top to bottom. We have to have integrated account plans. We have to have targeted key opportunities. So again, basics of running a practice within a professional services technology company. Ramnath coming from Accenture, looking at it and going, "Oh, my gosh, we are just so subscale, but it's not rocket science in fixing that." So it's about right people, right pricing, right new targeting of opportunities. There's clearly demand for it in the marketplace. We just have to go after the right jobs.

Yes. I think you said on the call that you're going to double your SAP practice.

That's right. That's our business plan, yes.

And so it sounds like you answered it a little bit there, but that was on my question list. Is it really just getting utilization up and getting the rate cards up and...

No, it's more work, more work. There definitely more work in us as a percentage of what we do versus our competitors, we're way underrepresented.

But you have the certified staff...

Oh yes, to do it.

That's the key, right?

That's the key.

So more work, meaning more sales.

More sales, yes, more opportunities, yes.

But you have the resources to have...

Totally have the resources.

So you mentioned, Ramnath. I think that was on my question list leading the CES business coming in from Accenture. We heard from Accenture earlier. What else can you share? What kind of initiatives is he putting into place? How quickly can we see some of the results, whether it'd be in CES or broadly speaking?

So he's got a really great appreciation of technical talent when he looks at our engineering talent, which has got an incredible pedigree and also a great referenceability, heavy in automotive, but also in other parts -- in other industries, really key players. That's, again, an offering that he thinks, based on his experience in other places, should be at a much higher level of appreciation.

And when I mean appreciation, meaning gross margin, net margin. And again, it's positioning and targeting the right skills. It's also using some of the new positioning. So we invested in a brand-new team that came in and looked at the competitive space from a brand marketing value proposition and created now this new like offering in terms of how we're coming across, both from the brand standpoint, from the look and feel standpoint and definitely from the content standpoint, making technical things that are complex, understandable and referenceable is so key to standing out in our business because there's a ton of technical jargon, but if you can mix in, I can do the technical plus I know that here's the business value, and I happen to know your industry really well. So it's a great combination.

Got you. Okay. So thinking about Ramnath coming in and some of the changes, it sounds like -- I know you have a big SAP practice. You mentioned that you have a big ServiceNow. practice. So it doesn't sound like it's a resource issue. It's really...

More shots on goal.

More shots on goal, including putting more sales effort and things like that. Okay.

And more -- like we launched a sales enablement team that is specifically built to help them in the last mile, right, the last mile of the pitch, the last mile of the positioning, any other content, any other cross referencing we should be doing. So again, a function that wasn't there before, and we put it in place with our Chief Revenue Officer.

And is that a -- last one, is that a quick fix? I mean...

No, it's a fix over time.

So how do you value -- how should we gauge or hold you accountable for progress there?

I think the -- ultimately, as this stuff is coming into market, which, again, it's been in the last quarter or so that's coming to market, the size of our pipeline should grow. It is growing. And then ultimately, the conversion rate, which will be a public book-to-bill number, those things should trickle.

Yes. Well, you've talked about just to get into those numbers a little bit. You talked about visibility improving and getting into the third quarter, and you're looking for bookings to get better. Quality of the signings and things like that, anything interesting?

Yes, I think -- so let's break it down in a couple of categories, please. With renewals, key to renewals is a happy customer. So our outages and reported delays in SLA breaches, all-time record low. Our NPS scores, which aren't a great measure, all-time high. We're getting invited ahead of time for recompetes. So we have to keep the business we have and recompete the business we have. The key is bringing new ideas and new solutions and new parts of the company. And so that the recompete can be solid and you can win it, but you also open the door to having new things that we can build and deploy and share.

So it's kind of a combination of items that will lead to a visible tipping. On any given day, on the 12-month rolling period, there's 70% of that 12 months that's booked. I need to get a bunch more, so that probably gets closer to 80%, then we can mathematically do a, "Hey, we can see flat in 2 quarters from now." But it all starts with more opportunities, the ones that you have already plus net new ones.

So what about the new loco side?

So Carnival Cruise Line is a great example, super competitive. We won it. We've now deployed. We're supporting them. We've transitioned from the other partner that was there before. And it's a great story, not just in technical skills to win what we want and to talk about what we do every day for the hundreds of thousands of passengers and crew that sail every day.

But now, okay, what's the game plan to go to Norwegian, to Royal Caribbean, to company X, company Y, getting that proactive muscle in place, getting those people in place, getting the content in place, actually going off and doing it, all that's work in progress. But all those things, once you do them once and twice and they show success, they're highly replicable.

Got you. So how about -- I should have probably asked it earlier, just on the macro front, anything to share there? There's always questions around visibility and discretionary versus nondiscretionary spending. But you've also said to us in the past that the self-help initiatives are more important than the cycle or the macro for you. But do you feel differently now?

Yes. No, I still think we can generate more opportunities to compensate for any sort of softness within a segment, right, like consumer products, people that are highly dependent on consumer products and services that are maybe been pinched by tariffs or inflation or cost and it's having an impact on the customer base. That will lead to some pausing, but the anecdote to that is to have just a more massive book that you're going after that you can afford to have these positives, which we're going to run into.

Okay. Nine minutes left. Any questions from investors, happy to take them. Otherwise, I can keep going. I'm almost halfway done my questions. But, yes, Brendan, do you want to ask one?

Thank you so much both of you for going through all the stuff. I'll ask one on the financials on the -- perhaps the margins, I guess. Could you talk through like the spending philosophy and I guess you could call it, like operating expense allocation philosophy as it relates to the business lines, like where is a lot of this fast track spending located? And how can we expect to see like the margins unfold in the various different business lines?

Yes, the new content development is across all 3 of the segment -- business segments. And it has been in the run rate probably the longest in the insurance segment because we've been developing new product there at a robust pace since my entire tenure here. It picked up about a year ago in GIS and now CES is following. So there will be a bit of an uptick in CES, while it's in the run rate of the other 2 business units.

And we'll, well, really -- from a margin perspective, we've been offsetting revenue declines. That's been the reality. So we've been really focused on driving efficiency, driving savings, especially in back-office processes and we'll continue to do that. But as soon as we're able to stabilize revenue, we'll start to see accretion because of that, because we're going to keep driving the productivity improvements, especially now as we deploy AI internally, we're going to continue to drive productivity.

And look, every function, I review every business function, I look at how legal is using AI, how marketing and communications is using AI. And every quarter, there's a step-up in productivity and cost savings. We created a movie that I played at the end of the earnings call, completely AI generated. I mean a fraction of the time that it would have taken 6 months ago, and the quality was just as good. So it really is impressive. And right now, again, everybody is in pilot mode. You still have headcount that was staffed against a different world and a fully AI tool centric world. So getting through that rotation is part of -- what I think is part of what '26 is that for all companies.

So the restructuring side then, I think it's been running pretty consistently. Could we see another a little bit more volatility there or not necessarily? What's sort of the outlook around...

I think it's stable levels since we are consistently turning over the team and shifting focus and skills. I think we're going to -- in the next 18 months or so, it will be consistent.

Just on the kind of revenue side of these fast track products, it sounds like next year is when most of that should come through. Is there any more detail you can kind of share about expectations?

On the pricing models, we're currently testing different things that are more value-based and less X times Y because they are reoccurring cloud-based products where we think we can create a win-win either on a per transaction or per event basis with the customer base. So the good news is we have flexibility. We've got some good input from a pricing standpoint. People came from different pricing backgrounds, mainly SaaS consumption background. So that's where you'll see it.

Yes. So it will develop over time. And we're now in the insurance market, we're in the market with our AI capability today. In the other 2 segments, we're in pilot mode with the initiatives that Raul is describing, and we'll see that develop over time. So we're hoping next year to be able to unveil metrics.

I mean the prospects, Raul, of this breaking the P times Q and the linearity of revenue and bringing in subscription services have been talked about in the sector for a long time. Do you feel like we're starting to actually see a shift towards subscription or other forms?

I think you have the ability to build things today at such a faster pace that -- and at much lower cost. Again, we're not paying for all this compute that we actually are all using today. It's -- it will allow you to launch a new revenue stream and I think be super different than the existing revenue streams. And I think part of it is also how we manage our people, right? So there's a higher degree of empathy, there's a higher degree of being very forward. Every town hall, I do in every meeting -- in every location that I go to, I get a question about AI, "Is AI going to change my job?" And I remind them that everything they did to get the job they have today to be sitting in the seat that they sit today, the education, the proactive curiosity, the teaching stuff to yourself, the hustle, all that is still super relevant in AI world. Maybe even more so because the easy work is going to get done.

So hustle, curiosity, trying things, learning things, turning around, all those attributes got people, their first jobs or the jobs that they have today. All those attributes will keep you there if you lean into them. But it's a big threat. I mean it's -- I've seen technology that I was talking to some CEOs in Asia. And Sora 2 came out and they're in kind of that business and he goes, "Well, it's first time my product teams have been like set back for a second like, wow, that was fast, and that was really good."

So the best of the best are getting pushed. We're the beneficiaries as practitioners and as consumers of all this stuff, we are the beneficiaries. And I can't imagine the amount of power that I really use prompting some of the stuff that I work on, but it's -- I'm not paying for it.

Sure. So does it create more tension with some of the software ecosystem with some of these tools and whatnot that you're developing on top of Hogan? Of course, you were already there, was running the core, but you also have other best-of-breed providers that are providing point solutions against it as well. So does it create more tension?

No, not yet, not today because we have such a legacy point of view where we can be very specific. We can structure our solutions to be very deep in the weeds as opposed to a generalized availability of a set of tools or products that then you have to go customize for your workflow or your particular industry. We're kind of working from the other side up. And we have great partnerships with all of the scale -- hyperscalers with all of the cloud providers, and we've got good diversity with regards to where our clients are at, whether it's AWS, Azure, ServiceNow, then abroad, big themes. Our sovereign clouds and sovereign AI and private AI instances, those are big themes that are actually in the Middle East, have been present for many, many years. And now you're starting to see companies that are moving in that direction as well.

So organic, can you do a lot of this work on the fast track side organically?

Fast track side has to pass an exponential bar of value impact, time, money, speed. And so we're trying to keep a pretty good definition of what fast track is really high impact. And then core track is just normal tech that just needs to normally work better, faster with more accuracy.

So could we see DXC dabble more in buying product and tools on the acquisition?

I think we can have customized solutions that again leverage us. I think on the acquisition front, we're still not a well-oiled enough machine where I have confidence that I can plug something into this part of the company and then it's going to scale. That's still work in progress. I think '26, there'll be some areas where we go, okay, I'm confident that, that is going to be a good use of potential capital, but it's going to be small. And I'm going to want to make sure that the system is ready to accept it and then really accelerate it beyond its stand-alone value.

Okay. Good. Any last question? Happy to take one more? So just to close it out for either of you, just thinking about as we evaluate next year and everybody is looking for KPIs, but what are you most excited to for us to track? What should we be paying closer attention beyond the headline?

I think our net new logo story is a good story that's developing and getting better. And the fact that we're getting opportunities on the back of innovative AI work, we're getting in the door. And the fact that once we're in the door, we're actually competing and winning is super exciting to me. So one of the things seeing and talking about our net new customers that are some of the best players in the world in their particular categories. That's going to be fun.

Very good. Perfect. Really appreciate you being here and spending some time with us.

Thank you so much.

Thank you both.

Thank you.

Thank you.

Ladies and gentlemen, thank you for standing by. My name is [ Christa ], and I will be your conference operator today. At this time, I would like to welcome you to the DXC Technology Services Second Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Roger Sachs, Head of Investor Relations. Roger, you may begin.

Thank you, operator. Good afternoon, everybody, and welcome to DXC Technologies Second Quarter Fiscal 2026 Earnings Conference Call. We hope you've had a chance to review our earnings release posted to the IR section of DXC's website. Speaking on today's call are Raul Fernandez, our President and CEO; and Rob Del Bene, our Chief Financial Officer. Here is today's agenda. First, Raul will update you on our strategic initiatives, Rob will then cover our quarterly financial performance as well as provide thoughts on our third quarter and fiscal full year guidance. Raul and Rob will then take your questions.

Please note certain comments on today's call are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially from those expressed on the call. Details of these risks and uncertainties are in our annual report on Form 10-K and other SEC filings. We do not commit to updating any forward-looking statements during today's call.

Additionally, during the call, we will be discussing non-GAAP financial measures that we believe provide useful information to our investors. Reconciliations of the most comparable GAAP measures are included in the tables, included in today's earnings release.

And with that, let me turn the call over to Raul.

Thank you, Roger. Our financial performance in the quarter was mixed. We were above our guidance and adjusted EBIT margin and non-GAAP diluted EPS and generated [indiscernible] second quarter free cash flow. However, I am disappointed in our performance in revenue and bookings, and we are laser-focused on building a predictable and growing company with better execution and pipeline conversion in the quarters ahead. I believe the strategic and tactical game plan we have in place will position us to create value in the rapidly evolving AI global economy. We have a strong balance sheet and consistent free cash flow and have the flexibility to continue to make the necessary investments to execute on our AI strategy. .

In the quarter, we formalized a 2-track approach to running our business, core track and fast track. Our core track represents our existing business where we are working to bring our portfolio of offerings to their full potential in the market. For an example on how we plan to energize our core business, let's take SAP. We have a 15,000-person strong SAP practice and ranked #3 among all system integrators for certified SAP business AI consultants, our business needs to convert this strong capability into strong revenue growth. We now have a structured plan to scale our SAP business over the coming quarters. We expect this will double our SAP revenue over the next 3 years. Fastrack represents our new AI native or highly AI-infused solutions that we have been building and piloting with a combination of our existing team, a new group of experienced leaders we have brought into the company in the last 20 months, Fast Track solutions have a goal to be 10% of our business within 36 months. These AI-based SaaS solutions are highly replicable and built on proprietary methodologies models and frameworks that create defensible competitive moats. And the best part is that clients can expect to see measurable results in weeks and months rather than quarters and years. Each product has a growth target and a net margin goal higher than our existing core portfolio baseline. We are targeting our first set of products for large and growing markets.

Let me give you a few examples of our Fast Track products. Within financial services, we are leveraging our strong legacy. Decades ago, 1 of DXC predecessor companies developed Hogan, the preeminent core banking platform used by some of the largest financial institutions in the world, supporting $5 trillion of deposits and facilitating $2.5-plus trillion in daily transactions. To enhance and modernize this essential banking platform, we are developing a new offering, DXC Core Ignite, we are redefining how banks unlock value from their core infrastructure by turning existing deposits and payment systems into cloud-native API-driven services that power new revenue streams. DXC Core Ignite converts cost centers into growth engines, empowering banks to launch innovative, monetizable services at speed and scale without ever disrupting the core. Recognizing the untapped potential of Hogan, we identified the opportunity to transform it from a legacy core into a growth platform solving for challenges of interoperability. We recruited a new entrepreneurial team and are standing up a dedicated group to bring this vision to life. Our recently announced partnership with [indiscernible] builds on that same fast track strategy. with this partnership, we would enable banks to unlock their most valuable asset, their existing customer relationships into a powerful competitive advantage. By offering buy now, pay later directly from customers' existing accounts, banks can meet the growing demand for flexible payments without introducing new friction. This approach strengthens trust, deepens engagement and keeps consumers within the bank's ecosystem. At the same time, it unlocks entirely new streams of transaction and interchange revenue, turning a defensive necessity into a strategic growth opportunity.

Now turning to another product in development called Oasis, which is part of our GIS managed services transformation. Oasis is a unified AI-powered orchestration platform that enhances our clients' current technology ecosystems. It embodies our human plus AI approach, combining advanced automation with expert oversight to deliver complete IT estate visibility and better outcomes for customers. This positions GIS competitively as enterprises increasingly seek proven AI capabilities in their managed services partnerships while creating new revenue opportunities for us.

Lastly, since we paused our strategic option process for our insurance business about a year ago, we continue to create a more valuable business by growing our SaaS portfolio from 30 to 45 products. We have execution plans in place to double our SaaS revenue in each of the next 2 years. These are 3 of our many Fast Track pilots that are in the works. Fast Track is a prime example of bringing exponential outcomes to our clients and we are bringing this to life in our newly launched Exponential branding and framework. Exponential is a new AI framework that helps DXC clients move from pilots to real business impacts with confidence. It blends governance, automation and human expertise to deliver measurable results fast. Early client successes show how exponential is helping organizations, not just operate faster, but unlock new capacity, reduce manual effort and improve decision-making. As we integrate this framework across DXC, we're strengthening our position as a trusted AI transformation partner, helping customers turn AI potential into tangible productivity and growth. We are also showing up differently in the market, and it's getting noticed. Our engagement with the analyst and adviser community continues to deepen and we are seeing a shift in how our capabilities and impact are being recognized. As a result, we were recently named as a leader in ISG's [ Provider Lens ] ServiceNow ecosystem partner study. IDC's Marketscape in industrial, IoT, end-to-end engineering and in Everest Group's custom application development service peak matrix. These recognitions matter as they validate the discipline and focus behind our strategy and help fuel confidence with our clients. With our rebuilt foundation and full stack expertise, we are reorienting ourselves around innovation and proactive solutioning. This signals to the market that we're more than steady operators of tech estates, we are better positioning ourselves as an enterprise technology and innovation partner that helps clients run more efficiently, modernizes their systems and harnesses the power of AI to drive outcomes through services, software and solutions. We're encouraged our expanding pipeline, which includes several large deals with clear line of sight to close in the coming months. As a result, we're confident our book-to-bill will move back above [ 1 ] in the second half of the fiscal year. With that momentum, we have an incredible opportunity to work across our offerings, markets and teams to solve customer problems and show up as 1 DXC.

And finally, as client [indiscernible], we are using existing and emerging AI across all corporate functions. In our legal department, we are using tools such as GCAI, Harvey and Lagora for legal research drafting and document comparison. This enables our attorneys to automate first pass reviews, rapidly assess risks against our playbooks and generate high-quality drafts. Our sales and marketing teams deploy AI across the full content life cycle. Agent force automate CRM workflows and enriches e-mail marketing with real-time thermographic data. Lupio accelerates proposal generation, mid-journey, generates presentation-ready graphics, video generation platforms, [ VO3 ], Runway and XLT help us to create compelling video content and voice and video synthesis tools, 11 labs and Notebook LM produce training materials and distilled complex messaging. This integrated AI toolkit accelerates content production by 10x, while elevating quality and enabling sales professionals to focus on high-value customer relationships.

Our finance teams are using a genic AI, such as AI Foundry, UiPath robot and copilot to transform our back-office activities by automating manual and repetitive processes. And as an example of how AI will impact every job, including the CEO, this script was written by Raul Fernandez, but delivered by my custom AI-generated voice model.

Let me turn the call over to Rob.

Thank you, Raul, and good afternoon, everyone. Today, I'll go over our second quarter results and provide guidance for the third quarter and our updated full fiscal year 2026 outlook. Now starting with the second quarter results. Total revenue was [ $0.2 billion ], declining 4.2% year-to-year on an organic basis within our guidance range and consistent with the past several quarters. Bookings grew approximately 2% year-to-year for a book-to-bill ratio of 0.85, which brings our trailing 12-month book-to-bill ratio to 1.08, a modest improvement from last quarter. This marks the third consecutive quarter with our trailing 12-month book-to-bill ratio above 1, positioning us for improved revenue performance entering fiscal '27. While we didn't get to the booking levels we anticipated for the second quarter, we continue to have a strong pipeline and anticipate a third quarter book-to-bill ratio greater than 1. Our confidence is grounded by the most robust list of new large opportunities in recent history. This is a reflection of the building of our go-to-market capabilities and newly developed AI-based solutions across all of our segments.

Adjusted EBIT margin was 8%, coming in above the high end of our guidance range, reflecting disciplined cost management across the company particularly within our GIS segment and corporate functions. On a year-to-year basis, adjusted EBIT margin declined 60 basis points primarily reflect continued productivity savings to offset top line pressure, higher investment levels to support future revenue growth and lastly, a onetime legal settlement that benefited the prior year second quarter results. The impact of the increased investment levels is visible in our insurance and CES segment margins. In our insurance business, we have been investing in our cloud-based software platform, building AI-based smart applications to deliver enhanced value and productivity to our clients. In CES, we are strengthening our advisory capabilities in developing asset-based AI solutions, which are included in the Fast Track initiatives that Raul described earlier.

Non-GAAP EPS was $0.84, above the guidance range, consistent with our adjusted EBIT results, down from $0.93 in the second quarter of last year, largely driven by lower adjusted EBIT and higher taxes, partially offset by lower net interest expense and our share count.

Now turning to our segment results. CES, which represents 40% of total revenue, declined 3.4% year-over-year on an organic basis. This reflects ongoing pressure in discretionary custom application projects which continues to impact the industry. Bookings for CES declined modestly year-to-year, with a book-to-bill of 0.92. While bookings moderated from the prior 3 quarters of strong performance, the trailing 12-month book-to-bill is 1.15, which we expect to lead to improved revenue performance in the latter part of this year and into fiscal 2027.

GIS, which represents 50% of total revenue declined 6.3% year-to-year organically, which is in line with our full year expectation. Bookings for GIS grew modestly year-to-year with a book-to-bill of 0.82, reflecting longer closing cycles on several large deals we expect to close in the coming quarters. The trailing 12-month book-to-bill remained at approximately 1.1. To help drive our long-term performance, we are building our AI-powered orchestration platform and plan to begin pilot deployments with select customers over the next few months. We expect to introduce the Oasis platform to a broader marketplace in the first half of calendar 2026. We are also enhancing our GIS offering portfolio with AI-enabled solutions targeting growth segments of the IT services market, and we're beginning to see the project pipeline build around these new solutions that we expect to convert and expand over time.

Insurance, which represents 10% of total revenue, grew 3.6% to year organically largely due to growth in software and volume-based increases in existing accounts. We continue to expect this business to grow at mid-single-digit rates for the year.

Now turning to our cash flow and balance sheet. During the quarter, we generated $240 million of free cash flow, up from $48 million last year. This increase in the quarter was largely driven by improved working capital and lower cash taxes. This brings our first half free cash flow to $337 million, an increase of $240 million year-to-year. The second quarter results include an increase in software payments, which we had anticipated. As a result of those payments, capital expenditures as a percentage of revenue returned to more recent levels at 5.3%. We also continue to minimize new capital lease originations, recording $6 million this quarter. Over the last 6 quarters, we paid down more than $400 million of capital leases while limiting new capital lease originations to just $31 million. These efforts, partially offset by currency movements on our euro-denominated bonds have brought our total debt down $107 million to approximately $4 billion. Over the same time period, our ability to consistently generate strong free cash flow enabled us to increase our cash balance by more than $660 million since the start of fiscal 2025, bringing it to $1.9 billion. As a result, we have reduced our net debt by approximately $770 million and in doing so, created additional financial flexibility. With this solid foundation, we will continue to execute with focus and discipline against our capital allocation priorities for the year, that include continuing to invest in our business to accomplish our top priority driving sustained profitable revenue growth, further strengthening our balance sheet by minimizing new financial lease originations and maintaining our investment-grade debt levels by retiring a portion of our senior notes maturing in the next 12 months and returning capital to shareholders. With our strong free cash flow through the end of the second quarter, we've repurchased [ $125 billion ] of shares, $50 million in Q1 and $75 million in Q2. In the third quarter, we intend to maintain the same quarterly pace of buyback as the first half of the year. As a reference point, at the end of the second quarter, 467 million remained under our Board-authorized share repurchase program.

Now let me provide you with our full year 2026 guidance. We now expect total revenue of $12.67 billion to $12.81 billion, with the organic revenue year-to-year decline narrowed to 3.5% to 4.5%, on the prior decline of 3.0% to 5.0%. At the segment level, we expect CES to decline in the low single digits organically with third quarter performance roughly in line with last quarter and an anticipated improvement in the fourth quarter as larger longer duration deals ramp. GIS is anticipated to decline at a mid-single digit organically and Insurance is expected to grow organically at a mid-single-digit rate, in line with recent performance.

We continue to expect adjusted EBIT margin to be between 7% and 8% and we continue to expect non-GAAP diluted EPS to be between $2.85 and $3.35. We are increasing our full year free cash flow from approximately $600 million to approximately $650 million, driven by our updated view of working capital and help from the new tax law legislation. With strong first half working capital performance, we anticipate a more balanced cash flow cadence over the course of the year relative to prior years that was more heavily weighted toward the second half.

Now for the third quarter of fiscal 2026, we expect total organic revenue to decline 4% to 5%. We anticipate adjusted EBIT margin in the range of 7% to 8%. And finally, non-GAAP diluted EPS of $0.75 to $0.85.

With that, let me turn the call back over to Roger.

Thank you, Rob. We'd now like to open the call for your questions. Operator, can you please provide the instructions?

[Operator Instructions] Your first question comes from the line of Bryan Bergin with Cowen.

I wanted to start on CES. So you've got a, I guess, a quarter or so under the belt of your new lead there. Can you talk about just how that business is kind of bearing under the covers, talk about any early areas to improve, particularly on the go-to-market to restart momentum in bookings. Any natural disruption that's occurring here just in the early stages. .

And then, Rob, you just mentioned CES picking up, I think, in 4Q. Is that in hand? Or is that go get type of revenue still?

All right. Let me just start. So we look at everything in terms of each of these offerings is Core Track and Fast Track. So let me start on the Core Track. There are many elements of that business and that operation that Ramnath has really dug into and has a very targeted goal and go-to-market plan to improve. Our SAP share in the marketplace is high from an engineering standpoint, but it's not commensurate with the revenues that we get from that practice. So that's a really good example of a core part of the business that we just have to operate at a much better functional level. So there's 2 or 3 other major areas that have revenue implications that have pipeline implications, both longer-term projects, bigger projects as well as smaller, shorter cycle projects.

On the Fast Track, as I mentioned in the call, that's an area that we're super excited. We are using our legacy as leverage and we are building on top of some incredible technical connections and footprints that we've got with Hogan Software to very quickly on a Fast Track basis, develop and deploy agentic solutions that will unlock many new services for our existing bank customers and new ones. And you saw a little bit of that in the release was splitted as well. So coming in very quickly and having a huge impact since the end of July joining the team, and so I'm very happy with the progress there. Let me turn it over to Rob.

Yes, Bryan, on your question on fourth quarter, is it in hand or go get. The -- you know the dynamics of the business require bookings and revenue generation in quarter and in especially 2 quarters out. However, we do see, based on the bookings we've had over the last several quarters. You guys hear me?

I'm here.

Okay. Good. Sorry about that. So based on the strength of the bookings over the last several quarters, which reflected in the trailing-12 months being [ 1.15 ] for CES. We have a solid base entering the fourth quarter and beyond into fiscal '27. So I'd describe it as we have the base. We could see the inquiry -- improvement coming but there's always more to go get. And we're looking to really strengthen the hand we have now with the third quarter for CES. The -- we have a robust pipeline. So we expect to do well in the quarter to continue the momentum, let me say it that way.

Okay. Okay. On the free cash flow, it was good to see that move higher within the guide. You mentioned a couple of primary sources, I think. As you consider those, are those are those lasting as you think about kind of free cash flow conversion or somewhat transitory?

So the dynamic in the first half of the year was different than the dynamics for the last couple of years. In that last couple of years, working capital was a drain in the first half of the year and snap back in the second half of the year, which generated most of our cash flow in the back half of the year. This year, we did a really good job, effective job on receivables in the second quarter. So we -- if you will, we've managed to pull in some of the benefits we used to get later in the year. So we expect that to be maintained for the rest of the year. We do expect good performance in working capital, but we will not get the commensurate bump that we've got in the last few years. So that I'd describe as -- it's sustainable. We're going to keep that benefit. And then on cash taxes, similar, we expect full year cash taxes to be better. So that -- that will also be sustained. And those were the 2 primary drivers. The third driver was capital expense. And so there, again, we expect to maintain a rate and pace that's similar to the first half of the year. However, I will say if opportunities come around that are worth deploying more capital, we will do that, and we won't hesitate.

Your next question comes from the line of James Faucette with Morgan Stanley.

Thanks for the question. It's Antonio on for James. I wanted to ask about the GIS business. If maybe like you could walk through any trends in that business? And then specifically within Hogan, like how that fits into GIS and any trends you're seeing there would be helpful?

So Hogan is part of the CES offering and the new product development and the team is all under Ramnath. On GIS, we've got a great upward tick on all customer related elements. So our scores are higher, our churn is lower. From an operating statistical standpoint, we're finishing like probably the best 2 quarters of uninterrupted service across the board around the world. So super solid from a foundation standpoint, from an operating standpoint. Again, new products are the key, not just for generating more revenue opportunities for us and more pipeline. But for us to change the narrative, frankly, from a safe pair of hands of legacy to a safe pair of hands for legacy and innovators for today's AI economy. So I feel good across all the offerings of 3 offerings that we play the right foundation. Rob?

Yes. And Antonio, I would just add a little what Raul described. Our year-to-date, we have had the project-based services marketplace has experienced difficulty across the board. So it impacts us not only in CES, but also in GIS. So that's been prevalent through the first half of the year. I will say, though, that the momentum building in GIS from a pipeline perspective and our large deal -- I mentioned it in the prepared remarks, the large deal pipeline has been building. We've got a robust list of opportunities. Those are longer term in nature, longer close cycles, but we're seeing really good demand both from a resale -- new content and resale perspective and new customer perspective. And the pipeline for the new offerings that the GIS team is bringing to market are also starting to gain traction. So we're seeing an uptick in that pipeline as well. So I think the future is looking brighter. We now have to convert the pipeline, obviously and bring that home.

Yes. That's helpful. And then as a follow-up, I wanted to ask about your investments within AI, like what is the runway for that? And how far are you guys there?

I think 1 of the most interesting things about this kind of technological wave that we're living through, is that the total cost of ownership of creating ideas has dropped almost down to 0. And that's due to a bunch of factors. One, all these tools. But two, we're living in an era today of incredible cross subsidies. So the compute power I use to generate my AI script, what I paid for versus what it cost is way off, right? If you use [indiscernible] if you use any of these platforms, you're getting an unbelievable level of compute and rendering and creation and a fraction of what the real cost is. So we are very happy to be corporate consumers of many of these tools and to infuse them into our solutions. And so it's a very achievable and maintainable level of investment to keep us at the forefront. Rob?

Yes. I'd just add that we have the capacity with the balance sheet that we've built over the last 18 months to make the necessary investments and take advantage of opportunities when we see them.

Your next question comes from the line of Jonathan Lee with Guggenheim Partners.

First from me, can you help calibrate what's contemplated across your revenue and margin outlook range from a macro perspective and a project ramp perspective, particularly as it seems there's some variability contemplated quarter-to-quarter in the back half from a margin perspective.

Yes. Jonathan, we -- in the back half of the year from a margin perspective, you took the midpoint of the range is pretty consistent. And I would describe it this way that, in that guide, we don't anticipate any significant changes to the macro environment. So we're not dependent on any uptick in the economy or anything, any other -- up or down any big changes economically that would drive increased demand or decrease demand. So it's pretty stable in terms of our assumptions. We're basing our forecast strictly on backlog. Our own data backlog pipelines, conversion rates and all the metrics you'd expect us to be utilizing.

That's good color. And just a follow-up. When your customer conversations gives you confidence in your ability to close these large deals that are in your pipeline, especially given the competitive pricing environment that some of your peers are highlighting? And are there any concessions that you may have to provide to close these deals?

I've been personally active selling a lot of our new offerings on previewing them to CEOs, CTOs, COOs, et cetera and I am just really energized by the interest, the sincere interest, the fact that we are showing up with brand new ways of doing things with tools at an enterprise and global level. And so I think the narrative of the conversation changes as we have more of these proof points out as we deploy more customers with these new tool sets, and it will build upon itself. But I think the great work we've done for the last 20 months to get this stuff together as a really solid foundation for new growth with new products is terrific as well as solidifying all of the legacy work that we continue to do and frankly, will continue to do because these systems will evolve, they will change. But as [indiscernible] they've been in technology, it always appears like it's going to change faster than it actually does.

And just add 1 final point on that. In terms of concession -- our pricing has been stable. We've -- look at the first lateral quarters, there's been stability in pricing.

SP1 Your next question comes from the line of Tien-Tsin Huang with JPMorgan.

Just thinking about the core Ignite product there. Is that going to be -- are you going to go after the back book of Hogan? Or is this really a new opportunity? I'm just asking if you're converting existing Hogan account, thinking about the revenue change there. If you flip to a SaaS or a subscription model under core Ignite, what's the delta between that and the [indiscernible].

Everything that we are building with core Cognite is accretive and additive. It is not cutting into any existing terms. What's really cool is because we've got the legacy relationship, we built the thing and we know the code in a way that nobody else does and frankly, have some [indiscernible] rights that are pretty interesting. We are uniquely positioned to do this in a way that no 1 else can do as quickly as well and with a high level of technical confidence in being able to deploy an enterprise-grade solution.

And you've been at this for a while. So thinking about this ability to break the linearity and go after more of the subscription type with this kind of new model. Did you feel like with AI in this product push you're discussing, this is really a turning point for that?

Absolutely. Look, when I started, I was still in experimenting a lot of what was machine learning was being used as AI. And now we really have revolutionary products that are literally leapfrogging existing players on a week-over-week basis. It's also going to create a new discussion with customers about how we charge and how we get paid. And it will be much more value-based over time. It will not happen overnight, but we are very well positioned to be aggressive players in that value-based discussion, which is around, as you know, replicable solutions, whether it's full SaaS, ARR or some replicable combination of software and services.

Okay. Rob if you don't mind, just 1 quick question, forgive me for the third one. Just thinking about the segment profit. I just want to make sure I caught that. Any call-outs as we model out the rest of the year across the 3 segments here, what they consider on the profit side?

From a segment perspective, no real callouts in terms of different trajectories for what we have in 2Q.

Your next question comes from the line of Jamie Friedman with Susquehanna.

Raul, I'm not sure if that was you or your digital twin, but the creativity is noticed and I want to be tone deaf to that. And it sounds different. So I'm just wondering First of all, in terms of how you're going to operate, manage and disclose Fast Track, how should we be thinking about the kind of -- is it a champion challenger? Is that going to be laboratory? How are you going to incubate the Fast Track opportunity?

Yes. Well, thank you. We -- I used the tool over the last -- literally the last few days, and it's just getting better and better. And so I thought I'd try it. So yes, the script was written by me but delivered by my AI twin. But this is really me. So the answer to that is in the beginning of the new fiscal year, we're going to have more clarity and more information to share on how these -- what are currently pilots and products in production and early stages of client use and give you a much better road map for the ramp-up of those. And look, we are going after -- we talked about a handful today. We're going after more than the ones that we talked about. Not all of them will be successful, but only, only a few of them need to be successful to help change the revenue trajectory of this company. And I'm super excited again about the creativity, the product focus we have. And really, the biggest thing for me is the replicability, these are not one-off solutions that have to get built or rescoped over and again. These are built to be replicable, and they are then built also to have a higher gross and net margin contribution.

Interesting. And then, yes, I mean, it makes a lot of sense to stay to refresh the Hogan platform. Obviously, it was a real landmark platform of the industry. Is there any sizing that you can share? I think the last disclosure on Hogan, I remember were a little dated. Yes, anything that you could share, how big is it today? I do -- a lot of financial institutions to run it? How meaningful is it as any dimension of the business? Anything you could share about Hogan all that would be helpful?

Yes. Yes. And again, like I said, we're going to -- as we enter the new fiscal year, we'll have some existing customers to talk about that are already using it. But I think the way to think about it is that it's not a revival. It's an extension of Hogan in a very lightweight manner in an AI API-centric manner that's going to allow the banks, the customer here to offer new services at a fraction of the cost and speed. And because you have this legacy, meaning now the code, have access to the code, have maintained the code, we're in a unique ability to leverage it. So it's a core banking platform and system. Some of our customers have used derivative versions, so we're not going to be in the business of trying to rebuild that. We're in the business of trying to expand and extend it using AI and create value for our customers, banks and create, obviously, value for ourselves. .

Your next question comes from the line of Brad Clark with Bank of Montreal.

You mentioned in the quarter to cost discipline driving some margin upside versus the guide. As you think longer term, DXC's been taking cost out of the business for a while. How sustainable do you think these sort of cost -- management cost takeout [indiscernible] in terms of growing aspiration to grow EBIT margin longer term?

Yes, Brad, this is Rob. So we've demonstrated that over a sustained period of time, we could manage costs to maintain margin levels, and I'm confident we could continue to do so. And when revenue stabilizes and beyond, it will provide a great platform for us, and we will maintain the spending discipline. It will then provide the platform for growing margins. So I feel kind of especially now with enablement of AI tools internally, we will continue to tightly manage spending, drive productivity from a margin perspective.

Brad, client 0, I've mentioned many of the internal products that we're using across every business function. 1 that I mentioned in the first call was our Agentic SoC solution that we're now taking to market our partner [ 7 AI ]. That has been running in place and clearly, that's going to have, from an operating standpoint, from an operator standpoint, a positive cost in terms of how we operate in the coming years. Again, that's not fully baked into next year's guidance, which we're still working on. and we're still working on the rollout of a product in terms of not just using it internally, they're reselling it externally.

[Operator Instructions] Your next question comes from the line of Darrin Peller with Wolfe Research.

This is Paul Obrecht on for Dan. Can you provide a bit more detail on how you're thinking about head count strategy going forward, especially as we think about AI being increasingly embedded across really every facet of the business, it sounds like.

Yes. Sure. I'll give you a little bit of color commentary and then Rob will kick in. Look, I think the traditional labor pyramid and the traditional way of thinking about labor in terms of onshore, nearshore, offshore will be obsolete, will be obselete in 3 years, 6 years, I don't know. But the pyramid will start looking more like a diamond and at the bottom of it are going to be AI agents. And part of what we're doing is making sure that our workforce is skilled to continue to move up the value chain as we deploy these forms of agents work that was done by Level 1 and Level 2 engineers. So it is an ongoing human capital discussion that we've got. It's a human capital investment that we're doing. But it's also 1 that's going to impact every company in this space.

Yes. So Paul, as that new model evolves, along the way, we'll continue to balance resources with our demand profile and delivery requirements, while we continue to drive productivity throughout the overhead functions in the company. So we will maintain our normal management approach while the new model is evolving.

Got it. That's helpful color. And then last quarter, you noted seeing your win rates increase, I think it was low to mid-single digits during the quarter acros CES and GIS. Just curious, any updates there, if you observed a similar trend this quarter? .

Yes. I'd say quarter they were stable. So no real change in the trajectory.

Next question comes from the line of Rod Bourgeois with DeepDive Equity Research.

I have a general question about your Fast Track solution plans. I like the sound of these new plans. It sounds like you're moving past some of the tackling turnaround work and you're now moving to improve positions and some key is there. So on that note, I'd just like to ask if there's a certain milestone that you've reached that's now enabling you to better pursue these kind of Fast Track opportunities, whereas before those kind of new market approaches were seemingly somewhat on hold. So is the milestone that you have more room to invest or more of a readiness with execution? Or is it an AI opening the door [indiscernible]. Can you just elaborate on the -- what the pivot point is here?

The absolute number 1 -- thank you. The absolute #1 pivot point is new that has come in with the skill sets to do this. And that talent has gotten here and we've been able to bring others that we've all worked with in the past in different companies. And that is the absolute key to this transformation. That new talent came up with the opportunity. That new talent came up with the product framework, that new talent is building and deploying that as we speak. So that's the absolute key. And finding the right people, getting them onboarded, as you said earlier, it's a playing offense and playing defense. The defense is stabilizing our kind of our core business and operating in a more efficient and effective way of professional services firm. And then the offense is going to market with these fast-track products.

Okay. All right. And then just a follow-up to focus on the free cash flow from a different angle. If you produce $650 million in free cash flow this year, can you give us a sense of whether that creates a baseline next year to grow on top of? Or given that you have some free cash flow benefit that you're reaping this year, is the $650 million more of a stable level to consider on a go-forward basis. Just -- I know you can't give guidance that far out, but a general idea on the trajectory and how this year's benefits will apply to next year?

Sure, Rod. The way I'd describe it is -- this will be our third year in a row of producing free cash flow in that range. And I fully expect that to continue at this point, right, without any major disruptions. I fully expect it to continue.

And that concludes our question-and-answer session. I am now going to turn it back over to Raul for closing comments.

Thank you so much. Before we sign off, we'd like to share a short video showcasing the AI capabilities I discussed earlier. It was created using AI tools at a fraction of the typical production cost. The video is available in the IR section of DXC's website, along with our other earnings material. Thanks, everyone, for joining us on the call today, and we look forward to speaking with you again next quarter.

Hello, and welcome to the DXC Technology First Quarter Fiscal 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Roger Sachs, Vice President of Investor Relations. You may begin.

Thank you, operator. Good afternoon, everybody, and welcome to DXC Technology's First Quarter Fiscal 2026 Earnings Conference Call. We hope you've had a chance to review our earnings release posted to the IR section of DXC's website.

Speaking on today's call are Raul Fernandez, our President and CEO; Ramnath Venkataraman, our new President of our Consulting & Engineering Services segment; and Rob Del Bene, our Chief Financial Officer.

Let me walk you through today's agenda. First, Raul will provide an overview of our results and update on our strategic initiatives. Rob will then walk you through our financial performance for the quarter as well as provide some thoughts on our second quarter and fiscal full year guidance. Rob and Raul will then take your questions.

Certain comments made during today's call are forward-looking and subject to risks and uncertainties that can cause actual results to differ materially from those expressed on the call. You can find details of these risk and uncertainties in our annual report on Form 10-K and other SEC filings. We do not commit to updating any forward-looking statements during today's call.

Additionally, during this call, we will be discussing non-GAAP financial measures that we believe provide useful information to our investors. Reconciliations to the most comparable GAAP measures are included in the tables included in today's earnings release.

And with that, let me turn the call over to Raul.

Thank you, Roger. We delivered first quarter results at the high end of our guided ranges for both organic revenue growth and adjusted EBIT margin with non-GAAP EPS above the high end of guidance. Specifically, during the quarter, total revenue declined 4.3% year-to-year on an organic basis. Adjusted EBIT margin was 6.8%. Non-GAAP diluted EPS was $0.68, and we also had another strong quarter of free cash flow generating $97 million compared to $45 million last year in Q1.

Bookings increased 14% year-over-year, our third consecutive quarter of double-digit growth. resulting in a trailing 12-month book-to-bill ratio of 1.06, up from 1.03 at the end of fiscal 2025. Growth was broad-based across many of our industry verticals. This trajectory underscores the emerging stronghold of our new go-to-market initiatives and improved execution. We saw strong bookings in both Europe and Asia Pacific this quarter with book-to-bill ratios well above 1, driven by public sector strength across both regions and solid deal flow in manufacturing and consumer goods/retail in Europe.

With a healthy pipeline and steady deal inflows, we remain confident in our ability to consistently drive a trailing 12-month book-to-bill ratio above 1.0.

We continue to attract top-tier experienced talent to our leadership team with a shared passion to win. I'm thrilled to welcome industry veteran, Ramnath Venkataraman as President of Consulting & Engineering Services, to lead the business into its next phase of growth. Ramnath brings nearly 30 years of global experience from Accenture, where he built and grew high-performing businesses across industries and regions. He has a strong track record of helping clients embrace next-generation technologies, especially AI, and delivering operational excellence through innovation and disciplined execution. Ramnath brings fresh perspective to CES, and we're confident his leadership will help sharpen our go-to-market focus, drive growth and unlock the segment's full potential.

Let me hand the call to Ramnath to make a few brief comments.

Thank you, Raul, for the warm welcome. I'm excited to join the DXC family and lead our CES business at such a pivotal time. The first few weeks have been energizing, and I've been extremely impressed with our exceptional talent and the value that we're delivering for our clients.

As I focus on driving profitable growth, the effort will be on delivery excellence through greater consistency, accountability and operational results. I look forward to scaling our innovation agenda to keep pace with the rapidly changing technology landscape and deliver greater value for our clients and our shareholders.

Back to you, Raul.

Thank you, Ramnath. AI is redefining every business process and redefining every customer interaction. Our approach to AI solutions is centered around integrating AI seamlessly into the fabric of our clients' operations, ensuring that AI is not just an add-on but a core component of their business strategy and go to market. Combining our deep domain expertise with advanced AI capabilities, we help clients across our segments move faster, operate smarter and unlock outcomes that were previously out of reach.

Recognizing that technology is only as good as the people behind it. We're investing with urgency in talent, training over 50,000 GenAI-enabled engineers and achieving AI readiness across 92% of our technical teams. Combined with our deep industry expertise, these capabilities are positioning DXC to lead with AI and deliver real enterprise-grade impact. We are seeing results from our investments.

We're proud to share that DXC has been recognized by Gartner as an Emerging Leader in the inaugural Consulting and Implementation Services Market Quadrant for Generative AI. We believe this recognition reflects both the strength of our current AI capabilities and our clear strategic vision for helping clients deploy GenAI at scale, with speed, security, and real business value. It reinforces our position as a trusted transformation partner for enterprises navigating complex regulated industries with emerging technologies.

Let me share a couple of examples of how we are using AI-based solutions to deliver impact for clients. First, we signed a long-term agreement with Unicaja, one of Spain's top banks to modernize core operations, including mortgages, payments, procurement and loan management, tackling fragmented processes, limited agility and rising costs. At the heart of the transformation is AI and GenAI, powering document automation, intelligent customer communication, virtual assistance and frictionless resolution of customer needs. The result: faster service, smarter operations and significant cost savings over time.

Next, a leading German automotive supplier turn to us to take control of a fragmented SAP environment spread across 6 vendors in multiple countries and sites. They needed one partner to help them streamline SAP service across manufacturing, supply chain, logistics, finance and procurement. We're delivering exactly that. Standardizing processes, cutting through complexity and building a unified efficient SAP service landscape that enhances productivity and drives growth.

As we expand our market reach, we know partnerships are key to scaling, which is why we continue to deepen our global ecosystem to unlock new opportunities. That's why I'm thrilled to announce that DXC entered into a strategic partnership with Boomi, a leader in AI-driven integration automation. Boomi connects applications, automates workflows, manages APIs, and ensures data integrity across cloud and on-premise environments.

By combining Boomi's AI tools with DXC's full stack engineering talent, our customers can link their different systems like orders, inventory and shipping. So everything works together seamlessly. This end-to-end connectivity helps clients streamline operation, automate routine tasks and reduce complexity. It also enables faster, smarter decision-making by surfacing insights faster to accelerate transformation.

Internally, we are embedding AI across all corporate functions. In IT, we're enhancing developer productivity and automating service desk support. Our security teams are leveraging agentic AI to deliver real-time threat intelligence, providing an almost 70% reduction in investigation time with 95% investigation accuracy.

In marketing, we've cut content creation and video production time down by 30%. In HR, predictive analytics are helping us identify attrition risks, accelerate talent matching and improve general workforce utilization. Our legal team is automating contract reviews and risk assessments. And lastly, in finance, we're improving forecasting speed and accuracy through AI-driven insights.

We're not just applying AI to improve our operations. We're pressure testing and documenting our journey as Client Zero. This hands-on experience helps us move faster, learn in real time and bring smarter, more scalable solutions to our clients.

While first quarter organic revenue growth came in at the high end of our guide, we know we need to do better and we're taking action. Our pipeline continues to expand, and we're building toward more consistent bookings growth. Our focus is clear: driving sustainable, profitable growth. We're sharpening execution across the company with our leaders, instilling a winning culture and tackling the structural and operational issues that matter the most. As part of this journey, we continue to build a workplace where all 120,000 colleagues feel valued, supported and empowered. That commitment was recently recognized by Newsweek which named DXC one of America's Greatest Workplaces for the second consecutive year.

Over the past 18 months, we've rebuilt our foundation, streamlining operations, strengthening leadership, reorienting around innovation, proactive solutioning, performance management, execution and talent. Turnarounds of this magnitude takes time, but we're clear on the road ahead. We're moving in the right direction, and we have confidence in achieving our full year guidance.

Now let me turn it back over to Rob.

Thank you, Raul, and good afternoon, everyone. Today, I'll go over our first quarter results and provide guidance for the second quarter and our updated full fiscal year 2026 outlook.

Before I begin, a quick reminder. Starting with first quarter, we're reporting our financial results in 3 segments that better align with how we run the business. These are Consulting & Engineering services or CES; Global Infrastructure Services or GIS, which includes cloud and ITO, modern workplace, security and horizontal BPO; and finally, Insurance Software & Services or simply insurance.

For reference, we filed an 8-K last week that includes 2 years of revenue, organic revenue growth and segment profitability under the new structure. This information is also available in our Excel data sheet, which will be posted to DXC's Investor Relations website immediately following today's call.

And now starting with the first quarter results. Total revenue was $3.2 billion, declining 4.3% on an organic basis towards the top end of our guidance range. As Raul noted earlier, bookings grew by 14% year-to-year, marking our third straight quarter of double-digit growth. Our book-to-bill ratio of 0.9 for the quarter moderated from the levels we achieved during the second half of last year largely reflecting typical seasonality in our business and the deferral of a couple of longer-term larger deals in GIS. Adjusted EBIT margin was 6.8% down modestly by 10 basis points year-to-year. We're investing to support future top line growth while continuing to drive productivity to offset revenue declines.

With the transition to 3 segments, we adopted an updated classification of spending between cost of goods sold and SG&A. As a result, non-GAAP gross margin expanded by 140 basis points, while SG&A as a percent of revenue increased by 230 basis points, reflecting the reclassification and investments. Given the reclassifications, we believe adjusted EBIT represents the clearest view of profitability for our results in the near term. Non-GAAP EPS was $0.68, down from $0.75 in the first quarter of last year, largely driven by lower adjusted EBIT and higher taxes, partially offset by lower net interest expense.

Now turning to our segment results. CES, which represents 39% of total revenue, declined 4.4% year-over-year on an organic basis. This reflects ongoing pressure in short-cycle custom application projects with clients continuing to invest in larger strategic deals which typically have significantly longer duration than short-term project-based services. Underscoring client confidence in our capabilities, we drove bookings growth of 32% year-to-year for a strong book-to-bill ratio of 1.2, the third straight quarter of good performance. Our trailing 12-month book-to-bill also stands at approximately 1.2 which we expect to lead to improving CES revenue performance in the second half of this year and in fiscal 2027.

GIS, which represents 51% of total revenue declined 5.7% year-to-year organically, which was consistent with our fourth quarter performance and in line with our full year expectation. Bookings for GIS grew modestly year-to-year with a book-to-bill of 0.7%, driven by a couple of large deals that got deferred out of the quarter, which we expect to close in the coming quarters. The trailing 12-month book-to-bill improved to approximately 1.1.

Insurance, which represents 10% of total revenue, grew 3.6% year-to-year organically largely due to growth in software and volume-based increases in existing accounts. We continue to expect business to grow at mid-single-digit rates for the year.

Now turning to our cash flow and balance sheet. During the quarter, we generated $97 million of free cash flow, up from $45 million last year. This increase was largely driven by lower in-period capital requirements and the timing of certain software payments. As a result, capital expenditures as a percentage of revenue declined to 2.8% compared to 6% in the same period last year. We also continue to minimize new financial lease originations, recording only $1 million this quarter. Restructuring payments for the quarter were an incremental $4 million year-to-year. Since the start of fiscal 2025, we've taken deliberate steps to strengthen our balance sheet by reducing debt and building cash to create financial flexibility.

Over the past 5 quarters, we paid down nearly $350 million of capital leases, while limiting new finance lease originations to just $25 million. These efforts partially offset by currency movements in our euro-denominated bonds have brought our total debt down $60 million to approximately $4 billion.

Over the same time period, our ability to consistently generate strong free cash flow enabled us to increase our cash balance by almost $570 million since the start of fiscal 2025, bringing it to $1.8 billion. As a result, we have reduced our net debt by approximately $630 million.

With this solid financial foundation, we will continue to execute with focus and discipline against our capital allocation priorities for the year that include continuing to invest in our business to accomplish our top priority, driving sustaining profitable revenue growth, further strengthening our balance sheet by minimizing new financial lease originations and retiring a portion of our senior notes maturing in January 2026 and returning capital to shareholders with plans to spend $150 million on share repurchases in fiscal 2026.

During the first quarter, we used our free cash flow to support these priorities, reducing both debt and returning capital to shareholders. This included $49 million of capital lease paydowns and repurchase of 3.3 million shares for $50 million with a cash outlay of $48 million.

Now let me provide you with our full year fiscal 2026 guidance. We continue to expect total organic revenue to decline 3% to 5%. As a result of the benefit from currency tailwinds, we now expect total reported revenue in the range of $12.6 billion to $12.9 billion, an increase of approximately $430 million at the midpoint of the guide. At the segment level, we expect CES to decline low single digits organically with an improving performance in the second half of the year as the larger longer-duration deals ramp. GIS is anticipated to decline at a mid-single-digit rate organically, and insurance is expected to grow organically at a mid-single-digit rate, in line with recent performance.

We continue to expect adjusted EBIT margin to be between 7% and 8%. We now expect non-GAAP diluted EPS to be between $2.85 and $3.35, an increase from our prior guide of $2.75 to $3.25, reflecting our higher reported revenue projection. We continue to expect free cash flow for the full year to be approximately $600 million, reflecting our EBIT guidance and our continued expectation of $30 million of incremental restructuring spend in the year.

For the second quarter of fiscal 2026, we expect total organic revenue to decline 3.5% to 4.5%. We anticipate adjusted EBIT margin in the range of 6.5% to 7.5%. And finally, non-GAAP diluted EPS of $0.65 to $0.75.

With that, let me turn the call back over to Roger.

Thank you, Rob. We'd like to now open the call for your questions. Operator, can you please provide the instructions?

[Operator Instructions] And our first question comes from the line of Bryan Bergin with TD Cowen.

Guys, can you hear me?

We sure can.

Sorry about that. I wanted to ask about just free cash flow. The puts and takes as you move through the balance of fiscal '26, just the confidence you have there, anything we should be mindful of as you move through the remaining quarters?

We're confident in the guide we gave. We did -- as we just mentioned, did a little better in the first quarter. We have levers, we still have room for improvement in working capital. So that's a lever going forward. Bryan, we expect we're going through the analysis of the new tax legislation. And that, we think, will be a modest improvement from a cash tax perspective going forward, which is not baked into the current guide yet. We have to do our work and we'll update you in 90 days on that. So there's ample evidence here that we're going to continue to work the number. And so I feel really good about the guide. And from a risk perspective, I feel really good about it.

Okay. That's clear. As it relates to bookings, it sounds like some things may have moved to the right a little bit, understandable in this environment. Just your 2Q expectations, just comment on pipeline view, replenishment, post 1Q signings, those kind of things.

Yes. Our pipeline for 2Q is strong. And the way -- in the short term, the best indicator of general strength is the non-mega pipeline, so below $100 million deals, if you will, that's not skewed by 1 or 2 big deals. And that pipeline shows solid growth across the board. It's most pronounced in CES. So the expectation is we'll have another good quarter in 2Q on bookings generally. I'm expecting -- we have the opportunity, let me put it that way. We have the opportunity to further expand the trailing 12 months in 2Q. So it would be 3 quarters in a row -- 4 quarters in a row of expanded trailing 12 months. So that's our expectation.

Your next question comes from the line of Jonathan Lee with Guggenheim Partners.

Can you walk us through what's contemplated in your fiscal '26 revenue growth outlook from a macro perspective across the range as well as across each of the segments? And can you also talk through the thought process of maintaining your revenue growth outlook despite an incremental quarter of visibility and the outperformance in the quarter?

Yes. Yes. So thanks for the question, Jonathan. Look, from a macro perspective, my comments will be similar to last quarter. In that, in our guide, our minus 3% to minus 5% guide, we left room for economic uncertainty. And I should say, a worsening of conditions because of economic uncertainty. So that still stands -- said it last quarter still stands. We haven't seen a worsening in conditions. So I feel like we still have room at the low end of the guide, should conditions change. So feeling solid in our guidance range from that perspective.

And in our prepared comments, we mentioned that, see we do expect narrowing of the declines in CES as we progress through the year. We're starting -- we could see the layering in of the larger contracts that have come from the solid book-to-bills over the last 3 quarters. So start to turn into better revenue performance progressively as we go through the year and into fiscal '27.

So feeling good about that trajectory. Insurance, we've got a solid backlog, confident in the mid-single-digit projections for the year, maybe a little better in the second half than the first half is my expectation. And GIS is going to be in the range of the first half of the year, will carry over into the second half of the year. That's the current expectation. Although the pipelines are good in GIS as well. So hopefully, we can improve that performance, but that's the current view.

And just a follow-up. I mean, have you seen any changes to yield or win rates around your bookings given -- or any other macro factors?

Yes. So we've been extremely consistent in first from a pricing perspective. Our pricing has been very, very consistent year-to-year, quarter-to-quarter. In the first quarter, our win rates increased low to mid-single digits. And that increase came in both CES and GIS, which was encouraging to us. So we have good performance from that perspective.

Your next question comes from the line of Jamie Friedman with Susquehanna.

I had a couple of questions. I'll just ask them both upfront. So in terms of the decline in the insurance bookings, has the company begun to journey of transitioning from like term to subscription yet? And if not, when do you expect that or would you expect that to occur? That's the first one.

And then just a very big picture question, but I'd love to get your perspective on if AI improves or in any way, deteriorates your perception of your competitive position?

Sure. Let me start with the last part and then Rob will pick up on the insurance question.

No, look, from -- any time a new cycle of technology where literally, we're reinventing every process, every customer interaction, every business-to-business interaction. It creates a great opportunity not just for established players, but obviously for start-ups and disruptors. We've got an incredible foundation with our long history of relationships running very complex systems for our customers in many cases, in highly-regulated industries and a proven partner over time. So AI is a huge opportunity for us. That's why we've talked about it so much in the prepared script of what we're doing internally and then what we're taking to market. But we are still in the early stages of this.

As an example, we've seen, like others have commented, dramatic gains in code conversion and requirements validation but quality assurance remains super time intensive. AI can produce code fast but it often lacks the contextual depth needed for accuracy, security and compliance. And so it requires basically more testing. So while coding time goes down, testing time goes up slightly. Again, super early stage of learning by doing, and we're learning by doing across all of our business functions. And then across our companies that we serve globally. Rob, back on insurance?

Yes. Jamie, on your insurance question, the dynamics, the bookings and backlog dynamics and insurance are different than the other 2 offerings that we have. It's the offering that has the most revenue coverage from -- in the backlog. So the -- and the booking cycles are -- they tend to be larger renewals that come periodically. So in period and even the trailing 12 months, of bookings for the insurance business doesn't have the same relationship to near-term revenues as it does in the rest of the business. And that's why I'm confident, even with the bookings well below a book-to-bill of 1 in the last few quarters, I know we have the backlog to deliver the mid-single-digit revenue progression throughout the year. So I feel good about that.

We haven't -- your second point on that question was the transition to SaaS. And we have not had a significant transition yet. It's strategically, we're going to get there, and we're going to go -- we're going through the planning of that transition as we speak and that will be unveiled at a later time.

Our next question comes from the line of Keith Bachman with BMO.

I know Bryan had asked about the bookings outlook for the September quarter. I wanted to raise that up a little bit. And just how should we be thinking about bookings through the year in terms of the pipeline? And really the orientation of my question, just what do you think the book-to-bill needs to be such that when you arrive at '27, a 0 or in terms of revenue growth might be possible. But I'm just trying to -- can you talk about bookings trends that we might expect for the year? And what do you need to be to get to a 0?

Yes. So Keith, thanks for the question. And there's a lot packed into that question. First, I'll just preface everything. We don't give guidance on bookings. But I'll tell you that the full year pipelines we have are healthy. They're strong. So that is a good indicator and gives us confidence in future bookings in Raul's comments at the beginning of the call. So it's prefaced on data, it's prefaced on what's in our current pipelines.

The level of book-to-bill required does vary by offerings. Just heard my comments related to the insurance business. So I'm going to set that aside as I answer this question because it has different dynamics. The rest of the portfolio, CES has less in backlog than GIS as you enter a year or enter a quarter. So the bookings dynamics are more important in CES to get higher book-to-bills consistently, get a trailing 12-month above 1, to get to sustained -- to stabilize and get to sustained growth. A little less so in GIS.

So when I think about -- and without any precision, when I think about on a sustained basis, and the other thing I'd point out, Keith, is that all of these businesses have a natural level of erosion in the backlog. Every company has it, right? So you have to factor that in for the answer. So you need a pipeline -- I'm sorry, a trailing 12 months between 1.05 and 1.11 on a sustained basis depending on the line of business, a little higher for CES, a little lower for GIS.

And let me just give some additional color. Just on the dynamics of this. As I've been here 18 months, I realized early on that the company had done, obviously, a good job historically in responding to RFPs and being competitive in renewals. We are much better competitively in our RFP process, and we are getting much better in our renewal statistics, but we're also adding proactive solutioning. And that is key. That is us bringing net new ideas, net new solutions that leverages some aspect of our implementation heritage. And that leads to more opportunities with a higher probability of wins. So this proactive solutioning that we're literally rolling out this quarter and beyond in scaling will add to the pipe that Rob commented on.

Makes sense. And just any comments on how duration may change as the year unfolds of your backlog?

Yes. Keith, hard to predict. It depends entirely on the mix of smaller project-based services and larger deals. I'll tell you the project-based services, as I described them earn in 6 to 9 months. And the larger, more strategic deals earn anywhere in the range of 15 to 25 months. So that mix really determines what the average duration is. So the mix in any quarter could vary pretty significantly. And so we have had a larger mix to the more strategic deals the last 3 quarters, which is why in CES, we have not had revenue improvements to date, but we could see it on a going-forward basis.

Your next question comes from the line of James Faucette with Morgan Stanley.

It's Antonio on for James. I wanted to double-click into the contracts that you guys are looking into, like as far as shutting some of the lower-margin contracts and how the sales traction around that is going with those new pricing constructs?

Yes. Antonio, we -- so the approach we've taken on -- from a contractual standpoint, where we have a contract where the margins are not favorable we always enter into the renewal period with a strategy to work with the customer on both price and terms to improve the situation for us and to deliver more value to the customer. So that's the way we approach this. We don't approach it with a definitive list of contracts we want to exit. So I'd say over the last couple of years, as we've approached the market upon renewal, we've been able to get more favorable terms and arrive at a mutually beneficial relationship going forward.

That's helpful. And then on GenAI, what type of investment strategy are you pursuing there? Is it more like organic, more like inorganic? And then how is that baked into some of these new engagements as far as pricing goes as well?

Sure. Look, I think all companies that have got a history or heritage of using technology to advance their businesses are actively learning by doing. And we are doing the same thing across our internal functions and also across key functions, such as our security operation centers, where we're deploying disruptive but proven technology, testing that technology, getting KPIs that are clear in early POCs and learning how to scale those in a much broader way.

So we are getting and seeing the impact of efficiency, how that efficiency then leads to both revenue growth as well as cost optimization is work in progress. And I think this calendar year is about learning by doing and applying those lessons learned in a much more scaled manner in the next fiscal year. but I am very, very positive and happy with the breadth and depth of where we're applying AI, not just for our own internal operations, but being thought leaders with our customers.

Your next question comes from the line of Tien-Tsin Huang with JPMorgan.

Raul, I also want to pick your brain on AI. I'm curious if you're seeing existing clients look to reengage with DXC to consider adding AI content? And if that's happening already, is it impacting your bookings and ARR in any way? It's always that question of addition or subtraction, that kind of thing. I just wanted to pick your brain on that.

Yes. No, no, no. It's absolutely addition. It's additive. And what I mentioned earlier about proactive solutioning, what we're trying to do is to focus in on highly scalable, replicable frameworks that are AI-centric and have some other hook where we've got some advantage, right? So we know the industry, it's a highly regulated business that we've been serving for many years. We know the existing business processes. We know the existing data situation, meaning is it ready to use? Do we both need to work on it to get it ready to use?

So we are targeting our new proactive solutions that we're bringing to our customers, which, by the way, being -- everybody wants to hear new ideas that have real bottom line impacting results. And so I'm happy with the packaging up that we've got with these proactive solutions and the initial conversations we're having with great clients.

Okay. Great. I appreciate those thoughts. And Ramnath, welcome to the call. If you're on the call, can I ask a question to you. Just coming from Accenture, evaluating CES in the time you've been there. How strong are the bones there? Do you anticipate making meaningful or just more modest changes? Any thoughts on the delivery capability, that kind of thing?

Thank you. Thank you for the welcome. It's been a fabulous experience coming in and taking a look at the strength of the people and the capabilities that we have in DXC, the client stories and examples that we have. What we really need to do is make sure that we follow the pieces that Raul mentioned at the beginning, which is sustainable, profitable growth, and there are really strong foundational elements that are in there, which Rob spoke about, the book-to-bill is very strong with 1.2. So my focus is really going to be on how do we convert the backlog without any leakages and make sure that in a programmatic way, convert those to revenues, which is on the top line side and on the execution side.

Clearly, there are efficiencies to be had, whether it's on operational efficiency or on delivery execution by streamlining some of the processes that we have and making it a lot more simpler. But the foundational elements are extremely strong. The client base is fantastic and the people capability is absolutely world-class. So I'm very, very bullish of being able to convert this and really translating what Rob and Raul said, from a strong book-to-bill to a strong revenue growth story.

Excellent. Roger, don't be mad. Third question, really, really quick. Just Rob, for you, does the gross margin comparability having gotten through the restatements is, when we're getting this question, is there a way to get a comparable gross margin figure for the quarter?

Yes. I mean our gross margins, and you'll see it in the data sheets. Our gross margins are stable. We had some -- as we've sharpened our -- we've gone through a lot of integration work, systems work as we've sharpened our classification of spending between cost and expense. On a year-to-year basis, you see the gross margins going up. So that year-to-year is really the result of sharpening our pencil and better aligning spending with cost versus expense. But our margins quarter-to-quarter are consistent. So -- and we expect that going forward. So was that helpful?

Our next question comes from the line of Darrin Peller with Wolfe Research.

This is Paul Obrecht on for Darrin. Raul, you obviously have extensive visibility into enterprises, infrastructures and data foundations. Can you just provide us with an update on enterprise readiness for AI? What share of enterprises are actually ready to leverage these AI solutions versus the ones who still have extensive work to do before being able to leverage it?

I spent time, obviously, with our customers, but I'm also an investor in earlier stage companies. So I measure ourselves not just against the big competitors and then obviously leading class companies in many industries that we serve but also up-and-coming disruptors.

And so I -- looking at it from that point of view, I'm very optimistic that this will have a profound business impact and will change every interaction, every business to business interaction, every business to consumer interaction. But that change using AI will require a rethink in process, will require a relook at data, and will require a new methodology. We've talked a lot in the past about waterfall and agile. There will be a new way that we implement. And part of what we're doing, what we're documenting by doing is trying to put together a framework that we can share with our customers to take this journey in a much more streamlined fashion.

We are in the era of experimentation. All of us are trying it in many ways. There is no way to learn other than doing. So curiosity is king here and it's super important for our customers. But there is a lot of data readiness that needs to be addressed obviously, privacy and all other types of regulatory issues need to be addressed.

So plenty of work to be done because again, this isn't a plug-in and just accelerate an existing process. This will be rethinking every process using AI to replicate human functions, using AI to augment human intensity by lowering operational intensity. So plenty of change. And if you're in the front line of that change and you can document that change and share that change and experience with your customers, you're in a great position as a partner.

That's really helpful. And then there's obviously been lots of change underway at the company in the past few years with new leaders coming in and efforts to enhance the operating model, revamp the go-to-market approach. Can you just touch on how employees have been responding to these changes internally?

Yes. Employees are energized, committed to a winning culture, committed to competing across every opportunity. And I think what we've brought, if you think about the last 18 months and I think about it in 6-month increments, the first month was heavy assessment and beginning to bring in new talent. The second 6-month period was adding to new talent and laying the foundation for new go-to-market solutions and processes.

And we're in the middle of the last period, the next 6 months where we're scaling those. And as we enter the second year, we think that the foundation that we've laid is very, very strong. The new talent has been here for a period of time, and you can see the impact that they've got across the organization. But it's not going to be a linear journey. It hasn't been. And we'll have accelerations in some areas. We'll have some areas that don't move as quickly that we feel that we've got a handle on how to turn this company into a sustainable growth company.

[Operator Instructions] And our next question comes from the line of Rod Bourgeois with DeepDive Equity Research.

Great. Rod Bourgeois here. So historically, DXC's margins seasonally improved as the fiscal year would progress. I think your guidance is not implying seasonally better margins down the road. So I'm wondering if -- is that reflecting some guidance conservatism? Or are there other factors at work to offset the past seasonality that would exist?

Yes. Thanks for the question, Rod. So you're right, 1Q to 2Q, there typically is some seasonality, and it's varied year-to-year, but it has been some seasonality fairly consistently. So a little less so this year. So that's true. However, we do have margins increasing in the second half of the year in the guide. So we do have an expectation that we'll be improving margins in the back half of the year. So a little different pattern than previous years, but nevertheless, progressing margins as we go along.

Okay. Okay. Great. And then just a big picture question. You've mentioned the goal of achieving profitable revenue growth. And I just wanted to ask, can you just outline the main DXC repositioning factors that give you confidence that you're going to hit that crossover point at some point where you move into profitable growth? Or maybe it's achieving growth that's more kind of at par with a peer group or something. But what are the main factors? And when do you see that crossover point being reached?

Sure. We've touched on a couple of them. Obviously, a trailing book-to-bill is key to that, and Rob mentioned where the hurdle point is on that. But for us, it's really around sales opportunities and our effectiveness in winning. It comes down to winning renewals that makes sense economically for us and the customer. It comes down to winning situations where we get invited to compete and those are RFP or advisory-driven opportunities.

And then one new gear, which was not here before, are the new proactive solutions where we've stepped back and we thought, what can we do, what can we bring using AI that leverages some heritage, meaning industry knowledge, process knowledge, technology knowledge, data knowledge with proactive and highly replicable solutions. And that is just coming into the marketplace today, and we are scaling that. And that's what gives me confidence that we're on the right trajectory.

And with no further questions in queue, I will now turn the call back over to Roger Sachs for closing remarks.

Great. Thank you, everybody, for joining us today, and we look forward to speaking with you again next quarter. Thank you.

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.