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

Mike Salvino: The second thing I would tell you is having the business hit on all five out of six offerings shows that, look, we still have not only relevancy in the market, but there is demand. So look, can I tell you what’s going to happen to the economy? I mean, you look at everything, you read the scripts, people say this is the year of efficiency. We do efficiency well, Keith. So if people want cost savings, and if people want somebody to run something efficiently, that’s us. So like I said, I mean, I can’t call out exactly what’s going to happen in 2024 or two or three months or two or three quarters down the path. But what I can call is that we feel good about Q4 and we feel good about the momentum we’ve created so far.

Keith Bachman: Okay, perfect. Many, thanks. I’ll cede the floor.

Mike Salvino: Keith, thanks. Brent, next question?

Operator: Your next question is from the line of Jason Kupferberg with Bank of America. Your line is open.

Mike Salvino: Hey, Jason.

Jason Kupferberg: Thanks. Hi, there. How are you? Thanks for taking the question. I just wanted to ask the first one on organic revenue growth. I mean, I know in the quarter it was a little below plan, I guess fourth quarter is coming in a little below what was previously expected. So just as you unpack that, I mean, where would you say the shortfall has been relative to what you had previously anticipated, which of the service lines?

Mike Salvino: It was Modern Workplace and Applications. So we expected that we would turn Modern Workplace quicker than we did because I kept telling everybody that that’s following the exact same transformation journey as ITO. You’ll see that we turned ITO within probably about a year. So we thought we would turn that a little bit quicker. And then Applications, we expected to get more project revenue out of that. When you looked at our plan for FY 2023, it was back end loaded and we expected to get a little bit more out of apps. But I think apps will, you’ll see a turnaround in apps, just like you’ll see a turnaround amount of workplace in Q4 based on the bookings we just knocked down.

Jason Kupferberg: Okay. And then my second question was just more of a clarification, I guess, Ken, I think you’ve said in the script that there was some kind of commercial matter that was settled that, and I don’t know if I got this right, so correct me if I’m wrong, help. GIS margins by 80 bps in the quarter, is that what it was? And is that just kind of a one-off?

Ken Sharp: Yes. It’s kind of a non-recurring, so that’s why we called it out, but you got the numbers right.

Jason Kupferberg: Okay. So what is that about 40-ish basis points overall? It was 80 for GIS.

Ken Sharp: Yes.

Jason Kupferberg: Okay.

Ken Sharp: Thereabouts, yes.

Jason Kupferberg: Okay. Thank you guys.

Ken Sharp: Yes.

Mike Salvino: Thanks Jason. Brent, next question?