Q3 2024 DXC Technology Co Earnings Call

Operator: Thank you for standing by. My name is Christina, and I will be your conference operator. At this time, I would like to welcome everyone to the DXC Technology Q3 Earnings Call. All lines have been placed on you to prevent any back, After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Thank you for standing by my name is Christina and I'll be your conference operator today at this time I would like to welcome everyone to the DXP technology Q3 earnings call.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there'll be a question and answer session.

Speaker Change: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Operator: If you would like to withdraw your question again, press star 1. Thank you. I would now like to turn the floor over to Jon.

Speaker Change: If you would like to withdraw your question again press Star one.

Thank you I would now like to turn the floor over to John Sweeney, Vice President of Investor Relations. John You May begin your conference.

Jon: Vice President of Investor Relations. Dumb, you may begin your presentation. Thank you. Good afternoon, everybody. I'm pleased that you're joining us for DXC Technology's third quarter fiscal year 2024 earnings call. Our speakers on the call today will be Raul Fernandez, President and CEO, and Rob DelVenere, our EVP and CFO. The Coliseum webcast, DXC's investor relations website, and the webcast include slides that will accompany this discussion today. Today's presentation includes certain non-GAAP financial measures which we believe provide useful information to our investors. In accordance with SEC rules, we provide a reconciliation of these measures to their respective and most directly comparable GAAP measures.

Thank you and good afternoon, everybody I'm pleased that you're joining us for DXP Technology's third quarter fiscal year 2024 earnings call. Our speakers on the call today will be Raul Fernandez, President and CEO, and Rob <unk>, our EVP and CFO.

John Sweeney: Our call is being webcast at <unk> Investor Relations website on the webcast include slides that will accompany this discussion today. Today's presentation includes certain non-GAAP financial measures, which we believe provide useful information to our investors in accordance with SEC rules. We provide a reconciliation of these measures to their respective and most directly comparable.

Jon: These reconciliations can be found in the tables included in today's earnings release and in the webcast slide. Certain comments we make on the call will be forward-looking. These statements are subject to known risks and uncertainties, which could cause actual results to differ significantly from those expressed on the call.

GAAP measures. These reconciliations can be found in the tables included in today's earnings release and the webcast slides.

Certain comments, we make on the call will be forward looking these statements are subject to known risks and uncertainties, which could cause actual results to differ materially from those expressed on the call. A discussion of these risks and uncertainties is included in our annual report on Form 10-K, and other SEC filings I'd now like to remind our listeners that DXP technology assumes no.

Jon: A discussion of risks and uncertainties is included in our annual report in form 10-K and other SEC filings. I'd now like to remind our listeners that DXC Technology assumes no obligation to update the information presented on the call except as required by law. And with that, I'd like to introduce DXC Technology's President and CEO, Raul Fernandez.

Speaker Change: Obligations to update the information presented on the call except as required by law and with that I'd like to introduce DXP technologies, President and CEO Ramon Fernandez Raul.

Raul Fernandez: Thanks, John, and good evening, everyone. Thank you for joining today's call. I'm Raul Fernandez, President and CEO of DXC. Before we start, I would like to thank Mike Salvino for his contributions to DXC. As you saw in the press release issued before the call today, the Board of Directors has appointed me to be DXC's President and CEO.

Thanks, John and good evening, everyone. Thank you for joining today's call umbrella Fernandez, President and CEO of <unk>.

Speaker Change: Before we start I would like to thank Mike Salvino for his contributions to DXP.

Speaker Change: As you saw in the press release issued before the call today. The board of Directors has appointed me to be the president and CEO of <unk> I am on.

Raul Fernandez: I am honored and excited to take those positions, and, therefore, I am no longer the Interim CEO. Let me take you through our agenda for the call. I will start my commentary by sharing my observations about DXC. We will then review the business performance and discuss each of our six offers. Rob will then discuss our financial results in more detail. And finally, I will leave you with a few key takeaways before opening the call to questions. As you can see on slide five, we had solid performance in the third quarter, and organic revenue growth came in at the midpoint of our guidance range. Adjusted EBIT margin and non-GAAP EPS were both above our guidance range. Free cash flow was $585 million in the quarter, an excellent result, and up 26% as compared to the prior year.

Umbrella Fernandez: Honored and excited to take those positions and therefore I have no longer interim CEO, Let me take you through our agenda for the call I will start my commentary by sharing my observations of DXP.

We will then review the business performance and discuss each of our six offerings.

Rob will then discuss our financial results in more detail and finally I'll leave you with a few key takeaways before opening the call up for questions.

As you can see on slide five we had solid performance in the third quarter organic revenue growth came in at the midpoint of our guidance range adjusted EBIT margin and non-GAAP EPS were both above our guidance range free cash flow was $585 million in the quarter, an excellent result, and up 20.

6% as compared to prior year as.

Raul Fernandez: As you may know, I have been a DXC board member since 2020, having previously served as chairman of the Nominating and Corporate Governance Committee and as a member of the Compensation Committee. A little over 40 days ago, I was appointed interim president and CEO. In my first 40 days plus, I have met with employees, customers, partners, and investors. As a director, you get a good sense of the business, its values, and its challenges.

As you May know I have been a <unk> board member since 2020, having previously served as chairman of the nominating and corporate governance Committee and is a member of the compensation Committee.

Over 40 days ago, I was appointed interim President and CEO and my first 40 days plus.

Umbrella Fernandez: With employees customers partners and investors.

The director you get a good sense of the business its values and its challenges, but as an operator you got to go deeper and fully appreciate the talent technologies and great work that our employees do every day around the world.

Raul Fernandez: But as an operator, you get to go deeper and fully appreciate the town, the technologies, and the great work that our employees do every day around the world. You also get a really good sense of how we can work smarter and elevate our performance. In the last 40 days, I have learned to more deeply appreciate the mission-critical nature of the work our employees do on behalf of our clients, the digital systems that we build and implement, and the technology and software that we operate for global brands. And here's a great example of our capability. I recently visited our Madrid office and met with the leadership and full team.

You also get a really good sense of how we can work smarter and elevate our performance in the last 40 days I have learned to more deeply appreciate the mission critical nature of the work our employees do on behalf of our clients.

The digital systems that we build and implement and the technology and software that we operate for global brands.

And here's a great example of our capabilities.

I recently visited our Madrid office and met with the leadership and full team I got to listen to the great capabilities that we have and the team brief me on the work they do with Banco Sabadell, a leading Spanish financial institution.

Raul Fernandez: I got to listen to the great capabilities that we have, and the team briefed me on the work they do with Banco Sabadell, a leading Spanish financial institution. The bank decided to realign their business processes by splitting application testing from development and maintenance in order to improve quality, time to market, and cost efficiency. DXC partnered with Banco Celebre to achieve this goal. Legacy application development increased, and the speed of bringing applications into production accelerated by 50%. The team reduced application modernization costs by 40% and reduced testing time by 30%.

The bank decided to realign their business processes by splitting applications testing from development and maintenance in order to improve quality time to market and cost efficiency DXP partnered with Banco saw that to achieve this goal legacy application development increased and the speed of bringing apt.

Locations into production accelerated by 50%.

The team reduced application modernization cost by 40% and reduced testing time by 30% as.

Raul Fernandez: As a result of this initial success, the bank is expanding its engagement into other critical business operations. Now, I will take a few minutes to share my priorities and the near-term actions we are taking. The foundation of our business is service delivery excellence. DXC is trusted with delivering mission-critical IT services for our customers, and we will continue to drive an intense focus on delivery and customer satisfaction. While our company has an impressive collection of assets, technology, and people, it's clear that we need to sharpen our execution and accelerate our performance. To accomplish this, we're going to continue the full implementation of our operating model, establishing global offerings with full responsibility for offering development, delivery, solution design, and P&L accountability.

As a result of this initial success the bank is expanding our engagement into other critical business operations.

Speaker Change: Now I will take a few minutes to share my priorities in the near term actions we are taking.

Foundation of our business is service delivery excellence.

DXP is trusted with delivering mission critical services for our customers and we will continue to drive an intense focus on delivery and customer satisfaction.

While our company has an impressive collection of assets technology and people, it's clear that we need to sharpen our execution and accelerate our performance.

Speaker Change: To accomplish this we are going to continue the full implementation of our operating model, establishing global offerings with full responsibility for offering development delivery solution design and P&L accountability.

Raul Fernandez: In addition, we will sharpen our sales execution through a geographic market-based sales team. This will enable us to develop market-leading offerings with the right solutioning and pricing and local sales execution. I have learned that there are many compelling attributes of DXC that are either underappreciated or unknown outside the company.

Speaker Change: In addition, we will sharpen our sales execution through a geographic market based sales team.

This will enable us to develop market, leading offerings with the right solution ing and pricing and with local sales execution.

I've learned that there are many compelling attributes of DXP that are either underappreciated or unknown outside the company.

Raul Fernandez: We will change this by doing a better job of highlighting each of our six offerings, showcasing how we tailor our services to empower customer success. We will emphasize the unique value we deliver and highlight our competitive advantages with much greater clarity. As CEO, it is imperative to stay closely connected to our employees and our customers, as they have great ideas and insights that can be harnessed to take the company to the next level. I'm going to invest the time to get this feedback on an ongoing basis.

We will change this by doing a better job of highlighting each of our six offerings showcasing how we tailor our services to empower customer success.

We will emphasize the unique value, we deliver and highlight our competitive advantages with much greater clarity.

As CEO it is imperative to stay closely connected to our employees and our customers as they have great ideas and insights that can be harnessed to take the company to the next level.

I'm going to invest the time to get this feedback on an ongoing basis.

Raul Fernandez: Focusing on these priorities will allow us to achieve our financial objectives, maintaining our solid investment grade credit rating, investing back into the business, and delivering on our capital allocation priorities, including by that the board and I are fully aligned on our capital allocation strategy. With that said, let's move to review our 3GDS and our 3GIS operators. In analytics and engineering, we engineer great products, services, experiences, and operations for global brands. Our A&E team has an unmatched array of talent across AI, engineering, software development, and deep industry knowledge. That combination makes us a trusted partner.

Focusing on these priorities will allow us to achieve our financial objectives, maintaining our solid investment grade credit rating investing back into the business and delivering on our capital allocation priorities, including buybacks.

The board and I are fully aligned on our capital allocation strategy.

With that said, let's move to review, our three GBS and our three Gis offerings.

In analytics and engineering, we engineered great products services experiences and operations for global brands.

Our A&D team has an unmatched array of talent across AI engineering software development and deep industry knowledge that combination makes us a trusted partner and example of our tremendous work here is in the auto industry. The competitive landscape for auto manufacturers is shifting to full <unk>.

Raul Fernandez: An example of our tremendous work here is in the auto industry. The competitive landscape for auto manufacturers is shifting to full digital transformation, and we have been instrumental in helping our clients make that transition. A leading German premium auto manufacturer told us that quote, "we would not have had autonomous driving without DXC."

Digital transformation and we have been instrumental in helping our clients make that transition.

Speaker Change: Leading German premium auto manufacturer has told us that quote we would not have had autonomous driving without DXP.

Raul Fernandez: Next up, applications. The applications business is made up of two components, custom application development and enterprise applications. DXC is uniquely positioned to service this market because of our decades-long and deep industry expertise. Moreover, because of our heritage in running mission-critical systems, we know how to get value quickly and with minimal operational risk. Our focus and strategy have led us to build a strategic business unit centered around platforms such as SAP, ServiceNow, and Oracle by developing specific expertise in these classes. We are more competitive in large fields for these implementations and integrations while maintaining robust project work capability. Early results are encouraging, with new logos increasing quarter over quarter. Also, the size of your work versus renewal is going in the right direction, and our deal sizes are gradually increasing year over year. More data and more tools require our customers to be better and faster across business functions. We have a great experienced global talent base to help with that. As we all know, AI will impact all aspects of society, but in the near term, customers with large data sets are best positioned to extract value from AI.

Next up applications. The applications business is made up of two components custom application development and enterprise applications Dx.

<unk> Z is uniquely positioned to service this market because of our decades long and deep industry expertise. Moreover, because of our heritage and running mission critical systems, we know how to get value quickly and with minimal operational risk.

Our focus and strategy has led us to build our strategic business units centered around platforms, such as SAP service now in Oracle by.

By developing specific expertise on these platforms, we are more competitive in large deals for these implementations and integrations, while maintaining robust project work capabilities.

Early results are encouraging with new logos increasing quarter over quarter.

Also the size of new work versus renewals is going in the right direction and our deal sizes are gradually increasing year over year.

More data and more tools require our customers to be better and faster across business functions. We have a great experience global talent base to help with that as we all know AI will impact all aspects of society, but in the near term customers with large datasets are best positioned.

To extract value from AI, we have many global customers with large datasets and we have the expertise to help them leverage this data to extract actionable insights and optimize operations for improved efficiency and innovation.

Raul Fernandez: We have many global customers with large data sets, and we have the expertise to help them leverage this data to extract actionable insights and optimize operations for improved efficiency and innovation. To round out our GDS segment, I'm excited to give you a little bit more detail about our insurance software and BPS offerings. Our software insurance business unit facilitates the operations of 80% of Fortune 500 insurance companies. Our work is valued and appreciated by our customers. We earned about 500 customer renewals in fiscal year 23, demonstrating the strength of our platform with our insurance customers.

To round off our GBS segment I'm excited to give you a little bit more detail about our insurance software and vps offering our software insurance business unit facilitates the operations of 80% of Fortune 500 insurance companies or.

Our work is valued and appreciated by our customers. We earned about 500 customer renewals in fiscal year 'twenty three.

Speaker Change: Demonstrating the stickiness of our platform with our insurance customers.

Raul Fernandez: We're building out our portfolio of staff-based products to provide our customers with additional features and solutions and, in many cases, are co-developing those solutions with our customers. Now, turning to GIS. Let's start with our security offerings. Cybersecurity is a top C-suite concern, given the increase in global and state-sponsored infrastructure. Customers want simplicity in their security ecosystem. We are able to deliver that for them through our best-of-breed security solutions, in which we devise and implement a security setup where the tools work seamlessly with each other to create the best possible security environment for each customer's needs. The need for security continues to grow, and we fully expect to participate in this growth to a better degree than we have historically. In cloud and ITO, DXC is one of the largest service providers in the industry.

Speaker Change: We're building out our portfolio of SaaS based products to provide our customers with additional features and solutions and in many cases are co developing those solutions with our customers.

Turning to GI, yes, let's start with our security offering cyber security is a top C suite concern given the increase in global and state sponsored incidence.

<unk> want simplicity and their security ecosystem.

Speaker Change: We are able to deliver that for them through our best of suite security solutions in which we devise and implement a security setup, where the tools work seamlessly with each other to create the best possible security and environment for each customer's needs.

The need for security continues to grow and we fully expect to participate in this growth to a better degree than we have historically.

In cloud and IPO DXP is one of the largest service providers in the industry.

Raul Fernandez: The key to delivery in this space is to leverage automation, working in conjunction with experienced IT professionals that can handle the required intervention. With our new geographic sales organization being closer to the customer, we are focused on increasing our share. We are able to provide experienced live support for your current environment, and with our team, we have all the right capabilities to modernize and streamline IT platforms as we enable our clients' cloud transition. Next, we have Modern Workplace. AI will have a big impact here, enabling greater ticket issue resolution in an automated fashion.

Key to delivery in this space is to leverage automation working in conjunction with experienced professionals that can handle required interventions.

With our new geographic sales organization being closer to the customer we are focused on increasing our share.

Speaker Change: We are able to provide experienced life support to your current environment and with our team we have all the right capabilities to modernize and streamline it platforms as we enable our clients' cloud transitions.

Next we have modern workplace.

Hey, I will have a big impact here, enabling greater ticket issue resolution in an automated fashion.

Raul Fernandez: Our customers are moving from working in one place to embracing a distributed, location-agnostic work model. Employees expect mobility; they expect customer service and support models, and a frictionless IT experience. We aim to provide a near-zero-touch support model that enables employees to onboard, work, and solve problems without using traditional IT support mechanisms like calling in and logging in tickets.

Our customers move from working in one place to embracing a distributed location agnostic work model employees expect mobility employees expect customer service and support models and a frictionless experience.

We aim to provide a near zero touch support model that enables employees to onboard work and solve problems without using traditional support mechanisms like calling in and logging and tickets.

Rob DelVenere: With this approach, we enhance and hit on the metrics that are important to our customers. These metrics are employee productivity, engagement, and sentiment. Our financial focus is on improving the business mix; by this, I mean further reducing low-margin resale revenue and driving a higher level of service, including those directly associated with AI and automation. Okay, with that, I'll turn the call over to Rob to discuss the Thank you, Raul. I'll now provide you with a view of our third quarter performance, with results in line or ahead of our 3Q guidance. Organic revenue growth was down 4.5% year-over-year, which came in at the midpoint of our organic revenue guidance. Our results continue to be impacted by the year-to-year decline in resale revenues, which was 90 basis points of the 4.5% decline. Adjusted EBIT margin came in at 7.6%, above our guidance range and up 30 basis points quarter to quarter. Margin was down 110 basis points year-to-year, with the decline due to a 50 basis point impact of lower non-cash pension income.

This approach, we enhance and hit on the metrics that are important to our customers.

These metrics are employee productivity engagement and sentiment.

Our financial focus is on improving the business mix by this I mean further reducing low margin resale revenue and driving a higher level of services, including those directly associated with AI and automation.

Speaker Change: Okay with that I will turn the call over to Rob to discuss the financials.

Thank you Rocco I'll now provide you with a review of our third quarter performance with results in line or ahead of our <unk> guidance organic revenue growth was down four 5% year over year, which came in at the midpoint of our organic revenue guidance. Our results continued to be impacted by the year to year decline.

Our retail revenues, which was 90 basis points of the 4.5% decline.

Adjusted EBIT margin came in at seven 6% above our guidance range and up 30 basis points quarter to quarter.

Margin was down 110 basis points year to year with the decline due to a 50 basis point impact of lower noncash pension income.

Rob DelVenere: A 40 basis point impact from a lower level of asset sales and a non-recurring 30 basis point impact from executive severance costs. Without these three impacts, margins would have been up year to year. Non-GAF EPS is 87 cents, 7 cents above our guidance range and up 17 cents sequentially. Pre-cash flow for the quarter was $585 million, the result of disciplined operational management and improving control of capital expenditures and working capital. As I mentioned on previous calls, our free cash flows are seasonally weighted to the second half of the year, and that played out in the quarter. Book-to-bill was.99, with improved performance from the first half of the fiscal year. The trailing 12-month book-to-bill is.93.

A 40 basis point impact from a lower level of asset sales and a nonrecurring 30 basis point impact from executive severance costs.

Without these three impacts margins would have been up year to year.

non-GAAP EPS was <unk> 87.

<unk> <unk> above our guidance range and up 17% sequentially.

Free cash flow for the quarter was $585 million. The result of disciplined operational management and improving control of capital expenditures and working capital.

As I've mentioned on previous calls our free cash flows are seasonally weighted to the second half of the year and that played out in the quarter.

Book to Bill was <unk> 99, with improved performance from the first half of the fiscal year. The trailing 12 month book to Bill is <unk> 93.

Rob DelVenere: Now moving to our Chief Financial Officer. Our third quarter growth margin of 22.4% was up 70 basis points year-over-year, benefiting from our ongoing labor and non-labor cost reduction. SG&A accounted for 8.5% of revenues, nearly flat in absolute dollars as we are maintaining our go-to-market investment level. Other income decreased $51 million year-to-year, driven primarily by a decline in non-cash pension income, lower gains on asset sales, and foreign exchange.

Speaker Change: Now moving to our key financial metrics.

Speaker Change: Our third quarter gross margin of 22, 4% was up 70 basis points year over year benefiting from our ongoing labor and non labor cost reductions SG.

SG&A was 85% of revenues nearly flat in absolute dollars as we are maintaining our go to market investment levels.

Other income decreased $51 million year to year, driven primarily by a decline in noncash pension income and lower gains on asset sales and foreign exchange.

Rob DelVenere: Adjusted EBIT margins were down 110 basis points due to, as I mentioned on the first slide, lower pension income, lower asset sales, and executive separation costs. At interest expense of $22 million, an increase of $7 million year-over-year, primarily due to a higher level of variable interest expense on short-term debt. Net Interest Expense Improved $3,000,000 Sequentially, Non-GAAP EPS is down 8 cents year to year, with the main decrease being a higher tax rate of 12 cents, $0.06 of lower pension income, $0.05 of lower gains on asset sales, and other impacts such as executive severance and higher interest expense.

Adjusted EBIT margins were down 110 basis points due to as I mentioned on the first slide lower pension income lower asset sales and executive separation costs.

Net interest expense was $22 million, an increase of $7 million year over year, primarily due to a higher level of variable interest expense on short term debt.

non-GAAP EPS was down <unk> <unk> with the main decrease is being a higher tax rate of 12.

<unk> <unk> of lower pension income.

<unk> of lower gains on asset sales and other impacts such as executive severance and higher interest expense.

Rob DelVenere: These decreases were partially offset by a $0.15 benefit from a reduced share count and an $0.08 benefit from non-controlling interest. Now, turning to our second result. Our business mix continues to trend for a higher-margin GBS segment, and the two segments are now almost equal, with GBS at 49.9%, up 120 basis points from a year ago, while GVS grew 30 basis points organically. The deceleration in the GVS organic growth rate is a reflection of the challenging market environment. GDF's profit margin was 11.9%, consistent with the performance from the first half of the year.

These decreases were partially offset by a <unk> <unk> benefit from a reduced share count and then <unk> benefit from non controlling interest.

Now turning to our segment results.

Our business mix continues to trend toward higher margin GBS segment and the two segments are now almost equal with GBS at 49, 9% up 120 basis points from a year ago.

GBS grew 30 basis points organically.

Celebration in the GBS organic growth rate is a reflection of the challenging market environment.

GBS profit margin was 11, 9% consistent with the performance from the first half of the year.

Rob DelVenere: We are managing our GDS resource level to capture future growth opportunities. Turning now to GIS, organic revenues declined 8.9%, a modest improvement from first half performance. GIS's profit margin increased 40 basis points year-over-year driven by the ongoing execution of cost reduction initiatives. Now moving on to our individual offerings, first in GBF. Our analytics and engineering team, which has world-class industry capabilities in the field of design and engineering, has been impacted by the economic environment, bringing our growth rate to low single digits. However, in the quarter, we did have an improved book-to-bill due to a high volume of client intervals, which is a strong validation of the values delivered by the A&E team. Moving to our applications offering, revenue declined 2% and is consistent with the performance of the first half of the year and reflective of our bookings for the last two quarters.

Our GBS resource levels to capture future growth opportunities.

Turning now to Gis organic revenue declined eight 9% a modest improvement from first half performance.

<unk> profit margin increased 40 basis points year over year.

And by the ongoing execution of cost reduction initiatives now moving onto our individual offerings first in GBS, our analytics and engineering team, which has world class industry capabilities in the field of design and engineering has been impacted by the economic environment, bringing our <unk>.

Growth rate to low single digits.

In the quarter, we did have an improved book to bill due to a high volume of client renewals, which is a strong validation of the value delivered by the <unk> team.

Moving to our applications offering revenue declined 2% and is consistent with the performance of the first half of the year and reflective of our bookings for the last two quarters.

Rob DelVenere: In the quarter, we improved our book-to-bill to 1.11x, with a number of large renewals, new client acquisitions, and an increase in project-based services. Our insurance offering continues to grow with organic revenue of 2.1%. So to build was 1.58X, up significantly from our first half performance. However, bookings in this business vary from quarter to quarter based on the timing of large renewals. In 3Q, we had two significant renewals, reflecting strong customer recognition of the value of our software platform and services capabilities. Our insurance staff business continued its strong performance, growing 6% in the quarter. In the fourth quarter, we expect the growth rate to temporarily moderate due to a one-time perpetual IP license sale in the fourth quarter of fiscal 23. Now moving to our GIF segment. Security declined 5.1% year-to-year, with revenue flat quarter-to-quarter and in line with the first half of the year.

In the quarter, we improved our book to Bill to 1.1, Onex with a number of large renewals new client acquisitions and an increase in project based services.

Our insurance offering continues to grow with organic revenue up two 1% book to Bill was 158 X up significantly from our first half performance.

Bookings in this business vary from quarter to quarter based on the timing of large renewals and <unk>. We had two significant renewals, reflecting strong customer recognition of the value of our software platform and services capabilities are.

Our insurance SaaS business continued its strong performance growing 6% in the quarter.

In the fourth quarter, we expect the growth rate to temporarily moderate due to a onetime perpetual IP license sale in the fourth quarter of fiscal 'twenty three.

Now moving to our Gis segment.

Securities declined five 1% year to year with revenue flat quarter to quarter and in line with the first half of the year bookings were eight onex.

Rob DelVenere: Bookings were $0.81X. However, cloud infrastructure and IT outsourcing revenue declined 10.9% year-to-year. This business continues to be impacted by long-term market declines and shorter-term decreases in lower-margin resale revenues. In the third quarter, resale was over one-third of the decline, and we anticipate that this trend will continue into the fourth quarter. We're taking a very disciplined approach to geoeconomics and contract management and will continue to evaluate opportunities to reduce excess capacity and capital requirements. This approach is reflected in our book-to-go results, which were.72 and.32.

Cloud infrastructure in it outsourcing revenue declined 10, 9% year to year. This business continues to be impacted by long term market declines and shorter term decreases in lower margin resale revenues.

In the third quarter resale was over one third of the decline and we anticipate that this trend will continue into the fourth quarter.

We're taking a very disciplined approach to deal economics and contract management, and we'll continue to evaluate opportunities to reduce excess capacity and capital requirements. This approach is reflected in our book to Bill results, which was <unk> seven two and three Q.

Rob DelVenere: Next, we have the modern workplace, which declined 4.2% year to year. The quarter-to-quarter improvement in performance was driven by two large transactions, which included resale content, which we don't anticipate to recur in the fourth quarter. Looking ahead to the fourth quarter of fiscal 24, we face a difficult comparison due to a high level of resale revenues in the fourth quarter of fiscal 23. As a result of the upcoming difficult prompt, we expect the modern workplace to decline in the mid-teens in the fourth quarter. Now turning to the Financial Foundation, debt levels have remained stable from the beginning of the year at about $4.5 billion.

Next we have modern workplace, which declined four 2% year to year.

Quarter to quarter improvement in performance was driven by two large transactions, which included resale content, which we don't anticipate to recur in the fourth quarter. Looking ahead, the fourth quarter of fiscal 'twenty four we face a difficult comparison due to a high level of resale revenues in the fourth.

Quarter of fiscal 'twenty three.

As a result of the upcoming difficult comp, we expect modern workplace to decline in the mid teens in the fourth quarter.

Now turning to the financial Foundation.

Debt levels have remained stable from the beginning of the year at about $4 5 billion.

Rob DelVenere: Net interest of $22 million in the quarter was up $7 million as compared to the prior year, reflecting the higher interest rate environment on our short-term borrowing. Restructuring and CSI expenses were down 31% year-to-year and flat sequentially. Operating lease payments and related expenses were $88 million, down $9 million year-to-year, reflecting continued prudent management of our real estate footprint. In the quarter, capital expenditures were $121 million, down $41 million year-to-year, and $36 million sequentially. Finance lease originations were $15 million.

Net interest of $22 million in the quarter was up $7 million as compared to prior year, reflecting the higher interest rate environment on our short term borrowings.

Restructuring and Tsi expense was down 31% year to year and flat sequentially.

Speaker Change: Operating lease payments and the related expenses were $88 million down $9 million year to year, reflecting continued prudent management of our real estate footprint.

In the quarter capital expenditures were $121 million down $41 million year to year and $36 million sequentially.

Speaker Change: Finance lease originations were $15 million and as a percentage of revenue capital expenditures and lease originations declined to 5% of revenues indicative of disciplined management of our capital expenditures and leasing commitments.

Rob DelVenere: And as a percentage of revenue, capital expenditures and lease originations declined to 5% of revenues, indicative of disciplined management of our capital expenditures and leasing commitments. Turning to capital deployment in PreQ, we deployed $252 million and repurchased 11.3 million shares. In fiscal 24, DXC has repurchased over 15% of our shares outstanding, which is in addition to the 7.4% of shares that we repurchased in fiscal 22 and 10.6% in fiscal 23. As we've communicated in prior calls, we're funding our targeted fiscal 24 $1 billion share repurchase program through a combination of $800 million of free cash flow and asset sales. Through the third quarter of the fiscal year, our proceeds from asset sales are now approximately $100 million. We have additional sales targeted, which may extend into fiscal 25, and if so, we'll adjust our 24 repurchase plans accordingly. We remain committed to our capital deployment priorities of managing our investment grade credit rating, investing appropriately in the operations of the company, and returning capital to shareholders. There is no change to our approach or our capital deployment strategy.

Turning to capital deployment in <unk>, we deployed $252 million and repurchased 11 3 million shares in fiscal 2000 for DXP has repurchased over 15% of our shares outstanding which is in addition to the seven 4% of shares that we repurchased in 'twenty two.

And 10, 6% in fiscal 'twenty three.

As we've communicated in prior calls we're funding our targeted fiscal 'twenty for $1 billion share repurchase program through a combination of $800 million of free cash flow and asset sales.

Through the third quarter of the fiscal year, our proceeds from asset sales is now approximately $100 million.

We have additional sales targeted which may extend into fiscal 'twenty five and if so we will adjust our 24 repurchase plans. Accordingly, we remain committed to our capital deployment priorities of managing our investment grade credit rating investing appropriately in the operations of the company and return.

Capital to shareholders. There is no change to our approach or our capital deployment strategy now.

Rob DelVenere: Now turning to the fourth quarter outlook. In GBS, while 3Q bookings improved, we're seeing longer than anticipated conversion to revenue, which reflects continued caution on the part of our customers. As a result, we expect UDS year-over-year performance to be similar to the third quarter. GIS year-over-year organic revenue growth is expected to decelerate compared to the third quarter, largely due to lower modern workplace resa

Now turning to the fourth quarter outlook and GBS, while <unk> bookings improved we're seeing longer than anticipated conversion to revenue, which reflects continued caution on the part of our customers as.

As a result, we expect GBS year over year performance to be similar to the third quarter.

Gis year over year organic revenue growth is expected to decelerate compared to third quarter, largely due to lower modern workplace resale revenues.

Rob DelVenere: This brings total Q4 organic revenue to minus 6.5% to minus 5.5%. We are expecting somewhat similar adjusted EBIT margins compared to the third quarter and anticipate a range of 7.0 to 7.5 percent, and finally, non-gap diluted EPS of 80 cents to 85 cents. Turning to our four-year 24 guidance, we are reducing our organic revenue growth to minus 4.5% to minus 4.3%, adjusted EBIT margin guidance is lowered to 7.1% to 7.2%, and EPS to $3.05, reflecting a tax rate of 34% versus prior full year guidance of 30%, which has an EPS impact of $0.18. We are maintaining our precast flow guidance of 800 million.

This brings total Q4 organic revenue to minus six 5% to minus five 5%.

We are expecting somewhat similar adjusted EBIT margins compared to the third quarter and anticipate a range of 7.0 to seven 5%.

And finally, non-GAAP diluted EPS of <unk> 80.

Speaker Change: Turning to our full year 'twenty for guidance, we are reducing our organic revenue growth to minus four 5% to minus four 3% adjusted EBIT margin guidance is lowered to seven 1% to seven 2%.

And EPS to $3 to $3 five.

Speaker Change: Reflecting a tax rate of 34% versus prior full year guidance of 30%, which has an EPS impact of <unk> 18.

Speaker Change: We are maintaining our free cash flow guidance of $800 million.

Raul Fernandez: With that, let me turn the call back to Raul for key takeaways. Thank you, Rob, for your detailed update. I want to express how excited I am to be here leading DXC. I'm convinced that we have a significant opportunity to enhance the execution of this company. We have the right team and the right capabilities to enable us to succeed. I also want to thank the thousands of DXC customers who place their trust in our team every day to do this mission-critical work. With that, Operator, please open the call for questions. Thank you. And at this time, I would like to remind everyone, in order to ask a question, press the star, then the number one on your telephone.

With that let me turn the call back to Ralph for key takeaways.

Thank you Rob for your detailed update I want to express how excited I am to be here, leading dfc I'm convinced that we have a significant opportunity to enhance the execution of this company.

Have the right team.

Ralph: And the right capabilities to enable us to succeed I also want to fact that thousands of DXP customers, who place their trust in our team every day for this mission critical work.

With that operator, please open the call for questions.

Thank you and at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Operator: Once again, if you do have a question, please press star 1. We'll pause for just a moment to compile the Q&A room. Thank you. Your first question comes from the line of Bryan Bergin of Curlin.

Ralph: Once again, if you do have a question. Please press star one we'll pause for just a moment to compile the Q&A roster.

Thank you. Your first question comes from the line of Bryan Bergin of Cowen Your line is open.

Bryan C. Bergin: Your line is open. Hi guys, good afternoon.

Hi, guys. Good afternoon. Thank you, maybe we'll start with strategy here and nice to meet you.

Raul Fernandez: Thank you. Maybe we'll start with Jody here. And Raul, nice to meet you.

Raul Fernandez: I understand you've been close to the daily operations here for just over a month, but as you officially become CEO, can you talk about what changes you may be considering, kind of what you consider to be maybe the top one or two specific action items for you here in the near term? And just as you think about the offering. All of the offerings that DXC currently has make sense for me in the portfolio. Yeah, I've been spending a lot of time with the business units individually and with the geographies and looking at some areas that I think we can execute at a faster, more efficient pace. How we sell, how we solve problems, how we deliver, how that turns into revenue, and ultimately how that revenue becomes more profitable. There's a lot of little things that add up and make a big impact, and I think focusing on those things, focusing on execution, and operational excellence. This business has a lot of race times hours, but race times hours can become frameworks. Those frameworks can become replicable solutions.

I understand you've been close to the daily operations here for just over a month, but as you officially become CEO can you talk about what changes you may be considering kind of like what do you consider to be maybe the top one or two specific action items for you here in the near term and just that as you think about the offerings.

Ralph: All of the offerings of DXP currently that makes sense to remain in the portfolio.

Yes, I've been spending a lot of time with the business units individually with the geographies.

And looking at some areas that I think we can execute at a faster more efficient pace.

How we sell how we solution, how we deliver how that turns into revenue and ultimately how that revenue becomes more profitable theres a lot of little things that add up and make a big impact and I think a focus on those things to focus on execution operational excellence.

Sure.

This business has a lot of rates times ours that rates times ours can become frameworks. Those frameworks can become replicable solutions. There's a lot of things that I think we can do that the industry does.

Raul Fernandez: There's a lot of things that I think we can do that the industry does that I've done over the years, not just in my company but in other companies that I've advised and invested in or been on the board of. I think it just gets down to a lot of better execution across the board, which also includes messaging. I think as I sit and hear the mission critical systems that we develop, we deploy, and maintain, there are an incredible number of great case studies, great content, great solutions, and great wins for great global brands. We really have undersold ourselves in the storytelling and case study area, and so that's going to be another focus area. I think there is a lot of focus on execution across our business units. We talked a little bit about finalizing our go-to-market model. We're accelerating all of that, so it's about speed, efficiency, and delivering better and faster. I think the offerings all make sense. I think they all have different costs.

That I've done over the years and not just my company, but in other companies that I've advised invested in or been on the board of and and I think it just gets down to a lot of better execution across the board that also includes messaging I think as I as I sit in here the mission critical systems that we develop we deploy.

<unk> maintained its an incredible amount of great case studies, great content, great solutions, great wins for Great Global brands, and we really have under sold ourselves.

Ralph: In the in the storytelling in case study area and so that's going to be another focus area I think it's a lot of focus on execution across our business units.

Ralph: We talked a little bit about finalizing our go to market model, we're accelerating all of that so it's about speed efficiency and delivering better and faster.

Okay, just a question.

<unk> do they all make sense, yes, I think the offerings all makes sense I think they all have different comps. If you were to sit back as a private company and say how would you value. This.

Raul Fernandez: If you were to sit back as a private company and say, how would you value this? You'd probably take a whole different set of costs across the board. I've only been here 40 days.

Probably take a whole different set of comps across the board I'm only here 40 days.

Rob DelVenere: I'll have more to say on that in the next call and the one after that. That makes sense. Maybe, Rob, one just on free cash flow. So if the move to break-even growth may be a little bit more distant in a slower lending environment, can you talk about what else you can optimize in free cash flow drivers, perhaps, and maybe capital lease outlays, as we think about the future of free cash flow? Absolutely, and I think we've demonstrated in the prior quarters and in the third quarter that we are timely managing those capital expenditures and new lease commitments, and we've made steady progress in bringing down those requirements and contributing to free cash flow. And that's going to continue. That's not a temporary discipline.

Have more to say on that in the next call and the one after that.

That makes sense.

Maybe Rob one just on free cash flow. So if the move to breakeven and growth may be a little bit more distant and a slower spending environment can you talk about what else you can optimize and free cash flow drivers, perhaps and maybe capital lease outlays as we think about the few.

Few Jr. On free cash flow.

Absolutely.

Think we've.

Ralph: We've demonstrated.

Ralph: Prior quarters in the third quarter.

That we are tightly managing those capital expenditures and new lease commitments.

And we've made steady progress in bringing down those requirements and contributing to the free cash flow.

Ralph: And thats going to continue that that's not a temporary discipline. It's a discipline that will continue into the future.

Rob DelVenere: It's a discipline that will continue into the future. Working capital management, which we exhibited in the third quarter, was improved as well. And we will continue that march into the future as well. So I do think there is room for continued improvement across the board. And that's what we're going to do. All right, thank you. Welcome. Your next question comes from the line of James Friedman, Francisco. Transcription by Trans-Expert at Fiverr.com, www.

The working capital management that we exhibited in the third quarter.

Was improved as well.

And we will continue that that march into the future as well so.

Ralph: I do think there is room.

For continued improvement across the board and that's what we're going to drive.

Speaker Change: Alright, thank you.

Welcome.

Speaker Change: Your next question comes from the line of James Friedman from Susquehanna. Your line is open.

Hi.

Thanks for taking my question Congratulations Phil.

James Eric Friedman: DXC.org, Hi, thanks for taking my question. Congratulations. You mentioned in your prepared remarks, um..., that you were anticipating potentially participating, I think was the language, in the growth in security. And it doesn't seem to us like it has underperformed the wider market. So I was just wondering, how is it that you're going to accelerate growth? You're a great question. Thanks. And nice to meet you.

You mentioned in your prepared remarks.

That you were anticipating potentially participating I think was the language in the growth in security.

It does seem to us like it has underperformed the wider market.

So I was just wondering how is it that you're going to.

Phil: Sure Great question, Thanks, and nice to meet you.

Raul Fernandez: I think there are a couple of issues. One is how we have traditionally sold it. It's been an ingredient across multiple business unit sales and did not have a focus on selling the great people, the great projects, the great case studies that we have as a standalone. So we're emphasizing the ability to go to market directly in Mark's business unit and being able to tell the story, both in combination with the other business units, which is kind of the history, but also by itself. I got to participate in the last 30 days in an RFP exercise where we made it down to the final four. However, we didn't make it past the final four.

I think there's a couple of issues. One is how we have traditionally sold it it's been an ingredient across multiple business units sales and did not have a focus on selling the great people. The great projects. The great case studies that we have as.

As a standalone so were emphasizing the ability to go to market directly.

In Mark's business unit and being able to.

Phil: It's being able to tell the story both in combination with the other business units, which is kind of the history, but also by itself I got to participate in the last 30 days in an RFP exercise.

Where we've made it down to the final four we didn't make it past the final four but it gave me a really good sense of where we could do better how we can position ourselves better as you know the.

Raul Fernandez: But it gave me a really good sense of where we could do better, how we can position ourselves better. As you know, that segment is growing, and we're not growing anywhere near the rate of the market. So there's some upside there that I think if we can do better, I think we'll be able to do better. If we approach it with the right additional talent and the right focus, we can see those results. Because the demand backdrop is there, and our abilities, our capabilities, and our people are here.

That segment is growing and we're not growing anywhere near the near the rate of the market. So there is some upside there that I think if we approach it with the right additional talent and the right focus we can we can see those results because the demand backdrop is there and our abilities and our capabilities and our people are here. So.

Raul Fernandez: So connecting those two is the first step. And then, if I could follow up on the insurance segment, so conversely, we have a bit of Garland Child outperforming the other segments and probably the market as a whole. So I'm just curious, when you look at that segment, what... What differentiates that in the marketplace? You had some comments in your prepared remarks, but... Yeah, so what, you know, what are the kind of standout qualities of the insurance business? I think if you were to look at the insurance business as a standalone, you'd see that it's a mix of traditional perpetual license and maintenance. You'd see that it has a mix of FAPS, revenue, other business process outsourcing services, and other professional services. And I think if you were to look at it and value it on its own, you'd look at very different comps and very different metrics.

Connecting those two.

As the first step.

And then if I could follow up on the insurance segment. So Conversely, that's.

Phil: It really been a darling child outperforming the other segments.

The market as a whole so I'm just curious when you look at that segment.

What is it that differentiates that in the marketplace you had some comments that were prepared remarks.

Phil: Yes.

What are the kind of standout qualities of the insurance practice.

I think if you were to look at the insurance business as a standalone you'd see that it's a mix of traditional perpetual license and maintenance you'd seen that has a mix of SaaS revenue other business process outsourcing services and other professional services and I think if you were to look at it and value it on its own.

You would look at it very different comps in very different metrics today. It is one six.

Raul Fernandez: Today it is 106 where we're indexing in terms of the metrics that we look at, the metrics we follow, more towards the people side of the business and less towards the FAPS side of the business. And I think we can do a better job at positioning it and also picking the right metrics that matter for the business unit. So that is one that I'm extremely excited about because the fundamentals are there. And I think if we do a better job at telling the story and selling the story, we'll be able to extract more value from it. Great, I'll drop back in a few.

We're we're indexing in terms of the metrics that we look at the metrics, we follow more towards the people side of the business and less towards the SaaS.

Side of the business and I think we can do a better job at positioning it and.

And also picking the right metrics that matter for the business units. So that is one that <unk>.

STREAMWAY excited about because the fundamentals are there and I think if we do a better a better job at telling the story and selling the story.

We'll be we'll be able to extract more value there.

Speaker Change: Great I'll jump back into queue. Thank you.

Raul Fernandez: Thanks. Your next question comes from the line of Bryan Bergin. I'm Jake.

Okay.

Your next question comes from the line of Bryan Keane from Deutsche Bank. Your line is open.

Bryan C. Bergin: Your line is open. Hi guys, just wanted to step back for a second on Mike Salvino. You know, the departure was kind of abrupt there. Maybe you could help us understand what exactly happened with Mike. And then he hired almost the entire leadership team.

Hi, guys just wanted to step back for a second on Mike Salvino.

The departure was kind of abrupt there maybe you could help us understand what exactly happened with Mike.

And then <unk>.

Hired almost the entire leadership team so I guess my.

Raul Fernandez: So I guess my, my word would be, you know, what's the attrition rate like for that leadership team, and do you expect people to stick around now that he's left? Great, thanks. Thanks for asking that question. We really, as a board and me individually, appreciate the work that he did in stabilizing the company, in executing some asset sales that were very meaningful for the company at a critical juncture and a point in its history. And then, as you said, for bringing in great people, I have spent the last 40 days meeting with them, planning with them, coaching them, getting feedback from them, and figuring out how we as a team can operate better. I am very pleased with the engagement.

He would be what's the attrition like for that leadership team and do you expect people to stick around now that he's well.

Great. Thanks, Thanks for asking that question, we really as a board and me individually appreciate the work that he did in stabilizing the company.

In executing some asset sales that were very meaningful for the company at a critical juncture and point in its history and then as you said for bringing on great people.

Spent the last 40 days meeting with them planning with them coaching them getting feedback from them and figuring out how we as a team can operate better.

I'm very pleased that the engagement.

Raul Fernandez: We're all looking forward to executing better and faster. And so I'm happy, very happy with the team this year. And so I just expect us to continue to move forward. I think they see the opportunity I see. I see multiple ways to win here. It's not one game plan, not one way. There are multiple ways.

We're all looking forward to executing better and faster and so I'm happy very happy with the team this year.

And so I would just expect us to continue to move forward I think they see the opportunity I see I see multiple ways to win here. It's not one game plan not one way theres multiple ways and that's a very exciting position to be in.

Raul Fernandez: And that's a very exciting position to be in. Got it, got it. And then just another kind of big picture for you, Raul. Where are we in the transformation of the company, the turnaround? You know, I know Mike was working on that.

Speaker Change: Got it got it and then just another kind of big picture.

For you well where are we in the transformation of the company the turnaround.

Mike was working through that and now it feels like maybe with some transition in a little bit of a tougher market. It might be a few more extra years added to actually do the turnaround can you just give us kind of more of a big picture, where we are at <unk> and how long it might take to get it to where you want it to be.

Raul Fernandez: And now it feels like maybe with some transition and a little bit of a tougher market, there might be a few more extra years added to actually do the turnaround. Can you just give us kind of a bigger picture of where we are at DXC and how long it might take to get it to where you want it to be? Yeah, I think if you isolate up the six and you say, look, four have a great demand backdrop, they, or the other six businesses have a great demand drop, maybe some of the near-term project work slows down a little because of global economic uncertainty. But the bottom line is, we are nowhere near the full digital transformation as companies, as countries, as nations, and AI is now feeling much more of that. And we're very well positioned kind of in this next wave. If you step back and think about where AI in the near term is going to have the most impact, it is with organizations with large data sets.

Yes, I think if you if you isolate up to six and you say look for have great demand backdrop.

For the six business units had great demand dropped maybe some of the near term project work slows down a little because of global economic uncertainty, but the bottom line is we are nowhere near the full digital transformation.

<unk>.

As companies as country those nations and AI is now fueling much more of that and we're very well positioned kind of in this next wave if you step back and think about where AI in the near term is going to have the most impact is with organizations with large datasets, we have a lot of clients with large datasets and we do.

Raul Fernandez: We have a lot of clients with large data sets there, and we do a lot of work with those clients being able to become a leader in those companies to help them in the next transformation. I feel super confident about the demand backdrop; the demand is there.

A lot of work with those clients being able to become a leader.

In those companies to help them in the next transformation.

Speaker Change: I feel super confident about so the demand backdrop backdrop is there.

Raul Fernandez: The reality of the modern workplace and NGO clients is clearly a shrinking macro environment. But we have an ability, I believe, to make it more efficient, meaning reverse the decline, and then also make it more cash efficient, meaning it'll throw off more cash and help you with all parts of the business. As we get into the next call, I'll be able to go deeper on how I would look at this business by business unit and the metrics that matter. 40 days in, you're gonna have to give me a minute here to finish catching up and, and, and finish formulating what I think is a better way of approaching this. Got it. Thanks, and good luck.

The reality on the on the modern workplace and the Ico front.

It's clearly a shrinking macro environment, but we have an ability I believe to make it more efficient meaning.

Reverse the decline.

And then also make it more cash efficient, meaning it will it will throw off more cash and helped fuel other parts of the business as we get into the next call I'll be able to go deeper on how I would look at this business by business unit and metrics that matter.

40 days and you're going to have to give me a minute here to finish catching up in and finished formulating what I think is a better way of approaching this.

Speaker Change: Got it thanks and good luck.

Darrin Peller: Thank you. Your next question comes from the line of Darrin Peller from Wolf Research. Your line is open.

Thank you.

Your next.

Question comes from the line of Darrin Peller from Wolfe Research. Your line is open.

Raul Fernandez: Thanks, guys. Look, Raul, I appreciate it's been 40 days, but you know, I know you both. I guess, I just want to understand your thought process around some of the most challenging categories. So maybe just, if you could just touch on a bit about whether you're interested in anything changing about the strategy of modern work and, you know, if there's anything in your mind that might be able to move the needle a little bit faster.

Thanks, guys look.

Look Robert I appreciate it's been 40 days, but I know you've also had some experience on the board I guess I just want to understand your thought process around some of the most challenged categories in Gis. So maybe just if you could just touch on a bit around what you think if you think should anything should change on the strategy from before till today on modern workplace.

Or perhaps cloud infrastructure and IPO.

And if there's anything on your mind that might be able to move the needle a little bit faster.

Raul Fernandez: It's been elusive inflation and revenue growth for the company for a long time. Yeah, look, I have a couple of thoughts. And again, I haven't had as much time to dig in on all of them. But I think the modern workplace, when you think about the customer support services and the impact that AI has on the relationship you have with Microsoft, the ability to take what is now still a pretty human-centric, Centric Ticket Slash Issue Resolution Business Process and apply it in partnership very closely with Microsoft tools that will make it ticketless, self-service, and more intuitive. I think there is a tailwind on that front that should, if we're able to capture some of that business and become more efficient, reverse the decline. Rob and I pledge to manage your expectations better. We haven't had a great track record of hitting all the expectations that have been set out in the past. So we want to be measured.

Speaker Change: It's been an elusive inflection in revenue growth for the company for a long time and I think we're all hoping to see something that might be a little more innovative on that front. So just any thoughts would be great.

Yeah look I think a couple of thoughts and again haven't had as much time to dig in on all of them, but I think modern workplace. When you think about the customer support services and the impact that AI has the relationship we have with Microsoft the ability to take what is now a still a pretty human centric.

Centric ticket slash issue resolution business process and to apply in partnership very closely with Microsoft tool.

Tools that will make it.

Ticketless self service more intuitive I think there is a.

Tailwind on that front that should if we're able to capture some of that business and become more efficient reverse.

Reverse the decline one of the things that.

Robyn I pledge is to manage your expectations better.

We haven't had a great track record of hitting all the expectations have been set out in the past. So we want to be measured and we also want to be thoughtful about it.

Raul Fernandez: And we also want to be thoughtful about it. So I'm not going to talk about numbers or reversals in those two business units because I need more time to dig into them. But I know we can do better, and we will do it. And I guess, just very quickly, the progress and the success of the analytics and engineering and, frankly, the, you know, typical growth that we could see out of Apple are hardening. And so I guess it goes back to what we've heard from different executive leadership of the company. Crossing, right?

So I'm not going to talk about numbers of reversals in those two business units, because I need more time to dig into it but I know, we can do better and we will do better.

Okay. Thank.

And then I guess.

It's very quickly the progress and the success of the analytics and engineering and frankly, the typical growth that we could see out of applications. I think is something encouraging and so I guess it goes back to the we've heard from different executive leadership of the company over the years, but cross selling right.

Raul Fernandez: Trying to take the relationships you have in GIS and sort of, some of those customers to provide services that they would need that are really, And is that something that you see going well at the company before today? Or is there some room for improvement? There's definitely room to improve it, and I think it's not just cross-selling, but being smarter at solutioning. How are we engineering our response, hopefully to something that's not an RFP, something that we've come up with proactively? If it is an RFP, how are we putting something forward that's differentiated technically, that provides us with an ability to make more margin, that takes examples of work that maybe we've done before, where we can replicate a methodology, replicate a framework, ultimately replicate code, and reuse code?

Trying to take the relationships you have in Gis and sort of harvest some of those customers to provide services that they would need that are really in demand now.

Is that something that you see going well at the company before today or is there some room to improve that from your perspective.

Speaker Change: There is definitely room to improve it and I think it's not just cross selling but being smarter at solutions. However, we engineering our response hopefully to something Thats not an RFP is something that we've come up with proactively if it is an RSP how are we putting something forward that's differentiated technically.

It provides us an ability to make more margin that takes examples of work that maybe we've done before where we can replicate our methodologies to replicate a framework ultimately replicate code and reuse code.

Raul Fernandez: There's a lot of basic optimization, if you want to call it that, in how we enter engagements, and then some of that technology that we develop and write, not just across the company but across other verticals. So, again, there is no one magic answer, no one magic, oh, we're going to do one thing differently. We're going to do a lot of things differently, and fortunately, we've got great professionals here from companies, backgrounds, and experiences with different models in terms of the business units that they ran in the past, and how they went to market. And look, as someone who started one of these digital companies with myself and three engineers in the mid-1990s with no venture capital, so I used my savings, I know exactly what it's like to sell, I know what it's like to deliver, I know what it's like to collect the cash, and I know what it's like to scale.

There is a lot of basic.

Optimization, if you want to call it that on on how we enter engagements and then some of that technology that we develop in rate not just across the company, but across other other vertical other verticals.

So again there is no one magic answer no one magic Oh, we're going to do one thing differently, we're going to do a lot of things differently.

Speaker Change: And Fortunately, we've got great professionals here from companies backgrounds experiences with different models in terms of the business units that they ran in the past how they went to market and look at someone who started one of these digital companies with myself and three engineers in the mid nineties with no venture capital. So I use my savings.

Speaker Change: I know exactly what it's like to sell I know, what it's like to deliver I know what it takes to collect the cash and I know, what it's like to scale and so the numbers are bigger here, but the basic.

Raul Fernandez: And so the numbers are bigger here, but the basic path of doing that, then doing it smarter, then doing it in a more profitable way is something that I've lived through personally, and I see here. I think we can elevate it, and then we can accelerate it, and that should show in our financial results. Your next question comes from the line of T.M. Sinhae from J.P. Morgan.

Path.

Speaker Change: Doing that than doing it smarter than doing it in a more profitable way.

Is something that I've lived through personally and I see here I think we can elevate it and then we can accelerate it and that should show in our financial results.

Sounds good great. Thank you.

Your next question comes from the line of Tien Tsin Heng from Jpmorgan. Your line is open.

Raul Fernandez: Your line is open. Hey, thank you. I look forward to working with you. You have a great sort of background and you've seen a lot of different businesses, including ATT&CK and systems immigration, some media. I'm just curious, sort of, you know... What you've learned from that and what you'll bring to the table here as you take on the task here of DXC, and given it's been in turnaround mode, as a lot of people have talked to I'm just curious sort of what you'll bring to the table specifically if you don't mind going through that.

Okay. Thank you look forward to working with you here about what you have a great sort of background and you've seen a lot of different businesses.

Speaker Change: A tech and systems integrations of media.

I'm, just curious sort of.

And what you've learned from that and what you bring to the table here as you take on the task of DXP.

Given it's been in turnaround mode is a lot of people have talked to you about already I'm, just curious sort of what your what you bring to the table specifically if you don't mind going through that thank you.

Raul Fernandez: Sure. Look, I think it's operational experience, literally from the ground up. I think it's working with much larger companies, both, again, as an advisor, as an owner, as a shareholder, knowing what those transitions are like, but also knowing the best-in-class. Look, I've sat on the Broadcom board now for over three years. One of the best companies on the planet, does incredible work on M&A, and they're ready for M&A. Obviously, we just did one of the biggest transactions in tech history, but I can tell you that we're not ready right now.

Speaker Change: Sure look I think it's operational experience literally from the ground up I think it's working with much larger companies both again as an advisor as an owner.

As a shareholder knowing what those transitions are like.

But also also knowing.

Best in class look I've sat on the Broadcom Board now for over three years, one of the best companies on the planet does incredible work on M&A.

And they are ready for M&A, obviously, we just did one of the biggest transactions in tech history, but I can tell you that we're not ready right now.

Raul Fernandez: We can get ready; we will get ready, but even if we had the desire to use capital allocation in a different way, I wouldn't use it that way because we're not ready to do it. And so I'm very realistic and grounded, but I'm also setting the foundation that when we're ready, we'll know because we're going to keep a dashboard of it by business unit, and then that'll open up, potentially, an opportunity to do something on that front. But just to get back to your question, I'm going to take my experience in big companies and small companies, and I'm going to apply it here. I think one of the things that excites me as I travel around and see the work that we do is that we have incredible referenceability, incredible brands, and incredible case studies. We have not done a great job at storytelling.

We can get ready we will get ready.

Even if we had the.

The desire to use capital allocation in a different way I wouldn't use it that way because we're not ready to do it and so I'm very realistic and grounded but I'm also.

Setting the foundation that when we're ready we'll know because we are going to keep a dashboard of it by business unit.

And then that will open up potentially an opportunity to do something on that front.

But just to get back to you or to your question I'm going to take the experiences in big companies and small companies and I'm going to apply it here.

I think one of the things that excites me as I as I've traveled around and seen the work that we do is we have incredible reference ability incredible brands incredible case studies, we have not done a great job at storytelling.

Raul Fernandez: I've dealt with a lot of companies that are literally dreams and a whiteboard presentation, and all of a sudden, this becomes a product, and that product then gets sold, and then it grows, and it becomes a company, and then that company gets sold. So I've seen it being done with a dream, and I think the foundation that we have here is just so solid that if we really focus on operational excellence across the board, from pre-selling, solutioning, through delivery, and then making it better and faster and more profitable, we will see results. And it's a lot of little actions, and one of the great things here is that a smarter way of doing work gets amplified by 130,000 people globally. So that's part of the job here is to lead that, identify it, lead it, and be an evangelist for it. Thank you for that. That's great!

I've dealt with a lot of companies that are literally dreams, and a whiteboard presentation and all of a sudden it becomes a product and that product then gets.

Gold and then it grows and it becomes a company and then that gets sold so I've seen it being done with a dream and I think the foundation that we have here is just so solid that if we really focus on operational excellence across the board from pre selling solution, Inc. Through delivery, and then making it better than <unk>.

Foster and more profitable, we'll see the results and it is a lot of little actions and one of the great things here is smarter way of doing work gets amplified by 130000 people globally. So that's part of the job here is to lead that identify lead it and be an evangelist for it. Thank you.

Raul Fernandez: And then just my quick follow-up, and I'll jump off. I know Brian asked about strategy, but just, I know... Mike Salvino was talking about the transition from stability to higher performance. That always resonated with me.

That's great and then just my quick follow up and I'll jump off I know, Brian asked about strategy, but just I know.

Mike was talking about transitioning from stability to higher performance that always resonated with me in your mind.

Raul Fernandez: In your mind, is that still the case? Where are we in that spectrum? Are we still thinking, or are you thinking maybe more in the stability focus? Is that the right call for now, if you understand my question?

Is that still the case, where are we in that spectrum or are we still thinking are you thinking maybe more on the stability focus is the right call for now if you follow my question.

Raul Fernandez: Yeah, I think it's a great question. I'll be able to answer it a little bit more in more detail in the next earnings call to gauge how long it will take to do some of the basic things that we can do better and then how that ultimately impacts new wins, new margins, and how that flows through our business units, how quickly we can deliver that. I want to be measured and not make promises that we can't keep. So, great question.

Yes.

Great question, and I'll be able to answer it a little bit more and more detail on the next earnings call.

Speaker Change: To gauge how long.

It will take to do some of the basic things that we can do better and then how that ultimately impacts new wins, new margins and how that flows through our business units how quickly we can deliver that.

I want to be measured and thoughtful on that and not make promises that we can't deliver on so great question I'll have more on the next call on that.

Raul Fernandez: I'll have more on that in the next call. Very good, thank you for taking my question. Your next question comes from the line of Ashwin Shirvaikar from Citi. Your line is open. Thanks.

Very good thank you for taking my questions.

Your next question comes from the line of Ashwin Shoemaker from Citi. Your line is open.

Thanks.

Ashwin Shirvaikar: Congratulations on the CEO appointment. I look forward to getting to know you better. I guess my first question alludes to the comment you had earlier on this call about how a private entity might look at some of DXC's assets recently, but do you think DXC is better off in public markets? Was that a sum of the parts comment, or could you shed some more light on how you're approaching, you know, approaching the big, Great. Good. It's nice to meet you.

Ashwin Shirvaikar: Congratulations on the CEO appointment.

And look forward to getting to know you better.

Ashwin Shirvaikar: I guess my first question alludes to the comment you had earlier on this call about how siloed entity might look at some of <unk> assets differently.

Ashwin Shirvaikar: But do you think bx.

Better off in public markets was that some of the parks comment if you could shed some more light on how you're approaching.

Raul Fernandez: I look forward to getting together. As I looked at the business units, one of the things that we've tried to do is to say, okay, best-in-class comp. Let's not do the, okay, we get comp against these groups.

Approaching the business.

Great got nice to meet you look forward to getting together.

As I looked at the business units one of the things that we've tried to do is to say, okay best in class comp, let's not do the okay. We get we get Comped against these groups best in class comp for your business units. So we're in the process of putting that together and looking at the delta between the key metrics that the.

Raul Fernandez: Best-in-class comp for your business unit. So we're in the process of putting that together and looking at the delta between the key metrics that define the best-in-class for every single business unit and what the delta is from where we're performing to where we should be performing. Breaking it down by business unit is super helpful. It makes it real. It makes it personal. It's obviously more accurate, right?

Best in class is for every single business unit and what the Delta is from where we're performing as to where we should be performing.

Breaking it down by business unit is super helpful. It makes it real.

It makes it personal.

It's.

Obviously more accurate rates, because our SaaS software insurance Tech business is very different than our services application engineering business. So thats a process that we're in right now we're a public company. We're here, we're going to perform well as a public company, we're going to we're going to execute.

Raul Fernandez: Because our staff, software, insurance, and tech business is very different than our services, application, and engineering business. So that's the process that we're in right now. We're a public company. We're here.

Raul Fernandez: We're going to perform well as a public company. We're going to execute. And so I won't comment on anything beyond that, other than learning or taking from being on both sides of the equation, public and private. We're going to extrapolate the right goals, the right lessons, and the right targets, and then execute on them. That seems more like a benchmarking and role-setting exercise. Second question is, you know, good to hear your points on execution, how it needs to improve. Does that necessarily translate into sort of management exits, potential talent upgrades? or is it more of a comment on, you know, capabilities with regard to, you know, is there an investment cycle coming from DXC? Look, I think it's a combination of all of the above, right?

Ashwin Shirvaikar: And so I won't comment on anything beyond that other than.

Ashwin Shirvaikar: Learning or taking from being on both sides of the equation public and private where going to extrapolate the right goals the right lessons and the right targets and then execute on them.

Speaker Change: Got it seems more like a benchmarking and goal setting exercise.

Second question is good to hear your points on execution, how it needs to improve.

Does that necessarily translate into sort of management exits potential talent upgrades.

Or is it more of a comment on.

Capabilities with regards to I know is that an investment cycle coming from DXP.

Speaker Change: Look I think it's a combination of all of the above right in any business you are competing for the most important thing which is your human capital and talent. So keeping the great talent that we have attracting.

Raul Fernandez: In any business, you're competing for the most important thing, which is your human capital and talent. So keeping the great talent that we have, and attracting the additional talent that we need to make ourselves better is key in this business. It's key in any business, but it's absolutely key in this business.

The additional talent that we need to make ourselves better.

Is key in this business key in any business, but it is absolutely key in this business.

Raul Fernandez: So that'll be a continued focus. And I think one thing that does help us is when we do this benchmarking by business unit, you're going to see the areas where you're on point, where you're totally off point, and where you're close, and that's going to then drive some decisions about what talent you need going forward. So talent is absolutely key here.

Speaker Change: So that'll be a continued focus and I think one thing that does help us is when we do this benchmarking by business unit, you're going to see the areas, where you are on point, where youre totally off point and where you are close and Thats going to then that's going to then drive some decisions about what talent mix you need going forward so talented.

Speaker Change: Absolutely key here.

Raul Fernandez: Yeah, and then this company is a combination of two large divisions seven, eight years ago. You know, if that had been a private transaction seven or eight years ago, at least in my experience, you would have just put together a plan much like the best-in-class companies that do acquisitions in the public and private space and fully integrated every process, every system around the world. That wasn't done.

Speaker Change: And then this company was a combination of two large divisions seven eight years ago.

Yes.

That was a private transaction seven or eight years ago and at least in my experience you would have just put together a plan much like the best in class companies that do acquisitions in the public and private space and fully integrated every process every system.

Speaker Change: Around the world.

Raul Fernandez: And that's being done, has been done, is being done, and needs to continue being done. But that journey, we're still building, we're still working off some legacy integration that just, frankly, wasn't there. And frankly, one of the reasons that I'm here is that we're going to move all aspects of that forward at a much faster pace and focus on the fundamentals, because that's what's going to give us a better platform to grow from. Next time, good to hear from you. Thank you. Your next question comes from the line of Jason Kupferberg from Bank of America. Your line is open.

That wasn't done and Thats being done has been done is being done and needs to continue being done but that journey. We're still building, we're still working off some legacy.

Integration that it just.

Frankly, it wasn't there and frankly one of the reasons that I am here is that we're going to move all aspects of that forward at a much more faster pace and focus on the fundamentals because that's what's going to deliver us a better platform to grow to grow from.

Makes sense good to hear from you.

Speaker Change: Thank you.

Your next question comes from the line of Jason Kupferberg from Bank of America. Your line is open.

Jason Kupferberg: Thank you. Welcome. I want to follow up a little bit on that. I'm just wondering, as you think about the different elements and areas of execution, I know you said, across the board, it needs to be better. But I think if you were going to really highlight one or two areas that have the most room for improvement, Sales, Marketing, Service, Implementation, whatever it may be, we would just love to get some of your initial impressions on that front. So in this change, in our market model change, one of the things that we will be able to get a better end-to-end accountability on and then be able to track is Pre-sales Solutions Sales, Execution, Use of Existing Resources, and Net new resources that we need.

Jason Kupferberg: Thank you.

Welcome.

I wanted to follow up a little bit on that I'm. Just wondering as you think about the different elements in areas of execution. I know you said across the board it needs to be better but.

We're going to really highlight one or two areas that have the most room for improvement.

Sales marketing service implementation whatever it may be.

Just love to get some of your initial impressions on that front.

So.

In this in this change in our go to market model change one of the things that we will be able to get a better end to end accountability on and then be able to track is <unk>.

Jason Kupferberg: Pre sales solution Inc.

Sales execution use of existing resources.

Jason Kupferberg: So if you think about the whole life cycle of solving something, staffing something, delivering the product or the service or the application or solution and doing it in a way that you plan to do it, meaning the budget was right, you're hitting it or beating it, that is one, let's call it, fundamental operation in that workflow that we're very, very focused on. So that's one. The second one is absolutely not marketing, and I'm not talking about marketing with logos on cars because we're re-looking at all that.

Net new resources that we need so if you think about the whole lifecycle of.

Solutions, something staffing something delivering the product or the service or the application of our solution.

And doing it in a way that you plan to do it meaning.

Jason Kupferberg: That is one let's call it fundamental operations in that workflow that we're very very focused on so thats. One the second one is absolutely end marketing and I'm not talking about marketing with logos on cars. Because we are re looking at all of that it is it is great for <unk>.

Raul Fernandez: It is great for some brands, and it's appropriate for some brands, but frankly, I see a lot of value in putting those marketing dollars at the business unit level so they can make a great connection with their customers. We have a great relationship with our partners in some of the global marketing spend. We love the work that we do, and we appreciate it. We love the brand associations, but I think, as someone that sees the different buyers that we have by business unit, they're probably best served by having more control over their marketing spend and targeting it more efficiently and effectively against the one or 200 buyers that really matter in their business unit. So the global brand is great. We love our partners, but I think going forward, you'll see a more business unit-centric approach to thinking about it and then executing on it. Okay, so that's good color. And Rob, maybe, for you.

Some brands and it's appropriate for some brands, but frankly, I see a lot of value in putting those marketing dollars at the business unit level. So they can make a great connection with their customers, we have a great relationship with our partners.

Jason Kupferberg: And some of the global spend in marketing we love the work that we do we appreciate them, we love the brand Association, but I think as someone that sees the different buyers that we have by business unit, they're probably best served by having more control over their marketing spend and targeting at targeting it.

More efficiently and effectively against the one or 200 buyers.

That really matter in their business unit. So global brand is great. We love our partners, but I think going forward, you'll see a more business unit centric approach to.

Thinking about it and then executing on it.

Okay. That's good color, Rob maybe one for.

Rob DelVenere: Just looking at organic revenue growth. I know you came in right in line with the middle of your range for the third quarter. You talked about some tough comps for the fourth quarter, and others were factored into the original guide. And so I just wanted to isolate what's changed since last quarter, since I know we are taking the overall full-year organic growth down a little bit for the year. Yes, so our guide for the full year from two quarters ago had somewhat of a recovery in our project-based businesses in the back half of the year, but that really has not materialized in either apps or A&E. So that's the primary reason for the taking down of the guide. Now going from third quarter to fourth quarter, we see QDS. The fourth quarter will look a lot like the third quarter. It's going to be flat, you know, in the range of flat year to year. But the mix is a little different.

Are you just looking at organic revenue growth I know you came in right in line with the middle of your range for the third quarter, you talked about some tough comps for the fourth quarter.

Those were factored into your original guidance. So just wanted to isolate what's changed since last quarter. Since I know we are taking.

Taking the overall full year organic growth down.

A little bit for the year.

Speaker Change: Yes, so are our guide.

Speaker Change: For the full year from two quarters ago.

Speaker Change: At somewhat of a recovery in our project based businesses in the back half of the year.

Speaker Change: And that really has not materialized in either apps or A&D.

So that's the primary reason for the taking down of the guide now going from third quarter to fourth quarter, we see GBS.

GBS.

The fourth quarter will look a lot like the third quarter, it's going to be flat.

And the range of flat year to year.

The mix is a little different in the third quarter, we had.

Rob DelVenere: In the third quarter, we had apps and games declining, and we had insurance and amity growing about 2% each. And in the fourth quarter, with the good bookings that we had in apps, we see improvement in that business. We see a little bit of a decline quarter to quarter in the A&E business, and then we have a really tough comp in insurance. So that, but bottom line, GBS will be about flat again, year to year. GIS in the fourth quarter will deteriorate a little bit. The decline will get a little bigger.

Apps and apps declining and we had insurance in any growing about 2% each.

In the fourth quarter with the good bookings that we had in apps, we see improvement in that business we see.

A little bit of a decline quarter to quarter in the A&D business and then we have a really tough comp and insurance, so that but bottom line GBS will be about flat again.

The year.

In the fourth quarter will deteriorate a little bit.

Speaker Change: The decline will will get a little bigger and that is almost entirely to the modern workplace.

Rob DelVenere: And that is almost entirely due to the modern workplace, where we had a tough compare for last year in resale. Plus we have a quarterly decline in resale going from 3-2 to 4-2, so the entire deterioration is really a modern workplace statement, and it could be isolated for resale. The services in the modern workplace will be flat quarter-to-quarter.

Where we had first we have a tough compare to last year and resale.

Speaker Change: Plus we have a.

Quarter to quarter decline and resell it from going from <unk> to <unk>. So the entire deterioration is really a modern workplace statement and it could be isolated the resale of the services.

Rob DelVenere: I hope that helps. I think now we did have very courteous bookings in the third quarter in the GDS business for Schwab and that gives us, that's part of the problem.

Workplace will be will be flat quarter to quarter.

<unk>.

I hope that helps I think now.

We did have were encouraged that the bookings.

In the third quarter and the GBS business was strong.

And.

Speaker Change: That gives us.

That is promising.

Jason Kupferberg: Your next question, operator, is on the line. Yeah, I think we have time for one more question, please, Dr. Wright. Yes, thank you. And your last question comes from the line of James Fawcett from Morgan Stanley. Great, thank you very much for... I wanted to ask a couple of questions. Maybe a follow-up.

Okay.

Sure.

Your next question operator, I underline.

Speaker Change: Alright, I think I'll start with that.

One more question please operator.

Yes. Thank you and your last question comes from the line of James Faucette from Morgan Stanley. Your line is open.

Great. Thank you very much for the questions I wanted to ask a couple of questions.

Maybe as a follow ups well it seems like in your commentary you feel like.

The there's been a lot of.

James Eric Friedman: Well, it seems like in your commentary, I feel like there are a lot of resources that are being used at www.dxcc.org www.dxc.com. Whether you think that you have all the necessary tools, or is there incremental investment? Ashwin's question, I guess, and I'm just looking at www.dxc.com 3, from incremental, www.dxc.com, Yeah, no, great.

Resources that are being used that could be.

Directed or where you could get better return et cetera, and I guess I'm wondering, particularly in the context of capital allocation over the last few years, whether you think that you have all the necessary tools and resources to make the change youre looking for or.

Is there incremental investment that we should think about.

It goes a little bit.

<unk> question I guess.

And I'm just looking at the the kind of the growth rates in <unk> and <unk>.

Some of the things that are happening in the market generally and wondering if there isn't a need to at least increase some incremental investment to accelerate the change or just would love to get your opinion on that view.

Raul Fernandez: And I came in, obviously, with some knowledge and an open mind. And, you know, while I think we've done a great job on capital allocation and we'll continue to use most of it on the buyback program, you know, I don't rule out, like, could some of that be used to increase the value and increase the performance of the company faster? I think we have the leadership, we have the best practices, we have, you know, the execution experience that we have all lived through. We need to apply that here.

Yes, no great and I came in obviously with some knowledge and an open mind and.

Well I think we've done a great job on capital allocation.

And we will continue to use most of it on the buyback program.

I don't rule out like could could some of that be used to increase the value and increase the performance of the company faster.

Think we have the leadership, we have the best practices we have.

Speaker Change: Execution experience that we have all lived through we need to apply that here. There is a lot of upside to working smarter working better working more collaboratively with the tools we have in place. The people we have in place and the investments we have in place. So that's my first goal is to.

Raul Fernandez: There are a lot of upsides to working smarter, working better, working more collaboratively with the tools we have in place, the people we have in place, and the investments we have in place. So that's my first goal, to optimize what we have in place. There are, like I said before, multiple ways to win here. And we don't have to get them all right at 100%.

Optimize what we have in place.

Said before theres multiple ways to win here and we don't have to get them all right at 100%, but if we work on it.

Raul Fernandez: But if we work on it, and again, going into the business units and getting very detailed on their action plan, if we work on it, we can make ourselves better, and that'll show up across the board. Right. I appreciate the candor on that. And then, Rob, I think in your prepared remarks, you indicated, particularly on the GPS and GBS sides, excuse me, that Time to Revenue www. DXC.com The Dixie Cut, in part because of decision-making and prioritization of cost. What's your sense in terms of where we are in that process? Are we starting to see some stabilization, or is there still a fair amount of uncertainty?

And then going into the business units and getting very detailed on their action plans. If we work on it we can make ourselves better and that will show up across the board.

Great I appreciate the candor on that and then Rob I think in your prepared remarks, you indicated, particularly on the GPS GBS side excuse me.

Time of time to revenue is extending a bit and it seemed like it was.

Rob: In part because of decision, making and prioritization of customers. What's your sense in terms of where we are in that process.

Are we starting to see some stabilization or is there still a fair amount of uncertainty as to kind of what that time to revenue and beginning of work in cadence is going to look like on a go forward basis.

Rob DelVenere: What the that kind of, Yeah, what I was referring to is, in our A&E business, we had a very good booking level in the bookings level in the third quarter. And as we pressed for the detail of that, we found that there was a fair amount of renewing a little bit early. Now in that business, this is not like a big, huge renewal that you get in an outsourcing business or a big app steal. This is ongoing renewals of project-based services. And as we went through the waterfall of those bookings turning into revenue, we found that the renewals came a little bit earlier than they normally do. And I think it's your customers prioritizing that spend and planning for that spend. So it's encouraging in that they're indicating that that spend is important to them and part of their budgeting process. But the transition into revenue is just going to take a little bit longer. And since this is project-based services, that little bit longer is, we're not talking quarters; we're talking months.

One of them.

He was referring to is in our A&D business, we had a very good booking in the bookings level in the third quarter.

And as we we crawl through the detail of that.

We found that there was a fair amount of renewing a little bit early now in that business. This is not like a big huge renewal that you get it and outsourcing business or a big apps deal. This is.

Ongoing renewals are project based services.

And as we went through the waterfall of those bookings and turning into revenue.

We found that the renewals came a little bit earlier than they normally do and I think it's just customers prioritizing that spend and planning for that spend so it's encouraging in that they're indicating that the spend is important to them and part of their budgeting process, but.

The transition into revenue is just going to take a little bit longer.

Since this is project based services that little bit longer is is we're not talking quarters, we're talking months.

Rob DelVenere: Okay, great. That's really useful, Cole. I appreciate it, and best of luck, and thank you. Thank you, and with no further questions, I'd like to turn the floor back over to Raoul. Listen, thank you all for joining us tonight. Part of our new approach to communications is to be engaged more on this front. You'll see more of that from Rob and me.

Okay, Great that's really useful color I appreciate it and best of luck guys.

Thank you.

Thank you and with no further questions I'd like to turn the floor back over to lateral Fernandez.

Thank you so much listen thank you all for joining us Tonight part of our.

Lateral Fernandez: A new approach to communications is to be engaged.

More on this front youll see more of that from Robyn I and I look forward to meeting you in person and having more dialogue as the days and weeks and months come along so thank you again.

Raul Fernandez: And I look forward to meeting you in person and having more dialogue as the days, weeks, and months come along. So thank you again. Good night. Thank you, and this does conclude today's conference call. You may now go.

Right.

Lateral Fernandez: Okay.

Speaker Change: Thank you and this does conclude today's conference call you may now disconnect.

Please wait the conference will begin shortly.

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