Q1 2025 DXC Technology Co Earnings Call

Hello and welcome to the DXC Technology Q1 Fiscal Year 2025 Earnings Call.

Speaker Change: I'll like to have been placed on me to prevent any background noise. After the speakers are marked, there will be a question in the answer session.

Speaker Change: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.

Operator: 25 Earnings. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, just press star 1. I would now like to turn the call over to Roger Sachs, VP of Investor Relations. You may begin.

Speaker Change: If you would like to withdraw your question, again, just press star 1. I would now like to turn the call over to Roger Sachs, VP of Investor Relations. You may begin.

Roger Sachs: Thank you, operator. Good afternoon everybody, and welcome to DXC Technologies' first quarter earnings conference call. We hope you had a chance to review our earnings release posted to the IR section of DXC's website. Speakers on today's call are Raul Fernandez, our President and CEO, and Rob DelBene, our Chief Financial Officer. Our agenda will be as follows.

Roger Sachs: Thank you, operator. Good afternoon, everybody, and welcome to DXC Technology's first quarter earnings conference call. We hope you had a chance to review our earnings release posted to the IR section of DXC's website.

Speaker Change: Speakers on today's call are Raul Fernandez, our President in CEO and Rob Del Benny, our Chief Financial Officer.

Raul Fernandez: Raul will provide an overview of our results and an update on our strategic initiatives. Rob will then walk you through our financial performance for the quarter, as well as update you on our full year outlook and provide some thoughts on our fiscal second quarter. Both Raul and Rob will then take your questions.

Speaker Change: Our agenda will be as follows. Raul will provide an overview of our results and an update on our strategic initiatives. Raul will then walk you through our financial performance for the quarter, as well as update you on our full-year outlook and provide some thoughts on our fiscal second quarter. Raul and Rob will then take your questions.

Unknown Executive: Certain comments we make on today's call will be forward-looking. These statements are subject to risks and uncertainties that 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. We do not undertake any obligation to update or release any revisions to any forward-looking statement.

Speaker Change: Certain comments we make on today's call will be so we're looking, these statements are subject to resonance, certain these, which could cause actual results to differ materially from those expressed on the call. A discussion of these resonance, certain these, is included in our annual report on Form 10K and other SEC filings.

Speaker Change: We do not undertake any obligation to update or release any revisionist to any forward-looking statements.

Unknown Executive: Also, during this call, we will discuss 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 direct comparable GAAP measures. These reconciliations can be found in the tables included in today's earnings release. And with that, I will turn the call over to Raul.

Speaker Change: Also, during this call, we will discuss non-gap financial measures which we believe provide useful information to our investors.

Speaker Change: and accordance with SEC rules we provide a reconciliation of these measures to their respective and most direct comparable gap measures. These reconciliation can be found in the tables included in today's earnings release. Now with that, let me turn the call over to Raul.

Raul Fernandez: Thank you, Rodger, good afternoon everyone, and thank you for joining us today for our first quarter fiscal 2025 earnings call. I'm pleased with our first quarter results, which came in ahead of our expectations on the top line, adjusted EBIT margin, and adjusted diluted EPS. Our performance is an early testament to the improved execution by our teams along many fronts. Our teams are focused on designing and implementing solutions that embed engineering skills, AI, and industry expertise to capture opportunities in an expanding addressable technology market.

Raul Fernandez: Thank you, Roger. Good afternoon everyone and thank you for joining us today for our first quarter fiscal 2025 burning call.

Raul Fernandez: I'm pleased with our first quarter results that came in ahead of our expectations on top line, adjusted and adjusted deluded EPS.

Raul Fernandez: Our performance is an early testament to the improved execution by our teams along many fronts.

Speaker Change: Our teams are focused on designing and implementing solutions that embed engineering skills, AI and industry expertise to capture opportunities in an expanding addressable technology market.

Raul Fernandez: As our enhanced operating model gains traction, we believe it positions us well to deliver greater value for our customers, improve financial performance, and drive long-term shareholder value. Specifically, during the quarter, total revenue declined 4% year over year on an organic basis, with an adjusted even margin of 6.9% expanding 40 basis points year over year, non-gap diluted EPS of 74 cents was up 17% year over year, and we generated free cash flow of 45 million compared to using 75 million during the first quarter of last year.

Speaker Change: As our enhanced operating model gains traction, we believe it positions us well to deliver greater value for our customers, improve financial performance, and drive long-term shareholder value.

Speaker Change: Specifically during the quarter, total revenue declined 4% year over year on an organic basis.

Speaker Change: adjusted EBIT margin of 6.9%, expanding 40 basis points year-over-year.

Speaker Change: Non-gap diluted EPS of 74 cents was up 17% year-over-year, and we generated free cash flow of $45 million compared to using $75 million during the first quarter of last year.

Raul Fernandez: In light of ongoing market uncertainty, we continue to see cautious behavior from many of our customers. This has resulted in an ongoing, restrained, discretionary spending environment on short-term project work, down modestly from the prior year, across both our global business services and global infrastructure service segments. Therefore, along with our selective new approach to deals, overall bookings during the first quarter remained under pressure. However, we had factored this lower level of bookings going into the full year outlook that we provided this past May.

Speaker Change: In light of ongoing market uncertainty, we continue to see cautious behavior from many of our customers.

Speaker Change: This has resulted in an ongoing, restrained, discretionary spending environment on short-term project work, down modestly from the prior year, across both our global business services and global infrastructure service segments.

Speaker Change: Therefore, along with our selected new approach to deals overall bookings during the first quarter remained under pressure. We had factored this lower-level bookings going into the full year outlook that we provided this past May.

Raul Fernandez: We are revamping our go-to-market approach within our sales organizations. A few examples include dedicated client partners having significant domain expertise tied to specific clients and industries, an updated compensation structure that includes bookings, revenue, and profitability, as well as elevated incentives to expand client relationships, and a clear delineation between existing and new logo account teams. We are beginning to see some early success from our efforts. Our pipeline has expanded nicely, largely driven by new deal inflows in consulting and engineering services, which is our largest segment.

Speaker Change: We are revamping our go-to-market approach within our sales organizations. A few examples include dedicated client partners having significant domain expertise tied to specific clients and industries.

Speaker Change: updated compensation structure that includes bookings, revenue and profitability, as well as elevated incentives to expand client relationships.

Speaker Change: and a clear delineation between existing and new logo account teams.

Speaker Change: We are beginning to see some early success from our efforts.

Speaker Change: Our pipeline has expanded nicely, largely driven by new deal inflows in consulting and engineering services, which is our largest segment.

Raul Fernandez: Additionally, within our pipeline, we are seeing a greater mix of larger deals progressing to the later stages of the sales cycle. Although these engagements are expected to have a lesser contribution to near-term revenue, we believe they provide a solid foundation for long-term stability.

Speaker Change: Additionally, within our pipe, we are seeing a greater mix of larger deals progressing to the later stages of the sales cycle.

Speaker Change: Although these engagements are expected to have a lesser contribution to near-term revenue, we believe they provide a solid foundation for long-term stability.

Raul Fernandez: Let me take a minute to quickly highlight details of two new deal wins led by our technology and engineering expertise, together with deep vertical domain knowledge. For ContiTek, one of the world's leading industrial suppliers, our consulting and engineering services business is leading the effort to consolidate multiple SAP legacy ERP systems on a new SAP S4 HANA platform. This migration allows greater process optimization across the company and provides timely actionable insights for strategic decision making to drive business performance.

Speaker Change: Let me take a minute to quickly highlight.

Speaker Change: Details of two new deal wins led by our technology and engineering expertise together with deep vertical domain knowledge.

Speaker Change: For Contitech, one of the world's leading industrial suppliers, our consulting and engineering services business is leading the effort to consolidate multiple SAP legacy ERP systems to a new SAP S4 HANA platform.

Speaker Change: This migration allows greater process optimization across the company and provides timely, actionable insights for strategic decision-making to drive business performance.

Raul Fernandez: Within our cloud and infrastructure business, we recently entered into a long-term IBM mainframe managed service agreement with First Horizon Bank for ongoing management and support. During the first quarter, we initiated several tactical actions under our enhanced operating model.

Speaker Change: Within our cloud and infrastructure business, we recently entered into a long-term IBM mainframe managed service agreement with First Horizon Bank for ongoing management and support.

Speaker Change: During the first quarter, we initiated several tactical actions under our enhanced operating model.

Raul Fernandez: Within GBS, where we help clients accelerate digital transformation, we are doing the following. Last quarter, we consolidated our analytics, engineering, and applications business and now call it consulting and engineering services under industry veteran Howard Beauville. This streamlines our offering structure and enhances our ability to design and go to market with more standardized, scalable enterprise applications. Additionally, under Howard's leadership, we've aligned the business to five verticals, including financial services.

Speaker Change: Within GBS, where we help clients accelerate digital transformation, we are doing the following.

Speaker Change: Last quarter we consolidated our analytics, engineering, and applications business and now call it consulting and engineering services under industry veteran Howard Bovell.

Speaker Change: This streamlines our offering structure and enhances our ability to design and go to market with more standardized, scalable enterprise applications.

Speaker Change: Additionally, under Howard's leadership, we've aligned the business to five verticals, financial services,

Raul Fernandez: Automotive and Manufacturing, Healthcare and Life Sciences, Airlines, and Public Sex, where we have significant domain expertise, allowing us to develop very targeted solutions to address industry-specific challenges. To enhance our operating and delivery model during the quarter, we began to execute on the following initiatives. Optimizing our global delivery network to quickly identify and leverage the best available talent in geographic regions, increasing the adoption of Gen AI capabilities for application development, testing, and maintenance, implementing a new workforce planning management system to better manage resources in all market conditions through predictive modeling, and restructuring our account pyramids to drive further offshore delivery.

Speaker Change: Automotive and Manufacturing, Healthcare and Life Sciences, Airlines and Public Sector, where we have significant domain expertise allowing us to develop very targeted solutions to address industry specific challenges.

Speaker Change: To enhance our operating and delivery model, during the quarter, we began to execute on the following initiatives, optimizing our global delivery network to quickly identify and leverage the best available talent in geographic regions.

Speaker Change: Increasing adoption of Gen-AI capabilities for application development, testing, and maintenance.

Speaker Change: Commanding a New Workforce Planning Management System to better manage resources in all market conditions through predictive modeling and restructuring our account pyramids to drive further offshore delivery.

Raul Fernandez: Within insurance software and BPS, we continue to explore a range of opportunities to accelerate the already strong performance of our market-leading insurance software and services unit, which generates more than a billion dollars of annual revenue.

Speaker Change: With an insurance software and BPS, we continue to explore a range of opportunities to accelerate the already strong performance of our market leading insurance software and services unit.

Raul Fernandez: We anticipate providing you with a further update in the near future. Moving on, to GIS, which represents our portfolio of technology solutions. We are bringing together our infrastructure, security, and modern workplace teams under the trusted leadership of Chris Drumgoole, a tenured DXC executive. This better enables us to develop and deliver unique and mission-critical, secure technology solutions to meet the evolving needs of our customers. Our integrated GIS workforce of almost 50,000 practitioners across 70 countries will be one of the largest, most experienced, and best equipped in the marketplace. These professionals have over 49,000 certifications across AWS, Google Cloud, and Microsoft Azure, as well as specialized security technology.

Speaker Change: That generates more than a billion dollars of annual revenue. We anticipate providing you a further update in the near future.

Chris Drumgel: Moving to GIS, which represents our portfolio of technology solutions, we are bringing together our infrastructure, security, and modern workplace teams, under the trusted leadership of Chris Drumgel, a tenured DXE executive.

Speaker Change: This better enables us to develop and deliver unique and mission-critical secure technology solutions to meet the evolving needs of our customers.

Speaker Change: Our integrated GIS workforce of almost 50,000 practitioners across 70 countries will be one of the largest most experienced and best equipped in the marketplace.

Speaker Change: These professionals have over 49,000 certifications across AWS, Google Cloud, and Microsoft Azure as well as specialized security technologies.

Raul Fernandez: While each of our offerings will continue to innovate and maintain distinct market identities, this combination helps that our solutions are designed, built, sold, and operated to work together seamlessly. Specifically, within cloud, ITO, and security, we are executing on the following. Developing a Targeted Set of Offerings, Investing in and Growing Top Performing Accounts, Winding Down Select Non-Performing Accounts, and driving deeper penetration of our AI data-driven intelligent automation platform that helps customers quickly detect and resolve IT issues and prevents future problems before they occur. Within Modern Workplace, we're continuing to implement AI and Gen AI tools to enhance the capability of our chatbots to handle increasing inbound service requests.

Speaker Change: While each of our offerings will continue to innovate and maintain distinct market identities, this combination helps that our solutions are designed, built, sold, and operated to work together seamlessly.

Speaker Change: Specifically within cloud, ITO, and security, we are executing on the following.

Speaker Change: Developing a targeted set of offerings, investing in and growing top performing accounts, and winding down select non-performing accounts.

Speaker Change: and driving deeper penetration of our AI data-driven intelligent automation platform that helps customers quickly detect and resolve IT issues and prevents future problems before they occur.

Speaker Change: Within Modern Workplace, we're continuing to implement AI and Gen AI tools to enhance the capability of our chatbots to handle increasing in-bound service requests.

Raul Fernandez: Additionally, during the quarter, we took steps to improve our operational efficiency. We began to consolidate, standardize, and eliminate redundant processes across our sales, business, and account operations through the implementation of a global shared services model. As part of our consolidation plan, we are in the final stages of upgrading our targeted ERP system to S4 HANA and expect to start an initial phase of migrations later this year. Revamping our go-to-market approach, as well as the actions we are taking across GBS, GIS, and our internal infrastructure, enables us to reduce overhead and redirect investments towards more value-added front-end initiatives. The impact is already being felt.

Speaker Change: Additionally, during the quarter, we took steps to improve our operational efficiency.

Speaker Change: We began to consolidate, standardize and eliminate redundant processes across our sales, business and account operations.

Speaker Change: for the implementation of a global shared services model. As part of our consolidation plan, we're in the final stages of upgrading our targeted ERP system to S4HANA and expect to start an initial phase of migrations later in this year.

Speaker Change: Revamping our go-to-market approach as well as the actions we are taking across GBS GIS and our internal infrastructure enables us to reduce overhead and redirect investments towards more value-added front-end initiatives.

Raul Fernandez: As we are realizing a notable improvement in delivery metrics and overall quality of our services that has resulted in higher client satisfaction net promoter scores, I want to now take a moment to briefly comment on an area that I am deeply passionate about, protecting intellectual property. This mission has been a cornerstone of my career as a leader, investor, and entrepreneur. At DXC, we're defining how to embrace innovation ethically and responsibly, helping our customers navigate digital transformation with comp.

Speaker Change: The impact is already being felt as we are realizing a notable improvement in delivery metrics and overall quality of our services that has resulted in higher client satisfaction net promoter scores.

Speaker Change: I want to now take a moment to briefly comment on an area that I am deeply passionate about, protecting intellectual property.

Speaker Change: This mission has been a cornerstone of my career as a leader investor in entrepreneur.

Speaker Change: At DXC, we are defining how to embrace innovation ethically and responsibly, helping our customers navigate digital transformation with confidence.

Raul Fernandez: We believe our commitment to IP protection represents a cornerstone of company advancement and stakeholder value. We also take extensive measures to safeguard our own technology while ensuring excellence. As such, I'm very pleased with the recent favorable judgment by the United States District Court, which endorses our commitment to responsible innovation and protecting our intellectual property from certain actions by one of our competitors, TCS. Before concluding, I want to express my gratitude to our global team who diligently worked with customers that were recently impacted by the CrowdStrike software update that led to widespread disruption.

Speaker Change: We believe our commitment to IP protection represents a cornerstone to company advancement and stakeholder value.

Speaker Change: We also take extensive measures to safeguard our own technology while ensuring excellence.

Speaker Change: As such, I'm very pleased with the recent favorable judgment by the United States District Court which endorses our commitment to responsible innovation and protecting our intellectual property from certain actions by one of our competitors, TCS.

Speaker Change: Before concluding, I want to express my gratitude to our global team who diligently worked with customers that were recently impacted by the crowd strike software update that led to widespread disruption.

Raul Fernandez: Our response demonstrated that our dedication to our customers goes well beyond transforming their operations. We assembled a dedicated team that quickly implemented a recovery plan, leveraging our extensive experience with similar incidents. Our technicians worked directly with end customers, guiding them through complex restoration processes to keep customers' operations up and running. For example, our efforts enabled a regional airline carrier, a global petroleum company, a worldwide logistics company, and a global manufacturing company to have their operations restored shortly after the event, minimizing disruption.

Speaker Change: Our response demonstrated that our dedication to our customers

Speaker Change: goes well beyond transforming their operations.

Speaker Change: We assembled a dedicated team that quickly implemented a recovery plan, leveraging our extensive experience with similar incidents. Our technicians worked directly with end customers, guiding them through complex restoration processes to keep customers' operations up and running.

Speaker Change: For example, our efforts enabled a regional airline carrier, a global petroleum company, a worldwide logistics company, and a global manufacturing company to have their operations restored shortly after the event, minimizing disruption.

Raul Fernandez: To conclude, we believe our greatest near-term opportunities will come from being much more effective across the life cycle of capturing new business, solving it correctly, incorporating proper pricing, and creating better economic models for renewals. Our success will be defined by our ability to execute against these opportunities, and I am determined to drive the transformation of our company as quickly as possible. Now, I will turn the call over to Rob to review our first quarter results.

Speaker Change: To conclude, we believe our greatest near-term opportunities will come from being much more effective across the life cycle of capturing new business.

Speaker Change: Solutioning it correctly, incorporating proper pricing and creating better economic models for renewals.

Speaker Change: Our success will be defined by our ability to execute against these opportunities.

Speaker Change: and I am determined to drive the transformation of our company as quickly as possible.

Speaker Change: Now let me turn the call over to Rob to review our first quarter results.

Rob DelBene: Thank you, Raul, and good afternoon, everyone. Today, I'll review details of our first quarter results and then provide you with our latest thinking regarding our full-year fiscal 2025 outlook, along with our view for the second quarter. Please note that the additional financial information we have historically provided as an appendix to our slide presentation is now being made available as an Excel file for your convenience. You can download it from the Investor Relations section of DXC's website immediately following our call.

Rob: Thank you, Raul, and good afternoon, everyone. Today, I'll review details of our first quarter results and then provide you with our latest thinking regarding our full-year fiscal 2025 outlook, along with our view for the second quarter.

Speaker Change: Please note that the additional financial information we have historically provided as an appendix to our slide presentation is now being made available as an Excel file for your convenience. You can download it from the IR section of DXC's website immediately following our call.

Rob DelBene: Additionally, given the leadership changes Raul discussed, we have reassessed how we will report results. Moving forward, we will continue to disclose revenue, book-to-bill ratios, and profitability by our two segments, global business services and global infrastructure services. Within GBS, we will now report revenue and book-to-bill ratios for consulting and engineering services, as well as for our insurance software and BPS offering. Additionally, under GIS, we will now disclose revenue and book-to-bill ratios for cloud, ITO, and security, and our modern workplace offering. And now on to our results.

Rob: Additionally, given our leadership changes Raul discussed,

Raul Fernandez: We have reassessed how we will report results.

Rob: Moving forward, we will continue to disclose revenue, book-to-bill ratios, and profitability by our two segments, global business services and global infrastructure services.

Raul Fernandez: Within GBS, we will now report revenue and book-to-bill ratios for consulting and engineering services, as well as for our insurance, software, and BPS offerings.

Raul Fernandez: Under GIS, we will now disclose revenue and book-to-bill ratios for cloud, ITO, and security, and our modern workplace offerings.

Rob DelBene: Total revenue of $3.2 billion declined 4% year over year on an organic basis, which was better than our expectation. GBS revenue, which now represents 52% of total revenue, increased 1% year over year on an organic basis. GIS revenue, which represents 48% of total revenue, declined 9% year-over-year.

Raul Fernandez: and now on to our results.

Raul Fernandez: Total revenue of $3.2 billion declined 4% year-over-year on an organic basis, which was better than our expectation.

Raul Fernandez: GBS revenue, which now represents 52% of total revenue, increased 1% year-over-year on an organic basis.

Raul Fernandez: GIS revenue, which represents 48% of total revenue, declined 9% year-over-year.

Rob DelBene: With continued pressure on customer discretionary spending and our more selective approach to new deals, our book-to-bill ratio for the quarter was 0.77, with a trailing 12-month book-to-bill ratio of 0.88, declining modestly from last quarter. Adjusted EBIT margin expanded 40 basis points year over year to 6.9%. This better than anticipated performance was largely due to top line results ahead of our expectations. Gross margin for the first quarter was 21.9%, expanding 80 basis points year over year, largely driven by disciplined cost management within GIS. SG&A as a percentage of revenue was 9.1% flat year over year, largely due to prudent spending management. Non-GAAP net income attributable to DXC shareholders was up 2 million year-over-year.

Raul Fernandez: with continued pressure to customer discretionary spending and are more selective approach to new deals. A book to build ratio for the quarter was 0.77 with a trailing 12 month book to build ratio 0.88, declining modestly from last quarter.

Raul Fernandez: Adjusted EBIT margin, expanded 40 basis points year over year to 6.9%.

Raul Fernandez: This better than anticipated performance was largely due to top line results ahead of our expectations.

Raul Fernandez: Gross margin for the first quarter was 21.9%, expanding 80 basis points year over year, largely driven by disciplined cost management within GIS.

Raul Fernandez: SG&A, the percentage of revenue was 9.1% flat year over year, largely due to prudent spending management.

Raul Fernandez: non-GAAP net income attributable to DXC shareholders was up 2 million year-over-year. non-GAAP EPS was 74 cents, up 17% from 63 cents in the first quarter of last year.

Rob DelBene: Non-GAAP EPS was $0.74, up 17% from $0.63 in the first quarter of last year. The $0.11 increase was primarily related to the benefit from lower outstanding shares. Free cash flow for the quarter was $45 million. Now, we turn to our segment results.

Raul Fernandez: The $0.11 increase was primarily related to the benefit from lower outstanding shares.

Raul Fernandez: Free cash flow for the quarter was $45 million.

Rob DelBene: For GBS, organic revenue increased 1% year over year, largely driven by mid-single-digit growth in our insurance, software, and BPS business. However, profit margin declined 50 basis points year over year to 10.8%. The changes we're making to the operating model of our CES business, including the restructuring actions we are targeting, are expected to provide future margin growth. Consulting and Engineering Services declined 1% year over year on an organic basis, consistent with the trends we saw last quarter.

Raul Fernandez: Now, turning to our segment results.

Raul Fernandez: For GVS, organic revenue increased 1% year-over-year, largely driven by mid-single-digit growth of our insurance, software, and BPS business.

Raul Fernandez: Profit margin declined 50 basis points year-over-year to 10.8 percent.

Raul Fernandez: The changes we are making to the operating model of our CES business, including the restructuring actions we are targeting, are expected to provide future margin growth.

Raul Fernandez: Consulting and Engineering Services declined 1% year-over-year on an organic basis consistent with the trends we saw last quarter.

Rob DelBene: The book-to-bill ratio of 0.88 was impacted by the ongoing short-term project pressures reflected in both our revenue and bookings for the quarter. However, the trailing 12 month book-to-bill ratio was stable quarter over quarter at 0.96. Insurance and horizontal BPS grew 5% year over year on an organic basis; embedded in this performance is our core insurance and software business, representing approximately 75% of the total, which was up 6% organically year over year, continuing the strong momentum we saw during 2024. The book-to-bill ratio is 0.65.

Raul Fernandez: The book to Bill Ratio.88 was impacted by the ongoing short-term project pressures reflected in both our revenue and bookings for the quarter.

Raul Fernandez: The Tralling 12 month book to Bill Ratio was stable quarter over quarter at 0.96.

Raul Fernandez: Insurance and horizontal BPS grew 5% year over year on an organic basis.

Raul Fernandez: Embedded in this performance is our core insurance and software business representing approximately 75% of the total, which was up 6% organically year over year, continuing the strong momentum we saw during 2024.

Rob DelBene: As a reminder, bookings in this business tend to be lumpy with significant variation quarter-to-quarter. Moving to GIS, revenue declined 9% year over year on an organic basis, in line with recent trends and ahead of our expectations. While resale revenues performed as expected, down 28% year over year, services revenue declined 8% held by higher than anticipated quarter volume. Profit margin expanded over two points to 7.3%. This performance was largely driven by better resource management as we embedded automation in our delivery processes and took disciplined cost actions to optimize our data centers and networks.

Raul Fernandez: The book to build ratio was 0.65, as a reminder, bookings in this business tend to be lumpy with significant variation quarter to quarter.

Raul Fernandez: Moving to GIS, revenue declined 9% year-over-year on an organic basis, in line with recent trends and ahead of our expectations.

Raul Fernandez: While resale revenues performed as expected down 28% year-over-year, services revenue declined 8% held by higher than anticipated in-quarter volumes.

Speaker Change: Prof. Margin expanded over two points to 7.3%. This performance was largely driven by better resource management as we embedded automation in our delivery processes and take discipline cost actions to optimize our data centers and networks.

Rob DelBene: The lower mix of resale revenue also contributed to the year-to-year margin improvement. Within GIS, cloud ITO and security declined 8% year-over-year on an organic basis, with resale revenue down 24%, impacting the total growth rate by about one point. The book-to-bill ratio is 0.67, primarily attributed to the ongoing challenging ITO market, coupled with our disciplined approach to new deals.

Speaker Change: The lower mix of resale revenue also contributed to the year-to-year margin improvement.

Speaker Change: Within GIS, cloud ITO and security declined 8% year-over-year on an organic basis with resale revenue down 24% impacting the total growth rate by about one point.

Raul Fernandez: The book-to-bill ratio is 0.67, primarily attributed to the ongoing challenging ITO market, coupled with our disciplined approach to new deals.

Raul Fernandez: The trailing 12 month book to Bill Ratio equaled 0.76

Rob DelBene: Modern Workplace is down 14% year-over-year on an organic basis with a book-to-bill ratio of 0.80 and a trailing 12-month ratio of 0.92, consistent with last quarter. Turning toward cash flows and balances, During the quarter, our free cash flow, defined as operating cash flow less CapEx, equaled $45 million, compared to a use of $75 million in the same period last year. This improvement was primarily driven by a stronger working capital position, as we saw a sequential improvement in our DSO, as well as lower capex spending.

Raul Fernandez: Modern Workplace was down 14% year-over-year on an organic basis with a book-to-bill ratio of 0.80 and trailing 12-month ratio of 0.92, consistent with last quarter.

Raul Fernandez: Turning to our cash flows and balance sheet.

Raul Fernandez: During the quarter, our free cash flow, defined as operating cash flow, lets CapEx equal $45 million, compared to a use of $75 million in the same period last year.

Raul Fernandez: This improvement was primarily driven by a stronger working capital position, as we saw a sequential improvement in our DSO, as well as lower CAPEX spending.

Rob DelBene: Capital expenditures were equal to $193 million, down $9 million year-over-year, and new lease originations were $7 million, down $37 million from last year. Taken together, cap expenditures and lease originations declined $46 million year-over-year, and as a percent of revenue, improved to 6.2%, compared to 7.1% for the fiscal first quarter of 2024. We began to execute upon the incremental $250 million in restructuring initiatives we announced last quarter. While we saw minimal impact to our cash flow in the first quarter, we expect the program will ramp throughout the year with the majority of spending being back half loaded. Our balance sheet remains strong, with cash and cash equivalents totaling $1.3 billion.

Raul Fernandez: Capital expenditures equal to $193 million, down $9 million year over year, and new lease of regulations were $7 million, down $37 million from last year.

Raul Fernandez: Taken together, CapExpenditures and Lisa Reginations declined 46 million year over year and as a percent of revenue improved to 6.2% compared to 7.1% for the fiscal 1st quarter of 2024.

Raul Fernandez: We began to execute upon the incremental $250 million of restructuring initiatives we announced last quarter. While we saw minimal impact to our cash flow in the first quarter, we expect the program will ramp throughout the year, with the majority of spending being back half-loaded.

Our balance sheet remains strong with cash and cash equivalents totaling $1.3 billion. As planned, we incurred a modest increase to our debt levels to $4.1 billion due to first quarter seasonal needs.

Rob DelBene: As planned, we incurred a modest increase in debt levels to $4.1 billion due to first quarter seasonal needs. With our cash flow generation and existing cash balances, we have ample flexibility to execute on our capital allocation plan and invest in our business. As a reminder, our capital allocation plans for the year prioritize $250 million of incremental restructuring, as well as reducing our debt levels, which includes minimizing new financial lease originations that are equal to $185 million during fiscal year 2024.

Raul Fernandez: With our cash flow generation and existing cash balances, we have ample flexibility to execute on our capital allocation plan and invest in our business.

Raul Fernandez: As a reminder, our capital allocation plans for the year prioritize 250 million of incremental restructuring.

as well as reducing our debt levels.

Raul Fernandez: which includes minimizing new financial lease originations that equal to $185 million during fiscal year 2024.

Rob DelBene: Now, let me provide you with our latest thinking on our full year outlook. We continue to expect total revenue to decline between 6% to 4% year over year on an organic basis. Better than expected start to the year, we've remained confident in our ability to achieve our full-year revenue outlook. For GBS, we are maintaining our full-year outlook calling for slightly positive top-line growth. We now expect first half revenues to be roughly flat year over year, improving to low single digit growth in the second half, given our pipeline and stable conversion rate. We continue to anticipate GIS full-year top line to decline at low double digit rates, given expected lower resale revenues and deal selectivity.

Raul Fernandez: Now let me provide you with our latest thinking on our full year outlook.

Rob DelBene: We continue to expect total revenue to decline between 6% to 4% year-over-year on an organic basis.

Rob DelBene: With a better-than-expected start to the year, we remain confident in our ability to achieve our full-year revenue outlook.

Rob DelBene: For GBS, we are maintaining our full-year outlook calling for slightly positive top-line growth.

Rob DelBene: We now expect first half revenues to be roughly flat year over year, improving to low-sigletagic growth in the second half, given our pipeline and stable conversion rates.

Rob DelBene: We continue to anticipate GIS full-year top line to decline at low double-digit rates, given expected lower resale revenues and deal selectivity.

Rob DelBene: Based on first quarter performance and with our updated view of projected cost savings initiatives, we now expect full year adjusted EBIT margin to be in the range of 6.5% to 7% compared to our prior outlook of 6.0 to 7.0. We now expect a full year non-GAAP effective tax rate of approximately 32% compared to our prior expectation of approximately 30%. This increase is largely due to an updated mix of jurisdictional income.

Rob DelBene: Based on first quarter performance, and with our updated view of projected cost savings initiatives, we now expect full year adjusted EBIT margin to be in the range of 6.5% to 7% compared to our prior outlook of 6.0 to 7.0.

Rob DelBene: We now expect a full-year non-GAAP effective tax rate of approximately 32% compared to our prior expectation of approximately 30%. This increase is largely due to an updated mix of jurisdictional income.

Rob DelBene: Full year non-GAAP diluted EPS is now anticipated to be between $2.75 and $3 compared to our prior outlook of $2.50 to $3. This update is driven primarily by an increase in our adjusted EBIT margin outlook. Free cash flow for the year is now expected to be approximately $450 million, an increase from our prior view of around $400 million. This improved outlook is largely due to an increase in our adjusted EBIT outlook, as well as better working capital performance for the year.

Rob DelBene: Full year non-GAAP diluted EPS is now anticipated to be between $2.75 and $3.00 compared to our prior outlook of $2.50 to $3.00.

Rob DelBene: This update is driven primarily by the increase of our adjusted event margin outlook.

Rob DelBene: Free cash flow for the year is now expected to be approximately $450 million, an increase from our prior view of around $400 million.

Rob DelBene: This improved outlook is largely due to the increase of our adjusted EBIT outlook, as well as better working capital performance for the year. We still expect the increased level of restructuring year-over-year to be about $250 million skewed to the second half of the year.

Rob DelBene: We still expect the increased level of restructuring year over year to be about $250 million skewed to the second half of the year. As a reminder, our year-over-year free cash flow expectation is largely driven by the incremental $250 million restructuring program, as well as our efforts to minimize new financial lease originations that are expected to lead to higher levels of capital expenditures compared to fiscal 2024. Absentee elements or free cash flow for fiscal 2025 would be more in line with last year's performance.

Rob DelBene: As a reminder,

Rob DelBene: Our year-over-year free cash flow expectation is largely driven by the incremental $250 million restructuring program, as well as our efforts to minimize new financial lease originations that expect to lead to higher levels of capital expenditures compared to fiscal 2024.

Rob DelBene: Absent these elements, our free cash flow for fiscal 2025 would be more in line with last year's performance.

Rob DelBene: And now for the second quarter, we expect total organic revenue to decline 6.5% to 5.5% year over year. This decline from the Q1 growth rate is based on our backlog and the projected view of current contract volume activity. We anticipate adjusted EBIT margins in the range of six and a half to 7%. And finally, non-GAAP diluted EPS of 70 cents to 75 cents. With that, I will turn the call back over to Raul for some closing remarks.

Rob DelBene: And now for the second quarter, we expect total organic revenue to decline 6,4.5% to 5,5% year over year. This decline from the Q1 growth rate is based on our backlog and the projected view of current contract volume activity.

Rob DelBene: We anticipate adjusted EBIT margins in the range of 6.5% to 7%, and finally, non-GAAP diluted EPS of $0.70 to $0.75.

Rob DelBene: And with that, let me turn the call back over to Raul for some closing remarks.

Raul Fernandez: Thank you, Rob. Before I turn it over to questions, I would like to briefly comment on the recent speculative reporting in the press. It is our policy not to comment on market rumors, and we do not intend to break from that policy today. Instead, as we have been discussing, we are 100% focused on building a great company by executing against our enhanced operating model that highlights our differentiated global industry-focused offering and aligns our sales and account organization by geographic markets. Our commitment will help drive more business outcomes and deliver significant value for our customers. I remain confident we will see continued progress in our efforts and our results during the coming quarters.

Raul Fernandez: Thank you, Rob. Before I turn it over for questions, I would like to briefly comment on the recent speculative reporting in the press.

Raul Fernandez: is our policy not to comment on market rumors and we do not intend to break from that policy today.

Raul Fernandez: As we have been discussing, we are 100% focused on building a great company by executing against our enhanced operating model that highlights our differentiated global industry-focused offering and aligns our sales and account organization by geographic markets.

Raul Fernandez: Our commitment will help drive more business outcomes and deliver significant value for our customers. I remain confident we will see continued progress of our efforts and our results during the coming quarters. And we'll now turn it over for your questions. Thank you.

Operator: And we'll now turn it over to you for your questions. Thank you. All right, thank you so much. Enjoy.

Operator: All right. Thank you so much. And just as a reminder, to ask a question today, please press star followed by the number one on your telephone keypad. I'll give it just one moment to compile the roster. All right, our first question comes from Tinson Wong from J.T. Morgan. Please go ahead.

Operator: All right, thank you so much. And just as a reminder, to ask a question today, please press star followed by the number one on your telephone keypad.

Operator: I'll give it just one moment to compile the roster.

Operator: i

Operator: All right. Our first question comes from Tianxin Wang from JPMorgan. Please go ahead.

Tinson Wong: Thanks a lot, good quarter here. I'll ask on the revenue, with that coming in ahead of expectations, give a little more detail on where the sources of the upside came from and was there any pull forward because it does look like revenue does assume some deterioration here in the fiscal second quarter. So anything you can share would be terrific.

Speaker Change: Hey, thanks a lot, good quarter here.

Tinson Wong: I'll ask on the revenue, with that coming in ahead of expectations, give a little more detail on where the sources upside came from and was there any pull forward? Because it does look like revenue does assume some deterioration here in the fiscal second quarter. So anything you can share would be terrific.

Rob DelBene: Attention! It's Rob.

Rob DelBene: Attention, it's Rob. Thanks for the question. The strength came primarily in our ITO versus expectation came primarily in our ITO business.

Rob DelBene: Thanks for the question. The strength came primarily in our ITO versus expectation came primarily in our ITO business. And it really came from the quarterly volume activity in our client base, and that increase in volume activity was fairly widespread. So it didn't come from a concentrated short list of customers. So that's what really drove the outperformance relative to our original guidance. Now we've, We haven't factored in increased activity in the second quarter in our outlook. So when it, when it, when you come to 1Q to 2Q comparisons. That increase; we're not counting on a repeat of that increase in the second quarter.

Rob DelBene: And it really came from in-quarter volume activity in our client base.

Rob DelBene: And that increase in volume activity was fairly widespread, so it didn't come from a concentrated short list of customers. So that's what really drove the outperformance relative to our original guidance.

Rob DelBene: Now we've

Rob DelBene: We haven't factored an increased activity in the second quarter in our outlook. So when you come to 1Q to 2Q comparisons,

Rob DelBene: That increase, we're not counting on a repeat of that increase in the second quarter.

Unknown Caller: Got it. No, I think that's prudent. My follow-up question, Dan, if you don't mind just The Disciplined Approach to New Deals, I know that you've talked about that for a little bit. I'm just curious, the discipline here is, I'm sure it's more than just price, is there a need to then lower your delivery cost in order to be able to be more... available to attack some of these deals? I know there's a talk, I think, Raul, you mentioned optimizing the global delivery network. I'm just curious if those are all related. Thank you.

Unknown Caller: Got it. No, I think that's prudent. My follow-up, Dan, if you don't mind, just...

Unknown Caller: The disciplined approach to new deals, I know that you've talked about that for a little bit. I'm just curious, the discipline here is, I'm sure it's more than just price. Is there a need to then lower your delivery cost in order to be able to be more...

Unknown Caller: available to attack some of these deals. I know there's a talk I think where you mentioned optimizing the global delivery network. I'm just curious if those are all related. Thank you.

Raul Fernandez: Yeah, look, look, I think at a macro level the headline is a relentless focus on all aspects of execution and that starts with existing customers because I think one of the things that I've continued to appreciate more and more as I spend more and more time with customers that have been with us 5, 10, 15, 20 years plus is that we have an incredible beach head, our work is valued, our professionals are very valued and that is a great base to build off of so when you think about what we've been doing over the last quarter, it's been focusing on all aspects of execution from existing customers and getting those renewals and having lines of sight on those renewals and making sure the economics of those renewals are good for both sides and that's both pricing as well as cost. It's also a focus on net new deals, new logos, the number of new logos in the pipeline is at a level that I hadn't seen before.

Raul Fernandez: Yeah, look, look, I think at a macro level, the headline is a relentless focus on all aspects of execution.

Raul Fernandez: and and that starts with existing customers because I think one of the things that I've continued to appreciate more and more as I spend more and more time with customers that have been with us 5, 10, 15, 20 years plus

Raul Fernandez: is that we have an incredible beachhead. Our work is valued.

Raul Fernandez: Our professionals are very valued.

Raul Fernandez: and that is a great base to build off of.

Raul Fernandez: So when you think about, you know, what we've been doing over the last quarter, it's been focusing on all aspects of execution from

Raul Fernandez: existing customers and getting those renewals and having line of sight on those renewals and making sure the economics of those renewals are good for both sides. And that's both pricing as well as cost.

Raul Fernandez: It's also a focus on net new deals, new logos, the number of new logos in the pipeline is at a level that I hadn't seen before. The pipeline is growing very nicely. So the focus on execution from

Raul Fernandez: pre-solutioning, to sales, to delivery, to then client management, you can weave in.

Speaker Change: Updated Compensation Metrics.

Speaker Change: Um, it's a lot, as I mentioned in my first, you know, few calls.

Raul Fernandez: It's a lot of little things that are basic that weren't being done at the right level, and we're beginning to take them up to the right level. We are not done. There's a lot more work ahead.

Unknown Caller: Good, it's encouraging. Thank you.

Unknown Caller: But the good news is that we're seeing early results and early returns on it.

Speaker Change: Good. That's encouraging. Thank you.

Operator: Our next question comes in line from Bryan Bergin from Cohen. Please go ahead.

Speaker Change: Our next question comes from the line of Bryan Bergin from Cohen. Please go ahead.

Zach Ajzenman: Thanks. This is Zach Ajzenman on for Bryan.

Raul Fernandez: Maybe just picking up on that last point, Raul, the early self-help focus areas that you've put into play here. Can you maybe just update us on some of the nearer-term initiatives that the company has prioritized? And where have you seen the most progression to date? And where do you continue to see more room for improvement?

Raul Fernandez: Well, there's room for improvement everywhere. We're nowhere near getting through the punch list of operational, I won't even call it excellence, I'd call it getting to a level of operational discipline and execution that's commensurate with a good company. And so it's a lot of small initiatives, but with the follow-up and the accountability that, you know, just wasn't there in the past. And it's here now, both with our existing team that was here, plus the new teammates that we've brought in. But it is really balanced.

Raul Fernandez: It's existing delivery, existing global delivery networks, and locations where we are servicing existing clients where we're investing to bring in new talent. The mix of talent, we talked a little bit about having our obviously technology talent, which is very appreciated, but also having a better fit or a better combination with industry knowledge. We have really deep industry expertise in various areas, and our consulting and engineering group is continuing to build on that capability. And then, frankly, you know, just step back for a second.

Raul Fernandez: But it really is balanced it's existing delivery existing global delivery networks and locations, where we are servicing existing clients, where we're investing to bring in new talent the mix of talent and we talked a little bit about having.

Raul Fernandez: Obviously technology talent, which is very appreciated, but also having a better fit or a better.

Raul Fernandez: Combination with industry knowledge, we have really deep industry expertise and.

Raul Fernandez: In various areas and our consulting and engineering group is continuing to build up those capabilities and then frankly just step back a second I've talked a lot about storytelling and the first few calls and marketing.

Raul Fernandez: I talked a lot about storytelling, you know, on the first few calls and marketing. You know, we've got a world-class head of marketing that we recruited who has been here for a couple of months but is having a huge impact. So it really is across the board, taking it up a level in terms of just operational execution. And again, early results are good, but there's still a long way to go across all those areas.

Raul Fernandez: Got a world class head of marketing that we recruited who has been here a couple of months, but having a huge impact. So it really is across the board.

Raul Fernandez: Taking it up a level in terms of just operational execution.

Raul Fernandez: And again early results are good but there is still a long way to go across all of those areas.

Raul Fernandez: Got it. And on that consulting and engineering piece within GBS, what can you say about what you're seeing more recently in terms of stabilization, or there's still some further deterioration at play here? And then within that, any note where the vertical or geocolops are, and either direction, just kind of curious what it would make clients feel confident enough to begin releasing spend that has been delayed in the third and that area was in the third.

Speaker Change: Got it and on that consulting and engineering piece within GBS.

Raul Fernandez: What can you say about what youre seeing more recently in terms of stabilization or is there still some further deterioration at play here and then within that any noteworthy vertical or geo callouts in either direction, just kind of curious what will give clients the confidence to begin releasing spend that has been delay.

Raul Fernandez: And deferred and that area within services.

Raul Fernandez: Yeah, look, I think it's, you know, vertical by vertical, industry group by industry group, for us from a business execution point of view, our ability to, as you said, self-help and get better with everything that we've got in front of us is going to have a bigger impact than the overall environment. The overall environment obviously affects us all, but we have so much upside based on the relentless focus on getting better at execution and all I think the spend environment, again, from checking in with customers and hearing other companies and their comments and talking to other CEOs, I think it's as you've heard, right? It's tepid.

Speaker Change: Yes look I think it differs.

Raul Fernandez: Differs vertical by vertical industry group by industry group for us from a business execution.

Raul Fernandez: Our ability to as you said self help and get better with everything that we've got in front of us is going to have a bigger impact than the overall environment. The overall environment, obviously affects us all but we have so much upside based on the.

Raul Fernandez: Our relentless focus on getting better at execution in all aspects of execution that has a much bigger factor by multiples.

Raul Fernandez: And then the spend environment.

Raul Fernandez: I think the spend environment again from my checking in with customers and hearing other.

Raul Fernandez: Other.

Raul Fernandez: Companies in their comments in talking to other Ceos I think.

Raul Fernandez: As you heard right.

Raul Fernandez: But we do have some early signs that some of our areas where we have, again, invested in are beginning to show an uptick above and beyond where the market is. Let me turn it over to Rob. Yeah, Zach.

Raul Fernandez: But we do have some early signs that some of our areas, where we have again invested in RV getting to show uptick above and beyond where the market is let me turn it over.

Rob DelBene: So there's a couple of, you know, green shoots. We're undergoing a pretty significant operating model, enhancement in our CES business. And, as Raul described in his opening remarks, we're focused on establishing practices and industry verticals. So we've, you know, invested in resources and CES to help drive this change in the marketplace. And that's the primary reason why the margins declined a little bit earlier in the first quarter for GBS.

Rob DelBene: Yes, Zach so there is a couple of <unk>.

Rob DelBene: Green shoots we are undergoing a pretty significant operating model and.

Rob DelBene: Enhancement in our CES business.

Rob DelBene: And those are all described in his opening remarks, we're focused on establishing practices and industry verticals. So we've.

Rob DelBene: We've invested in resources and CES to help drive this change in the marketplace and that's that's the primary reason the margins declined a little bit earlier in the first quarter four for GBS.

Rob DelBene: But as we progress and organize around these verticals, we're shifting from custom applications, which is two-thirds of that business, to enterprise applications in those specific industry verticals. And so in those new practice areas, we're beginning to see green shoots in terms of pipeline growth. And in terms of revenue growth in the first quarter in certain areas like data and AI, and SAP, and other custom applications that other enterprise applications rather Howard's team is focusing on. So we've, you know, it's early days, but we are seeing benefits starting to accrue.

Speaker Change: But as we progress and organize around these verticals, we're shifting from shifting from custom applications, which is two thirds of that business. The enterprise applications in those specific industry verticals.

Rob DelBene: And those new practice areas.

Rob DelBene: We're beginning to see green shoots in terms of pipeline growth.

Rob DelBene: And in terms of revenue growth in the first quarter in certain areas like data and AI and SHP and other custom applications. Other enterprise applications, rather that Howard's team is focusing on.

Rob DelBene: It's early days, but we are seeing benefits starting to accrue.

Speaker Change: Thanks for all the color.

Operator: Our next question comes from the line of Jamie Friedman from Susquehanna. Please go ahead.

Rob DelBene: Our next question comes from the line of Jamie Friedman from Susquehanna. Please go ahead.

Jamie Friedman: Hi, I was hoping to get some perspective specifically on the GIS margin. Um, it's up. 210 basis points, year over year, and I'm wondering, Raul, how you're prioritizing margin expansion, full stop, relative to revenue growth or relative to anything. Is that the North Star of this? And do you have any perspective on, and some of your competitors disclose this, the margin on renewal or on new signings, how much of the margin expansion is here due to leaving contracts that are losing money? Any inputs that you can unpack on the GIS margin would be helpful.

Operator: Hi.

Jamie Friedman: I was hoping to get some perspective, specifically on the Gis margin.

Raul Fernandez: It's up 210 basis points.

Speaker Change: Year over year and.

Jamie Friedman: Im wondering how youre prioritizing margin expansion.

Speaker Change: Full stop relative to revenue growth relative to anything is that the Northstar. This and do you have any perspective on.

Jamie Friedman: And some of your competitors disclose this.

Speaker Change: Margin on renewal or a new signings how much of the margin expansion. This year due to leaving contracts that are losing money.

Jamie Friedman: Any inputs that you can unpack on the Gis margin would be helpful.

Raul Fernandez: Sure. Look, it is holistic. There isn't one magic lever that you can pull on this front. It is, first of all, doing an analysis for your existing installed base and your renewals, where you are at, at the gross and net level. Are the utilization numbers correct? Is the labor mix correct?

Raul Fernandez: Sure. It look it is holistic there isn't one magic lever that you can pull on this front.

Raul Fernandez: It is first of all doing an analysis of <unk> for your existing installed base and your renewals.

Raul Fernandez: Where you're at at.

Raul Fernandez: At the gross and net level.

Raul Fernandez: Are the utilization numbers correct as the labor mix correct.

Raul Fernandez: And then looking at other third-party costs like software pass-throughs, etc. But then it's being smart about how you're pricing both the renewal and how you're pricing net new work to factor in your offering, your value-add, etc. So it's not one lever that I can point to.

Raul Fernandez: And then looking at other third party costs like software pass throughs et cetera.

Raul Fernandez: But then it's being smart about how you are pricing, both the renewal and how youre pricing net new work.

Raul Fernandez: The factor you're offering your value add et cetera. So it's.

Rob DelBene: It's not one lever that I can point to I think buy by each business unit and Rob will give a little bit more color commentary they have taken a bottoms up.

Raul Fernandez: I think at each business unit, and Rob will give a little bit more color commentary, they have taken a bottoms-up approach to looking at their business, looking at their customers, looking at their profitability, looking at their mix of talent. And by deal, by customer, by net new opportunity, they're making smart business decisions and pricing things and then competing effectively to be able to show the differentiated value that we bring to the table.

Rob DelBene: <unk> approach to looking at their business looking at their customers looking at their profitability looking at their mix of talent.

Rob DelBene: And by deal by customer.

Rob DelBene: <unk> net new opportunity Theyre, making smart business decisions and pricing things and then competing effectively to be able to show the differentiated value that we bring to the table. So it is holistic from not just numeric and spreadsheet, but also.

Raul Fernandez: So it is holistic from not just numeric and spreadsheet but also, are we telling the story correctly so that we can get the value that we're actually delivering? And again, early returns are that it's it's it's beginning to get better across the board in the complete life cycle. Yeah.

Raul Fernandez: Are we telling the story correctly, so that we can get the value that we're actually delivering and again early returns are that.

Raul Fernandez: That it's it's beginning to get better across the board.

Rob DelBene: And the complete lifecycle and so Jamie it's Rob I'll, just I'll just add that the team has done a very nice job of driving automation into the accounts. So they are becoming more labor efficient. If you will and that is a sustainable change I think it will continue.

Rob DelBene: Yeah, and so Jamie, it's Rob. I'll just add that the team has done a very nice job of driving automation into the accounts. So they're becoming more labor efficient, if you will. And that is a sustainable change I think we'll continue to see. They've driven down real estate costs and networking costs. So, a very good job on cost management. On your point, are the margins getting any better in new deals? I have seen an improvement in signed margins, but I will say, The bulk of that, the important thing is delivering on those margins.

Jamie Friedman: To say that driven down real estate costs networking cost so very good job on cost management on your point on are the margins getting any better in new deals.

Rob DelBene: We have seen an improvement in signed margins.

Rob DelBene: But I will say.

Rob DelBene: Bulk of that the important thing is delivering to those margins. So a maniacal focus.

Rob DelBene: So a maniacal focus on executing the automation plays that we have. We've already started, enabling a focus on driving down the fixed cost structure is paramount and delivering with quality and not incurring SLA penalties. I have to say the team is at an all-time low in terms of delivery at SLA penalties, which means they're meeting customer commitments at an amazingly high rate. So they're delivering quality, improving costs, driving automation, all of the above led to the two points in the first quarter. So the trend is positive.

Rob DelBene: Executing the.

Rob DelBene: The automation plays that we have.

Rob DelBene: <unk>.

Rob DelBene: We've already started.

Rob DelBene: <unk>, enabling.

Rob DelBene: Focus on driving down the fixed cost structure.

Rob DelBene: Is paramount and delivering with quality.

Rob DelBene: Nonrecurring SLA penalties that I'll have to say the team is at an all time low in terms of delivery SLA penalties, which means.

Rob DelBene: They're meeting customer commitments.

Rob DelBene: <unk>.

Rob DelBene: Amazingly high rates, so, they're delivering with quality improving costs driving automation in all of the above led to the two points in the first quarter. So the trend is positive.

Jamie Friedman: And for my follow-up, Rob, sorry if I missed it, but are you guiding margins at a segment level for the year, or at least if you could share a trajectory, that would be helpful? No, we haven't guided margins at a segment level. But, you know, I think we'll see stability and margins in both GBS and GIS. Okay, I'll drop back. Thank you.

Speaker Change: And then for my follow up Rob.

Jamie Friedman: Sorry, if I missed it but are you are.

Jamie Friedman: Are you guiding margins at a segment level through the year or at least.

Jamie Friedman: If you could share trajectory that'll be helpful.

Speaker Change: No no we haven't we haven't guided margins at a segment level.

Jamie Friedman: But yes, I think we'll see stability and margins in both GBS and Gis.

Speaker Change: Okay I'll jump back thank you.

Speaker Change: Thank you.

Operator: Our next question comes from Jason Kupferberg from Bank of America. Please go ahead. Thank you, guys.

Jamie Friedman: Our next question comes from Jason Kupferberg from Bank of America. Please go ahead.

Jason Kupferberg: Thank you, guys. I just wanted to come back to the book, Bill, and you talked about the soft discretionary spending environment, and I think it's good to see you're being more selective on some of the large deals that are out there, but can you give us a sense of how you're thinking about bobbling as we move through the fiscal year, and we know it can be lumpy in a given quarter?

Jason Kupferberg: Thank you guys just wanted to come back on the book to Bill I know you talked about the soft discretionary spending environment I think it's good to see you are being more or less.

Dave: Dave on.

Jason Kupferberg: Laurence.

Speaker Change: But can you give us a sense.

Jason Kupferberg: Okay.

Jason Kupferberg: Okay.

Speaker Change: Through the <unk>.

Speaker Change: We know it can be lumpy.

Speaker Change: Thank you.

Jason Kupferberg: Okay.

Jason Kupferberg: Okay.

Speaker Change: Got it.

Jason Kupferberg: Yeah, you cut out a little bit. But I think the question is not one-color commentary on on book to bill. Yes.

Jay: Yes, you cut you've cut out a little bit, but I think the question is does that one color commentary on on book to Bill, Yes, So Jay.

Jason Kupferberg: No.

Jason Kupferberg: Yeah, sorry, just forward-looking on book to bill, and how you're thinking about it. Thanks.

Speaker Change: Yes, sorry, just forward looking on book to Bill how are you thinking about it. Thanks.

Rob DelBene: Yeah, so So the book, let me just take that in two parts, cover G, BS, and then GIS and G, and BS. Our book to bill in the first quarter was down low single digits, low to mid single digits. And that's really a reflection of the CES market, right? And the book to bill of the trolling 12 months is consistent. We had all of that factored into our revenue forecast, so that was in line with expectations and our outlook.

Speaker Change: Yeah. So.

Rob DelBene: So the book, let me just take that in two parts coverage.

Rob DelBene: And then Gis and GBS are book to Bill in the first quarter.

Rob DelBene: And as Raul mentioned earlier, our pipelines are improving, and our conversion rates are stable. So I would, you know, I would expect to see it in that business and at CES, it will really depend on the marketplace. So we're not counting on higher conversion rates. We're not counting on an outsized improvement in bookings. We're just gonna have to make sure we have stability. We're counting on stability, and the pipeline supports that in GBS. In GIS, you know, GIS has larger deals in both the modern workplace and ITO. And there we had a more significant year-to-year decline; it was around 30% in larger deals that occur typically in those business units. However, there again, the pipelines are improving. So that is very encouraging.

Speaker Change: Was down low single digits low to mid single digits, and that's really a reflection of the CES market alright, and the book to Bill of the trailing 12 months is consistent we had all of that factored into our revenue forecast. So that was in line with expectation.

Rob DelBene: And our outlooks.

Speaker Change: And the pie as Martin mentioned earlier, our pipelines are improving and our conversion rates are stable. So what I would I would expect to see it really in that business and CES. It will really depend on the marketplace.

Rob DelBene: So we're not we're not counting on an extraordinarily higher conversion rates, we're not counting on an outsized improvement in bookings.

Rob DelBene: Just going to we have stability or counting on stability and the pipeline supports that and GBS and Gis Gis as larger deals in both modern workplace and IPO and there we had a more significant year to year decline it was around 30% in <unk>.

Rob DelBene: Larger deals.

Rob DelBene: That occur typically in those business units.

Rob DelBene: There again, the pipelines are improving.

Rob DelBene: So that that is very encouraging the deals are lumpy in nature. So it's hard to predict with certainty within a quarter.

Rob DelBene: The deals are lumpy in nature, so it's hard to predict with certainty within a quarter what the bookings will be. I will say though, based on the pipeline, based on the named list of opportunities we have, we do expect bookings improvements through the rest of the year. Yeah.

Rob DelBene: The bookings will be I will say, though based on the pipeline based on the named list of opportunities. We have we do expect bookings improvements through the rest of the year, yes, and just to reiterate it really does start with the quality of the pipeline for net new business and the quality.

Raul Fernandez: Yeah, and just to reiterate, it really does start with the quality of the pipeline for net new business and the quality of the renewal pursuit. And in both cases, I've been involved in multiple, you know, very, very large deals where the teams are really operating, again, at a new level. And so I'm encouraged that all those factors will lead to, you know, over a 12-month period, a very, very solid book-to-bil

Raul Fernandez: Of the renewal pursuit and in both cases I've been involved in multiple very very large.

Raul Fernandez: Pursuits, where the teams are really operating again at a new level and so I'm encouraged that all of those factors will lead to over.

Raul Fernandez: Over a 12 month period, a very very solid.

Raul Fernandez: As you know, in my mind, there's book-to-bill that burns in the next 12 months and book-to-bill that burns beyond that. And I think that's a distinction that I've gotten better insight into. But I'm confident that, you know, the pipeline, and our existing customers will lead to a good full year on that.

Speaker Change: Book to Bill number as you know it's in my mind. There is book to Bill that Burns in the next 12 months and book to Bill Burns beyond that and I think that's a distinction that I have gotten better insight Ed.

Raul Fernandez: But I'm confident that.

Raul Fernandez: The pipeline our existing customers will lead to a good full year on that.

Jason Kupferberg: Okay, that's good color. And then I wanted to just come back on the new go-to-market strategy and the operating model. I mean, what's your general sense, Raul, of how long you think it'll take to fully implement that across the organization?

Speaker Change: Okay. No. That's good color and then I wanted to just come back on the new go to market strategy and the operating model I mean, what's your general sense, a roll of how long you think it'll take to fully implement that across the organization.

Raul Fernandez: Look, I think I mentioned earlier that it's a full year journey because you're putting in new processes, you're making sure those processes are followed, you're taking any sort of action if they're not being followed. But in many cases, you've got to have a couple of quarters worth of execution to get it, you know, kind of fully right, you know, at least at an initial stage. So I expect to see continued improvement across all these metrics for all the businesses quarter over quarter. Again, it's not one lever that is going to give you a stair step. It's steady progress across all aspects that will continue to deliver the results that, you know, we are beginning to see today.

Raul Fernandez: Look I think I mentioned earlier that it is a full year journey and it because you're putting in new processes Youre, making sure. Those processes are followed youre, taking any sort of action if theyre not being followed.

Raul Fernandez: But in many cases, you've got to have a couple of quarters worth of execution to get it kind of fully right at least at an initial stage. So.

Raul Fernandez: I expect to see continued improvement across all these metrics for all of the businesses quarter over quarter.

Raul Fernandez: Again, it's not one lever that is going to give you a stair step it's steady progress.

Raul Fernandez: Across all aspects that are that will continue to deliver the results that we are beginning to see today.

Raul Fernandez: Okay.

Speaker Change: Alright, good stuff. Thank you.

Operator: All right, good stuff. Thank you. Our next question comes from the line of Jonathan Lee from Guggenheim. Please go ahead.

Speaker Change: Our next question comes from the line of Jonathan Lee from Guggenheim. Please go ahead.

Jonathan Lee: Great, thanks for taking our questions. You know, it's tremendous to hear the push toward a more effective sales team. Are there any signs of early success?

Jonathan Lee: Great. Thanks for taking our questions Eric tremendous to hear the push toward a more effective sales team are there any signs of early signs of success from clients. There given some of the changes you've made the business so far.

Raul Fernandez: Yeah, I think the number of new logos that have won and, you know, with these, you've got to get permission to talk about them. So hopefully, we get more permission to talk about them in more detail on the next call.

Speaker Change: Yes, I think the number of new logos that have won.

Raul Fernandez: These you got to get permission to talk about them. So hopefully we get more permission to talk about in more detail on the next call I think the early signs are.

Raul Fernandez: I think the early signs are, at least for me, in looking at the business in detail, a lot more new logo wins than we had traditionally, a lot better positioning on the resale, a lot better planning on the renewal, many, many quarters out on renewal, making sure that we're going into the renewal period in the strongest possible fashion. And then a lot of learnings. We're, you know, looking at deals that we lose and deals that we win, and why.

Raul Fernandez: At least for me in looking at the business in detail.

Raul Fernandez: A lot more new logo wins than what we had traditionally.

Raul Fernandez: Lot better positioning on the resell a lot better planning on the not resell on the renewal a lot better planning.

Raul Fernandez: Many many.

Raul Fernandez: Quarters out on renewal, making sure that we're going into the renewal period.

Raul Fernandez: The strongest possible fashion.

Raul Fernandez: And then a lot of learnings, we're we're looking at deals.

Raul Fernandez: Deals that we lose and deals that we win and why and I think for me, it's been really encouraging because on the on the ones that I've gotten deep bond that we've lost its been a lot of errors that we committed that we can fix.

Raul Fernandez: And I think for me, it's been, you know, really encouraging because on the ones that I've gone deep on that we've lost, there were a lot of errors that we committed that we can fix. So it wasn't that we didn't have the talent, it wasn't that we didn't have the credentials, it was some other part of the sales process and capture. And it's been great to go back and look at the wins and losses to really fine-tune how we can continue to get better at it. So I'm very encouraged here and take their advice as a follow-up, you know.

Raul Fernandez: So it wasn't that we didn't have the talent and it wasn't that we didn't have the credentials. It was some other part of the sales process and capture and it's been great to go back and look at the wins and losses.

Raul Fernandez: To really fine tune, how we can continue to get better on it so I'm very encouraged.

Speaker Change: I appreciate your insight there as a follow up it's good to see the project discipline Youre showing how would you characterize the current pricing environment across both the Gis and GBS and how has that evolved relative to earlier this year.

Rob DelBene: Yeah, so it's Rob Johnson. From my perspective and the data we have, the pricing has been stable. So I haven't, I haven't seen any notable changes, up or down, in the pricing environment. So I would just characterize it as stable.

Rob Jonathan: So it's Rob Jonathan.

Rob Johnson: From my perspective, and the data we have.

Rob Johnson: <unk> has been stable.

Rob Johnson: I haven't I haven't seen any notable changes.

Speaker Change: Up or down in the pricing environment.

Rob Johnson: We're just characterize it as stable.

Speaker Change: Thanks for the detail there.

Operator: As a reminder, if you would like to comment...

Speaker Change: As a reminder, if you would like.

Operator: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Rod Bourgeois from Deep Dive Activity. Please go ahead.

Speaker Change: As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Operator: Our next question comes from the line of Rod bourgeois from deep dive activity. Please go ahead.

Rod Bourgeois: Hey guys, firstly, I want to ask about investment plans. DXC has leaned into share buybacks over the past couple years and reduced the share count. You're also working to improve free cash flow. So I want to ask, do you feel that you currently have sufficient capacity to invest to be competitive in your key markets while also doing the buybacks and the free cash flow improvement? So, essentially, do you have room to invest? And how much and where are you making investments in your future?

Rod Bourgeois: Hey, guys, Hey, I wanted to first ask about investment plans.

Rod Bourgeois: DXP has leaned into share buybacks over the past couple of years and reduce the share count you are also working to improve free cash flow. So I wanted to ask are you feeling that you currently have sufficient capacity to invest to be competitive in your key markets. While also doing the buybacks and the free cash.

Speaker Change: One improvement so essentially do you have room to invest and how much and where are you making investments in near future growth. Thanks.

Raul Fernandez: So one of the themes that I talked about early on was that as I came in and you know off the board and got deep, there was a lot more to do for integration, deduplication of back office functions, deduplication of legal entities, etc. So we are going on a very thorough and consistent plan to just operate better in a more streamlined way. Taking a look at things that hadn't been looked at before.

Speaker Change: So one of the themes that I talked about early on was that.

Raul Fernandez: I came in and off the board and got deep.

Raul Fernandez: There was a lot more to do on integration de duplication of back office functions de duplication of legal entities et cetera. So we are going on a very thorough and consistent plan too.

Raul Fernandez: Operate better in a more streamlined way.

Raul Fernandez: That gives us the ability to reinvest some of that back into the business, back into talent, back into training, back into differentiation at a at a at an industry level, and then back into innovation, innovation around generative AI, innovation around helping our customers get their data ready to begin to use generative AI. I think there's obviously been a lot of talk and a lot of hype around that, which is, which is correct.

Raul Fernandez: Taking a look at things that werent looked at before that's providing us the ability to reinvest some of that back into the business back into talent back into training.

Raul Fernandez: Back into differentiation at a.

Raul Fernandez: At at.

Raul Fernandez: At a industry level.

Raul Fernandez: And then back into innovation, the innovation around generative AI innovation around helping our customers get their data ready to begin to use generative AI I think theres, obviously been a lot of talk and a lot of hype around that which is which is.

Raul Fernandez: Correct, but I think one of the things that hasn't really been discussed is all of the process.

Raul Fernandez: But I think one of the things that haven't really been discussed is all of the processes that are currently in place to do what companies do. The data and the cleanup of the data before you can actually begin to apply some of these generative AI tools, all that is going to fuel business for companies like ours and others in the industry. So we're very well positioned to capture that. And, you know, as you know, we've got a mix of business with our customers.

Raul Fernandez: That currently is in place to do what companies do the data and the cleanup of the data before you can actually begin to apply some of these generative AI tools all of that is going to fuel business for companies like ours and others in the industry. So we're very well positioned to capture that.

Raul Fernandez: And as you know, we've got a mix of business with our customers. Many customers. We help run their operation. So we're very well positioned to look at their internal data and be a great partner and a great leader for them in the <unk> space.

Raul Fernandez: Many customers we help run their operations. So we're very well positioned to look at their internal data and be a great partner and a great leader for them in the gen AI space. But I think that across the board, with regard to your question on going to market, do you want to make some comments on investments? Yeah, right.

Speaker Change: But I think that across the board with regards to your question.

Speaker Change: On go to market do you want to make some comments.

Rob DelBene: So we, with the geographic market organization that we're establishing, we are investing in the market. And as Raul mentioned, now with Gen AI, we're investing in the CES practices that Howard is standing up. So those are two areas in particular that we're investing in. And, you know, our cash, our cash generation is very stable; our balance sheet is strong. So we have ample, you know; we have ample flexibility to invest as we see fit in the business.

Rod Bourgeois: The investments, yes rod.

Speaker Change: With with the geographic market organization that we're establishing we are investing in the markets.

Rob DelBene: And.

Earl: As Earl mentioned.

Rob DelBene: With <unk>, we're investing in the CES practices that Howard is standing up so.

Rob DelBene: Those are two areas in particular.

Rob DelBene: That we're investing in.

Rob DelBene: And our cash our cash generation is very stable our balance sheet is strong so we have ample.

Rob DelBene: We have ample flexibility to invest.

Rob DelBene: As we see trends in the business.

Raul Fernandez: Okay, great. And it's encouraging on the bookings outlook. It sounds like the operating model makes sense that it takes a while to get traction, but it's encouraging in the outlook for the second half. My question on the operating model is really a clarification one. Last year, the prior leadership was pivoting to an operating model that it called an offering-led operating model. And this year, you've been emphasizing this geography-oriented sales model. So I just wanted to clarify, maybe give us a little more color on the geography-oriented sales model and how it's different, and I assume you feel like it's better than the operating model that was being pursued last year. Can you just juxtapose the current operating model with the prior one that was being pursued? Thanks.

Speaker Change: Okay, great and it's encouraging on the bookings outlook it sounds like the operating model.

Raul Fernandez: It makes sense that it takes a while to get traction, but it is encouraging and the outlook for the second half my.

Raul Fernandez: My question on the operating model is really a clarification one last year. The prior leadership with pivoting to an operating model that it called offering led operating model and this year you've been emphasizing this geography oriented sales model. So I just wanted to clarify maybe give us a little more color.

Raul Fernandez: On the geography oriented sales model and how it's different and I assume how do you feel like it's better than the operating model that was being pursued last year can you just juxtapose the current operating model with the prior one that was being pursued.

Rob DelBene: Yeah, I think at a macro level, at a theme level, it's tighter and better coordination and collaboration, right? You've got the resources that are, you know, located in geography. And you've got offerings, and you've got other technical skills that may span across a company and can be leveraged across the company and across the globe. So it is, what I would say is, a better coordination of the two. I don't think it's one or the other.

Speaker Change: Yeah I think.

Speaker Change: At a macro level the theme level, it's tighter and better coordination and collaboration right. You've got the resources that are located in a geography.

Rob DelBene: And you've got offerings and you've got other technical skills that may.

Rob DelBene: They span across the company and can be leveraged across the company and across the globe.

Rob DelBene: So it is a what I would say is a better coordination of the two I don't think it's one or the other.

Raul Fernandez: It is the fact that we have talent in different parts of the world. We have better tools now to manage that talent, to find that talent, to find the availability of that talent, as they come off projects, and they're available to roll on to new projects. So it's, I would call it, closer collaboration between the offerings and the geographies, as kind of like, what's different and why it's having a better impact now than before.

Raul Fernandez: It is the fact that we've got talent in different parts of the world.

Raul Fernandez: We have better tools now to manage that talent to find that talent to find the availability of that talent as they come off projects and they are available to roll onto new projects.

Raul Fernandez: So it's I would call it closer collaboration between the offerings and the geographies as kind of like what's different and why it is having a better impact.

Raul Fernandez: Now than before.

Rob DelBene: Yeah, and Rod, just to supplement that, you know, sales are local, right? The relationships are local.

Rob DelBene: Yeah, and Rod, just to supplement.

Raul Fernandez: And Rod just to supplement that.

Rod Bourgeois: Sales as local right the relationships are local.

Rob DelBene: And so that's best managed in the market. So that is one fundamental shift here is having the market presence that was missing before. And then on the flip side of that, it's, you know, invest in developing offerings once, develop global pools of skills. So development, solutioning, delivery is a business unit, a core competency, and sales is local. So that, in a nutshell, is what we're trying to accomplish with the new

Rod Bourgeois: And so thats best manage in the market.

Rob DelBene: So that is one fundamental shift here is having the market presence that was missing before and then on the flip side of that.

Rob DelBene: Invest in developing offerings once developed global.

Rob DelBene: Pulls of skills.

Rob DelBene: No.

Rob DelBene: So development solutions <unk> delivery is a business unit.

Rob DelBene: Core competency and sales is local so that in a nutshell is what we're trying to accomplish with the new model.

Speaker Change: Got it thank you.

Speaker Change: Welcome to our next.

Operator: Our next question comes from Darrin Peller from Wolf Research. Please go ahead.

Rob DelBene: Our next question comes from Darrin Peller from Wolfe Research. Please go ahead.

Darrin Peller: Guys, thanks. Just in terms of developing expertise and industry verticals for the consulting and engineering business, please help us understand where there's still room to improve and just what areas you think you need to invest in further around

Darrin Peller: Guys. Thanks, just in terms of developing expertise and industry verticals for the consulting and engineering businesses.

Speaker Change: Help us understand where theres still room to improve and just what areas do you think you need to invest in further around that.

Raul Fernandez: You know, tightening up solutions within an industry where there's some level of replicability, and that could be replicable frameworks in terms of how we walk the customer through getting the right solution defined, and then replicable code bases in terms of how we build once but use often, and take that IP with us, and continue to invest in it on an industry-wide basis. So I think from, you know, what's left ahead of us in terms of improvement, I'd say that we're, you know, we've got that mix today, but that mix could be, you know, stronger and have a much bigger impact.

Speaker Change: Tightening up solutions within an industry, where there's some level of replica ability and that could be replicable frameworks in terms of how we work the customer through getting the right solution defined and then replicable code bases in terms of how we build once.

Raul Fernandez: Use often.

Raul Fernandez: And take that IP with us.

Raul Fernandez: And continue to.

Raul Fernandez: Invest in it.

Raul Fernandez: On an industrywide basis, so I think from.

Raul Fernandez: Whats left ahead of us in terms of improvement I'd say that we're.

Raul Fernandez: We've got that mix today that that mix can be stronger and have a much bigger impact the other area that I touched on in previous calls is internal collaboration and internal communication.

Raul Fernandez: The other area that I touched on in previous calls is internal collaboration and internal communication. We have a lot of upside in being better at internally collaborating, sharing case studies, sharing technical solutions, taking things that are truly innovative that are being done all around the world and exposing them, putting a spotlight on them, and making sure that everyone's aware of them. Every time that I go into a customer, I obviously know what we're doing for that customer.

Raul Fernandez: We have a lot of upside and being better internally collaborating sharing case studies sharing technical solutions, taking things that are truly innovative that are being done are all around the world and exposing them, putting a spotlight on them and making sure that everyone's aware of them every time.

Raul Fernandez: I go into a customer obviously know what we're doing for that customer and I always take the opportunity to say and did you know that we also do this and so far 100% of the time they've come back and they've said no I didn't know that you also do that can you send somebody in to help me.

Raul Fernandez: And I always take the opportunity to say, and did you know that we also do this? And so far, 100% of the time, they've come back, and they've said, no, I didn't know that you also did that.

Raul Fernandez: Can you send somebody in to help me, you know, figure out if you're a partner for us there? So that internal collaboration and that internal cross-selling, there's a lot of upside there that we are just beginning to scratch the surface on. And again, when you think about all this stuff, it just goes back to basic execution at a different level. So I'm excited about the runway that we have there. And I'm excited about the again, the installation base and the ability to be able to tag in different parts of our business into great accounts.

Raul Fernandez: Figure out if you are a partner for US there so that internal collaboration and that internal cross selling that's there's a lot of upside there that we are just beginning to scratch the surface on and again when you think about all this stuff. It just goes back to basic execution at a different level. So I'm excited about the runway that we have.

Raul Fernandez: Got there.

Raul Fernandez: And I am excited about the again, the installed base and the ability to being to be able to tag in.

Raul Fernandez: Different parts of our business into great accounts.

Raul Fernandez: Okay.

Darrin Peller: Can I just, one quick follow-up is just to make sure we're understanding the booking dynamics. And I understand you talked about macro volatility in GBS and timing, I'm sorry, and timing on GIS, but I guess the shift from what was almost 100% bookings to book-to-bill last quarter in GBS down to, I think it was 0.8 or so, 0.83. It just seems like a quick move. And so I'm curious if there's anything substantial you're seeing in one particular category or some confidence you can really work on that getting a little bit better beyond just macro, anything you can do that's in your control. Thanks, guys.

Speaker Change: Can I can I just one quick follow up is just to make sure. We're understanding of the bookings dynamics and I understand you talked about macro volatility in GBS and timing I'm, sorry, Ian and timing on Gis, but I guess the shift from what was almost 100% bookings book to Bill last quarter in GBS down to I think it was <unk>.

Speaker Change: <unk> III.

Speaker Change: It just seems like a quick move and so im curious if theres anything substantially youre seeing in one particular category or some some confidence you can really work on that getting a little bit better beyond just macro or anything you can do that's in your control. Thanks, guys. Yeah. It's it goes back to the quality of the pipeline.

Raul Fernandez: Yeah, it goes back to the quality of the pipeline. As the new team has come in, you know, the scorecard of existing bids and wins and losses being better. So I think it's both the funnel, right, how big and how qualified and how good those opportunities are, our ability to address them in a more competitive way, both clarity of the technical solution as well as pricing. And, you know, as I said, I've been working on multiple deals that are very, very, very big. And The team has competed really well.

Raul Fernandez: As the new team has come in.

Raul Fernandez: Scorecard of existing bids and wins and losses being better. So I think it's both the funnel right, how big and how qualified and how good that those opportunities are our ability to address them in a more competitive way both clarity of the technical solution as well as pricing.

Raul Fernandez: And, you know, you can't talk about them until they're signed. But I'm very encouraged that starting with the funnel, and then starting with better execution of opportunities there in the funnel, that number will, on a full year basis, be in a good place. And don't forget, like some of these deals in parts of our business can be five-year deals, right? So it's a little the book to bill isn't exactly a because it can be multi-year like that.

Raul Fernandez: And as I said I've been working on multiple deals that are very very very big and the team has competed really well and you can't talk about them until they are signed but I'm very encouraged that starting with the funnel and then starting with better execution of opportunities there in the funnel.

Raul Fernandez: That number.

Raul Fernandez: On a full year basis be in a good place and don't forget some of these deals in parts of our business can be five year deals right. So it's a little the book to Bill isn't exactly a because it because it can be multi year like that and because it can be so big that clarity on the next 12 months really is you need more than one quarter.

Raul Fernandez: And because it can be so big, the clarity on the next 12 months really is, you know, you need more than one quarter to really look at it. So that's why I'm confident that we're in a good place there.

Raul Fernandez: Order to really look at it so.

Darrin Peller: So that's why I'm confident that we're in a good place there, yes, Darrin, it's Roger and my recalling enrolls prepared remarks, you didn't mention the good part of the pipeline expansion was due to inflows in our CES business. So.

Roger Sachs: Yeah, I'm Darrin. It's Roger. And you might recall in Raul's prepared remarks, he did mention that a good part of the pipeline expansion was due to inflows into the CES business. So it's in the right direction from an opportunity standpoint.

Roger Sachs: In the right direction from an opportunity standpoint.

Darrin Peller: understood. That makes sense, guys. Thank you.

Speaker Change: Understood that makes sense guys. Thank you.

Speaker Change: Thank you.

Operator: Alright, and at this time, we have no more questions in the queue, so I'll turn it back over to Roger Sacks and the team.

Speaker Change: Alright, and then at this time, we have no more questions in the queue. So I'll turn it back over to Roger Sachs from the team.

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

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

Operator: That concludes today's call; have a pleasant day.

Speaker Change: That concludes today's call have a pleasant day.

Speaker Change: Please wait the conference will begin shortly.

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Raul Fernandez: The pipeline is growing very nicely, so the focus on execution from presolutioning to sales to delivery to then client management can weave in updated compensation metrics. There are a lot, as I mentioned in my first few calls, a lot of little things that are basic that weren't being done at the right level, and we're beginning to take them up to the right level. We are not done, there's a lot more work ahead, but the good news is that we're seeing early results and early returns on it.