IT services provider DXC Technology (NYSE: DXC) reported Q2 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 2.4% year on year to $3.16 billion. Guidance for next quarter’s revenue was optimistic at $3.17 billion at the midpoint, 2% above analysts’ estimates. Its non-GAAP profit of $0.68 per share was 9.9% above analysts’ consensus estimates.

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Company Overview

Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $12.79 billion in revenue over the past 12 months, DXC is larger than most business services companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. This also gives it the flexibility to offer lower prices. However, its scale is a double-edged sword because finding new avenues for growth becomes difficult when you already have a substantial market presence. To expand meaningfully, DXC likely needs to tweak its prices, innovate with new offerings, or enter new markets.

As you can see below, DXC’s demand was weak over the last five years. Its sales fell by 7.8% annually, a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. DXC’s annualized revenue declines of 5% over the last two years suggest its demand continued shrinking.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, DXC’s organic revenue averaged 4.5% year-on-year declines. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, DXC’s revenue fell by 2.4% year on year to $3.16 billion but beat Wall Street’s estimates by 2.4%. Company management is currently guiding for a 2.3% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 3.8% over the next 12 months, similar to its two-year rate. Although this projection is better than its two-year trend, it’s hard to get excited about a company that is struggling with demand.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

DXC was profitable over the last five years but held back by its large cost base. Its average operating margin of 2.5% was weak for a business services business.

On the plus side, DXC’s operating margin rose by 8 percentage points over the last five years.

in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for DXC, its EPS and revenue declined by 3.6% and 7.8% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, DXC’s low margin of safety could leave its stock price susceptible to large downswings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For DXC, EPS didn’t budge over the last two years, but at least that was better than its five-year trend. We hope its earnings can grow in the coming years.

In Q2, DXC reported adjusted EPS at $0.68, down from $0.74 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 9.9%. Over the next 12 months, Wall Street expects DXC’s full-year EPS of $3.37 to shrink by 8.7%.

Key Takeaways from DXC’s Q2 Results

It was great to see DXC raise its full-year revenue and EPS guidance. We were also glad this quarter's revenue and EPS outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 2% to $13.90 immediately after reporting.

DXC put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.