ASHBURN, Va. - DXC Technology (NYSE: NYSE:DXC), a leading provider of global technology services, reported fourth-quarter earnings that surpassed analyst estimates, but stock plummeted sharply as the company provided a weaker-than-expected outlook for fiscal year 2025.
The company reported fourth-quarter adjusted earnings per share (EPS) of $0.97, beating the consensus estimate of $0.83 by $0.14. Revenue for the quarter was $3.39 billion, slightly above the consensus estimate of $3.37 billion. Despite the earnings beat, the company's revenue marked a 5.7% decline from the same quarter last year.
DXC Technology's guidance for the first quarter of fiscal year 2025 forecasts EPS in the range of $0.55 to $0.60, which falls below the analyst consensus of $0.76. The company also expects Q1 2025 revenue to be between $3.1 billion and $3.15 billion, surpassing the consensus estimate of $3.02 billion.
For the full fiscal year 2025, DXC Technology anticipates EPS to be between $2.50 and $3.00, significantly lower than the consensus estimate of $3.30. Revenue guidance for FY2025 is projected to be between $12.67 billion and $12.95 billion, which is below the consensus estimate of $13.65 billion.
DXC Technology's stock plunged more than 23% in premarket trading Friday. The sharp decline is attributed to the company's FY25 guidance, which is lower than the consensus estimates.
"Many investors had anticipated an improvement in the Y/Y top-line decline in FY25, but management's outlook for a 5% Y/Y decline in organic revenue growth at the midpoint implies a further deceleration this year," analysts at Wolfe Research commented in a post-earnings note.
"We remain Underperform rated on structural challenges and an unclear path to revenue inflection," they added.
Raul Fernandez, Chief Executive Officer, commented on the results, stating, "My first months as CEO have strengthened my view of the incredible talent of our employees and the value we bring to our customers every day." He expressed confidence in the company's future, despite the current challenges.
The company's financial performance in the fourth quarter was driven by declines in Modern Workplace and Cloud and ITO. However, organic revenue growth came in above DXC's guidance range. The company also highlighted its third consecutive year of free cash flow over $700 million.
Investors are now grappling with the company's cautious outlook, as DXC Technology navigates a challenging environment for technology services. The company's full-year guidance reflects the impacts of ongoing global economic pressures and strategic decisions aimed at positioning DXC for long-term success.
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