Financial Analysis

Commitments and Contingencies Commitments Minimum purchase commitments as of June 30, 2026 were as follows: Fiscal year Minimum Purchase Commitment (in millions) Remainder of 2027 $ 411 2028 639 2029 536 2030 368 2031 335 Thereafter 172 Total $ 2,461 Contingencies Securities Litigation: On August 20, 2019, a purported class action lawsuit was filed in the Superior Court of the State of California, County of Santa Clara, against the Company, directors of the Company, and a former officer of the Company, among other defendants. The action asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, as amended, and is premised on allegedly false and/or misleading statements, and alleged non-disclosure of material facts, regarding the Companys prospects and expected performance. The putative class of plaintiffs includes former shareholders of Computer Sciences Corporation (CSC) who exchanged their CSC shares for the Companys common stock pursuant to the offering documents filed with the Securities and Exchange Commission in connection with the April 2017 transaction that formed DXC. The State of California action had been stayed pending the outcome of the substantially similar federal action filed in the United States District Court for the Northern District of California. The federal action was dismissed with prejudice in December 2021. Thereafter, the state court lifted the stay and entered an order permitting additional briefing by the parties. In March 2022, Pla …

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Debt The following is a summary of the Companys debt: (in millions) Interest Rates Fiscal Year Maturities June 30, 2026 (1) March 31, 2026 (1) Short-term debt and current maturities of long-term debt $700 million Senior notes 1.80% 2027 400 400 Current maturities of finance lease liabilities 0.59% - 14.59% 2027 - 2028 82 92 Current maturities of other long-term debt Various 2027 - 2028 19 28 Short-term debt and current maturities of long-term debt $ 501 $ 520 Long-term debt, net of current maturities 750 million Senior notes 0.45% 2028 856 862 $650 million Senior notes 2.375% 2029 648 648 650 million Senior notes 4.25% 2031 726 731 600 million Senior notes 0.95% 2032 683 687 Finance lease liabilities 0.59% - 14.59% 2027 - 2035 70 82 Borrowings for assets acquired under long-term financing 0.00% - 7.55% 2027 - 2033 6 7 Other borrowings Various 2027 - 2035 14 15 Long-term debt, net of current maturities 3,003 3,032 Total debt $ 3,504 $ 3,552 (1) The carrying amounts of the senior notes as of June 30, 2026 and March 31, 2026, include the remaining principal outstanding of $3,313 million and $3,328 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $24 million and $27 million, respectively. Fair Value of Debt The estimated fair value of the Companys senior notes was $3.2 billion and $3.1 billion as of June 30, 2026 and March 31, 2026, respectively, compared with carrying value of $3.3 billion and $3.3 billion as of J …

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The following table presents DXCs revenues disaggregated by geography, based on the location of incorporation of the DXC entity providing the related goods or services: Three Months Ended (in millions) June 30, 2026 June 30, 2025 United States $ 742 $ 828 United Kingdom 401 480 Other Europe 1,039 1,038 Australia 288 259 Other International 529 554 Total Revenues $ 2,999 $ 3,159 …

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"Stock Incentive Plans Restricted Stock Units and Performance-Based Restricted Stock Units Restricted stock units (""RSUs"") represent the right to receive one share of DXC common stock upon a future settlement date, subject to vesting and other terms and conditions of the award, plus any dividend equivalents accrued during the award period. The RSUs vest one-third ratably over a three-year period. In general, if the employees status as a full-time employee is terminated prior to the vesting of the RSU grant in full, then the RSU grant is automatically canceled on the termination date and any unvested shares and dividend equivalents are forfeited. The Company also grants performance-based restricted stock units (PSUs), which generally vest at the end of a three-year period. The number of PSUs that ultimately vest is dependent upon the Companys achievement of certain specified financial performance criteria over a three-year period. If the specified performance criteria are met, awards are settled for shares of DXC common stock and dividend equivalents shortly subsequent to the end of the performance period, subject to continued employment through the last day of the third fiscal year. DXC also issued PSU awards that are considered to have a market condition. Settlement of shares for these PSU awards will be made shortly subsequent to the end of the third fiscal year, subject to certain market conditions and continued employment through the last day of the third fiscal year. T …

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Income Taxes The Companys effective tax rate (ETR) was 47.7% and 73.1% for the three months ended June 30, 2026, and June 30, 2025, respectively. For the three months ended June 30, 2026, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, and a reduction in a deferred tax asset for stock based compensation. For the three months ended June 30, 2025, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, the tax benefit of a worthless stock deduction under section 165(g) of the Internal Revenue Code related to DXCs investment in a wholly owned subsidiary, and a reduction in a deferred tax asset for stock based compensation. As of June 30, 2026, the Company had undistributed earnings from foreign subsidiaries that were not indefinitely reinvested and had a deferred tax liability of $20 million for the estimated taxes associated with the repatriation of these earnings. The Company also had undistributed earnings and other outside basis differences in foreign subsidiaries that were indefinitely reinvested for which no taxes have been provided and the quantification of the deferred tax liability, if any, was not practicable. If future events, including material changes in estimates of cash, working capital and long-term investment requirements, necessitate that these earnings be distributed, an additional provision for taxes may apply, which could materially affect our future effective tax rate. In connection …

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Leases The Company has operating and finance leases for data centers, corporate offices, and certain equipment. Its leases have remaining lease terms of one to ten years, some of which include options to extend the leases for up to ten years, and some of which include options to terminate the leases within one to three years. Operating Leases The components of operating lease expense were as follows: Three Months Ended (in millions) June 30, 2026 June 30, 2025 Operating lease cost $ 72 $ 76 Short-term lease cost 3 5 Variable lease cost 14 15 Sublease income (3) (3) Total operating costs $ 86 $ 93 Cash payments made for variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and as such, are excluded from the supplemental cash flow information below. Three Months Ended (in millions) June 30, 2026 June 30, 2025 Cash paid for amounts included in the measurement of operating lease liabilities operating cash flows $ 72 $ 76 ROU assets obtained in exchange for operating lease liabilities (1) $ 47 $ 142 (1) Net of $150 million and $214 million in lease modifications and terminations for the three months ended June 30, 2026 and June 30, 2025, respectively. See Note 15 Cash Flows for further information on non-cash activities affecting cash flows. The following table presents operating lease balances: As of (in millions) Balance Sheet Line Item June 30, 2026 March 31, 2026 ROU operating lease assets Operating right-of-use assets, …

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"Recent Accounting Pronouncements The following Accounting Standards Updates (""ASU"") issued by the Financial Accounting Standards Board have not yet been adopted by DXC: Date Issued and ASU DXC Effective Date Description Impact November 2024 ASU 2024-03, Disaggregation of Income Statement Expenses Fiscal 2028 The update requires disclosure, in the notes to financial statements, of specified quantitative information about certain costs and expenses presented in the income statement and certain qualitative information about costs that are not disaggregated. Early adoption of this update is permitted. The Company is in the process of assessing the impacts and method of adoption. This ASU will impact the Companys financial statement disclosures, but not its consolidated financial statements. ASU 2025-06 Targeted Improvements to the Accounting for Internal-Use Software Fiscal 2029 The update amends the guidance for capitalizing internal-use software so that it is neutral to different software development methods, primarily by removing the previous development stage model to more closely align the capitalization of internal use software to that of software to be sold or marketed externally. Early adoption of this update is permitted. The Company is in the process of assessing the impact of the ASU on our consolidated financial statements as well as its method of adoption. Other recently issued ASUs that have not yet been adopted are not expected to have a material effect on DXC's …

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Pension and Other Benefit Plans Defined Benefit Plans The components of net periodic pension income were: Three Months Ended (in millions) June 30, 2026 June 30, 2025 Service cost $ 12 $ 13 Interest cost 81 75 Expected return on assets (125) (117) Amortization of prior service credit (1) (1) Net periodic pension income $ (33) $ (30) The service cost component of net periodic pension income is presented in costs of services, and selling, general and administrative and the other components of net periodic pension income are presented in Other income, net.

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Restructuring Costs The composition of restructuring liabilities by financial statement line items is as follows: As of (in millions) June 30, 2026 March 31, 2026 Accrued expenses and other current liabilities $ 20 $ 20 Other long-term liabilities 3 3 Total $ 23 $ 23 Summary of Restructuring Plans Fiscal 2027 Plan During fiscal 2027, management approved global cost savings initiatives designed to better align the Companys workforce, facility and data center requirements (the Fiscal 2027 Plan ) . Restructuring Liability Reconciliations by Plan Restructuring Liability as of March 31, 2026 Costs Expensed, Net of Reversals Costs Not Affecting Restructuring Liability (1) Cash Paid Restructuring Liability as of June 30, 2026 Fiscal 2027 Plan Workforce Reductions $ $ 16 $ $ (7) $ 9 Facilities Costs 1 (1) 17 (1) (7) 9 Fiscal 2026 Plan Workforce Reductions $ 12 $ $ $ (7) $ 5 Facilities Costs 12 (7) 5 Other Prior Year and Acquired Plans Workforce Reductions $ 10 $ 2 $ $ (3) $ 9 Facilities Costs 1 7 (8) 11 9 (11) 9 Total $ 23 $ 26 $ (1) $ (25) $ 23 (1) Restructuring costs associated with right-of-use assets. Included in restructuring costs for the first quarter of fiscal 2027 is $1 million related to amortization of the right-of-use asset and interest expense for leased facilities that have been vacated but are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases. …

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Revenue Revenue Recognition The following table presents DXCs revenues disaggregated by geography, based on the location of incorporation of the DXC entity providing the related goods or services: Three Months Ended (in millions) June 30, 2026 June 30, 2025 United States $ 742 $ 828 United Kingdom 401 480 Other Europe 1,039 1,038 Australia 288 259 Other International 529 554 Total Revenues $ 2,999 $ 3,159 The revenue by geography pertains to both of the Companys reportable segments. Refer to Note 16 Segment Information for the Companys segment disclosures. Remaining Performance Obligations As of June 30, 2026, approximately $16.3 billion of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 33% of these remaining performance obligations in fiscal 2027, with the remainder of the balance recognized thereafter. Contract Balances The following table provides information about the balances of the Companys trade receivables, contract assets and contract liabilities: As of (in millions) Balance Sheet Line Item June 30, 2026 March 31, 2026 Trade receivables, net Receivables and contract assets, net of allowance for doubtful accounts $ 1,929 $ 1,940 Contract assets Receivables and contract assets, net of allowance for doubtful accounts $ 401 $ 379 Contract liabilities Deferred revenue and advance contract payments and Non-current deferred revenue $ 1,274 $ 1,307 Change in contract liabilities were as follows: Th …

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"Segment Information DXC has a matrix form of organization and is managed in several different and overlapping groupings including services, industries and geographic regions. As a result, and in accordance with accounting standards, operating segments are organized by the type of services provided. Our Chief Executive Officer (""CEO"") and Chief Financial Officer (""CFO"") serve as our Chief Operating Decision Makers (""CODM"") and are responsible for obtaining, reviewing, and managing the Companys financial performance based on these segments. The Company reports its financial results under a segment structure designed to reflect the Companys operational structure and the delivery of end-to-end IT services. The structure includes three reportable segments that align with how management assesses performance of the business and allocates resources: CES, GIS, and Insurance, as previously described above in Note 1 - Summary of Significant Accounting Policies. In connection with our segment reporting change, we have recast previously reported amounts across all reportable segments to conform to current segment presentation. The Company's CODM uses segment profit to measure operational strength and performance, assist in evaluation of underlying trends, and allocate resources through periodic budget and forecasting processes. Segment profit is defined as segment revenues less costs of services, selling, general and administrative, depreciation and amortization, and other segment …

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Stockholders Equity Share Repurchase Program During the first quarter of fiscal 2027 and fiscal 2026, there were 6,704,651 and 3,275,268 shares repurchased under our Share Repurchase Program, respectively. Fiscal 2027 Fiscal 2026 Fiscal Period Number of Shares Repurchased Average Price Per Share Amount (in millions) Number of Shares Repurchased Average Price Per Share Amount (in millions) 1st Quarter Open market purchases 6,704,651 $ 10.42 $ 70 3,275,268 $ 15.27 $ 50 Total 6,704,651 $ 10.42 $ 70 3,275,268 $ 15.27 $ 50 Accumulated Other Comprehensive Loss The following table shows the changes in accumulated other comprehensive loss, net of taxes: (in millions) Foreign Currency Translation Adjustments Cash Flow Hedges Pension and Other Post-retirement Benefit Plans Accumulated Other Comprehensive Loss Balance at March 31, 2026 $ (1,060) $ (19) $ 189 $ (890) Other comprehensive income before reclassifications 46 (1) 45 Amounts reclassified from accumulated other comprehensive loss 11 (1) 10 Balance at June 30, 2026 $ (1,014) $ (9) $ 188 $ (835) (in millions) Foreign Currency Translation Adjustments Cash Flow Hedges Pension and Other Post-retirement Benefit Plans Accumulated Other Comprehensive Loss Balance at March 31, 2025 $ (948) $ (7) $ 193 $ (762) Other comprehensive loss before reclassifications (32) (10) (42) Amounts reclassified from accumulated other comprehensive loss 3 3 Balance at June 30, 2025 $ (980) $ (14) $ 193 $ (801) …

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