DXC Technology posts $245m EBIT in first quarter since merger

The newly formed IT services giant reported $245 million in earnings before interest and tax during its first quarter as DXC Technology.

DXC Technology has reported its first quarter earnings for fiscal 2018, posting earnings before interest and tax (EBIT) of $245 million and $173 million in net income on revenue of $5.9 billion.

Global Business Services profit was $282 million on revenue of $2.267 billion, Global Infrastructure Services profit was $290 million on revenue of $2.969 billion, while the company's United States Public Sector segment brought in $77 million in profit off the back of $677 million in revenue.

Overall, income before tax was $185 million in the first quarter, after outlaying $190 million in restructuring costs, $124 million in transaction and integration-related costs, and $120 million from the amortisation of acquired intangibles, the company said in its report.

The results are the first since the formation of DXC Technology in April, which was the result of the merger of Computer Sciences Corp (CSC) and the Enterprise Services arm of Hewlett Packard Enterprise (HPE).

At the closure of the deal, the new $26 billion IT services giant boasted nearly 6,000 clients in more than 70 countries, with the combined companies claiming only a 15 percent overlap in accounts.

"In the first quarter, DXC Technology delivered on the revenue, profit, and cash flow roadmap that we laid out at our Investor Day," DXC Technology chairman, president, and CEO Mike Lawrie said in a statement on Tuesday.

"We achieved several key merger integration milestones and are executing on our synergy plan. We have implemented the first phase of the plan and are on track to meet our targets of $1 billion of year-one cost savings in fiscal 2018 as well as $1.5 billion of run-rate cost savings exiting the year.

"We continue to lead our clients on their digital transformation journeys, leveraging efficiency gains in traditional IT to reinvest in digital solutions, including our own."

DXC Technology Australia and New Zealand managing director Seelan Nayagam said the market took the company's first quarter results positively, noting DXC's share price rose by $3 at the close of Tuesday.

"I'm guessing they were happy," he said. "The results globally and locally were good, but at the same time, the number of critical go-lives that happened with all of this stuff going on."

During the quarter, Nayagam said the local arm of the global IT giant completed the upgrade of the Australian government's Budget system, which he said despite taking quite a long time, showed him the local teams' resilience to the end-client amid an organisational restructure.

Nayagam said the ANZ business grew roughly 3 percent in the first quarter over the same period last year, but noted there were different performances displayed across the many arms of the local business.

He touted the overall business as doing well, with the consulting business in the local market boasting over 1,100 individual consultants.

During the quarter, DXC Technology announced the acquisition of Microsoft Dynamics 365 integrator Tribridge and its affiliate company, Concerto Cloud Services.

Under the acquisition agreement Tribridge was rebranded as Tribridge, a DXC Technology Company, while Concerto Cloud Services, which provides advisory services and fully-managed cloud solutions, is now DXC Concerto.

"The combination of Tribridge with DXC Eclipse significantly strengthens DXC's role as a leading Microsoft Dynamics 365 systems integrator, greatly enhancing our ability to address client needs," Lawrie said last month.

For the 2018 fiscal year, DXC Technology is expecting to report $24-$24.5 billion in revenue.