DXC Technology Company (DXC) — Q1 2024 Earnings Call Transcript

Thank you. Good afternoon, everybody. I'm pleased that you're joining us for the DXC Technology's first quarter fiscal year 2024 earnings call. Our speakers on the call today will be Mike Salvino, our Chairman, President, and CEO; and Rob Del Bene, our EVP and CFO. This call is being webcast at the DXC Investor Relations website, and the webcast includes the slides that will accompany the discussion today. Today's presentation includes certain 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 directly comparable GAAP measures. These reconciliations can be found in the tables included in today's earnings release and in the webcast slides. Certain comments we make on the call will be forward-looking. These statements are subject to known risks and uncertainties, which could cause actual results to differ materially from those expressed on the call. A discussion of the risks and uncertainties is included in our quarterly report on Form 10-Q and other SEC filings. I'd now like to remind our listeners that DXC Technology assumes no obligations to update the information presented on the call, except as required by law. And with that, I'd like to introduce DXC Technology's Chairman, President, and CEO, Mike Salvino. Mike?

Thanks, John, and I appreciate everyone joining the call today, and I hope you and your families are doing well. Today's agenda will begin with an update on our overall business performance. Next, I will update you on the performance of our GBS and GIS businesses. Rob will then discuss our financial results in detail, provide his perspective on DXC and his focus moving forward, and then discuss our updated guidance. And finally, I will provide some closing remarks before opening the call up for questions. Before I get into the results of Q1, I want to give you some context. We are taking the right steps to shape DXC into a company that consistently delivers revenue growth and expanded margins, EPS, and free cash flow. We are doing this by focusing on our high-value growth business of GBS and fixing the historical challenges of our GIS business, along with changing the revenue mix so that GBS represents the majority of our revenue. As we began FY '24, we saw resiliency in our business because in FY '23, we delivered four quarters of revenue stability in a slowing IT market. Also, we thought customer demand for our work would stay at the buying levels we saw in late FY '23 because the work we do is essential to our customers' operations. Currently, we are seeing customer demand for hardware PCs and network devices, along with some project work, either stopped or delayed to the second half of the year at a higher rate than we anticipated. You will see that the resiliency in our GBS business held up. GBS performed as we had planned and delivered solid growth. In contrast, GIS did not show the resiliency that we had hoped. Although this is not great news, I would like to point out that a major piece of the revenue shortfall was resale revenue, which is low margin, and we have conscientiously reduced over the last few years to limit our dependency on this type of revenue. We have made measurable improvements this quarter to proactively change our organization to be more competitive in this market environment. We have changed how DXC engages with the market by moving to an offering-led operating model. The offering-led operating model moves us from a regional model where leaders were generalists concerning offerings to a global operating model where the leaders are experts and focused 100% on growing revenue and margin for their offerings. This model increases our customer coverage and assures we bring the right skills to our customers to deliver and win new work. As I mentioned last quarter, our analytics and engineering and insurance offerings were early adopters of this model, and they are consistently our highest revenue growth offerings. Our intent is to get this model to work for the other four offerings. Now let me discuss our Q1 results and the performance of our GBS and GIS businesses. Organic revenue growth was minus 3.6%, which is about $75 million lower than the midpoint of our guidance range. Our EBIT margin was 6.5%, the lower-than-expected margin was a result of us needing to fine-tune our new operating model to better manage supply and demand. Our free cash flow was better than expected due to our strong execution around our working capital management. Non-GAAP EPS was $0.63. And finally, after having a strong second half book-to-bill for FY '23, we delivered a book-to-bill of 0.89 as we continue to replenish our pipeline. Our trailing 12-month book-to-bill is now 1.03. Now turning to our GBS business. The GBS business grew 3.3% in Q1. We look at GBS as a flywheel for DXC that provides sustainable growth at double-digit margins. It has now grown nine consecutive quarters. Also, GBS is 49.4% of our overall revenue. It is still early days, but we've seen the ability to sell new GBS work to longstanding GIS customers, and scaling this will provide a source of upside revenue to our GBS business. Our GBS offerings are all uniquely positioned in their respective markets. Analytics and engineering is well positioned due to our engineering talent. Our skilled team does not just write code; they bring the code together in engineering solutions to make things work better. A great example are the solutions we've developed for the dashboards in the cars of BMW and Mercedes. Our insurance offering is the world's largest provider of insurance software and BPS solutions, working with 18 of the top 20 global insurers. Our unique position is we run the platform for Lloyd's of London. This platform brings together brokers and writers to create insurance policies for the European market. We are currently using our custom application team to modernize this important platform, which we believe will be another source of revenue growth. Along with our custom application skills, we have unique capabilities with enterprise application providers like ServiceNow. We run one of the largest instances of the ServiceNow product, and we have used our custom application team to embed ServiceNow into Platform X, which is our AI tool that monitors and fixes the IT estates of many of our GIS customers. Moving now to our GIS business. As I mentioned, we did not make the progress we had hoped in GIS, and it declined 9.9%. Let me give you a quick performance recap of our three GIS offerings. Our security offering grew. This offering provides security strategies and valuable resources to both proactively and reactively help our customers protect themselves against security threats. Cloud ITO experienced the largest decline. Chris Drumgoole, our former COO, and I are working closely together to fix our dependency on underutilized data centers we own, develop a solid pipeline and path to move work to the cloud, and use our unique position in the ITO market to take market share from our competitors and improve economics. An example of us taking market share at better economics was our recently announced AT&T deal, where we will be providing securely managed server, storage, enterprise backup, and maintenance services to AT&T. After three quarters of consistent revenue in FY '23, Modern Workplace declined in Q1. We expected that Cloud ITO and Modern Workplace would perform better in FY '24, based on the following three actions we have taken to fix them. First, we managed the disruption from terminated contracts that happened two to three years ago. This work takes multiple years to fall off. And for the most part, it will be out of our numbers after this year. Second, we bolstered our customer delivery and offshore delivery capability to secure the revenue we maintain and deliver it at better margins. Third, to win more work, we improved our market reputation. For example, Gartner now ranks us as a leader in Modern Workplace. We invested in tools to be more competitive like Platform X and UPtime. We are bringing in new work at better economics, and we have positioned ourselves to become the partner of choice for cloud providers as they move workloads that are essential to customer operations to the cloud. All that being said, it will take a little bit more time to get these two offerings to perform as we expected. Before turning the call over to Rob, I want to comment on our AI capability that we have built into both our GBS and GIS businesses because we believe we are in a position to lead the market in this area. As many of you know, AI has been a passion for me. I brought this passion to DXC, and we have made focused investments in AI every year that I've been CEO. We have over 10,000 women and men that are trained in AI, and we have AI capability in now four out of our six offerings. In GBS, we have embedded our AI capability into both insurance and analytics and the engineering offerings. In insurance, DXC Assure uses AI to better serve customers by providing them insights and answers about the most complex policy questions. In analytics and engineering, robotic drive uses AI to enable cars to be self-driving, ranging from driving technology to assist drivers to full driving automation. In GIS, we have developed AI capability in both our Cloud ITO and Modern Workplace offerings. In Cloud ITO, our Platform X tool uses AI to proactively monitor IT estates to detect and resolve issues with one of our 10,000 bots to avoid costly business disruptions. In Modern Workplace, AI is built into our UPtime platform, which we leverage across 7 million devices. We use AI every time an employee reaches out for assistance and can resolve up to 80% of those interactions without human intervention, along with using AI to predict issues with PCs and reduce the carbon footprint for our customers. The bottom line is that all of these solutions are at scale, are providing enhanced customer delivery capability, and are driving new revenue for us. Now I want to turn the call over to Rob, who has been a pleasure to work with. And I have complete trust that he will transform our finance organization to deliver the financial analytics to make our results more predictable and repeatable. Rob, over to you.

Mike, thanks for the introduction, and thank you for the opportunity to be part of the DXC team. In my brief time here, I've been impressed by the intense focus on delivery excellence, culture and customers. I can clearly see the strategic and long-term value of the business. I'll now provide you with a quick rundown of our first quarter performance, covering the important highlights of where we executed well and where we fell short of our expectations. Organic revenue growth for the quarter was down 3.6% with consistent year-to-year growth of the GBS segment being offset by a greater than expected decline in the GIS segment. In the quarter, we were impacted by a slowdown in customer expenditures. This is mainly the resale of IT equipment, such as PCs, networking gear and servers, and project work. These are projects that are typically below $5 million in size and are sold into our existing account base. The GIS segment experienced the bulk of the slowdown. The declines in resale and projects are consistent with what is taking place in the industry with the economic environment impacting spending. This, we believe, accounted for the bulk of our revenue underperformance versus expectation with half of the miss in resale and half in project revenues. In the first quarter, the revenue shortfall impacted profitability, particularly since the revenue weakness was not evident until late in the quarter. While the resale revenue provides little to no bottom line profit, it does provide modest gross profit and absorb overhead. So, in the short term, the underrun in resale revenue impacts bottom line profit. As communicated by Mike and the team in prior calls, the strategy over the longer term is to reduce resale revenue and focus the team on driving services revenues. The project-based services revenue shortfall has a greater impact on profitability as the resources to deliver the higher revenue levels are already on board, reducing this excess capacity will be a focus going forward. Expenses were well managed in the quarter with spending in line with our expectations. Free cash flow for the quarter was negative $75 million, ahead of our expectations due to continued focus on working capital management including strong collections performance. As a reminder, the first quarter is seasonally our lightest free cash flow quarter as we made previously planned annual vendor payments for software, maintenance and paid annual bonuses. Now moving to our key financial metrics. Our first quarter gross margin of 21.1% was up 10 basis points year-over-year, but below our expectation due to the revenue shortfall. SG&A spending was down 6.5% year-over-year, flat as a percentage of sales. Depreciation and amortization was down 10.5%, lower by 30 basis points. Other income decreased $40 million year-over-year, lower by 90 basis points, driven by two factors: a $30 million decline in pension income and a lower level of gains on sales of assets, which reduced adjusted EBIT by $17 million year-over-year. Taking this all together, adjusted EBIT margin was down by 50 basis points year-over-year, excluding pension income and asset sales, the EBIT margin is up 60 basis points year-over-year. Non-GAAP EPS was down $0.12 compared to the prior year. The EPS reduction was driven mainly by the lower pension income and a lower level of asset sales in the current year. The higher tax rate compared to the prior year reduced non-GAAP EPS by $0.08, but this was fully offset by the lower share count resulting from our ongoing share repurchase program. Now turning to our segment results. Our business mix continues to trend toward our higher margin GBS segment. As a percent of total revenue, GBS is now 49.4%, up 60 basis points sequentially. We anticipate that this trend will continue and that in a matter of quarters, the GBS segment will be the majority of our revenue. GBS grew 3.3% organically and posted a ninth consecutive quarter of organic growth, which reflects the deep industry-based customer value delivered by the GBS team. The GBS profit margin declined 60 basis points year-over-year, reflecting the capacity required to continue to drive future growth and the impact of lower pension income. Turning now to GIS. Organic revenue declined 9.9%, driven by declines in cloud infrastructure and ITO and moderating declines in Modern Workplace. GIS profit margin decreased 130 basis points year-over-year, driven by the reductions in pension income, reduced gains on asset sales, and revenue impact of clients delaying project-based services. Now let's take a closer look at our offerings. Analytics and engineering revenue performance was up 8.8%, which is slightly ahead of the fourth quarter growth rate. This is very solid performance in the current demand environment. The book-to-bill was 1.03x and trailing 12-month number is a strong 1.14x. Applications revenue declined 70 basis points, similar to the fourth quarter decline. The trailing 12-month book-to-bill is 1.06x. The application offering team has made good progress in expanding our capabilities and success in enterprise applications such as SAP and ServiceNow. Insurance software and BPS continued to grow with revenue up 5.1%. The insurance SaaS component of the portfolio grew 8.5%. The insurance software and deep insurance industry BPS skills of our team are resonating in the market. Security had strong performance up 6.8% year-over-year. Cloud infrastructure and IT outsourcing declined 12.7%. This business was significantly impacted by a slowdown in both resale revenue and project-based services revenue. The resale reduction accounted for almost five points of the revenue decline, while project-based services revenue accounted for 2.5 points. Also impacting revenue is the wind down of several contracts that terminated some time ago. The headwinds from these contracts will continue throughout the year and combined with the reduced resale revenue will result in ITO in the negative high single-digit range for the remainder of the year. Now turning to Modern Workplace. Based on our performance last fiscal year, we anticipated moderating declines going forward. However, like cloud infrastructure and ITO, we experienced a slowdown in project-based services that impacted revenue. We have also experienced several clients moving from a virtual model and taking work back in-house, further impacting revenue. These two factors drove the 5% decline in Q1, and we are anticipating continued year-on-year declines for the remainder of the year. Turning to our financial foundation, which the team has consistently managed. As anticipated three months ago, debt levels increased modestly in the first quarter to $4.6 billion. We continue to tightly manage restructuring and TSI expenses, which were $21 million in the first quarter. Operating lease payments and the related expenses were $90 million, down $16 million year-over-year. We continue to manage new lease commitments in an effort to reduce our real estate footprint. Capital expenditures ticked up to $202 million in the first quarter, impacted by planned annual software renewals. Going forward, we expect to continue the progress that has been made lowering our capital requirements and drive free cash flow. Financing lease originations were reduced by $14 million year-over-year in the first quarter, another indication that we are lowering future commitments. As a percentage of revenue, capital expenditures and lease originations increased to 7.3% of revenues, with the increase due to the annual software renewal. Turning to capital deployment. We made continued progress on our latest $1 billion share repurchase program during the quarter. It is important to note that in aggregate, our share repurchase program will be self-funded by our full-year 2024 free cash flow of $800 million in additional asset sales. As you'll remember from our last earnings call, we completed our previous $1 billion share repurchase program in April. We continue to believe DXC presents an attractive valuation. Assuming the current share price, the approximately $800 million remaining from the $1 billion program would equate to removing approximately 15% of the current outstanding shares. And please remember, this is on top of the 21% of shares we've already removed from the share base. As a result of the areas of weakness that I discussed earlier, we are lowering our guidance. We expect second quarter organic revenue to decline minus 4.5% to minus 5.5%, reflecting the continued difficult economic environment impacting resale and projects most significantly in ITO and Modern Workplace. Adjusted EBIT margin of 6.5% to 7% with the revenue shortfalls continuing to impact profitability. We expect to improve adjusted EBIT margins in the second half of the year as our cost optimization efforts take hold. Non-GAAP diluted EPS of $0.65 to $0.70. Turning to our full-year guidance. We are reducing our organic revenue growth to negative 3% to negative 4%. Adjusted EBIT margin is now 7% to 7.5%, impacted by the lower revenue and partially offset by cost reductions in the second half of the year. We're continuing the successful initiatives from fiscal year 2023, focusing on staff and contractor optimization, reducing our real estate footprint, and third-party spending. Non-GAAP diluted earnings per share of $3.15 to $3.40. Our non-GAAP EPS guidance reflects a tax rate of 29% and our expectations for the timing of our share repurchase initiative. Our non-GAAP EPS guidance does not reflect potential losses on asset sales that we are evaluating. While potential sales drive cash, they may have an associated noncash book loss. And lastly, free cash flow of $800 million, down from our previous guidance of $900 million. Now before I turn the call back over to Mike, allow me to comment on my immediate priority, which is to produce the metrics and analytics, meaning the financial headlights to drive predictable and repeatable results. I will align the financial teams to support the offering-led model and drive enhancements to our processes and systems. The offering-led model, fully supported, will give us transparency of financial performance and financial returns of the offerings enabling focused operational management, targeted investments, portfolio management, and help us confirm our strategy. I expect us to make steady progress with this finance transformation. And with that, let me turn the call back over to Mike for his final thoughts.

Thank you, Rob, and let me leave you with a few key takeaways. GBS is our high-quality growth business that we are proud of and is performing in a tough project-based environment. We are actioning the Cloud ITO and Modern Workplace offerings of GIS, which have been impacted by the slowing IT market and are keeping us from making the progress we desire. We are still confident that we will stabilize the performance of these two offerings. We have made improvements in both leadership and our operating model to grow our company and to be even more competitive. We are managing areas that we can control very well, like free cash flow and restructuring in TSI, and the financial analytics that Rob and his team are focused on building will allow us to deliver more predictable and repeatable results. We can see the value we are creating in DXC. And because of this, we will continue to deliver on our $1 billion buyback while maintaining our investment-grade credit profile. While the execution of any transformation journey is never a straight line, we feel strongly that we are making the right long-term decisions to position DXC for success. With that, operator, please open the call up for questions.

Hi, thanks. This is Zack Ajzenman on for Bryan. On the quarter, at a higher level, as you think about how demand played out, just kind of looking to dig further into what changed so quickly here in two and a half months just to cause the magnitude of this guidance cut? And also, as we think about the guidance framework, has anything changed there, given the lower visibility that is seemingly an issue here in the current environment?

Thank you for your question, Zack. When we began fiscal year '24, we noted the resilience in our business, particularly after four consecutive quarters of stable revenue. Although we observed a slowing environment in the latter half of last year, our revenue remained steady. It's also important to recognize that our services are vital for our customers, which led to continued spending on hardware, PCs, and maintenance projects throughout fiscal year '23. As we guided for fiscal year '24, we anticipated that revenue would stay stable, allowing us to navigate a slowing IT environment based on our revenue data. Looking at the first quarter and the entire year, our Global Business Services (GBS) division performed as expected, and we are pleased with the results. Our various offerings also held up well. The challenges we are discussing are primarily limited to our Cloud IT Outsourcing (ITO) and Modern Workplace segments. We've noticed that these numbers haven't changed significantly. Initially, we expected them to lean towards mid-negative single digits, but they are now anticipated to remain in the high-negative single digits for two main reasons. First, concerning resale revenue, which comes from selling hardware and PCs, we've consistently indicated that this area offers low margins. Our strategy aims to reduce this revenue while increasing service revenue, and this shift has moved quicker than expected. In fact, half of the revenue shortfall this quarter, which we estimate at around $75 million, came from resale. We've decided not to pursue that low-margin revenue aggressively, aligning with our sales philosophy to focus on higher-margin deals. The second factor is related to services project work, which includes essential maintenance for IT estates. We've observed delays in these projects, which accounted for the other half of our shortfall in the first quarter. We believe clients will resume their spending in the latter half of this year. Additionally, we have adjusted our operating model to enhance customer engagement, which we expect will help us recover some of this lost revenue over time. I hope this answers your questions, Zack.

It does. And just a follow-up on free cash flow and related to margins. I guess, given the cut on revenue and earnings, I guess, we're surprised the free cash flow view was not reduced even further. So, maybe you can speak to the levels that are partly inflating free cash flow here? And maybe what you're doing to support expenses without cutting into the bone.

Thank you for the question, Zach. We anticipate maintaining the EBIT margin at that level for the remainder of the year. After reviewing our working capital strategies, we are confident in achieving the adjusted target of $800 million. We have implemented cost reduction initiatives that will support the EBIT margin, and we have operational measures in place to enhance working capital and reduce capital expenditures to reach the $800 million goal.

So, Zach, let me add to that, because you have seen that we've been focused and we'll continue to focus on our expenses. And we still think there's more room there. In addition to that, we think that our cost takeout initiatives will deliver at the same levels of FY '23. Remember, we generated 737. So, we're going to be right there. So, we think that's a good guide. So, thanks for that question.

Thanks.

Thank you for taking my question. I would like to inquire about the trends you are observing in the more cyclical aspects of your business, particularly regarding project-based work and resale activities. Have you noticed any improvements since the last quarter that might enhance your outlook as the year progresses? Specifically, you had mentioned earlier that you anticipate some project work to return in the latter half of the year, but you also indicated it may take time for the ITO and workplace businesses to fully recover. My question revolves around the cyclical demand challenges you are facing and whether your updated guidance presumes a significant improvement in project-based work in the second half of the year. Thank you.

Okay. So, Rod, if you take them in both pieces, first of all, the resale revenue, we didn't expect that. So, if you didn't expect that to get better throughout the year. So, you will see that in the guide, the majority of the adjustment is around that resale revenue. Because, like I said, we've typically seen that it's been around 25% down. We seem to have been able to play through that in Q3, Q4, but we definitely didn't do it in Q1. So, we carry that all the way through. On the project stuff, the project work doesn't always just impact ITO, Cloud ITO, and Modern Workplace. So, Cloud ITO and Modern Workplace, we're going to go hard after that project work, but there's project work in the other offerings that are performing well. And we expect that we can increase that project work in the back half of the year. So that's basically the guide. So you should take what we're doing in Q1 and push it all the way through the year, and then for resale and for the project-based services stuff, you should see an uptick in the back half of the year.

Okay. And I want to ask another question that I'm seeing kind of on the heels of this update that you've given. You definitely saw other big players in the industry have to lower their guidance for the year because of cyclical challenges. Accenture and Infosys both had big guidance reductions. You also, during that same quarter, had a CFO transition. So, I guess, it's worth asking if the CFO transition contributed at all to the shortfall in the expectations, and then perhaps if something was learned about ways to kind of stay in front of that to be able to track these things to recognize them ASAP and make adjustments. And I'm really asking that because I do think it was a challenging quarter on the macro, but I also want to get these investor questions in about whether the CFO transition had any impact and whether there were some lessons learned.

So, Rod, I would say it had zero impact. What I can tell you is that we changed the operating model in the quarter. We shifted from a regional model, which you are familiar with, to a global offering model. This change allows our leaders to sell any of the six offerings, and they typically gravitate towards the ones they know best. To drive this change effectively and to promote the movement of these offerings, adopting a global model was necessary. As we’ve discussed, analytics and engineering, along with insurance, have become our flagship offerings that have successfully adopted this new model; it is working. We can see these offerings driving growth in both revenue and margin. Our goal is to ensure that the other four offerings begin to operate in the same manner. Additionally, I anticipate that we will experience benefits from this in the latter half of the year as we continue to make adjustments. I view the current softness in project work as a challenge to the operating model, rather than anything else.

Got it.

Hi. Thank you. Mike, I wanted to play off something you said about asset sales maybe being part of what happens over the next couple of quarters. And to put it in context, if I think about what's going on, essentially half of your business, you haven't been able to turn it around. And in particular, workforce management is an area that you look to sell. It doesn't seem like you could get enough value for it, decided to turn around, but it's still really struggling. And your growth would be much improved without something like workforce management. So, I just wanted to revisit the broader theme. Is there a sense of less is more in some areas that you haven't been able to turn around despite having some opportunity to do so over the last year or so or more? Is there more that you could do on, say, getting rid of underperforming assets to try to help the financial condition of the broader DXC.

Thank you for your question, Keith. I want to emphasize that we are continuously evaluating all our offerings. Right now, we believe we can enhance sales of new GBS work among our long-standing GIS customers, and we are beginning to see improvement in that area. Eliminating an asset isn't always in the best interest of our customers, so we believe that DXC will benefit from keeping everything integrated. Regarding your point about our challenges in transitioning Cloud, ITO, and Modern Workplace over the past few years, I want to assure you that we have been making efforts to adapt the business. Two key aspects are worth mentioning: first, we are looking to sell certain data centers, and second, our successful delivery for customers has provided us with an entry point to engage with them, which cloud providers appreciate. Our aim is to become the preferred partner for cloud providers as they migrate critical workloads to the cloud. We are actively working towards this goal, and while it takes time to implement changes, we are not merely observing the situation. That addresses your question, Keith. Do you have another question?

I wanted to ask about the free cash flow to EBIT. I understand the previous answer about why free cash flow performance is better, particularly regarding some working capital adjustments. Are these adjustments impacting next year's potential free cash flow generation to support the 800 target, or is there a more significant degradation related to the EBIT line?

Keith, this is Rob. The answer to that is no. I mean, we think there are operational improvements that will benefit us over the long term, which will help us drive capital savings over time and get the receivables to what we think is the right sustainable future level. So, we are not trying to accelerate anything temporarily. We're more focused on just operational discipline and getting to the right levels, as I said, on a sustained basis.

All right. Thank you very much.

Thank you, Rob, and let me leave you with a few key takeaways. GBS is our high-quality growth business that we are proud of and is performing in a tough project-based environment. We are actioning the Cloud ITO and Modern Workplace offerings of GIS which have been impacted by the slowing IT market and are keeping us from making the progress we desire. We are still confident that we will stabilize the performance of these two offerings. We have made improvements in both leadership and our operating model to grow our company and to be even more competitive. We are managing areas that we can control very well, like free cash flow and restructuring in TSI, and the financial analytics that Rob and his team are focused on building will allow us to deliver more predictable and repeatable results. We can see the value we are creating in DXC. And because of this, we will continue to deliver on our $1 billion buyback while maintaining our investment-grade credit profile. While the execution of any transformation journey is never a straight line, we feel strongly that we are making the right long-term decisions to position DXC for success. With that, operator, please close the call.