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DXC Execs: Cloud Services Strength Gave Company a Q1 Boost

Strength in DXC Technology’s cloud services provided the company with a revenue boost during its first quarter (ended June 30), according to CEO Mike Lawrie.

Shares in the company were up more than 8% at $83.75 in early afternoon trading, after it reported total Q1 revenue grew to $5.9 billion from $1.9 billion a year ago and it swung to a $159 million profit (55 cents a share) from a $21 million loss (15 cents a share) a year ago.

Enterprise cloud applications were among the strongest-performing businesses in DXC’s Global Business Services division, while cloud services were among the strongest-performing businesses in its Global Infrastructure Services division, Lawrie said on an earnings call Aug. 8.

DXC’s total digital services revenue across all its business divisions grew 13.4% on a constant currency basis, he also said, noting that included cloud, enterprise cloud apps, analytics, security and consulting. Combined enterprise cloud apps and consulting revenue grew 6.3% in constant currency, while cloud revenue was up 26.2% in constant currency, he said.

The company “achieved several key merger integration milestones” in the first quarter, he said in the company’s earnings news release. It implemented the first phase of that “synergy” plan and was “on track to meet our targets” of $1 billion in year-one cost savings and a $1.5 billion run rate in cost savings exiting the current fiscal year, he said on the call.

DXC recently announced the acquisition of Tribridge, he pointed out on the call. Combined with Eclipse, which DXC bought last year, the Tribridge purchase makes DXC the largest independent integrator of Microsoft Dynamics globally, he said. Tribridge represented DXC’s first acquisition since it was created from the merger of Computer Sciences Corporation and the Enterprise Services business of Hewlett Packard Enterprise, he noted.

“Our combined capabilities allow us to offer clients complete end-to-end solutions that build on DXC’s strong partnership with Microsoft,” he said, adding: “We’re also simultaneously committed to making key strategic investments to grow our revenue in subsequent years post-integration.” As an example, he told analysts, DXC invested in Virtual Clarity, a provider of IT and service transformation that provided DXC with “exclusive access to more than 200 professionals with significant skills in digital cloud transformation.”

During the first quarter, DXC also extended its portfolio of offerings for Microsoft Azure with a hybrid cloud solution from DXC’s data centers based on the Azure stack, he also pointed out on the call. That offering was complemented by a comprehensive set of managed services and backed by a major expansion in DXC’s Azure training, he said.

DXC also expanded its alliance with Amazon Web Services in the first quarter to offer enterprise clients integrated solution offers, he pointed out. DXC is “training and certifying thousands of consultants and developers in these new solutions,” he said.