Kenneth P. Sharp
Executive Vice President and Chief Financial Officer at DXC Technology
Thank you, Mike. Turning to our financial performance on slide 12. For the quarter, DXC exceeded the top end of our revenue, margin and earnings guidance, and continued to deliver a strong book-to-bill. GAAP revenue was $4.14 billion, $10 million higher than the top end of our guidance range. Adjusted EBIT margin was 8% in the quarter, an improvement of 380 basis points as compared to the prior quarter. In Q1, bookings were $4.6 billion for a book-to-bill of 1.12, the fifth straight quarter of a book-to-bill greater than one.
Moving on to slide 13. Our Q1 non-GAAP earnings per share was $0.84 or $0.08 higher than the top end of our guidance, benefiting $0.05 from a lower tax rate. Restructuring and TSI expenses were $76 million, down 58% from prior year. Free cash flow was a use of cash of $304 million as compared to a use of cash of $106 million in the prior year. We expect free cash flow to improve significantly as the year progresses. As the next slide shows, our Q1 FY 2022 performance continues our trajectory as we deliver on our transformation journey.
Starting with organic growth progression, we went from approximately 10% decline in the first three quarters of FY 2021 to down 6.5% in the fourth quarter and now down to a decline of 3.7%. This is a 40% improvement from the prior quarter. Let me highlight our organic revenue growth calculation, and our prior year earnings releases was structured to provide the year-over-year deconstruction of revenue changes into FX, acquisitions, dispositions and organic compared to prior period GAAP revenue. Our previous organic revenue growth calculation was not performed in this manner.
As a result, we have revised the organic growth rates for the prior year periods in our earnings deck and have further supplemented our organic calculation to include all the information to support the calculation, providing you complete transparency. This change does not yield a meaningful difference to our historically reported organic revenue growth rates, trajectory or guidance. Adjusted EBIT margin expanded 380 basis points. Excluding the impact of dispositions, margin expanded almost 600 basis points. We continue to market with five consecutive quarters of a book-to-bill greater than 1, and lastly, non-GAAP earnings per share quadrupled. Now moving to our GBS business, composed of analytics and engineering, applications and business process services.
Revenue was $1.9 billion in the quarter. Organic revenue growth was positive 2% as compared to prior year. In terms of quarterly progression, organic revenues declined about 6% to 7% in the first three quarters of FY 2021, declined 3.4% in the fourth quarter and turned to positive 2% this quarter. GBS segment profit was $272 million with a 14.4% profit rate, up 450 basis points from the prior year. GBS bookings for the quarter were $2.4 billion for a book-to-bill of 1.29. As you have seen for a number of quarters, the demand for our GBS offerings, the top half of our technology stack have been quite robust and now yielding positive organic revenue growth. Turning to our GIS segment, consisting of IT outsourcing, cloud and security, and modern workplace. Revenue was $2.3 billion, down 9.1% year-over-year on an organic basis.
We are seeing the rate of decline moderate this quarter despite the headwinds from our modern workplace business. GIS segment profit was $131 million with a profit margin of 5.8%, a 480 basis point margin improvement over the prior year quarter. GIS bookings were $2.2 billion for a book-to-bill of 0.97 compared to 0.77 in the prior year. It is safe to say revenues continue to stabilize and demonstrate that with improved customer intimacy and delivery, our revenue is not running away, allowing us to build our growth foundation. Now I will break down our segment results, GBS and GIS, into the layers of our enterprise technology stack, starting with GBS. Analytics and engineering revenues were $482 million, up 12.9% as compared to prior year. We continue to see high demand for our offerings with a book-to-bill of 1.32 in the quarter.
Applications also continued to demonstrate solid progress with revenue of $1.246 billion, growing organically almost 1%. Applications also continues its strong book-to-bill at 1.32. Business process services revenues were $118 million, down 13% compared to the prior year quarter with a book-to-bill of 1.13. Cloud and security revenue was $549 million, up 4.9% as compared to the prior year. The cloud business is benefiting from increased demand associated with our hybrid cloud offerings. Book-to-bill was 0.85 the quarter. IT outsourcing revenue was $1.13 billion, down 9% as compared to prior year. To put this decline in perspective, last year, this business declined almost 20% year-over-year. We expect this momentum to continue and organic declines to further abate as the year progresses.
Modern workplace revenues were $577 million, down 19.7% as compared to prior year. Book-to-bill was 1.0 in the quarter. As you may recall, modern workplace was part of our strategic alternatives and was not part of our transformation journey until recently. As a result, we previously disclosed that the performance would be uneven as we invest in the business, enhancing our offerings and innovating the end-user experience. As our transformation journey takes hold, we expect modern workplace performance to improve similar to the trend we have seen with our ITO business. One of our key initiatives to drive cash flow and improve earnings power is to wind down restructuring in TSI costs. We expect to reduce this from an average of $900 million per year over the last four years to $550 million in FY 2022 and about $100 million in FY 2024.
On slide 19, we detail our efforts to strengthen our balance sheet. We are proud of what we achieved on this front, reducing our debt by $7 billion, while improving our net debt leverage ratio to 0.9 times. Further, we have reached our targeted debt level of $5 billion with relatively low maturities through FY 2024. From our improved balance sheet, let's move to cash flow for the quarter. First quarter cash flow from operations totaled an outflow of $29 million. Free cash flow for the quarter was negative $304 million. As you likely realize, with Mike's leadership, we will continue to make decisions to better position the company for the longer term, creating a sustainable business. Certain of these decisions impacted cash flow this quarter.
As our guidance anticipated, we plan to take certain actions that impacted the Q1 cash flow. We remain on track to deliver our full year free cash flow guidance of $500 million. Let's now turn to our financial priorities on slide 21. We are working to build a stronger financial foundation and use that base to drive the company forward in a disciplined and rigorous fashion, unleashing DXC's true earnings power. Our second priority is to have a strong balance sheet. We achieved our targeted debt level. We are encouraged by our almost 50% year-over-year interest expense reduction. We continue to focus on reducing interest expense and are evaluating refinancing options given the advantageous interest rate environment. Third, we will focus on improving cash flow. During the quarter, we paid $88 million to draw to conclusion a long-standing $3 billion take-or-pay contract for IT hardware. These types of contracts are not efficient, and we are reducing our exposure.
Additionally, we paid down $300 million of capital leases and asset financing in order to allow us to dispose of IP hardware purchased under the previously mentioned take-or-pay arrangement and realizing tax deduction once we dispose of the unutilized assets. Given our relatively low borrowing cost, it makes less sense to enter into capital leases as the borrowing costs are higher and creates other complexities. We continue to reduce capital lease and asset financing origination from approximately $1.1 billion in FY 2020 to $450 million in FY 2021 and believe that we will remain at that level or lower for FY 2022. As we continue to curtail capital lease origination, our average quarterly lease payment will reduce from about $230 million a quarter in FY 2021 to about $170 million near term. Our efforts to limit capital leases does create upward pressure on capital expenditures.
Though, on balance, we expect to reduce cash outflows for both capital leases and capital expenditures over time. Lastly, we terminated our German AR securitization program, negatively impacting cash flow by $114 million for the quarter. Going forward, this will result in interest savings, strengthen our balance sheet, but more importantly, it will bring us closer to our customers as cash collections is tied to their success. Fourth, we will reduce restructuring and TSI expense, improving our cash flow. Fifth, as we generate free cash flow, we will appropriately deploy capital to invest in our business and return capital to our shareholders, all the while continuing to maintain our investment-grade credit profile.
During the quarter, we executed $67 million of stock buybacks to offset dilution, taking advantage of what we believe was an attractive valuation in the market. I should note, we continue to make progress with our efforts to optimize our portfolio, unlocking value as we divest noncore assets, including both businesses and facilities. We expect to continue these efforts. Our results today include the benefit from the sale of assets, partially offset by other discrete items, and the headwind of 30 basis points of margin associated with the disposition of our health care provider software business.
Moving on to second quarter guidance on slide 22. Revenues between $4.08 billion and $4.13 billion. This translates into organic revenue declines of down 1% to down 3%. Adjusted EBIT margins of 8% to 8.4%. Non-GAAP diluted earnings per share in the range of $0.80 to $0.84. As we look forward to the rest of the year, I would note that we expect $175 million of tax payments in Q2 related to the gains on dispositions. We also updated our FY 2022 interest guidance to approximately $180 million, a $20 million improvement; and reduced our full year non-GAAP tax rate by 200 basis points to 26%. As noted on slides 23 and 24, we are reaffirming our FY 2022 and longer-term guidance. Lastly, we expect to see further improvement in the quarterly year-over-year organic revenue growth rates as we move through the year. With that, I will now turn the call back to Mike for his closing remarks.
