Q1 2022 Infosys Ltd Earnings Call
Ladies and gentlemen.
And both of them to the Infosys funny on future calls.
I never mind.
All lines may be in the listen only mode and that was the and opportunity for you to ask question and I'll start the presentation country.
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Okay.
Thanks, Bob and I can add it on and then complete and pick of any qualms can discuss 1 of the fact that you do on.
And he believes and Sandeep and then Mr Mason City and Bangalore.
And then you got to go and its quality and then it's based on anybody.
And Mr. Kevin that you have to listen and and Linda along with other members of senior management team and.
South deposits and got it and the performance of the company by segment I mean in the London debated and up the call for questions. Please.
And but anything that we say the type of thought I would take that if we did of a forward looking statement, which must be that in conjunction with any type of company.
And each of them that you mentioned might be but it is that the living and our filings with the FCC.
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And that I would now like the parts of dermatology.
Thanks Sandeep.
And good morning to everyone on the call.
Thank you for joining us today and just each of you and your families are safe and well.
I'm delighted to share with you that would be bad and landmark first quarter.
Robust year on year of growth of 16, 9%.
And sequential growth of 4.8% and constant currency sales.
It has been the fastest growth, we've seen and 10 years.
We continued to gain significant market share you'd use growth being essentially organic and especially in the area of digital transformation.
This is a clear reflection of infosys and resilience and client relevance and theirs.
Strong growth you'd be unwavering commitment of our employees.
And on differentiated digital portfolio.
I would like to thank all of our employees for their enormous dedication and contribution, especially during another testing period.
With the second Covid be in India.
Some of the highlights of our results.
Revenues were 3.87 and 78 billion.
Growth of 16, 9% year on year, and 4.8% sequentially and constant currency.
Digital and business grew by 42% year on year and now constitutes 53, 9% of on overall revenue, we had broad based growth across all of our sectors services line and geography.
Financial services grew by 22% retail, 22% life Sciences.
And 1% manufacturing at 10%.
North American geography by 21%.
A large these would add to $6 billion, Nike Adidas and over $50 million and values.
Operating margins were strong at 23, 7%.
He had a tremendous focus on other employee.
Especially related to the wellbeing.
And to the new talent expansion approach that you have with employees.
Free cash flow of strong at each 1 of them and $63 million.
18.5% higher than the same quarter of the previous year.
Christian increased to 39%.
We had a net head count increase of 8 housing.
Factoring of leading talent from the market.
And I'm comfortable with our ability to support our clients and their digital transformation journey.
I've sustained approach and building differentiated digital capabilities.
Helping out and they've been our clients and move with speed.
And I try and create value and they cannot.
And with their customers and employees and partner.
With new digital common stocks.
Examples of cloud, becoming a strategic driver of let people businesses.
More clients across industries, and engaging with us to take advantage of Infosys cobalt solutions and services, especially on the cloud.
With this strong start to the financial yeah. Good large deals in Q1 strong pipeline, we are increasing our annual revenue growth guidance.
Which was a 12% of 14%.
<unk> increased at 214% of 16% growth.
In constant currency.
Our operating margin guidance remains unchanged at 22% to 24%.
Last week Infosys completed 40, yes.
And I'm delighted to share with you the vision of our founders and all the leaders that have helped shape. The company are contributing to us be well positioned for growth and being a strong and cause and BOP ministry of of clients and their digital transformation journey.
I'd like to think of the founders and employees.
And shareholders and all our stakeholders for their ongoing guidance and support and contribution.
With that let me turn it over to Kevin.
Yeah.
Thank you Kelly.
Hello, everyone.
Hope you and your family are safe.
Based on M P.
All of a period of extended continuing medical education.
Ladies and the conveyor of pandemic.
And that's gradually returning to momentum.
They have been extremely focused on employee there'll be.
Extending every possible and the oil come and he medical education of our employees.
Yeah, but and the facts and they've been great for employees and their families.
And before he has actually made that 58% therefore of employees in India with at least 1 shot.
We felt the pain growth acceleration and quarter 1.
And you hit on the other constant currently growth of 16, 9%.
We hope of dog based with Covid.
And in the segment reporting strong double digit growth.
Bleeding, but do not yet and I think services and retail.
And more than 20% year on year.
Operating parameters of continued to improve during the quarter.
It makes sense and improved quite a bit of new all time high of 88, 8%.
On paper, but mixed reviews and part of that their new low $24.1 per segment.
All of our satcom costs increased by 120.
It was a stronger than expected growth.
But he can and demand for Michigan.
We won't do large deals and quarter, 1 totaling $2.6 billion.
19 and financial services.
And you can read it and and that it needs to be courses and services.
And in manufacturing and 1.8 and communication.
And life Sciences segment.
And you didn't life, putting that on America.
Net from Europe, and rest of day, 1 and 1 on India.
And the theater of new deals in quarter, 1 well per se.
Glenn metrics improved meaningfully and that million plant.
Increasing to 34 and.
And the increase of 9 yeah, yeah yeah.
And I did 1 new client and the last quarter.
With growth coming back and demand for top and then pass I was born and 3.
And then 3 loss development of 3 can increase from and 1.9% last quarter.
And 1.9 but then in part of 1.
Although we're not gonna be backfill that brief and completely.
But also our debt net debt at both and 300 and employed on a net basis.
And he is a testimony to the strength of recruitment and getting that in corpus and.
It does have to sort of set of employers.
Yeah. They can go on and they're thinking about that.
And and employee value proposition and.
Improved both talent acquisition and retention.
However, we expect that they tend to be high in the near term because of strong demand.
And corporate of 1 we on boarded on what's been tough.
And college graduates and thought it couldn't be here, we have increased our colleague exciting target.
He played both of them globally and here.
And can think black belt already.
As communicated earlier, but that was really become part of it because then people will pick up from the life blood of my daughters Airport employees.
Moving to the business segment.
Industry, leading performance and financial services continued its steady increase and growth momentum.
And you did buy signings during the quarter.
Well it is led by U S based.
That means that certain sub segment like banking what day did well.
And big government services.
And I didn't opening of the economy and also being significantly improvement independent of sector.
And if the female of penetration and adoption and we are working with many of our clients on cloud migration, Lord and management and other cloud related platform.
With the combination of all of the mine life.
All of the digital capabilities.
And he came back of pushback digital transformation plan.
Fulfillment of the retail segment improved meaningfully with both new and then finding during the quarter and spend as ramp up of previous dealings.
Yeah, he aggressive investment day plant of the heap and capability.
It's a huge I'll put it and that'd be part of the Big Omnichannel.
Mccann and capability.
I'm pleased with the digital natives and right size their perspective.
And that's continued to invest in and then it picks back up someplace day rates for most of them fulfillment.
It sounds like Youre.
And you're seeing.
That's right, yeah, and analytics with the attraction of course.
So let me break and segment performance improved compared to the previous call that you took on.
And our findings and ramp up of brand 1 day.
With Covid are penetrating the need for better connectivity and you have to be improving the plumbing and paint approximately 1.
We are working with our customers and advanced Iot use cases and product.
And that'd be a litany of resources and services like because grew strong double digits along with other people.
And during the quarter. The overall outlook is improving across the pet and demographics of the operating landfill and only getting back to normalized levels of discretionary spending.
And areas in 1 and cause somebody experience on a person that we couldn't see and associated legacy transformation.
And that's a great people sort of becoming important with the recent incident and and.
And at the end of the segment.
And manufacturing segment of a stronger tailwind from buildings and the past few quarters.
Infosys grew market share through the pandemic across all support and automatic aerospace and industrial.
And I think I'll put it and that is on various Benton B E R and D fit and it does bring some increased spending on digital and it.
You have to make the industrial Iot flow that option I deal with the integration and making the manufacturing value of tenants Martha and Boston.
As mentioned earlier, we have done their deal.
And I'm picking up and debate.
This segment also.
We continue to grow at strong double digit growth or do you think the offerings like personalized medicine solution part of complex therapy.
Kidney and type of platform to help drive commercial epic and Pete and digital and that's 1 patient engagement and you hit it.
Well it has been accelerating digital adoption across automotive and other things.
And that's the biggest and to overall revenue increased but there could be 3.
3.9% and quarter, 1 with a very strong growth of 42, 1% year on year and constant currency.
And as the pent up demand and we started delayed projects and I do think that the continuation of the pandemic related right. It works.
Digital transformation of and took place and prospect and customer experience.
And so I recognize that some other day adoptions and makes it that business are going to be permanent and that increasing their investment in digital abandoned and transfer of its products and food.
And the last quarter and placements of ranked US leader and 10 digital instead of if you look at capability.
No services modernization, and arguably kidney and again and the plate and buy in this day on Monday.
With that I will handle excuse me London.
Okay.
Thankfully and Hello, everyone and thank you for joining the call and I Trust each of you and your families are safe and well.
And we are encouraged with our quarter, 1 performance, which has significant and broad based acceleration and growth as we began the year.
At 4.8% PBT growth of o'clock, the highest sequentially quarter, 1 revenue growth and the last live and yet.
On a year on year basis revenue growth of cricket grew 16, 9% in constant current feed them because of HIFU and any quarter over the last 10 years. This is low.
It was on the back of a relatively strong Q1, 'twenty one's apartment because of peak of pandemic induced revenue impact.
Operating margin for Q1 was 23, 7% and increased by 100 basis point of our quarter 121, while being 80 basis points lower compared to quarter 421.
The major components of the sequential movement, well of 10 basis points of benefit due to currency movement of profit.
The basis point benefit.
And utilization and these benefits were offset by a 50 basis point impact due to increase and popcorn and third party costs and then of the balance 80 basis point impact due to all other costs, primarily related to employee hiring promotions and things and then being caught.
EPS grew by 26, 1% in dollar terms and 22, 6% and I not on a year on year basis.
We have top of the quarter and grew by 1 day to 70 on the back of a little bit of collections and.
Consequently of free cash flow continued to increase and was 863 million and quarter, 1 and an increase of 18, 5% year on year and yes.
We have conversions of Kodak and and 22% of net topic.
Driven by healthy cash generation consolidated cash and investment was 5 point of view of 7 billion of toward returning approximately 1 billion of final dividend and the industry.
Can you kind of buyback.
Consequently, auto E increase of 29, 3% and quarter, 1 compared to 27, 4% and quarter 4 and I'm happy to share that Ottawa and he has increased by 3.4% and last 2 years driven by a robust capital allocation policy.
Need on cash balance continues to decline when you look for 9% and quarter, 1 compared to 5.1% and quarter, 4 and 6.1% and quarter 1 lots of cars.
Now, let me talk about the progress made on the buyback plan.
We initiated share buyback on June 25th office of killing share holder approval during the AGM on June 29th of.
Although the maximum buyback price of 9002 hundred calls they're doing.
And thirdly, we had completed 690 crores on approximately 7.5% of the buyback by end of quarter 1.
During the period, we bought back $4.4 million shares and average price of 15 and 72 till.
And David we have completed 15, 42 crores of share buyback and bought back 9.8 million shares and in that.
Average price of cookies, 15, and 69 all day.
And the mix of tuition is improving and many parts of the world and the different slowly return to normalcy and we expect some of the discretionary costs, including travel to compete etc.
Normalizing in the coming quarters and.
We will also rollout of compensation hikes of majority of employee.
What's the current market, meaning we did we are anticipating continuing cost relating to employee retention and acquisition and well being and the dropdown.
And I look good enough focus on structural lever to improve efficiency and cost structure, we remain confident of our margin guidance band of.
Of 22% to 24% for the full year gross.
And by strong quarter, 1 and visibility given baidu finding backed by a robust deal pipeline and we are increasing our revenue growth guidance for the year to 14% to 16% from 12% to 40% previously but that we can open the call for questions.
Thank you very much.
A question and answer session.
And anyone who wishes to ask a question maybe that some other.
And touched on telephone.
If you watched it and love yourself on the question you made sense and.
Sure.
So I think it's been part of question.
And that's why I'm asking a question.
Anyone who would like to on the question you made that sound and 1.
At this time.
Ladies and gentlemen, we will wait for a moment as part of the question Yeah.
The first question is from the line of will shake out on that Bush. Thank you on it.
Please go ahead.
Hey, Thanks, and congrats on a very strong result, so most of the questions. We're getting this morning, where around margins and the leverage on the model and and and I guess, there's a lot of focus on the wage inflation and that's picking up and attrition that's picking up.
Maybe you can talk a bit of about the levers and the model and how do we get that comfort, but the 22% to 24% EBIT margin on a range of sustainable beyond this year and then should we assume that I guess of second half should have maybe some less pressure on margins given some of the normal.
On the bench is that of the right way to look at it thanks a lot.
Yeah sure Moshe So I think of as we had you know given the guidance of at the beginning of the Yelp of 'twenty 2 to 'twenty 4 and coming on the back of 24, 5% last year I think few of 8 care that they would be and some headwinds.
<unk> got the 1 off benefit during FY 'twenty, 1 mandate you know I can read of that clearly in terms of Pavel.
Philippines and other discretionary costs.
The depth of cost like you know big hikes, and promotions et cetera, which were put on hold.
And we are clearly and that that wouldn't be an impact and a headwind as we look into FY 'twenty, 2 and that was really factored into the 22% to 24% of.
Margin is ready.
What has changed slightly has been of course, the demand has picked up and.
Like I always say Becker of bank demand due to supply and supply the other be supply do you think demand a bit.
And the long run it's much better to fulfill demand as it comes and we can continue to work on our cost optimization levers and that's why of course, our guidance both of those up.
And I seem to be a small headwind during the year and and in terms of it and can cost going up and coming back on top of guns, but point and simply gets announced and we will take now $25000 of graduate and Luckily hate to ask a few of the pyramid and help us.
And cost optimization and of course, we continue to look at the other avenues of automation of onsite offshore mix etcetera. So I think 22 to 24 of the quite quite confident on that otherwise they may be the short term impact, but I think of some of them like I've gone index like that 1 tired and comes back and own.
We should see some benefits there. So I think right now we're all model we remain quite confident within the 22 to 24.
But like I said I mean, the most important thing is that demand is shaping supply and he was a situation you really want to be and the other than the other day.
Understood and just as a follow up.
Given the fact that digital is almost 54% of revenues.
Should we assume any sort of pricing power coming out from that part of the business, especially based on some of the commentary you're seeing from some of the pure play digital names out there. Thanks a lot.
Yeah, So I think and.
And so theres going to be not structural impacts I think of it.
And then making it 1 of those across the entire workforce transformation and ability basically to work and.
And part of the World and nearshore and offshore on.
And Tonight and.
The other 1 is of course before they get to the transformation and factor, which is very very fundamental to how the.
And the clients of our consumers are interacting with bands on it because it's not about you know mainline brick and mortar retail and manufacturing and the extent to financial services insurance and I think a lot of our clients fundamentally realize that <unk> to support and fuel the spend towards more digital transformation a lot of that can come from cost optimization.
And a way of speaks to be on offshoring and.
And Covid has demonstrated that we can.
And some of this requirements of any part of the world and that's really can be tuned back into the degree of transformation. So that's the way I think.
And minerals and they make the news.
And also I think now a lot of our conversation and there's also more and.
And navigating to add.
Value and that kind of value. We are you know.
I think for our client side, whether it's on the consumer side and some retention side, it's and supply chain logistics and how we position ourselves well I guess about you know of rates or the price of rock, but more about more innovative ways of pricing.
And linked to outcome linked to a result of our clients.
And that's the way, we think and features that can help often and so I think if it gets about starting to work. We are doing and we think all of the next few quarters and more structurally you may be able to get some gains and they're on this.
Thanks for the color.
Thank you.
Question is from the line up now.
Yeah.
Please go ahead.
Oh, Thanks for taking my question and congrats on a very strong quarters and the guidance change.
And just a follow up on your question on pricing I noticed that you are talking about structure and there's movement and pricing.
On the at the press conference to I think sell literally of pointed out that type of work more or less stable and.
And trying to understand why they wouldnt be seeing of better pricing environment, given how strong demand is and the fact up and it's a fair amount of supply pressure on across you know pretty much on some part of that digital value chain.
That's my first question.
Okay.
Thanks, David This is Sally I think.
The point you make them early and depressed our best conference. The question was on how we've seen the pricing and are in Q1 from what you're seeing in terms of life views and thoughts interactions are you applying share in terms of.
What is the opportunity to see some pricing power and also building on the previous question I think is and you know.
Sharing with you.
And I believe we have and.
And extremely a day.
And she did digital portfolio.
And we believe that that creates a lot of value for our clients. We are very active and making sure that the of demonstrate and communicate that value of these and now she overtime and also because of the supply concerns, but also because of the digital value and how of that.
That translates.
And that you don't want to create and that's 1 of the strategic lever that and the London. That's talked about we've always talked about and the part of.
And we are feeling that among others gives us good comfort for that guidance band in 'twenty, 2 'twenty and so on a pretty margin and we will see how that plays out and.
Especially would be supply constrained.
And if that gives us more leverage and the future of of course that will become reflected in and what we seem to be.
Got it and I noticed that the net debt.
The net new deals for a little bit on the lowest price compared to what they've done and the last few quarters.
And I do and I. Appreciate this is a quarter of and you could have fluctuation and how do you see the deal pipeline and then not known.
Uh huh.
If something happens.
Yeah.
So there you actually reside I think of these are on a quarterly.
Fluctuations and we look really due to the of shuttles that are on and on a longer timeframe and we saw last year are there. The net new was significant as we looked at the overall AR and.
Number.
The pipeline looks good and strong Ah theres, good focus on new deals and there's always.
And so of course, we are focused on ensuring we continue where they are and extend into that portfolio and I said no no visible markers to claim that.
We will probably look to replicate what we've done in the past few years, they met and who has been a critical factor and it remains something we look at proactively and into the pipeline.
Hi, sorry, just a quick follow up of that has been and number of Mega deals and the pipeline gone up and so.
And the last few quarters sales.
So Dan do you have you don't.
Provide some more color on the specifics of the pipelines if I should just say that the overall value of the pipeline is extremely good a nice increase from the previous quarter and we see that continuing to increase and the pipeline is comprised of a mix of the different types of large deals are the.
And let's call it medium and the law.
By the end of day not yet.
Thank you and and come back for follow up of status time, and I wish you all of the best for the rest of day.
Thank you.
Thank you. The next question was on the lineup of deals and some ice.
Please go ahead.
Yeah, Green and gentlemen, and congrats on a great quarter and my first question is just I mean, selling and B do you see on so infosys was holding the pole position and I'd be misleading in terms of growth.
But the next decade has not really I know the Viva and would have hoped for and again over the last couple of years, even before the start of Covid and of course after the start of the pandemic Cashman and Infosys has been outperforming competition on growth and back to buy our life Sciences and you have been talking about very confidently talking about market share gains from competition.
And how confident are you on sustainability of writing the company into the pool and pollution and I'm thinking over the next decade.
And so thanks for your question and I think that the behavior of leukemia and this is this growth 16, 9% 4.8% is really.
And really the pass cars in the past 10.11 years.
Essentially organic growth so we feel extremely good.
And because that's a good.
Metric as of course, you know that is that clients are preferring infosys and that's the ultimate test and this in this market.
And we feel comfortable that you.
And the capabilities that we have made and that digital portfolio.
And there's extreme dedication of our employees and a very difficult period over the last several quarters of it.
Combining to give us that that outcome and so the.
Focus remains on client relevance and therefore, the outcome metric is growth and.
We will see you know how of the poorly positioned and plays out over time.
But for me and my second question and actually 1 of the previous decade, they never team and started looking at some of that and then he got a how confident that would be the standard only and not be the case and so on.
And I'd focus will be in terms of exiting the industry leadership.
And then follow that question sorry could you just because he can you repeat the question you control it.
Yeah no other.
And seeing what the previous decade of when everything started looking at a V. C summer that day he cuts, but the standard on how confident that'll be that you know it will not be the case and there will not be and he said today and.
And I believe and tight focus will be on achieving industry leadership.
Sure there are effects on all of it it's a feeling of you'd been unclear of the sound on.
Our focus is to keep our attention to clients.
And extremely motivated and leadership team a day.
These are extremely supportive of very strategically minded and really give good guidance and support to the management team and a broad and leadership.
Sure my own sense is.
And we keep this attention to our clients and building on the discipline of capability and.
And the rest will follow from that.
Okay, Thanks, and all the best.
Thank you. The next question is on the lineup on cash proportion from CLSA. Please go ahead.
Yeah, Hi, thanks for the opportunity of.
And then my last question is on sort of at least.
And the best price.
And if you can understand and definitely so there's lots of things.
On cost optimization.
And does it mean that clients are now taking longer on.
And also deciding on their needs.
And as bad quarter of meeting, who maybe are soft and making a beep beep beep on it.
Okay.
Yeah.
Okay.
The.
Quarter on quarter view of that percentage is always a.
Little bit of up and down.
What we've seen the pipeline is a significant amount of activity where clients are looking at.
Moving on the digital transformation program.
And also working on areas, which relate to cost efficiency and.
All of the true we are seeing opportunities, which we've discussed in the past Oh vendor consolidation.
And we don't see the and the timeline has changed in terms of movement on that.
And what do we see some different set of criteria in terms of.
The types of deals on the pricing.
And what is and what is clear is.
The broad economic growth and in our end markets and we're just coming back and rapidly.
Allowing for many industries to go through the transformation.
And he's within industries accelerating companies, which had lower digital presence and are growing faster too.
Catch up and leapfrog and village already had digital cousins on making sure that and maintained a donkey so all of those things bode well for the technology spend.
We are positioned quite nicely and in that and that technology spend.
And because of the person on site.
Yeah.
And just lots of clients.
Next question.
The next question is from the line of Ashwin.
Please go ahead.
Hi, thanks of the possibility of <unk>.
1 question in terms of the guidance.
If I presume that is not going to go day to day of it and you're still now and.
And even if I and built in the numbers and they're kind of getting the transfer of that being a day life seafood yard over the next 3 quarters of appears to be pretty soft.
Boy and 6218, and so are we building and some kind of database.
There's tons of it did miss in terms of out of guidance on anything that we that makes us a leading question and scan.
So.
On the guidance and as you've seen on revenue growth guidance, we've increased it by 2 points relative to 14 to 14 to 16.
It's a I think of demonstrating our confidence and what is going on.
With respect to the demand outlook and with respect to the deals that we have done and of course this quarter and also on the POS on this specific client and their revenue and mix I won't comment, but I wouldn't say that we don't see really any softness in what we see in the coming quarters.
Okay. Okay. Thanks, a lot and just 1 more and give.
Given the fact that you've largely I did though shows this quarter do you think Uh huh.
And then you are expecting their supply of HAE patients and attrition and to increase foot of bed.
Think of subcontracting expenses of Vale for delegate elevated from there to be on.
Okay.
So on the subcontractors.
We need to do we have and extremely attractive talent proposition the.
As you saw with the couch, sorry, and the E.
And people can be I did and.
Net additions, we are managing it extremely well to attract good talent.
And what he will ensure to do over this next quarter and of course and the quarters to come.
To make sure that we add the forefront of fulfilling the demand.
In terms of subcontractor, we don't specifically model of forecasts that are there.
And there is upward on but he and the flexibility.
We do all of that class of our cost lever and I didn't do it to ensure that our guidance will be of mid range that we've given of 22 to 2000 and fall.
And so there's just a follow up to this.
You heard that I'll pause and people.
From what I heard if I heard you correctly.
And today she is on boarded this quarter.
And the company product and some new things new unit sales.
And it will be much more skewed towards life to fulfill their demand and that we see.
Yeah.
And I tell them why do you think the figure of cash of 10000, I think there's a big luxury.
And the hiring as well and the fixing of classes of lack of infrastructure.
Right, so and that can be of a very strong and again. The first 1 is of course, because that's off the back followed by macros and any and every negates the top up and always will be a tough comps on all of the T V.
Activate like I said, it's very very important to meet demand now right that are absolutely critical and.
The good thing and we've not done any of our clients and then and they talked about earlier that we are seeing strong demand outlook and a net of clients who have methods, there and I had mentioned and.
And therefore, they're important to get back on all of the dog and then figure out our cost structures have gone the Katanga of course, and I think that's something we're quite comfortable with you continued to remain at the end of July pardon me of talent and that's a very strong proposition that we have.
Thanks, a lot and all of the base.
Thank you.
The next question is from the line of Keith Bachman from Bank of Montreal. Please go ahead.
Hi, Thank you very much I wanted to ask about.
And the margin guidance for the current fiscal year and take the guidance range of 22 to 24 and just.
Wondered if you could break down what are the key drivers for the year over year decline from what you already reported for FY 'twenty, 1 and so.
Just wondering if you could break that down into the bigger pieces and what I'm really trying to understand is.
And how much we each other.
Inflation is impacting margins.
Guidance for the year.
And there's other factors such as mix and particularly of the ramping of the large deals. If there's any kind of comments you could help us understand and then they have a full of question. Please.
Yeah.
Yeah sure.
Again like I said, it's important and starting to go back you know even before the pandemic into FY 'twenty and we when we had given that comfort range of 21 to 'twenty 3 and as we moved into FY 'twenty, 1 like I mentioned earlier and not in the call and we saw a lot of these 1 off benefits right and figure it out.
And the discretionary spend.
Probably came down quite sharply.
Silicon cost of people started working from home.
On marketing.
Fisher and things like that they get for a lot of pay hike and last year the promotions and therefore, although we were at 24, 5 and we were very clear and starting the guidance at the beginning of the year on that this would fall would be.
The headwinds coming up on this year as many of these costs, we will get back to normal we would rollout of pay hike in January and in July both of which act I didn't and therefore, our guidance of 22 to 24 and look at the $24 and tireless clearly reflective of these had been coming up right and I think you know me.
More than once you've talked about it.
And we looked ahead, we've factored in both of the rate hikes, and yeah and wages always of number 1 player and margin. We don't split out the impact of weak are you know day mixes, but nevertheless, the largest impact on the margin movement on a year on year basis will be on wages.
But despite this we know we are very comfortable with and the 22% to 24%.
The Gleevec, which we continue to employ automation is a massive lever.
In terms of our cost optimization of picking of people from other projects and redeploying them be.
And the onsite offshore.
Mix is.
I think we have very unique and creating and onsite pyramid and historically most of the I T. A services company that was very very steep onsite pyramid.
On a 6 hubs and the U S nearshore businesses and I think that helps us build of much more flack of pyramid.
And then mimicking what we have and be off of geography and ideas.
1 of the high of 3001 of items.
Highest specials on outside of India.
So all of these will help us in the future of in terms of and are taking some of the you know even on the wind out of these.
Headwind, which are coming our way.
Okay. Thank you very much and my follow up question if I could.
Is a similar as you think about the year unfolding.
Do you think attrition moves lower from here or stays the same or goes up and similarly, as you think about the onsite mix.
And it's continued to move lower so your offshore mix continues to move higher does that how do you think that unfolds through the year does that mix of onshore on site stay where it is and it becomes more favorable or any comments on how attrition and onsite offshore mix.
And might move as we look for the balance of the fiscal year. That's it for me and many thanks.
Yeah. So I think on be it for shouldn't like I said, you know I'd, rather be and integration with demand exceeding supply and the other way round and therefore that fundamentally of good news for the industry and I think it's important to realize that it takes time for the supply chain of the industry to catch up.
And the main clearly made new net demand can be in a day.
Relative to cash account right I'm delighted to be leaders on me and my attrition of somebody else's lateral and somebody else's attrition of my electrical fundamentally the only way this demand can be services through a pressure and as you know most of the fixtures historically vacate college campus ratios are and the way contracted 6 months of where you are out of it.
It is only now that we.
Demand is currently such that we are looking at new ways of getting pressures on AR and the last call you don't need maintenance and we would take 25000 pressure of leave that up to $25 and pictures and started a completely new battling and stretch of hiring program off campus predictive of Covid.
And so I think there will be some gaps.
On the short term gaps in terms of months of supply chain and sort of adjusted sales.
But like I said this is good news if you know if it fundamentally there is.
Logistics, there's no demand with your opinion and cross sell.
So in that sense of via our job is fundamentally to continued feelings of demand whether it is through detection of other sub con ops with the lack of and I think we've already hired 8000 net despite the attrition higher attrition and the quarter.
The second part of the question was.
While on site off of where it makes it.
Yes, I think of getting a we've seen this map of where you don't change over the last.
We got Lucky and that gave them cut deeper 227, and and within 1 year from 27 to 24 and again, we talked about it earlier and I guided that we would probably see a little bit of.
Eating out as of travel etcetera opened up but I think of secular trend and definitely is it should continue and the long run and you know of.
Big impact of the Covid has been that clients have been able to see that work can be performed across the globe.
And this is really it doesn't have to be independent and they're on our workforce by affiliates of gas that was net doesn't have to and it can be performed in front of them you know on site.
And on time it can be.
Same time zone and a different location same times on mutual it can be offshore and I think that in the long run I think very positive force.
And so it's sort of thing and that's because we think that clearly they should improve but and they talk to them. They can be these sops and GAAP says that.
Okay. Thank you.
Thank you. The next question is from the line.
Okay.
Please go ahead.
Hi, Congrats on a great execution of the final question is on the BFS side, we have seen a pretty sharp recovery in North America, and I shared services revenues compared to pre COVID-19 level.
Europe is still just about to recover to the same level. So is it fair to say the on time market share gain and ease of largely concentrated in North America why do the backward on me and you can earn back that would be helpful.
Yeah.
Yeah.
Yeah.
And big part of the growth has definitely come from on ARPA Medica.
And Emily and sub segment like banking and Mark the gateways and that will tend to come and has its life.
Yeah.
Okay.
Yes.
Hello.
Okay.
Okay.
And I thought that funded and and.
And that most of the growth has been a little on that.
Most of all.
And the performance between Europe, and North America.
Right.
I didn't have mostly to do it.
Maybe if that that's sort of demanding that and that'd be.
And that banking clients and.
And in some cases, they have 1 building a day delaying that and put that.
Well I don't think it's a secular trend because in this day and the last quarter.
And that's a very sound growth consistently and I Wouldnt Bank brand and have you seen growth led by our U S side of the equation and that had been paying for and they have seen a much stronger growth in Europe and that and we kept the perfect.
So I don't think that I mean, the product like net trend that we are not seeing any of that.
Thought of the anything of any specific plant and without it.
More of course, then all.
They made the ramp up and things like that.
Okay second question is on margins.
What other drivers that can take you to the operating of the guidance for the full year, what would be those 2 or 3 key factors as it of growth coming towards the upper end of the guidance.
Is it digital and continuing to grow at.
And just kind of part of the Reed just trying to understand what are the variables, which can take you put up I don't know, Quebec and thank you.
So I think it'd be given overall guidance of 22 to 24 and not you know what there's going to be the quartile of back.
And we remain quite confident to operate within this.
And I'll leave us are quite well known and we've mentioned about automation and mix.
The pyramid a topic on you know operating leverage do you think of on a benefit of operating leverage over the last yard itself on them.
And length of it I mean multiple levered.
And like I said Oh rapid.
To stay within that and we're quite confident without giving any targets et cetera.
Thank you.
Thank you. The next question is from the line of I'm kind of.
From JP Morgan.
And I have.
Thank you and congrats on a on charter to yet.
On the first question do you think looking at the demand environment that you'd want to be a bit more flexible on vale margins land and how you're optimizing for growth and investments compared to the plan and you wanted to start of the year.
Okay.
And goodness of Sally and thanks for the question.
I am not sure.
And I fully follow it but gets to a third to respond and we can clarify.
We.
The demand environment is shaping up and.
You see very well and it just.
<unk> strong.
And other approaches to make sure that the capability set and we believe Oh day liberally to our clients to help them with their digital programs and automation.
Automation program.
And within that we are.
At this stage and I'm trying to find June.
What that will go or more or less and you see that demand is a holistic picture and we are driving to make sure that we work with our clients and doing that.
But what is clear is the London and she had a little bit earlier day.
Yeah.
Several of them Levered in the operation of student group, if you can call it that.
Which we are deploying a.
So that each of the scheme of work and wherever they start from a and then further optimized.
And that gives us the confidence because of those neighborhood.
We will land.
Fairly well.
And finally, clearly within the margin of Bang on.
And the approach that we have in place today.
Thank you Shannon and I think of as part of my question, which is not being completely address was do.
Do you think for example, the margins came in lower in <unk> versus what you had planned on your and hence you are being a bit more flexible and what you said chasing demand as opposed to optimizing for margin.
Oh, no I think that my sense is.
And.
We have shared over the last year and I know on the London and also shed.
And many of the actions we took last year, we're giving us on many of the outcomes of lost people and 1 time benefits of for example on the travel of course, the onsite offshore mix and it has.
You know moving much more of those types of Lilly.
The fact that we would use several other cost line items.
In the March April May timeframe last year with the.
<unk> group of bad things of agreed.
So we didn't think it at least and online that the margin was gonna be differing.
And we started the year I'll share with 22 to 24, and even as we closed out of previous jet and default point and time, because we could see.
And the salary increases, which we and then later than originally planned in January.
And salary increase of July and all of those were coming up.
And that's and we are not changing or as you call of chasing something of more because of this margin has come in low.
We had this view of the margin as we started the year.
Our demand.
Demand outlook, and and then and.
And actually becomes stronger.
And we feel.
But what we started with 12 to 14 with what we his team and the way. These deals are working and there's a lot of activity that clients are coming to us to give you..1 example.
2 weeks ago I wasn't of client discussion, where they want us to expand what we do within that our client portfolio.
Within this 1 client and it could be 30, 40% of expansion and these are just anecdotally, which add up and my and my colleagues all of that sales team and having those sorts of discussion so that gave us the confidence to increase the growth guidance.
And on that we are chasing something more because of the margin was lower than what we expected.
I appreciate the color and just 1 follow up if I can on.
Are you do you think the supply situation that you're facing and the market, which you elaborated on and do you think that had any bearing on the signings and the quarter and that's part 1 and part of it is.
Is that having and is the supply situation of having an impact on it and try and conversation and competitive behavior from a pricing perspective.
Yeah.
What we're seeing on the supply situation again.
If you look back over the last 5 or 6 quarters and this is something I've heard from any kind of.
We feel that we have a really consistently supported and delivered without any real constrained and.
And so we are seeing a benefit of clients and look we'd rather you use scale up with us.
So the supply situation however reported.
I feel is coming through of benefit to us because we have a convener share and other forum and.
Incredible brand, which attracts talent.
And he added incredible training.
Capability and all of those things and.
On shotgun and things you cannot develop over the quarter that helped us to bring and the talent, that's sort of what client and see and so yes, there is and supply.
Constrained because there's a huge demand and we are still seeing good growth and in fact are extending and improving on growth guidance.
Yeah.
Thank you and measurable.
Yeah.
Thank you. The next question is from the line of Sandeep Shah from <unk> Securities. Please go ahead.
Yeah. Thanks for the opportunity. The question is how do you do agree and half of margin just wanted to understand.
Guidance factoring in some of them on both Baidu and <unk>.
The mix of part of this financial year argument right because.
Because if I look at the day, absolutely not come and do the numbers actually shoes as well.
Ladies and at all time high.
And then the offshoring of loops.
So just wanted to understand on the guidance is thinking and surprising.
And second and just a bookkeeping question if I look at your Unbilled revenue.
On a Q on Q basis, as 1 of my life of some data point anything to read into it.
And do free cash flow generation.
Yes.
Yeah, well I think on the margin side like I said and you know what day of continuous Levi's, which we have the pyramid onsite offshore price thing.
On a trailing average and.
And I think all of that is baked into our models and you know how we look at the quarter and head and then that basically I think we are quite comfortable and the 22 to 24.
Range of some of these headwinds.
And had been kind of Mac grill, So I think that's quite clear on that the.
Second question on the and then I think there is some seasonality on ways, which we see in quarter 1.
And if you see that and usually that touch the taping out so nothing really concerning on any single on pretax more idea of toys come down.
And as well so.
And I think.
Yeah, I think on percentage of revenue the same as of yet he gets Paul yeah and as well.
So we loved and best of clarification on guidance on demand.
And in some places.
And then.
And there's a lot of things that's going on it's not like you know I.
I know, what's going to be the pricing environment, which day.
And the fourth quarter retail.
All of the indicators on pricing.
Some of them will come through some of them don't come through there will be some new cost takeout.
And then leave US so you have to be very dynamic and fleet footed and I and that's free to contribute to manage that and you know you use probabilities on what can work on block something he loves it and where they live on.
And they believe us so all of that factored and as we forecast of a year ahead.
Of that language.
Thanks, and all of us.
Okay.
Thank you.
The next question was on the line of from.
And good luck Sir please go ahead.
Yeah, and things further would you do and congratulation for stronger Yogurts and well.
First question is about the margin and the literature now, but I'm wondering can you quantify what we they picked up really JK and Daimler deal in Q2.
And congrats on these on sort of neutral to margin once again with them.
22 to 2 and 2.4 percentage margin trajectory, which we are concrete and could be trained for this year, but if 1 on conversion from them and give them comfort there to do it.
And considering that the utilities no more than half of the revenue and growing really strongly and most of what order of strong demand and roaming weekend of gaining that you're aware of historical 25 person, but it's kind of tricky things.
Yeah.
On the margin question.
Daimler and large deal is all factored in and we don't break out the impact of a Daimler and we looked at and cost optimization across project we looked at.
And you've always talked about and that day.
And all built in 2 of 22% to 24% guidance and well on the digital.
And was.
On digital are with respect to this is Sally and.
I think of your question was because it's becoming larger.
And that gives us the opportunity to have a different of higher margin.
We certainly.
And that digital business.
And is that of higher margin and that company average today.
However, the guidance that we're giving is.
Financial year for operating margin, which was 22 to 24.
And there are many leavers as of the London share and of course, there are several areas are richer and increase the cost as well and all of those will balance out and then at the end of this year and he will provide the view for the following year, but we don't have any particular view on that.
And different number at this stage.
Perfect. Thank you.
Yeah.
Thank you, ladies and gentlemen, and last question for today.
I now hand, the conference and of the management.
Okay.
Oh, Thank you and this is selling so first thank you everyone for joining us for this session and 1.
And to reiterate just a couple of points 1 on the demand side, we see a good environment and with all of the points.
And we've discussed and be a wait and see.
See the market, we've increased our growth guidance with from 12% to 14% of 14% to 16% for this year.
On the margin we have a set of leaders, which we have deployed and are continuing to deploy across the board whether it is the mix whether it's the utilization whether it is of subcontractor usage versus the overall rule of mix and the delayed.
Whether it's now more value and pricing on demand and Oklahoma.
On higher demand skills and.
And a bit on some factors, which relate to employee costs and.
And some other travel coming back when we mix all of that together and we have confidence that we will be index margin guidance of 22 to 24, we will continue to drive the business in that direction and keeping in mind.
Clients employees and shareholders and we.
Look forward to a very exciting and successful year and thank you again for joining us.
Thanks.
And look forward to kind of going to do everything I have a good day.
Thank you very much members of the management.
On behalf of enforcing that concludes this conference call.
Thank you for joining us and you may now disconnect your lines.