Q3 2024 Infosys Ltd Earnings Call
Ladies and gentlemen.
Good day and welcome to the Infosys earnings Conference call.
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I now hand, the conference over to Mr. Sandeep Mahindra, Thank you and over to yourself.
Sandeep Mahindroo: Hello, everyone and then a complaint because at the Onyx Qualcomm G T. A slide 24.
Speaker Change: Let me start by wishing everyone, a very happy new year.
Speaker Change: Joining us on this call is CEO and MD, Mr selling body CFO, Mr. Miller, Linda and other members of the leadership team.
Speaker Change: I'll start the call with some remarks on the performance of the company.
Speaker Change: Keith.
Sequent to which we will open up the call for questions. Please.
Speaker Change: Please note that anything we say that if I thought I would go for the future is a forward looking statement, but let's say that in conjunction with the risk that the company faces a full.
Speaker Change: The statement explanation of these risks literally no findings of the FCC, which can be found on www Dot FCC don't Ya Li.
Speaker Change: I'd like to pass on the call a defendant.
Speaker Change: Thanks, Andy.
Andy: Good evening and good morning to everyone on the call.
Andy: Wish you a happy new year.
Q3 revenue declined by 1% quarter on quarter, and 1% year on year in.
Constant currency terms for the first three quarters, our revenue grew by one 8% over the same period last year in constant currency.
Andy: We see lower traction for digital transformation programs and more activity for us.
Andy: And efficiency programs and increasing interest in generators AI program.
Andy: Operating margin was 25%.
Speaker Change: We delivered this outcome, while managing through one off business disruptions like Jen will provide more detail for this.
Speaker Change: Large deals with a $3.2 billion, 71% of this was net new this included one mega beer.
These are large D value for the first three quarters stands at $13 $2 billion.
Speaker Change: Of which 50 plus 55% isn't it.
Speaker Change: This is the highest ever lasting value for the first three quarters in the fiscal year for us.
Speaker Change: We see that with our large deal wins, we continue to win market share and strengthen our position through our leading capabilities in helping clients with cost efficiency automation programs.
Speaker Change: And by leveraging generative, yeah digital and cloud.
Speaker Change: We have seen impact in financial services Telco and high Tech segments, we see our strength in manufacturing energy utilities and life science.
Speaker Change: We are seeing strong traction for generators air programs leveraging bats capability.
We created a generative yeah, I can pull ins into after the client portfolio, creating impact for our clients.
Speaker Change: 100000 employees screened in generator AI areas you developed.
Speaker Change: Range of use cases and benefits scenarios across different industries for our clients.
Some of these areas are related to client analytics process optimization field marketing knowledge analysis software developing self service and personalization.
Speaker Change: Some examples of the work we're doing in these areas.
Speaker Change: We are working with a large global bank to support them in their risk analysis program by using a large language models for them.
Speaker Change: We are working with the global food supply epic personalized food experience for their customers and to make their operations efficient using artificial intelligence.
We are working with a global retail company and defining the AI first business transformation strategy.
Speaker Change: Our clients are leveraging all of these generally to AI capabilities into pad combined with our cloud capabilities and cobalt to help them navigate through this current business environment and setting up for the future.
Speaker Change: Our margin improvement program continues to gain traction.
Speaker Change: Below the large organization mobilization and steady execution are creating impact.
Speaker Change: Based on the performance in the first three quarters and our outlook for Q4, we are tightening our revenue growth guidance for financial year, 'twenty fall, one 5% to 2% in constant currency.
Speaker Change: Our operating margin guidance for financial year, 'twenty, four remains unchanged at 20% to 22%.
Speaker Change: As you probably know the London is leaving Infosys at the end of this financial year.
Speaker Change: I want to thank the London for the excellent work he has done and the strong position you guys put enforce it in.
Speaker Change: In addition, I also want to thank him for his partnership and his friendship over the past several years.
Speaker Change: We wish him all the best in his future plans with that.
Speaker Change: I lived in the language.
Speaker Change: Thanks, Alan and good.
Speaker Change: Good evening, everyone and thank you for joining the call.
Coming to absolute Peters out our revenues declined by 1% year on year in constant currency.
Speaker Change: Quaintly revenues similarly declined by 1% in constant currency and one 2% in dollar terms.
This includes the impact of furloughs, and one off well, even the domain felt coupled with seasonality and normalization of one time revenues we had in Q2.
Speaker Change: While the overall environment remains subdued allowed V. P. C D is highest ever on a YTD basis.
Speaker Change: We'll talk about the large deals in more detail revenue for nine months increased by one 8% in constant currency and two 5% in USD terms.
We're making steady progress on project maximize the margin improvement plan across five pillars, I know what 'twenty tracks.
Speaker Change: This strengthens our confidence that the program really give us the impetus for margin expansion over time.
Speaker Change: Operating margin for Q2 were 25% a decline of 70 basis points sequentially, bringing the nine month margins were 28%, which is within the guidance back then.
Speaker Change: Major components of Q on Q margin walk for Q3 margin I followed.
A headwind of 130 basis points, comprising up 70 basis points from salary increases effective first November 60 basis points from Mccamish cyber incident, which had an impact on both revenue and costs.
Speaker Change: This was partially offset by the 60 basis points comprising of 50 basis points of benefit from cost optimization, including our utilization envoy S. DNA 10 basis points from currency movement by balance includes impact of furloughs offset by higher utilization and a one off benefits, including lower provision for wholesale.
Speaker Change: Support employee theory model losses et cetera.
Speaker Change: I'd count at the end of the quarter stood at 322000 employees a decline of one 9% from the previous quarter, which is reflected in improvement in utilization to 82, 7% excluding feeney.
Speaker Change: Onsite mix also improved by 20 basis points sequentially to 24.4 as mentioned earlier, we continue to improve our operating efficiencies.
Speaker Change: N P M a fishing for you'll see reduce further by one 7% to 12, 9%.
Free cash flow for the quarter was robust at 665 million and the conversion of the net profit for Q3 was strong at 96%.
Speaker Change: Revenues for the third consecutive quarter and consequently, this is partly led to an increase in DSO by five days sequentially to 72 days.
Speaker Change: Consolidated cash and equivalents stood at $3 9 billion at the end of the quarter after a dividend payout of 895 million.
Speaker Change: He appears declined by six 1% and I not on a year on year basis and grew by 3% in INR for the nine months period ended.
Speaker Change: And on cash balances was six 9% in Q3 auto improved to 31, 8% largely momentum continue N V. D. C. D. C was $3 2 billion with 71% and next to me.
Speaker Change: <unk> P. C. D's are what 13 billion, which is the highest ever for any comparator period.
Speaker Change: Clearly reinforces our position and strengthens our relevance and strength of our service offering.
We signed 23 large deals in Q3, including one Mega would be.
We signed eight deals in manufacturing fixed in effect for an E. R. S. Two each in retail and communication and one in the region.
Speaker Change: Region Wise, we've signed 10 large deals in America at nine in Europe, and three in a row, the blue and one in India.
Speaker Change: Coming to industry verticals.
Speaker Change: Inflation uncertain macro and delay in decision, making continues to impact the financial services sector with increasing cost pressures clients remain cautious on spending I know re prioritizing their programs to deliver maximum business value.
Speaker Change: Taught by the central do I generate a V I discussions, which is gaining momentum and use cases around improving customer experience.
Speaker Change: We also started implementing juice cases in some of our clients focusing on improving client experience is detecting fraud, they catch up or what all while the near term outlook remains volatile we will benefit from the recent deal wins and the new account opening.
Speaker Change: Clients and communications sector continues to face growth challenges, which is putting pressure on opex spend.
Speaker Change: Certainty about medium term spend the remainder as clients right sizing cost optimization and vendor consolidation clients.
Speaker Change: Clients are looking at conserving cash, which is visible and delayed decision, making and project deferrals, our focus on large and Mega deals resulted in a healthy pipeline and deal win.
Speaker Change: And then he utilities resources and services clients remain cautiously optimistic about the demand environment with Catlin shutdown spend.
Speaker Change: And then how do you segment, we are seeing market share gains due to consolidation.
Speaker Change: That's been an industry cloud solutions in the energy transition combined with extreme focus on human experience have helped us differentiate when multiple deals and build a strong pipeline.
Speaker Change: Manufacturing segment continues to deliver strong performance on the back of new deal wins and ramp up of all your large deal signed.
Speaker Change: Growth was broad based across Europe, and the U S as well as across industrial automotive and aerospace industries.
While the budget remains largely stable clients continue to find ways to channel run savings into new areas like digital cloud data and Iot.
Pipeline remains healthy with emerging opportunities on various fronts in the yard in the space, resulting from increased spending.
Speaker Change: In the retail segment cost take outs and consolidation remain the primary focus for the clients while discretionary spends remain under pressure there are pockets of opportunities and everything generally of AI and predictive analysis real time insights and decision support areas deep pipeline is stronger.
It goes I mean long.
Speaker Change: But is it in performance in a seasonally weak quarter and the continued momentum in deal wins, coupled with a very large extent execution engine gives us confidence for growth in the medium term driven.
Speaker Change: Driven by our YTD growth of one 8% in seafood dumps and Q4 outlook, we have revised our revenue guidance for FY 'twenty four from 1% to 2.5% previously to one 5% to 2% in constant currency terms.
Speaker Change: We retain our margin guidance band for the year at 20% to 22%.
Finally, I would personally like to thank all the stakeholders of Infosys.
Speaker Change: Fabulous finance team here for their support over the past five years.
Speaker Change: Got it down and I look forward to working closely with the entire leadership team over the next few months to ensure a smooth transition finally, I wish Jay the very best as he assumes the role of CFO I'm supposed to be approved for any fault with that we can open up the call for questions.
Speaker Change: Thank you very much.
We will now begin the question and answer session.
Speaker Change: Anyone who wishes to ask a question May press star and one on detached from the telephone.
Speaker Change: If you wish to remove yourself from the question to you May Press Star two.
Participants are requested to use headsets for Alaska a question there.
Speaker Change: Ladies and gentlemen, we will wait for a moment, while the question keyless habits.
Speaker Change: Okay.
Speaker Change: The first question is from the line of commodity <unk> from BNP Paribas. Please go ahead.
Hi, Good evening and thank you for taking my question.
Speaker Change: My first question was really.
Classic I had a question just speak up a bit.
Speaker Change: Sure Richard.
Richard: Yes go ahead please.
Richard: Thank you. So my first question goes I don't think you'd even switch has been pretty strong at $2 3 billion someone go how you see you have seen in recent quarters.
Richard: Now I would like to own between employees 30 news have been beaker and bear decent quarters, we have seen.
Richard: It looks to be in the range of winter in a hospital billing in this quarter it was less than 1 billion.
Richard: It could also be the reason for the slowdown in the second half what you are expecting.
Richard: You can understand that the annuity insurance would be lumpy and difficult to predict but you would have a time line on daily news hum than they would be happening and what is the probability that you could see bringing them back. So how do you see the next quarter. It also banging away from their renewal perspective or any visibility on that seat.
Speaker Change: Oh Hi. This is studying thanks for that question I think.
Speaker Change: My my reading of the new Oh, the large deal win is more along the lines that we are continuing to do well with the news and then we've got a really excellent.
Speaker Change: Net new wins are in the $3 2 billion as we have discussed and at other times.
Speaker Change: The large deals by themselves the numbers are very quarter on quarter.
As you know last quarter was also extremely large number.
Speaker Change: Having said that we have on the renewals are clear sight of what's coming up. They also benefiting in many of these areas from consolidations, which are in the London are referenced and also where we are seeing.
Speaker Change: Our clients are seeing opportunities for cost and efficiency. So all of that gets combined with the renewals are carrying along a regular cycles.
Speaker Change: Yeah.
Speaker Change: Got it thanks for that.
Speaker Change: And my second question was around January So you have talked about a little hungry I was in Europe.
Speaker Change: So he's been trained on January but can you just quantify your share some insights onto client engagement fade and you think that your friend corn differing number of projects that you're looking or are doing fair amount of deals that you are bringing anything that you can start tracking on Betsy.
Speaker Change: So they are we are not at this stage sharing externally and any views on revenues or projects and sort of what what is to.
To give you color on what is happening today is almost every discussion with clients in raws some element of regenerative AI and what we have now developed to Topaz is.
Speaker Change: Set of areas, where there's benefit cases use cases scenarios, where there's impact that'd be working across a large number of clients on those in different skus, where there are some which are more pilot some which are programs and that that's the three examples.
Speaker Change: That I should be.
We're also developing trends across a number of large language models, where we changed our teams.
Speaker Change: And then on how to leverage data sets.
Speaker Change: Our focus.
Speaker Change: It was very much on large enterprises, what our clients.
And the data sets within those enterprises, depending on the usage of that.
Speaker Change: That's like language model is to be apply and we have a very strong business in data and analytics, which becomes the foundation for degenerative AI work.
Speaker Change: And then.
Speaker Change: We are working to make sure that the benefits I've felt across all of our service offerings. So we can start to see in your discussions with clients.
Speaker Change: Productivity benefits, which are downstream.
From the agenda do that so at this stage, while we are not externally quantifying all of the elements I reference that is the sort of color. We are seeing across a large number of discussions.
Speaker Change: Thanks for that center.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Lipton Fund monopolies from Investec. Please go ahead.
Hi, good evening, thanks for the opportunity.
Lipton Fund: Ah congrats on the strong deal wins.
I think first off I'm not selling anything that you have seen oh versus the previous quarter in terms of client behavior. That's what would sort of suggest green shoots on the discretionary side.
Lipton Fund: I think that will continue to be under pressure for some time.
Lipton Fund: The second question is for.
Lipton Fund: And they'll engine.
Lipton Fund: It appears that we will exit the year with margins lower than last year.
Lipton Fund: Do you still believe that margins could be better next year with Oh, you know what.
Lipton Fund: As the current one.
Lipton Fund: Sort of highlighted that as sort of an aspiration at the beginning of the Oh. So just wondering your thoughts on how one should think of that at this point in time. Thank you.
Speaker Change: Thanks, Hi, this is Ali in terms of the client discussions.
Ali: We have not seen a some sort of significant change in one or the other direction from what we were seeing last quarter. So some of the digital transformation work or some of that type of a program of their clients and not putting focus on it.
Ali: Engine that is the cost and the efficiency and now even consolidation we are seeing more and more of that which is what we were seeing last quarter as well. So in that sense. We don't have any any change that we have sensed at this stage.
Ali: So and I think on the margin question I think you've seen this quarter as well the underlying margins. Excluding the one offs are quite a resilient and we've talked about not predict Maximus. This is merely the third quarter and there's a lot of work has been going on and we are seeing the benefits of that and you can see that in our commentary as well and we are very confident.
Ali: How about the overall margin outlook, but we won't give a number about next year.
Ali: But really the multiple number of cracks around value based selling around efficient pyramid Oh.
Ali: And automation and Jenny I I think they all work and therefore I think that gives us good optimism over the medium term in terms of that margin structure.
Ali: Yeah.
Speaker Change: Perfect. Thank you so much and all the best.
Okay.
Speaker Change: Thank you.
Speaker Change: The next question is from the line of Moshe country from Wedbush Securities. Please go ahead.
Moshe Katri: Hey, Thanks for taking my questions and congrats on strong bookings for the quarter.
Speaker Change: That's question <unk>.
Speaker Change: Color on the budget cycle for calendar 'twenty four you think budgets will be on time and you think about it.
Speaker Change: It will be delayed any color there on that one.
Oh. Thanks Moshe this is Sally on the budgets are.
Speaker Change: We have seen.
Speaker Change: First.
As we saw our Q3 end of the quarter the furloughs well in in play be seeing that coming into play in the Q1.
Speaker Change: Fun, a calendar year to argue for the.
Speaker Change: The budget decisions are ongoing and as as you know well. These will go through the early part of this month, so nothing from that but we don't see any change in what we were seeing in terms of behavior from the last quarter, where budgets would suddenly I.
Speaker Change: Or a different direction. So at this stage it looks like it's a similar to what we would see that everything is not yet closed out from our discussions on the budget.
Speaker Change: Understood and then looking at the deal flow the large deal for that one through calendar 'twenty three are there.
Speaker Change: There were some concerns that they're not converting so it'll be we're not converting on a timely basis.
Has that changed in any way in terms of conversion some of these deals and when we could start seeing that inflection point in revenue growth because of those deals converting thanks a lot.
Speaker Change: On that.
Speaker Change: But where we see the revenue flowing.
Again as you go to where the large deals are basically giving US a foundation, especially the net new and renewal for future revenue.
And at the same time, we're also seeing impact.
Speaker Change: The digital programs I'm, not moving our digital programs and sometimes I'm being stopped.
Speaker Change: That combination is what gives.
Speaker Change: Just give that revenue outcome.
At this stage.
Speaker Change: We have no specific sort of.
Speaker Change: The external view on on you know what'll happen.
Speaker Change: In the quarter, but our overall revenue guidance for this could engineer, which is only one more quarter gives you a sense of how you're feeling about that we even see because a lot of the large deals as they start to build up and when sort of the digital capabilities start to have a.
Instead of interest with clients, we will start to see that change I'm sure.
Oh Hello.
Speaker Change: Thank you.
Speaker Change: The next question is from the line of unclear to us at all from J P. Morgan Chase. Please go ahead.
Speaker Change: Yeah.
J P: Hi, Thank you could you elaborate on what you've seen decline spending sentiment has been E. On projects that have already been signed let's in the last nine months or so on the cost takeout side and be on incremental signing off.
J P: Smaller projects, because we can see on large projects, where we don't have a visibility on how you're smart, but he said.
J P: Oh.
Speaker Change: Sure so.
Speaker Change: On the client spending.
Speaker Change: Clients have signed recently in the last 369 months that spending is going well both on cost.
And our other projects incremental projects as you were describing on things that were more in the past that that'd behavior are on the cost has continued on the incremental projects that we have seen even in the past quarter has some impact but what has been signed recently we see those those.
Speaker Change: Proceeding I spend what they've signed up.
Understood and I mean, I think you've mentioned several times on the call that it seems to be you know delays in W. Recognition because of project you know reprioritisation instead of me I'll, maybe estimating this for our benefit plan investments benefit like for example.
Well you know fiscal 'twenty three of the last two years total contract value signings may have been impacted because of change in client client priorities or Alternatively, you know how much of the signings have been shrinking every quarter because we won back with you Your project signings, where you just stay at the same place.
Speaker Change: Hum.
Speaker Change: We are not in a position to share that are externally.
Speaker Change: We have a view on what we look at in terms of wins.
Speaker Change: Execution and lives do you use internally, but also oh.
Speaker Change: There are programs some small to mid sizes, rich girl up and down I'm sure that that internally.
Speaker Change: Internal competition, something which we work with but it's not something which we are.
In the past are growing even today's shedding externally.
I understand that but I wanted to color it as opposed to maybe a quantification.
Yeah. So Sam I think at this stage are you you know the the outcome is what are we have a we've not not giving any more on that in terms of color as well on corporate.
Speaker Change: Understood maybe moving to margins just final question you know obviously this quarter if I take out the impact of that ransomware incident. It appears that margins would have been up by 60 basis points is that right number one number two if you could elaborate where we are on the various project Maximus believers and there isn't a meeting support let's say over the next year or so.
Speaker Change: Yeah. So we've given the margin walkaway initial strip <unk> quite clear about the one off the salary et cetera.
Speaker Change: From.
Speaker Change: Maximus like I said, there are a lot of trucks, which are currently in play our utilization is why youre seeing in fact, that's the biggest one straight up in your metrics you can see that in all of that flowing into margins. They are the internals of course, our programs on the pyramid a lot of work there onsite offshore for the first time, we've seen some positive movement.
Speaker Change: A lot of quarters, AR automation and Jenny I a lot of work going on now with Jenny I coming in there additional sort of NEVA is available to us more than the traditional automation, which we used to do our pricing has been much better. There's a lot of work happening on value based selling and in fact, that's also reflected.
You know what a lot of our P. B that are we are seeing a much more stable pricing underlying pricing regime, and that's something which we are pushing on so I think all the levers in play are we have a quarter, where we are able to squeeze more and many new ideas I think perfect Maximus, which have come into the fray as well.
Speaker Change: King at large programs and whether we can get into a you know a margin improvement program rather than what was originally budgeted doing the big fan. So there's a lot of stuff happening and I think our we always seem to only resolved.
Speaker Change: A quick follow up if I can oh, there's some concern that some of the cost takeout contracts won in the last nine months me try some margin headwinds is that something that you should sort of impact on a portfolio basis next year.
Speaker Change: Well, that's something we've always talked about we even though we have a portfolio of contracts in the first second third fourth fifth tier right, so, thereby new contracts come in which are initially potentially at lower margins at the same time, we have.
Speaker Change: You know our contract with jobs been going into a steady state.
Some of these questions were raised fears back in one of our segments as well and you've seen the improvement in that segment, particularly over the period of time, where it's nearly closer to the average margin for the company. So that's something which as you know Uh huh.
Speaker Change: You know a really fine tuned and you know a moscone over the few years. So in that sense, that's always built into our predictions and forecasts.
Speaker Change: I appreciate the color. Thank you and best of luck.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of Brian Hogan from TD Colin. Please go ahead.
Bryan C. Bergin: Hi, good evening. Thank you.
Bryan C. Bergin: First question I have and demand by geography can you talk about pipeline and client spending plans across the U S versus Europe and he also based on what you have in backlog I'm curious you do you think the recent trend of North America weakness being offset by solid Europe performance is likely to continue or whether that may change as you go through fiscal 'twenty five.
Speaker Change: Thanks Celine.
Speaker Change: On the geography as you point out we had a good good growth in Europe in Q3.
Speaker Change: Weaker in North America, our outlook outcome.
In terms of pipeline, we don't a shadow pipeline split by geography.
Speaker Change: We do see a large deals that melungeon shed by geography are in good good momentum at least on the large deals onboard our U S and European saying what are we doing sort of specifically call out pipeline or.
Outlook by geography are within within that business.
Speaker Change: Okay any reason that the current.
Hello, its trajectory should change near term or should it remain somewhat consistent.
Speaker Change: Sure there are.
If you look at you know our guidance.
Speaker Change: Guidance.
Speaker Change: For the remaining for the for the full year, which is for the remaining quarter.
Speaker Change:
Speaker Change: It's for the entire our entire business and.
Speaker Change: And we don't have like a specific view that we share externally on the U S or Europe.
Speaker Change: Okay. Okay.
Speaker Change: Okay follow up on that third party items. So in another uptick here just stepping over 8% of revenue now can you talk about whether you expect third party optimistic continue to rise as the mix of revenue or maintenance starting to come down as you go forward and deal composition potential changes I'm, just trying to think about a sustainable level here or is it just has no meaning.
Speaker Change: Over the last couple of years.
Yeah, So as we've talked about this before.
Speaker Change: We are involved in larger transformation do you longer term transformation deals across the entire stack.
Speaker Change: In France Sidebar application development data I think many of these are bundled deals, which have software and hardware elements in it and in a way that's also giving us the benefit of taking.
Speaker Change: Taking these larger deals off the table and at the same time be able to manage our margins as well. So we have to be able to navigate both the impact of this so we have no number in mind to say that this is the way of your target or the optimal level as long as we are able to get incremental market share and you know get our margins in line.
Which is what the programming Maximus is also about I think we are comfortable with that.
Speaker Change: Okay.
Speaker Change: Last one for you just on Academy Sports implant can you just get a sense, how you're thinking about resourcing plans near term and that was down again sequentially about 2% I'm just curious if you've kind of reached a stabilization point.
Speaker Change: Yeah. So we still have a lot of headroom and we've talked about it you know in fact, the last two quarters that that utilization is actually quite low.
Speaker Change: We've operated at much higher Utilizations 80, 485 nickel videos, maybe 80 788. So that's one and we are still below 84 as we speak we also have an untapped demand.
Speaker Change: But fulfillment from our you know official module. So we can absorb a you know the fresh oven very fast because we don't have to now go for colleges and wait for the annual cycle now we have a source of supply from off campus as well and with attrition are slowing down there is a lot of talent, even if on a natural basis available.
Speaker Change: Ross.
You know the country as well so I don't think that's a big concern for us.
Speaker Change: Yeah.
Speaker Change: Good luck to you. Thank you.
Thank you. Thank you.
Speaker Change: Next question is from the line of Keith Bachman from BMO. Please go ahead.
Keith Bachman: Hi, Thank you I wanted to ask a couple of questions if I could first on pricing.
Keith Bachman: Pricing you mentioned specific segment of pricing, but I wanted to ask about a pricing on renewals are you seeing pricing pressure that's different from past cycles at the time of renewals and then also you have good deal signings or large deals it wanted to.
Keith Bachman: If you could address pricing for those large deals.
And how that might be impacting your margins and then I have a follow up please.
Speaker Change: Yeah, So I think.
Speaker Change: We've seen much better pricing stability over the last few years and in fact, we are also very conscious with our in car like value based selling program that we are not leaving anything is on the table. When we are going after deals are because then that he would be if we.
Speaker Change: We wanted to make sure that you know, we're not leaving a lot of dollars on the table. So I think there's a lot of work happening there, but overall from a competitive positioning of our pricing really has been stable across and I think that's reflective of the cost pressure that our people are Oh I'm also conscious of their margins are and where they are.
Speaker Change: So in that sense I don't know when we'll confirm you of course have the one off etcetera specific clients specific segments are where they are in trouble and of course, they may want to rebate some of that but overall it has not been something that you view it.
Speaker Change: It is really concerning us in that sense today.
Speaker Change: Okay and my follow up relates to duration, it's just a little bit differently earlier in the call, but as you're getting a good signings of large deals.
Speaker Change: The duration of those large deals extending so that investors should be thinking about the book to bill.
Being a bit longer.
So we don't give out the duration of the deal win so we have of course deal, which come with longer time period than some of our you could see the announcements we have made but I think specifically whether they are going up across our we don't comment on that.
Okay, well, maybe I could sneak in one more if you just look out over the next couple of quarters.
Speaker Change: If you could just help us we're not I'm not asking for guidance, but just the puts and takes on margins that we should be thinking about you've already said that.
Utilization, perhaps as a source of at least I heard it as potential margin upside as utilization goes up I would think that wage pressures would be loss going forward.
Speaker Change: But I'm not sure how mix tapes.
Speaker Change: Anything you just want to highlight beyond the March quarter, but just the puts and takes that we should at least be completely clean paws were creating a margin profile over the next call it four or five quarters.
Speaker Change: Yeah. So I think one of the earlier questions on this and probably I talked about with project Maximus as well I mean, I bet benefits, which are we doing factoring into any of our models are really playing defense operating leverage right.
Speaker Change: You can see the impact of our SG&A benefits on operating margin and then when we were growing in.
Speaker Change: Nah 2021 grade grew 23, so that's something which automatically flows into the P&L bit growth alright, and innovate gets reversed the operating leverage works against you.
Speaker Change: When revenues are down so that's something you know from a pure margin perspective, which flexes secondly, I think similarly on the currency, we don't build anything into our programs.
Speaker Change: And that also comes in in the future as well, but it's not part of Maximus a stuff there are things out there you know how what they do.
Speaker Change: Our expectations of dollar movement. So these are some things more extraneous as well, which can impact, but we are more confident about what we are able to control within the 20 tracks of Maximus and we've talked about that.
Speaker Change: Okay alright, thank you.
Thank you. The next question is from the line of Jamie Friedman from Susquehanna International Group. Please go ahead.
Hi, I'm good.
James Eric Friedman: Anything in the lunch and in your prepared remarks, you expressed confidence in growth in the medium term.
Speaker Change: I was just hoping you could unpack that a little when you say medium term is that just a comment about the fourth quarter or is that longer in duration.
Speaker Change: [noise], yeah medium term as medium term.
Speaker Change: It's definitely more than the fourth quarter.
Speaker Change: Okay. Thank you and then.
Speaker Change:
Speaker Change: Oh, so the origin and so I tried to reconcile when Silvio observes the strength in the T. C V at a record of nine months.
Speaker Change: The lunch and you used the word subdued in your prepared remarks.
Speaker Change: It seems like you're saying, it's hot and cold at the same time.
Speaker Change: So.
Speaker Change: I know these are where many of these questions are going but how can the weather.
Both.
Speaker Change: Hi, this is <unk>.
Maybe the way.
Speaker Change: Thinking about this you can share with you.
The large deals are really give us a good confidence.
Speaker Change: Of revenue over the next several periods.
Speaker Change: In terms of the wins book for net new and renewals.
Speaker Change: And the comment which was more around.
Speaker Change: [noise] subdued.
Speaker Change: Look at it from a perspective of where we see less.
Speaker Change: Less activity on digital.
Speaker Change: Programs and.
Less activity on some of those type of projects are that takes away a little bit from the revenue. So that's the sort of imbalance.
Speaker Change: Fine.
Speaker Change: One of them, giving us a that that revenue outlook.
Speaker Change: Outlook than the other.
Speaker Change: Our clients are.
Speaker Change: Constraints on their own spend Oh did.
Did you see some of that is that that's how we see the balance on that.
Speaker Change: Hopefully that clarifies the comments.
Speaker Change: Yes.
Speaker Change: Thank you I'll jump back in the queue.
Speaker Change: Thank you Nick.
Cemig: The next question is from the line of Cemig.
CLSA: From CLSA. Please go ahead.
Yeah, Hi, thanks for the opportunity Firstly wanted to ask around you know what the one time loss. What you have got on commission are you expecting it to reverse back in Q4 were not included in your guidance or if we looked at both sometime in FY 'twenty five.
Speaker Change: No. This is one time there is no reversals.
Speaker Change: Yeah.
Speaker Change: Got it and secondly wanted to check it on your platform business I mean, we have seen for the last two years there was absolutely no growth.
Speaker Change: In that particular business.
Speaker Change: Although we keep seeing deal and so not only our clinical tactful and but very little banks cant remember that even geography and kind of other regional banks in North America as well. So can you shed any plans to grow up that part of the piece because they all have you seen the other SaaS companies globally has actually seen of a traction pulls per day.
Speaker Change: All things in their solutions.
Speaker Change: Yeah. So I think we continue to do well I think for nickel business continues to move.
Speaker Change: It is a very nice deal wins across.
Speaker Change: And are you don't know world platforms, you know the more generic you know you said you end up having be attractive across various opinions about clinical actually overall has been doing very well.
Yeah.
Speaker Change: So any reasons for the platform business to be flat over the last two years.
Speaker Change: But I think we can get back to you on that.
Speaker Change: Okay. That's all I had thank you.
Speaker Change: Okay, I think our I think there are some people are just dumping me they'd be able to use it for internal productivity as well.
Speaker Change: Okay plus services.
Okay.
Speaker Change: I got it thank you.
Speaker Change: The next question is from the line of Yogesh.
HSBC. Please go ahead.
Yogesh: Yeah, Hi, just one quick question.
Yogesh: No employees no matter of employees are down 7% year on year, but the total wage bill is up around one or two per cent.
Yogesh: It means that the wage bill per head is up around 19% a year on year. So I would've assumed that that did have made would have kicked in in this new world grew with us a few quarters to.
Yogesh: Any particular reason why theyre being built but it has gone up so much.
Yogesh: Yeah.
Yogesh: Okay.
Yogesh: I'm, sorry, I think I don't think there's a comp increase also has happened.
Yogesh: This quarter and of course in the initial part of the year. We had you know more record movements coming in and the top end of the pyramid goal, but I think in the recently received the latest quarter you will see that there wasn't enough that I think the employee costs have come down I think in the Florida.
So I think you'll see that trend reversing.
Speaker Change: Great. Thanks, and then all the best.
Speaker Change: Thank you.
Thank you.
The next question is from the line of they both singles from the alumni equities. Please go ahead.
Yeah, Hi, Thanks for taking my question Oh.
Alumni Equities: Well I know he's already.
Alumni Equities: Handset that has a nickel in the line.
Alumni Equities: Yeah.
Alumni Equities: Is it better now.
Speaker Change: Yes. Please go ahead.
Speaker Change: Yeah. Thanks, a lot for taking my question. So somebody does something that's a question on the diesel number I know people already have a bet on it so but just wanted to pick up a bit of feedback on we know this quarter was.
Speaker Change: It can be also on the software side, both in terms of seasonality.
Speaker Change: We put those being higher than the last year.
Speaker Change: But the overall demand environment that you're looking at.
Let's say in terms of the cost take out all the decision. These things also the odd basically.
Speaker Change: The different verticals that we're looking at is there any change in the overall demand.
Speaker Change: The demand environment that you are looking at all from let's say three months ago that'd be met for the second quarter results and how do you see this playing out over the next couple of months as clients get into their budget cycles and any specifics.
Speaker Change: There are some pockets that you might want to call it.
Speaker Change: So that you know the thing that would be.
Speaker Change: <unk> is.
Speaker Change: As we look at a large client base.
Speaker Change: The B M ply.
Clients are behaving in terms of spend we've not seen a change in in the way they're looking at it.
Speaker Change: We still see a you know what what we were discussing earlier on on digital.
Speaker Change: Transformation programs being more impacted.
Speaker Change: Reg cost efficiency being much more in play there's also more consolidation that we're seeing in that that was.
Speaker Change: Coming through in the past quarter as well.
Speaker Change: And then there's a lot of interest.
Speaker Change: And almost every conversation we have the agenda to be eye is part of the mix. So in that sense I don't don't have a feeling that the issues are.
Speaker Change: There is a change that we are seeing now. This is also the start of the financial there or the calendar year, we will get a sense are you know fairly quickly.
Speaker Change: Hum.
Speaker Change: How people our clients are looking at the spend and as we come to the end of our financially and as we plan for next year that that will give us, let's say more view into that that spending pattern.
Speaker Change: Got it got it.
Dumps water Beach hope I mean, but these things that'd be happened in the first half of the Oh, well then he talks on it even now.
Speaker Change: Any color on let's say some of those deals are getting into execution mode. So driven by the conversations with your clients. How is the I mean, so you are seeing incremental.
Some oh basically, let's say intend from the clients.
Speaker Change: So I think those deals, which was maybe a little bit delayed on that side, but anything any color on that that we have seen incrementally over the last three months.
Speaker Change: Sure Dan.
Speaker Change: We've seen essentially in this last three months cycle.
Speaker Change: And the dean are stopping or ramping up being as we had anticipated. So nothing has changed in that and there's a three month cycle.
There are places in some of the large deals where there's need for incremental work, which is also starting to be visible a ritual hopefully flow through so there will be no no delay that we've seen in fact, we've seen more of those are on track and in the last three months.
Speaker Change: Got it got it thanks for taking my questions and I'm sure all of us.
Speaker Change: Thank you.
Speaker Change: The next question is from the line of quite a photo from Morgan Stanley. Please go ahead.
Speaker Change: Hi, Thanks for taking my questions. The first question is with respect to a bigger insight into Q. There transition period was expected to be a little longer.
Speaker Change: And some of them are supposed to come into revenues in the fourth quarter et cetera. So is the expectation remaining similar on diet or has anything changed with respect to go transition period, and so true up that revenue.
Speaker Change:
Speaker Change: As we had shared previously it was towards the end of the year and that's where we are so we don't see that oh changing yet.
Speaker Change: Got it second question is with respect to the underlying sort of leakage in the business on small these discretionary spend.
Speaker Change: Has been continuing now for some time.
Speaker Change: How would you characterize your treat you versus lets see one two into Q has the leakage remain largely similar or has that kind of come down compared to the.
Is that it was a kind of a leaking in the first two quarters.
[noise], so that let me sort of try to give color in the way we look at it.
Speaker Change: In the last quarter or so in the last few months, we have not seen those things change in direction. They they appear to be stable or similar.
Speaker Change: Yeah.
Yeah.
Speaker Change: And is that just similar thing built in your outlook for the fourth quarter as well.
Speaker Change: I couldn't yogurt bank.
Speaker Change: At this stage that's what we've.
<unk> put into the Q4 outlook.
Speaker Change: Sorry.
Speaker Change: Last question is on the margins given that you will have some bit of or headwind in fourth quarter, because that'll be full three months impact of the wages.
Speaker Change: Can I have provided for in this quarter.
Speaker Change: Margins, probably will have some more headwinds.
Speaker Change: Thus your implied guidance points.
Speaker Change: Points to sort of are getting weak revenue trajectory in the fourth quarter also so no major massive operating leverage per se. It just that you're exiting the year with.
Speaker Change: Margins closer to the lower end of the guide is that the bottom for the margins and given the project Maximus is adobe.
Speaker Change: From here on the magnitude only.
I'll be going in the upward direction is that the way to look for.
Speaker Change: I'm not specifically looking for fiscal 'twenty five, but just trying to understand is is that the border. Thank.
Speaker Change: Thank you.
Speaker Change: Yeah. So in Q4, I mean, it really was more sort of Q3 as well and we are there are puts and takes in Q3 and.
Speaker Change: And like we've said before I think Maximus continues to deliver very strongly and are you know in all over all our commentary we've talked about the optimism in the medium term for our margins.
Speaker Change: Coming out of a maximum.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you.
Next question is from the line of Sandeep Shah from <unk> Securities. Please go ahead.
Sandeep Shah: Yeah. Thanks, Thanks for the opportunity most of the questions have been concert.
Sandeep Shah: I wanted to understand 60 bps impact on those hybrid securities the possibility to break down in terms of revenue and cost and is it fair to assume the impact which could have beaten dead because of the cost will actually no longer be there it would be a tailwind in the fourth quarter.
Sandeep Shah: Yeah.
Speaker Change: Yeah, I think the first thing we want kind of split it but our board. These are one time impact and.
Speaker Change: The loss of revenue and the cost impact.
Speaker Change: So it does look like the puts and takes so this is going to in Q4 as we see it now there's not going to be there.
Speaker Change: Okay. So you wouldnt be revenue will come back in the fourth quarter right.
Speaker Change: Yeah, So as you know.
I think in the statement you have seen that the systems are back substantially in by the end of December but the systems up and running are so.
Speaker Change: That part goes away.
Speaker Change: Okay, and the London for once a week type 60 to 70 Bips speech in fact looks slightly lower so is it the almost 100% of the eligible employees that we can convert and is it safe to assume the impact will be much lower in the fourth quarter, because it would be one month impact.
Speaker Change: Okay.
We're going to be a one month impact absolutely and every time, we do have a wage hike. We look at of course, the competitive scenario, we look at the market attrition our employees. Our tenure our you know what are the paypoint grid. So it's a it's a very complex exercise and based on this we.
Speaker Change: I think our you know what rehab it rolled out and of course, you can see the attrition figures are also good.
Speaker Change: Okay, Okay and last question, it's a little I think it was one of the responses you can check the laws in the December quarter May continue in the March quarter is it Oh I have heard it correctly or I have been mistaken.
Speaker Change: So then what we what we saw.
So is the my point was on more Q3, we had the furloughs and that is a seasonal impact.
Speaker Change: In Q4.
Speaker Change: We typically see a little bit of that are always in our business in Australia, and that's really the lessons I was making.
Speaker Change: Okay. Okay, Thanks, and all the best spend all the best in the London.
Speaker Change: Thank you.
Speaker Change: Thank you.
The next question is from the line of.
Cortez: Cause us deep central chat from Cortez. Please go ahead.
Speaker Change: Yeah, Hi, My question is for underlying Jenn Mann.
Are the margins for this quarter is it based on your dogma.
Speaker Change: Uh huh.
Speaker Change: Variable compensation provision or is that something which has taken a hit in this quarter.
Speaker Change: Yeah. So we don't talk about the no variable pay of course I think in the next few there'd be enough music [laughter] papers about that but we don't give any commentary on maybe it will be yeah. My fingers would make its way into the media after months of my time today to talk about it [laughter].
Speaker Change: [laughter] me never confirm or at any case.
Okay got that all the best and if you're trying to do it as of yet.
Speaker Change: Thanks Scott.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of monarch the nature from Axis capital. Please go ahead.
Speaker Change: I think you put the opportunity just wanted to understand what are the corso loss.
Speaker Change: Nine to 12 months and that's T has been complaining about.
The leakage on the existing projects.
Speaker Change: Project delays.
Speaker Change: Non.
Speaker Change: Extension of the D SNP, but.
Speaker Change: Are you seeing any change on that front that's question number one.
Speaker Change: <unk> question was that the docs too.
Speaker Change: The expansion in Townsville Skeptics centers, and we continue to see news flow on that front any comments from you on you on that front.
Yeah.
Speaker Change #100: Ah Thanks, I think I'm.
Speaker Change #101: On the first part.
Speaker Change #101: I think as you know.
Last quarter. It was in this Q3, so we've not.
Speaker Change #101: Seen any change.
Speaker Change #101: Change in in the work on those projects are there that's had essentially a similar type of trajectory.
Speaker Change #101: On the captive centers that typically we see.
Speaker Change #101: But any time, there's new sort of technology shifts.
Speaker Change #101: It was a digital.
Speaker Change #101: Digital or cloud or agenda to AI, there's a there's definitely more interest in some clients building out our captors I E.
Speaker Change #101: <unk> technologies age, we see some clients are looking to oh exit and especially.
Speaker Change #101: To be more optimized and we've seen that in several of our large deals. If you look back over the last several quarters.
Speaker Change #101: We believe that these are in addition to the transformation we've taken on the task of optimizing our pre preexisting captives and so on so we don't see a change. It's just maybe it's that new technology Ah Ah moment, where we see the activity, but we also see.
Speaker Change #101: Congress activity of things mature.
Let's say set up five 710 years ago, which are going through that change or decline in that situation.
Speaker Change #102: Sure and one last question from my end.
Speaker Change #102: No.
Speaker Change #102:
Speaker Change #102: You didn't seem like a concrete deals for the last several quarters.
Speaker Change #102: Any sense on how we should be thinking about.
Speaker Change #102: The optimization on that front, given our given the I know these wins that you've had.
Speaker Change #102: In the last three quarters.
Speaker Change #103: Yeah. So I think I've mentioned, a couple of times our utilization is something that we have had room. So I've been a decline in head count really doesn't concern us too much and most of them are availability of talent to ramp up we have now have a very strong off campus program.
Speaker Change #103: Ram. This is something you know over the last three or four years, we've perfected post COVID-19.
Speaker Change #103: And that's fairly on tap without having to give out demand.
Speaker Change #103: Requests through colleges, one yet in Atlanta and of course from a lateral perspective like I mentioned with the market being soft there is of course talent available even less so.
Speaker Change #103: So and that tends to be a very very comfortable with any.
Speaker Change #103: Volume requirements and our ability to fulfill.
Sure, Thanks, and all the best for the teacher.
Speaker Change #104: Thank you.
Ladies and gentlemen that was the last question for today I now hand, the conference over to the management for their closing remarks, Thank you and over to you.
Speaker Change #105: Thank you.
Speaker Change #105: Just a first ever you got on the call. Thanks, very much for joining us and for your questions.
Speaker Change #105: Summarize with a few points first.
Speaker Change #105: Very excited with the large deals at $3 2 billion, 70% of that deal. It really shows the foundation of what we see for the future.
Speaker Change #105: Very very happy with the strong margin and also for our extremely strong margin improvement program that's in place.
Speaker Change #105: Our agenda today I will cause really pervasive it's across all of our client discussions and the service lines and we believe you're building extremely deep capability.
Speaker Change #105: We did not grow fast.
Speaker Change #105: And set of capabilities.
Speaker Change #105: We see continued strong focus on cost takeout consolidation and we have extreme strength in that we feel good that that would continue if that continues we have a good play into that and then finally, we've seen.
Speaker Change #105: Good overall about the resilience of our business given the quarter and the seasonality.
Speaker Change #105: Seasonality that we add and the overall economic environment and we feel really good about the resilience of our business in the future. So thank you everyone again and look forward to catching up at the next quarter call in with them.
Speaker Change #106: Thank you very much members of the management.
Speaker Change #107: Ladies and gentlemen on behalf of Infosys that concludes this conference. Thank you for joining US and you may now disconnect your lines.
Speaker Change #107: Okay.