Q1 2025 Infosys Ltd Earnings Call

July 18, 2024

Operator: Arnex Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should we need assistance during this conference call, please signal an operator by pressing star, then zero on your dashboard phone. Please note that this conference is being recorded.

Mooji: Satsang with Mooji

Speaker Change: Ladies and gentlemen, good day and welcome to Infosys earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing. I now hand the conference over to Mr. Sandeep Chaudhary. Thank you, and Thank you.

Speaker Change: Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone.

Unknown Attendee: I now hand the conference, auditors and Debindra.

Speaker Change: Please note that this conference is being recorded.

Unknown Attendee: Thank you, and over to you, sir.

Speaker Change: I now hand the conference over to Mr. Sandeep Mahindra. Thank you and over to you, sir.

Salil Parekh: Thank you, everyone, and welcome to Interpreter's Units call for Q1F525.

Sandeep Chaudhary: Hello everyone, and welcome to Infosys' earnings call for Q1 FY25. CFO Mr. Jai Sanghrajka and other members of the leadership team. We will start the call with some remarks on the performance of the company, subsequent to which the call will be opened up for questions. Please note that anything we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risks that the company faces. A full statement and explanation of all these risks is available in our filings with the SEC, which can be found on www.sec.gov. I'd now like to pass on the call to Salil.

Sandeep Mahindroo: Thanks Nirav. Hello everyone and welcome to Infosys earnings call for Q1 FY25.

Salil Parekh: Joining us on this call is the U&MD, Mr. Salal Parich.

Unknown Attendee: C.F.

Salil Parekh: Mr. Jambitme Jay, Sangra Arskar, and other members of the leadership team. We will start the call with some remarks from the performance of the company.

Speaker Change: Joining us on this call is CEO and MD Mr. Salil Parekh, CFO Mr. Jai Sankarachkar and other members of the leadership team. We'll start the call with some remarks on the performance of the company, subsequent to which the call will be opened up for questions.

Salil Parekh: Subsequent to wish to call, will be opened up for questions. Please note that anything we say which refer to our outlook for the future is a forward-looking statement, which must be read in conjunction with the rest of the company faces.

Speaker Change: Please note that anything we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risks that the company faces.

Unknown Attendee: A full statement in the explanation of all these races available in a file into the SEC, which can be found on www.sc.gov.

Speaker Change: A full statement and explanation of all these risks is available in a filing with the SEC, which can be found on www.sec.gov.

Salil Parekh: I'm not like to pass on the call to fellow.

Salil Satish Parekh: Thanks Sandeep. Good evening and good morning to everyone on the call. We started the financial year with a strong performance in quarter one across multiple dimensions, including broad-based revenue growth expansion, broad-based revenue growth, operating margins, strong large deal wins, and strong cash generation. Our revenues for the quarter grew 3.6% sequentially and 2.5% year-on-year in constant currency terms. I am particularly pleased with 7.9% growth in the financial services segment, where we are seeing improvement in client spend in North America.

Salil Parekh: Thanks, Sunlit. Good evening and good morning to everyone on the call. We started the financial year with strong performance in quarter one across multiple dimensions, including broad base revenue growth expansion, operating margins, strong, large deal wins, and strong cash generation. I've been used for the quarter group 3.6 percent sequentially and 2.5 percent year on year in constant currency terms. I'm particularly pleased with 7.9 percent growth in the financial services segment, where we are seeing improvement in client spend in North America. All geographies and most industry groups grew sequentially. Volume growth turned positive after several quarters.

Speaker Change: I would now like to pass on the call to Salil.

Salil Satish Parekh: Thanks Sandeep. Good evening and good morning to everyone on the call.

Salil Satish Parekh: We started the financial year with a strong performance in Q1 across multiple dimensions, including broad-based revenue growth, expansion in operating margins, strong large-deal wins, and strong cash generation.

Salil Satish Parekh: Our revenues for the quarter grew 3.6% sequentially and 2.5% year-on-year in constant currency terms. I'm particularly pleased with 7.9% growth in financial services segment where we are seeing improvement in client spend in North America.

Salil Satish Parekh: All geographies and most industry groups grew sequentially; volume growth turned positive after several quarters. We also had an improvement in realization. We had another quarter of strong large deal wins with 34 large deals at a total contract value of $4.1 billion. Our clients see us as a preferred partner of choice for consolidation, cost takeout, and efficiency programs.

Salil Satish Parekh: All geographies and most industry groups grew sequentially. Volume growth turned positive after several quarters. We also had an improvement in realization.

Salil Parekh: We also had an improvement in realisation. We had another quarter strong, large deal wins with 34 large deals, and a total contract value of $4.1 billion. A client sees as a preferred partner of choice for consolidation, cost-take-out, and efficiency programs. This is also the reflection of a leadership stream. With the mobilisation of a margin program, we see a positive impact on our operating metrics and pricing. This resulted in a margin expanding by one point sequentially.

Salil Satish Parekh: We had another quarter of strong large deal wins with 34 large deals at a total contract value of $4.1 billion. Our clients see us as a preferred partner of choice for consolidation, cost takeout and efficiency programs. This is also a reflection of our leadership strength.

Salil Satish Parekh: This is also a reflection of our leadership strength. With the mobilization of our margin program, we saw a positive impact on our operating metrics and pricing. This resulted in our margin expanding by one point sequentially. Jayesh will elaborate on margin puts and takes later on the call. Free cash flow was the highest ever at $1.1 billion.

Salil Satish Parekh: With the mobilization of our margin program, we see positive impact on our operating metrics and pricing. This resulted in our margin expanding by one point sequentially. Jayesh will elaborate on margin puts and takes later on the call.

Salil Parekh: Jayesh will elaborate on margin puts in takes later on the corner. Free cash flow was highest ever at $1.1 billion. Our employee attrition rate was at 12.7 percent. We continue to see strong traction from a time for generative AI programs to deliver through top apps. Enterprises are focused on their own data set that can be used in generative AI large language models. As an example, we are partnering with the telecommunications leader to transform the product engineering practices with AI and to elevate both their customer and employee experience. An another example is how we are optimising and modernising IT infrastructure services and transforming the IT operating model with AI for a leading bank.

Salil Satish Parekh: Our employee attrition rate was at 12.7%. We continue to see strong traction from our triumphs with generative AI programs delivered through Topaz. Enterprises are focused on their own data sets that can be used in generative AI large language models.

Jayesh Sanghrajka: Free cash flow was highest ever at 1.1 billion dollars. Our employee attrition rate was at 12.7 percent.

Jayesh Sanghrajka: We continue to see strong traction from our clients with generative AI programs delivered through Topaz. Enterprises are focused on their own data sets that can be used in generative AI large language models.

Salil Satish Parekh: As an example, we are partnering with a telecommunications leader to transform product engineering practices with AI and to elevate both the customer and employee experience. Another example is how we are optimizing and modernizing IT infrastructure services and transforming the IT operating model with AI for a leading bank. We are helping several of our clients prepare for their AI transformation journey by building strong data foundations with robust cloud capabilities using our Cobalt cloud services.

Jayesh Sanghrajka: As an example, we are partnering with a telecommunications leader to transform the product engineering practices with AI and to elevate both the customer and employee experience.

Jayesh Sanghrajka: Another example is how we are optimizing and modernizing IT infrastructure services and transforming the IT operating model with AI for a leading bank.

Salil Parekh: We are helping several of our clients prepare for the AI transformation journey by building strong data foundations with robust cloud capabilities using our Cobalt cloud services. In this, we are analysing the knowledge and leadership in the domain of enterprise-generative AI. We continue to invest in strengthening our AI capabilities and building AI for solutions for clients. In the quarter we launched Aster, a marketing suite of AI-amplified solutions for our clients to create grand experiences with enhanced marketing efficiency and accelerated performance effectiveness. Our investment in nourishing our global workforce with AI-first skills and expertise continues as over 270,000 of our employees in our well-trained building a wide range of AI-powered solutions for our clients.

Jayesh Sanghrajka: We are helping several of our clients prepare for their AI transformation journey by building strong data foundations with robust cloud capabilities using our Cobalt cloud services.

Salil Satish Parekh: Industry analysts acknowledge our leadership in the domain of enterprise generative AI. We continue to invest in strengthening our AI capabilities and building AI solutions for clients. During the quarters, we launched Aster, a marketing suite of AI-amplified solutions for our clients to create brand experiences with enhanced marketing efficiency and accelerated performance effectiveness. Our investment in nurturing a global workforce with AI-first skills and expertise continues as over 270,000 of our employees are now well-trained in building a wide range of AI-powered solutions for our clients.

Jayesh Sanghrajka: Industry analysts acknowledge our leadership in the domain of enterprise-generative AI. We continue to invest in strengthening our AI capabilities and building AI-first solutions for clients.

Jayesh Sanghrajka: During the quarters, we launched Aster, a marketing suite of AI-amplified solutions for our clients to create brand experiences with enhanced marketing efficiency and accelerated performance effectiveness.

Jayesh Sanghrajka: Our investment in nurturing a global workforce with AI-first skills and expertise continues as over 270,000 of our employees are now well-trained in building a wide range of AI-powered solutions for our clients.

Salil Parekh: We are today uniquely positioned as a digital first, cloud first, and AI-first brand in the market, and a continued differentiation has helped us being recognised among the 100 most valuable brands in the world by Canter Brand Z. We have also been ranked among the most trusted brands across the US and India. Along with our overall robust performance in Q1 and strong opportunity pipeline, we are seeing early signs of improvement in the financial services vertical in the US. While discretionary spends continue to be under pressure, a highly differentiated offering around driving efficiency at scale and transformation capabilities around generative AI have positioned us well in the market.

Salil Satish Parekh: We are today uniquely positioned as a digital-first, cloud-first, and AI-first brand in the market, and our continued differentiation has helped us to be recognized among the 100 most valuable brands in the world by Canter Brand Z. We have also been ranked among the most trusted brands across US and India.

Jayesh Sanghrajka: We are today uniquely positioned as a digital-first, cloud-first, and AI-first brand in the market, and our continued differentiation has helped us being recognized among the 100 most valuable brands in the world by Canter Brand Z.

Jayesh Sanghrajka: We have also been ranked among the most trusted brands across US and India.

Salil Satish Parekh: Along with our overall robust performance in Q1 and strong opportunity pipeline, we are seeing early signs of improvement in the financial services vertical in the US, although discretionary spends continue to be under pressure. A highly differentiated offering around driving efficiencies at scale and transformation capabilities around generative AI has positioned us well in the market. With respect to our recent acquisition of Intech, we have received the required approvals and have closed the acquisition. Given a strong performance in Q1 and our current outlook, we have revised our revenue growth guidance for the full financial year to 3% to 4% growth in constant currency.

Jayesh Sanghrajka: Along with our overall robust performance in Q1 and strong opportunity pipeline, we are seeing early signs of improvement in financial services vertical in the US.

Jayesh Sanghrajka: While discretionary spends continue to be under pressure, a highly differentiated offering around driving efficiency at scale and transformation capabilities around generative AI have positioned us well in the market.

Salil Parekh: With respect to a recent acquisition of Intek, we have received the required approvals and have closed the acquisition. Given our strong performance in Q1, our current outlook, we have revised our revenue growth guidance for the full financial year to 3% to 4% growth in constant currency. Our operating margin guidance for the financial year remains at 20% to 22%.

Jayesh Sanghrajka: With respect to a recent acquisition of Intech, we have received the required approvals and have closed the acquisition.

Jayesh Sanghrajka: given a strong performance in Q1

Jayesh Sanghrajka: And our current outlook, we have revised our revenue growth guidance for the full financial year to 3% to 4% growth in constant currency.

Salil Satish Parekh: Our operating margin guidance for the financial year remains at 20% to 22%. With that, let me hand it over to Jayesh to share his update. Thank you, Salil. Good morning and good evening, everyone, and thank you for joining the call today.

Jayesh Sanghrajka: With that, let me hand it over to Jayesh to share his update.

Jayesh Sanghrajka: Our operating margin guidance for the financial year remains at 20% to 22%.

Jayesh Sanghrajka: Thank you. Thank you, Salil.

Jayesh Sanghrajka: With that, let me hand it over to Jayesh to share his update. Thank you.

Jayesh Sanghrajka: Good morning and good evening, everyone. Thank you for joining the call today. We entered FI-25 focusing on ski strategic priorities, including market share gains to accelerate revenue growth and drive margin improvement through project maximum. I am delighted to highlight results that we have achieved across different business dimensions in this quarter, including strong and broad-based revenue growth across all geos and most verticals year-on-year in constant currency terms. Sequentially positive volume growth after several quarters, coupled with improvement in realisation. Financial services return to positive sequential growth after six quarters with 7.9% growth in constant currency terms. 34 large deals signed during the quarter, which is a record number of deals in any quarter.

Jayesh Sanghrajka: Thank you Salil. Good morning and good evening everyone and thank you for joining the call today.

Jayesh Sanghrajka: We entered FY25 focusing on key strategic priorities, including market share gains to accelerate revenue growth and drive margin improvement through project maximization. I am delighted to highlight the results that we have achieved across different business dimensions this quarter, including strong and broad-based revenue growth across all geographies and most verticals year-on-year in constant currency terms. Sequentially positive volume growth after several quarters coupled with improvement in realization. Financial services returned to positive sequential growth after six quarters with 7.9% growth in constant currency.

Jayesh Sanghrajka: We entered FY25 focusing on key strategic priorities, including market share gains to accelerate revenue growth and drive margin improvement through Project Maximise.

Jayesh Sanghrajka: 34 large deals were signed during the quarter, which is the record number of deals in any quarter. Large deal TCV at 4.1 billion, including 58% net new. Deal pipeline continues to remain strong. 1% Operating Margin Expansion Sequentially improvement in operating parameters, including 1.8% increase in Utilization and Lowest On-Site Mix in 10 Quarters; Highest ever free cash flow generation in a quarter with free cash flows normalized for tax refunds at 104% of net profit.

Jayesh Sanghrajka: I am delighted to highlight results that we have achieved across different business dimensions this quarter, including

Jayesh Sanghrajka: Strong and broad-based revenue growth across all geos and most verticals year-on-year in constant currency terms.

Jayesh Sanghrajka: Sequentially positive volume growth after several quarters coupled with improvement in realization.

Jayesh Sanghrajka: Financial services returned to positive sequential growth after 6 quarters with 7.9% growth in constant currency terms.

Jayesh Sanghrajka: 34 large deals signed during the quarter which is the record number of deals in any quarter large deal TCV at 4.1 billion including 58% net new

Jayesh Sanghrajka: Large deals DCV at 4.1 billion, including 58% net new. Deal pipeline continues to remain strong. One person operating margin expansion sequentially, improvement in operating parameters, including 1.8% increase in utilization and lowest onset mix in 10 quarters. Highest ever free cash flow generation in a quarter, with free cash flows, normalized for tax refunds at 104% of net profits. Fifth consecutive quarter of reduction in unbuilt, attrition has remained stable, and increase in return on equity by 1.5% QOQ 233.6% primarily, the resulting from higher payout stream investors. With that, let me now elaborate with details. Revenue for Q1 was 4.7 billion, up 3.6% sequentially and 2.5% year on year in constant currency terms. This included benefit from improved realization from 1.5%. Operating margin improved by 1% sequentially to 21.1%, led by 1.4% improvement in gross margins, on account of strong operating performance across different dimensions.

Jayesh Sanghrajka: Deal pipeline continues to remain strong 1% operating margin expansion sequentially Improvement in operating parameters including 1.8% increase in utilization and lowest onsite mix in 10 quarters

Jayesh Sanghrajka: Highest ever free cash flow generation in a quarter with free cash flows normalized for tax refunds at 104% of net profits.

Jayesh Sanghrajka: 5th consecutive quarter of reduction in unbilled, Attrition has remained stable. An increase in return on equity by 1.5% QOQ to 33.6% primarily resulting from higher payouts to investors. With that, let me now elaborate on details. Revenue for Q1 was Rs. 4.7 billion, up 3.6% sequentially and 2.5% year-on-year in constant currency terms. This included a benefit from improved realizations from one-timers of 0.5%. Operating Margin improved by 1% sequentially to 21.1%, led by a 1.4% improvement in gross margins, on account of strong operating performance across different dimensions. The major components of sequential margin work are as follows.

Jayesh Sanghrajka: Fifth consecutive quarter of reduction in unbilled, attrition has remained stable, an increase in return on equity by 1.5% QOQ to 33.6% primarily resulting from higher payouts to investors.

Speaker Change: With that, let me now elaborate with details. Revenue for Q1 was Rs. 4.7 billion, up 3.6% sequentially and 2.5% year-on-year in constant currency terms. This included benefit from improved realisation from one-ten as of 0.5%.

Speaker Change: Operating margin improved by 1% sequentially to 21.1%, led by 1.4% improvement in gross margins on account of strong operating performance across different dimensions.

Jayesh Sanghrajka: The major components of sequential margin work are as follows. Tailwinds of 2.2% comprising of normalization of Q41 times as of 1%, 0.8% benefit from project maximum, largely from higher utilization and value-based selling. .4% from the improvement in realization mentioned above, partly offset by headwinds of 1.2% from higher variable pay, higher leave cost offset by currency and others. We continue to drive project maximals across the organization with strong intensity. Headcount at the end of the quarter stood at over 3 lakhs of 10,000, with utilization further increasing to 85.3%, and the attrition was table at 12.7%. Unwell revenue dropped for the fifth consecutive quarter to 1.7 billion, free cash work for the quarter was highest over at 1.10 or 9.4 million, a sequential increase of 29%.

Jayesh Sanghrajka: Tailwinds of 2.2%, comprising normalization of Q4 one-timers of 1%, 0.8% benefit from Project Maximus, largely from higher utilization and value-based selling. 0.4% from the improvement and realization mentioned above partly offset by headwinds of 1.2% from higher variable pay, higher leave costs offset by currency, and others. We continue to drive Project Maximus across the organization with strong intensity. Headcount at the end of the quarter stood at over 3,15,000, with utilization further increasing to 85.3%. LTM attrition was stable at 12.7%. Unbilled revenues dropped for the fifth consecutive quarter to 1.7 billion.

Speaker Change: The major components of sequential margin walk are as follows. Tailwinds of 2.2%, comprising of normalization of Q4 one-timers of 1%, 0.8% benefit from Project Maximus, largely from higher utilization and value-based selling,

Speaker Change: 0.4% from the improvement in realization mentioned above, partly offset by headwinds of 1.2% from higher variable pay, higher leave costs offset by currency and others.

Speaker Change: We continue to drive Project Maximus across the organization with strong intensity.

Speaker Change: Headcount at the end of the quarter stood at over 3,15,000 with utilization further increasing to 85.3%. LDM attrition was stable at 12.7%.

Speaker Change: Unbilled revenues dropped for the 5th consecutive quarter to Rs 1.7 billion. Free cash flows for the quarter was highest ever at Rs 1094 million, a sequential increase of 29%.

Jayesh Sanghrajka: Free cash flows for the quarter was the highest ever at 1094 million, a sequential increase of 29%. DHO for the quarter was 72 days compared to 71 days in Q4. Consolidated cash and cash equivalents stood at Rs 4.3 billion after factoring in payout of Rs 1.4 billion towards dividend decline in Q4.

Jayesh Sanghrajka: Deato for the quarter was 72 days compared to 71 days in Q4. Consolidated cash and cash equivalent to that 4.3 billion, after factoring in pay out of 1.4 billion towards dividend-declaring Q4; consequently, return on equity increase, equivalent to 33.6%. Yearland cash balance is worth at 7.1% in Q1; ETF for the quarter was 29.4%, which is in line with our expectation for the year. EPS grew by 7% in Ayana and by 5.4% in dollar terms on a year-on-year basis. We closed 34 large deals with TCV of 4.1 billion. 50.1% of this was net new. Vertical wise, we signed 80s, each in retail and communication, 6 in U.R.s, 5 in financial services, 4 in manufacturing, 2 in high tech, and 1 in live services.

Jayesh Sanghrajka: Consequently, return on equity increased sequentially to 33.6%. Yield and cash balances were at 7% in Q1. ETR for the quarter was 29.4%, which is in line with our expectations for the year. EPS grew by 7% in INR and by 5.4% in dollar terms on a year-on-year basis. We closed 34 large deals with PCV of Rs. 4.1 billion.

Speaker Change: DSO for the quarter was 72 days compared to 71 days in Q4.

Speaker Change: Consolidated cash and cash equivalents stood at Rs. 4.3 billion after factoring in payout of Rs. 1.4 billion towards dividend decline in Q4. Consequently, return on equity increased sequentially to 33.6%.

Speaker Change: Yield and cash balances was at 7% in Q1, ETR for the quarter was 29.4% which is in line with our expectation for the year. EPS grew by 7% in INR and by 5.4% in dollar terms on a year-on-year basis.

Jayesh Sanghrajka: 58% of this was net new. Vertically, we signed 8 deals, each in retail and communication, 6 in URS, 5 in financial services, 4 in manufacturing, 2 in high-tech, and 1 in licenses. Region-wise, we signed 21 large deals in America, 12 in Europe, and 1 in ROW.

Speaker Change: We closed 34 large deals with TCV of Rs 4.1 billion. 58% of this was net new. Vertical wise, we signed 8 deals, each in retail and communication, 6 in URS, 5 in financial services, 4 in manufacturing, 2 in high tech and 1 in licenses.

Jayesh Sanghrajka: Region wise, we signed 21 large deals in America, 2 in Europe, and 1 in Florida. Coming to vertical, BFS are returned to positive growth after 6 quarters, net by ramparts of large deals and absence of 1 of last quarter. In the U.S., we see some recovery in areas like mortgage, capital markets, and cards and payments. Overall, clients still remain cautious on spending and are focusing to deliver maximum business value through deals combining transformation, technology, and operations. Pipeline remains strong and we are working with the clients to accelerate the adoption of January for modernizing legacy platforms throughout detection, credit process, simplification, etc.

Speaker Change: Region-wise, we signed 21 large deals in America, 12 in Europe , and 1 in ROW.

Jayesh Sanghrajka: Coming to verticals, BFSR returned to positive growth after six quarters, led by ramp-ups of large deals and the absence of one-off deals last quarter. In the U.S., we see some recovery in areas like mortgage, capital markets, and cards and payments. Overall, clients still remain cautious on spending and are focusing on delivering maximum business value through deals combining transformation, technology, and operations. Pipeline remains strong, and we are working with clients to accelerate their adoption of Gen AI for modernizing legacy platforms, fraud detection, credit process simplification, etc.

Speaker Change: Coming to verticals

Speaker Change: BFSR returned to positive growth after six quarters led by ramp ups of large yields and absence of one-off last quarter.

Speaker Change: In the U.S., we see some recovery in areas like mortgage, capital markets, and cards and payments. Overall, clients still remain cautious on spending and are focusing to deliver maximum business value through deals combining transformation, technology, and operations.

Speaker Change: Pipeline remains strong and we are working with the clients to accelerate their adoption of Gen-AI for modernizing legacy platforms, fraud detection, credit process simplification, etc.

Jayesh Sanghrajka: In manufacturing, growth was garbage across geographies and sub-verticals like industrial, automotive, and aerospace. While pressure on discretion is spent versus we see increased benefits of vendor consolidation, opportunities around resolving supply chain bottlenecks and rationalizing infrastructure and application.

Jayesh Sanghrajka: In manufacturing, growth was broad-based across geographies and sub-verticals like industrial, automotive, and aerospace. While pressure on discretionary spends persists, we see increased benefits of vendor consolidation, opportunities around resolving supply chains, bottlenecks, and rationalizing infrastructure and applications. We see strong interest in Gen-AI with deep client engagement.

Speaker Change: In manufacturing, growth was broad-based across geographies and sub-verticals like industrial, automotive, and aerospace. While pressure on discretionary spends persists, we see increased benefits of vendor consolidation, opportunities around resolving supply chains, bottlenecks, and rationalizing infrastructure and applications.

Jayesh Sanghrajka: P.C. strong interest on Jainaya with deep-cland engagement, our capability in pipeline in the engineering space will be solidified by acquisition of Intek which will help us accelerate the segment growth in F-I-25. Growth in communication was led by Rampup of recent large ill-win; overall environment, however, remains cautious, with continued op-ex pressure and delayed decision making. Telcos, despite challenges, are navigating their way by focusing on rapid digitization and reprioritization of spread. Uncertainty is a retail sector continue with clients focusing on cost takeouts to fund their business transformation journey. There are opportunities around areas like customer and employee experience, predictive analytics, digital marketing, and landscape modernization.

Jayesh Sanghrajka: Our capability and pipeline in the engineering space will be solidified by the acquisition of Intech, which will help us accelerate the segment growth in FI25. Growth in communication was led by the ramp-up of recent large-scale events. The overall environment, however, remains cautious, with continued op-ex pressure and delayed decision-making. Telcos, despite challenges, are navigating their way by focusing on rapid digitization and reprioritization of

Speaker Change: We see strong interest on Gen AI with deep client engagement. Our capability and pipeline in the engineering space will be solidified by acquisition of InTech which will help us accelerate the segment growth in FI25.

Speaker Change: Growth in communication was led by ramp-up of recent large-scale events. Overall environment, however, remains cautious, with continued op-ex pressure and delayed decision-making. Telcos, despite challenges, are navigating their way by focusing on rapid digitization and reprioritization of spend.

Jayesh Sanghrajka: Uncertainties in the retail sector continue, with clients focusing on cost takeouts to fund their business transformation journey. There are opportunities around areas like customer and employee experience, predictive analytics, digital marketing, and landscape modernization. However, while the pipeline remains healthy, decision cycles continue to stay along it.

Speaker Change: Uncertainties in retail sector continue with clients focusing on cost takeouts to fund their business transformation journey. There are opportunities around areas like customer and employee experience, predictive analytics, digital marketing, and landscape modernization. While the pipeline remains healthy, decision cycles continue to stay along it.

Jayesh Sanghrajka: While the pipeline remains healthy, decision cycles continue to stay longer. Environment in EURS continues to be impacted by high interest rates in geopolitical conflicts, which are influencing the spend pattern. While pressure on discretionary spend persists, our differentiation in areas like energy transition, integration business, and human experiences helping us build a strong pipeline. I take vertical continue to remain soft. Driven by our strong all-round performance in Q1, improvement in U.S.

Jayesh Sanghrajka: The environment in EURS continues to be impacted by high interest rates and geopolitical conflicts, which are influencing the spend pattern. While pressure on discretionary spend persists, our differentiation in areas like energy transition, integration business, and human experience is helping us build a strong pipeline. High Tech Vertical continues to remain soft. Driven by our strong all-round performance in Q1, improvement in U.S. financial services, strong large-deal closures, and in-tech acquisition, we are increasing the revenue guidance to 3-4% in consecutive terms.

Speaker Change: Environment in EURS continues to be impacted by high interest rates and geopolitical conflicts which are influencing the spend pattern, while pressure on discretionary spend persists, our differentiation in areas like energy transition, integration business and human experience is helping us build a strong pipeline.

Speaker Change: Hitech Vertical continues to remain soft.

Jayesh Sanghrajka: financial services, strong large ill courges and Intek acquisition, we are increasing the revenue guidance to 3-4% in concert currency jobs.

Speaker Change: Driven by a strong all-round performance in Q1, improvement in US financial services, strong large-scale closures and in-tech acquisition, we are increasing the revenue guidance to 3-4% in consequency terms.

Jayesh Sanghrajka: We are maintaining our operating margin guidance at 20% to 22%, and with that, we can open the call for the question.

Jayesh Sanghrajka: We are maintaining our operating margin guidance at 20% to 22%, and with that, we can open the call for questions. We will now begin the questions. Anyone who wishes to ask, press Star and One. If you wish to remove yourself from the question queue, you may press Star 1.

Speaker Change: We are maintaining our operating margin guidance at 20% to 22% and with that we can open the call for the questions.

Unknown Attendee: Thank you very much.

Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press R&1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking no question.

Speaker Change: We will now begin the question and answer session.

Speaker Change: Anyone who wishes to ask a question may press star and 1 on the touchtone telephone.

Salil Satish Parekh: Participants are requested to use handsets while asking questions. For a moment, the first question is from the line of Ankur Rai. Hi, thank you, and good to see very good numbers after a while. Just wanted to get a sense of Salil, you know, what's the breakup of the very strong momentum this quarter, if you could, between the last deal that you won over the last year, any kind of improvement in execution of short cycle business or discretionary business?

Speaker Change: If you wish to remove yourself from the question queue, you may press star and two.

Speaker Change: Participants are requested to use handsets while asking a question.

Operator: Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press R&1 to ask a question.

Speaker Change: Ladies and Gentlemen, we will wait for a moment while the questions are assembled.

Speaker Change: Participants, you may press star and 1 to ask a question.

Ankur Rudra: The first question is from Ankurudra from J.B. Morgan. Please go ahead.

Mooji: Satsang with Mooji

Speaker Change: The first question is from the line of Ankur Rudra from J.P.Morgan. Please go ahead.

Ankur Rudra: Thank you and good to see very good numbers after a while. Just wanted to get a second. So, what's the breakup of the very strong momentum this quarter? If you could between the large deal that you've won over the last year. Any kind of improvement in execution of short cycle business or discretionary business. And potentially better execution. And also, when you answer that, if you can talk about how client conversations are changing, if there's anything turning a bit more positive. And any change in the momentum or the short cycle, the large deal we can see is going on very strongly.

Ankur Rudra: Hi, thank you and good to see very good numbers after a while.

Ankur Rudra: Just wanted to get a sense of, Salil, you know, what's the breakup of the very strong momentum this quarter, if you could, between the large deal that you've won over the last year, any kind of improvement in execution of short cycle business or discretionary business,

Salil Satish Parekh: and you know potentially better execution, and also, when you answer that, if you can talk about how client conversations are changing, if there's anything turning a bit more positive, and you know any change in the momentum on the short cycle, but largely, as we can see, is going on. Thanks and Kud, Regarding discretionary or short cycle, what we are seeing is in financial services in the US, we've seen that shift that we have highlighted, and we saw that during the quarter. Outside of that, discretionary still remains similar to where we were when we started the year, which is still in a difficult situation.

Speaker Change: and you know potentially better execution and also when you answer that if you can talk about how client conversations are changing if there's anything turning a bit more positive and you know any change in the momentum on the short cycle but largely we can see it's going on very strongly. Thanks.

Jayesh Sanghrajka: Thanks.

Jayesh Sanghrajka: Thanks, Ankurudra. The view on discretionary or short cycle, what we are seeing is in financial services. In the US, we've seen that shift that we have highlighted. And we saw that during the quarter, outside of that, the discretionary still remains similar. To where we were when we started the year, which is still in a difficult situation. So that's the one that we have seen the change in.

Ankur Rudra: Thanks, Ankur.

Speaker Change: View on discretionary or short cycle, what we are seeing

Speaker Change: is in financial services in the U.S. We've seen that shift that we have highlighted, and we saw that during the quarter.

Speaker Change: Outside of that...

Speaker Change: The discretionary still remains similar to where we were when we started the year, which is...

Salil Satish Parekh: So that's the one that we have seen the change in. The clan conversations... You know, there's a lot of talk and discussion about generative AI, but the programs, even though they're not POCs, the actual projects are not large revenue projects, and transformation is not so much what we are seeing. So even in a large deal, the vast majority is still cost takeout, efficiency, consolidation, automation, that type of work. And in some instances where there is, these are funded massively through cost takeout; the transformation is. So it's not really big, big, large spends there. So that's how we're seeing discretionary work at this. Thank you.

Speaker Change: Still in a difficult situation.

Jayesh Sanghrajka: The client conversations.

Speaker Change: So that's the one that we have seen the change in. The clan conversations...

Jayesh Sanghrajka: Raja, in general, there is a lot of talk and discussion with generative AI, but the programs, even though they are not POC, the actual projects are not large revenue projects, and transformation is not so much what we are seeing. So even in a large deal, the vast majority still cost take out efficiency, consolidation, automation, that type of work, and in some instances where there is, these are funded massively through cost take out. The transformation is, so it is not really big large spends there, so that is how we are seeing the discretionary work at this time.

Speaker Change: Bye-bye.

Speaker Change: In general, you know, there's a lot of talk and discussion with generative AI, but the programs, even though they're not POCs, the actual projects are not large revenue projects and transformation.

Speaker Change: is not so much what we are seeing. So even in a large deal, the vast majority still cost take out, efficiency, consolidation, automation, that type of work.

Speaker Change: And in some instances where there is, these are funded massively through cost takeout, the transformation is. So it's not really big, big, large spends there. So that's how we're seeing the discretionary work at this time.

Jayesh Sanghrajka: Thank you, and from here on, I mean, you have seen this change in financial services, in your client conversations. Do you sense there is anything in particular, clients especially in maybe the ITAC space, or energy and utility where you highlight a problem, still process, or even manufacturing, which might change the client behavior, maybe not this thing, but into next year, one of the main things clients may be waiting for. So there, first on energy utilities, we have had a good outcome last year. We have seen sort of similar discussions now, not a huge change. Manufacturing, again, good outcome last year, will be decent growth. This is just slower than last year, so not like a big, big change there.

Salil Satish Parekh: And you know, from here on, have you seen this change in financial services? In your client conversations, do you sense there's anything in particular in particular clients, especially in, you know, maybe the high tech space, or, you know, energy and utility where you highlighted, you know, problems still persist, or even manufacturing? which might change client behavior, maybe not this year, but into next year.

Speaker Change: Thank you. And, you know, from here on, are you, I mean, have you seen this change in financial services?

Speaker Change: In your client conversations, do you sense there's anything in particular, clients, especially in, you know, maybe the high tech space?

Speaker Change: or you know energy and utility where you highlighted you know problems still persist or even manufacturing which might change the client behavior maybe not this year but into next year. What are the main things clients may be waiting for?

Salil Satish Parekh: One of the main things clients may be waiting for So, first one energy utilities, you know, we've had a good outcome last year, we've seen sort of similar, discussions now, not a huge change. Manufacturing again, a good outcome last year, will be decent growth. This is just slower than last year. A big, big, big change there. On high tech, it's still difficult, as you point out. I don't know what the trigger could be.

Speaker Change: So there, first one, energy utilities, we've had a good outcome last year. We've seen sort of similar...

Speaker Change: Discussions now not not a huge change. Manufacturing again good outcome last year will be decent growth this is just slower than the last year so not like

Jayesh Sanghrajka: On ITAC, it is still difficult as you point out. I do not know what the trigger could be; of course, on a macro level, there is not with clients. They are generally speaking of you, that if US inflation and interest rate and all of those discussions change, that will change something, but we do not know what will that trigger the view. Okay, appreciate it.

Speaker Change: Big big big change there on high-tech. It's still still difficult as you point out

Jayesh Sanghrajka: Of course, on a macro level, you know, there is, not with clients but generally speaking, a view that U.S. inflation and interest rates and all of those discussions change that that will change something that we don't know what that trigger will be. Okay, appreciate it. Maybe just one question for Jayesh. Jayesh, you know, great performance on the margins.

Speaker Change: I don't know what the trigger could be. Of course, on a macro level, there is, not with clients, but generally speaking, a view that

Speaker Change: Yes, yes.

Speaker Change: U.S. inflation and interest rate and all of those discussions change that that will change something that we don't know what will that what will that trigger be.

Jayesh Sanghrajka: Could you maybe talk about, you know, how do you think about the puts and takes from here on? Utilization, especially among trainees, seems to be high, but I guess that indicates fewer trainees in the system. You know, what sort of headwind will we see from there?

Jayesh Sanghrajka: Maybe just one question for Jage: great performance on the margins. Could you maybe talk about how do you think about the percentage from here on? Utilization, especially including trainees, seems to be high; I guess indicates fewer trainees in the system. What sort of headwind will be seized from there? Secondly, I am guessing there will be wage hikes at some point in the next couple of quarters. So how are you thinking about what will help you maintain, if not improve margins from here on, and extend Project Maximus?

Speaker Change: Okay, appreciate it. Maybe just one question for Jayesh. Jayesh, you know, great performance on the margins.

Jayesh Sanghrajka: Could you maybe talk about, you know, how do you think about the percentage from here on?

Speaker Change: Utilization, especially including trainees, seems to be high. I guess that indicates fewer trainees in the system.

Speaker Change: What sort of headwind will we see from there? Secondly, I'm guessing there will be wage hikes at some point in the next couple of quarters. So how are you thinking about what will help you maintain, if not improve, margins from here and extend Project Maximus?

Jayesh Sanghrajka: Yeah, so one good there.

Jayesh Sanghrajka: Thank you for that first. If you look at the project Maximus, and we talked about the five pillars of project Maximus, many of them are starting to show results. VBS, which is value-based selling, is one of them, efficient pyramid, very utilization, and other factors are part of it. Lean in automation is a third piece in that. So there are many of these tracks which are showing results, and we still believe there is more meat there. Of course, in terms of if you look at the headwinds, you know, you will have comp; if you are someone in time doing the year, that could be a headwind. We have at this point in time not decided the timing, et cetera, of that.

Speaker Change: Thank you for that first of all and if you look at you know the project Maximus and we've talked about the five pillars of project Maximus

Speaker Change: Many of them are starting to show results. You know, VBS, which is Value Based Selling, is one of them, Efficient Pyramid Utilization and other factors are other part of it.

Speaker Change: Lean in Automation is the third piece in that, so there are many of these tracks which are showing results and we still believe there is more meat there, of course in terms of if you look at the headwinds, you know you will have

Jayesh Sanghrajka: Secondly, I'm guessing there'll be wage hikes at some point in the next couple of quarters. So how are you thinking about what will help you maintain, if not improve margins from here on and extend Project? There is more meat there. Of course, in terms of if you look at the headwinds, you know, you will have a comp review at some point in time during the year that could be a headwind. We have not, at this point in time, decided the timing etc. of that.

Speaker Change: Comp review at some point in time

Jayesh Sanghrajka: So that would be headwind. Some of the laws that we have signed, you know, the transition and ramp up of that would be a headwind. So we will have to balance that as we go through the year.

Jayesh Sanghrajka: So that would be a headwind. Some of the large deals that we have signed, you know, the transition and ramp up of that would be a headwind. So we will have to balance the two as we go through the year. At this point in time, we are very confident of our margin value. Appreciate it. Thank you. Thank you and best of luck.

Speaker Change: the timing etc of that

Speaker Change: So that would be headwind. Some of the large deals that we have signed, you know, the transition and ramp-up of that would be a headwind. So we will have to balance the two as we go through the year. At this point in time, we are very confident of our margin values.

Jayesh Sanghrajka: At this point in time, we are very confident of our margin value.

Unknown Attendee: Thank you.

Unknown Attendee: I appreciate it. Thank you.

Nitin Padmanabhan: Next question is from Nanakit from BMO, please go ahead. Hi, thank you very much. First, I wanted to get some additional feedback on financial services. You indicated that you thought that business outcomes or business energy had improved. I think something we haven't heard from some of our software related companies, but what do you think is the driver of the improvement in financial services in particular? So, keep that. If you look at your commentary on that, we are seeing some recovery in U.S. financial services specifically in the areas like mortgages, capital markets, and card payments, you know, and the logic lines there.

Keith Bachman: Next question is from Keith from BMO. Hi, thank you very much. First, I wanted to get some additional feedback on financial services, indicating that you thought that business outcomes or business energy had improved. I just wanted to hear a little bit more about that.

Speaker Change: Thank you and best luck. Thank you.

Speaker Change: Next question is from the line of Keith from BMO, please go ahead.

Keith: Hi, thank you very much. First, I wanted to get some additional feedback on financial services.

Salil Satish Parekh: It's certainly something we haven't heard from some of our software-related companies. But what do you think is the driver of the improvement in financial services, in particular? So keep that in mind, if you look at, you know, a commentary on that, we are seeing some recovery in US financial services, specifically in areas like mortgages, capital markets, and card payments, you know, and the larger clients there. So we are seeing some volume coming in and some recovery, some early signs of recovery in those areas. Do you think that's Infosys? Or do you think that's, in other words, are you willing to share those accounts?

Keith: Indicated that you thought that business outcomes or business energy had improved. I just wanted to hear a little bit more about that. It's certainly something we haven't heard from...

Speaker Change: from some of our software related companies. But what do you think is the driver of the improvement in financial services in particular?

Speaker Change: So keep that if you look at you know a commentary on that we are seeing some recovery in in US financial services specifically in the areas like mortgages capital markets and card payments

Nitin Padmanabhan: So, we are seeing some volumes coming in and some recovery, some early signs of the COVID in those areas. Do you think that's Infosys, or do you think that, in other words, are you willing to share in those accounts? Or do you think that's a more broader base in North American banks that there is a general front towards recovery in some? So, I think it's a combination of various factors. There are instances where we are consolidating; there are instances where we have one new and larger businesses. They talked about some of the large deals wins also in the financial service sector.

Speaker Change: and the larger clients there. So we are seeing some volume coming in and some recovery, some early signs of recovery in those areas.

Salil Satish Parekh: Or do you think that's a broader base and say, North American banks that there is a general trend towards recovery and stuff? So I think it's a combination of various factors; it's where, you know, where, I mean, there are instances where we are consolidating, there are instances where we have won new and larger businesses, you know, as I talked about, some of the large deals won also in the financial service sector. So I think there are multiple combinations of those factors. Okay, okay.

Speaker Change: Do you think that's Infosys? Or do you think that's, in other words, are you willing to share in those accounts? Or do you think that's a more broader base than say North American banks that there is a general trend towards recovery and spend?

Speaker Change: So, I think it's a combination of various factors. It's where, you know, where, I mean, there are instances where we are consolidating, there are instances where we have won new and larger businesses. You know, they talked about some of the large deals wins also in the financial service sector. So, I think there are multiple combinations of those factors in there.

Nitin Padmanabhan: So, I think there are multiple combinations of those factors in that.

Nitin Padmanabhan: Okay. And then just on the margin guide in terms of puts and takes, you highlighted some on the previous question. But how is the, you close the deal with adding almost 200 million in revenue on a run rate basis. How is that impacting margins, aimed or any other issues you want to call out, including any comments on effects impact as you see it today in terms of margins.

Jayesh Sanghrajka: And then just on the margin guide, in terms of puts and takes. You highlighted some in the previous question, how is the, you closed the deal with adding almost $200 million in revenue on a run rate basis, how is that impacting margins and or any other issues you want to call out, including any comments on FX impact as you see it today in terms of margins, and that's it for me. Thank you very much.

Speaker Change: Okay, okay. And then just on the margin guide in terms of puts and takes.

Speaker Change: You highlighted some on the previous question.

Speaker Change: How is the, you closed the deal with adding almost $200 million in revenue.

Speaker Change: on a run rate basis. How is that impacting margins and or any other issues you want to call out including any comments on FX impact as you see it today in terms of margins? And that's it for me. Thank you very much.

Nitin Padmanabhan: And that's it for me. Thank you very much.

Nitin Padmanabhan: Okay. I didn't get any questions. Clearly, if you go to. How is the MNA that the recent transaction that you close, how is that impacting margins and then also how do you see the exchange rate. It's impacting margins as you work out over the next couple of quarters. Effects rates. So, kids, the acquisition that we have done, you know, compared to the size of the company, is relatively smaller to have a material margin impact. And, you know, as you have seen from our filings, also, the intake is coming with healthy margins and there are opportunities, etc.

Speaker Change: Okay, I didn't get the question clearly if you could...

Jayesh Sanghrajka: Okay, I didn't understand the question. Clearly, if you could, how is the M&A, the recent transaction that you closed, how is that impacting margins? And then also, how do you see the exchange rate impacting margins as you look out over the next couple of quarters? FX rates.

Speaker Change: How is the M&A, the recent transaction that you closed, how is that impacting margins and then also how do you see the exchange rate impacting margins as you look out over the next couple quarters?

Jayesh Sanghrajka: Kids, the acquisition that we have done, you know, compared to the size of the company, is relatively smaller to have a material margin impact. And, you know, as you have seen from our filings also, the intake is coming with healthy margins, and there are opportunities, etc., in synergies.

Speaker Change: FX Rates.

Speaker Change: Kids, the acquisition that we have done, you know, compared to the size of the company is relatively smaller to have a material margin impact and, you know, as you have seen from our filings also, the intake is coming with healthy margins.

Nitin Padmanabhan: in synergies. Coming to the forex, the forex has remained range bound for the last couple of quarters. So, at this one point in time, we don't really see an impact, but, you know, as you will appreciate, Forex's range bound. I mean Forex is unpredictable, and it can have the margin benefit of or impact depending on which way it goes. So, at this point in time, it is remaining range bound.

Speaker Change: and there are opportunities etc. in Synergy.

Speaker Change: Coming to the forex, the forex has remained range bound for last couple of quarters.

Jayesh Sanghrajka: Coming to the forex, the forex has remained range bound for the last couple of quarters. So at this point in time, we don't really see an impact. But, you know, as you will appreciate, the forex is range bound. I mean, forex is unpredictable, and it can have the margin benefit of or impact depending on which way it goes.

Speaker Change: Thank you for your time.

Jayesh Sanghrajka: But at this point in time, it is remaining range bound. Okay. All right. Perfect. Many thanks. Congratulations on a solid job. Thank you. Next question is from the line of Kumar Rakesh from BNP Barabas. Please go ahead. Hi, good evening.

Unknown Attendee: Thank you.

Speaker Change: Okay. All right. Perfect. Many thanks. Congratulations on solid results.

Speaker Change: Thank you.

Speaker Change: Next question is from the line of Kumar Rakesh from BNP Barabas, please go ahead.

Kumar Rakesh: Thank you for taking my question. My first question was for Jayesh, just a clarification. So during the press briefing, you talked about 40 bps of one-off impact on the margin. So can you just help us understand the revenue and the margin impact coming out of that? And I understand it is a recovery which you have made from one of the customers based in India, if that is correct. Yeah, so that's right.

Unknown Attendee: My first question was, Jayesh. Just a clarification. So, during the press briefing, you talked about 40 bits of one-off impact in the margins. Can you just help us understand the revenue and the margin impact coming out of that? And I understand it is a recovery which you have made from one of the customers based in India, if that is correct. Thanks. Yeah, so that's right. This is for a customer based in India. It's one-off in the revenue, and therefore most of that has flown into margin directly. So half a person on revenue, pretty much impacting 40 bits of margin.

Kumar Rakesh: Hi, good evening. Thank you for taking my question. My first question was for Jayesh, just a clarification. So, during the press briefing, you talked about 40 bps of one-off impact in the margin. So, can you just help us understand?

Speaker Change: The revenue and the margin impact coming out of that and I understand it is a recovery which you have made from one of the customers based in India, if that is correct. Thanks.

Jayesh Sanghrajka: This is for a customer based in India, it's a one-off in revenue, and therefore, most of that has flown into margin directly. So you know, half a person in revenue, pretty much impacting 40 bps on margin. Got it. Thanks for that.

Jayesh Sanghrajka: Yeah, so that's right. This is for a customer based in India. It's one off, you know, in the revenue, and therefore, most of that has flown into margin directly. So you know, half a percent on revenue, pretty much impacting 40 bps on margin.

Salil Satish Parekh: My second question was, Salil, for hyperscalers, we are seeing their growth accelerate, and also, the AI demand, especially for some of the chip makers, such as NVIDIA, has been quite strong. So it doesn't seem like discretionary demand is entirely missing in the market. So is there a transformation in the underlying business mix which is happening where, possibly, discretionary demand is, for now, at least, moving towards platform and hardware makers and not coming to services companies?

Unknown Attendee: Thanks for that.

Unknown Attendee: My second question was for hyperskillers; we are seeing the growth is accelerating, and also the AI demand, especially for some of the chip makers such as Nvidia, have been quite strong. So it doesn't seem like the discretionary demand is entirely missing in the market.

Jayesh Sanghrajka: Got it. Thanks for that. My second question was, Salil...

Salil Satish Parekh: For hyperscalers, we are seeing their growth is accelerating and

Speaker Change: Also, the AI demand, especially for some of the chip makers, such as NVIDIA, has been quite strong. So it doesn't seem like the discretionary demand is entirely missing in the market.

Jayesh Sanghrajka: So is there a transformation in the underlying business mix which is happening where possibly discretionary demand for now at least is moving towards platform and hardware makers and not coming to services companies? So there the view we have is what we saw, and we highlighted so far the shift in financial services in the US shows that some of that type of demand is coming.

Speaker Change: So is there a transformation in the underlying business mix which is happening where possibly discretionary demand for now at least is moving towards platform and hardware makers and not coming to services companies?

Salil Satish Parekh: The view we have is, you know, what we saw and highlighted so far, the shift in financial services in the US shows that some of that type of demand is coming now. We'll wait and see across all the industries, whether it's what you are describing or whether tech services project, discretionary work also comes back, or whether they'll be, Transformation Programs in Tech, which will also come. We are definitely seeing, you know, more and more discussions in enterprises on generative AI programs. Jayesh also shared a couple of examples.

Speaker Change: So there...

Speaker Change: The view we have is, you know...

Speaker Change: What we saw and we've highlighted so far the

Speaker Change: The shift in financial services in the U.S. shows that some of that type of demand is coming now. We'll wait and see across all the industries, whether it's what you are describing or whether tech services, project,

Jayesh Sanghrajka: Now we will wait and see across all the industries whether it's what you are describing or whether tech services project discretionary work also comes back, whether there will be transformation programs in tech which will also come. We are definitely seeing more and more discussions and enterprises on generative AI programs. Jaiya has also shared a couple of examples. I shared a couple of examples. So we do see, and these are not POC; these are actual projects where we are participating. So we do see that my own sense is this USFS is one data point. We will wait and see what some of the other data points look like.

Speaker Change: Discretionary work also comes back whether they'll be

Speaker Change: transformation programs in tech which will also come

Speaker Change: We are definitely seeing...

Speaker Change: You know, more and more discussions in enterprises.

Speaker Change: On generative AI programs, Jayesh also shared a couple of examples, I shared a couple of examples.

Speaker Change: So we do see, and these are not POC, these are actual projects.

Speaker Change: where we are participating.

Speaker Change: So we do see that. My own sense is this USFS is, you know, one data point. We'll wait and see what some of the other data points look like.

Jayesh Sanghrajka: So selling what I was trying to understand was that is there a deep thing of discretionary demand which is happening, or is this a sequence in which we will see first the hardware and platform makers getting the discretionary demand and eventually coming to services. So is that a decoupling or a sequence of events which eventually comes to services as well? What do you think would be the chain of events.

Salil Satish Parekh: I shared a couple of examples. So we do see, and these are not proof of concept; these are actual projects where we are participating. So we do. We do see that. My own sense is this USFS is, you know, one data point. We'll wait and see what some of the other data points look like. So Salil, what I was trying to understand was whether there is a decoupling of discretionary demand which is happening, or is this a sequence in which we will see first the hardware and platform makers getting the discretionary demand and eventually coming to services. So is that a decoupling or a sequence of events which eventually comes to services as well? What do you think would be the chain of events?

Speaker Change: So Salil, what I was trying to understand was that is there a decoupling of discretionary demand which is happening or is this a sequence in which we will see first the hardware and platform makers getting the discretionary demand and eventually coming to services?

Salil Satish Parekh: So is that a decoupling or a sequence of events which eventually comes to services as well? What do you think would be the chain of events?

Jayesh Sanghrajka: So that's difficult to say. So again, it's you know just this year, one quarter, what we saw was that in financial services, US, some of that discretionary work is there. So when it was decoupled or following on from something difficult to say, but we did see some evidence. of that.

Salil Satish Parekh: So that's difficult to say. So again, it's, you know, just this year, one quarter of. What we saw was that in financial services in the U.S., some of that discretionary work is there. Whether it was decoupled or following on from something is difficult to say, but we did see some evidence.

Salil Satish Parekh: That's difficult to say. So again, it's, you know, just this year, one quarter.

Salil Satish Parekh: What we saw was that in financial services U.S., some of that discretionary work is there. Whether it was decoupled or following on from something, difficult to say, but we did see some evidence of that.

Nitin Padmanabhan: Thanks a lot for that. The next question is from the line of Nitin Padmini. Yeah, hi, good evening.

Unknown Attendee: Thanks a lot for that. Thank you.

Nitin Padmanabhan: Next question is from the Land of Nitin, Padmanabhin, from Investig. Please go ahead. Yeah, hi, good evening. Congrats on the quarter. I just wanted your thoughts on one of these financial services. You did mention that you saw growth from mortgages, card payments, and obviously capital markets. When you think of the sustainability of the recovery, how should we think about it? Because mortgages for it to continue to give you a delta would require age to come down meaningfully. And from a card's perspective, it looks like delicacies in the US are rising. It's like a mixed data point that we see on the outside, but just wanted your thoughts on how are you thinking about the sustainability of the recovery on the financial service space.

Speaker Change: Thanks a lot for that.

Speaker Change: Thank you.

Speaker Change: Next question is from the line of Nitin Padmanabhan from Investec. Please go ahead.

Salil Satish Parekh: Congratulations on the quote. I just wanted your thoughts on one, the financial services phase. You did mention that you saw growth from mortgages, cards, payments, and, obviously, capital markets. When we think of the sustainability of the recovery, what should we think about it? Because mortgages, for it to continue to give you a delta, would require rates to come down, and from a credit card perspective, it looks like delinquencies in the US are rising.

Nitin Padmanabhan: Hi, good evening, congrats on the quarter. I just wanted your thoughts on one, the financial services phase. You did mention that you saw growth from mortgages, cards, payments and obviously capital markets.

Speaker Change: When you think of the sustainability of the recovery, how should we think about it? Because mortgages, for it to continue to give you a delta, would require rates to come down meaningfully.

Salil Satish Parekh: So it's like a mixed data point that we see on the outside, but just wanted your thoughts on how you think about the sustainability of the recovery in the financial services space. And then I had one more quick question. So Nitin there, what we are seeing right now is early signs, as I said, you know, of recovery. Of course, you know, it's early signs. So we don't know how sustainable at this point in time it is going to remain.

Speaker Change: And from a cards perspective, it looks like delinquencies in the US are rising. So it's like a mixed data point that we see on the outside, but just wanted your thoughts on how are you thinking about the sustainability of the recovery on the financial services space. And then I had one more quick question.

Nitin Padmanabhan: And then I had one more quick question.

Jayesh Sanghrajka: So, Rajin, there's what we are seeing right now: early science. As I said, you know, recovery. Of course, you know, it's early science, so we don't know how sustainable at this point in time it is going to remain. But the fact that we saw, you know, volume growth after many quarters, piece of strong growth in our financial services after six or four quarters. So I think those are the positives that we are taking. We are seeing large deals, both the ones that we assign and the ones we are in the pipeline. So all of that put together gives us a little bit of confidence on that.

Salil Satish Parekh: But the fact that we saw, you know, volume growth after many quarters, we saw, you know, strong growth in our financial services after again, six or quarters. So I think those are, those are the positives that we are taking. We are seeing large deals, both the ones that we have signed and the ones we are in the pipeline. So all of that put together gives us a little bit of confidence in that.

Speaker Change: Thank you.

Speaker Change: What we are seeing right now is early signs, as I said, you know, of recovery, of course, you know, it's early signs, so we don't know how sustainable at this point in time it is going to remain, but

Speaker Change: The fact that we saw, you know, volume growth after many quarters, we saw, you know, strong growth in our financial services after, again, six odd quarters.

Speaker Change: So I think those are those are the positives that we are taking we are seeing large deals both the ones that we assign and the ones we are there in the pipeline so all of that put together gives us a little bit of confidence on that but yeah we have to see more data points to to see how the year

Salil Satish Parekh: But yeah, we have to see more data points to see how the year progresses. So one of your smaller peers characterized it as financial services, who have sort of stalled multiple projects in the past, and having sort of not spent for almost six quarters, having to make those spend because that's causing problems, and thereby that seeing a pickup with short cycle projects on those deals. Would you characterize it similarly?

Jayesh Sanghrajka: But yeah, we have to see more data points to see how the year progresses.

Jayesh Sanghrajka: So one of your smaller peers characterized it as financial services who have sort of told multiple projects in the past and having sort of not spent for almost six quarters, having to make those spend because that's causing problems. And thereby that seeing a pickup which saw cycle projects on those deals. Would you characterize it similarly? Are you seeing something similar? I wouldn't say that nothing to be very honest. You know, we are seeing this not specific to one of clients. It could be, you know, limited to one of clients for that player. I can't comment on that.

Speaker Change: So one of your smaller peers characterized it as financial services who have sort of stalled multiple projects in the past.

Speaker Change: and having sort of not spent for almost six quarters, having to make those spends because that's causing problems.

Speaker Change: and thereby that seeing a pickup with short cycle projects on those would you characterize it similarly are you seeing something similar

Salil Satish Parekh: Are you seeing something similar? I wouldn't say that, Nitin, to be very honest, you know, we are not seeing this specific to one of the clients; it could be, you know, limited to one of the clients for that player; I can't comment on that, but we are not seeing it concentrated on one client. All right. And lastly, on the guidance, I think if we include the acquisition and normalize the earlier guidance for the acquisition, I think the earlier guidance would have been in the 2 to 4% range.

Speaker Change: I wouldn't say that Nitin to be very honest you know we are seeing this not specific to one of clients it could be you know limited to one of clients for that player I can't comment on that we are not seeing it concentrated on one client etc

Jayesh Sanghrajka: We are not seeing it considered as one client, etc.

Nitin Padmanabhan: All right. And now see on the guidance. I think if we include the acquisition and normalize the earlier guidance for the acquisition, I think the earlier guidance would have been in the two to four percent range.

Salil Satish Parekh: Now it looks like they've narrowed it to 3 to 4%, including the acquisition in both cases, despite the strong beat in the current quarter. So is it just that you're being very watchful and careful about it? Or is there something more to it that you specifically worry about?

Speaker Change: And lastly on the guidance, I think if we include the acquisition and normalize the earlier guidance for the acquisition, I think the earlier guidance would have been in the 2-4% range.

Nitin Padmanabhan: Now it looks like I'm narrowed it to three to four percent, including the acquisition on both cases. Despite the strong beat in the current quarter. So is it there that you are being very watchful and careful about it? Or is there something more to it that you specifically worry about?

Speaker Change: Now it looks like we have narrowed it to 3-4%.

Speaker Change: Despite the strong beat in the current quarter. So is it this that you're being very watchful and careful about it? Or is there something more to it that you specifically worry about?

Jayesh Sanghrajka: So living there, we don't really break up the guidance into, you know, what is organic and what is to for a specific acquisition that we have done. Having said that, you know, if you look at our filing, the intact revenue for the last year was 170 million euros. And we, I mean, we just closed it, so we only get part of that revenue. So you can do a back-of-the-envelope calculation. And the rest of it is going to be all the factors that Thalil talked about, you know, the Q1 performance, including large deal wins, the volume and U.S.

Jayesh Sanghrajka: So, Nitin, there we don't really break up the guidance into, you know, what is organic and what is for a specific acquisition that we have done. Having said that, if you look at our filing, the intact revenue for the last year was 170 million euros. And we, I mean, we just closed it, so we'll only get part of that revenue. So you can do a back of the envelope calculation. So perfect.

Speaker Change: So, Nitin, there we don't really break up the guidance into, you know, what is organic and what is food for a specific acquisition that we have done. Having said that, you know, if you look at our filings, the intact revenue for the last year was 170 million euros.

Speaker Change: We I mean we just closed it so we'll only get part of that revenue so you can do a

Speaker Change: [inaudible]

Jayesh Sanghrajka: financial services, while the discussion is still continuing to remain challenging.

Jayesh Sanghrajka: That's all from my end. Thank you and all the best. Thank you. Thank you. Next question. Yeah, hi. Good evening.

Speaker Change: So perfect, that's all from my end. Thank you and all the best.

Speaker Change: Thank you.

Speaker Change: Next question is from the line of Vibhor Singhal from Nuwama Equities. Please go ahead.

Vibhor Singhal: Thanks for taking my... And congratulations on a very solid start to the financial year. So there are two questions from my side. One is, we have seen that, I mean, all almost all verticals have done really well for us in the quarters. But for retail.

Vibhor Singhal: Yeah, hi. Good evening. Thanks for taking my question and congrats on a very solid start to the financial year.

Speaker Change: So there's two questions from my side. One is, we have seen that, I mean, all the, almost all verticals have done really well for us, quarters, but for the retail sectors. I think retail sector is something which is breaking the almost entire industry. Your peers also have kind of spoken about it.

Jayesh Sanghrajka: I think the retail sector is something that is plaguing almost the entire industry, something that your peers have kind of spoken about. What is the outlook on this sector? I mean, what do you think the clients are waiting for to restart their businesses? and where could those friends be coming in in terms of the domains that they are learning?

Vibhor Singhal: What is the outlook on this sector? What do you think the clients are waiting for to restart their spends and where could those spends be coming in in terms of the domains that we are looking at? And then I have a follow-up question.

Jayesh Sanghrajka: and then I have a follow-up question. So Vibhor, I think it's a sectoral challenge at this point in time. The whole sector is going through challenges, and it's not specific to us. And as Salil was mentioning earlier, one of the factors could be US interest rates recovering, etc. But it's hard to predict what will lead to recovery in the sector at this point. I mean, just to dwell a little bit further on that, what exactly is, I mean, we know that macro overhang is on most of the BFSI companies and all, at this point in time, any specific thing that you think could be a trigger, apart from So retail typically has higher exposure to discretionary spending as well, right?

Vibhor Singhal: So, Vibhor, I think there, I think it's a, it's a sectoral challenge at this point in time, the whole sector is, is going to, going through challenges and, you know, it's not specific to us.

Vibhor Singhal: And as Salil was mentioning earlier, one of the factors could be US interest rates recovering, etc. But it's hard to predict what will lead to recovery in the sector at this point in time.

Salil Satish Parekh: Thank you.

Jayesh Sanghrajka: So and that is going to be linked to the macro environment, largely with, you know, I think that would be one of the key reasons. Otherwise, you know, outside of that, we are winning deals. If you look at this quarter, also, we have won eight large deals in retail as well. But discretionary spending has to come back.

Speaker Change: So regret typically has a higher exposure to discretionary as well, right? So and that is going to be linked to the macro environment largely with also.

Jayesh Sanghrajka: My second question is, I think at the end of the last quarter, we had mentioned that we are expecting the first half to be better than the second half. Any change in that outlook given that we've been in this quarter has been quite strong. So do you, if those were to slightly ramp up in the second half, would it be correct to say that maybe we can expect second half to be slightly better than what we were expecting three months, So we've got two parts where we still continue to believe our first half is going to be better than the second half and I think Q1 is just a testimony of that from that perspective you know we've delivered from there of course the the fact that we have increased guidance is also you know proof that we are seeing that the three quarters better than what we envisaged earlier, Great, thank you so much for taking my questions and wish you all the best. Thank you. Next question is from the land of Kauravas.

Speaker Change: Thank you.

Speaker Change: Any change in that outlook given the deal win in this quarter has been quite strong. So if those were to slightly ramp up in the second half, would it be correct to say that maybe we can expect second half to be slightly better than what we were expecting it three months ago?

Speaker Change: So we have got two parts where we still continue to believe our first half is going to be better than the second half.

Speaker Change: And I think Q1 is just a testimony of that, from that perspective, you know, we've delivered from there.

Speaker Change: Of course, the fact that we have increased guidance is also a proof that we are seeing the three quarters better than what we envisaged earlier.

Speaker Change: Thank you so much for taking my questions and I wish you all the best.

Speaker Change: Thank you.

Arataria: Next question is from the land of Kaurava Rataria from Morgan Stanley . Please go ahead.

Salil Satish Parekh: Hi, thanks for taking my question. So, Salil, the first question is on revenue, it looks like... Yeah, can you have a better one? Salil, the first question is for you.

Gaurav Rateria: Hi, thanks for taking my question. So, Salil, the first question is on revenue. It looks like... There is a slight disturbance from the line. Can you speak through the handset?

Salil Satish Parekh: On revenue, it looks like it has surprised you positively, which is why you have raised the guidance. So, is it led by the ramp-ups in the deals happening faster than you expected? Is it led by leakage in the discretionary improving compared to the last few quarters? So, this is Salil, the...

Speaker Change: Yeah, can you hear me better? Yeah, go ahead.

Salil Satish Parekh: Yeah, Salil, the first question is for you. On revenue, it looks like it has surprised you positively.

Speaker Change: Which is why you have raised the guidance. So, is it led by the ramp-ups on the deals happening faster than you expected? Is it led by leakage in the discretionary improving compared to the last few quarters that you have seen?

Salil Satish Parekh: The way this quarter has gone, what we have seen is the volumes have been strong. We have then seen that change in financial services in the US, which has given us a more positive outcome for the quarter. Then... work that we're doing in terms of working with our clients on value and pricing has also translated overall into the mix for our revenue. And then the way we see the outlook.

Salil Satish Parekh: So, this is Salil, the...

Salil Satish Parekh: The way this quarter has gone, what we have seen is the volumes have been strong, we have then seen that change in the financial services in the US, which

Speaker Change: has given us more more positive outcome for the quarter.

Salil Satish Parekh: Then...

Speaker Change: Some of the...

Speaker Change: work that we're doing in terms of

Speaker Change: Working with our clients on value and pricing has also translated overall into the mix for our revenue and then the way we saw the outlook

Salil Satish Parekh: You know, as we did some of the large deals in this quarter, which was a good outcome, that gives us a little bit more visibility into the year. So all of those things led us to look at this as being a stronger outcome. Got it. Any reason to believe that this momentum could decelerate in the near term? Any data points to suggest that?

Speaker Change: As we did some of the large deals in this quarter, which was a good outcome, that gives us a little bit more visibility into the year. So all of those things led us to look at this as being a stronger outcome.

Salil Satish Parekh: Or as of now, you would expect the momentum to continue in the near term. So, what we have done is we've taken what we have seen in this quarter across the different industries and service offerings, and then put in, you know, as Jayesh shared, what is more typical, which is that our second half is usually lower than our first half. And with that, we have created the outlook for the year. But we didn't take into account any other trigger beyond what I just shared. Thank you. Last question for Jayesh:

Speaker Change: Got it. Any reason to believe that this momentum could decelerate in near term? Any data point to suggest that? Or as of now, you would expect the momentum to continue from a near term perspective?

Speaker Change: So what we have done is we've taken what we have seen in this quarter

Speaker Change: across the different industries and service offerings.

Speaker Change: And then put in, you know, as Jai has shared, what is more typical, which is a second half is usually

Jai: The Outlook for the Year. But we didn't take into account any other trigger beyond what I just shared.

Jayesh Sanghrajka: What would be the incremental levers for margins from here on? Utilization is near peak, and sub-con has already stabilized. Just trying to understand what could be the additional levers over the coming quarter. Thank you. If you look at there, you know, again, across all the pillars of Maximus, there are multiple of them firing.

Jai: Thank you. Last question for Jayesh. What would be the incremental levers for margins from here on? Utilization is near peak. Subcon has already stabilized. Just trying to understand what could be the additional levers over the coming quarter. Thank you.

Jayesh Sanghrajka: If you look at there, you know again across all the pillars of Maximus, there are multiple of them are firing.

Jayesh Sanghrajka: VeriBase selling, we have seen, you know, as we talked earlier, we have seen improvement in realization. So that's one lever we do have, and we continue to have. We did talk about hiring some freshers as we go, you know, through the years. So that would help in getting some better role ratios, better role mixes, etc.

Speaker Change #101: We did talk about hiring some freshers as we could, you know, through the years, so that would help.

Speaker Change #101: in getting some better roll ratios or better roll mixes etc.

Jayesh Sanghrajka: Nearshoring, you know, lean automation. So there are multiple levers we still have to, you know, improve or offset the headwinds. The headwinds that we see today are, as I said earlier, again, comp, which decision we'll take as we progress through the year. And the ramp up of the deeds, one, you know, towards the end of last year as well as this quarter. Thank you very much.

Speaker Change #101: As I said earlier again is you know comp which is which decision will take as we progress through the year and the ramp up of the deeds one you know towards the end of last year as well as this quarter

Unknown Attendee: Thank you.

Jayesh Sanghrajka: Thanks. The next question is from Lanof Brand: Hi, good evening. Thank you. The first question I had is about generative AI.

Bryan Bergin: Next question is from the land of Bryan Bergin, from Diti Kovant. Please go ahead.

Speaker Change #102: Thank you very much.

Speaker Change #103: Thank you.

Speaker Change #103: Next question is from Brian Bergen from TD Coventry. Please go ahead.

Salil Satish Parekh: Can you provide some detail on how generative AI may be impacting your delivery productivity and whether it may be changing the nature of the contracting conversations with clients yet? Thanks. Thanks for the question. Delivery and Generative AI.

Bryan Bergin: Hi, good evening. Thank you. First question I have on general AI. Can you provide some detail on how Gen AI may be impacting your delivery productivity and whether it may be changing any nature of the contracting conversations for Koyant here. Thanks for the question on delivery and generative AI. So what we have done, we have taken all of our service lines and start to put in place the impact of generative AI and broadly AI into this, and that change is ongoing; a lot of it has happened. Where we have seen some of the benefits on delivery relate to areas, for example, software development of process optimization.

Unknown Attendee: Hi, good evening. Thank you. First question I had on is on generative AI. Can you provide some detail on how gen AI may be impacting your delivery productivity and whether it may be changing any nature of the contracting conversations with clients yet?

Salil Satish Parekh: So what we've done, We have taken all of our service lines and staff to put in place. The impact of generative AI and broadly AI into this, and that change is ongoing; a lot of it has happened. We've been seeing.

Speaker Change #105: We have taken all of our service lines and start to put in place the impact of generative AI and broadly AI into this and that change is ongoing a lot of it has happened.

Salil Satish Parekh: Some of the benefits on delivery relate to... areas, for example, software development or process optimization. There's also a large benefit on productivity for more customer service-type areas that we have already demonstrated proof of. We don't have a lot of footprint on that within our current mix, but we know for new work, that's something that is being discussed with clients. In each of these cases, the way our clients are looking at it... within their own enterprise on their own data set.

Speaker Change #105: We have just seen...

Speaker Change #105: Some of the benefits on delivery relate to

Speaker Change #105: areas, for example, software development or process optimization.

Jayesh Sanghrajka: There is also a large benefit on productivity for more customer service type of areas that we have already demonstrated before. We don't have a lot of footprint on that within a current mix, but we know for new work that something and that is being discussed with clients. In each of these for the contracting, the way clients are looking at it within their own enterprise on their own dataset. When there is a client where we see and where they have, let's say for software development, a single uniform approach across the whole company, which is not that frequent because of acquisition and different decisions in different divisions in department, then the range of benefits is potentially higher and the contracting discussions around what of those benefits will accrue with the client.

Speaker Change #105: There is also a large benefit on productivity for more customer service type of areas that we have already demonstrated proof of. We don't have...

Speaker Change #105: A lot of footprint on that within our current mix that we know for new work that's something that is being discussed with clients.

Speaker Change #105: in each of these for the contracting

Speaker Change #105: The way our clients are looking at it

Salil Satish Parekh: When there's a client like we see, and where they have, let's say for software development, a single, uniform approach across the whole company, which is not that frequent because of acquisitions and different decisions in different divisions and departments, then the range of benefits is potentially higher.

Speaker Change #105: within their own enterprise, on their own data set.

Speaker Change #105: When there is a client

Speaker Change #105: where we see and where they have, let's say for software development, a single

Speaker Change #105: Uniform approach across the whole company which is not that frequent because of acquisitions and different decisions in different divisions in department

Speaker Change #105: Then the range of benefits is potentially higher.

Speaker Change #105: And the contracted discussions are around what of those benefits will accrue with the client. So a lot of these discussions are in that spirit. There is some benefits that accrue to us and some to the client.

Jayesh Sanghrajka: So a lot of these discussions are in that spirit. There is some benefits that accrue to us and some to the client. But there are very few clients within their own datasets which have large consistent tech landscape which can give you know the full benefit of generally aware right away. Many kinds also need that data infrastructure to be put in place where sometimes that is not in place today, between structured and unstructured data. So the work actually starts with building a data program when they are able to spend that on a data program. And then to have the cloud capability in place so that a lot of part of the data are part of the apps on the cloud for the client.

Salil Satish Parekh: And the contractual discussions are around what of those benefits will accrue to the client. So a lot of these discussions are in that spirit; there are some benefits that accrue to us and some to the client. But there are very few clients within their own data sets which have large consistent tech landscapes which can give you the full benefit of generative AI right away. Many grants also need that data infrastructure to be put in place where sometimes that is not in place today between structured and unstructured data.

Speaker Change #106: But there are very few clients within their own data sets which have large consistent tech landscapes which can give the full benefit of generative AI right away. Many clients also need...

Speaker Change #106: that data infrastructure to be put in place where sometime that is not in place today.

Salil Satish Parekh: So the work actually starts with building a data program when they're able to spend that on a data program, and then to have the cloud capability in place so that a lot of the data, part of the apps, are in the cloud for the client. So the discussion is typically, "Here's the roadmap for generative AI in an enterprise given the landscape of tech, and here are the first steps, data, and cloud, and then here's something that can actually deliver impact today, which could be more, let's say, a smaller, smaller area of the company, but these are all discussions that are done which eventually relate to how contracting is done. Okay, that's helpful. Thank you for the color.

Speaker Change #106: between structured and unstructured data. So we the work actually starts with building a data program when when they're able to spend that on a data program.

Speaker Change #106: and then to have the cloud capability in place so that a lot of, part of the data, part of the apps are on the cloud for the client.

Jayesh Sanghrajka: So the discussion is typically on here's the roadmap for generating AI in an enterprise, given the landscape of tech, and here are the first steps, data and cloud. And then here's something that can actually deliver, in fact, today, which could be more, let's say, a smaller area of the company. But these are all discussions which are done, which eventually relate to how contracting is. Dunn.

Speaker Change #106: So...

Speaker Change #107: The discussion is typically on here's the roadmap for generative AI in an enterprise given the landscape of tech and here are the first steps

Speaker Change #107: Data and Cloud, and then here's something that can actually deliver impact today, which could be more, more, let's say a smaller, smaller area of the company.

Speaker Change #107: But these are all discussions which are done, which eventually relate to how contracting is done.

Unknown Attendee: Okay, that's helpful. Thank you for the color.

Jayesh Sanghrajka: My follow up to clarification, just on the one cue, one time I think you cited 40 bps of quarterly out margin benefit and a similar revenue impact. Was that expected in your prior guidance? Or was that a surprise or a new item that wasn't expected before on the plan?

Unknown Attendee: My fall is a clarification.

Jayesh Sanghrajka: Just on the one queue one time I already decided 40 steps quarter of a quarter out margin benefit and a similar revenue impact was that expected in your prior guidance or was that a surprise or a new item that wasn't expected before on the plan? That wasn't expected. Enough guidance that was a new item.

Speaker Change #108: Okay, that's helpful. Thank you for the color. My follow-up is a clarification just on the 1Q, one time I think you cited 40 BIPs, quarter over quarter out margin benefit and a similar revenue impact. Was that expected in your prior guidance or was that a surprise or a new item that wasn't expected before on the plan?

Jayesh Sanghrajka: That wasn't expected in our guidance; that was a new item. Okay. Thank you. Thank you. Next question. Hi, good evening.

Speaker Change #112: That wasn't accepted in our guidance, that was a new item.

Unknown Attendee: Okay, thank you. Thank you.

Speaker Change #109: Okay, thank you.

James Friedman: Next question is from Land of James Freedman, from Cisco Anna International. Please go ahead. Hi, good evening, and let me echo the congratulations. So, in terms of banking, is the improvement contemplated to continue. In terms of what we see today, is this change in the U.S. Financial services. We don't the way we've assuming that that will be the way it will progress. So we have not assumed that it will change. We've not also assumed that it will become much larger. We've not also assumed that this will move to some other geography in financial services. So we don't know, but that's what the assumption is into our guidance.

Speaker Change #109: Thank you.

Speaker Change #109: Next question is from the line of James Freedman from Susquehanna International. Please go ahead.

Salil Satish Parekh: Let me echo the congratulations. Salil, in terms of banking, is the improvement contemplated to continue. In terms of what, sir? Oh, I'm sorry.

James Friedman: Hi, good evening and let me echo the congratulations

Leo: So, Salil, in terms of banking, is...

Leo: The improvement contemplated to continue.

Leo: In terms of what, sorry? James, sorry to interrupt. Can you speak a little louder, please?

Salil Satish Parekh: In terms of the banking vertical, the BFSI vertical, is the growth contemplated to continue? So what we see today is this change in U.S. financial services. We don't, the way we've constructed Outlook is we, and we...

James Friedman: Oh, I'm sorry, in terms of the banking vertical, the BFSI vertical, is the growth contemplated to continue?

Leo: So what we see today is this change in the U.S. financial services.

Speaker Change #113: We don't, the way we've constructed Outlook is we, and we...

Salil Satish Parekh: Assuming that that will be the way it progresses, so we have not assumed that it will change, we've not also assumed that it will become much larger, we've not also assumed that this will move to some other geography in financial services. So we don't know, but that's what the assumption is in our guidance. All the client discussions seem to indicate that U.S. financial services will have this sort of attraction. That's the way we built Outlook.

Speaker Change #114: Assuming that that will be the way it will progress.

Speaker Change #114: So we have not assumed that it will change, we have not also assumed that it will become much larger.

Speaker Change #113: We have not also assumed that this will move to some other geography in financial services. So, we don't know, but that's what the assumption is into our guidance.

Jayesh Sanghrajka: Although client discussions seem to indicate that US financial services, we will have this sort of attraction. That's the way we built our outlook. I got it.

Speaker Change #113: All the client discussions seem to indicate that U.S. financial services will have this sort of attraction. That's the way we built Outlook.

Salil Satish Parekh: I got it. Thank you. And then, in terms of Europe, it has been an important source of growth for the company this cycle. Could you unpack some of the trends that you're seeing in Europe? In Europe, so what we are seeing is different things in different places.

Jayesh Sanghrajka: Thank you. And then in terms of Europe, it has been an important source of growth for the company, this cycle.

Speaker Change #113: Got it, thank you. And then in terms of Europe , it has been a...

Speaker Change #115: Important source of growth for the company this cycle. Could you...

Jayesh Sanghrajka: Could you unpack some of the trends that you're seeing in Europe? On Europe, so what we have seen is different things in different places. So, for example, in the Nordic countries we had good traction over the last few quarters and even a little bit before. In how we engage with clients, and we've seen some good expansion of our large daily programs. We've seen some of that in continental Europe broadly. If you look at some of the large deals across Telco, we've seen that a different type of positive traction in Germany, where we are seeing some of our local Europe competitors are having more constraints and where we are benefiting from those constraints as we are expanding.

Speaker Change #116: Unpack some of the trends that you're seeing in Europe .

Speaker Change #117: on on Europe so what we are seeing is different things in different places so for example

Salil Satish Parekh: So, for example, in the Nordic countries, we've had good traction over the last few quarters and even a little bit before in how we've engaged with clients, and we've seen some good expansion of our large deal programs. We've seen some of that in continental Europe broadly, if you look at some of the large deals across telco. We've seen that.

Speaker Change #118: In the Nordic countries we've had good traction over the last few quarters and even a little bit before in how we've engaged with clients and we've seen some good expansion of our large deal programs.

Speaker Change #118: We've seen some of that in continental Europe broadly, if you look at some of the large deals across telco.

Salil Satish Parekh: A different type of positive traction in Germany, where we are seeing some of our local European competitors having more constraints and where we are benefiting from those constraints as we are expanding. So it's different in different geographies, and our focus, or even industry, has been to be a little bit more fine-tuned into that market, and then try to get the benefit of it. Got it. Thank you, Salil. I'll drop back into the queue.

Speaker Change #118: We've seen that.

Speaker Change #118: A different type of a positive traction in Germany

Speaker Change #118: where we are seeing some of our local Europe competitors are having more constraints and where we are benefiting from those constraints as we are expanding. So, it's different in different geographies and our focus.

So it's different in different geography and our focus or even industry. Our focus has been to be a little bit more fine tuned into that market and then try to get the benefit of.

Speaker Change #118: [inaudible]

Speaker Change #119: Got it. Thank you, Salil. I'll jump back in the queue.

Speaker Change #120: Thank you. Thank you.

Speaker Change #121: Next question is from the line of Sumit Jain from CLSA India, please go ahead.

Salil Satish Parekh: Thank you. Thank you. Next question. Yeah, hi, thanks for the opportunity. Firstly, I wanted to check whether, in your previous guidance of 1 to 3% you gave in April, intake acquisition was part of that guidance? So Sumit, this is Jayesh here.

Speaker Change #122: Yeah, hi. Thanks for the opportunity. Firstly, I wanted to check, you know, in your previous guidance of one to three percent you gave in April , was intake acquisition part of that guidance?

Jayesh Sanghrajka: We had clearly called out at that point in time that Intech acquisition was part of it because we were, I mean, it was pending approval from various regulatory authorities. Right, so maybe the Intech acquisition now being closed and the 50 basis point impact on revenue in India business. Can one assume these are the two primary factors for your revision in the, Not necessarily.

Speaker Change #122: So this is Jayesh here. We had clearly called out at that point in time that Intech Acquisition isn't part of it because we were, I mean, it was pending approval from various regulatory authorities.

Speaker Change #123: Right, so maybe Intech acquisition now being closed and the 50 basis point impact on revenue in India business. Can one assume these are the two primary factors for your revision in the guidance?

Jayesh Sanghrajka: Again, as I said, we don't break out our guidance between, you know, the in-tech and non-in-tech from that perspective. But if you look at the numbers that we printed when we announced the acquisition of in-tech, revenue was around 170 million euros. And it's only going to be part of the year, considering we just concluded or closed the transaction. And there are other factors, you know, Q1 performance, volume, financial services, growth of the company, you know, the continuing softness in the discretionary part of the company.

Speaker Change #124: Not necessary. Again, as I said, we don't break out our guidance between, you know, the in-tech and non-in-tech from that perspective, but if you look at, you know, the numbers that we printed when we announced the acquisition in-tech,

Speaker Change #124: Revenue was around 170 million euros

Speaker Change #124: And there are other factors, you know, Q1 performance, volume, financial services, growth offset by, you know, the continuing softness in the discretionary part of the business.

Jayesh Sanghrajka: And secondly, I wanted to check, you know, in your cost line items, the third-party items bought for service delivery are significantly down this quarter, almost one percentage point of your revenue and also down on an absolute level. So can you just give us a sense as to, you know, from the bookkeeping perspective, how to look at this line expense item going forward? So guys, as we have said earlier as well, the third-party hardware and software cost is an integral part of many of the large deals where we take over turnkey projects from the clients, including the technology landscape of theirs.

Speaker Change #125: That's helpful. And secondly, I wanted to check, you know, in your cost line items or third party items.

Speaker Change #126: Bhawat for service delivery is significantly down this quarter, almost 1% point of your revenue and also down on an absolute level. But can you just give us a sense as to, you know, from the bookkeeping perspective, how to look at this line expense item going forward?

Jayesh Sanghrajka: And that is therefore dependent on the kind of deals and how the ramp-up or ramp-down of these deals happens across the quarter. So it is going to be, to that extent, dependent on which deals and how they ramp up and down. Got it. And lastly, just on the India business, can you give us a sense of what kind of project it was?

Speaker Change #127: So guys, as we have said earlier as well, the third-party hardware-software cost is an integral part of many of the large deals where we take over turnkey projects from the clients, including technology landscape of theirs.

Jayesh Sanghrajka: Because it's a pretty sharp jump we are seeing this quarter. So any large deal ramp-up we are seeing there, or some government contract? What exactly is the nature of this one time? So Sumit, first of all, the India business is relatively much smaller, so anything that happens in that business shows up in percentage terms much larger, but having said that, it was a one-time impact on one of our Indian clients, you know, and it's a one-off, so I think we should just take it as one. Got it. Thanks for the opportunity and all the best.

Speaker Change #128: Got it. And lastly, just on the India business, can you give us a sense what kind of project it was? Because it's a pretty sharp jump we are seeing this quarter. So any large deal ramp up we are seeing there or some government contract? What exactly is the nature of this one time impact?

Speaker Change #128: So Sumit, first of all, the India business is relatively much smaller, so anything that happens in that business shows up in percentage terms much larger, but having said that, it was one-time impact on one of our India clients, you know, and it's one-off, so I think we should just take it as one-off.

Jayesh Sanghrajka: Thank you. Thanks. Next question is from the line of Kavaljit Saluja from Kodak Securities. Hi, thank you everyone. You know, great to see a well-rounded performance.

Sumit: Got it. Thanks for the opportunity and all the best.

Speaker Change #130: Thank you.

Speaker Change #131: Next question is from the line of Kavaljit Saluja from Kodak Securities, please go ahead.

Kawaljeet Saluja: Hi, thank you everyone. You know, great to see a well-rounded performance. Congratulations. I have just a couple of questions. The first is for Jayesh.

Kawaljeet Saluja: Congratulations. I have just a couple of questions. The first is for Jayesh.

Jayesh Sanghrajka: Jayesh... You know that 40 bits recovery that you see; does it show up in either ECL or provision for post-sales client support, or is it just basically a direct flow through from revenue? It's 50% revenue cover which is impacting 40% margin. Okay, and you know, basically does it tie in with the provision for post-page client support, or that's something which is, No, it's separate. Okay, got it.

Kawaljeet Saluja: You know that 40 bits recovery that you see, does it show up in either ECL or provision for post-sales client support or you know it's just basically a direct flow through to from revenue?

Speaker Change #133: It's 50% revenue cover which is impacting 40% margins.

Speaker Change #133: Okay and you know basically does it tie in with the provision for postage line support or that's something which is separate?

Jayesh Sanghrajka: Yeah. The second thing is wage revision. You know, I mean, I guess the cycle of wage revision was changed last year.

Speaker Change #134: No, it's separate.

Speaker Change #135: Okay, got it. Yeah, second thing is wage revision, you know, I mean,

Speaker Change #136: I guess the cycle of wage division was changed last year. Do we get back into wage division cycle, which is a lot more normalized, which is actually starting second quarter, or that's something on which you have not taken a call yet?

Jayesh Sanghrajka: Do we get back into the wage revision cycle, which is a lot more normalized, which is actually starting in the second quarter, or is that something on which you have not taken a call? So, if you recall Kavel, last year we did our wage revisions effective in November, so at this point in time, we haven't really decided, we are evaluating, considering all the factors that we always consider, you know, including inflation, when was the last wage revision taken, the environment, the macro environment, as well as peer practice, and we will take a call considering all of these factors. Having said that, as I called out in Okay, that's very helpful.

Speaker Change #137: So if you recall Kaval, last year we did our wage revisions in effective November .

Kaval: So at this point in time, we haven't really decided. We are evaluating, considering all the factors that we always consider, you know, including the inflation, including when was the large

Kaval: Last way the vision taken the environment the macro environment as well as the peer practice

Kaval: and we will take a call considering all of these factors. Having said that, as I called out in our margin walkout also, you know, we have increased our variable pay.

Kaval: during the quarter versus last year as well as last quarter.

Jayesh Sanghrajka: Our final question, you know, is for you and Salil. Both of you have articulated the fact that you want the profitability to improve in the medium term. And then there are a number of structures, levers, that will be utilized to drive that expansion. I mean, what kind of an environment and what kind of levers, you know, does, you know, one need to see, you know, to gain that directional comfort of profitability improvement? from here on.

Kaval: Okay, that's very helpful. Our final question, you know, is I guess for you and Shalil.

Shalil: Both of you have articulated the fact that you want the profitability to improve in the medium term, and then there are a number of structures, levers,

Shalil: That will be utilized to drive that expansion. I mean, what kind of an environment and what kind of levers does one need to see to gain that directional comfort of profitability improvement from here on as such?

Jayesh Sanghrajka: So, Kaval, if you look at our margin work across the last three or four quarters, you know, since we launched Project Maximus, you would see consistently the contribution from Project Maximus across various pillars, you know, from L&A, I mean, lead and automation from value-based selling on, you know, on the pyramids, etc., things like that. So you will see, I mean, you have seen that, and our endeavor is to continuously focus on all of that.

Karan: So Karan, if you look at our margin works across the last three or four quarters, you know, since we launched the project Maximus, you would see

Karan: You have seen that and our endeavour is to continuously focus on all of that. At this point in time, they are offsetting the headwinds to a large extent. The endeavour is to more than offset the headwinds in the mid-term.

Jayesh Sanghrajka: At this point in time, they are offsetting the headwinds to a large extent. The endeavor is to, you know, more than offset the headwinds in the mid-term. Okay, cool. Thanks, sir. Wish you the best. Thanks. Next question is from... A lot of moving parts here on the 1st of July. Hey, great. Good evening.

Karan: Okay, cool. Thanks, sir. Best of the best.

Karan: Next question is from the line of Jonathan Lee

Speaker Change #141: From Going Home Securities, please go ahead.

Speaker Change #143: Great, thanks for taking our questions. Jonathan, sorry to interrupt you, may I request you to speak a little louder please?

Jayesh Sanghrajka: Thanks for taking our questions. There are a lot of moving parts here on the margin side. Can you remind us how we should be thinking about seasonality through the year, especially as you think about the impact of Project Maximus and large deal rents? So, margin on Jonathan.

Jonathan Lee: Hey, great. Good evening and thanks for taking our questions. A lot of moving parts here on the margin side. Can you remind us how we should be thinking about seasonality through the year, especially as you think about the impact from Project Maximus and large-scale rent?

Jayesh Sanghrajka: Margin, one of the headwinds would be comp decisions as in when we take them. There are seasonalities in our business model, which are furloughs that impact us in Q3 and Q4. That also impacts both, you know, pricing to some extent and margin, therefore. But those are the large seasonalities that we have in our model. Outside of that, our margins are going to be dependent on, you know, our acceleration on project Maximus, as well as, you know, revenue and volume growth, which helps us, you know, flatten our pyramid and, therefore, benefit from the pyramid. I appreciate that color.

Jonathan Lee: Margin, on Jonathan, margin, one of the headwinds would be comp decision as in when we take. There are seasonalities in a business model which is furloughs that impact us in Q3 and Q4. That also impact both pricing to some extent and margin therefore.

Speaker Change #144: Thank you.

Jayesh Sanghrajka: And second, can you help us think through what's contemplated in your outlook, both at the low end and at the high end as it relates to vertical performance based on, you know, expected large steel ramps or what's in your pipeline? Sorry, your question didn't come across as clearly. Would you repeat that, please? Can you help us think through what's contemplated in your outlook as it relates to vertical performance based on expected large deal ramps and what's in your pipeline both at the low end and at the high end of the range?

Speaker Change #147: I appreciate that color and second can you help us think through what's contemplated in your outlook both at the low end and at the high end as it relates to vertical performance based on you know expected large steel ramps or what's in your pipeline

Speaker Change #145: Sorry, your question didn't come across as clearly. Would you repeat that, please?

Speaker Change #146: Can you help us think through what's contemplated in your outlook as it relates to vertical performance based on expected large deal ramps and what's in your pipeline both at the low end and at the high end of the range?

Jayesh Sanghrajka: So Jonathan, it's very difficult to call out which vertical performance will end up at the low-end and high-end of our range. I think we run various models internally to get to the margin band. Some of them, you know, get us to the lower end of the band, and some of the assumptions will get us to the higher end of the band. I don't think there is any secular segment that is going to push either way.

Speaker Change #146: Om.

Speaker Change #149: There, Jonathan, it's very difficult to call out which vertical performance will end up to low-end and high-end of our range.

Speaker Change #148: I think we run various models internally to get to the margin band, some of them you know get us to the lower end of the band and some of the assumptions will get us to the higher end of the band, I don't think there is any secular segment that is going to drive either ways.

Jayesh Sanghrajka: Got it. I appreciate the call. Thank you. The next question is from: Yeah, thanks for the opportunity. The three to four percent guidance, if I do my math, comes to about one to one and a half percent CQTR from here on. It seems way too conservative because that also includes the intake acquisition. So are you assuming that the 2H F525 is going to be pretty bad? So Girish, let me give you a little more color on the map.

Speaker Change #152: Got it. Appreciate the call. Thank you.

Speaker Change #148: Thank you.

Speaker Change #148: Next question is from the line of Girish Pai

Girish Pai: From B.O.B. Capital Markets, please go ahead.

Girish Pai: Thanks for the opportunity. The 3-4% guidance, if I do my math...

Speaker Change #151: So the total comes to about 1 to 1.5% EQGR from here on. It seems way too conservative because that also includes the in-tech acquisition. So are you assuming that the 2H Fi25 is going to be pretty bad?

Jayesh Sanghrajka: If you look at the first quarter, our year-on-year growth has been 2.5%, and 50 pips, as I said, that is a one-off, so that's the first point. We have always maintained that our H1 is going to be better than H2 and that the guidance breaks in on that. Okay, the next question is on US financial services. Do you think this is a more Infosys-specific situation, or do you think it's much more broad, that the other vendors who have US financial service exposure would also be doing well? Or is this something very specific to you? So, this is Salil.

Speaker Change #151: So Girish there, let me give a little more color, you know, on the mat. If you look at the first quarter, our year-on-year growth has been 2.5%.

Speaker Change #153: and 50 bips as I said of that is one off.

Speaker Change #154: So that's the first point. We have always maintained that our H1 is going to be better than the H2, and that the guidance breaks in on that. And then there is Intech. So, you know, all of that put together makes up for our guidance of three to four percent.

Speaker Change #155: Okay, the next question is on U.S. financial services. You think this is more Infosys specific situation or do you think it's a much more broad-based that the other vendors who have U.S. financial services exposure would also be doing well or this is something very specific to you?

Salil Satish Parekh: So difficult for us to say, like for other companies, we can see that some of that benefit in financial services, in cards, in payments, we see some of the benefits which come through with some of our clients, but I'm not able to tell if it's just Infosys or not. We do feel we have a very strong set of capabilities, you know, from digital cloud, generative AI, cost, and efficiency. So we do see, you know, much more connect with clients, but it's difficult to say for the others.

Speaker Change #155: So this is Salil. So difficult for us to say like for the other companies.

Speaker Change #156: We can see that some of that benefit on financial services, in cards, in payments.

Speaker Change #156: We see some of the benefits.

Speaker Change #156: which came through with some of our clients but I'm not able to tell if it's just Infosys.

Speaker Change #156: We do feel we have a very strong set of capabilities, you know, from digital, cloud, generative AI, cost and efficiency. So we do see, you know, much more connect with clients, but difficult to say for the others.

Salil Satish Parekh: If I may squeeze in one last question, Salil, you mentioned that interest rates are one factor which could probably be driving demand. So, are customers looking at the start of a cutting cycle, or are they looking at a certain level of the Fed Funds rate before they kind of start spending in a much bigger fashion? So there, I think... My point in the prior comment was more on what the macro environment is. So first, we don't know if that sort of, if that's a trigger or not a trigger.

Speaker Change #157: If I may squeeze in one last question, Salegh you mentioned that interest rates are one factor which could probably be driving

Speaker Change #158: Demand. So are the customers looking at the start of a cutting cycle or are they looking at a certain level of Fed Funds rate before they kind of start spending in a much bigger fashion?

Salegh: So there, I think, my point...

Salil Satish Parekh: We are typically seeing the last digital program, the last program, even now with generative AI, clients are still not ready to launch on them. So, you know, the sort of more specific point you make difficult for us to, Okay, thank you very much. Ladies and Gentlemen. I will now hand the conference over to the Thank you. So thank you everyone for joining us. It's really wonderful to get all the questions.

Speaker Change #160: In the prior comment was more on

Salegh: What is the macro environment? So first, we don't know, you know, if that sort of, if that's a trigger or it's not a trigger.

Speaker Change #161: We are typically seeing the large digital programs, the large programs even now with generative AI, clients are still not ready to launch on them. So, you know, the sort of more specific point you make, difficult for us to...

Speaker Change #161: Take a view on that.

Speaker Change #162: Okay, thank you very much.

Speaker Change #162: Thank you very much.

Speaker Change #163: Ladies and Gentlemen

Speaker Change #164: We will take that as the last question.

Speaker Change #165: I will now hand the conference over to the management.

Speaker Change #165: For Closing

Speaker Change #165: [inaudible]

Salil Satish Parekh: We are delighted with the strong first quarter growth, margin, cash, large deals, and volume. So it's very, very good to see that outcome for our business. We have a good outlook, so the change in guidance gives a sense of what we see in the outlook, 3 to 4% growth. We hold the margin between 20 to 22%. It's good to see financial services in the U.S. have made that change. We feel extremely strong about what we're building in generative AI.

Speaker Change #166: We feel extremely strong in what we are building in generative AI and we can see the traction to that in the projects and programs we're doing. And we believe you're well positioned, you know, really as a company.

Speaker Change #167: where we are benefiting from a variety of areas, whether it's in digital, whether it's in cloud, whether it's in technology transformation or cost efficiency, all of these

Salil Satish Parekh: And we can see the traction for that in the projects and programs we're doing. And we believe you're well positioned, you know, really, as a company where we are benefiting from a variety of areas, whether it's in digital, whether it's in the cloud, whether it's in technology transformation, or cost efficiency. All of these are something that we can support our clients with, and we remain well positioned to do that through this year and the. So, thank you again for joining us, and catch up at the next quarterly call. Thank you very much, on behalf of Thank you for joining us, and you may now disconnect your lines. Thank you.

Speaker Change #167: [inaudible]

Speaker Change #168: Thank you very much.

Speaker Change #169: 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 #170: Thank you.

Mooji: www.Infosys.com www.Infosys.com

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