Q2 2025 Infosys Ltd Earnings Call
Ladies and gentlemen, good day and welcome to Infosys Limited Q2, FY 'twenty five earnings conference call.
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Note that this conference is being recorded.
Speaker Change: I now hand, the conference over to Mr. Sandeep mind at all.
Speaker Change: Thank you and over to Mr. Haynesville.
Mr. Haynesville: Hello, everyone and thanks for joining in.
Ballpark.
Mr. Haynesville: Q2, FY 'twenty five.
Mr. Haynesville: So I'm just going to fear and they can be Mr. Felipe <unk> CFO, Mr. Jason Scott and other members of the leadership team.
Mr. Haynesville: Got the call with some remarks on the performance of the company subsequent to which the call will be opened up for questions.
Mr. Haynesville: But anything we say hey, chip I'll start I'll go for the future is a forward looking statement.
Mr. Haynesville: Must be that in conjunction with the risks that the company faces.
Mr. Haynesville: Full statement and explanation of these risks is available in our filings with ACC, which can be found on www dot FCC don't Jody.
I would now like to turn the call to sell it.
Mr. Haynesville: Yeah.
Speaker Change: Thanks, Andy.
Speaker Change: Good evening and good morning to everyone on the call.
Speaker Change: We had a strong performance in Q2 with robust and broad based growth stable operating margins strong cash generation strong large deal and increased employee head count.
Speaker Change: Revenue grew 3.1% quarter on quarter, and three 3% year on year in constant currency terms.
Speaker Change: Financial services grew at 2% and manufacturing double digit energy utilities and services at five 8% all quarter on quarter we.
Speaker Change: We saw growth in all geographies quarter on quarter basis.
Speaker Change: Large deals were $2 4 billion overall pipeline remains strong we saw double digit quadrant quarter increase and a pipeline of deals below $50 million.
Our operating margin for Q2 was up 21.1% free cash flow for the quarter at $39 million.
Speaker Change: Employee attrition is stable at 12, 9%.
Speaker Change: We will launch our employee compensation increased in two phases effective Jan one 2025 in April one 2025.
Speaker Change: Our financial services segment in the U S continues to see discretionary spend increase.
Speaker Change: In capital markets mortgages cards and payments.
Speaker Change: You've seen slowness.
Speaker Change: In the automotive sector in Europe.
Speaker Change: Apart from these verticals demand trends remain stable with clients continued to prioritize all speak out over discretionary initiatives.
Speaker Change: Our Q2 performance reflects our sustained strength and differentiation in the industry.
Speaker Change: We are deepening our work in general Yeah.
Speaker Change: We are working with clients to deploy enterprise generative AI platforms, which become the launchpad for client usage of different use cases in January to B I D.
Speaker Change: You're building, a small language model leveraging industry and in pushes dataset.
Speaker Change: This will be used to build applications across different industries.
Speaker Change: We've launched multi agent capabilities to support clients and deploying agent solutions using Jessica would you be I.
Speaker Change: Okay.
Speaker Change: Our agenda D V. I approach is helping clients drive growth and productivity impact across the organization, you're partnering with plans to build a strong data foundation, which is critical for any of the agenda to AI programs.
Speaker Change: Yeah.
Speaker Change: One example, we are working with the logistic major using topaz to power their operational efficiency improvements.
Speaker Change: Concurrently we're supporting their digital transformation journey to help them deliver exceptional services for their customers.
Speaker Change: With our strong performance in Q2, and our current outlook, we have revised our revenue growth guidance.
Speaker Change: The financial year, the new guidance is 3.75% to 45% growth in constant currency.
Speaker Change: Our operating margin guidance for the financial year remains the same at 20% to 22%.
Speaker Change: With that let me hand, it over to Josh.
Josh: Thank you Sarah and good morning, and good evening, everyone and thank you for joining the call.
Josh: Oh, we had a strong Q2 with broad based growth and as you can imagine I'm in an uncertain macro environment.
Josh: Let me talk about some of the key highlight.
Josh: Revenues grew sequentially at three 1% in constant currency terms I hate upside expectation, all geos and verticals batting vide sequentially Europe had a strong growth and is now approximately 30% of our revenue.
Josh: Inorganic contribution was five 8% up a 0.8% Q O Q, which contributed to growth in Europe manufacturing.
Josh: We had another quarter of volume growth.
Josh: So this is in the U S continues to see discretionary spend uptick in capital markets mortgages and cards and payments both U S and manufacturing leather goods reported double digit yeah.
Josh: Overall deal pipeline remain strong pipeline for deals less than 50 million increased double digits sequentially.
Josh: Operating margin during the quarter was stable at 21, 1% driven by better operating metrics. Despite higher maybe it would be an acquisition impact.
Josh: Utilization continued to improve to $85, 9% up 60 basis points sequentially.
Josh: So head count additions after six quarters, an attitude that and find it implies sequentially.
Josh: We had second quarter second consecutive quarter of a 100% of free cash flow conversion to net profit free cash flow for the H one stood at $1 9 billion, 41% Hyatt.
Josh: Last year.
Speaker Change: Let me build upon that he did snow.
Speaker Change: Revenue for Q2 was $4 9 billion up three 1% sequentially and keep on pushing on the year on year basis constant currency does this include the benefit from acquisition of eight find it but.
Operating margin was stable at 21 by one the major component and subsequent to the margin I imagine walk us tailwind.
Speaker Change: They'd winds up 80 basis points benefit from project Maximus 10 basis points from the currency movement offset by 30 basis point impact from acquisition, mainly on account of amortization of intangible assets.
Speaker Change: 60 basis points from higher variable pay and other costs.
So I think Maximus remains a key focus area in Texas as all of that is visible and include operating matrix cause like utilization realization.
Speaker Change: Conducting cause it sets up for the quarter.
Speaker Change: They tend to have any growth was two 9% in constant currency operating margins were at 21, 1% 10 basis points up year on year base.
Speaker Change: Had gone at the end of the yards do that three like 17000, returning to a positive sequential growth after six quarters of.
Speaker Change: Six quarters of decline.
Speaker Change: With net additions of approximately 2500 employees.
Speaker Change: Utilization excluding trainees.
Speaker Change: Increased by 60 basis points to 85, 9% LTM attrition for Q2 was up by 20 basis points to 12, 9%. We are on track to onboard 15 to 20000 facials in FY 'twenty five.
Speaker Change: Free cash flow conversion was approximately 110, 8% for Q1.
Hey, John when he first free cash flow is 41% higher than they turned 20 foot DSO for the quarter was 73 days versus 72 sequentially consolidated cash and cash equivalents stood at $4 6 billion of debate being at $1 4 billion towards dividend.
<unk> announced an interim dividend of at least 20 when bush at an increase of 16, 7% as compared to last year.
Speaker Change: Yield on cash balance was flat at 7% in Q2, ETR was 29, 6% for Q2 and 29, but faithful excellent. We continue to expect E. P. S for FY 'twenty to be in the range of getting to 30%.
Speaker Change: EPS grew by four 7% in INR entity, but full button into other dumped on Y O Y O y basis.
Speaker Change: We closed 21 deals with D. C. We have $2 4 billion, 41% of this wasn't that you want because we signed seven deals in financial services, each and communication manufacturing and others do.
Doing detailed and one each in the U S and high Tech and life Sciences.
Speaker Change: Median life, we signed 12 large deals in America five in Europe, three in India and one in auto W. At your large deal wins stood at 55 deals with D. C. We have 615 billion and 51% of that doesn't make it.
Coming to vertical financial services saw continued good momentum in Q2 with detection and cost optimization through large outsourcing and transformation opportunities.
Speaker Change: Discretionary spend up they can get from the market mortgages and cards and payments deal wins during the quarter restaurant, let's cut but.
Speaker Change: Which coupled with expanding pipeline of small leap.
Speaker Change: Gives us visibility for future growth, we are going we are doing with their ideal damietta and I've seen them getting embedded in Nashville.
We don't think there continues to be impacted by economic and political uncertainties caused they got efficiency in consolidations I'll keep that at a pixel clients have you must have been in the upcoming holiday season will be he didn't make a difficult decision.
Speaker Change: We're progressing well on that journey.
To deliver business value that they've got their own privacy ethics Central's et cetera.
Speaker Change: Across areas, such as the non stars customer and employee experiences.
Okay.
Communications sector outlook is telling you with lifetime at an equal because of cost reduction and making that.
Speaker Change: Investment buffered, a bit discouraging and car Oems are expected to remain under pressure cost optimization, Linda consolidation out of the top out at a piece of client open to innovate solutions and asking for AI to amplify productivity.
Speaker Change: Bloating afraid when you play will be driven by logic.
Speaker Change: And are you at at your political conflict and Hyatt interested continues to influence spending factor, causing clients to focus on cost optimization initiatives.
Speaker Change: So we saw strong growth in verticals, especially in the energy sector and then he said which is.
Speaker Change: Basically there is significant traction in cloud programs with many companies adopting to adopting the cloud and you get that.
Speaker Change: Our comprehensive energy transition space human experience, and then but taking out that proactive client pitches have handsets been felt.
Right.
Speaker Change: Clothing manifesting restaurant, partially contributed by index acquisition, you know about the minerals sector. There has been I think recent challenges, but it's cliche, but remain under pressure.
Speaker Change: An increase benefit the lender consolidation do you see opportunities around supply chain optimization cloud ERP Smart factory and connected devices are Cosby itself.
Speaker Change: We are in discussion with multiple clients with setting up E. Ico is to drive adoption at scale.
Speaker Change: Most of our clients remain cautious due to geopolitical tensions discretionary spend and new projects that are slow due to cash conversion. So.
Speaker Change: We added one thing.
Speaker Change: So you'll see the implementation focusing on customer support and sales effectiveness.
Speaker Change: But he went bad H H and performance and outlook for the rest of the year, we had the rising.
Speaker Change: Revenue guidance due to a bunch of them pay the full 10, 5% in constant currency terms.
Speaker Change: Our operating margin guidance remain separate he doesn't need a person.
Speaker Change: With that we will open the call.
Speaker Change: Four questions.
Speaker Change: Thank you very much even though I'll begin with the question and answer session.
Speaker Change: Anyone who wish to ask a question maybe for Scott and one on their touched on California.
Speaker Change: If you wish to remove yourself from the question queue Yuma Prescott and do.
Speaker Change: Participants are requested to use handsets and my last question.
Speaker Change: Yeah.
Speaker Change: Ladies and gentlemen, you will wait for a moment while the question she has some months.
Speaker Change: Our request to all the participants kindly use handsets, while asking a question.
Speaker Change: Yeah.
Speaker Change: The first question is from the line of going after them.
Speaker Change: Morgan Stanley. Please go ahead.
Speaker Change: Hey, Hi, Thanks for taking my question first question is you know the reasons for changing guidance for revenue growth.
Speaker Change: Is it largely because <unk> came in better than your expectations or is it because the outlook for two which has improved versus your prior expectations because of a better pipeline of just one or two.
Speaker Change: So hi. This is geisha I think there are multiple factors that led to increased guidance.
Speaker Change: Of course, the actual performance of the Q2 performance as you said.
Speaker Change: And more importantly, the broad base Q2 performance was one factor we saw continued momentum in volumes as well as the momentum in financial services.
Speaker Change: Odd increase in this smaller deals which is less than 50 million dollar deals as we said earlier, which has had a strong double digit growth I think all of these factors contributed to increase in AR.
Speaker Change: And the guidance.
Speaker Change: Second question on the January adoption have you seen the journey I actually triggering a large.
Speaker Change: Since formation project and leading to you know multimillion dollar D. Auto multiyear do you is it just trying to understand that are you just going to lead to Aviv off a larger parent and increase the overall addressable market for us.
Speaker Change: Oh, Hi, this is felipe on generative yeah, what we are seeing is first.
Speaker Change: We've built the capability set three examples that I said, well I'll be doing it with platforms with the agents and the small language module.
Speaker Change: It's also very much focused on productivity and growth as clients are looking at it so any of our large deal that allowed us to they're not that much focus on transformation more focused on cost and efficiency. So more of the journey I focus is productivity.
Speaker Change: Any of the large deals that we're looking at the degenerative AI component to it now is it driving the large deal not in itself, but it is very much a part of that launch.
Speaker Change: Alright, and last question for Jay Ash, what would be the deal wings.
Speaker Change: From a margin point of view in the second half, which could help us to offset impact of the V. Jack Thank you.
Speaker Change: That's about all of you know this is to put together all the headwinds and tailwind the headwinds will come from competition increase in AR in Q4 that we talked about.
Speaker Change: The Q3, and Q4 will have a regular seasonality in terms of boilers in terms of lower looking in calendar had picked up and tailwind would be all the all the things that we're doing in the park project Maximus, whether you know pricing, whether you're talking about ROE ratios sub con optimization all of those.
Speaker Change: <unk> would be a part of the same bucket of project.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Scott do you have any final question. So thank you. Thank you. So thank you very much.
Speaker Change: Next question is from Atlanta Fine button from D. D. Goldman. Please go ahead.
Speaker Change: Hi, Thank you I wanted to ask just as you think about how you built the forecast forward and the discretionary view aside from the improvement you've cited in U S. B episodic have you basically held everything else you did your discretionary view as you go through the December and March quarters.
Speaker Change: So hi, Brian This is geisha you know as I.
Speaker Change: Earlier I think their latest factors that has led to a margin expansion sorry, our guidance. The change are you know starting from the Q2 Q2 performance of the increasing volumes that we saw across multiple sectors, including financial services.
Speaker Change: Our pipeline, which is strong large deal pipeline as well as these smaller deals which are less than 50 million dollar deals which has.
Speaker Change: Grown double digit so I think all of these have a have been baked in of course, there would be seasonality in there too as we all know about in terms of furloughs in terms of lower working days et cetera. So all of that at this point in time is baked into our guidance.
Speaker Change: Okay. Thank you and then just just a follow up just to make sure I understand the furloughed can you just.
Speaker Change: How did you think about composing a furlough activity that you're embedding in the year and any any different than what you saw from last year or historical levels.
Speaker Change: No. So we at this point in time have Big then the regular furloughs that we've seen over the last past few years.
Speaker Change: Thank you.
Speaker Change: Thank you very much.
Speaker Change: Next question is from the line of Jonathan Lee.
Speaker Change: I'm glad I'm Securities. Please go ahead.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Are you sure further detail around what you're hearing and pricing conversations both around new deals of any potential re scoping of deal terms, particularly given continued focus on cost optimization quiet.
Speaker Change: Well I do not think this is geisha.
Speaker Change: I think overall the environment remains stable.
Speaker Change: They didn't they didn't the pricing environment, we've been able to make a lot of progress in terms of you know getting we're getting benefits on the track that we're running under budget Maximus, which is value based selling.
Many of those tax have started kicking in benefit which is visible.
Speaker Change: In our numbers you know if you look at our volume growth using a proxy of the head count you will see a there'll be a delta between the revenue and the volume growth.
Speaker Change: Which is contributed by the.
Speaker Change: By the pricing significantly.
Speaker Change: Okay.
Speaker Change: Thanks for that color and how should we think about large deal P. C. D momentum going forward are we seeing any changes to client preferences around signing of large deals, perhaps maybe towards smaller deals given some of what you called out around smaller deals right.
Felipe: Hi, This is felipe.
Speaker Change: The large deals the way we are seeing it is the pipeline there.
Felipe: It means quite good for us today.
Felipe: There's a much more focus on the cost efficiency automation and consolidation type of work.
Felipe: Uh huh.
Felipe: These are lumpy so in some quarters, we see a little bit more some little bit lifted we don't see a change in in that.
Speaker Change: The outlook for large deals.
Speaker Change: Blind on the smaller deals that Jay has shed what was a little bit attitude, we are seeing mom.
D V D. There as well, which we should be at which is different from what we had seen before.
Speaker Change: Yeah.
Speaker Change: Thanks for the detail.
Speaker Change: Thank you.
Speaker Change: The next question is from Atlanta single coming along Mike <unk>. Please go ahead.
Yeah, Hi, Thanks for taking my question.
Speaker Change: No certainly not.
Speaker Change: Just wanted to thank campaigns maybe on call.
Speaker Change: Okay, and just final thing.
Speaker Change: Well, it's been interesting.
Speaker Change: Changing conversation.
Speaker Change: No change.
Speaker Change: Jason.
Jason Scott: Uh huh.
Jason Scott: Mindstorms this makes any sense.
Hum.
Jason Scott: Obviously not.
Jason Scott: And then I have a bundle.
Jason Scott: Oh, Thanks, Saddam financial services.
Speaker Change: We saw last quarter a good good improvement in discretionary spend and we continue to see that in Q2 or the discretionary spend is good we also saw.
Speaker Change: The results of some of the large U S banks look quite.
Speaker Change: Strong.
Speaker Change: V C.
Speaker Change: The focus is much more on the discretionary and then some cost efficiency program. We are still not seeing large transformation type of program, but given our skin and the needs that the banks have and.
Speaker Change: Some of our clients, where we are seeing good good traction the overall feeling.
Speaker Change: When we look at.
Speaker Change: Financial services, whether it's capital markets mortgages and cards and payments, but we see good traction on the discretionary side.
Speaker Change: Got it.
Speaker Change: My second question was on the PCB side, it does seem to be almost all of them.
Speaker Change: Yeah.
Speaker Change: I have to say when.
Speaker Change: When you are not.
Speaker Change: He thinks there's a deep well.
Speaker Change: Oh Wow.
No.
Speaker Change: I'm just trying to find one besides wishing to these dollars because of the pending your conviction on would you lean back and how he would see Hep b no that's coming to bear.
Speaker Change: Very good.
Speaker Change: Sure they are.
Speaker Change: We have not seen a changing the behavior.
Speaker Change: The Q1, two the Q2 in terms of the deal timelines and Sean on large deals are these are at least you're not experience from the past over multiple quarters or sometimes lumpy, we see some more some quarters some less because they are large deal that's where we're looking at what you're doing.
Speaker Change: See that has at least we don't see any change in the data about it including in the pipeline, which looks good as well.
Speaker Change: So you would have made a bigger point out.
Do you see maybe you can see on coupons.
Speaker Change: Oh, My God I'm thinking back on.
Speaker Change: Again, it will depend on how the microbiome it's Neal.
Speaker Change: It'll be more so the deal flow is is decent but sometimes because of the size of these deals is quite large sometimes they they bunch up in a quarter, sometimes the the spread out a bit but should we look at it a little bit more.
Speaker Change: Over the half over the full year and then we look backwards and that maybe get us because most of them. You know are driving revenue for the next several years. So it's not really like they convert it into a quarterly movement. So we look at it more in that sort of a time.
Time horizon.
Speaker Change: Okay. Thank you so much when I see my question I guess my question is if I can squeeze in.
Speaker Change: Monday's news.
Speaker Change: Sure, Yes, the hidden behind E G L b.
Speaker Change: We are not.
Speaker Change: And Q1 of next year I mean, do you find that sounds like me some part of the organization.
Speaker Change: Can you just keeping it completely in terms of me, saying so is this market.
Speaker Change: Demand in Vineland.
Speaker Change: I know you haven't given Nokia.
Speaker Change: Just wondering if you can maybe sometimes.
Speaker Change: Oh yeah.
Speaker Change: Let me look at the compact we look at various factors, including you know what the demand environment, what's the market practice, but when did we do the lot compensation it tipped up.
Speaker Change: We have taken all of that into account a lot that's going to increase wasn't November locked yet. So this is pretty much almost sudden anniversary Oh, you know if you look at it. So that's that's probably number one and number two if you look at within this quarter, we have increased the lady but bad bad so.
Speaker Change: So that's another factor to consider is that yeah.
Speaker Change: Well I think Bobby.
I guess, what makes what I think my question time in Charlotte.
Speaker Change: Thank you thank.
Speaker Change: Thank you.
Speaker Change: The next question is from the line of my package from BNP Paribas. Please go ahead.
Speaker Change: Hi, Good evening and thank you for taking my question.
Speaker Change: My first question was to understand how those two attraction on yard January book. So you have to pass back for which you have launched you argue harmful.
Speaker Change: Similar platform grew by two 2 billion in Mexico.
Terrific entrepreneur technology.
Speaker Change: Relative to how it was at that time and Kumar I can assure you must north San Jose was forced to get traction.
Speaker Change: Traction in terms of how many cars permanent differences that are happening at home and customer signed up for that.
Speaker Change: Relative to that how do you see two patents pending.
Felipe: Hi, This is felipe.
Felipe: So the first.
Felipe: On cobalt.
Felipe:
Felipe: The way is of course, you know it was launched and rolled out a we had a very strong partnerships with the three big public cloud players and have today, but when it was launched as well we had a very strong private cloud offering which we also have expanded.
Felipe: And the other set of offerings on the SaaS providers are the range of them.
Felipe: So that wasn't ecosystem rich what enterprises was already in motion and Veeva already playing on that and cobalt brought all of it together.
Felipe: In January the T V.
Felipe: Yeah.
For the enterprise is it's it's just start in terms of how it will be adopted there are of course as you know several use cases some of them get some good traction with clients, but the method of adoption.
Felipe: So what we have done here.
Felipe: In into badge.
Felipe: Some of the examples that I said you know we've created agenda. They do AI platform, which can be rolled out across a large organization and then the individuals in the organization start to build out their own journey I Ah Ah Ah Ah.
Felipe: Our applications on that.
Being a small language module.
Felipe: We have a multi agent framework, where the agents are doing.
Felipe: All of the set of agents are doing full solutions to certain business processes also didn't functions. So these are different ways of generative AI is being rolled out.
Felipe: It's difficult to compare in that sense.
Felipe: The two B C. Much deeper capability set that'd be rolled out in January to do AI today than what we see anyway and as our clients are giving us that same view.
Felipe: You're also seeing reality, we had locked in productivity and especially in the deal flow, we see today in caustic out.
Felipe: And there.
Felipe: Almost every.
Felipe: Large deal a significant deal even has some generally do a component related to productivity I said, it's not the whole deal degenerative AI are part of the deal becomes Jerry do back. So it's a different way, it's creating an impact from from what we saw in the cloud space.
Speaker Change: And any insight on the customer adoption and how many customers have signed up or down at harmony transactions are happening at home and you're familiar because you've ever done on that.
So Dave we have not publicly shared that are for the generative yeah. What we have shared this approach we are taking plus.
Speaker Change: That our projects to theyre, not a POC or proof of concept that actual projects, but they're small in revenue delivering impact in that space.
Speaker Change: Got it thanks for that and my second question was on <unk>. During the first one for you to talk about this one language Martin for industry and for Q excuse me I'm pretty tough.
Speaker Change: We're working on my understanding is that it needs to become more recently looked right on or are you doing for kunz, who must be smart for interpreting that generally for more use.
Speaker Change: Use cases not for industry specific use cases.
Speaker Change: This could be a lightspeed from from the product perspective, how do you want to position different they're in market, where it could be just Phoenix America don't drop off once you are there to do it or you would want to eventually look at defense I guess a separate product.
Speaker Change: Yeah.
Speaker Change: So yeah first if you step back.
Speaker Change: Our views and enterprise AI gender D V. I like language models will also play a part.
Speaker Change: In addition, we are working on a small language models. So it's not a one or the other.
Speaker Change: And for the small language model. We believe we have some very good data sets within Infosys and we're taking some let's call it clean dataset from outside the industry and so on these then become these doesn't help train the small language Martin.
Speaker Change: It then becomes.
Speaker Change: Yeah.
Excuse me, we had we had been building it for different industries and it then becomes deployable in an industry for those specific client where they can build a weekend has been built on this small language model other business application. So the idea is oh, it's a new N V C.
Speaker Change: We have some level of leadership on that and we have launched this to see where it ends up.
Speaker Change: Oh, Okay. So this will also work as an accelerator and deployment of applications.
Speaker Change: It will also be an accelerator it will also be.
Speaker Change: A foundation on which are the.
Speaker Change: Business.
Speaker Change: Jenny do AI applications can be built by the client all.
Speaker Change: With by Us for the client.
Speaker Change: Great. Thanks, and on some of their funds I think the questions.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of Ashish engine rollout from iPhone institutional equities. Please go ahead.
Speaker Change: Yeah. Thanks for the opportunity just one question.
Speaker Change: So did you <unk> you.
Speaker Change: Growth in this quarter as well as last quarter has been fairly broad based across verticals did has been you know the commentary that you've given also suggests that discretionary you're seeing some sort of pick up in some verticals.
Speaker Change: But the guidance that you did you provided for the second half effectively means that there is a considerable slowdown in the overall growth momentum.
Speaker Change: To stand there is some bit of seasonality that comes through but given the nature of broad based growth that you've delivered.
Speaker Change: For two consecutive quarters at the midpoint of the guidance not having crude seems to be a little bit counterintuitive was what you had commented on the demand environment. So just wanted to understand how you're thinking about it.
I always say this is Jay here. So if we look at you know what we have consistently stated in the buses that actually is going to be stronger than it is to it's.
Speaker Change: It's too will have seasonality because furloughs lower looking in calendar day in Q3, and a lot of looking and calendar day in Q4. So all of that is is baked in the guidance our guidance philosophy hasn't changed.
Speaker Change: We we ran multiple models lining up with our guidance of which to find about the midpoint and the top end of the guidance and we we we said as we see it right. So at this point in time. This is what we are seeing in terms of guidance.
Speaker Change: Got it and just very quickly given radio's utilizations levels are right now is it fair to assume that going forward, though.
Speaker Change: You know the hiring trend will largely reflect you know how you ended up grew England news has been since a lot of the a moderation on on utilization is probably behind us.
Speaker Change: That's the.
Speaker Change: That's right a ratio again, we always maintain that 80, 485% is.
Speaker Change: As a you know a lot of.
Speaker Change:
Speaker Change: The comfort level of utilization, we are already about that so we don't think at this point in time that is there is any significant headroom left on that.
Speaker Change: You know most of the volume growth that would come from the net hiring going forward.
Speaker Change: Okay.
Speaker Change: Okay. Thank you so much.
Speaker Change:
Speaker Change: Thank you.
Speaker Change: Next question is from Atlanta, Jamie Friedman from Susquehanna International Group. Please go ahead.
Jamie Friedman: Hi, congratulations on the continued improvement.
Speaker Change: You don't but a number of questions you're getting there.
Jamie Friedman: What your assumptions are about the seasonality of the year I know you said in your previous Saturdays.
Speaker Change: The year is typically super seasonal in the first half.
Speaker Change: In terms of what you're contemplating for the second half.
Speaker Change: What if you could share.
Speaker Change: Maybe what your assumptions are on say the cost takeout narrative versus the discretionary narrative is that right.
Speaker Change: The rate of change changing.
Speaker Change: And maybe some color on the verticals because I see no. It's great to have the two consecutive quarters in banking, but the retail was a little bit more volatile than expected. So any comments on the typical super seasonality and why this year it looks a little heavier thank you.
Speaker Change: Hi, This is Sally the.
Speaker Change: The way we've seen it there are two parts to it.
Speaker Change: From what you are.
Speaker Change: Mention one.
Speaker Change: In our building the outlook.
Speaker Change: We've taken we've taken a view of what we see today. So financial services discretionary you saw positive we didn't see we have not seen as of now discretionary in the other industries. We saw the continued.
Speaker Change: The weakness on retail and then we saw a little bit new weakness on that automotive in Europe. So all of that we took it together then that would be created so we've not assumed for example that some new discretionary will be positive or negative in this Q3 Q4 and the other part of seasonality.
Speaker Change: Josh had shared earlier.
Speaker Change: One is the furloughs in our Q3.
Speaker Change: Then as the calendar days situation, both in Q3, and we have an additional little bit in Q4. So that that is also adding to the way we have built this our.
Speaker Change: Our outlook for the full financial year.
Speaker Change: Perfect. Thanks for the kind of picks and we appreciate it I'll jump back into queue.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of Nathan Padmanabhan from Investec. Please go ahead.
Nathan Padmanabhan: Yeah, Hi, Thank you for the opportunity.
Nathan Padmanabhan: So you mentioned that the deal pipeline for smaller deals.
Below 40 million has sort of been put in double digit.
Speaker Change: Always it mean in terms of closures, but he's got them what when the pipeline has improved policy towards us being in the current quarter have you seen that improve as well.
Nathan Padmanabhan: And that is a quick question.
Nathan Padmanabhan: The second question is around the.
Nathan Padmanabhan: These Boston proper packaging, Oh that seems to have increased on a sequential basis.
Nathan Padmanabhan: How much of that would have been third party wasn't being done.
Nathan Padmanabhan: There are significant pass through revenue this quarter was the equipment that they come in.
Nathan Padmanabhan: Any color around that would be.
Speaker Change #100: Yeah. So.
Speaker Change #100: Rather than a person.
Speaker Change #100: At the close of the.
Speaker Change #100: So if you look at our large deal closes I don't think.
Speaker Change #100: Small small these are largely in Florida.
<unk> seen a significant change in the decision making process a buffet oh.
Speaker Change #100: So I didn't say it earlier, both our large deal pipeline still remains strong then.
Speaker Change #100: A smaller deal pipelines have increased double digits over the last quarter.
Speaker Change #100: But we haven't done we haven't really seen a attained in the between making behavior. They by nature. These deals remain lumpy right. So you will see quarters, where you do more and you will see quarters, where you'll do.
Speaker Change #100: Do like that.
Speaker Change #100: But theres no in terms of closure, there's no increase in losses in the current quarter when the pipelines improve the closures on they've been 50 million has not improved in the current quarter is that the favorite one at that.
I'm I'm seeing that closure in terms of the time taken to a decision hasn't changed so the decision making process hasn't changed.
Speaker Change #100: There is no further delay or you know delayed closure is what I meant.
Speaker Change #101: Yeah, what I was asking what are in terms of the absolute closures in the current quarter have they improved sequentially audio down where it is.
Speaker Change #102: What I was trying to understand in terms of these smaller deals.
Speaker Change #103: Yeah. So look what we are talking about the Q T pipeline, which has increased so we love to see you know how the conversion of that that increases, but you know the pipeline increasing our win rates and maintain the closure will definitely.
Speaker Change #102: The increase right now we haven't really given color on that.
Speaker Change #103: We are talking about the pipeline, we see a significant increase at this point of the day.
Speaker Change #103: Got it.
Speaker Change #103: No.
Speaker Change #104: Coming to the second question and third body, Nick N T third body remains an integral part of many of our large deals and especially the mega deals.
Speaker Change #104: You know when you take over a large project from a client where you're taking over I think people technology the whole solution.
Speaker Change #104: You will have third party costs that we'll incur you know which could be hardware software licenses that took that rich.
Speaker Change #104: Cost of U N and become part of the revenue for the client.
Speaker Change #104: This is both a that that third party, we take it from me.
Speaker Change #104: The third party vendor then whatever cost that we incur as it.
Speaker Change #104: It's all of that we don't really pick up.
Speaker Change #105: Got it.
Okay.
Speaker Change #106: That's helpful. Thank you so much and all the best.
Speaker Change #107: Thank you. Thank you.
Speaker Change #108: Next question is from the line of M. B should come on from JM financial. Please go ahead.
Speaker Change #109: Yeah, Hi, good evening.
Speaker Change #110: My question I wanted to double click on the nature of these smaller deals.
Speaker Change #111: The audio is not coming to me I can add a closer to speak for the handset.
Speaker Change #110: Yeah.
Speaker Change #112: Yeah, Hi, I hope this is better yes, I think yeah. So I just wanted to double click on the nature of smaller DS you'd mentioned in the prepared remarks that discretionary spend is restricted to certain.
Speaker Change #110: Sub segments of financial services.
So in that context are these smaller deals mostly in those subs.
Subsectors are these deals and also non discretionary essentially you know smaller appeals that are applying to the releasing a against a large lump sum contract.
Speaker Change #110: That's my first question.
Speaker Change #113: That's why we think these are deemed across various verticals and various types of needs. We don't really go further comment on that.
Speaker Change #113: And the fact that it was a significant moment to know what are the pipeline, we did call it out, but we're not really breaking it up into you know how much of that is discretionary.
Speaker Change #113: Right.
Speaker Change #114: Alright Oh.
Okay. Second question is on a wage hike could you quantify the impact that we should bake in some wage hikes in sports due and England deals next year.
Speaker Change #115: So again, Oh, we think we have not really broken that out what we have said is we will do that in a phased manner. As we have done and are in the earlier you go as a part of the employees when we'll get it done effective January end of the balance and get it affects us less paper.
Speaker Change #114: Okay. Thank you and all of this.
Speaker Change #114: Thank you.
Speaker Change #116: Next question is from the line of Keith <unk> from BMO capital. Please go ahead.
Speaker Change #114: Yeah.
Speaker Change #117: Hi, Thank you very much I wanted to ask two questions if I could.
The first is for the annual guidance what is the embedded.
Speaker Change #117: Expectations for the inorganic contribution.
Speaker Change #117: For the year.
Speaker Change #118: So Gabe this is Asia in the last quarter when we when we changed our guidance, we had baked them being bad impact of of the the acquisitions in that so just to clarify that this guidance does not have any incremental change from.
Speaker Change #118: On the acquisition this quarter, we got a benefit of 80 basis points from from acquisition, which is pretty much do enough months off the you know they.
Speaker Change #118: The consolidation effect of the equity.
Speaker Change #118: So you can I mean, it would be in the similar range for Q3 and Q4.
Speaker Change #119: Okay perfect perfect. Okay, and my second question is it is interesting what you said about discretionary spend.
Speaker Change #119: Coming back and the smaller deals contributing to T. C D growth.
I just wanted to get your perspective on why you think there was.
Speaker Change #119: A change in this category.
Speaker Change #120: Reason I ask is as you said you know these deals all deals can be lumpy and so I'm trying to understand what do you think that their ability is.
Speaker Change #120: The pipeline, increasing and the small.
Category do you think it's sustainable at this point are durable as we look out over the next number of quarters and that's it for me. Thank you.
Speaker Change #120: Hi, Kate this is Sally.
Speaker Change #120: The.
Sally: The first I think just to make sure I understood. The question. So the there's a discretionary review in the.
Sally: These are these smaller than 50 million view and they they are let's say somewhat distinct there is an overlap but they are two separate type of activities. We've referenced in our comments on the do you smaller than 50 million.
Speaker Change #122: As Jay said the Veeva.
Speaker Change #122: We saw good increase and thought it was relevant in that that point of share because that gives a different type of a look into the market from what we see today.
Speaker Change #122: We don't know if.
Speaker Change #122: If it's Georgia boot.
Speaker Change #122: Now we will get a sense over the next few quarters, you know how it looks all the closing timeline of the D and like does it stay or does it disappear, but just though it is more due to shows like it was about all the changes, which we felt would be would be something.
Speaker Change #122: Of interest a show like that.
Speaker Change #123: Okay, but that is the category that I was interested in is you know the smaller deals.
Speaker Change #123: No comments on whether you think that's terrible.
Speaker Change #124: Got it got it.
Speaker Change #124: Days in place.
Speaker Change #124: Yeah.
Speaker Change #124: Okay. Okay.
Speaker Change #125: Is there any commonality in the type of deals in there I know you said it was across industry verticals, so I heard that but any commonality in the in the type of deals with them but.
Speaker Change #125: A smaller category.
Speaker Change #126: Nothing that we have.
Speaker Change #125: What are the things that we would share more color on the there is some.
Speaker Change #125: So it looks to me that in terms of you know like the areas and so on where that is.
Speaker Change #125: Which skews all of which are technologies, but we don't we.
Speaker Change #125: We're not sharing that at this stage.
Speaker Change #127: Okay, Alright, that's it for me.
Speaker Change #127: Thank you.
Speaker Change #128: Next question is from the line of my son, Godaddy from Pictet asset management. Please go ahead.
Speaker Change #128: Yeah.
Speaker Change #129: Thank you for the opportunity My question is I don't like.
Speaker Change #130: I like to call the new deal wins.
Speaker Change #131: A bit of a soft quarter, but that is okay, and what kind of concerned about the input on that.
When I look at the sales and support employees, they've kind of gone down by 9% Y O y.
Speaker Change #131: Can you just explain what is happening is that the modem sales are all support side and by that we put a lot of production because I would think that you still need to keep her engagement with their customers high so that hasn't really discretionary demand picks up.
Speaker Change #131: Then you can actually start getting projects also.
Speaker Change #131: How do you kind of think about that person obviously, the short term kind of margin management, which might have been trying to do to the prediction.
Speaker Change #131: Personally.
Speaker Change #131: So Brett this is Jack Oh, I think you know, it's just a factor of some attrition that says that we have a we have a large pipeline of employees are going to be Johnny.
Speaker Change #131: Joining us on the thing is that so.
I don't think that has anything to do with the marketing programs that we will continue investing into sales and you know it was acquired in the business.
Speaker Change #131: Yeah.
Speaker Change #132: So this is more of a temporary blip or it might be number of salespeople will actually increase in the coming quarters.
Speaker Change #132: Yeah, and you know what I'm, saying cost hasn't I mean in terms of the dollar value of the closet.
Speaker Change #132: But for now.
Speaker Change #132: But then over the.
Many many years I think this is just a small blip.
Speaker Change #132: Okay.
Speaker Change #132: Okay. Okay, alright, thank you much.
Speaker Change #132: Thank you.
Speaker Change #133: Next question is from the line of monarch Sunny Shah from Axis capital. Please go ahead.
Speaker Change #134: Thank you.
Speaker Change #135: When does that start to take them into the market for me.
Speaker Change #135: So that's the understand.
Speaker Change #136: The factors that have driven the.
Speaker Change #136: The sharp decline in margins in what he called Snake.
Speaker Change #136: D DS.
Speaker Change #136: Are those settlement and the woman that gets you know the amount of extra thing.
Speaker Change #137: Oh, Hi, this is geisha.
Speaker Change #137: That'd be multiple factors.
Speaker Change #137: That will play out across our segments. So you know in terms of utilization in terms of onsite mix are in.
In terms of the kind of business thinks that that you know the beetle doesn't ramp up intra quarter. So there could be there will be multiple factors that will play out.
Speaker Change #137: We don't see a significant change if you look at it on a on a trend basis for a few quarters, but I don't know on a short term quarterly basis, you will see some of these factors playing out in terms of money.
Speaker Change #137: And the last one was with regards to we take lightly used to just take that David.
Speaker Change #137: Our cross to be that starting January one would be great to listen to get some things on the quantum oki takes the likely impact in Q4, and how should how has that picked up across the workforce that can be done, but do you need it.
Speaker Change #138: Yeah. So we haven't really spelled out the quantum of the wage hike or something that are at this point in time, we always say that it's going to be in two phases are you know obviously you are doing their employees will get it in in January in the restaurant and get it in April.
Speaker Change #138: The majority of the employees you'll get it in.
Speaker Change #138: January.
Speaker Change #139: Sure. Thank you and all the best with each other.
Speaker Change #140: Thank you.
Speaker Change #141: The next question is from the line of Sandeep Shah from <unk> Securities. Please go ahead.
Speaker Change #142: Yeah, Hi, thanks for the opportunity and congrats on a good execution most of my questions be not until it gets what it wants to stand out E. W. Did you can you know smaller deals below 15 million.
Speaker Change #142: Is it fairly broad based across verticals.
Speaker Change #142: Can it continue that that trend.
So it all comes back.
Speaker Change #142: The calendar 'twenty.
Speaker Change #142: So any fight why I'm asking this is one of them.
Speaker Change #142: Our forces like our performance in the fight when people went to fight for D. C. B E lock menu conversion or even well below $50 million in terms of Pos pickup.
Speaker Change #143: So sandeep the purpose of shedding this as I said earlier as you know we do share what we see and that is what are you know this was one of the one of the interesting one of the important things we thought it was important for our for the investors to understand that we are seeing.
Speaker Change #143: And then in this volatile pipelines, which directly indirectly are in some way you know the presence a discretionary spend et cetera. So that's probably number one defined number two are of course, if we have the win rate remains the same and we are able to convert that that should that would reflect a you know in terms of revenue in the near term.
Speaker Change #143: At this point in time, it's just one data point very difficult to say, whether there is going to become a trend becomes sustainable etcetera etcetera. So I think we should at this point and I believe it is one data point.
Speaker Change #144: Okay, Okay and is it broad based across verticals and markets.
Speaker Change #145: Yes. It is.
Speaker Change #146: Okay, Thanks, and all of us.
Speaker Change #146: Thank you.
Speaker Change #147: Next question is from the line of Girish <unk> from <unk> capital markets. Please go ahead.
Speaker Change #148: Yeah. Thanks for the opportunity My first question is regarding maker needs.
Speaker Change #149: It caused the industry, even when I look at the peers, you've not seen any mega deals being signed so are there.
Speaker Change #149: You know similar number of Mega deals in the pipeline compared with pretty treaty.
Speaker Change #149: Or have the megadeal number kind of come down that's my first question.
Speaker Change #150: So on Mega deals, we don't share specific data on what is in the pipeline and not be the only talk about the overall large deal approach.
Speaker Change #151: Okay. My second and third question second question D. C V to revenue conversion has that changed versus what it was in the previous quarter or six months back.
Speaker Change #150: That's question number two question number T is.
Speaker Change #150: You talked about value based pricing being one of the key levers in this project Maximus can you just give us some examples as to how does it impact the strike now.
Speaker Change #152: Yeah, So girish coming to your first question on conversion.
Speaker Change #152: We haven't really seen any significant change in in terms of signing or in terms of conversion of the fun and games.
We continue to gain market share.
Speaker Change #152: Consistent even when we looked at it.
Speaker Change #152: On a quarter on quarter basis.
Speaker Change #152: We do project Maximus under value based selling I think there are multiple multiple tax within that are you know right from.
Speaker Change #152: The new wage pricing the tracks on a you know getting the change request, where whereby we are eligible for a you know getting the right freight rates et cetera. So there are multiple of those tracks are within that we haven't released yet data.
Speaker Change #152: Beyond this are for obvious reasons, but you know as you could see we have a we have I mean, the track has contributed significantly.
Speaker Change #152: In terms of the realization of that price realization.
Speaker Change #152: Okay. Thank you very much.
Speaker Change #152: Thank you very much.
Speaker Change #153: Ladies and gentlemen, the last question I now hand, the conference over to the management for closing comments.
Speaker Change #154: Hi, Thank you everyone. So first I wanted to share in summary, we.
Speaker Change #155: We had a strong quarter on the revenue growth margins cash collections lodge due so we feel good about that.
Speaker Change #155: And that resulted in the increase in our revenue growth guidance for the full year, which also gives us a good confidence as we look into the future.
Speaker Change #155: Clearly financial services, showing a continued strength in discretionary spend.
Speaker Change #155: Our segments are remaining about the same with the small comment with the comment on automotive in Europe are becoming a bit slower.
Salil Parekh: We have deep, deep capabilities in genitive AI, and these are things where we are building platforms, agent solutions, small language models that we believe will be of huge impact with our clients. And we continue to see strong, strong focus on execution across our business, and that remains key for us as we go ahead. So we remain optimistic as to how the year will play out.
Speaker Change #155: We have deep deep capabilities engender do AI and these are things, where we are building platforms agent solutions small language models.
Speaker Change #155: We believe will be a huge impact with our clients.
Speaker Change #155: And we continue to see a strong strong focus on execution across our business and that remains key for US as we go ahead and should we remain optimistic as to how the year will play out thank.
Unknown Attendee: Thank you, everyone, for joining in and look forward to catching up in the next quarterly discussion.
Speaker Change #155: Thank you everyone for joining and look forward to catching up in the next quarterly discussion.
Unknown Attendee: Thank you very much, members of the management, ladies and gentlemen. On behalf of Infosys Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.
Speaker Change #156: Thank you very much members of the management.
Ladies and gentlemen on behalf of Infosys Limited that concludes today's conference call. Thank you all for joining US and you may now disconnect your lines. Thank you.
Speaker Change #156: Yeah.