Q3 2025 Infosys Ltd Earnings Call - Press Conference

January 16, 2025

and Sandeep Mahindroo, and Jayesh Sanghrajka, and Sandeep Mahindroo, and Jayesh Sanghrajka.

[music].

Okay.

Yes.

Okay.

Rishi Basu: Very good evening, everyone, and a very happy new year. Thank you for joining Infosys's Q3 financial results. My name is Rishi, and on behalf of Infosys, I'd like to welcome all of you today. I typically would have said one question per media house. Should I say that? With that, I invite our Chief Executive Officer, Mr. Salil Parekh, for his opening remarks. Over to you, Salil.

A very good evening, everyone and a very happy new year.

For joining infosys, a third quarter financial results.

Rishi: Name is rishi and on behalf of Infosys I'd like to welcome all of you today.

Rishi: I typically would have said one question per media house should I see that.

Rishi: [laughter].

Rishi: With that I invite our chief Executive Officer, Mr. Sal in Paris for his opening remarks over to you said.

Rishi: Okay.

Salil Parekh: Thanks, Rishi. Good afternoon to all of you. Thank you for joining us here in person. Very happy new year to each one of you. Our revenue grew 1.7% quarter-on-quarter and 6.1% year-on-year in constant currency terms in Q3. All verticals and most geographies grew year-on-year. We saw double-digit growth in Europe, India, and our manufacturing business. Large deals were at $2.5 billion. Operating margin at 21.3%. Free cash flow for the quarter was at an all-time high of $1.26 billion. Headcount grew by over 5,000 sequentially, where we are now over 323,000 employees worldwide. Financial services in the US continues to grow strongly in this quarter and over the past few quarters. We've seen a revival in European financial services during Q3.

Sal: Thanks, Ashley good afternoon to all of you. Thank you for joining us here in person.

Rishi: Very happy new year to each one of you.

Rishi: Our revenue grew one 7% quarter on quarter, and six 1% year on year in constant currency terms in Q3.

Rishi: All verticals and most geographies grew year on year, and you saw a double digit growth in Europe, and India and in Atlanta fracturing business.

Rishi: Large deals with a $2 $5 billion.

Rishi: Operating margin at 21.3.

Rishi: Free cash flow for the quarter was at an all time high of one point or $6 billion.

Rishi: Head count grew by over 5000 sequentially, where we are now over 323000 employees worldwide.

Rishi: Financial services in the U S continues to grow strongly in this quarter and over the past few quarters.

We have seen a revival in European financial services during Q3.

Salil Parekh: We are seeing an improvement in retail and consumer product industry in the US, with discretionary pressures easing. Automotive sector in Europe continues to remain slow. In generative AI, we have built 4 small language models for banking, for IT operations, for cybersecurity, and broadly for enterprises. In generative AI, we are also developing over 100 new agents. These agents are for deployment within our clients, many of them already using agents that we've developed. Based on our strong performance in this quarter and our view for the rest of this financial year, we are revising our revenue growth guidance to growth of 4.5% to 5% in constant currency terms. Our operating margin guidance remains unchanged at 20% to 22%. With that, let's open it up for questions.

Rishi: We are seeing an improvement in retail and consumer products industry in the U S with discretionary pressures easing.

Rishi: Automotive sector in Europe, Europe continues to remain slow.

Rishi: And generative AI, we have built for small language models for banking for IP operations for cyber security and broadening for enterprises.

In General we're also developing.

Rishi: Over 100, new <unk>.

Agents. These agents after deployment within our clients many of them already using engines that we've developed.

Rishi: Based on our strong performance in this quarter and our view for the rest of this financial year.

Rishi: We are revising our revenue growth guidance to growth of four 5% or 5% in constant currency terms.

Operating margin guidance remains unchanged at 20% to 22%.

Rishi: With that let's open it up for questions.

Rishi Basu: Thank you, Salil. We will now open the floor for questions. Joining Salil is Mr. Jayesh Sanghrajka, Chief Financial Officer, Infosys. The first question is from Ritu Singh, CNBC-TV18.

Speaker Change: We will now open the floor for questions. Joining Salim is Mr. J S Undergrad, Scott Chief Financial Officer of Infosys. The first question is from reducing CNBC deviating.

Ritu Singh: Hi, Salil. Hi, Jayesh. Happy New Year. You know, let me just start with that revenue growth that you've posted, because Q3 is typically a seasonally weak quarter. The market estimates were about 1% growth, but you've been able to deliver 1.7%. You know, is the environment significantly better than what you saw three months ago? If you could give us a commentary on that. And on raising your revenue guidance to about 4.5% to 5%, was on expected lines but, you know, what is the implied growth rate for the Q4 then? Are you expecting a degrowth of about 2.5%, given these margins that you've given?

Josh: Hi, Josh happy new year.

Josh: Let me just start with that revenue growth that you've posted because Q3 is typically a seasonally weak quarter. The market estimates were at about 1% growth that you've been able to deliver one 7%.

Josh: So if the environment significantly better than what you saw three months ago. One if you could give us a commentary on that and on raising your revenue guidance to about 4.5% to 5% wasn't expected lines, but you know what is the implied growth rate for the full fourth quarter. Then are you expecting a de growth of about 2.5% given this margins that you've given.

Ritu Singh: Also your wage hikes, I think last time we asked you, and you said it may happen in Q4. If that is on track, and what will be the impact on margins, once you do undertake that? Hiring again, you know, has been going up for the last two quarters. How should we read into that? Again, coming back to your revenue question, you know, if you're expecting a degrowth in Q2, you know, will you continue this pace of hiring? What is the demand outlook? If I may add, you know, deal wins, while they've been steady, they've not really accelerated. You know, if you could give us a sense of what the pipeline looks like, from here on. Thank you.

Josh: Also your wage hikes I think last time, we asked you and you said it may happen in the fourth quarter. If that is on track and what will be the impact on margins.

Josh: You do want to take that in hiding again has been going on for the last two quarters, how should we read into that again coming back to your revenue question.

Josh: If you are expecting a deep roots in the second quarter.

Josh: You continue with this pace of hiring what is the demand outlook and if I may add deal wins, while they've been steady they've not really accelerated.

Josh: But if you could give us a sense of what the pipeline looks like from here on thank you.

Salil Parekh: Thanks. I'll try and go through the question, and so Jayesh Sanghrajka will also answer. On the first, I think the sort of view in Q3 and it was the growth at 1.7%, what we saw was, you know, the last quarter we had seen discretionary becoming good in financial services in the US. Now, this quarter, we have seen financial services in Europe also the discretionary is showing signs of improving, and in retail and consumer products in the US is showing those signs of improving. That coupled with how we delivered in the quarter was the reason why we changed the guidance to increase. Now, the second, I think was about if that is the guidance, what is the Q4 and so on.

Josh: So thanks.

Josh: I'll try and go through the question and some jazz will also.

Josh: Answer.

Josh: On the first I think.

Josh: That sort of view in Q3, and it was the growth at one 7%.

Josh: What we saw was that.

Josh: Last quarter, we had seen discretionary are becoming good in financial services in the U S. Now this quarter, we are seeing financial services in Europe also the discretionary is showing signs of improving.

Josh: And on retail and consumer products in the U S is showing signs of improving so that.

Coupled with how we delivered in the quarter was the reason we changed the guidance to increase.

Josh: Now the second I think was about if that is the guidance what is the Q4 and so on so there first.

Salil Parekh: First, as we've always shared, our Q1, Q2 in a typical financial year are strong. Our Q3, Q4 are typically weak. That's the sort of seasonality that we see in Q4, nothing more or less. Jayesh will give a little bit more color on some of these points. On the hiring that you mentioned, there I'll say a few words, and I'll pass it on to Jayesh. We've had a strong hiring in Q3 with this expansion of over 5,000 employees, and we see that based on some of the discretionary, this will continue, but it will have seasonality as we see in our revenue.

Josh: As we've always said.

Josh: Our Q1, Q2, and a typical financially a strong Q3 Q4 typically weak. So that's the sort of seasonality that we see in Q4, nothing more or less jazz.

Josh will give a little bit more color on some of some of these volumes.

Josh: On the.

Speaker Change: The hiring that you mentioned.

Speaker Change: Then I'll say, a few words and I'll pass it onto jazz we've had a strong hiring in Q3 with this expansion of over 5000.

Speaker Change: Employees and we see that based on some other discretionary this win continue but it will have seasonality as we see in that revenue for.

Salil Parekh: For the next financial year, we are obviously not giving the growth guidance, but what we do see is that many of the things we've put in place, across the whole company, focus on large deals, focused on small deals, focused on artificial intelligence, making sure we're doing cost takeout for clients. All of these things combined are helping the company to execute, as well as it's doing. Let me pause here if there's anything else.

Speaker Change: For the next financial year, we obviously not giving the growth guidance, but what we do see is that many of the things we've put in place.

Speaker Change: Across the whole company focus on large deals focused on small these focused on artificial intelligence, making sure. We're doing cost take out for clients. All of these things combined are helping the company to execute as well as doing so let me pause here if there's anything else.

Ritu Singh: How much of it was organic, how much inorganic because of the in-tech acquisition, that as well.

Speaker Change: How much of it was organic how much inorganic because of the <unk> acquisition on that as well so in that Curt Let me just answer that and I'll go back to your other questions and that was last quarter, we had pretty much two and half months of index. So this quarter. The impact was roughly around 20 bps in revenue.

Salil Parekh: in-tech, let me just answer that, and I'll go back to other questions. in-tech was last quarter, we had pretty much 2.5 months of in-tech. This quarter the in-tech was roughly around 20 bips in revenue. Coming back to the other points, if you look at large deals, you know, our large deals, while the overall large deal number you will see is remaining same, within that, the net new has increased significantly. Last quarter our net new was 40%. This quarter our net new is 60%, which means that the large deals per se or the net new TCV of the large deals have gone up 1.5 times, you know, between Q2 and Q3. Our large deal pipeline has become stronger, you know, as we see.

Speaker Change: Coming back to the other bonds. If you look at large deals large deals.

Speaker Change: When the World lies in pneumonia when team cementing fame.

Speaker Change: Within that the net new adds increased significantly last quarter and net new was 40%. This quarter net new is 60%, which means that the large deals per.

Speaker Change: Firstly on the net new or do you think there's a lot of things have gone up about an hour basis between Q2 and Q3.

Speaker Change: A large deal pipeline has become stronger.

Salil Parekh: All of that has led to our increase in guidance. Just to add to the point that Salil was making. Coming to the other question on comp. We had announced earlier that comp will happen in two phases, one phase from 1 January, the other one will happen from 1 April. We are on track with that. The first part of the comp is getting rolled out in this quarter. We are working with HR on that. Sorry. HR team is working on that.

Speaker Change: As we see it so all of that led to our increase in guidance as to where to the point that it was me.

Speaker Change: Coming to the other question on comp.

Speaker Change: We had announced earlier that comp will happen in two phases. One phase from first January the other one will happen from first of April we are on track with that.

Speaker Change: So first part of the comp is getting rolled out in this quarter end.

Speaker Change: We are working with each other and that's what he does HR team is working on that question rather was what'll be the impact on margin, we don't define the impact on comp I mean exact impact on the come.

Ritu Singh: Oh, the question rather was what will be the impact on margins.

Salil Parekh: We don't define the impact on comp, I mean, exact impact on the comp in terms of margins. We will have some headwinds coming from the comp in Q4 and Q1, based on it. You know, broadly, the comp that we are expecting is 6% to 8% in India. You know, the overseas comps will be in line with the earlier comp reviews.

Speaker Change: Margins. So we will have some headwinds coming from the comp in Q4 and Q1.

Speaker Change: But broadly the gone.

Speaker Change: We are expecting a 6% to 8% in India.

Speaker Change: Well I think it's going to be.

Speaker Change: In line with the earlier continues.

Ritu Singh: I think, Salil, the question on discretionary spends on high-tech, telecom, some of these areas that you had continued to flag in the last quarter, if the outlook on that is improving and if the BFSI momentum you expect to continue into the new year.

I think the question on discretionary spend in high Tech Telecom. Some of these areas that you'd continue to flag in the last quarter is the outlook on that is improving and it has to be at the same momentum you expect to continue into new year. So.

Salil Parekh: The one on high tech and on telecom, we've not seen a change. What we've seen the change is really on financial services, more in Europe and on retail consumer products in US. Will it continue at this stage? That's what we're seeing in terms of what we saw in Q3, but we'll wait and see how it looks beyond.

Speaker Change: The on.

Speaker Change: Hi Tech and telecom, we have not seen a change what we have seen the changes really on financial services.

Speaker Change: More in Europe, and in retail consumer products and U S will it continue at this stage.

Speaker Change: We are seeing in terms of what we saw in Q3, but we'll wait and see how it looks beyond.

Rishi Basu: Thank you. The next question is from NDTV Profit, Haripriya.

Speaker Change: Thank you.

Speaker Change: The next question is from Ndtv profit Harrier.

Haripriya: Hi, Salil. On the discretionary spending part that you mentioned, is this kind of change that you're seeing is only sentimental or you see this translating in the budgets, in the upcoming budgets for the companies, across the sectors that you mentioned? With the new administration coming in the US, what's the kind of impact that you're expecting from that? The market expects the stability to bring in a lot more budgets to open up a lot more. On the employee headcount, the attrition is also rising a little bit more, if not gradually as well. How do we read into that? On the margins, what's the kind of impact the cross-currency headwinds have had?

Speaker Change: Oh on the discretionary spending part that you mentioned is this kind of change that is seeing its only sentimental or do you see this translating into budgets and upcoming budget for the companies across the sectors that you mentioned and also with the new administration coming in the U S. What's the kind of impact that you're expecting from that.

Speaker Change: Market expects the stability to bring in a lot more.

Speaker Change: Budgets to open up a lot more and also on the employee head count the attrition is already rising a little bit more if not graduated whelchel, how do we read into that I'm. The on the margins, what's the kind of impact.

Speaker Change: Impact of cross currency headwinds have had.

Haripriya: There's a lot of movement that has happened in the currencies. Also, would there be any furloughs or spillover? In the long term, like, you have had a guidance band for margin, and it is there. Also it's quite narrow. In the long term, what is it, how is it that you choose to improve on the margin part, given that there's also a project margin project improvement that you have?

Speaker Change: A lot of movement that has happened in the currency.

Speaker Change: And Oh.

Speaker Change: Would there be any furloughs or spillover and in the long term like you have had a guidance mindful margin.

Speaker Change: Does that but also it's quite a milder winter in the long term what is it.

Speaker Change: How is it that you choose.

Speaker Change: To see improvement in margin, but given that there's also Oh project Marjan project improvements, but they do have.

Salil Parekh: Let me start off with some of them. The first one was on the discretionary. The budgets for our clients will be on a calendar year basis, which will start now. We'll get a sense in this quarter itself. Our commentary is mainly on what we've seen in Q3 and how the discussions have been going, and that seems to indicate the changes that I mentioned. In terms of the new changes in the US, we'll wait and see how it goes. Generally speaking, most people who are economists and so on have a view that the economy there will do better. That's what our clients are saying. We'll wait and see how it goes. We have a business that works in those growth situations, in the cost situations.

Speaker Change: So let me start off with some of them.

Speaker Change: The first one was on the discretionary.

Speaker Change: <unk>.

The budgets for our clients will be on a calendar year basis, which will stop now so we can get a sense in this this quarter itself.

Speaker Change: Maintaining mainly on what we've seen in Q3 and how the discussions have been going and that seems to indicate the changes that I mentioned.

Speaker Change: In terms of the new.

Speaker Change: Changes in the U S.

Speaker Change: We'll wait and see how it goes generally speaking most people worthy economists and so on have a view that the economy, there we'll do better.

Speaker Change: That's what our clients are saying, but waiting wait and see how it goes we have a business that works.

Speaker Change: Those growth situations and the cost situations. So we're feeling quite confident in terms of the outlook there what's the dependency on day two M B visa deal.

Salil Parekh: We're feeling quite confident, in terms of the outlook there.

Haripriya: I don't know what's the dependency on the H-1B visas. Do you see any impact there?

Speaker Change: C N impacted.

Salil Parekh: There, maybe you wanna go?

Speaker Change: So there.

Speaker Change: Many.

Jayesh Sanghrajka: Yeah, I can answer that. If you look at over the years, our dependence on H-1Bs has reduced significantly, right? First and foremost, our on-site mix has reduced significantly. We used to be in the 30% range, we are now at 24% range. Within that, our nearshore has increased significantly. Within the on-site, the US on-site population that we have, our H-1B independent folks are now 60+%. We have now built a pretty resilient model from that perspective, and we are therefore much more confident from where we are versus where we used to be earlier.

Speaker Change: I can answer that so if you look at you know over the years.

Dependence on a 20 is Edwin reserve reduced significantly right.

Speaker Change: First and foremost our onsite mix has reduced significantly and used to be in the 30% range. We are now at 24 pleasantly within that add on near shore has increased significantly and within their onsite. The U S. N type of population that we have.

Speaker Change: And shouldn't depend to an independent folks on a 60 plus percent. So we had pretty much we have now built a pretty resilient model.

Speaker Change: From that perspective, we are therefore, much more confident from from where we are less than we used to be earlier.

Haripriya: How can you?

Speaker Change: Okay.

Salil Parekh: Any other questions about attrition?

Speaker Change: My question, Yeah, so coming back to your other questions.

Jayesh Sanghrajka: Yeah, coming back to your other questions, you know, attrition at this point in time has remained at 13.7, which is one of the lower attritions that we have seen in the last multiple years. It's range-bound, and we don't see a challenge there at this point in time. We have already added net new employees in the last two quarters. And, you know, our campus hiring program is also as per our plan, so we don't really see a challenge there. You had another question on margins.

Speaker Change: Attrition at this point in time has remained at 13, one seven which is one of the lower attrition that we have we have seen in the last multiple years, it's ranged upon and.

Speaker Change: And we don't see a talent that at this point in time.

Speaker Change: Have already added to last two quarters, we have added net new employees and our campus hiring program is also in as per our plan. So we don't really see a challenge.

Speaker Change: You had another question on margins.

Salil Parekh: Margins.

Jayesh Sanghrajka: If you look at our margins this quarter, we have expanded our margins by 20 basis points during the quarter. If I just take the puts and takes of that, 40 basis points came from currency benefit, you know, both rupee depreciation as well as the cross currencies. 30 basis points came from Project Maximus, you know, mainly from the pricing benefit that we got. 20 basis points came from the expected credit loss provisions and lower provisions on the post-sale customer support, offset partly by higher third-party costs that we had. The headwind of 70 basis points was furloughs, lower working days, and other costs.

Speaker Change: So if you look at our margins this quarter, we have expanded our margin by 20 basis points during the quarter. If I just take the puts and takes of that 40 bps 40 basis points came from currency benefit.

Speaker Change: There'll be a rupee depreciation as well as the cross currencies.

Speaker Change: 20 basis points gained 30 basis points came from of Maximus.

Speaker Change: Mainly from the pricing benefit that we got 20 basis points came from the the expected credit loss provisions and lower provisions on the post sale customer support offset partly by a third party at higher third party costs that we had and the headwind of 70 basis points, let's furloughs and lower working days in another call.

Jayesh Sanghrajka: That's our, you know, margin work for the quarter. As we get into the next quarter, we will have headwinds coming from the compensation increase that we have rolled out already. That would be a headwind. Currency, we'll have to see how it pans out. At this point in time, looks like currency will give us some benefit in terms of margin, but we'll have to see how the currency progresses through the quarters.

Speaker Change: So that's a margin walk for the quarter as we get into the next quarter, we will have headwinds coming from from the the compensation increase that we have rolled out already so that would be a headwind currency, we love to see how it pans out at this point in time, it looks like currency will give us some benefit in terms of margin, but we'll always see how their currency.

Speaker Change: The vessels with the court.

Rishi Basu: Thank you. The next question is from The Economic Times, Beena.

Bina: Thank you. The next question is from the economic time Bina.

Beena Parmar: Hi. I have a question on the, you know, hiring commitment. I think you'd committed to 15,000 to 20,000 freshers. Is that on track? And how much have you hired so far under that? And what's the outlook for the next fiscal? And if you can just give us maybe this calendar year as well. What's the sort of hiring that you're looking at, both freshers and overall hiring? On the deal momentum, just if you could just give us a sense of which sectors are likely to grow in the next two quarters, while financial services is seeing a lot of pickup. Could you delve into the other segments as well? And, you know, with the deal cycle closing, a lot of other peers have said that that is sort of shortening.

Bina: Hi.

A question on the hiring commitment committed to 15000 to 20000 today shows is that on track and how much have you hired so far.

Bina: And what's the outlook for the next fiscal year and if you can just give us maybe this calendar year as well, what's what's the sort of fighting that youre looking at blood pressures and overall hiring.

Bina: On the deal momentum just if you could just give us a sense of which sectors are likely to grow in the next two quarters well financial services has seen a lot of pick up could you delve into the other segments as well.

Bina: And you know with the deals.

Bina: Bill cycle closing a lot of other peers have said that.

Bina: That is sort of shortening if you could also give us some sense on how the cycle has been.

Beena Parmar: If you could also give us some sense on how the cycle has been. How is the large and mega deal pipeline going forward, for the next, near term, maybe next two quarters? The last thing, you know, what sort of impact do you see because of the recent lawsuit that has been made public, you know, in one of your court filings? What is the business impact because of that lawsuit? Could you give us some color on, you know, the charges? Because I think some of it is very serious. That's it.

Bina: And how does the large and mega deal biplane going forward for them.

Bina: Next near term, maybe next two quarters and the last thing you know what sort of impact do you see.

Bina: Because of the diesel lawsuit that has been made public.

Bina: In one of your court filings.

Bina: What is the business impact because of that lawsuit and could you give us some color on it.

Bina: The charges because I think some of it is very serious so that's it.

Jayesh Sanghrajka: Okay. If you look at the headcount, we are on track in terms of headcount or the fresher hiring this year. We will be hiring 15,000+. We are expecting for FY26 at this point in time, 20,000+ fresher hiring. We do not really give an outlook in terms of the lateral hiring that is dependent on multiple factors, you know, how the demand grows, how the attrition pans out, et cetera. But it's also a factor that over the years we have now moved to a very agile hiring model. You know, we can pretty much fill it this in India in two to three months, on-site in less than a month in terms of the demand.

Bina: Okay. So if you look at the head count we are on track in terms of head count the fresher hiring. This this year, we will be hiring 15000, plus we are expecting for FY 'twenty six at this point in time training.

Bina: 20000, plus a fresher hiring we do not really give our outlook in terms of the lateral hiring that is dependent on multiple factors you know how the demand.

Bina: Gross how are the attrition pans out etcetera etcetera.

Bina: And it's also a fact that over the years, we have now moved to a very agile hiring model. So you know we can we can pretty much fill at this there's an email in total 10 months onsite in less than a month in terms of the demand. So we don't really therefore, you don't give out an OMB or outlook in terms of the lateral hiring but in terms of Freshers 15000, plus for this year.

Jayesh Sanghrajka: We don't really, therefore, you know, give out an overview or outlook in terms of the lateral hiring. In terms of freshers, 15,000+ for this year and 20,000 next year is what we are looking at as a quantum.

Bina: And 20000 next year is what we're looking at it but.

Salil Parekh: In terms of the industry and the next few quarters, as you mentioned. We don't give industry specific views which are forward. We have that overall guidance which we've increased. We've given a view more on what we've seen in Q3, and we think that is something that's a good sign because financial services, which was strong in the US, is now strong. The discretionary has come back in Europe and with the retail and consumer products expanding. Beyond that, manufacturing still remains slow, and the other industries are at the same place where they were. That's the way we are looking at it. Incremental, we see that it's a better situation in Q3 than what we saw in Q2. In terms of the large deals and the pipeline. Our pipeline is strong.

Bina: In terms of the industry in the next few quarters as you mentioned.

Bina: We don't give industry specific views.

Bina: We reach out forward, we have that overall guidance, which we have increased.

Bina: We've given a view more on what we've seen in Q3, and we think that is something that's a good sign because financial services, which was strong in the U S is now strong all the discretionary has come back in Europe, and with the retail and consumer products expanding beyond that manufacturing standards.

Bina: Remains slow and the other industries at the same place where they were so that's the way we look at it but incrementally we can see that it's a better situation in Q3 than what we saw in Q2.

Bina:

Bina: In terms of the large deals and the pipeline. Our pipeline is strong we typically don't give the value of it but it's a strong pipeline with large deals and some mega deal. These are these when you feel good about given the way that some of the conversions have happened in.

Salil Parekh: We typically don't give the value of it, but it's a strong pipeline with large deals, and some mega deals. These are deals we feel good about given the way that some of the conversions have happened. In terms of the timeline of the closure, the deal timeline, we have seen essentially similar situation from what we saw in Q2. That is where we are, except which is not just on the large. It's on the discretionary where in those few industries that I mentioned, the discretionary moves a little bit faster. The large deal movement is about the same in the pipeline. In terms of any of the legal things, we have no additional comments here.

Bina: In terms of the timeline of the closure of the deal.

Bina: Timeline, we've seen essentially similar situation from what we saw in Q2.

That that is where we accept.

Bina: Which is not just on the logic and something on the discretionary ran those few industries that I mentioned, the discretionary moves a little bit faster, but the last deal movement is about the same in the pipeline and in terms of any of the legal things we have no additional comments here.

Jayesh Sanghrajka: Thank you. The next question is from The Times of India. Veena.

Bina: Thank you.

Speaker Change: The next question is from the times of India a winner.

Bina: Yes.

Veena: Good evening, gentlemen, and Happy New Year. Your contribution from the top 5 clients has dropped to 12.7 from 13.4, you know, a year back and compared to the previous quarter, 13.7. What are the reasons for that? The Street has been expecting a more nuanced metric to call out on the GenAI business. What would those metrics be for Infosys? Also, there's a term in the industry called AI washing, you know, where people generally, you know, you use AI to a bare minimum and then give it an AI tag. Is that happening? Can you tell me a little bit about that?

Speaker Change: Good evening, gentlemen, and happy new year.

Speaker Change: So your contribution from the top five clients has dropped to 12.7 mm Nah 13.4.

Speaker Change: You go back and compared to the previous quarter 13.7 is there what are the reasons for that.

Speaker Change: St has been expecting a more nuanced metric not too to call on you know.

Speaker Change: Called out on the on the Jennie O business, So what would those metrics b.

Speaker Change: And might it be for Infosys.

Speaker Change: And also.

Speaker Change: That there's there's a dominantly industrial EIA washy, you know where people generally you know you'll use E E.

It was bad minimum and then give it nei Doug is that happening and yeah can you tell me a little bit about that and also as the head count.

Veena: Also, is the headcount growth the same pace going to continue with generative AI being one of the main things being talked about in industry? Also, one clarification. You mentioned 6 to 8% in India. That's the quantum of hike or is that-

Speaker Change: Good <unk> pay is going to continue with generally to be a.

Speaker Change: <unk> being one of the main things being talked about in industrial one clarification, you mentioned, 6% to 8% in India. So that's the quantum of hike was is that.

Salil Parekh: Quantum of hike.

Veena: That's the quantum of hike. Sure.

Speaker Change: So that's the quantum of it.

Jayesh Sanghrajka: Yeah. If you look at, you know, the contribution from the top five clients, many of them had furloughs this quarter. This is typically the seasonal quarter from furlough perspective that has impacted the contribution from these top clients.

Speaker Change: Yeah. So if you look at you.

Speaker Change: The contribution from the top five clients many of them had for noise. This quarter and this is typically the seasonally seasonal quarter from furlough perspective that is impacted.

Speaker Change: The contribution from the stock.

Salil Parekh: On generative AI, I think you mentioned the washing.

Speaker Change: So on the general theory I think.

Speaker Change: You mentioned the wash.

Jayesh Sanghrajka: AI washing.

Speaker Change: Yeah Yeah.

Salil Parekh: AI washing. I'm not aware of that within Infosys, but you may be aware of that outside with some other companies. We are very clear on what we're doing on generative AI. The small language model, just as an example. Today we have several discussions with clients where they would like to use the small language models that we have built. How are they built? They are built by using the proprietary data that we have, let's say, on banking or on IT operations. It then uses some very standard industry or, in this case, horizontal data, and then the client builds their own into that small language model. Some clients are asking us for them to build a small language model of their own.

Speaker Change: Yeah washing.

Speaker Change: I'm not aware of that within Infosys, but you may be aware of that outside with some other companies.

Speaker Change: We are very clear on what we're doing on January <unk>.

Speaker Change: This small language model just as an example.

Speaker Change: So today, we have several discussions with clients, where they would like to use. This small language models that we have been so how did the how they build their belt by using the proprietary data that we have let's say on banking are on IP operations.

Speaker Change: And then uses some very standard industry or in this case a horizontal data.

Speaker Change: And then the client bill is their own into that small language bottle.

Speaker Change: Some clients are asking us to.

Speaker Change: For them to build a small language model of their own. So for example, with the telco client they want to build their own let's say company X telco their own small language model, which we are helping them because we have the platform for it.

Salil Parekh: For example, with a telco client, they want to build their own, let's say company X telco, their own small language model, which we are helping them because we have the platform for it. This is real, generative AI work that we are doing. You look at agents. To give you some example, we have built for a client. This is actual work, not just like a proof of concept where we have built a research agent for a client, a large tech company, where they are now using that in their product area to support how queries are looked at and where their own people and their own customers can look at this, use this agent.

Speaker Change: And this is real generative AI work that we are doing then you look at Egypt.

Speaker Change: So to give you. Some example.

Speaker Change: We have built for our clients. This is actual work not just like a proof of concept where.

Speaker Change: We have built a Z search agent for a client a large tech company, where they are now using that in their product.

Speaker Change: Area to support how grad, he's I looked at and where their own people and their own customers can look at this and use this agent.

Salil Parekh: Some of the statistics are quite impressive from going from something like 18 days of time to do things to 8 days of time to do things. These are real examples. We see real benefits with clients. Another example of an agent, we built an agent for audit work for a professional services company. 3 different agents. They are now helping that company to more efficiently and with, fewer errors, do what they're doing in their audit activity. The work we're doing in generative AI, we feel is leading in the industry. We are very clear in how it's being used across because these are real projects with clients. Almost every discussion with clients has some element of it.

Speaker Change: Some of the statistics are quite impressive from going from something like 18 days of time to do things to eight days of time to do things. So these are real examples we see real benefits with clients. Another example of an agent.

Speaker Change: Rebuilt an agent for audit work for a professional services company with three different agents. They are now helping that company too.

Speaker Change: More efficiently and with fewer.

Fewer errors do what they're doing in their audit activity. So the work we're doing in general we feel is leading in the industry.

Speaker Change: We are very clear in how it's being used across because these are real projects with guidance.

Speaker Change: Almost.

Speaker Change: Every discussion with clients has some element of it so.

Salil Parekh: Let's say the overall work is large, but there's always some element of generative AI in that discussion that we are involved in.

Speaker Change: The overall work is large but there's always some element of generative in that discussion that we are involved.

Rishi Basu: Thank you. The next question is from Moneycontrol, Rishab.

Speaker Change: Thank you.

Speaker Change: The next question is from Mani control Richard.

Rishab: Thanks, Rishi. Good. Happy new year, gentlemen. A couple of questions there. First of all, on the deal cycle, you know, you highlighted that the North American market is already better, but even Europe is getting better. On that front, are you seeing deal cycles getting shorter and shorter? You know, second, on your trainees, the Mysore campus, this case is now, I think the forest department has said the leopard has not been spotted. When are trainees going to be back on the campus? I hear that they'll be back by 25th or 26th.

Speaker Change: Thanks Ricky.

Speaker Change: Happy New year, gentlemen couple of questions. There. So first of all on the do you think is.

Speaker Change: You highlighted that.

Speaker Change: The North American market as has already been done, but even Europe is getting better. So on that front are you seeing do you think is getting shorter and shorter.

Speaker Change: Second.

Speaker Change: On.

Speaker Change: No.

Your trainees.

Speaker Change: Nobody to campus.

Speaker Change: Keith is now I think the positive for the department of Ed the lipid that's been Oh.

Speaker Change: Not been supported to bennati needs be are going to be back on the campus I hear that.

Speaker Change: They'll be back by 'twenty five 'twenty six.

Rishab: Also on the Bhupendra person who went out on LinkedIn and said a lot of things on, you know, the culture, work culture. What are your views on that?

Speaker Change: Also on the bookings.

Speaker Change: <unk> been through a bolt in who's who went out on Linkedin and said a lot of things on the culture work culture. So what are your views on that.

Salil Parekh: First on the deal cycle. Where we've seen, for example, the discretionary work coming back, where we talked about financial services or retail in the specific geographies. There, for the discretionary work, things move relatively quickly. The overall deal cycle, if you look at large deals, has remained about the same. In terms of Mysore campus, with the sighting of the leopard, we've engaged with the Karnataka Forest Department, now, and made sure that the safety of our employees and also to make sure there was no harm to the leopard. We have taken all the appropriate steps. In fact, all the employees, we moved them outside the campus.

Speaker Change: So first on the deal cycle. So there we have seen for example, the discretionary work coming back we talked about financial services or retail in the specific geographies.

Speaker Change: For the discretionary work things move relatively quickly, but the overall DRAM cycle as you look at.

Speaker Change: Large deals has remained about the same.

Speaker Change: In terms of our Mysore campus.

Speaker Change: The siting of the leopard.

Speaker Change: We are engaged.

Speaker Change: Engagement, the Karnataka Forest Department.

Now.

Speaker Change: And made sure that the safety of our employees and also to make sure. There was no harm to the leopard or we have taken all the appropriate steps in fact, all of the employees B.

Speaker Change: Move them outside the campus.

Salil Parekh: As of today, the Karnataka Forest Department has had a view where, there's been no sighting or signs or whatever indications of the leopard for several days. Now we are in the process of looking at what the next steps will be. In terms of, the employee question that you mentioned, within Infosys, we have a very clear approach, to make sure that everyone is treated fairly. We have a well-defined process of looking at, how the performance is driven. We are equal opportunity in making sure that everyone gets the benefits of that, and we hold ourselves to this high standard.

Speaker Change: As of today, they're Kalydeco Forest Department has had a view.

Speaker Change: Theres been no siting or signs or whatever indications of the leopard for several days and now we are in the process of looking at what the next steps will be.

Speaker Change: In terms of.

Speaker Change: The employee question that you mentioned.

Speaker Change: Within Infosys, we have a very clear approach to.

Speaker Change: Make sure that everyone is treated Fannie we ever will.

Defined process of looking at how the performance is driven we are equal opportunity and making sure that everyone gets the benefits of that and we hold ourselves to this high standard.

Rishab: Thank you.

Speaker Change: Thank you.

No.

Salil Parekh: We are now in the process of looking at that update and putting together the next steps for that.

Speaker Change: Okay.

Speaker Change: <unk>.

Salil Parekh: We are now in the process of looking at that update and putting together the next steps for that.

Speaker Change: So we are now in the process of looking at that update and putting together the next steps for that.

Rishi Basu: Thanks, Rishab. The next question is from Reuters News, Ritam.

Speaker Change: Thanks Vishal.

Speaker Change: Next question is from Reuters news rhythm.

Ritam: Hi, gentlemen. Congratulations on a good set of numbers. Sir, I wanted to know what is the latest update on the McCamish cybersecurity incident. We had a couple of banks coming up saying that they were impacted. If you can give us some color on what is the latest and if there is any estimated impact to top line from that. Secondly, Mr. Parekh, you gave some comments about the US economy, but I want to ask you if you see if you are feeling particularly confident about Trump's return to presidency and now that his inauguration is a few weeks away. How do you look at US economy now that Trump is back? That's all.

Speaker Change: Hi, gentlemen, congratulations on good set of numbers.

So I wanted to know what is the latest update on the Mccamish cybersecurity incident.

Speaker Change: We had a couple of banks coming up scene that is impacted if you can give us some color on what is deleted and if there is any estimated impact to top line from debt and taken leave Oh.

Speaker Change: Missouri, Patrick you gave some comments about the U S economy, but I want to ask you. If you see if you are feeling particularly considered about Trump's returned to presidency and know that his inauguration is a few weeks of the.

Speaker Change: How do you look at U S economy, now that Trump is back.

Speaker Change: Uh huh.

Salil Parekh: On the first point, we have made several disclosures on that in the past, which hold. In addition, the e-discovery process for that is complete. Recently in December, there were 6 different class action suits that were filed. The court has decided at the end of December to club or join all of them and allow for what's called a mediation process, and that is the step that is underway today. In terms of the US, I think the US market or the economy is done incredibly well in the past few quarters with the way it has been managed post the COVID situation.

Speaker Change: So on the first point.

Speaker Change: We have made several disclosures on that in the past which hole.

Speaker Change: In addition.

Speaker Change: The E discovery process for that is complete.

Speaker Change: And recently in December there are six different class action suits that were.

Speaker Change: Hi.

Speaker Change: The court has decided at the end of December two clubs.

Speaker Change: Club or join all of them and allow for what's called immediate mediation process.

Speaker Change: That is the step that is underway today.

Speaker Change: In terms of the U S.

Speaker Change: The U S.

Speaker Change: Market or the economy is.

Speaker Change: Is done incredibly well in the past few quarters with the way it has been managed forest.

Speaker Change:

Speaker Change: The COVID-19 situation and everything we see in terms of what the outlook is especially with what we saw on the inflation and the interest rates. It gives us a view that the U S will remain very good and strong market for us.

Salil Parekh: Everything we see, in terms of what the outlook is, especially with what we saw on the inflation and the interest rates, gives us a view that the US will remain a very good and strong market for us.

Rishi Basu: Thank you. The next question is from Mint, Jaspreet.

Speaker Change: Thank you. The next question is from Mint Jeff.

Speaker 17: Good evening. Three questions. If you can just throw a little more light on whether you're seeing deal tenures get shortened. Does this imply that every year you're seeing more deal renewals come up than, say, in the last 36 months? If I look at the sequential figures, the client contribution, not just to the top five, but also to the top 10 and top 25 clients from the top of those clients have been coming down. If you can help me explain that. And third, are you seeing any sort of a pricing pressure in your conversations with clients going forward? If yes, which businesses are most affected?

Speaker Change: Good evening three questions.

Speaker Change: If you can just throw a little more light on whether you've seen built in yours gets shortened.

Speaker Change: Does this imply that every year, you'll see more deal renewals come up then see in the last 36 months.

Speaker Change: Then if I look at the sequential figures the client contribution not just of the top five but also to the top 10, the top 25 clients from the top.

Speaker Change: Those clients have been coming down.

You can help me explain that.

Speaker Change: And third are you seeing any sort of a pricing pressure in your conversations with clients going forward.

Speaker Change: Yes on which businesses are most affected.

Salil Parekh: Okay. Let me start with the first one. Jayesh will have some points on the second and the third. On the deal cycles, we don't see a change from Q2 to Q3 as we've seen the market in what we are seeing on the large deals. We do see because the discretionary is slightly better on financial services or retail in different geographies. Those are typically deals which get done a little bit quicker. But if you take the appropriate deals for them, it's remaining the same in that. Jayesh will handle too. I just wanna say one thing on pricing. We have some very strong positive momentum in pricing, but Jayesh will share the details.

Speaker Change: Let me start with the first one.

Speaker Change: I will have some points on the second and the third.

Speaker Change: On the deal cycles.

Speaker Change: We don't see a change.

Speaker Change: From Q2 to Q3 is as we've seen the market and what we're seeing on the large deals.

Speaker Change: We do see because the discretionary is.

Speaker Change: Slightly better on financial services retail and different geographies. Those are typically these bids get done a little bit quicker, but if you take the appropriate deals for them. Its remaining the same in that.

Speaker Change: Josh will handle two I just wanted to say one thing on pricing, we have some very strong positive momentum in pricing, but the judge will share the detail, yes, if you look at our.

Jayesh Sanghrajka: Yes. If you look at our margin expansion program, one of the tracks there is value-based selling, and that is pricing in a way. That has delivered, you know, great results. Over nine months, pricing has improved by 3.6%. That is one which has helped us expand margins. If you look at our margin expansion, nine months over nine months has expanded by 30 basis points. Despite the fact that, you know, we had multiple headwinds coming from the comp increase that we did last year in November, so full year impact came this year. We had furloughs this quarter. We had impact of, you know, increased third-party costs. We had an impact coming from an acquisition that we did on account of that, you know, the amortization of intangibles.

Speaker Change: Our margin expansion program one of the drag that is a value based selling and that is pricing in a way and that is delivered.

Speaker Change: Results of the nine months over nine months pricing has improved by three 6% that is one which has helped us expand margins. If you look at our margin expansion in nine months over nine months has expanded by 30 basis points.

Speaker Change: The fact that we had multiple headwinds headwinds coming from the comp increase that we did last year in November as a full year impact came this year, we had furloughs this quarter, we had impact of.

Speaker Change: Increased.

Speaker Change: Oh third party costs.

Speaker Change: We had an impact coming from an acquisition that we did on the ground is that the amortization of intangibles. So all of the of subsumed all of that and despite that we have we have been increase are able to increase our margins. One of the reason is the pricing benefit that would be that'd be good but the coming to the next question you asked about the.

Jayesh Sanghrajka: We have subsumed all of that, and despite that, we have been able to increase our margins. One of the reason is the pricing benefit that we got. Coming to the next question, you asked about, you know, the reduction in revenues in multiple brackets. I think it's the same answer. You know, the furloughs do impact clients across multiple brackets, and the clients in the top five clients do reflect in top ten and top twenty as. That's the main reason of the reduction there.

Reduction in revenues and multiple brackets I think it's the same answer.

Speaker Change: The furloughs do impact client across multiple multiple bracket in that.

Speaker Change: Clients in the top four pipelines do reflect in top 10 and top 20 years. So that's that's the main reason of the reduction there.

Salil Parekh: Thank you. The next question is from The Hindu Business Line, Sanjana.

Speaker Change: Thank you.

Angina: The next question is from the Hindu business lines angina.

Sanjana: Hello, gentlemen. Is this on? Okay, yeah. I just wanted to understand what the demand trends are in key verticals like BFSI, retail, manufacturing, because analysts had estimated that for Q3, BFSI will aid growth while weakness in manufacturing will weigh on this growth. This is the opposite for you, where, you know, like manufacturing has worked, like done better than BFSI. Just wanted to understand, you know, like how these dynamics played out. Also, in a previous conversation with the company, I learned that Infosys Cobalt enjoys better margins, you know, than your conventional services, but with a lot of focus on AI. I just wanted to understand, you know, like do you think Topaz will sort of, the margins of Topaz will outpace this growth?

Speaker Change: Hello, gentlemen.

Angina: Okay.

So I just wanted to understand what the demand trends are in key verticals like be in society Dale manufacturing because analysts had estimated that for Q3.

Angina: I will eat growth, while weakness in manufacturing will be on this growth.

Angina: But this is the opposite for you that you know like manufacturing as well.

Angina: <unk> done better than B Epicyte. So just wanted to understand you know like how these dynamics played out.

Angina: And also you know in the previous conversation with the company I learned that emphasis cloud goodbye enjoys a better margin than your conventional services, but with a lot of focus on AI I. Just wanted to understand you know like do you think to two.

Angina: So let's start with the margins of Topaz will outpace the scope and another question.

Sanjana: Another question, in Q2, you'd mentioned that you had a double-digit growth in deals below $50 million. Do you see existing and incoming clients sort of shifting their preferences towards smaller deals? Yeah. Thank you.

Angina: In Q2, you had mentioned that you had the double digit growth in deals below $50 million. So do you see existing and incoming clients sort of shifting the preferred interest towards smaller deals. Thank you.

Salil Parekh: I'll take the second and the third, and maybe Jayesh, you go on the first one. On the margins, you know, for cloud or other things within the company, we typically don't share that externally, so we have no real view on that. However, the way Jayesh shared a little bit of that, we have a program where we look at margins across the company in different components. All of those things are helping us to make sure that the margin appropriately is growing. We have an ambition in the long term of having better and better margins. That's something that we look at, but we don't have this sort of external sharing of the cloud and so on.

Angina: I'll take the second and third in any national ones. The first one.

Angina: On the margins you know for cloud or other things within the company. We typically don't share that externally. So we have no real view on that however.

Angina: The way I shared a little bit of that the Arab program, where we look at margins across the company indifferent.

Angina: Components. So all of those things are helping us to make sure that the margin.

Angina: Appropriately is growing and we have an ambition in the long term of having.

Angina: Better and better margins. So that's something that as we look at but we don't have the sort of external sharing of the cloud and so on.

Jayesh Sanghrajka: On the industries. Sorry, what was the question?

Angina: And the streets, sorry, what was the worst financial incentives.

Salil Parekh: Financial services.

Jayesh Sanghrajka: If you look at industries, you know, within industries, our financial services has continued to grow stronger, especially the US financial services. We are seeing revived interest in the European financial services. The retail, we've seen again better predictability in terms of US retail, especially the retail and CPG on the back of the better holiday seasons and better client sentiment. Those are the positives that we are seeing. Manufacturing, while has delivered double-digit growth, you know, we still continue to see softness in European manufacturing, and that continues. You know, high tech continues to remain soft for us. You know, communications, similar commentary. We're not seeing any challenge from that perspective.

Angina: So if you look at industries of within industries.

Angina: Our financial services continue to grow stronger, especially the U S financial services.

Angina: We are seeing.

Waived interest in the European financial services retail, we've seen again, a better predictability in terms of U S retail, especially retail and.

Angina: CPG on back of a better holiday season than in a better client sentiment. So those are the positives that we're seeing.

Angina: Manufacturing well why does that delivered double digit growth.

Angina: Shouldn't continue to see softness in Europe manufacturing.

Angina: And that continues Hy tech.

Angina: <unk> continues to remain soft for us.

Angina: Communication similar commentary, we have not seen any challenge from that perspective coming to geographies.

Jayesh Sanghrajka: Coming to geographies, you know, the US has shown positive year-on-year growth after four quarters of decline. Europe, as Salil said earlier, we have now had strong double-digit growth on the back of multiple large deals. Overall, we do see those challenges in those changes in the environment. Sorry. The question on smaller deals? Yes. Overall, the smaller deals, the deal pipeline has continued to remain stable. The large deal pipeline has grown, as Salil said earlier. Overall deal pipelines has become stronger, you know, between Q2 and Q3.

Angina: The U S has shown positive.

You only have grown positive year on year after four quarters of decline.

Angina: Europe is set had said earlier, we have now had a double digit strong double digit growth on back of multiple large deals. So overall, we do see those challenges and that those changes in the environment.

Sorry, the question on smaller Dcs. So overall these smaller deals.

Angina: Deal pipeline has continued to remain stable and largely in pipelines has grown as Alan said earlier, so overall deal by blender becomes stronger.

Speaker Change: Between Q2 and Q3.

Rishi Basu: Thank you. The next question is from Fortune India, Rukmini.

Speaker Change: Thank you. The next question is from Fortune, India Rukmini.

Speaker 18: Thank you. Salil, I have three questions. One, if you have to look at the corresponding Q2 two fiscals ago, 31 December 2022. If you have to look at the rate of growth of number of clients in the $1 million bucket and the $50 million bucket, it's been the fastest, you know, about 85 and 10 odd clients. How do we read this? It's, you know, are deals coming only in this kind of bucket now and the $10-plus million dollar deals that would have come are no longer there or, you know, there are fewer in the market itself? Also your days sales outstanding on 31 December 2022 was about 68 days which is now up to 74 days, six days of...

Speaker Change: Thank you.

Speaker Change: So I have two questions. One is you have to look at all the corresponding quarter two fiscal year to December 31, 'twenty 'twenty. Two if you have to look at the REIT agree with a number of clients in the 1 million bucket and the 50 million bucket. It's been the fastest about 85 and 10 outlines how do we need. This is you know.

Speaker Change: Our deals coming only in this kind of bucket now in the 10 plus million dollar on the kind of build that would have come are no longer dead on.

Speaker Change: We're in the market itself and also your job you know.

Speaker Change: These are outstanding steel on December 31st two and <unk> 22 was about 68 days, which is now up to 74 days now sixties, I mean, and given that you have an improved cash flow now is it a lot of AR collections that have happened and that is reflecting in the free cash flow and Todd is given that you have such.

Speaker 18: I mean, given that you have an improved cash flow now, is it a lot of collections that have happened and that is reflecting in the free cash flow? Third is, given that you have such excellent free cash flow, would it make you guys a lot more adventurous, look for bigger acquisitions, perhaps? Thank you.

Speaker Change: Excellent free cash flow with it make you guys a lot more adventurous look for bigger acquisitions, perhaps thank you.

Salil Parekh: I'll take the first and the third, and the DSO, Jayesh will look at. In the buckets of clients, I think the way you looked at it. We have a strong focus on making sure that all the different levels of clients we expand, and some of that is what you're seeing in the data that you referenced. Now, the deal size is a slightly different parameter because the deal size will be like in a specific client, which will be over multiple years. Part of it will get reflected into the one specific year or a quarter or so on. The deal size, as Jayesh was sharing, there's, and even we shared last quarter, you know, we saw a good increase in that smaller deal size, not the large deal only.

Speaker Change: Yeah.

I'll take the first and the third in the DSO, Josh when we look at.

Speaker Change: So on the.

The buckets of clients I think the way you looked at it so.

Speaker Change: Yeah.

Speaker Change: Our strong focus on making sure that all the different levels of clients, we expand and.

Speaker Change: And some of that is what you're seeing in the data that you referenced.

Speaker Change: Now the deal size is a slightly different parameter because the deal size will be like in a specific client which will be over multiple years. So part of it will get reflected into the one specific year on a quarter or so.

Speaker Change: So the deal size.

Speaker Change: As J S. We're sharing that there's an even we shared last quarter. We saw a good increase in that smaller deal size not the large deal only and then this quarter as Joe said, we've seen also the larger deal pipeline, becoming bigger. So that's that's one huge positive that we have seen.

Salil Parekh: This quarter, as Jayesh shared, we've seen also the larger deal pipeline becoming bigger. That's one huge positive that we are seeing in the change of the pipeline in the deal size. The earlier point was on the size of our clients. We wanna make sure that at all levels, we have a approach that builds up the client. Because today, when a client trusts us with X million, you know, tomorrow it could be three X or five X. That's something that grows year over year. That's part of something we've done internally, which is being reflected from the outside on the numbers. Typically, there's a progression over time that happens.

Speaker Change: In the change of the pipeline and the Doj.

Speaker Change: The earlier point was on.

Speaker Change: The size of our clients, we want to make sure that at all levels we have.

Speaker Change: Approach that builds up the client because.

Speaker Change: Today, when our clients Trust us with X million tomorrow, it could be three acts or five X and that's something that grows year over year and that's.

Speaker Change: Part of something they've done internally, which is being reflected from the outside and the numbers.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: So typically there's a progression over time that happens.

Salil Parekh: Part of some of the activities we do inside is to make sure that we share with our clients what other services we have that takes the clients from that level to a different level once they become comfortable with it. Now, on the point of having so much cash and being adventurous, I think it's highly unlikely that we'll be adventurous.

Speaker Change: And part of.

Speaker Change: Some of the activities, we do in signage to make sure that we share with our clients. What other services. We have that takes clients from that level to a different level once they become comfortable with it.

Speaker Change: Now on the point on having so much cash and being adventurous I think it's highly unlikely that we'll be adventurous.

Speaker Change: [laughter].

Jayesh Sanghrajka: Yeah. Coming to the DSOs and the cash flow question. If you look at this quarter, we had, as Salil said earlier, we had one of the highest cash generation, right? That is on back of the multiple intervention that we have, we've been doing for last multiple quarters. We've had a razor-sharp focus on cash conversion. Our unbilled and unearned has come down significantly in this quarter. Our unbilled minus unearned has come down by $300 million. Typically, that first converts into AR and then converts into cash. While you see, you know, an AR increase, if you look at AR, you know, net of unbilled and unearned, it's come down by 6 days. That has reflected in our cash flow.

Speaker Change: [laughter], yeah coming to.

Speaker Change: The dsos.

Speaker Change: And the cash flow question. If you look at this quarter, we had as Alan said earlier, we had one of the highest cash generation right and that is on back of the multiple intervention that we have been doing for last multiple quarters. We've had a razor sharp focus on cash conversion.

Speaker Change: Our Unbilled unearned has come down significantly in this quarter, and then minus analyst come down about $300 million. So typically that first convert into air and then convert into cash so while you'll see you know any other increase if we look at <unk>.

Speaker Change: And when it does come down by six days and that has reflected in our cash flow of course, we also had a tax refund, which has helped our cash flow in the nine months, but even after that.

Jayesh Sanghrajka: Of course, we also had a tax refund, which has helped our cash flow in the nine months. Even after that, adjusted for tax refund, our cash flow for the nine-month period has gone up by 50% on a nine-month over similar nine months last year. As we start collect at the end of it, yeah.

Speaker Change: I said for tax even when our cash flow for the nine month period has gone up by 50% on on a nine month old similar nine months last year.

Speaker Change: Okay.

Speaker Change: As we collect start collect at the end of it.

Rishi Basu: Thank you, Rukmini. The next question is from The Financial Express, Padmini.

Speaker Change: Thank you Luc many the next question is from the financial express, but many.

Padmini: Hi. So was your revenue contribution from the rest of the world and $10 to 20 million category customer affected due to dollar appreciation? Why where is the India growth coming from, and why is the rest of the world declining? Are you seeing any challenges in contract renewals with clients seeking expanded project scopes at same price and/or same scopes at reduced values? Is there lumpiness in mega deals because of AI's fast evolution? Your nine-month margin average is already about 21%, so is there a particular reason for retaining the guidance?

Speaker Change: Hi, So what's your revenue contribution from the rest of the World and 10 to 20 million category customer affected due to donate a precision and Hawaii.

Speaker Change: Hawaii veins in their growth coming from and why has the rest of the world.

Speaker Change: A decline and I'm seeing any challenges and contract renewals with clients seeking expanded project scopes. It seem plays and on a same school set reduced values and if there is lumpiness.

Speaker Change: <unk> seen megadeals because of Ai's fast evolution and.

Speaker Change: I didn't have it is already about when he won so is there a particular these important beating the guidance.

Salil Parekh: Let me start with some of them. You know, first you can come back to Jayesh. The question around what we do with the margin guidance, I think we will keep the same margin guidance, which is 20 to 22. We are not changing the margin guidance, even as you mentioned with the nine-month outlook. Sorry, what was the one before that?

Speaker Change: Let me start with some of them in your first you can come back to me.

Speaker Change: Great question around.

Speaker Change: What we do with the margin guidance I think we will keep the same margin guidance, which is 20 to 22.

Speaker Change: We're not changing the margin guidance, even as you mentioned with the nine months outlook.

Speaker Change: Sorry, what was the one before that dollar precision yeah.

Jayesh Sanghrajka: Dollar appreciation.

Salil Parekh: Yeah.

Jayesh Sanghrajka: I'll answer.

Speaker Change: The rest of the World you can.

Salil Parekh: Rest of the world, you can do.

Jayesh Sanghrajka: I'll answer that. If you look at our rest of the world, the reason of decline in rest of the world was because we had some one-time, in the last quarter, last year same quarter, which was, you know, the third-party related cost and therefore the revenue that we got out of that. That has helped those quarters. Underlying growth has still remained strong for us, and we don't see

Speaker Change: So if you look at the rest of the world. They the reason of decline in rest of the World was because we had some one time in the last quarter last year's same quarter, which was the third party related costs and therefore, the revenue that we got out of that so that that has helped those quarters underlying growth has still remained strong for us and we don't see.

Salil Parekh: Any challenge coming from there. India is a very small segment for us, so you know, any small change there will show large in percentage terms. You know, it's a very small segment for us. These projects will have some spikes and bottoms depending on seasonality on those projects. As I said earlier, the client segmentation is mainly impacted by furloughs in this quarter.

Speaker Change: Any challenges coming from there.

Speaker Change: Yes.

Speaker Change: India is a very small segment for us so any small change there will show a large in percentage terms, but it's a very small segment for us. So these projects will have some some spikes in burdens depending on seasonality on those projects.

Speaker Change: Okay.

Speaker Change: As I said earlier that the that the client segmentation is mainly impacted by the phone knows in this quarter.

Speaker Change: Okay.

Rishi Basu: Thank you. The next question is from the Deccan Herald, Sonal.

Speaker Change: Thank you. The next question is from the Deccan Herald sooner.

Speaker 20: Hello, gentlemen. Congratulations on the result. A few questions here. One of your peers had highlighted that CY 25 will be a better year. How are you looking at it? Also, how have third-party pass-through revenues been this quarter? Thirdly, also on the median salary package, if you could shed some light on that. Has it increased for freshers? How has it been? Yeah.

Speaker Change: Hello, gentlemen, and congratulations on the there's been a few questions here.

Speaker Change: One of your peers have highlighted that sito, Steve I don't if I would be a better year. How are you looking at it.

Speaker Change: Also how have put part you pass through revenues been this quarter.

Speaker Change: Second a totally also on the median salary package. If you could shed some light on that has it increased professionals how has it been yeah.

Salil Parekh: On the first one, we give a guidance, you know, for the financial year, and we have increased our guidance for this financial year, even with one quarter outstanding. We don't have a view beyond that. What we are seeing is a clear change in the discretionary activities in financial services, retail, and consumer products. It gives us a good confidence that overall we are executing very well within the company, and clients are seeing tremendous traction with us. We feel that as a positive thing, but we don't have a view which is going beyond this financial year.

Speaker Change: So on the first one.

Speaker Change: We gave our guidance for the financial year, and we have increased our guidance for this financial year even.

Speaker Change: With one one quarter outstanding we don't have.

Speaker Change: Beyond that but what we are seeing is a clear change in the discretionary.

Speaker Change: Activity is in financial services, and retail and consumer products. So it gives us a good confidence that overall, we are executing very well within the company and clients are seeing tremendous traction with us. So we feel that as a positive thing when we don't have a view which is going beyond this.

Speaker Change: Financial here.

Speaker 20: All true.

Speaker Change: Also the third party costs has gone up.

Salil Parekh: Yeah. The third-party cost has gone up. You know, this is a seasonal quarter again, where the third-party cost as a percentage of revenue goes up. It's gone up in line with that.

Speaker Change: This is a seasonal quarter again weather third party costs as a percent of revenue goes up it's gone up in line of that.

Speaker 20: The median salary package as well.

Speaker Change: And also normally you didnt salary package.

Salil Parekh: On that we have no change to announce at this stage. No comment on that.

Speaker Change: So on that we have no no change to announce at this stage no comment.

Rishi Basu: Thank you. With that, we come to the end of this press conference. We thank our friends from media for being here today. Thank you, Salil, and thank you, Jayesh. Before we conclude, please note that the archive webcast of this press conference will be available on the Infosys website and on our YouTube channel later today. Thank you, and please join us for high tea outside.

Speaker Change: Thank you with that we come to the end of this press conference. We thank our friends from media for being here today. Thank you for Lillian. Thank you Josh before we conclude please note that the archived webcast of this press conference will be available on the emphasis website and on our Youtube channel later today. Thank you and please join us for high tea outside.

Speaker Change: Yeah.

Speaker Change: Hum.

Speaker Change:

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: Sure.

Sure.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change:

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Uh huh.

Speaker Change: Okay.

Speaker Change: Uh huh.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change:

Speaker Change: Uh huh.

Speaker Change: Hum.

Speaker Change:

Speaker Change: Oh.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: Yes.

Q3 2025 Infosys Ltd Earnings Call - Press Conference

Request a DemoDemo

INFY

Infosys

Earnings