FY24 Revenue Growth Guidance: 13%-16% CC
Management reiterated annual constant currency revenue growth guidance of 13%-16% for fiscal year 2024, supported by record order intake and strong executable order book.
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FY24 Adjusted EBITDA Margin Guidance: ~18.3%
Management reaffirmed annual adjusted EBITDA margin guidance of around 18.3%, expecting typical quarterly ramp-up from Q1's 16%.
Gross Margin Improvement of 50bps in FY24 vs FY23
Management reiterated conviction that gross margin will improve by 50 basis points over FY23 in FY24.
Operating Cash Flow to be 70% of EBITDA for FY24
Management expects full-year operating cash flow to be 70% of EBITDA, in line with historical trends.
50 bps adjusted EBITDA margin expansion for FY25
Management reaffirms guidance of 50 bps improvement in adjusted EBITDA margin for the full fiscal year, with H1 margins expected to be 50 bps higher than H1 FY24.
Cigniti EBITDA margin to exceed 16% from Q2 onwards
CFO guided that Cigniti's EBITDA margin will be 16%+ in Q2-Q4 FY25, up from 12.6% in Q1, driven by operational improvements and no further exceptional items.
Cigniti revenue growth to outpace Coforge
CEO stated that Cigniti will grow faster than Coforge in coming quarters, supported by new verticals and cross-sell initiatives.
Net cash position by end of FY25
CFO expects the company to become net cash by fiscal year-end, aided by QIP proceeds and debt repayment.
14% EBIT margin target for FY26
Management reiterated a pathway to 14% reported EBIT margin for the full fiscal year, supported by operational leverage and cost optimization.
At least 20 large deals in FY26
The company aims to close at least 20 large deals in the current fiscal year, up from 14 in the prior year.
H2 growth stronger than H1
Management expects second half revenue growth to be much stronger than first half due to large deal ramp-ups.
Signiti merger closure by Dec 2025/Jan 2026
The merger with Signiti is expected to close by December 2025 or January 2026, with effective date of April 1, 2025.
FY24 revenue growth guidance of 13%-16% in CC terms reiterated
Management reaffirmed the annual guidance given at the start of the year, expecting to deliver within the range despite macro challenges.
Adjusted EBITDA margin guidance of flat vs FY23 reiterated
Management expects full-year adjusted EBITDA margins to be similar to FY23, supported by hedge gains and ARC initiatives in H2.
Q3 margin expansion of ~100 bps sequentially expected
Driven by hedge gains, absence of client event costs, and initial ARC benefits, partially offset by furloughs.
ESOP costs to normalize from Q3 and decline ~30 bps in FY25
One-time ESOP acceleration in Q2; costs expected to decline by about 30 basis points next fiscal year.
Cigniti standalone EBITDA margin target raised to 18%+ by Q4 FY25
Management now expects Cigniti's EBITDA margin to exceed 18% by the end of the fiscal year, up from the earlier target of 16.5%.
Medium-term revenue target of $2B with concurrent margin expansion
Management reiterated its medium-term guidance of reaching $2B in revenue while delivering material EBITDA margin expansion.
ESOP cost headwind of ~120bps incremental in Q3 and Q4
CFO guided that incremental ESOP cost will be ~120bps per quarter for the next two quarters, with total ESOP cost of ~180-200bps.
14% EBIT margin target for FY26
Management targets a reported EBIT margin of 14% for the full fiscal year, with Q4 expected to achieve this level despite wage hike headwinds in Q3.
H2 FY26 growth to be robust
Management expects H2 to be a growth half over H1, with Q4 traditionally the strongest quarter, supported by pipeline and deal momentum.
Free cash flow to PAT ratio of 70-80%
On a sustained basis, free cash flow to PAT is expected to be around 70-80%, with focus on maintaining this metric.
Healthcare vertical to approach $100M run rate
Healthcare book of business expected to be near $100 million by end of FY26, with potential separate reporting from Q1 FY27.
FY24 organic CC revenue growth to be at lower end of 13%-16% band
Management expects to deliver within the annual guidance range of 13%-16% organic constant currency revenue growth, likely near the lower end.
Q4 FY24 adjusted EBITDA margin to improve 150-200 bps sequentially
Q4 margins expected to rise sharply by 150-200 bps from Q3's 18%, driven by furlough reversal and new business ramp-up, targeting exit margin between 19.6% and 20.4%.
FY25 margins to be significantly higher than FY24
Next year margins will clearly be higher due to offshore mix improvement, SG&A peaking at 15%, and average resource cost tailwinds.
SG&A to remain around 15% of revenue going forward
SG&A as a percentage of revenue is expected to stay at the current 15% level, growing in line with revenue rather than as a percentage.
EBIT margin expansion to ~13.5% by Q3 FY26
CFO Saurabh Goel guided that EBIT margin should expand from 11.8% currently to roughly 13.5% by Q3 next year, driven by ESOP cost tailwinds and operational improvements.
ESOP cost to decline to ~100 bps of revenue by Q3 FY26
ESOP cost is expected to reduce from current ~210 bps to ~150 bps by Q1 FY26 and further to ~100 bps by Q3 FY26, providing margin tailwinds.
Sustained robust growth expected in coming year
CEO Sudhir Singh expressed confidence in continued robust and sustained growth, citing strong order book, pipeline, and broad-based demand.
14% EBIT margin for FY26
Management reiterated guidance of 14% EBIT margin for full fiscal year 2026, with Q4 expected to deliver 15% EBIT.
Exceptional FY27 growth
Management expects FY27 to be an exceptional year, with continued robust growth driven by large deal pipeline and key account momentum.
No EPS dilution from Encora in FY27
Management confirmed that the guidance of no EPS dilution in FY27 for the combined business remains intact, even after finalizing a term loan instead of QIP.
50 bps EBITDA margin expansion in FY25
Management expects adjusted EBITDA margin to increase by approximately 50 basis points in fiscal year 2025.
Revenue growth correlated with 17.3% executable order book growth
Management pointed to the 17.3% YoY growth in the executable order book as a strong indicator of robust organic revenue growth in FY25.
Target $2 billion revenue by FY27 with 150-250 bps margin improvement
Post Cigniti acquisition, Coforge aims to become a $2 billion firm by fiscal year 2027 with operating margins improving by 150-250 basis points.
Net cash company by end of FY25
CFO Saurabh Goel stated the company endeavors to be a net cash company by the end of fiscal year 2025.
Very strong growth in FY26
Management expects robust revenue growth in FY26, with organic growth not slowing vs FY25.
Reported EBIT to expand materially in FY26
EBIT margin expected to improve significantly from Q4 exit of 13.2%, with large part of journey to 14% covered in FY26.
FY27 target: $2B revenue, 18% reported EBITDA
Reiterated medium-term targets; management aims to achieve $2B revenue sooner than FY27.
ESOP cost to decline to ~100bps from H2 FY26
ESOP cost expected to reduce by 70-80bps from current 1.8% by Q3 FY26.
FY27 Consolidated EBITDA Margin 20.5-21%
Management guided EBITDA margins of 20.5% to 21% for FY27 on a consolidated basis, driven by AI automation, G&A leverage, and Enkora synergies.
FY27 Standalone EBIT Margin 16.5-17%
Standalone EBIT margin expected between 16.5% and 17% in FY27, excluding Enkora amortization.
FCF to PAT at 100%+ from FY27
Free cash flow to PAT ratio expected to be at least 100% from FY27 onwards, up from earlier guidance of 70-80%.
Q1 FY27 Revenue Flattish QoQ Due to India Business Exit
Revenue in Q1 FY27 expected to be flattish sequentially due to discontinuation of ~$20M low-margin India business, with growth resuming from Q2.