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Revenue
₹26,672 Cr
verified against source
Revenue YoY
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reported change
EBITDA
Pending
latest reported figure
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Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
HCLTech delivered a strong Q2 FY24 with services revenue growing 1.6% QoQ in constant currency and EBIT margins improving 154 bps QoQ to 18.5%. Record bookings of $3.96 billion were driven by a mega deal with Verizon Business, signaling robust demand for cost optimization and strategic partnerships. However, discretionary spending remains weak, leading to a revised FY24 revenue guidance of 5%-6% (from 6%-7%) and services organic growth of 4.5%-5.5%. Management expects strong H2 growth from the Verizon ramp, software seasonality, and steady-state conversions. Margin guidance of 18%-19% is reaffirmed, supported by productivity gains and cost controls. Key risk: sustained weakness in discretionary spend could pressure organic growth and delay recovery.
Colored figures show movement against the previous available record.
Guidance to track
- Company-level constant currency revenue growth for FY24 is now expected at 5%-6%, down from the earlier 6%-7% range, due to weak H1 discretionary spend.
- Organic services revenue growth for FY24 is guided at 4.5%-5.5% in constant currency, implying strong H2 CQGR of 2.6%-3.8%.
- Full-year EBIT margin guidance remains unchanged at 18%-19%, supported by operational efficiencies and cost optimization.
- Annual wage hikes deferred to October will impact Q3 margins by ~60-65 bps, with an additional 25-30 bps in Q4.
Risks flagged
- Management noted discretionary spend has not recovered as expected, and the macro environment remains uncertain, which could pressure organic growth.
- Analysts questioned the sharp 300 bps cut in the upper end of revenue guidance despite strong bookings, suggesting potential over-optimism earlier.
- The mega deal with Verizon is critical for H2 growth; any delays in transition or execution could impact revenue targets.
- Q3 margins face headwinds from wage hikes (60-65 bps) and potential reversal of one-off cost savings, which may pressure the 18%-19% guidance.
Key quotes
- This quarter, our bookings hit a record high of $4 billion, $3.96 billion, to be precise.
- Our operating margins recorded a 154 basis points improvement over the last quarter, led by a number of initiatives.
- I think it's still early days as clients are still evaluating them as POCs, while ensuring their data strategy is right, as well as establishing the guardrails to ensure data governance and compliance requirements.
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