eClerx Services Limited — Q3 FY26

eClerx Services Limited Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=JTEC4XCRFwM Published: 3 months ago

0:00 Hi everyone and uh sorry for slight delay. Good day and welcome to Q3 FI26 earnings call of E-Clark Services 0:08 8 seconds Limited. Please note that this webinar will be recorded. To take us through the results and to answer your questions, we have with us the top management of E-lux 0:17 17 seconds represented by Capil Jen, managing director and group CEO and Shinwasan Nadur, chief financial officer. We will 0:25 25 seconds start the call with brief opening remark by Capil followed by Shinasan who will be sharing the financial update and then we will open the floor for Q&A session. 0:34 34 seconds As usual, I would like to remind you that anything that is mentioned on this call that gives any outlook for the future or which can be construed as 0:42 42 seconds forward-looking statement must be viewed in conjunction with risk and uncertaintities that we face. This risk 0:49 49 seconds and uncertaintities are included but not limited to what we have mentioned in the prospectors file with sebi and subsequent annual reports which you can 0:58 58 seconds find on our website. Having said that I will now hand over the floor to Capil. Over to you Capil. 1:05 1 minute, 5 seconds Thank you Asha and good afternoon everyone. We are pleased to share the highlights of our performance in FI26 1:12 1 minute, 12 seconds Q3. It was a good quarter on both the revenue and margin front. Operating 1:17 1 minute, 17 seconds revenue for Q3 was 121.7 million up 5.4% sequentially. 1:25 1 minute, 25 seconds In INR terms, Q3 operating revenue is INR 10,73 million up 6 12% sequentially. 1:34 1 minute, 34 seconds Margins have also been strong. I beta for Q3 is INR 3075 million which is 28%. 1:42 1 minute, 42 seconds Up 3% sequentially. 1:45 1 minute, 45 seconds PAT for the quarter is INR1 1920 million at a margin of 17.5% up nearly 5% sequentially 1:54 1 minute, 54 seconds for the three quarters of FI26 USD operating revenue is 346.5 2:00 2 minutes million a Yony increase of 18% the corresponding INR figure for operating 2:07 2 minutes, 7 seconds revenue is 30,97 million up 22% yearonear while bad for 9 months of the 2:15 2 minutes, 15 seconds year is 5,68 million up 33% yearonear. 2:22 2 minutes, 22 seconds Deal wins for Q3 were 45 million. 2:26 2 minutes, 26 seconds Analytics and automation is up 10% which is healthy in this quarter as well. 2:31 2 minutes, 31 seconds Growth in the top 10 clients was higher than top 10 client growth. Top 10 client concentration is at 60% down from 62 to 64% in the prior quarters. 2:43 2 minutes, 43 seconds Growth in the FAO sub segment continued and this has resulted in strong growth in the emerging business. 2:50 2 minutes, 50 seconds Growth was also strong in high-tech and M&D. Fashion and luxury showed an increase from the seasonal low of Q2 2:58 2 minutes, 58 seconds while BFSI BFSI and CMT experienced modest growth. 3:03 3 minutes, 3 seconds I would now like to share some commentary and outlook uh about our businesses on financial services. We see opportunities across core and new 3:12 3 minutes, 12 seconds clients on operations and change. We have now started working on AI projects and uh across some of our larger and mid-tier clients. 3:22 3 minutes, 22 seconds Analysts covering fashion and luxury report that the industry might have bottomed out. Industry outlook for 2026 is low singledigit growth. 3:32 3 minutes, 32 seconds Both high-tech and M&D showed strong growth in Q3. In high-tech, client spending is directed on transformation 3:39 3 minutes, 39 seconds programs to automate and improve client satisfaction. 3:43 3 minutes, 43 seconds There is significant focus on agentic AI for self-healing services for consumer and business computing. 3:50 3 minutes, 50 seconds Growth in M &D was driven by new wins and expansion across key focused clients. In this business, we see opportunities in both data ops and 3:59 3 minutes, 59 seconds market intelligence. Our emerging businesses grew strongly in the last quarter and the outlook remains 4:06 4 minutes, 6 seconds positive. We saw expansion in FAO and order management services in existing clients on the communication media and telecom. 4:16 4 minutes, 16 seconds Our expansion into new delivery centers is resonating well with clients. 4:21 4 minutes, 21 seconds Couple of our existing clients have signed up for Cairo operations. So in the near term we will start servicing multiple clients out of our Egypt 4:30 4 minutes, 30 seconds center. We are continuing to upsell and cross-ell on the back of strong delivery commitment to innovation and insights 4:38 4 minutes, 38 seconds and strategic relationships in technology and analytics. We continue to see momentum in our suite of products 4:46 4 minutes, 46 seconds both with new and existing clients. On the data and AI front, we have won deals for Agentic AI deployments with a few 4:54 4 minutes, 54 seconds clients and continue to run pilots with all clients across the board. The technology and operations teams are 5:01 5 minutes, 1 second working closely with clients for adoption of AgentKI. 5:05 5 minutes, 5 seconds A brief on the awards and recognition during the quarter. In the last quarter, we were elevated to goal status in the 5:12 5 minutes, 12 seconds Adobe solution partner program for the America's region. Uh this achievement places us among an elite group of gold 5:20 5 minutes, 20 seconds partners globally underscoring our growing relevance and credibility and execution strength within the Adobe ecosystem. 5:29 5 minutes, 29 seconds We were recognized as a major contender in Everest group's intelligent process automation peak matrix. This recognition 5:36 5 minutes, 36 seconds highlights our rapid advancements in agentic AI driven by Robo Cogniflows our enterprisegrade agentic automation platform. 5:46 5 minutes, 46 seconds We also won the bronze award in the operational excellence category at the seventh ASQ South Asia team excellence awards for a project from our customer experience vertical. 5:58 5 minutes, 58 seconds FI26 has been strong positioning us well for continued long-term growth. 6:05 6 minutes, 5 seconds While near-term volatility is inheritant in our business and may result in Q4 being softer than the first three 6:12 6 minutes, 12 seconds quarters, underlying demand remains healthy. Our pipeline continues to be robust, supported by sustained and 6:19 6 minutes, 19 seconds meaningful engagement with clients. As always, we are here because of our clients, employees and partners. We sincerely thank them for their trust, 6:27 6 minutes, 27 seconds dedication and collaboration and for the opportunity to contribute to shared success. We look forward to continuing our journey together in the future. 6:37 6 minutes, 37 seconds Thank you and over to Shini for more details. 6:41 6 minutes, 41 seconds Uh thank you Capil and good afternoon everyone. Let me provide additional color on our quarterly performance. Uh so quickly recapping some of the revenue 6:50 6 minutes, 50 seconds and margin numbers. Uh the constant currency operating revenue is up 5.5% sequentially and 20% um as compared to Q3 of FI25. 7:01 7 minutes, 1 second Including other income of 313 million in the quarter. Total revenue is 11,73 million up 6.4% sequentially and 22% Y Y 7:10 7 minutes, 10 seconds Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y. 7:11 7 minutes, 11 seconds uh net operating cash flow was 2536 million and the EITA conversion metric is at 82%. 7:18 7 minutes, 18 seconds Um on a Q1Q basis, EITA margin is down 90 bips while it is up 190 bips compared to the same quarter of last fiscal. Uh 7:26 7 minutes, 26 seconds increase in u sales and distribution variable payouts and uh higher travel and marketing costs are the major contributes to the Q on Q margin decline. 7:36 7 minutes, 36 seconds Utilization has been higher in Q3 uh leading to a 30 bits improvement in uh delivery cost and there is minor 7:44 7 minutes, 44 seconds improvement in GNA as well. U on the other key metrics as couple already mentioned the top 10 concentration is 7:52 7 minutes, 52 seconds down to 60%. Uh DSO has moved up by about 2 days to 78 utilization is up by about 1.4%. 8:00 8 minutes And we've added 400 new seats in Chandigar. attrition is at pretty much similar levels compared to Q2. U on an 8:07 8 minutes, 7 seconds administrative note, we completed the buyback process in January and 625,000 shares were extinguished um as a result. 8:14 8 minutes, 14 seconds Uh and the board has approved a one is to one bonus which will be put up for shareholders approvals in the coming days. Thank you everyone. Uh and with 8:23 8 minutes, 23 seconds this we conclude our prepared remarks and we can now move on to the Q&A. Uh back to you Asha. 8:30 8 minutes, 30 seconds Thank you Shinasan. Thank you Capil. We will open the floor for Q&A session now. 8:35 8 minutes, 35 seconds Um participants please raise your hand for asking questions. So we have first question from the line of Manik Tanja 8:44 8 minutes, 44 seconds from Access. Manik please go ahead. I have unmuted your line. 8:51 8 minutes, 51 seconds Hi good evening. I hope I'm audible. Yes. 8:54 8 minutes, 54 seconds Yes. So uh first of all congratulations on the very steady performance that you've continued to sustain through the 9:02 9 minutes, 2 seconds last seven quarters. I just wanted to get your thoughts around two things. uh if you could talk in detail about uh our 9:10 9 minutes, 10 seconds analytics business in terms of what's the broad revenue split across industry 9:17 9 minutes, 17 seconds segments and is there a sort of a budget flush that you typically see in that business in third quarter given some of the we what we have essentially at our 9:26 9 minutes, 26 seconds end essentially is history for about 11 12 quarters only. So if you could talk about that aspect and the second one is 9:34 9 minutes, 34 seconds with regards to the the significant improvement that we are seeing across our client metrics as well as our 9:42 9 minutes, 42 seconds emerging client base. How are you thinking about some of these aspects from a go forward standpoint? Those would be my questions. 9:51 9 minutes, 51 seconds So man, I'll answer the second one and I'll let because I couldn't really hear the first question. So I'll let Shini Shini was taking some notes. So and then 9:59 9 minutes, 59 seconds I'll add on. So on the second question I think on the emerging markets as I had said uh the opportunity that we have in 10:05 10 minutes, 5 seconds front of us is uh upsell cross-ell uh and and the service kit that we have 10:12 10 minutes, 12 seconds and that's I think resonating well and whatever we have seen is in line with what we had uh laid out um about 10 11 10:21 10 minutes, 21 seconds quarters back uh in terms of the strategy and I think we are beginning to see uh the benefits uh of uh the 10:29 10 minutes, 29 seconds strategy. Y that we had laid out. So I think we in terms of whether it's uh emerging markets, finance, accounting, customer operations, new center 10:38 10 minutes, 38 seconds expansion, um it's resonating well both cross-ell as well as upsell. 10:46 10 minutes, 46 seconds Great. if you can also talk about the emerging client base because when I'm looking at your client metrics uh over the course of last 12 to 18 months we've 10:56 10 minutes, 56 seconds seen uh a steady increase in terms of our number of 1 million plus 3 million plus 5 million plus customers uh which 11:05 11 minutes, 5 seconds is very heartening to see given the challenges that we used to historically see on this front. Do you think uh this 11:12 11 minutes, 12 seconds is largely driven by uh by the inherent focus on crosseller and upsell or is this some element of new customer new 11:20 11 minutes, 20 seconds logo acquisitions as well and if you could provide some some vertical specific color to to this progression 11:28 11 minutes, 28 seconds so Manik it's a combination of both uh both new customer acquisitions as well as cross-ell and upsell right and uh 11:36 11 minutes, 36 seconds there is a concerted strategy to grow clients in each segment and there is 11:42 11 minutes, 42 seconds high focus for the sale. Uh in terms of what was your second question? 11:50 11 minutes, 50 seconds So the letter was if you could if you could give us some vertical specific color in terms of the the progression that we are seeing on climate tricks. Is this specific to some industry segments 11:59 11 minutes, 59 seconds that we are doing very well in in in being able to drive uh higher share of revenues from this customer base or this 12:07 12 minutes, 7 seconds is more broad-based? So uh growth across industry segment is broad-based uh and as well as on the uh capability sets 12:16 12 minutes, 16 seconds that we have. Obviously the deal sizes are larger in finance and account customer operations. Uh so there we are 12:24 12 minutes, 24 seconds seeing a higher growth because of the inherent nature of the deal ACV values. But I think it's across the 12:31 12 minutes, 31 seconds board we are seeing and we are seeing for example in our trade life cycle we are seeing uh on the chain side agentic 12:39 12 minutes, 39 seconds side in terms of uh uh trade settlement exception management uh we have developed solution on the back of agentic AI we are working on pilots with 12:47 12 minutes, 47 seconds some of the clients so I think uh the overall uh new client edition cross-ell 12:56 12 minutes, 56 seconds upsell we are seeing across uh it's more broad-based than being restricted to one or two industries. 13:04 13 minutes, 4 seconds Sure. And if you can answer that the first question the kind of services that we do in analytics, I would classify them into three broad areas. One is customer 13:13 13 minutes, 13 seconds analytics which is um if a customer is coming to a website then what is their propensity to buy? What is the typical journey of a customer through a website? 13:21 13 minutes, 21 seconds Uh the second is product data analytics which is what kind of products are selling? What are the gross margins of these products? what products should be 13:28 13 minutes, 28 seconds pushed more and that applies to across geographies. What is selling more? What is selling uh less and therefore how to 13:35 13 minutes, 35 seconds help uh product data owners to decide what products should be in stock uh more 13:42 13 minutes, 42 seconds or get kept more in stock as compared to other products. And the third is pricing analytics. Um so how does uh our 13:51 13 minutes, 51 seconds client's product compare in terms of pricing and other metrics to um their competitor's products and therefore is 13:58 13 minutes, 58 seconds there any significant difference in those pricing and that therefore help uh clients takes decision on decisions on 14:05 14 minutes, 5 seconds how to price their products effectively to make the most use of uh or capture the most um share of customer wallet. uh 14:13 14 minutes, 13 seconds because this uh area had its genesis in what was earlier known as our digital vertical. A lot of the work that we do 14:20 14 minutes, 20 seconds currently faces high-tech. We do work for uh M&D as manufacturing and distribution as well. Uh and some amount 14:27 14 minutes, 27 seconds of work for retail as well. Um I think in the last year year and a half we have also started doing work for the BFSI segment. 14:37 14 minutes, 37 seconds Great. And the last one from my end while you did allude to the fact that you would expect Q4 growth to be slightly lower than what we've seen through the course of last three 14:45 14 minutes, 45 seconds quarters is in the past our headcount relation for the current quarter seems to be a good indicator of near-term 14:54 14 minutes, 54 seconds growth. Is that the way we should be thinking about our Q4 growth? 14:58 14 minutes, 58 seconds There is a strong correlation right given that um 80% of our work is um continues to be FD. 15:06 15 minutes, 6 seconds Great. Thank you and all the best for the future. Thank you. Thanks manik. 15:11 15 minutes, 11 seconds Thank you Manik. Uh next question we have from the line of Deep Ma from MK Global. Deep please go ahead. 15:21 15 minutes, 21 seconds Thanks for the opportunity. Uh couple of question first just want to get uh sense on the I think in the quarter one earning call we indicated about plan to 15:30 15 minutes, 30 seconds have 20%age productivity implement using AI tools. So just want to understand what is the progress we have seen so far 15:38 15 minutes, 38 seconds in terms of using a drive productivity uh improvement uh so far. Uh second question is about the emerging 15:46 15 minutes, 46 seconds industries. Now you give uh some of the clarity but just want to understand how broadbased is the growth whether few clients is driving bulk of the growth 15:54 15 minutes, 54 seconds there and which industries we are seeing more traction which can let's say possibly start reporting maybe in a couple of year down the line. So if you 16:03 16 minutes, 3 seconds can provide some color uh specific to emerging industries and last question is about deal intake. Uh can you give some 16:11 16 minutes, 11 seconds sense about how the nature of deal wins are changing for us compared to 12 months back? Uh we report ACV but if you can give some sense about changing size of the deal and tenure of those deal. 16:21 16 minutes, 21 seconds Thank you. So you'll take the 20% productivity. 16:30 16 minutes, 30 seconds Okay. 16:30 16 minutes, 30 seconds Yeah. So on the uh on the emerging markets like I said uh the the growth is broad-based 16:37 16 minutes, 37 seconds and uh we continue in terms of the ACV uh wins uh the average deal size has 16:44 16 minutes, 44 seconds gone up in terms of what we were winning let's say 12 months back versus uh the current deal size and uh we see uh we 16:55 16 minutes, 55 seconds are very positive in terms of uh the overall outlook and the pipeline that we have uh there will be as I had indicated 17:05 17 minutes, 5 seconds in the past quarteronquarter abrations but on a medium to long-term basis uh I think we had said a few 17:13 17 minutes, 13 seconds things and we'll continue to deliver on those uh in terms of growth uh in the 17:20 17 minutes, 20 seconds top quartile of the peer segment that we operate uh a bit margin between 24 to 17:26 17 minutes, 26 seconds 28% and uh uh EPS and AITA growth sequentially 17:33 17 minutes, 33 seconds uh Y on Y. So I think that continues to be the same. I think in terms of industry segments, I think given our 17:41 17 minutes, 41 seconds size and scale, uh there are opportunities across the industry segments as well as the capability sets 17:52 17 minutes, 52 seconds and on the productivity improvement through AI generally that uh we've seen that in most uh pilots pilots progress 18:01 18 minutes, 1 second to production only when there is significant productivity improvement and typically client s have this gating criteria of between 15% upwards. So all 18:11 18 minutes, 11 seconds the projects that we've seen make it to production um do have this kind of uh productivity improvement metric. 18:20 18 minutes, 20 seconds Understood. Thank you Deep. 18:27 18 minutes, 27 seconds We have next question from the line of SEP Sha from Equia Securities. Sep please go ahead. 18:34 18 minutes, 34 seconds Yeah thanks. Thanks for the opportunity and congrats on a great set of numbers. 18:39 18 minutes, 39 seconds Uh sir just wanted to understand if I look at the top five top 10 client contribution on revenue uh though it has 18:48 18 minutes, 48 seconds been doing well but there is a softish growth anything to call out it's a quarterly operation any large client specific issue you foresee in any of the 18:58 18 minutes, 58 seconds verticals uh which uh may have some impact even in the coming quarter 19:06 19 minutes, 6 seconds uh no sep uh nothing extraordinary I think it's just that the outside of 19:14 19 minutes, 14 seconds top five top 10 clients have grown so that's the reason but there's nothing to call out which is extraordinary 19:20 19 minutes, 20 seconds okay okay and uh sir in the fourth quarter I agree on a high growth base there 19:29 19 minutes, 29 seconds could be quarterly abrasion but anything structural to call out or is it fair to assume that the luxury generally as a 19:37 19 minutes, 37 seconds fashion growth in fashion and luxury picks up in third quarter may normalize in the fourth quarter. So it's more a 19:45 19 minutes, 45 seconds quarterly operation or something else to read out. 19:49 19 minutes, 49 seconds No, I think Sep like I said it's quarterly abrasion. I had said that medium to long-term uh we see a positive 19:56 19 minutes, 56 seconds demand outlook uh and we are cautiously optimistic and the reason I'm using cautiously optimistic word is because of the overall geopolitical overall 20:04 20 minutes, 4 seconds macroeconomic environment but uh this this is just a quarterly abrasion and nothing to do with medium to long-term outlook. 20:13 20 minutes, 13 seconds Okay. Okay. answer uh average of 9 months TCB has been improving versus average of four quarters TCV earlier 20:22 20 minutes, 22 seconds years. So is it fair to assume this will still have an upside potential and which makes you remain positive on the 20:31 20 minutes, 31 seconds medium-term outlook? So sep I had said uh in Q2 or Q3 I can't remember Q2 sorry 20:38 20 minutes, 38 seconds Q2 Q3 we are in now that uh overall ACV uh of the deal closures that we will do 20:46 20 minutes, 46 seconds in FI 2526 will be higher than what we did last year and I continue to maintain 20:52 20 minutes, 52 seconds I'm confident of delivering on the same okay and sir uh in one of the examples 20:59 20 minutes, 59 seconds where you said uh in one of the trade product you are uh doing a pilot in terms of the agentic AI. So what is an 21:08 21 minutes, 8 seconds experience in terms of uh cannibalization of the revenue because we generally do on a proactive basis. So 21:15 21 minutes, 15 seconds I do agree for the same project TCV could be lower but uh is it leading to 21:21 21 minutes, 21 seconds client giving you more uh IT budget uh because you are putting some saving on the existing spend. So how is the 21:29 21 minutes, 29 seconds experience whenever you do a pilot on the agent? If you can give us separately for boys and nonvoice. 21:38 21 minutes, 38 seconds So uh sep overall I think it's little too early to give a long-term view where 21:45 21 minutes, 45 seconds it'll head out. I think the good thing is that our value proposition 21:52 21 minutes, 52 seconds uh tech first IPO owned BO/KPO work that we do for our clients is giving us 21:59 21 minutes, 59 seconds opportunity on the agentic AI and whatever is the latest and greatest on the technology front. So when with both 22:08 22 minutes, 8 seconds large clients as well as small clients and we are working on change cutting edge technology. So that's the positive 22:14 22 minutes, 14 seconds side. Now in terms of in the pilots that we have done we haven't seen any cannibalization on any impact. I think we see it as a positive opportunity 22:23 22 minutes, 23 seconds because it gives us an opportunity to go and influence outcomes in areas which are outside of the work that we are 22:32 22 minutes, 32 seconds currently doing. Uh however like I said this is uh the adoption and these pilots 22:41 22 minutes, 41 seconds is very new. So there isn't a history to say what the outlook would be in 12 24 36 months. 22:50 22 minutes, 50 seconds However, like I said that I see this as an opportunity given our domain process 22:57 22 minutes, 57 seconds tech first mindset that we have been driving and we have been delivering for the last 25 years. 23:04 23 minutes, 4 seconds Okay. And just last couple of bookkeeping question uh to Shini sir uh this time the new labor code impact 23:12 23 minutes, 12 seconds despite we have higher offshore strength looks lower. So how to read that is it one can expect that this chart can 23:20 23 minutes, 20 seconds increase on a going forward basis and second fourth quarter margins are generally flat or improving. So do you 23:29 23 minutes, 29 seconds believe with growth now consistently coming it's a time to reap benefits on the margin through operating leverage 23:37 23 minutes, 37 seconds and the band of 24 to 28 could shift to more towards midpoint to the upper end. 23:46 23 minutes, 46 seconds So sep the labor code I'll let shi answer on the margin I think we'll like I said uh you should be worried if uh I 23:55 23 minutes, 55 seconds think we'll continue to invest in terms of on tech uh AI 24:01 24 minutes, 1 second on sales and uh at this stage I think our view is that 24 to 28% is what we 24:09 24 minutes, 9 seconds would like to maintain as the overall guidance for the margin uh given that 24:16 24 minutes, 16 seconds our commitment is to deliver topline growth in the top quartile and we'll continue to deliver uh sequential growth 24:24 24 minutes, 24 seconds on AITA and EPS and on labor code um I think the impact for us is low because uh for most 24:32 24 minutes, 32 seconds designations um our basic was already at that 50% mark which is what is required by um the 24:39 24 minutes, 39 seconds new definition of wages so we did not have to do a lot of u I mean the revised impact was not significant. 24:48 24 minutes, 48 seconds Okay. Okay. And anything to call out on the fourth quarter margin in terms of admin tail? 24:55 24 minutes, 55 seconds Uh there is some capex that may happen um in um Peru. There is something that we are working on on um in moi which may 25:04 25 minutes, 4 seconds be Q4 or Q1. So there is there is some investment plus there may be investment on the people front as well. So uh I 25:14 25 minutes, 14 seconds think we will do what is necessary for the business. 25:18 25 minutes, 18 seconds Okay. Thanks. We'll come in the followup. All the best. Thank you. Thanks. Thank you, SEP. 25:25 25 minutes, 25 seconds Uh as a reminder to participants, please click on raise hand button for asking questions. We have next question from 25:32 25 minutes, 32 seconds the line of Vashnavi Gurang. Uh Vishnavi, please go ahead. 25:44 25 minutes, 44 seconds National We can't hear you. 25:58 25 minutes, 58 seconds VN we are not able to hear you. Maybe we'll go to the next participant. So uh we have next question from the line of S Romesh. 26:08 26 minutes, 8 seconds uh Romesh please go ahead and um congratulations on your good 26:17 26 minutes, 17 seconds results. So if you look at your uh industry split uh there is an increase in the emerging segment uh compared to 26:25 26 minutes, 25 seconds last year, third quarter, fourth quarter has been suddenly increasing uh even from the first quarter. So what are the constituents of this emerging segment 26:33 26 minutes, 33 seconds and is this trend likely to continue especially because your BFSA segment is kind of dropping off and is it something intended or is it something based on you 26:41 26 minutes, 41 seconds know how the market's moving and how do you see it moving the next one or two years 26:50 26 minutes, 50 seconds Romesh uh so Romesh I think in terms of we are looking at a portfolio of industries and clients that we service 26:58 26 minutes, 58 seconds in the industries So uh in terms of one particular segment in terms of emerging 27:04 27 minutes, 4 seconds markets or financial services CMT high-tech fashion and retail I think at 27:11 27 minutes, 11 seconds an level we believe that there is a good demand and we'll continue we are seeing 27:18 27 minutes, 18 seconds a good uh in terms of uh deal conversions and pipeline the industry-wise split I think there will 27:25 27 minutes, 25 seconds be some volatility as I've said because of the size of the portfolio of and the size of the each of the industry verticals and emerging markets is small 27:34 27 minutes, 34 seconds so volatility will be higher. So it's difficult to comment on specific industry like emerging markets what we will see quarter on quarter 27:42 27 minutes, 42 seconds directionally medium to long-term yes uh emerging markets will continue to grow and and and that's will will be there. 27:50 27 minutes, 50 seconds As a followup in terms of your margin guidance what will be the levers that will help you achieve the evida margins you're expecting in future? Will it be 27:58 27 minutes, 58 seconds topline growth or you also see some operating leverage? It'll be both uh uh 28:06 28 minutes, 6 seconds uh Romesh uh I think uh topline growth has to come because if growth doesn't come we won't have anything left to 28:14 28 minutes, 14 seconds manage the margin on. So I think growth absolutely is a determinant and so will be the operating leverage efficiencies that we bring in. 28:24 28 minutes, 24 seconds Okay. Thank you very much and wish you all the best. Yeah. Thanks Romesh. 28:30 28 minutes, 30 seconds Thank you Romesh. We have next question from the line of Pulkit Chavala from BNK Securities. Pulkit, please go ahead. 28:41 28 minutes, 41 seconds Yeah. Hi, thanks for the opportunity and congrats on a great set of numbers. A couple of my first questions to you. Uh your ACB numbers have been quite good 28:48 28 minutes, 48 seconds for the last four odd quarters. Uh just wanted to understand where are you actually winning these deals from? Is it from competition? uh you know are 28:55 28 minutes, 55 seconds clients now sort of becoming more open to outsourcing uh or where where where exactly are these deals been coming from? Uh second Sheni for you uh I mean 29:04 29 minutes, 4 seconds if you just understand what the margin work for this quarter is uh you know selling a distribution expenses have increased quite a bit this quarter. Uh 29:12 29 minutes, 12 seconds what has that got to do with uh yeah that's it for me. Thank you. 29:17 29 minutes, 17 seconds So Pulkit I think in terms of we are seeing consolidation of suppliers. So a we are winning if there is a consolidation opportunity. I think uh on 29:25 29 minutes, 25 seconds the back of strong delivery tech first IP own we are absolutely uh 29:31 29 minutes, 31 seconds gaining market share uh whenever there's a consolidation opportunity and uh our ability to uh also new 29:41 29 minutes, 41 seconds clients uh because I think we work with fortune 100 fortune 500 clients so that also is helping us so that's where the 29:49 29 minutes, 49 seconds ACV is coming from uh broadly both expand upsell process and addition of new clients. 29:57 29 minutes, 57 seconds Um and in terms of the margin block the uh increase in SND that is uh mainly on account of uh two reasons. One is the uh 30:06 30 minutes, 6 seconds increased provision for uh bonuses and variable payout and that's because of the strong performance on top line and 30:13 30 minutes, 13 seconds uh bottom line um and a little bit of increased spend on travel and marketing. 30:19 30 minutes, 19 seconds So in terms of the split um I think it would be about 75 for the first and 25 for the second. Um that is a little bit 30:28 30 minutes, 28 seconds offset by uh reduction in um 20 bit reduction in um GNA and maybe a 30 bit 30:35 30 minutes, 35 seconds reduction in delivery costs uh going to higher utilization. I trust that answers your question. 30:43 30 minutes, 43 seconds Perfect. Thank you. Thank you Bulgit. 30:48 30 minutes, 48 seconds Next question we have from the line of Bamshi uh from Got Securities. Wshi, please go ahead. 30:59 30 minutes, 59 seconds Hey. Hi. Uh uh uh Kab. So first for you so uh maybe can you just uh share an 31:06 31 minutes, 6 seconds outlook uh in BFSI uh between uh TLC and CLC? I believe CLC has been a little uh 31:12 31 minutes, 12 seconds muted for some time now. uh and um uh what would lead to recovery uh there uh 31:19 31 minutes, 19 seconds second uh in terms of uh deal uh ACV uh last couple of quarters uh it has been fairly robust uh but the near-term 31:28 31 minutes, 28 seconds commentary uh suggests some caution so is it a function of uh the deals being longistation deals with slower rampups 31:36 31 minutes, 36 seconds or uh are you seeing higher uh rolloffs than normal? 31:42 31 minutes, 42 seconds So Wshi, I didn't uh understand the first question on TLC versus CLC. Can you just repeat? 31:48 31 minutes, 48 seconds Uh can you uh maybe just share uh the outlook within BF the BFSI between transaction customer life cycle? 31:54 31 minutes, 54 seconds Okay. So I think uh on the uh client life cycle compliance KYC 32:01 32 minutes, 1 second uh the uh the uh crime and compliance space we are seeing good demand uh across our existing clients as well as 32:09 32 minutes, 9 seconds new clients as well as opportunity to drive efficiency cost takeout with 32:16 32 minutes, 16 seconds agentic AI and tech right on the uh trade life cycle we are seeing more on 32:23 32 minutes, 23 seconds the change side uh and opportunity. So I think the opportunities on both segments as well as on loans and we are also 32:32 32 minutes, 32 seconds looking at adjacent areas uh like when we are winning new clients it's not just these two segments which we have 32:39 32 minutes, 39 seconds traditionally been operating we are also looking at other buying centers in financial services and that's where the 32:47 32 minutes, 47 seconds cross-ell upsell comes in right so that's on on one front in terms of the uh gross sales uh and the ACV that we 32:57 32 minutes, 57 seconds have reported uh quarterly abrasions are there. I think uh Q1, Q2, Q3 if you look at uh we are at about 126 33:06 33 minutes, 6 seconds and uh Q2 was slightly soft on ACV and I think those quarterly operations will be there but it's nothing to do with a 33:14 33 minutes, 14 seconds higher rolloff percentage or deals taking longer 33:20 33 minutes, 20 seconds uh or or in terms of uh getting into uh steady state and so on and so forth. 33:28 33 minutes, 28 seconds nothing of that. So, uh got it. And then uh for you uh Shini, so uh 33:35 33 minutes, 35 seconds looking at the squad rates and uh uh uh hedge futures, uh it appears that there could be uh elevated losses at least in 33:44 33 minutes, 44 seconds the uh next few quarters. So are you uh is there a plan to maybe have a relook at your hedging strategy or uh is the 33:52 33 minutes, 52 seconds book uh more or less uh uh kind of fixed? 33:56 33 minutes, 56 seconds Uh so yeah we don't plan to look at it at least in the near term I think we think that it is the strategy is 34:02 34 minutes, 2 seconds programmatic for a reason um and reooking at it may just lead it to move away from hedging into speculation at least near near-term no plans. 34:14 34 minutes, 14 seconds Understood. Thank you. 34:18 34 minutes, 18 seconds Thank you Wamshi. We have follow-up question from the line of Sepia. Sep please go ahead. 34:26 34 minutes, 26 seconds My question got answered. Thank you. 34:29 34 minutes, 29 seconds Okay. Thank you. Thank you Sep. Uh we have next question from the line of Girish P from BB Capital. Girish please go ahead. 34:47 34 minutes, 47 seconds Girish, you're on mute. Hello. 34:56 34 minutes, 56 seconds Yeah. 34:57 34 minutes, 57 seconds Okay. Uh I see that your uh business development people number has remained constant for the last almost constant 35:04 35 minutes, 4 seconds for the last eight quarters. Uh so uh are you kind of underinvesting in sales and marketing? 35:12 35 minutes, 12 seconds No uh Gish I think what we have done is a we have a we have instituted a very robust performance management system so we have added few people but we have 35:21 35 minutes, 21 seconds also seen repurpose some of the people uh so that's one second is uh I think uh 35:29 35 minutes, 29 seconds we are not shying away from hiring good sales guys which is what we are looking at and as I had mentioned in the earlier 35:36 35 minutes, 36 seconds that we will continue to invest in uh BD resources sales as well as in the uh AI 35:44 35 minutes, 44 seconds and the technology segment. So that continues to be our investment focus. 35:50 35 minutes, 50 seconds Okay. And uh on the tech services headcount that's kind of doubled in the last 24 months from approximately thousand people to about 2,000 people. 36:00 36 minutes What exactly do these people do? I mean what skill sets do they bring to the table? 36:04 36 minutes, 4 seconds So on the tech side I think some of it is also reclassification because analytics business we combine under tech and analytics as one portfolio. So some 36:13 36 minutes, 13 seconds of the increase uh in the number you are seeing because of that and uh it's a 36:20 36 minutes, 20 seconds three broad areas in terms of the the one is in terms of uh people who are working on our own IP and continuously 36:30 36 minutes, 30 seconds enhancing our service kit service offering and the value proposition that we bring to the client. uh second set of 36:37 36 minutes, 37 seconds people are working on change uh on the third party client ERP homegrown client 36:44 36 minutes, 44 seconds systems and and and the rest of the people are working on traditional uh demand on the IT projects. So broadly 36:52 36 minutes, 52 seconds this would be the classification of of the team and obviously there was a analytics uh team that we had combined 37:00 37 minutes with the tech right uh my last question is regarding your top 10 clients just want to 37:07 37 minutes, 7 seconds understand uh uh the nature of the these clients have they been top 10 for the last for I mean has that list been 37:15 37 minutes, 15 seconds static for the last 2 three years and if that is the case uh have they asked for any productivity pass back on an annual 37:23 37 minutes, 23 seconds basis uh and has expectations on this front gone up and how have you handled that? 37:31 37 minutes, 31 seconds So I think the composition of top 10 they have not stayed same. So there are additions in the top 10 and uh so that's 37:39 37 minutes, 39 seconds that's answer your first question on the second one. See productivity is if you are purely doing FTE and bomb on a seat 37:48 37 minutes, 48 seconds model. The value proposition comes in from the analytics insights that we bring in our QBRS in our client interactions 37:56 37 minutes, 56 seconds and it's the game is beyond like give me 10% productivity improvement 5% productivity improvement 8% productivity 38:04 38 minutes, 4 seconds improvement. I think the question is what is the business value you are adding. I think there was a question on analytics and insights. Now if I'm able to go to the client and say we have got 38:13 38 minutes, 13 seconds client testimonials where they are saying that we have been working with suppliers for long and we have never got sort of insights and the savings from 38:23 38 minutes, 23 seconds fraud that we have been able to save from what you guys highlighted just by working with us for less than a year. So 38:32 38 minutes, 32 seconds I think you have to up the game and see how technology, analytics, business insights, ops, bringing it all together 38:39 38 minutes, 39 seconds is the value proposition that we bring to the client. So and to answer your specific question, no, we have not seen it because the clients are seeing the 38:46 38 minutes, 46 seconds overall value proposition. There are some asks from the client if they are facing headwinds and things like that. 38:53 38 minutes, 53 seconds uh we have always stood uh alongside with our clients and and in long-term that has always paid us in terms of if 39:01 39 minutes, 1 second clients are in need then we have supported but it's not like give me 10% productivity improvement because we have been giving that continuously the value 39:10 39 minutes, 10 seconds proposition whether it's productivity whether it's insights in terms of whether it's in terms of uh adding value 39:17 39 minutes, 17 seconds on the revenue side enhancing customer experience reducing fraud loss is 39:23 39 minutes, 23 seconds reducing credit losses disputes. So I think that continues to be the value proposition. I hope I've answered your question. 39:31 39 minutes, 31 seconds Yes. So I just want to squeeze in one last question is regarding medium-term growth outlook. Um we've seen I mean 39:39 39 minutes, 39 seconds we've had macroeconomic challenges in the last 12 months and maybe a little earlier than that. Do you think growth can remain at these levels or accelerate 39:48 39 minutes, 48 seconds over the next 12 to 24 months uh with some of these I mean people have customers have kind of got used to the 39:55 39 minutes, 55 seconds geopolitics and the macroeconomic challenges over the last 12 months. Uh do you think growth can accelerate or can remain at these levels? 40:05 40 minutes, 5 seconds So I think as uh we don't give any forward guidance on the growth. I think what we are I'm saying is that depending upon because in the segment we are 40:13 40 minutes, 13 seconds operating we see good demand pipeline is strong. We have said we will stay in the top quartile uh of our peer group in 40:22 40 minutes, 22 seconds terms of growth that definitely we see continuing in terms of in absolute numbers percentages whether we can do 40:31 40 minutes, 31 seconds more. If the overall industry does more and the top quartile does more, yes. Uh if the overall industry and the top 40:38 40 minutes, 38 seconds quartile is lower, then we'll try and stay ahead of the the curve is is what our aspirations are. 40:46 40 minutes, 46 seconds Okay. Thank you very much. 40:49 40 minutes, 49 seconds Thank you, Girish. We have next question from the line of Rahul Jane from Dalith Capital. Rahul, please go ahead. 40:59 40 minutes, 59 seconds Uh yeah, hi. Uh I hope my line is okay. Yeah. Yes, we can hear you. 41:05 41 minutes, 5 seconds Uh yeah, just uh since you are almost 2 years into your 4-year plan, so is there 41:12 41 minutes, 12 seconds a new set of uh you know steps that you want to bring it at this point uh to enhance or sustain the momentum that we 41:21 41 minutes, 21 seconds are having. We've been talking more about the sales team addition and stuff like that. 41:27 41 minutes, 27 seconds What about uh the newer segments that we were also aiming or is there any other uh gear shift that we are making other than the hiring part of it? 41:38 41 minutes, 38 seconds So Rahul I think uh we are continuing like I had said that we will look at adjacent areas. So for example we have 41:47 41 minutes, 47 seconds started looking at that we had said that on finance and accounting we were traditionally on the SMB segment. We 41:53 41 minutes, 53 seconds will look at uh mid tier and large clients as well. There we have had some success. Uh we said that we would look 42:03 42 minutes, 3 seconds at in terms of uh how do we take the customer experience, 42:10 42 minutes, 10 seconds customer service business across our client portfolios. We are beginning to see some traction. Matek uh that we 42:18 42 minutes, 18 seconds deliver for the clients traditionally we were delivering for one industry segment we are seeing traction in across the 42:27 42 minutes, 27 seconds industry segments whether CMT as well as financial services. So we are making as we are going on our strategy we are 42:34 42 minutes, 34 seconds making progress in terms of what are the adjacent areas where we can look at at this stage whatever strategy we had laid 42:41 42 minutes, 41 seconds out two years back and the momentum we are seeing and the success I think it's little too early to change the direction 42:48 42 minutes, 48 seconds which we had set out uh we will continue on the same path continue to execute on the strategy that we had laid out and 42:57 42 minutes, 57 seconds probably I think uh I would think 12 months would be the time to revisit and it's not that we have kept this and it's 43:04 43 minutes, 4 seconds getting dust on the shelf we are continuously looking at areas adjacent areas opportunities because but I think to take a refresh and a reook would be 43:13 43 minutes, 13 seconds probably in 12 to 18 months time frame right now I think we see enough and more opportunities on on the plan that we are laid on 43:22 43 minutes, 22 seconds okay okay that's pretty helpful just uh one bit more uh on the uh agentic uh solution uh deal that we have uh got 43:32 43 minutes, 32 seconds just wanted to understand how the competitive landscape here uh is shaping 43:37 43 minutes, 37 seconds up. Are there uh uh in-house uh team as well as a very different set of uh 43:45 43 minutes, 45 seconds competition coming in when it come to these kind of deal or these are your traditional peers who are coming with the uh newer version which is the agentic version. 43:55 43 minutes, 55 seconds So I think we are seeing uh the agentic AI I think and the pilots that we are 44:01 44 minutes, 1 second seeing are in areas where we are doing where we are currently working and we have we bring in domain 44:09 44 minutes, 9 seconds right so those are areas that are of strength to us so it's not like we are going and saying that look we can 44:17 44 minutes, 17 seconds implement agentic AI across the board and clients are also like I said this is relatively in terms of implementation, 44:25 44 minutes, 25 seconds pilots, execution. It's still little too early to say that what is the dollars that we are getting 44:34 44 minutes, 34 seconds in revenue, what are the benefits that clients are seeing. There's a lot of promise behind the technology. But there's also a 44:42 44 minutes, 42 seconds thinking that the overall growth will accelerate for the clients that we service if technology was to come in as 44:51 44 minutes, 51 seconds a force multiplier. So u I hope that answers your question. I think in terms of giving the competitive landscape and 44:58 44 minutes, 58 seconds all that I think it's a little too early to talk about the same. 45:04 45 minutes, 4 seconds Sure. Sure. Thank you so much. Thanks for that. Thanks. 45:09 45 minutes, 9 seconds Thank you Rahul. Um we have next question from the line of uh Vnavi. Uh 45:16 45 minutes, 16 seconds she's u facing challenges uh in the voice and that's why she had put on the chat. I'll just read out. So her 45:24 45 minutes, 24 seconds question is can you please highlight the demand outlook in the US particularly within the BFSI segment and are we 45:32 45 minutes, 32 seconds witnessing any client bring this services inhouse rather than outsourcing with adoption of AI and second question 45:41 45 minutes, 41 seconds is can you also please highlight the reason for low growth in Q4 as you have mentioned 45:50 45 minutes, 50 seconds over to you first the demand environment in the US especially in 45:57 45 minutes, 57 seconds so dem overall demand environment in the US for financial services the clients are doing very well financial services has done well if you look at the overall 46:05 46 minutes, 5 seconds sector banks institutional clients uh they have declared very positive results 46:13 46 minutes, 13 seconds uh I think the momentum is good so uh we don't we see a positive uh demand 46:20 46 minutes, 20 seconds outlook uh we don't see a concern concern on the demand side uh in financial services. 46:27 46 minutes, 27 seconds Uh second was on Q4 numbers. I think that's a quarter on quarter there like I had said in the previous calls and 46:36 46 minutes, 36 seconds earlier in today's call as well that there can be a quarteronquarter volatility because our numbers are small 46:44 46 minutes, 44 seconds I don't know 120 130 million quarterly revenue base uh there there is likely to be a volatility and that could be a 46:51 46 minutes, 51 seconds quarteronquarter operation but medium to long-term outlook continues to be positive and uh we are confident in 46:59 46 minutes, 59 seconds staying in the top quartile from a growth perspective on a Y on Y basis. I think there was one more question and these two was there. 47:08 47 minutes, 8 seconds Any other question Asha? 47:10 47 minutes, 10 seconds No. Um this was like uh do we have any client bring this services inhouse rather than out? 47:17 47 minutes, 17 seconds No, we haven't seen any trend uh because of technology. There could be a strategic reason small process but no 47:24 47 minutes, 24 seconds nothing which is worry worrisome to say that there is clients are bringing the value proposition that clients see uh 47:33 47 minutes, 33 seconds with many of our clients we coexist with their GCC's so we are not seeing that uh trend 47:41 47 minutes, 41 seconds um thank you Kapoor thank you Shini and uh as we have no further questions I will just uh remind participants if any questions please click on raise hand 47:50 47 minutes, 50 seconds button We'll just wait for a moment. If no questions, then I'll hand over the call to you for closing remark. 48:03 48 minutes, 3 seconds I think there are no further questions. 48:05 48 minutes, 5 seconds Uh I'll hand over the call to you uh for closing remark. Capel. 48:09 48 minutes, 9 seconds Yeah. Thank you everyone. Thank you for your continued support and we look forward uh to speaking with you in the next quarter. Thank you everyone. 48:18 48 minutes, 18 seconds Thank you. Thank you.