HCLTech FY25 Annual Earnings Summary
4 quarters covered · ₹1,17,055 Cr revenue · ₹17,399 Cr PAT · 0.0% average EBITDA margin.
Quarter-by-quarter progression
Management promises made during the year
Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q1 FY25Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q1 FY25Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY25Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY25Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY25Risks flagged during the year
Management cited geopolitical factors and global economic conditions as potential headwinds, and noted that discretionary spending can turn quickly.
Q4 FY25 · highManagement flagged that tariffs and deglobalization could lead to budget cuts, contract renegotiations, and delays, especially in retail and manufacturing verticals.
Q1 FY25 · mediumSoftness in the automotive segment, especially in Europe, led to a sharp decline in ASAP acquisition revenue and impacted Manufacturing vertical performance.
Q1 FY25 · mediumManagement noted that discretionary spend has not picked up meaningfully, and recovery depends on macro factors like interest rates and inflation.
Q1 FY25 · mediumCVK highlighted that competitive intensity, more than client expectations, is leading to irrational behavior in pricing for GenAI-related contracts.
Q2 FY25 · mediumAutomotive, especially in Europe, is under stress with program cancellations; aerospace may also see impact from client-specific issues.
Q2 FY25 · mediumManagement assumes similar furloughs as last year, which could limit sequential growth in Q3 and Q4.
Q3 FY25 · mediumManagement noted that significant changes in the global business landscape, including US policy, could alter client spending priorities.
Q3 FY25 · mediumDelayed renewals and new closures in software may not materialize in Q4, leading to potential revenue shortfall.
Q3 FY25 · mediumManagement indicated that the automotive segment remains challenged, with declines expected for another couple of quarters before recovery.
Q4 FY25 · mediumOne large deal was deferred in Q4 due to broader environment, not directly tariff-related, indicating potential pipeline softness.
Q4 FY25 · mediumManagement expects discretionary spending to remain weak, with new projects requiring strong ROI justification amid macro challenges.
What changed through the year
Q1 FY25 · FY25 revenue growth guidance maintained at 3-5% constant currency
Management reiterated full-year revenue growth guidance of 3-5% in constant currency, despite an 80bps impact from the State Street JV divestiture.
Q1 FY25 · FY25 EBIT margin guidance maintained at 18-19%
EBIT margin guidance for FY25 remains at 18-19%, with Q1 at 17.1% and expected improvement in subsequent quarters.
Q1 FY25 · Q2 FY25 sequential growth expected across all verticals except Financial Services
Management expects Q2 to show sequential growth in all verticals and geographies except Financial Services, which will be impacted by the State Street JV exit.
Q1 FY25 · Plan to train 50,000 employees on GenAI/AI skills in FY25
HCLTech targets training 50,000 employees on GenAI and AI skills this fiscal year; 33% of this target was achieved in Q1 alone.
Q2 FY25 · FY25 revenue growth guidance raised to 3.5%-5% YoY in CC
Overall revenue growth for FY25 is now expected between 3.5% and 5% year-on-year in constant currency, revised up from 3%-3.5%.
Q2 FY25 · Services revenue growth guidance of 3.5%-5% YoY in CC
Services revenue growth for FY25 is also expected between 3.5% and 5% year-on-year in constant currency.
Q2 FY25 · EBIT margin guidance unchanged at 18%-19%
EBIT margin for FY25 is maintained at 18%-19%, despite wage hike impacts in H2.
Q2 FY25 · Wage hike impact of 65-80 bps in Q3 and additional 50-60 bps in Q4
Wage hikes will impact margins by 65-80 basis points in Q3 and a further 50-60 basis points in Q4.
Q3 FY25 · FY25 revenue growth guidance of 4.5%-5% YoY in CC
Includes approximately 50bps contribution from HPE CTG acquisition. Services revenue growth also expected between 4.5%-5% YoY in CC.
Q3 FY25 · EBIT margin guidance unchanged at 18%-19%
Management maintained EBIT margin guidance for FY25 at 18%-19%.
Q3 FY25 · Q4 services organic growth expected -1.3% to +0.6% QoQ
Implies a sequential decline or modest growth due to large project completion and planned mega deal rundown.
Q3 FY25 · Software business expected low single-digit growth for FY25
Management expects low single-digit growth for the software business on a full-year basis, with some delayed renewals potentially not recovering in Q4.
Q4 FY25 · FY26 Revenue Growth 3%-5% CC
Full-year constant currency revenue growth guidance for the company, with lower end assuming macro deterioration and upper end assuming stable environment and large deal closures.
Q4 FY25 · FY26 EBIT Margin 18%-19%
Full-year EBIT margin guidance for both services and software, consistent with FY25 margin of 18.3%.
Q4 FY25 · Q1 Seasonality Expected to Be Normal
Q1 FY26 will have typical seasonal weakness but better than Q1 FY25, with ramp-up of mega deal starting in a few weeks.
Q4 FY25 · Inorganic Contribution ~1% in FY26
The CTG acquisition (closed Dec 2024) will contribute approximately 1% to FY26 revenue growth.