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Persistent discretionary spend weakness
View Risks →HCL Technologies Ltd — Q1 FY24
HCLTech reported a soft Q1 FY24 with constant currency revenue growth of 6.3% YoY but a sequential decline of 1.3%, missing internal expectations.
bearish
high
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HCLTech reported a soft Q1 FY24 with constant currency revenue growth of 6.3% YoY but a sequential decline of 1.3%, missing internal expectations. Services revenue fell 1% QoQ, dragged by a 5.2% sequential drop in ER&D, particularly in tech and telecom verticals due to discretionary spend cuts. EBIT margin contracted to 17% from 18.1% QoQ, impacted by lower utilization and one-time costs. Bookings were soft at $1.6 billion, but management highlighted an all-time high pipeline, up 18% QoQ and 26% YoY, with advanced-stage large deals expected to convert quickly. FY24 revenue and margin guidance were maintained, relying on a strong Q2 booking conversion and cost actions including skipping compensation reviews for senior management. Key risks include persistent discretionary spend weakness and the high ask rate for achieving guidance.
एचसीएल टेक का पहली तिमाही (Q1 FY24) का प्रदर्शन कमजोर रहा। पिछले साल की तुलना में राजस्व में 6.3% की बढ़ोतरी हुई, लेकिन पिछली तिमाही से 1.3% की गिरावट आई, जो उम्मीद से कम थी। सेवाओं का राजस्व 1% घटा, खासकर टेक और टेलीकॉम क्षेत्रों में खर्च कटौती के कारण। मुनाफा (EBIT) 18.1% से घटकर 17% रह गया, क्योंकि कर्मचारियों का उपयोग कम हुआ और एक बार के खर्च बढ़े। नए ऑर्डर 1.6 अरब डॉलर रहे, लेकिन कंपनी के पास रिकॉर्ड संभावित ऑर्डर (पाइपलाइन) है, जो पिछली तिमाही से 18% और पिछले साल से 26% ज्यादा है। कंपनी ने पूरे साल के राजस्व और मुनाफे के अनुमान को बरकरार रखा है। इसके लिए अगली तिमाही में मजबूत ऑर्डर रूपांतरण और वरिष्ठ प्रबंधन के वेतन वृद्धि रोकने जैसे कदमों पर भरोसा है। जोखिम यह है कि खर्च में कमजोरी जारी रह सकती है और अनुमान पूरा करना मुश्किल हो सकता है।
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Read Transcript →Quarter Snapshot
Total Bookings
$1.6B
-20% QoQ (approx)
Bookings fell from ~$2B+ in previous quarters to $1.6B, but pipeline is at all-time high.
Software ARR
$1.04B
+4.7% YoY
Annual recurring revenue for HCLSoftware grew 4.7% YoY in constant currency.
Attrition (LTM)
16.3%
-7.5pp YoY
Attrition continued to decline, down 7.5 percentage points year-on-year.
Pipeline Growth (QoQ)
+18% QoQ
+18% QoQ
Pipeline increased 18% sequentially and 26% YoY, with many deals in advanced stages.
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Guidance and risk preview
Despite Q1 softness, management reaffirms constant currency revenue growth guidance of 6-8% for FY24, relying on strong pipeline conversion.
Tech and telecom verticals saw deeper-than-expected cuts in discretionary spending, which may continue to pressure revenue.
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