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View Promises →HCL Technologies Ltd — Q1 FY25
HCLTech reported Q1 FY25 revenue of $3.36B, down 1.6% sequentially but up 5.6% YoY in constant currency, slightly above expectations.
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HCLTech reported Q1 FY25 revenue of $3.36B, down 1.6% sequentially but up 5.6% YoY in constant currency, slightly above expectations. Services revenue declined 1.9% QoQ, while Software grew 0.4% QoQ with ARR at $1.01B. EBIT margin was 17.1%, down 50bps QoQ but up 13bps YoY, within the guided 18-19% range for the full year. Growth was led by Telecom & Media (+69.2% YoY) and Retail (+9.7% YoY), while Manufacturing declined due to automotive weakness and ASAP acquisition softness. Bookings TCV was $1.96B. Management maintained FY25 revenue guidance of 3-5% and EBIT margin of 18-19%, expecting Q2 growth across all verticals except Financial Services due to State Street JV exit. GenAI momentum continues with AI Force and AI Foundry platforms, but discretionary spending remains cautious. Risk: Automotive sector stress in Europe could further impact Manufacturing revenue.
HCLTech ने पहली तिमाही में 3.36 अरब डॉलर की कमाई की, जो पिछली तिमाही से 1.6% कम है, लेकिन पिछले साल की समान तिमाही से 5.6% ज़्यादा है। सेवाओं की कमाई में 1.9% की गिरावट आई, जबकि सॉफ्टवेयर में 0.4% का उछाल रहा। कंपनी का मुनाफा मार्जिन 17.1% रहा, जो पूरे साल के 18-19% के अनुमान के अंदर है। टेलीकॉम और मीडिया में 69.2% और रिटेल में 9.7% की बढ़ोतरी हुई, लेकिन ऑटोमोटिव कमजोरी के कारण मैन्युफैक्चरिंग में गिरावट आई। कंपनी ने इस साल 3-5% कमाई वृद्धि और 18-19% मुनाफा मार्जिन का अनुमान बरकरार रखा है। जेनएआई में तेजी है, लेकिन खर्च में सावधानी बरती जा रही है। यूरोप में ऑटोमोटिव क्षेत्र में तनाव से मैन्युफैक्चरिंग पर असर पड़ सकता है।
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Automotive sector weakness in Europe
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Total Contract Value (TCV)
$1.96B
Not disclosed vs prior quarter
Bookings TCV for Q1 was $1.96 billion, with a mix of small and large deals.
Software Annual Recurring Revenue (ARR)
$1.01B
+3.5% YoY
HCLSoftware ARR reached $1.01 billion, growing 3.5% year-on-year in constant currency.
Attrition Rate (LTM IT Services)
12.8%
Down from prior quarter
Voluntary attrition for IT services on a last-twelve-month basis stands at 12.8%, one of the lowest in the industry.
Headcount
219,401
-3.6% QoQ
Total headcount reduced by 3.6% sequentially, largely due to the State Street JV exit.
What Changed vs Last Quarter
NEW
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.
NEW
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.
UPDATED
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.
UPDATED
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.
DROPPED
Q1 FY25 Revenue Decline ~2% QoQ
Management expects Q1 FY25 revenue to decline approximately 2% sequentially, driven by offshoring in a large deal and annual productivity passbacks, excluding State Street impact.
NEW RISK
Automotive sector weakness in Europe
Softness in the automotive segment, especially in Europe, led to a sharp decline in ASAP acquisition revenue and impacted Manufacturing vertical performance.
NEW RISK
Competitive intensity driving irrational pricing on GenAI deals
CVK highlighted that competitive intensity, more than client expectations, is leading to irrational behavior in pricing for GenAI-related contracts.
NEW RISK
State Street JV exit impact on Q2 revenue
The State Street BPO JV divestiture will cause an 80bps revenue impact at the company level and 90bps at the services level in Q2.
RISK GONE
GenAI Crowding Out Traditional IT Spend
Management noted that GenAI spending is coming at the cost of other IT budget areas, potentially limiting overall services growth.
RISK GONE
Large Deal Offshoring Impact on Revenue
The offshoring of a large financial services deal will cause a ~2% sequential revenue decline in Q1, and similar impacts may occur with other mega deals like Verizon later in the year.
🤫 Topics management stopped discussing
Mentioned in Q3 FY24, Q4 FY24
Operating margin guidance for FY25 is maintained at 18-19%, consistent with FY24 actuals, with no specific timeline to reach the aspirational 20% level.
Mentioned in Q2 FY24, Q3 FY24
Wage hikes impacted services margins by 65 bps in Q3, and Q4 will see a smaller impact of 20-25 bps.
Fast read
Guidance and risk preview
Management reiterated full-year revenue growth guidance of 3-5% in constant currency, despite an 80bps impact from the State Street JV divestiture.
Softness in the automotive segment, especially in Europe, led to a sharp decline in ASAP acquisition revenue and impacted Manufacturing vertical pe...
View Risks →