Total Bookings (YTD)
$7.5B
+10% YoY
Year-to-date bookings grew 10% over the same period last year, driven by large deal wins.
HCLTECH
Information Technology
12 Jan 2024
HCL Technologies Ltd — Q3 FY24
HCLTech delivered a strong Q3 FY24 with 6% sequential revenue growth in constant currency, the highest since Q3 FY21.
Financial stats pending filing verification
2-Minute Summary
✦ AI-Generated from Full Transcript
HCLTech delivered a strong Q3 FY24 with 6% sequential revenue growth in constant currency, the highest since Q3 FY21. Services revenue grew 3.1% QoQ despite furloughs, while software revenue rose 5% YoY. Operating margin improved to 19.8%, up 126 bps QoQ, driven by software outperformance. Net income reached a record INR 4,350 crore. Bookings YTD stood at $7.5 billion, up 10% YoY, with 18 large deals. Attrition fell to 12.8%, the lowest in several quarters. Management guided FY24 revenue growth of 5%-5.5% and margins of 18%-19%, with services expected at the higher end. Q4 growth is expected from large deal ramp-up, furlough reversal, and ER&D momentum. However, discretionary spending remains soft, and GenAI contributions are still nascent. A key risk is the uncertain demand environment in Americas and potential headwinds from macro uncertainty.
HCLTech ने तीसरी तिमाही में मजबूत प्रदर्शन किया। कंपनी की कमाई पिछली तिमाही से 6% बढ़ी, जो पिछले कुछ सालों में सबसे अच्छी है। सेवाओं से कमाई 3.1% बढ़ी, भले ही कुछ ग्राहकों ने छुट्टियों के कारण काम रोका। सॉफ्टवेयर से कमाई पिछले साल से 5% ज्यादा रही। कंपनी का मुनाफा 19.8% तक पहुंच गया, जो पिछली तिमाही से 1.26% ज्यादा है। शुद्ध मुनाफा 4,350 करोड़ रुपये रहा, जो अब तक का सबसे ज्यादा है। इस साल अब तक 7.5 अरब डॉलर के नए ऑर्डर मिले हैं, जो पिछले साल से 10% ज्यादा हैं। कर्मचारियों के छोड़ने की दर घटकर 12.8% हो गई, जो काफी कम है। कंपनी को उम्मीद है कि इस साल कमाई 5-5.5% बढ़ेगी और मुनाफा 18-19% रहेगा। हालांकि, अमेरिका में मांग कमजोर है और आर्थिक अनिश्चितता बनी हुई है।
Key Numbers
Attrition (LTM)
12.8%
-1.4pp QoQ
Attrition declined 1.4 percentage points sequentially, reaching the lowest level since FY21.
Software ARR
$1.06B
+2.9% YoY
Annual recurring revenue for software grew 2.9% year-over-year in constant currency.
Large Deals (Services + Software)
18
N/A
The company signed 18 large deals in the quarter, including 6 in services and 12 in software.
Management Guidance
FY24 revenue growth guidance of 5%-5.5%
Total revenue growth for FY24 is expected in the range of 5%-5.5% in constant currency, with services trending towards the higher end.
Management guidance revenueFY24 operating margin guidance of 18%-19%
Operating margins for FY24 are expected to be between 18% and 19%.
Management guidance marginsQ4 services growth driven by four factors
Q4 services growth expected from large deal ramp-up, furlough reversal, ER&D momentum, and rest of portfolio.
Management guidance growthKey Risks
Soft discretionary spending in IT services
Management noted that discretionary spending remains soft with no change from previous quarters, which could impact growth.
medium · management_commentaryUncertain demand environment in Americas
Despite strong growth, the Americas demand environment remains challenging, which could affect future performance.
medium · management_commentaryGenAI revenue still nascent
GenAI programs are currently small and in pilot stages; significant ramp-up is expected only over coming quarters.
low · management_commentaryPotential margin pressure from wage hikes
Wage hikes impacted services margins by 65 bps in Q3, and Q4 will see a smaller impact of 20-25 bps.
low · analyst_questionNotable Quotes
We have delivered a sixer of a quarter, with 6% constant currency growth quarter-on-quarter.
Our operating margins were strong at 19.8%, 126 basis points improvement sequentially, and 16 basis points improvement year-on-year.
While we still don't see an uptick in the overall discretionary spend, there is still a portion of tech spend that should remain resilient.
Frequently Asked Questions
What was HCLTech's revenue in Q3 FY24?
HCLTech reported revenue of — in Q3 FY24, representing a +4.3% change compared to the same quarter last year.
What guidance did HCLTech management give for FY25?
FY24 revenue growth guidance of 5%-5.5%: Total revenue growth for FY24 is expected in the range of 5%-5.5% in constant currency, with services trending towards the higher end. FY24 operating margin guidance of 18%-19%: Operating margins for FY24 are expected to be between 18% and 19%. Q4 services growth driven by four factors: Q4 services growth expected from large deal ramp-up, furlough reversal, ER&D momentum, and rest of portfolio.
What are the key risks for HCLTech in FY25?
Key risks include Soft discretionary spending in IT services — Management noted that discretionary spending remains soft with no change from previous quarters, which could impact growth.; Uncertain demand environment in Americas — Despite strong growth, the Americas demand environment remains challenging, which could affect future performance.; GenAI revenue still nascent — GenAI programs are currently small and in pilot stages; significant ramp-up is expected only over coming quarters.; Potential margin pressure from wage hikes — Wage hikes impacted services margins by 65 bps in Q3, and Q4 will see a smaller impact of 20-25 bps..
Did HCLTech meet its previous quarter's guidance?
Of 1 tracked promise, management 0 met, 0 close, 1 missed.
Where can I read the full HCLTech Q3 FY24 concall transcript?
The full earnings conference call transcript or source release is available on the linked source material. This page provides an AI-generated summary with filing verification status shown on the financial stats.