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View Promises →HCL Technologies Ltd — Q4 FY24
HCLTech reported FY24 revenue growth of 5% YoY in constant currency, with services growing 5.4% and software at 2.3%.
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HCLTech reported FY24 revenue growth of 5% YoY in constant currency, with services growing 5.4% and software at 2.3%. Operating margins came in at 18.2%, within the guided range. The company saw strong deal wins of $9.76 billion, up 10.2% YoY, and free cash flow grew 27.7%. However, FY25 guidance of 3-5% revenue growth disappointed, partly due to a -2% Q1 impact from offshoring in a large financial services deal and the State Street BPO JV divestiture. Management expects a back-half-weighted year with continued discretionary spending pressure. Key risk: GenAI spending may crowd out traditional IT budgets, limiting near-term growth.
HCLTech ने वित्त वर्ष 2024 में अपनी कमाई में 5% की बढ़ोतरी दर्ज की। सेवाओं में 5.4% और सॉफ्टवेयर में 2.3% की वृद्धि हुई। कंपनी का मुनाफा 18.2% रहा, जो उसके अनुमान के अनुसार है। उन्होंने 9.76 अरब डॉलर के बड़े सौदे जीते, जो पिछले साल से 10.2% अधिक है। फ्री कैश फ्लो में 27.7% का उछाल आया। लेकिन अगले साल के लिए 3-5% कमाई वृद्धि का अनुमान कमजोर रहा, क्योंकि एक बड़े बैंकिंग सौदे में काम विदेश ले जाने और एक कंपनी बेचने से पहली तिमाही में 2% नुकसान हुआ। कंपनी को उम्मीद है कि साल के दूसरे हिस्से में वृद्धि होगी, लेकिन खर्च पर दबाव बना रहेगा। जोखिम: नई AI तकनीक पर खर्च पुराने IT बजट को कम कर सकता है।
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GenAI Crowding Out Traditional IT Spend
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Read Transcript →Quarter Snapshot
Deal Wins (TCV)
$9.76B
+10.2% YoY
Annual total contract value of new deal wins, excluding renewals, grew 10.2% year-over-year.
Software ARR
$1.02B
+0.7% YoY
Annual recurring revenue for software business grew modestly, impacted by discontinuation of telecom products.
Attrition (LTM IT Services)
12.4%
-4.2pp YoY
Voluntary attrition declined significantly year-over-year, indicating improved employee retention.
Free Cash Flow
$2.6B
+27.7% YoY
Free cash flow grew strongly, driven by a 5-day reduction in DSO to 83 days.
What Changed vs Last Quarter
NEW
FY25 Revenue Growth 3-5% CC
HCLTech guides for constant currency revenue growth of 3-5% for FY25, with Q1 expected to decline ~2% sequentially due to offshoring impact in a large FS deal and annual productivity passbacks.
NEW
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.
UPDATED
FY25 Operating Margin 18-19%
Operating margin guidance for FY25 is maintained at 18-19%, consistent with FY24 actuals, with no specific timeline to reach the aspirational 20% level.
DROPPED
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.
DROPPED
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.
NEW RISK
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.
NEW RISK
Discretionary Spend Recovery Uncertain
Analysts questioned the lack of discretionary recovery baked into guidance; management confirmed they assumed a similar environment to FY24, with no rebound in discretionary projects.
NEW RISK
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.
RISK GONE
Soft discretionary spending in IT services
Management noted that discretionary spending remains soft with no change from previous quarters, which could impact growth.
RISK GONE
Uncertain demand environment in Americas
Despite strong growth, the Americas demand environment remains challenging, which could affect future performance.
RISK GONE
GenAI revenue still nascent
GenAI programs are currently small and in pilot stages; significant ramp-up is expected only over coming quarters.
RISK GONE
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.
🤫 Topics management stopped discussing
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
HCLTech guides for constant currency revenue growth of 3-5% for FY25, with Q1 expected to decline ~2% sequentially due to offshoring impact in a la...
Management noted that GenAI spending is coming at the cost of other IT budget areas, potentially limiting overall services growth.
View Risks →